VOLTAGE PICTURES, LLC, Petitioner-Appellee, v. GUSSI, S.A. DE C.V., Respondent-Appellant.
No. 23-55123
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
February 5, 2024
D.C. No. 2:21-cv-04751-FLA-RAO
Before: MILAN D. SMITH, JR., KENNETH K. LEE, and LAWRENCE VANDYKE, Circuit Judges. Opinion by Judge Milan D. Smith, Jr.
FOR PUBLICATION
SUMMARY*
Arbitration / Service
The panel affirmed the district court‘s judgment confirming an arbitral award in favor of Voltage Pictures, LLC (Voltage), and against Gussi S.A. de C.V. (Gussi SA), in a case arising from a dispute concerning the parties’ respective rights and obligations under their Distribution and License Agreement (DLA).
The panel held that the district court had jurisdiction to hear the motion to confirm the arbitral award but not for the reasons it articulated. The district court ruled that it had diversity jurisdiction, but the panel was not satisfied that it did where the record below did not indicate the citizenship of Voltage‘s members. The panel nevertheless held that Section 203 of Chapter 2 of the Federal Arbitration Act (FAA) and
The panel held that the district court erred in ruling that California law governed service of Voltage‘s notice of motion to confirm the arbitral award. Federal procedural law generally governs service when a party files an action in federal district court unless the party-to-be-served waives this protection. The panel looked to the DLA, which was governed by California law, and held that the parties agreed to accept service of a confirmation motion pursuant to the law that applied to such motions in the prevailing party‘s chosen confirmation forum. Because Voltage filed its confirmation motion in a federal court, the panel analyzed whether service of the motion on Gussi SA complied with federal law.
Applying federal law, the panel held that Voltage sufficiently served notice to confirm the arbitral award by mailing its motion papers to Gussi SA‘s counsel. Gussi SA does not reside in the district where the award was made, and Voltage did not serve Gussi SA by a U.S. marshal. Gussi SA contended that service of Voltage‘s notice of motion was insufficient pursuant to
Finally, the panel held that the district court did not abuse its discretion when it declined to extend comity to a purported Mexican court order enjoining
COUNSEL
Charles M. Coate (argued), Hamrick & Evans LLP, Burbank, California, for Respondent-Appellant.
Elaine Li (argued) and Jeremiah Reynolds, Eisner LLP, Beverly Hills, California, for Petitioner-Appellee.
OPINION
M. SMITH, Circuit Judge:
On June 10, 2021, Voltage Pictures, LLC (Voltage) filed a motion in the United States District Court for the Central District
FACTUAL BACKGROUND
Voltage is a film production and distribution limited liability company based in Los Angeles.1 Gussi SA is a Mexican corporation with its principal place of business in Mexico City. On November 7, 2018, Voltage, on behalf of non-party EVE Nevada, LLC, entered into a Distribution and License Agreement (the DLA) with Gussi SA to license the distribution rights of the film Ava in Latin America on an exclusive basis, and for pan-regional television services in Spanish in additional foreign countries on a non-exclusive basis.
Exhibit A to the DLA contains an arbitration provision, which states that “[a]ny dispute arising out of or relating to this Agreement will be resolved by final binding arbitration under the [Independent Film & Television Alliance (IFTA)] Rules [for International Arbitration] ... in effect at the time of the notice of arbitration is filed . . . .” It further states that Gussi SA “consents and submits to the jurisdiction of the state and federal courts located in Los Angeles County, California with respect to any action arising out of or relating to this Agreement or the Picture,” and that the DLA “shall be covered by and interpreted in accordance with the laws of the State of California (without regard to the conflict of laws provisions thereof).” It also provides that “[t]he Parties hereby submit to the jurisdiction of the courts in [Los Angeles County, California] to compel arbitration or to confirm an arbitration award.” Most significantly to this appeal, the arbitration provision declares that “[t]he Parties agree to accept service of process in accordance with the IFTA Rules.”
