Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-23-15296/USCOURTS-ca9-23-15296-0/pdf.json

Parties Involved:
Karl Hansen
Appellant
Elon Musk
Appellee
Tesla Motors, Inc.
Appellee
U.S. Securities Associates, Inc.
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

KARL HANSEN, 

Plaintiff-Appellant, 

 v. 

ELON MUSK; TESLA MOTORS, 

INC.; U.S. SECURITIES 

ASSOCIATES, INC., 

Defendants-Appellees.

No. 23-15296 

D.C. No. 

3:19-cv-00413-

LRH-CSD 

OPINION

Appeal from the United States District Court

for the District of Nevada

Larry R. Hicks, District Judge, Presiding

Argued and Submitted May 14, 2024

Pasadena, California

Filed December 10, 2024

Before: Daniel P. Collins, Holly A. Thomas, and Anthony 

D. Johnstone, Circuit Judges.

Opinion by Judge H.A. Thomas;

Partial Concurrence and Partial Dissent by Judge Collins

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2 HANSEN V. MUSK

SUMMARY*

Sarbanes-Oxley Act

The panel affirmed the district court’s order dismissing 

a complaint alleging whistleblower retaliation claims.

Karl Hansen sued Tesla, Inc., its CEO, and U.S. Security 

Associates, alleging that they retaliated against him for 

reporting misconduct at Tesla. The district court ordered 

most of Hansen’s claims to arbitration, except his claim 

under the Sarbanes-Oxley Act of 2002 (SOX). The district 

court confirmed the arbitration award disposing of the nonSOX claims, and granted defendants’ motion to dismiss the 

entire suit—including the SOX claim—because the 

arbitrator’s findings precluded Hansen from relitigating 

issues from arbitration that were also key to the SOX claim.

Affirming the district court’s dismissal of the complaint, 

the panel held that, although an arbitrator’s decision can 

never preclude a SOX claim, which is not subject to 

mandatory predispute arbitration agreements, a confirmed 

arbitral award can sometimes preclude relitigation of the 

issues underlying a SOX claim. In this case, relitigation of 

the dispositive issues underlying Hansen’s SOX claim is 

precluded by the confirmed arbitral award that also 

conclusively resolves Hansen’s other claims. 

Judge Collins concurred in the judgment in part and 

dissented in part. Judge Collins concurred in the judgment 

to the extent that the majority affirmed the district court’s 

* This summary constitutes no part of the opinion of the court. It has 

been prepared by court staff for the convenience of the reader.

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HANSEN V. MUSK 3 

rejection of all of Hansen’s claims other than his SOX 

retaliation claim. Judge Collins dissented from the 

majority’s decision affirming the district court’s holding that 

the arbitral award collaterally estopped Hansen from 

litigating his SOX claim in the district court. He would 

reverse the dismissal of that claim and remand for further 

proceedings. 

COUNSEL

George W. Thomas (argued) and Robert L. Sirrianni, Jr., 

Brownstone PA, Winter Park, Florida, for PlaintiffAppellant. 

Robin E. Largent (argued) and Alex A. Smith, Martenson 

Hasbrouk & Simon LLP, Sacramento, California; 

Christopher F. Robertson (argued), Seyfarth Shaw LLP, 

Boston, Massachusetts; Dora V. Lane, Holland & Hart LLP, 

Reno, Nevada; Matthew T. Cecil, Holland & Hart LLP, Las 

Vegas, Nevada; for Defendants-Appellees.

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4 HANSEN V. MUSK

OPINION

H.A. THOMAS, Circuit Judge:

The plain language of the Sarbanes-Oxley Act of 2002

(SOX) prevents SOX claims from being subject to 

mandatory predispute arbitration agreements. 18 U.S.C. 

§ 1514A(e). This case raises the question whether a federalcourt order confirming an arbitrator’s decision can

nevertheless have a preclusive effect in a SOX suit filed in 

federal court.

We hold that, although an arbitrator’s decision can never 

preclude a SOX claim, a confirmed arbitral award can 

sometimes preclude relitigation of the issues underlying 

such a claim. And, in this case, we hold that relitigation of 

the dispositive issues underlying Karl Hansen’s SOX claim 

is precluded by a confirmed arbitral award that also

conclusively resolves Hansen’s other claims. We therefore 

affirm the district court’s order dismissing Hansen’s 

complaint. 

I.

A.

On July 19, 2019, Karl Hansen brought this lawsuit 

claiming that Tesla, Inc., Tesla’s CEO Elon Musk, and U.S. 

Security Associates (USSA) (collectively, Defendants) 

retaliated against him for reporting misconduct at Tesla to 

Tesla’s management and the Securities and Exchange 

Commission (SEC).1 As alleged in Hansen’s complaint,

Hansen was hired as a protection associate by Tesla in March 

1 Although Hansen’s complaint also names Tesla Motors, Inc. as a 

defendant, he does not bring any claims against that entity.

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HANSEN V. MUSK 5

2018, and in subsequent months was assigned to work as an 

investigations case specialist at Tesla’s Nevada Gigafactory. 

While in those roles, Hansen investigated what he believed 

to be thefts at the Gigafactory costing Tesla tens of millions 

of dollars, as well as narcotics trafficking at the Gigafactory 

conducted in connection with Mexican drug cartels. Hansen 

also investigated contracts that he believed senior 

management at Tesla had improperly awarded. And he

expressed concerns over the monitoring of employee 

communications by Tesla’s Senior Manager of Global 

Security, including wiretapping and hacking. Hansen 

reported the findings of his investigations to Tesla’s 

management. His reporting eventually reached Musk. 

In June 2018, Tesla terminated Hansen’s employment, 

citing internal restructuring. Hansen accepted an offer to 

work at USSA, with which Tesla contracted to provide 

security services. Hansen continued his investigations of 

alleged thefts and ties to criminal organizations at Tesla. He 

requested coordination with local, state, and federal law 

enforcement due to what he saw as the complexities of the 

case and informed his supervisors about a possible cover-up 

by senior management. On August 9, 2018, Hansen also 

filed an SEC report about Tesla’s alleged misconduct.

On August 30, 2018, Musk saw Hansen stationed at an

entrance to the Gigafactory and demanded that he be 

removed from his post. USSA subsequently told Hansen that 

his position at the Gigafactory had been eliminated and that 

he would be trained for a different position unrelated to 

Tesla. Hansen alleges that he was removed in retaliation for 

reporting misconduct at Tesla to his supervisors and the 

SEC.

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6 HANSEN V. MUSK

B.

After Hansen filed his complaint, Defendants filed

motions to compel arbitration of most claims on the ground 

that Hansen’s employment agreement with USSA contained 

a provision mandating arbitration of disputes arising out of 

his assignment at Tesla. Defendants, however, did not move 

to compel arbitration of Hansen’s SOX claim, which federal 

law states may not be subject to any “predispute arbitration 

agreement.” 18 U.S.C. § 1514A(e)(2).

The district court granted the motions, ordering most of 

Hansen’s claims to arbitration. Hansen v. Musk, No. 19-cv00413, 2020 WL 4004800, at *3–4 (D. Nev. July 25, 2020). 

The district court stayed proceedings with respect to 

Hansen’s SOX claim, finding that it “ar[o]se from the same 

conduct” as his other claims. Id. at *8.

C.

