Frank v. Tesla, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: May 1, 2026
• Docket: 25-4168
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS MAY 1 2026 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

NAYMON FRANK, an individual, No. 25-4168 D.C. No. Plaintiff - Appellant, 2:22-cv-01590-MEMF-AGR v. MEMORANDUM* TESLA, INC., a corporation; SUZIE HATZIS, an individual,

Defendants - Appellees.

Appeal from the United States District Court for the Central District of California Maame Ewusi-Mensah Frimpong, District Judge, Presiding

Argued and Submitted April 21, 2026 Pasadena, California

Before: NGUYEN and BRESS, Circuit Judges, and TUNHEIM, District Judge.**

Naymon Frank (“Frank”) appeals the district court’s grant of Tesla, Inc.’s

(“Tesla”) motion to compel arbitration, and the district court’s denial of Frank’s

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable John R. Tunheim, United States District Judge for the District of Minnesota, sitting by designation. motion to vacate the subsequent arbitration award. We have jurisdiction under 28

U.S.C. § 1291 and 9 U.S.C. § 16(a)(3). We review decisions to compel arbitration

de novo. Sanford v. Memberworks, Inc., 483 F.3d 956, 960 (9th Cir. 2007). We

review a district court’s legal conclusions in confirming an arbitration award de

novo, albeit “cognizant that arbitration is an encouraged method of dispute

resolution and that our review of the [arbitrator’s] decision is greatly limited.”

U.S. Life Ins. Co. v. Superior Nat’l Ins. Co., 591 F.3d 1167, 1172 (9th Cir. 2010).

For the following reasons, we affirm both decisions of the district court.

When Tesla hired Frank in 2016, he signed an employment contract

containing an agreement to arbitrate (the “Agreement”). Frank resigned from

Tesla in 2020. In January 2022, Frank brought fourteen claims against Tesla and

his former supervisor, Suzie Hatzis, in state court. Among Frank’s claims were

discrimination, harassment, fraud, intentional infliction of emotional distress,

constructive discharge, and violations of California labor laws. The district court

compelled arbitration over Frank’s objection and, following arbitration, denied

Frank’s motion to vacate the arbitrator’s final award. Frank appeals both district

court decisions.

We turn first to the grant of Tesla’s motion to compel arbitration.

Agreements to arbitrate are unenforceable where “such grounds . . . exist at law or

in equity for the revocation of any contract.” 9 U.S.C. § 2. Frank argues that

2 25-4168 under California law, which binds us here, the Agreement was unconscionable, and

that the district court thus erred in compelling arbitration under the Agreement.

We conclude that the district court properly compelled arbitration. In

California, a contract is unconscionable only if both procedural and substantive

unconscionability are present. Sanchez v. Valencia Holding Co., LLC, 353 P.3d

741, 748 (Cal. 2015). California courts assess unconscionability on a “sliding

scale,” under which a greater degree of procedural unconscionability is tolerated in

proportion with a lesser degree of substantive unfairness. See Baltazar v. Forever

21, Inc., 367 P.3d 6, 11 (Cal. 2016).

The unequal bargaining power between Tesla and Frank gives rise to a

certain degree of procedural unconscionability. But we are not persuaded that the

Agreement was substantively unconscionable. First, Frank takes issue with a

carve-out in the Agreement allowing the parties to adjudicate certain types of

disputes in court, which he contends unfairly favors Tesla. However, the district

court declined to enforce that provision (which did not cover the instant dispute),

concluding it was substantively unconscionable. Frank nevertheless maintains that

the Agreement was unconscionable as enforced because it imposed impermissible

limitations on discovery. But the Agreement specifically empowered the arbitrator

to “compel adequate discovery for the resolution of the dispute,” and therefore did

not impose any such limits. Nor does Frank dispute that the arbitrator’s discovery

3 25-4168 plan permitted him to obtain any discovery for which he could demonstrate good

cause. Finally, while Frank argues that Tesla’s failure to attach the JAMS

arbitration rules to the employment contract renders the Agreement

unconscionable, Frank conceded below that he did “not argue that any of the

JAMS rules are unconscionable,” which forecloses his theory. See Baltazar, 367

P.3d at 12–13. For these reasons, the district court properly held that the

Agreement, save the sole one-sided clause, was enforceable.

Nor did the district court err in denying Frank’s motion to vacate the

arbitrator’s final award under 9 U.S.C. § 10(a)(3)–(4). First, Frank argues that the

arbitrator was “guilty of misconduct” in limiting discovery. See 9 U.S.C.

§ 10(a)(3). However, the arbitrator’s discovery rulings did not deprive him of a

“fundamentally fair hearing.” Move, Inc. v. Citigroup Glob. Mkts., Inc., 840 F.3d

1152, 1158 (9th Cir. 2016). Frank had various discovery procedures available to

him, some of which he did not use, including a person most knowledgeable

deposition. Nor has Frank shown prejudice from not being able to depose Troy

Jones, who provided a declaration and testified at the arbitration hearing, or Elon

Musk. Second, vacating an award based on an arbitrator exceeding her powers

under 9 U.S.C. § 10(a)(4) is evaluated under “a high standard”—one must show

that the arbitrator committed more than “even a serious error.” Lagstein v. Certain

Underwriters at Lloyd’s, London, 607 F.3d 634, 641 (9th Cir. 2010) (citation

4 25-4168 omitted). An arbitrator exceeds her power where the award is “completely

irrational” or exhibits a “manifest disregard of law.” See Kyocera Corp. v.

Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 997 (9th Cir. 2003) (citation

omitted). Frank’s arguments in support of vacatur, which rest primarily on

disagreement with the merits of the arbitrator’s rulings on summary judgment and

on the scope of discovery, do not approach this high bar, and we conclude that

Frank has not shown that the arbitrator exceeded her powers.

The district court, having no basis to disturb the final award, properly denied

Frank’s motion.

AFFIRMED.

5 25-4168