IFTA Rule 12 is titled “The Award.” IFTA Rule 12.5 provides, in part, that:
Service of any petition, summons or other process necessary to obtain confirmation of the Arbitrator‘s award may be accomplished by any procedure authorized by applicable law, Treaty or Convention, except that the parties waive application of the Hague Convention for Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters with respect to service of process.
Immediately below IFTA Rule 12.5 is IFTA Rule 13, titled “Applicable Law.” IFTA Rule 13.1 provides, in full, that:
The Arbitrator shall apply the laws of the State of California to all arbitrations conducted under these Rules unless the parties by mutual agreement or by the contract to be enforced provide that the Arbitrator shall apply the law of one other jurisdiction, or the Arbitrator for good cause designates another location to be the situs of the arbitration in which case the Arbitrator shall have the discretion to apply for good cause the law of the situs of the arbitration.
PROCEDURAL HISTORY
On July 22, 2020, Voltage filed and served its demand for arbitration against
On June 21, 2021, Gussi SA filed its first motion to quash service of and to dismiss Voltage‘s motion to confirm the arbitral award. On March 28, 2022, after the district court held that it had diversity jurisdiction pursuant to
The next day, Voltage mailed its notice of motion and accompanying motion papers to Gussi SA‘s address in Mexico via Federal Express and requested the return of a signed receipt upon delivery. A few days later, Voltage received a return receipt, signed by Silvia Torres, who had been designated by Gussi SA as its representative for service of process during the underlying arbitration proceedings. Then, on May 3, 2022, Voltage delivered the same papers through personal service on the registered service agent for Gussi, Inc., a Delaware corporation registered to do business in California and with its executive offices located in Los Angeles, California. Gussi SA and Gussi, Inc. are owned by the same Mexican holding company. Gussi, Inc. has only three employees, two of whom negotiated the DLA on behalf of Gussi SA.
On June 3, 2022, Gussi SA filed a further motion to quash service of process. Despite the district court already having ruled that California law governed service of process, Gussi SA reargued that federal procedural law—specifically,
Within two days of the district court‘s order denying Gussi SA‘s further motion to quash service, Gussi SA notified Voltage of an action that Gussi SA supposedly brought against Voltage in Mexico earlier that year. According to Gussi SA, a Mexican court issued an order enjoining Voltage from enforcing the arbitral award on February 2, 2022. Therefore, Gussi SA requested that the district court dismiss or stay Voltage‘s motion to confirm the arbitral award based on the Mexican court order. The district court ultimately denied
JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction pursuant to
ANALYSIS
I. The District Court Had Jurisdiction to Hear the Motion to Confirm the Arbitral Award but Not for the Reasons It Articulated.
The district court correctly recognized that “[t]he provisions of
In advance of oral argument, we ordered the parties “to be prepared to address . . . [w]hether the district court erred in concluding it had
Nevertheless, we hold that
Whereas subject matter jurisdiction refers to a court‘s power to hear a certain type of case, Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 639 (2009), personal jurisdiction refers to a court‘s power over a particular defendant, Int‘l Shoe Co. v. State of Wash., Off. of Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945). On appeal, Gussi SA objects to the district court‘s exercise of the latter. However, it is undisputed that Gussi SA, by entering into the DLA, “consent[ed] and submit[ted] to the” district court exercising personal jurisdiction over it
because the district court is a “federal court[] located in Los Angeles County, California . . . .” See Nat‘l Equip. Rental, Ltd. v. Szukhent, 375 U.S. 311, 316 (1964) (observing that “parties to a contract may agree in advance to submit to the jurisdiction of a given court“). Accordingly, the only basis for Gussi SA to contest the district court‘s exercise of personal jurisdiction over it would be insufficient service of Voltage‘s notice of motion to confirm the arbitral award. See generally S.E.C. v. Ross, 504 F.3d 1130, 1138–39 (9th Cir. 2007) (explaining that “in the absence of proper service of process, the district court has no power to render any judgment against the defendant‘s person or property“).