Before the arbitrator, Hansen brought multiple new 

claims, including claims for violations of the federal and 

Nevada Racketeer Influenced and Corrupt Organizations 

(RICO) Acts, and violation of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act’s (Dodd-Frank)

protections for whistleblowers. The arbitrator disposed of 

Hansen’s RICO claims in two interim awards, holding that 

Hansen had failed to adequately allege either a pattern of 

racketeering activity or a cognizable injury. The arbitrator

granted summary judgment to Defendants on Hansen’s 

claim for breach of contract and one of his claims for tortious 

interference with his contractual relationship with USSA,

finding that Hansen had no contractual right to continue 

working at the Gigafactory.

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HANSEN V. MUSK 7

The arbitrator issued a final award on June 8, 2022, 

rejecting Hansen’s remaining claim of tortious interference 

with contract and his claim of retaliation under Dodd-Frank. 

The arbitrator found the tortious interference claim failed

because Hansen had no contractual right to be assigned to 

work at the Gigafactory. As to the Dodd-Frank claim, the 

arbitrator explained that Hansen had been transferred from 

Tesla to USSA because Tesla outsourced the work of all 

employees with Hansen’s job position to USSA. And the

arbitrator found that Hansen’s position at the Gigafactory

had not been terminated because of his complaint to the 

SEC, but rather because Hansen had emailed significant 

amounts of confidential information to third parties, and then 

attempted to cover his tracks by deleting the emails from his 

“sent” folder. The arbitrator also found that USSA could not 

have retaliated against Hansen for any protected activity 

because USSA had never been made aware of the activity 

that Hansen claimed was protected.

Explaining that, to be entitled to Dodd-Frank’s 

whistleblower protections, Hansen must further prove that a 

reasonable person would have believed that the activities he 

reported violated securities laws, the arbitrator concluded 

that Hansen could not have reasonably held such a belief.

The arbitrator explained that Hansen’s complaints 

referenced only “[g]arden variety theft and drug 

violations[,] . . . matters governed by state and local law, not 

Dodd-Frank.” The arbitrator noted that Hansen had not

provided any argument to the contrary, and that Hansen had 

indeed testified that he was not even aware of what was 

reported to Tesla’s shareholders or included in its financial 

statements.

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8 HANSEN V. MUSK

D.

After the arbitrator’s decision, Defendants filed a motion 

before the district court to lift the stay of proceedings, 

including the stay of the SOX claim, and to confirm the 

arbitration award. Hansen did not oppose the motion, which 

the district court granted on July 25, 2022. Defendants then 

filed motions to dismiss the entire suit, arguing that the 

arbitrator’s findings precluded Hansen from relitigating the 

questions whether he engaged in protected activity, whether

USSA knew about any protected activity, and whether

USSA took adverse action against Hansen on the basis of 

protected activity—issues that were also key to Hansen’s

SOX claim.

The district court granted Defendants’ motions and 

dismissed the case. The district court first cited our decision 

in Clark v. Bear Sterns & Co., 966 F.2d 1318 (9th Cir. 1992), 

for the proposition that an arbitral award can have a 

preclusive effect on securities law claims, such as Hansen’s 

SOX claim. The district court then held that Hansen could 

not relitigate whether he had engaged in protected activity in 

pursuing his SOX claim because the arbitrator had found that 

Hansen had not engaged in any protected activity at all, and 

Hansen had a full and fair opportunity to litigate that issue. 

The district court emphasized the arbitrator’s finding that 

Hansen could not have reasonably believed the subject of his 

complaint was related to any violation of securities laws. 

And the district court noted that Hansen did not claim to 

blow the whistle regarding any other kind of fraud covered 

by SOX. The district court therefore dismissed Hansen’s 

SOX claim with prejudice. This appeal followed. 

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HANSEN V. MUSK 9

II.

We have jurisdiction under 28 U.S.C. § 1291. “We 

review dismissals for failure to state a claim under Federal 

Rule of Civil Procedure 12(b)(6) de novo and may affirm on 

any ground supported by the record.” Saloojas, Inc. v. Aetna 

Health of Cal., Inc., 80 F.4th 1011, 1014 (9th Cir. 2023). 

“We also review de novo whether issue preclusion is 

available,” and if it is, we review for abuse of discretion “the 

district court’s decision to apply the doctrine.” SEC v. Stein, 

906 F.3d 823, 828 (9th Cir. 2018).

III.

A.

In general, a “federal-court order confirming an 

arbitration award has ‘the same force and effect’ as a final 

judgment on the merits, 9 U.S.C. § 13, including the same 

preclusive effect.”2 NTCH-WA, Inc. v. ZTE Corp., 921 F.3d 

1175, 1180 (9th Cir. 2019). Claims brought under SOX’s

anti-retaliation provision, however, may not be committed to 

arbitration by a “predispute arbitration agreement.” 18 

U.S.C. § 1514A(e). Hansen argues that giving preclusive 

effect to the arbitrator’s decision as to the issues underlying 

his SOX claim would violate this statutory command,

because doing so would mean that his SOX claim was 

effectively resolved in arbitration proceedings. We disagree.

2 Because this case concerns the preclusive effect of an arbitral award 

confirmed by a federal court exercising federal question jurisdiction and 

because it concerns federal statutory claims, we apply federal law to 

determine the preclusive effect of the award. See Hawkins v. Riley, 984 

F.2d 321, 324–25 (9th Cir. 1993).

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10 HANSEN V. MUSK

1.

The Supreme Court has made clear that arbitration 

proceedings generally provide a suitable forum for the 

adjudication of federal claims. See 14 Penn Plaza LLC v. 

Pyett, 556 U.S. 247, 265–72 (2009). But the Court has not 

always taken this view. In McDonald v. City of West Branch, 

the Supreme Court held that an unappealed arbitration award 

could not preclude a plaintiff from bringing a civil rights 

claim in federal court under 42 U.S.C. § 1983. 466 U.S. 284,

292 (1984). The Supreme Court explained in McDonald that 

in certain proceedings, “an arbitration proceeding cannot 

provide an adequate substitute for a judicial trial” because 

arbitrators may not always have the experience or authority 

to consider Section 1983 claims, plaintiffs may not be 

adequately represented during arbitration proceedings, and 

arbitral factfinding procedures may not be adequate to 

protect plaintiffs’ federal rights. 466 U.S. at 290–92.

In Dean Witter Reynolds, Inc. v. Byrd, however, the 

Supreme Court took a step in another direction, suggesting 

that arbitration awards may sometimes be able to preclude 

federal claims, even when those claims could not themselves 

be resolved in arbitration. 470 U.S. 213, 222 (1985). Before 

Byrd was decided, some federal courts had held that 

arbitrable and nonarbitrable claims needed to be considered 

together in federal court, because otherwise the arbitration 

of the arbitrable claims might preclude the adjudication of 

the nonarbitrable claims. Id. at 222. The Supreme Court held 

in Byrd, however, that federal district courts could split such 

claims up, sending the arbitrable claims to arbitration and 

adjudicating the nonarbitrable claims themselves. Id. at 221–

24. As to the possibility that doing so might have a 

preclusive effect on litigation concerning nonarbitrable 

claims, the Court, citing McDonald as an example, noted that 

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HANSEN V. MUSK 11

federal courts had tools to deal with this: namely, by 

determining what preclusive effect should be given to 

arbitration proceedings.3 Id. at 223.

Following Byrd, federal courts of appeals held that 

arbitral awards could have a preclusive effect over 

nonarbitrable claims, but that this effect must be determined 

on a case-by-case basis. In Greenblatt v. Drexel Burnham 

Lambert, Inc., for example, the Eleventh Circuit held that an 

arbitration award precluded the plaintiff from asserting 

certain predicate acts in a subsequent RICO claim. 763 F.2d 

1352, 1359 (11th Cir. 1985). Noting that some courts had 

found RICO claims to be nonarbitrable, the Eleventh Circuit 

nevertheless held that the application of issue preclusion was 

appropriate in that case because the arbitration procedures 

employed “adequately protected the rights of the parties.” Id.

at 1361. Our court, in turn, cited Greenblatt’s reasoning with 

approval in C.D. Anderson & Co. v. Lemos, 832 F.2d 1097 

(9th Cir. 1987). There, we held that a plaintiff could not 

relitigate securities claims in federal court that had already 

been resolved in arbitration.4 Id. at 1099–1100. Then, in our 

1992 decision in Clark, we held that “[a]n arbitration 

decision can have res judicata or collateral estoppel effect 

even if the underlying claim involves the federal securities 

3 Byrd nevertheless explicitly declined to decide whether such preclusion 

was permissible. Id. at 223.

4 Before the Supreme Court’s 1987 decision in Shearson/American 

Express, Inc. v. McMahon, 482 U.S. 220 (1987), we had held that 

Exchange Act claims could not be subject to arbitration. Id. at 225 n.1.

In C.D. Anderson & Co., we declined to reach whether Shearson had a 

retroactive effect because the parties had voluntarily submitted their case 

to arbitration and our holding was consistent with Shearson. 832 F.2d at 

1099.

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12 HANSEN V. MUSK

laws.” 966 F.2d at 1321 (citing C.D. Anderson & Co., 832 

F.2d at 1100). 

Although our decisions in C.D. Anderson & Co. and 

Clark indicate that nonarbitrable securities claims may be 

subject to preclusion from arbitral awards, those decisions

did not directly address the question this case presents. In 

C.D. Anderson & Co., we considered only whether an 

arbitral award resolving a claim could preclude litigation of 

the same claim in federal court. 832 F.2d at 1099–1100. And 

in Clark, we considered the preclusive effect of an arbitral 

award on a claim made nonarbitrable by contract. 966 F.2d 

at 1321 n.2. We therefore did not consider in those cases 

whether a confirmed arbitration award resolving an 

arbitrable claim could preclude a separate claim made 

nonarbitrable by statute.

2.

Hansen invokes the Supreme Court’s decision in Byrd to 

argue that the arbitrator’s resolution of his Dodd-Frank claim 

should not have any preclusive effect over his nonarbitrable 

SOX claim. Specifically, he references the Court’s statement 

in that case that the preclusive effect of arbitration 

proceedings on nonarbitrable claims was “far from certain.”

Byrd, 470 U.S. at 222. But as the history recounted above 

makes clear, Hansen’s reliance on that decision is misplaced. 

Byrd specifically left open the question whether arbitration 

proceedings could have a preclusive effect on nonarbitrable 

claims. Id. at 223. And, just as Byrd “foreshadowed” our 

conclusions in C.D. Anderson & Co. and Clark, so too did 

those decisions foreshadow the conclusion we reach today. 

Clark, 966 F.2d at 1321.

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HANSEN V. MUSK 13

3.

It is true, as Hansen argues, that Congress has directed 

that SOX claims may not themselves be compelled to 

binding arbitration under a predispute agreement. 18 U.S.C. 

§ 1514A(e)(2). But that declaration does not serve as a bar 

to the arbitrator’s resolution of issues that may, as in this 

case, bear directly on the merits of a SOX claim. Nor does it 

prevent that resolution from having a preclusive effect.

The Supreme Court has “ma[d]e clear that issue 

preclusion is not limited to those situations in which the 

same issue is before two courts.” B & B Hardware, Inc. v. 

Hargis Indus., Inc., 575 U.S. 138, 148 (2015). Agencies, for 

example, may be unable to adjudicate certain federal claims

or lack certain procedural protections—such as the right to a 

jury trial—guaranteed in federal court. See id. at 150 

(considering an argument that granting preclusive effect to a 

federal agency decision could potentially violate the jury 

trial right). But the Supreme Court has nevertheless held as 

a matter of common law that an agency’s resolution of issues 

properly before it can have a preclusive effect. Id.; see also

United States v. Utah Constr. & Mining Co., 384 U.S. 394, 

422 (1966) (“When an administrative agency is acting in a 

judicial capacity and resolved disputed issues of fact 

properly before it which the parties have had an adequate 

opportunity to litigate, the courts have not hesitated to apply 

res judicata to enforce repose.”). 

Indeed, this holding has been applied to confer 

preclusive effect over state agency proceedings, even though 

the applicable statute requiring that federal courts give “full 

faith and credit” to state proceedings does not mention state 

agencies. 28 U.S.C. § 1738; see also Jamgotchian v. 

Ferraro, 93 F.4th 1150, 1154 (9th Cir. 2024) (explaining 

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14 HANSEN V. MUSK

that although 28 U.S.C. § 1738 “does not apply to state 

administrative agency decisions . . . the Supreme Court has 

held that, as a matter of federal common law, federal courts 

must sometimes accord preclusive effect to state agency 

decisions” (citation omitted)). We thus explained in Guild 

Wineries & Distilleries v. Whitehall Co., that the decisions 

of state agencies may have a preclusive effect “so long as the 

state proceeding satisfies the requirements of fairness 

outlined” by the Supreme Court.5 853 F.2d 755, 758 (9th Cir. 

1988) (citing Utah Constr., 384 U.S. at 422).

Here, by contrast, we need not rely on the common law. 

The Federal Arbitration Act contains an express statutory 

command that a federal-court judgment confirming an 

arbitrator’s decision be given “‘the same force and effect’” 

as any other judgment from a federal court, “including the 

same preclusive effect.” NTCH-WA, Inc., 921 F.3d at 1180

(quoting 9 U.S.C. § 13). And although 18 U.S.C. § 1514A(e) 

states that SOX claims may not themselves be subject to 

predispute arbitration agreements, nothing in the statute 

clearly limits the issue-preclusive force of a confirmed 

arbitral award’s resolution of issues within the arbitrator’s 

jurisdiction. Cf. Howard v. City of Coos Bay, 871 F.3d 1032, 

1040–44 (9th Cir. 2017) (finding that, even though a prior 

judgment could not have addressed the plaintiff’s present 

claim, issue preclusion applied because it “bars ‘successive 

5 Strengthening the analogy between arbitral and administrative 

proceedings, we also apply the Utah Construction factors to determine 

“whether an arbitration was sufficiently adjudicatory in nature” to have 

a preclusive effect in a federal court case. Jacobs v. CBS Broad., Inc., 

291 F.3d 1173, 1178 (9th Cir. 2002) (relying on California Supreme 

Court precedent that applied the Utah Construction factors). Here, 

however, no party has argued that the arbitration proceedings were 

insufficiently adjudicatory under Utah Construction.