Gussi SA maintains that it was never properly served with notice of Voltage‘s motion to confirm the arbitral award, and therefore, the district court lacked personal jurisdiction over Gussi SA to confirm the award. For us to evaluate whether service of Voltage‘s motion on Gussi SA was sufficient, we must first determine what law governs service of a confirmation motion. The district court ruled that California law governs service, but Gussi SA argues that federal procedural law governs. We agree with Gussi SA.
When a party files an action in federal district court, federal procedural law generally governs service, see, e.g., Brockmeyer v. May, 383 F.3d 798, 799–800 (9th Cir. 2004) (ruling that
By entering into the DLA, Voltage and Gussi SA clearly “agree[d] to accept service of process in accordance with the IFTA Rules.” Therefore, whether Gussi SA consented to accept service of the motion pursuant to California law (even if the motion is filed in federal court) hinges on our interpretation of the IFTA Rules governing service. The IFTA Rule governing service of a subsequent motion to confirm an arbitral award is IFTA Rule 12.5, which provides, in relevant part, that:
Service of any petition, summons or other process necessary to obtain confirmation of the Arbitrator‘s award may be accomplished by any procedure authorized by applicable law, Treaty or Convention, except that the parties waive application of the Hague Convention for Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial
Matters with respect to service of process.
To date, at least two district courts in the Ninth Circuit, including the court below, have concluded that the “applicable law” referenced in IFTA Rule 12.5, which governs the service of a motion to confirm an arbitral award, is necessarily California law. See Voltage Pictures, LLC v. Gussi, S.A. De C.V., 2022 WL 18397529, at *3 (C.D. Cal. Mar. 28, 2022); Voltage Pictures, LLC v. Gulf Film, LLC, 2018 WL 2110937, at *3 (C.D. Cal. Apr. 17, 2018). Those courts’ justification is simple: because “IFTA Rule 12.5 provides [for service of confirmation motion to] ‘be accomplished by any procedure authorized by applicable law,‘” and “IFTA Rule 13.1 defines ‘applicable law’ as ‘the laws of the State of California,‘” California law necessarily governs service of a confirmation motion, no matter the forum in which the prevailing party chooses to file its motion. Gussi, 2022 WL 18397529, at *3; see Gulf Film, 2018 WL 2110937, at *3.
If only it were that simple. IFTA Rule 13.1 does not actually “define ‘applicable law‘” in the way that Voltage or the district court suggests that it does. In fact, the words “applicable law” do not appear anywhere in IFTA Rule 13.1. The words “applicable law” only appear in the header of IFTA Rule 13. IFTA Rule 13.1 itself only provides that “[t]he Arbitrator shall apply the laws of the State of California to all arbitrations conducted under the[] [IFTA] Rules . . . .” The rule says nothing about the procedural law a court must apply when adjudicating a subsequent petition to confirm an arbitration award issued pursuant to the IFTA Rules. Nor does any other IFTA Rule.
Moreover, IFTA Rule 12.5 does not merely state that service must be accomplished by applicable law. Rather, it provides that service “may be accomplished by any procedure authorized by applicable law, Treaty or Convention, except that the parties waive application of the Hague Convention . . . with respect to service of process.” This language indicates that any law, treaty, or convention (except for the Hague Convention) that applies in the prevailing party‘s chosen confirmation forum may govern service. The drafters of the IFTA Rules could have easily provided that service of a confirmation motion must be accomplished by California law, regardless of the prevailing party‘s chosen confirmation forum, but they did not.
We therefore reject the district court‘s ruling that by agreeing to abide by IFTA Rule 12.5, Gussi SA voluntarily waived its right to be served with notice of Voltage‘s motion in compliance with federal law in federal court. Instead, we hold that, by incorporating IFTA Rule 12.5 into the DLA, Voltage and Gussi SA both agreed to accept service of a confirmation motion pursuant to any law, treaty, or convention (except for the Hague Convention) that applies to such motions in the prevailing party‘s chosen confirmation forum. Because Voltage filed its confirmation motion in a federal court, we must analyze whether service of the motion on Gussi SA complied with whatever federal law applies to such motions.