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HANSEN V. MUSK 15

litigation of an issue of fact or law actually litigated and 

resolved in a valid court determination essential to the prior 

judgment,’ even if the issue recurs in the context of a 

different claim” (quoting Taylor v. Sturgell, 553 U.S. 880, 

892 (2008))). 

Absent a “clear and manifest” expression of 

congressional intent, we will not presume that another 

statute has displaced the Federal Arbitration Act’s 

requirements. See Epic Sys. Corp. v. Lewis, 584 U.S. 497, 

510 (2018) (quoting Morton v. Mancari, 417 U.S. 535, 551 

(1974)). We therefore see no reason to exempt SOX claims 

from the preclusive effect afforded to confirmed arbitral 

awards.

6

4.

Contrary to Hansen’s argument, our holding does not 

circumvent the statutory restriction on the arbitration of SOX

claims. 18 U.S.C. § 1514A(e)(2). That restriction still has 

force. First, because “the plaintiff is ‘the master of the 

6 The dissent would hold that Alexander v. Gardner-Denver Co., 415 

U.S. 36 (1974), and its progeny compel us to read such a limitation into 

SOX. That line of cases held that arbitration awards can have no 

preclusive effect in subsequent statutory actions if the “arbitrators were 

not authorized to resolve such claims.” Pyett, 556 U.S. at 264. But those 

cases concerned only unconfirmed arbitration awards. See GardnerDenver, 415 U.S. at 42–43; Barrentine v. Arkansas-Best Freight Sys., 

Inc. 450 U.S. 728, 730–731 (1981); McDonald, 466 U.S. at 286. “[T]he 

considerations that motivated the Supreme Court to deny preclusive 

effect to unreviewed arbitration decisions are not present in a case like 

the one before us, which involves a reviewed arbitration decision.” 

Caldeira v. County of Kauai, 866 F.2d 1175, 1178 (9th Cir. 1989). And 

treating confirmed and unconfirmed arbitral awards equally would 

ignore the FAA’s command that confirmed awards “shall have the same 

force and effect” as a judgment. 9 U.S.C. § 13. 

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16 HANSEN V. MUSK

complaint,’” she may always avoid a preclusive arbitral 

award by declining to plead arbitrable claims along with a 

SOX claim, where the arbitration might resolve issues 

necessary for a SOX claim’s success. See Holmes Grp., Inc. 

v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 831 

(2002) (quoting Caterpillar Inc. v. Williams, 482 U.S. 386, 

398–99 (1987)). Indeed, Hansen himself initially took this 

route. His complaint before the federal district court did not 

allege a Dodd-Frank claim, which Hansen raised for the first 

time before the arbitrator.

Second, as the Supreme Court explained in Byrd, courts

can continue to apply conventional “preclusion doctrine” to 

“directly and effectively protect federal interests by 

determining the preclusive effect to be given to an arbitration 

proceeding.” 470 U.S. at 223. For example, courts must

insist that arbitration proceedings provide a “full and fair 

opportunity to litigate” the preclusive issue, and that “the 

issue was actually litigated and decided” in the arbitration 

proceedings. Howard, 871 F.3d at 1041 (quoting Oyeniran 

v. Holder, 672 F.3d 800, 806 (9th Cir. 2012)); Clark, 966 

F.2d at 1322–23 (declining to confer preclusive effect on an 

arbitral award because the record was insufficient “to 

pinpoint the exact issues previously determined”). Both 

plaintiffs and courts therefore retain tools to protect the 

statutory right to federal adjudication of SOX claims.

B.

Traditional preclusion doctrine holds that an issue 

resolved by a prior proceeding is precluded from relitigation 

if “(1) the issue at stake was identical in both proceedings; 

(2) the issue was actually litigated and decided in the prior 

proceedings; (3) there was a full and fair opportunity to 

litigate the issue; and (4) the issue was necessary to decide 

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HANSEN V. MUSK 17

the merits.” Howard, 871 F.3d at 1041 (quoting Oyeniran, 

672 F.3d at 806). The Supreme Court’s decision in 

McDonald, 466 U.S. at 290–91, and the Eleventh Circuit’s 

decision in Greenblatt, 763 F.2d at 1361, however, suggest 

that “at least with respect to an important, nonarbitrable 

federal claim,” courts should be “hesitant to preclude the 

litigation of [a] federal claim based on the [issue preclusive] 

effects of a prior arbitration award.” Greenblatt, 763 F.2d at 

1361. These decisions instead indicate that courts should 

consider additional factors beyond those contemplated by 

conventional preclusion doctrine, including “the federal 

interests in insuring a federal court determination of the 

federal claim,” the “expertise of the arbitrator,” and “the 

procedural adequacy of the arbitration proceeding.” Id.; 

McDonald, 466 U.S. at 290–91. Based on these decisions, 

Hansen urges us to take a “case-by-case approach to 

determining the [issue preclusive] effects of arbitration.”

Greenblatt, 763 F.2d at 1361. But we need not decide 

whether to do so here. Regardless of whether there are ever 

circumstances—beyond those contemplated by 

conventional preclusion doctrine—under which courts may 

decline to confer a preclusive effect on an arbitral award, 

such circumstances are not present in this case.

Unlike the factors the Court found controlling in 

McDonald, for example, Hansen points to no deficiency in 

the arbitrator’s experience or expertise in adjudicating 

federal statutory claims. Cf. McDonald, 466 U.S. at 290–91.

Nor can he, given the Supreme Court’s holding in Shearson,

482 U.S. at 227–39, point to a general rule limiting the 

arbitrator’s ability to consider federal securities law claims.

Quite to the contrary, the arbitrator considered and resolved 

Hansen’s Dodd-Frank claim—a securities law claim which, 

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18 HANSEN V. MUSK

as we will further explain, has similar elements to Hansen’s

SOX claim. 

Hansen also does not identify any deficiencies in the 

arbitration procedures themselves. Hansen and Defendants 

were represented by counsel and able to present relevant 

evidence. Cf. Greenblatt, 763 F.2d at 1361. Hansen therefore 

provides no legal or prudential reason to deny preclusive 

effect to the arbitrator’s decision.

IV.

Hansen argues that even if a confirmed arbitral decision 

can preclude relitigating issues in the litigation of a 

subsequent, nonarbitrable claim, the arbitrator’s findings in 

this case do not have issue preclusive effect on his present 

claim under SOX. We again disagree. 

“Issue preclusion, or collateral estoppel, ‘bars successive 

litigation of an issue of fact or law actually litigated and 

resolved in a valid court determination essential to the prior 

judgment,’ even if the issue recurs in the context of a 

different claim.” Howard, 871 F.3d at 1040–41 (quoting 

Taylor, 533 U.S. at 892). For issue preclusion to apply, the 

party seeking preclusion must show “(1) the issue at stake 

was identical in both proceedings; (2) the issue was actually 

litigated and decided in the prior proceedings; (3) there was 

a full and fair opportunity to litigate the issue; and (4) the 

issue was necessary to decide the merits.” Id. at 1041 

(quoting Oyeniran, 672 F.3d at 806).