III. Voltage Sufficiently Served Notice of Its Motion to Confirm the Arbitral Award by Mailing Its Motion Papers to Gussi SA‘s Counsel.
Notice of the application [to confirm an arbitral award] shall be served upon the adverse party, and thereupon the court shall have jurisdiction of such party as though he had appeared generally in the proceeding. If the adverse party is a resident of the district within which the award was made, such service shall be made upon the adverse party or his attorney as prescribed by law for service of notice of motion in an action in the same court. If the adverse party shall be a nonresident, then the notice of the application shall be served by the marshal of any district within which the adverse party may be found in like manner as other process of the court.
It is undisputed that Gussi SA does not reside in the district where the award was made—i.e., the Central District of California—and that Voltage did not attempt to serve Gussi SA by a U.S. marshal. Because of these undisputed facts, Gussi SA contends that service of Voltage‘s notice of motion was insufficient pursuant to
These arguments present several questions of first impression for us, including (1) whether later amendments to the Federal Rules of Civil Procedure implicitly repealed the marshal requirement in
A. When Congress Enacted § 9 of the FAA, Service by a U.S. Marshal Was the Prevailing “Manner of Other Process of the Court.”
“The FAA was enacted in 1925 in response to widespread judicial hostility to arbitration agreements.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). The Supreme Court has stated that “it [is] beyond dispute that the FAA was designed to promote arbitration.” Id. at 345. The Ninth Circuit has “gone [even] further, stating that ‘the FAA‘s purpose is to give preference (instead of mere equality) to arbitration provisions.‘” Chamber of Com. of the United States of Am. v. Bonta, 62 F.4th 473, 483 (9th Cir. 2023) (quoting Mortensen v. Bresnan Commc‘ns, LLC, 722 F.3d 1151, 1160 (9th Cir. 2013)). However, the Supreme Court has tempered “the FAA‘s ‘policy favoring arbitration‘” by clarifying that it “does not authorize federal courts to invent special, arbitration-preferring procedural rules.” Morgan v. Sundance, Inc., 596 U.S. 411, 418 (2022).
The FAA‘s provisions governing applications to confirm arbitral awards manifest Congress’ intent to promote arbitration. One provision is
If the adverse party is a resident of the district within which the [arbitral] award was made, such service [of the application to confirm the award] shall be made upon the adverse party or his attorney as prescribed by law for service of notice of motion in an action in the same court.
However, Congress provided a different rule for serving confirmation applications on adverse parties that do not reside in the district where the award was made:
If the adverse party shall be a nonresident [of the district within which the arbitral award was made], then the notice of the application [to confirm the arbitral award] shall be served by the marshal of any district within which the adverse party may be found in like manner as other process of the court.
B. Later Amendments to the Federal Rules of Civil Procedure Did Not Implicitly Repeal § 9‘s Marshal Requirement.
In 1983, Congress amended
Numerous courts, including lower courts in our circuit, have relied on the 1983 amendment regarding the service of summons to conclude that the marshal requirement in
nonresident service provision is an anachronism under the current Federal Rules. See, e.g., In re Arbitration Between InterCarbon Berm., Ltd. & Caltex Trading & Transp. Corp., 146 F.R.D. 64, 67 n.3 (S.D.N.Y. 1993) (stating that identical service language in
Some of those courts have even gone as far to suggest that the 1983 amendment implicitly repealed the marshal requirement in § 9‘s nonresident service provision and is thus no longer valid. See, e.g., Hancor, 381 F. Supp. 2d at 15-16 (jettisoning the marshal requirement because of the “later amendments to the Federal Rules“); Technologists, 725 F. Supp. 2d at 127 (concluding that the FAA‘s marshal requirement has been displaced by contemporary Rule 4); LG Elecs., 2018 WL 2059559, at *3 (ruling that “service under Rule 4 satisfies [§] 9‘s notice requirement“); see also, e.g., Elevation Franchise Ventures, LLC v. Rosario, 2013 WL 5962984, at *3 n.1 (E.D. Va. Nov. 6, 2013) (declining to apply § “9‘s requirement of service by U.S. Marshal” because some courts have found that it “need not be followed“); Dobco, Inc. v. Mery Gates, Inc., 2006 WL 2056799, at *2 (D.N.J. July 21, 2006) (implicitly ruling service by marshal pursuant to § 9 is no longer a requirement and is instead an “alternative” to Rule 4).