The district court correctly held that key aspects of 

Hansen’s SOX claim were precluded by the arbitrator’s 

findings resolving his Dodd-Frank claim. Dodd-Frank 

prohibits an employer from taking an adverse employment 

action or discriminating against a “whistleblower” because 

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HANSEN V. MUSK 19

of “any lawful act” the whistleblower performs “(i) in 

providing information to the [SEC] . . . ; (ii) in initiating, 

testifying in, or assisting in any investigation or judicial or 

administrative action of the [SEC] based upon or related to 

such information; or (iii) in making disclosures that are 

required or protected under” SOX or other securities laws. 

15 U.S.C. § 78u-6(h)(1)(A). The law defines a 

“whistleblower” as a person or group who “provides . . .

information relating to a violation of the securities laws to 

the [SEC], in a manner established, by rule or regulation, by 

the [SEC].” Id. § 78u-6(a)(6). To receive protection from 

retaliation, under the regulation in effect at the time Hansen 

contacted the SEC, the whistleblower must “possess a 

reasonable belief that the information . . . provid[ed] relates 

to a possible securities law violation.” Digit. Realty Tr., Inc.

v. Somers, 583 U.S. 149, 158 (2018) (quoting 17 C.F.R. 

§ 240.21F-2(b)(1)(i) (2011)).7

SOX provides different, although related, protections. It

protects employees of public companies from retaliation for 

providing information to a supervisor, federal agency, or 

Congress. 18 U.S.C. § 1514A(a). To obtain the statute’s antiretaliation protections, the employee must “report what they 

reasonably believe to be instances of criminal fraud or 

securities law violations.” Murray v. UBS Sec., LLC, 601 

U.S. 23, 27 (2024). But while “Dodd-Frank’s whistleblower 

provision . . . focuses primarily on reporting to federal 

authorities,” SOX’s “protections include employees who 

provide information to any ‘person with supervisory 

7 The current version of the regulation contains a similar requirement that 

a whistleblower “must reasonably believe that the information . . . 

provide[d] . . . relates to a possible violation of the federal securities 

laws.” 17 C.F.R. § 240.21F-2(d)(1)(ii) (2020).

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20 HANSEN V. MUSK

authority over the employee.’” Lawson v. FMR LLC, 571 

U.S. 429, 456 (2014) (quoting 18 U.S.C. § 1514A(a)(1)(C)).

In this case, the arbitrator found that Hansen could not 

have reasonably believed that the subject of his complaint to 

the SEC related to any violation of securities laws. This 

element is common to both Dodd-Frank and SOX claims, 

and Hansen points to no difference in the merits of what an 

arbitrator or court must find to resolve that element. 

Hansen does not point to any other difference that would 

militate against issue preclusion. Hansen does not argue, for 

example, that the issue was not “actually litigated and 

decided” or that it was not “necessary to decide the merits” 

of his Dodd-Frank claim. Howard, 871 F.3d at 1041 (quoting 

Oyeniran, 672 F.3d at 806). Nor could he. First, the 

arbitrator agreed with Tesla that Hansen had no reasonable 

belief that the conduct he investigated related to a violation 

of the securities laws. This is sufficient to satisfy the 

“actually litigated” requirement, which requires only that the 

issue be “raised, contested, . . . submitted for 

determination[,] and . . . determined.” Janjua v. Neufeld, 

933 F.3d 1061, 1066 (9th Cir. 2019) (quoting Restatement 

(Second) of Judgments § 27, cmt. (d) (1982)). And this 

finding was “necessary” to the arbitrator’s resolution of 

Hansen’s Dodd-Frank claim on the merits, as it disposed of 

a key element of that claim. See id. (explaining that even 

implicitly resolved issues satisfy this factor if “necessary to 

the ultimate determination”).

Although Hansen argues that he did not have a full and 

fair opportunity to specifically litigate his SOX claim before 

the arbitrator, he mistakes the nature of issue preclusion. The 

point of the doctrine is to bar the relitigation of an issue 

already litigated and resolved “even if the issue recurs in the 

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HANSEN V. MUSK 21

context of a different claim.” See Howard, 871 F.3d at 1041

(quoting Taylor, 553 U.S. at 892). And Hansen, as just 

discussed, did litigate the issue. Nor can Hansen show that 

he lacked a full or fair opportunity to do so, because he 

identifies no deficiencies in the procedures employed during 

the arbitration or in the parties’ incentives to fully air the 

issue out. See Maciel v. Comm’r, 489 F.3d 1018, 1023 (9th 

Cir. 2007) (explaining the factors used to determine whether 

a party had a full and fair opportunity to litigate an issue). It 

was thus appropriate for the district court to apply issue 

preclusion principles in dismissing this case.8

Hansen nevertheless argues that the arbitrator’s rejection 

of his Dodd-Frank claim cannot preclude his SOX claim 

because SOX claims rely on a burden-shifting framework to 

assess the employer’s retaliatory intent. Under this 

framework, the plaintiff must first make out a prima facie 

case of retaliation before the burden shifts to the defendant 

to show “‘by clear and convincing evidence’ that it ‘would 

have taken the same unfavorable personnel action in the 

absence of’ the protected activity.” Murray, 601 U.S. at 27–

28 (quoting 49 U.S.C. § 42121(b)(2)(B)(ii)).

8 Of course, SOX also prohibits retaliation against employees who report 

other forms of federal criminal fraud (including bank fraud, wire fraud, 

mail fraud, commodities fraud, and “fraud against shareholders”). 18 

U.S.C. § 1514A(a)(1). But Hansen makes no specific argument that he 

reported any such fraud, and his complaint contains only a conclusory 

allegation that Defendants committed non-securities fraud. These 

allegations are not enough to sustain his claim. See Van Asdale v. Int’l 

Game Tech., 577 F.3d 989, 1001 (9th Cir. 2009) (explaining that, to 

demonstrate an objectively reasonable belief of shareholder fraud, “the 

complaining employee’s theory of such fraud must at least approximate 

the basic elements of a claim of securities fraud” (quoting Day v. Staples, 

Inc., 555 F.3d 42, 55 (1st Cir. 2009))).

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22 HANSEN V. MUSK

We need not elaborate on how (or even if) the burdenshifting framework for determining a defendant’s retaliatory 

intent under SOX differs from the framework for 

determining a defendant’s intent under Dodd-Frank.

Hansen’s claim fails regardless of Defendants’ intent. To 

make out a prima facie claim under SOX, Hansen must 

allege an “objectively reasonable” belief that his complaint

to the SEC reported a violation of federal securities or fraud 

law. Van Asdale, 577 F.3d at 1000. But the arbitrator found

that Hansen did not have this objectively reasonable belief. 

Even if a burden-shifting framework applies only to SOX 

claims, the burden therefore would not shift. 

V.

Finally, Hansen argues that the arbitrator’s decision 

should not have prevented him from raising his state law 

claims in federal court, because the arbitrator’s dismissal of 

those claims merely precluded him from raising them again 

in the same forum.9 Hansen suggests that it is an issue of first 

impression “whether dismissal of claims by an arbitrator 

constitutes a determination on the merits” with a preclusive 

effect. But on the contrary, and as we have already 

discussed, it is well established that a “federal-court order 

confirming an arbitration award has ‘the same force and 

effect’ as a final judgment on the merits, 9 U.S.C. § 13, 

including the same preclusive effect.” NTCH-WA, Inc., 921 

F.3d at 1180. 

9 As we held in NTCH-WA, Inc., state preclusion law determines the 

preclusive effect of federal-court orders confirming arbitration awards 

when the federal court is sitting in diversity. 921 F.3d at 1180-81. 

Hansen, however, raises no argument under Nevada law nor does he 

argue that it differs from federal law on this issue. 

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HANSEN V. MUSK 23

The case law that Hansen cites in support of his argument 

is inapposite. In each of these cases, the court found only that 

dismissal of a claim on purely procedural grounds did not 

prevent the plaintiff from reasserting the claim in another 

forum. See Semtek Int’l Inc. v. Lockheed Martin Corp., 531 

U.S. 497, 499, 509 (2001) (holding that a failure to comply 

with California’s statute of limitations did not bar the claim 

from being raised again in Maryland court under Maryland 

law, which had a longer statute of limitations); Post, LLC v. 

Berkshire Hathaway Specialty Ins. Co., No. 20-cv-2972,

2022 WL 3139022, at *1 (D.D.C. Aug. 5, 2022) (holding 

that an arbitrator’s dismissal for “nonpayment of fees” did 

not give rise to a “claim-preclusive effect in related 

litigation”).

A decision that “passes directly on the substance of a 

particular claim,” however, may preclude subsequent 

litigation. Semtek Int’l Inc., 531 U.S. at 501–02 (cleaned up).

Here, the arbitrator addressed the substance of Hansen’s 

state law claims by finding that Hansen had failed to 

establish necessary elements of those claims. Those 

decisions were subsequently confirmed by the district court 

without opposition and are entitled to preclusive effect.

VI.

The arbitrator’s decision precluded each of the claims 

that Hansen raised before the district court. We therefore 

AFFIRM the judgment of the district court dismissing those 

claims.

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24 HANSEN V. MUSK

COLLINS, Circuit Judge, concurring in the judgment in part 

and dissenting in part:

In the proceedings below, Plaintiff Karl Hansen asserted 

a variety of claims against Defendants Elon Musk; Tesla 

Motors, Inc.; and U.S. Security Associates, Inc. The district 

court compelled arbitration of all of the claims except for 

Hansen’s claim against Defendants under the whistleblower 

retaliation provision of the Sarbanes-Oxley Act. See 18 

U.S.C. § 1514A. The latter claim was not submitted to 

arbitration because § 1514A(e) expressly states that the 

“rights and remedies provided for in this section may not be 

waived by any agreement, policy form, or condition of 

employment, including by a predispute arbitration 

agreement,” and that “[n]o predispute arbitration agreement 

shall be valid or enforceable, if the agreement requires 

arbitration of a dispute arising under this section.” Id. 

§ 1514A(e). After the arbitration was concluded, 

Defendants sought confirmation of the arbitral award, which 

had rejected all of the claims submitted to the arbitrator 

(which included some additional claims that were asserted 

by Hansen in the arbitration and had not been raised in 

Hansen’s original complaint). Hanson did not oppose 

confirmation, and the district court confirmed the award and 

adopted it as a “final, enforceable judgment.” Defendants 

subsequently moved to dismiss the remaining SarbanesOxley claim as barred by the issue-preclusive effect of the 

arbitral award, and the district court granted that motion. 

Hansen has appealed the resulting dismissal of his claims, 

and I would affirm in part, reverse in part, and remand.

I

For the first time on appeal, Hansen argues that the 

district court committed plain error in rejecting, based on the 

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HANSEN V. MUSK 25

adverse arbitral award, several of the claims he asserted 

before the arbitrator. Hansen’s arguments on this score are 

frivolous. Hansen asserts that the arbitrator’s pre-hearing 

dismissal of several state-law claims was not “on the merits,” 

but that contention is flatly belied by the arbitrator’s 

decisions. The arbitrator expressly dismissed these claims, 

in advance of the arbitral evidentiary hearing, because it was 

apparent either at the pleading stage or at summary judgment 

that Hansen could not satisfy one or more essential elements 

of these claims. The resulting judgment confirming the 

award was therefore an adverse final judgment on the merits 

of those claims, and Hansen is fully bound by that judgment. 

I therefore concur in the judgment to the extent that the 

majority affirms the district court’s rejection of all of 

Hansen’s claims other than his Sarbanes-Oxley retaliation 

claim.

II

In my view, however, the district court erred in holding 

that, despite the statutory prohibition on arbitration of 

Sarbanes-Oxley whistleblower retaliation claims, see 18 

U.S.C. § 1514A(e), the arbitral award collaterally estopped 

Hansen from litigating his Sarbanes-Oxley retaliation claim 

in the district court. I therefore dissent from the majority’s 

decision affirming the district court on this point.

A

In concluding that the arbitration award against Hansen 

may be given preclusive effect vis-à-vis his Sarbanes-Oxley 

retaliation claim, the majority places dispositive reliance on 

§ 13 of the Federal Arbitration Act (“FAA”), which states in 

relevant part that a judgment confirming an arbitration award 

“shall have the same force and effect, in all respects, as, and 

be subject to all the provisions of law relating to, a judgment 

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26 HANSEN V. MUSK

in an action; and it may be enforced as if it had been rendered 

in an action in the court in which it is entered.” 9 U.S.C. 

§ 13. According to the majority, invoking § 1514A(e) to 

decline giving preclusive effect to the confirmed arbitration 

award here would improperly “displace[]” FAA § 13’s 

requirements without the “‘clear and manifest’ expression of 

congressional intent” necessary to support such an asserted 

repeal by implication. See Opin. at 15 (citing Epic Sys. 

Corp. v. Lewis, 584 U.S. 497, 510 (2018)). But the canon 

invoked in Epic Systems rests on the premise that the “two 

statutes” in question “cannot be harmonized.” 584 U.S. at 

510 (emphasis added). Here, the conflict posited by the 

majority between the statutes is illusory, because the 

majority’s reliance on § 13 is ultimately question begging. 

We have said that federal common law governs the 

preclusive effect, under FAA § 13, of a federal court 

judgment confirming an arbitration award, see NTCH-WA, 

Inc. v. ZTE Corp., 921 F.3d 1175, 1180 (9th Cir. 2019), and 

the question presented here is whether, as a matter of federal 

common law, preclusive effect should be denied in this 

specific context in light of the general nonarbitrability of 

Sarbanes-Oxley retaliation claims.1 Whichever way that 

1 The majority suggests that, because federal common law would 

incorporate state common law in cases in which the district court is 

exercising diversity jurisdiction, see NTCH-WA, 921 F.3d at 1180, 

Nevada preclusion law would presumably apply here. See Opin. at 22

n.9. But the district court was not exercising diversity jurisdiction when 

it confirmed the arbitral award. Rather, the district court had federalquestion jurisdiction over Hansen’s still-pending Sarbanes-Oxley claim, 

see 28 U.S.C. § 1331, and supplemental jurisdiction over any related 

non-federal claims, id. § 1367(a). Accordingly, the preclusive effect of 

the federal judgment confirming the arbitral award here is governed by 

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HANSEN V. MUSK 27

federal common law issue under § 13 is properly resolved, 

there will be no resulting conflict between the two statutes.