Those courts erred. First, while it is true that the “principal purpose” of the 1983 amendment was to “tak[e] the marshals out of summons service almost entirely,” “[p]rocess other than a summons (or subpoena . . .) continue[d] to be servable only by a marshal or person specially appointed by the court.” Changes in Federal Summons Service, 96 F.R.D. at 94. That remains true today. See
Second, even assuming arguendo that the phrase “in like manner as other process of the court” in § 9‘s nonresident service provision necessarily refers to the method for serving summons pursuant to Rule 4, see, e.g., Reed & Martin, Inc. v. Westinghouse Elec. Corp., 439 F.2d 1268, 1277 (2d Cir. 1971) (holding that that the phrase “in like manner as other process of the court” refers to Rule 4 governing service of summons), that assumption would still fail to do away with the marshal requirement. The plain text of the statute clearly states that “the notice of the application shall be served by the marshal . . . .”
Section 9‘s marshal requirement does not expressly contradict or irreconcilably conflict with the current Federal Rules, which still allow for service by a U.S. marshal if the court so orders, and still mandates service by a U.S. marshal where Rule 4.1 applies. Accord Logan & Kanawha Coal Co., LLC v. Detherage Coal Sales, LLC, 789 F. Supp. 2d 716, 720-22 (S.D.W. Va. 2011) (holding that Rule 4 did not implicitly repeal § 9‘s marshal requirement and listing several contemporary instances where courts can still order marshal service). Accordingly, we hold that later amendments to the Federal Rules of Civil Procedure did not implicitly repeal the marshal requirement in § 9‘s nonresident service provision and that it is still valid where it applies.3
C. Section 9‘s Nonresident Service Provision Does Not Provide a Viable Method of Service on Adverse Parties Who Are Not Available for Service in the United States.
Despite lower court disagreement over whether § 9‘s marshal requirement has survived into the present day, there is an emerging consensus among district courts that § 9‘s nonresident service provision does not apply to adverse parties located outside the United States because service by a U.S. marshal outside of the territorial United States is impossible. See, e.g., InterCarbon, 146 F.R.D. at 67 (“The problem [with the marshal requirement] is that foreign parties will not necessarily be found in any district. Requiring parties to satisfy [it] might amount to requiring them to do the impossible.“); Technologists, 725 F. Supp. 2d at 126 (observing the same); PTA-FLA, Inc. v. ZTE USA, Inc., 2015 WL 12819186, at *7 (M.D. Fla. Aug. 5, 2015) (noting that § 9‘s nonresident service provision “arguably does not include any method for service on foreign parties at all since [such parties] will not necessarily be found in any district” (internal citations and quotation marks omitted)), aff‘d, 844 F.3d 1299 (11th Cir. 2016).
This emerging consensus among lower courts is well-founded. By ratifying the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) and enacting Chapter 2 of the FAA, Congress clearly intended for international arbitral awards to be confirmable in the courts of the United States. See Jones Day v. Orrick, Herrington & Sutcliffe, LLP, 42 F.4th 1131, 1133 (9th Cir. 2022). However, § 9‘s nonresident service provision requires service of a notice of application to confirm an arbitral award to be made by the marshal of the district within which the adverse party may be found. See
How do we resolve this irreconcilable conflict? Section 208 of Chapter 2 instructs that Chapter 2 only incorporates § 9 “to the extent that [§ 9] is not in conflict with [Chapter 2] or the Convention as ratified by the United States.”