B

I turn, then, to whether, under the applicable federal 

common law preclusion principles, preclusive effect should 

not be given to the confirmed arbitral award in light of 

§ 1514A(e). In applying the federal common law of 

preclusion, the federal courts have generally followed the 

principles set forth in the Restatement of Judgments. See 

B&B Hardware, Inc. v. Hargis Indus., Inc., 575 U.S. 138, 

148 (2015). Under § 84 of the Restatement, issue preclusion 

will not be afforded to a “determination of an issue in 

arbitration” if, inter alia, doing so “would be incompatible 

with a legal policy . . . that the tribunal in which the issue 

subsequently arises be free to make an independent 

determination of the issue in question.” RESTATEMENT 

(SECOND) OF JUDGMENTS § 84(3)(a) (emphasis added). 

According to comment (g) to § 84, this exception recognizes 

that the “conclusive effect of an arbitration award is 

subordinate” to any “statutory provisions for alternative or 

supplementary procedures” governing a dispute. Id. § 84 

cmt. g. The Reporter’s Note to § 84 further states that 

comment (g) is based on Alexander v. Gardner-Denver Co., 

federal common law. Semtek Int’l Inc. v. Lockheed Martin Corp., 531 

U.S. 497, 507 (2001); see also 18B CHARLES ALAN WRIGHT, ARTHUR 

R. MILLER, AND EDWARD H. COOPER, FEDERAL PRACTICE &

PROCEDURE § 4472, at p.358 (3d ed. 2019). And even if state law were 

borrowed as the rule of decision, that borrowing would be limited by the 

principle that any “federal reference to state law will not obtain, of 

course, in situations in which the state law is incompatible with federal 

interests.” Semtek, 531 U.S. at 509. For the reasons I will explain, here 

there is a “federal interest[]” that is incompatible with the application of 

issue preclusion.

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28 HANSEN V. MUSK

415 U.S. 36 (1974), which held that, under the circumstances 

of that case, an arbitral decision against an employee 

challenging his termination under a collective bargaining 

agreement could not be given preclusive effect so as to bar a 

subsequent racial discrimination suit under Title VII of the 

Civil Rights Act of 1964. Id. at 47–54. 

In a line of subsequent cases, the Supreme Court has 

explored the contours of the exception to arbitral preclusion 

recognized in Gardner-Denver. In McDonald v. City of 

West Branch, 466 U.S. 284 (1984), the Supreme Court noted 

that, similar to Gardner-Denver, the Court in Barrentine v. 

Arkansas-Best Freight System, Inc., 450 U.S. 728 (1981), 

had held that an adverse arbitration decision concerning 

employees’ wage claims did not “preclude[] a subsequent 

suit based on the same underlying facts alleging a violation 

of the minimum wage provisions of the Fair Labor Standards 

Act.” McDonald, 466 U.S. at 289. McDonald construed 

Barrentine and Gardner-Denver as being “based in large 

part on [the Court’s] conclusion that Congress intended the 

statutes at issue in those cases to be judicially enforceable 

and that arbitration could not provide an adequate substitute 

for judicial proceedings in adjudicating claims under those 

statutes.” Id. Applying that principle, the Court in 

McDonald reached the same conclusion with respect to an 

action under 42 U.S.C. § 1983, holding that arbitration 

“cannot provide an adequate substitute for a judicial 

proceeding in protecting the federal statutory and 

constitutional rights that § 1983 is designed to safeguard.” 

Id. at 290.

More recently, the Court has underscored “the narrow 

scope of the legal rule arising from th[e] trilogy of decisions” 

in Gardner-Denver, Barrentine, and McDonald. 14 Penn 

Plaza LLC v. Pyett, 556 U.S. 247, 263 (2009). As the Court 

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HANSEN V. MUSK 29

explained, those decisions “did not involve the issue of the 

enforceability of an agreement to arbitrate statutory claims,” 

because the employees in those cases “had not agreed to 

arbitrate their statutory claims.” Id. at 264 (citing Gilmer v. 

Interstate/Johnson Lane Corp., 500 U.S. 20, 35 (1991)). 

The three cases therefore addressed only whether, when the 

“arbitrators were not authorized to resolve such [statutory] 

claims,” the arbitral award resulting from the overlapping 

“contract-based claims precluded subsequent judicial 

resolution of statutory claims.” Id. (citation omitted). The 

Pyett Court stated that, given the arbitrators’ lack of 

authority to resolve the statutory claims in that trilogy of 

cases, “the arbitration in those cases understandably was 

held not to preclude subsequent statutory actions.” Id. 

(emphasis added). Pyett held that “Gardner-Denver and its 

progeny thus do not control the outcome where, as is the case 

here [in Pyett], the collective-bargaining agreement’s 

arbitration provision expressly covers both statutory and 

contractual discrimination claims.” Id. Because the parties 

had agreed to submit the statutory claims to arbitration, and 

no congressional policy overrode that choice, Pyett held that 

the lower courts had erred in refusing to compel arbitration 

of the statutory claims. See id. at 257–58; see also

Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 

226 (1987) (stating that the FAA generally “mandates 

enforcement of agreements to arbitrate statutory claims,” 

subject to that mandate being “overridden by a contrary 

congressional command”).

This case plainly falls within the Gardner-Denver line of 

cases, even as narrowly construed in Pyett. The Court in 

Pyett stated that, under the Gardner-Denver line of cases, 

preclusion “understandably” would not be afforded to an 

arbitral award so as to bar litigation of a statutory claim when 

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30 HANSEN V. MUSK

the “arbitrators were not authorized to resolve such claims.” 

556 U.S. at 264. That narrow principle squarely applies 

here, because, in light of § 1514A(e), the arbitrator in this 

case was explicitly not authorized to decide the SarbanesOxley retaliation claim. The predicate for application of the 

Gardner-Denver rule is therefore present here, and under 

that rule preclusive effect may not be given, vis-à-vis the 

Sarbanes-Oxley retaliation claim, to the arbitrator’s 

decision. 

Indeed, the result here is arguably on more solid footing 

than even the Gardner-Denver trilogy of cases themselves, 

because none of those cases involved a statute with a 

comparably explicit prohibition on waiving judicial 

remedies and opting for arbitration. Moreover, in Pyett, the 

Court sharply criticized the “broad dicta” in “the GardnerDenver line of cases” that “were highly critical of the use of 

arbitration for the vindication of statutory antidiscrimination 

rights,” 556 U.S. at 265, and we have construed the Court’s 

post-Gardner-Denver case authority as “reject[ing] a 

reading of [Gardner-Denver] as prohibiting the arbitration 

of employment discrimination claims.” EEOC v. Luce, 

Forward, Hamilton & Scripps, 345 F.3d 742, 748 (9th Cir. 

2003) (en banc) (emphasis added) (citations and internal 

quotation marks omitted). Thus, given that Title VII claims 

can be submitted to arbitrators, there will presumably be few 

cases calling for the application of the actual holding of 

Gardner-Denver—viz., that an arbitral award rendered by 

arbitrators who lacked authority to decide a Title VII claim 

will not be given preclusive effect against such a claim. But 

nothing in subsequent Supreme Court caselaw has abrogated 

the narrow non-preclusion rule reaffirmed in Pyett, see 

Mathews v. Denver Newspaper Agency LLP, 649 F.3d 1199, 

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HANSEN V. MUSK 31

1204–08 (10th Cir. 2011), and in light of § 1514A(e), this 

case falls within that rule. 