D. Section 6 of the FAA and Federal Rule of Civil Procedure 5(b) Fill the Gap Left by § 9, Not Rule 4.
When § 9 does not apply, what stands in its place? Many courts, including the Second Circuit, have concluded that Rule 4 necessarily fills the gap. See, e.g., InterCarbon, 146 F.R.D. at 67 (ruling that Rule 4, and not Rule 5, is “the proper fallback provision” where the FAA provides “no method of service for foreign parties not resident in any district of the United States“); Technologists, 725 F. Supp. 2d at 127 (same); Commodities & Mins. Enter. Ltd. v. CVG Ferrominera Orinoco, C.A., 49 F.4th 802, 812 (2d Cir. 2022), cert. denied, 143 S. Ct. 786 (2023) (noting that “[i]t is well established” in the Second Circuit that “Rule 4 sets forth the basic procedures for serving process in connection with arbitral awards“).
However, those courts discount § 6 of the FAA, which states that “[a]ny application to the court hereunder shall be made and heard in the manner provided by law for the
Because § 9‘s nonresident service provision does not provide a viable method of service of notice on adverse parties who are not available for service within the United States, we must rely on § 6‘s statutory mandate that “[a]ny application to the court hereunder shall be made and heard in the manner provided by law for the making and hearing of motions . . . .”
Gussi SA‘s reliance on Technologists, 725 F. Supp. 2d, and other district court cases finding that Rule 4 governs service of such applications is unavailing. In Technologists, the District Court for the District of Columbia rejected the view that Rule 5 governs the service of notice of applications to vacate4 arbitral awards on adverse parties unavailable for service within the United States because if Rule 5 governed, “foreign parties could be served by mail, whereas domestic parties who reside in another judicial district would” benefit from the heightened protections of §§ 9 and 12‘s nonresident service provisions5 “which generally do[] not permit service
by mail[].”
The court did so despite the plain language of § 6, which instructs that “[a]ny application to the court hereunder shall be made and heard in the manner provided by law for the making and hearing of motions . . . .”
A court‘s discomfort, as a matter of policy, that the default rule under the FAA allows for service of notice of applications to confirm an arbitral award pursuant to the “law for the making of motions” does not authorize that court to narrow the commands of the FAA to the effect of ignoring them. As the Supreme Court has instructed, “[e]ven the most formidable policy arguments cannot overcome a clear statutory directive[]” in the FAA. Badgerow, 596 U.S. at 16. As a court, we “have no warrant to redline the FAA,” id. at 11, importing Rule 4‘s procedural protections, which generally apply to the service of summons into § 9 of the FAA, which does not require
E. Gussi SA Insisted It Was Not Available for Service in the United States. Voltage Could Therefore Effect Service by Mailing its Motion Papers to Gussi SA‘s Attorney Pursuant to Rule 5(b).
In its first motion to quash service of the confirmation application, Gussi SA insisted that it had to be served in compliance with
Accordingly, Voltage only needed to serve the motion “in the manner provided by the law for the making . . . of motions,”
On appeal, Gussi SA also challenges the district court‘s decision not to take judicial notice of a document that Gussi SA claimed was a court order from Mexico enjoining Voltage from seeking to confirm the award in the United States. However, as the district court correctly noted, Gussi SA did not certify the genuineness of the document purporting to be a Mexican court order or the accompanying translation.
In its opening brief on appeal, Gussi SA fails to challenge either of those reasons stated by the district court for refusing to notice the order. Gussi SA only argues in general that the district court erroneously interpreted Federal Rule of Evidence 201 and fails to make any mention of the procedural and evidentiary rules upon which the district court relied, such as
Accordingly, we affirm the district court‘s denial of Gussi SA‘s request to stay or dismiss the case. Because Gussi SA‘s failure to certify the genuineness of the court order and its accompanying translation is sufficient to affirm the district court‘s denial, we need not reach the substantive question of international comity raised by Gussi SA on appeal.
CONCLUSION
For the foregoing reasons, we AFFIRM the district court‘s judgment confirming the arbitral award in favor of Voltage. Gussi SA shall bear Voltage‘s costs on appeal. See