C

In reaching a contrary conclusion, the majority first 

suggests that the Gardner-Denver line of cases is strictly 

limited to “unconfirmed arbitration awards” and therefore 

cannot apply to the confirmed arbitration award at issue in 

this case. See Opin. at 15 n.6. That argument misses the 

mark. McDonald emphasized the lack of judicial 

confirmation in explaining why the “Federal Full Faith and 

Credit Statute, 28 U.S.C. § 1738,” did not require the Court 

to adhere to state-law preclusion principles in considering 

the effect of the unreviewed arbitral award in that case. 

McDonald, 466 U.S. at 287. As the Court explained, the 

relevant language of § 1738 extends full faith and credit only 

to “judicial proceedings,” and because an “unappealed 

arbitral award” does not involve a judicial judgment, § 1738 

is inapplicable in the context of such awards. Id. at 287–88. 

As a result, the McDonald Court held that it was not required 

by § 1738 “to give the same preclusive effect to a state-court 

judgment as would the courts of the State rendering the 

judgment.” Id. at 287 (emphasis added). Instead, the Court 

was free to “judicially fashion[]” a federal “rule of 

preclusion” as a matter of federal common law, and it 

fashioned the rule that I have described above. Id. at 288. 

By contrast, we have held that, under “the plain language of 

section 1738,” state-law preclusion principles will control 

when a state court renders a judgment confirming an arbitral 

award. Caldeira v. County of Kauai, 866 F.2d 1175, 1178 

(9th Cir. 1989); see also id. at 1178 n.2 (noting that, by 

contrast, “[t]he federal courts have frequently fashioned 

federal common law rules of preclusion where § 1738 does 

not apply”). Here, as I have already explained, federal 

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32 HANSEN V. MUSK

common law governs the preclusive effect of the federal 

district court’s confirmation of the arbitral award rejecting 

Hansen’s federal and state claims. See supra note 1. And 

given that the Gardner-Denver rule is part of the relevant 

federal common law preclusion principles that govern here, 

it applies in this case.

The majority also claims that, in Dean Witter Reynolds, 

Inc. v. Byrd, 470 U.S. 213 (1985), the Supreme Court 

undermined the Gardner-Denver non-preclusion rule by 

“suggesting that arbitration awards may sometimes be able 

to preclude federal claims, even when those claims could not 

themselves be resolved in arbitration.” See Opin. at 10. 

Byrd said nothing of the sort. Byrd merely held that, when 

confronted with both arbitrable and arguably non-arbitrable 

claims, a court should not decline to compel arbitration of 

the arbitrable claims based on a concern that “the findings in 

the arbitration proceeding might have collateral-estoppel 

effect in a subsequent federal proceeding.” 470 U.S. at 221. 

Neither a stay of arbitration nor a federal court adjudication 

of the arbitrable claims was warranted on such grounds, the 

Court explained, because any such preclusion-based concern 

can be addressed by “the formulation of collateral-estoppel 

rules” that will “afford[] adequate protection to that 

interest.” Id. at 222. Far from being a rejection of the 

Gardner-Denver cases’ limits on preclusion, Byrd held that 

arbitration could go forward in such mixed cases precisely 

because preclusive effect could later be denied to the 

arbitration award if warranted. Id. In fact, Byrd specifically 

relied on McDonald in concluding that, after the arbitration 

was completed, the “courts may directly and effectively 

protect federal interests by determining the preclusive effect 

to be given to an arbitration proceeding.” Id. at 223 (citing 

McDonald, 466 U.S. at 287–88).

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HANSEN V. MUSK 33

The majority also asserts that this court’s caselaw has 

retreated from the narrowed Gardner-Denver rule, but that 

too is wrong. The majority notes that we afforded preclusive 

effect to an arbitration award in C.D. Anderson & Co., Inc. 

v. Lemos, 832 F.2d 1097 (9th Cir. 1987). But the predicate 

for application of the Gardner-Denver rule was not present 

in C.D. Anderson, and it is therefore not surprising that we 

did not apply it. As we noted in C.D. Anderson, the plaintiff 

had affirmatively agreed to submit its “securities law and 

RICO claims” to arbitration, despite contending that those 

claims were non-arbitrable and that it “could not waive its 

right to litigate the claims in federal court.” Id. at 1099. We 

rejected the plaintiff’s non-waivability argument and held 

that it had “waived any right it had to litigate those claims in 

federal court.” Id.; see also id. (holding that, in light of this 

valid waiver, we assertedly did not need to decide whether 

we could apply retroactively the Supreme Court’s holding in 

Shearson/American Express, 482 U.S. at 238–42, that Rule 

10b-5 and RICO claims were arbitrable). Because the 

arbitrator in C.D. Anderson thus did have authority to decide 

those claims, the predicate for application of the GardnerDenver rule—viz., that the “arbitrators were not authorized 

to resolve such claims,” Pyett, 556 U.S. at 264—was absent 

in C.D. Anderson. 

Our decision in Clark v. Bear Stearns & Co., Inc., 966 

F.2d 1318 (9th Cir. 1992), is also inapposite. Because the 

parties’ agreement there did not allow arbitration of the 

plaintiff’s “federal securities claims,” the district court 

compelled arbitration of the remaining claims and stayed the 

securities claims pending the outcome of the arbitration. Id. 

at 1320–21. The fact that the parties’ agreement denied the 

arbitrator the authority to decide the securities claims 

arguably did provide a predicate for applying the GardnerCase: 23-15296, 12/10/2024, ID: 12916712, DktEntry: 53-1, Page 33 of 35
34 HANSEN V. MUSK

Denver rule against giving issue-preclusive effect to the 

arbitration, but we said nothing about any such rule (perhaps 

because it was not raised by the parties).2 Instead, we noted 

that, under C.D. Anderson, there is no categorical prohibition 

on giving preclusive effect to an arbitration award “even if 

the underlying claim” to be precluded “involves the federal 

securities laws.” Id. at 1321. We nonetheless ultimately 

denied preclusive effect to the arbitral decision on other 

grounds, holding that the defendants had failed to carry their 

burden to establish “the exact issues previously determined” 

in the arbitration and that, as a result, collateral estoppel 

could not be applied. Id. at 1322–23. Because Clark denied 

issue-preclusive effect on other grounds and never squarely 

addressed whether the Gardner-Denver rule should have 

yielded the same result, our decision in that case cannot be 

understood as somehow recognizing an abrogation of that 

rule (which, of course, we would have no authority to do in 

any event). 

In short, neither Clark nor C.D. Anderson considered, 

much less rejected, the still-binding, narrow GardnerDenver rule that the majority wrongly fails to apply in this 

case.

* * *

For the foregoing reasons, I would reverse the district 

court’s dismissal of Hansen’s Sarbanes-Oxley 

whistleblower retaliation claim on preclusion grounds and 

remand for further proceedings concerning that claim. I 

would otherwise affirm the district court’s judgment. I 

2 We did recognize, however, that the arbitrator’s lack of jurisdiction 

over the securities claims did mean that res judicata—i.e., claim

preclusion—could not apply. Clark, 966 F.2d at 1321.

Case: 23-15296, 12/10/2024, ID: 12916712, DktEntry: 53-1, Page 34 of 35
HANSEN V. MUSK 35

therefore respectfully dissent in part and concur in the 

judgment in part.

Case: 23-15296, 12/10/2024, ID: 12916712, DktEntry: 53-1, Page 35 of 35