The Federal Lawyer magazine had a great article on the basics of arbitration. Practitioners and the judiciary should not assume that all arbitration agreements are enforceable. Rather, they should carefully analyze arbitration agreements under the precepts summarized in this article to determine their enforceability.
Rather, arbitration agreements may still be found unenforceable under arbitration-neutral theories applicable to all contracts generally. Each arbitration agreement should be analyzed carefully in light of the particular facts at issue. Here are some recurring themes observed in court decisions throughout the nation dealing with challenges to the enforceability of arbitration agreements in the wake of Concepcion and Italian Colors.
Corporate defendants have sought to enforce end user arbitration agreements against consumers, even if the defendants were not parties to the end user agreement. Courts remain in large part resistant to such attempts absent a showing that the consumer claims rely on or are intertwined with the third-party contract containing the arbitration provision and that equitable estoppel compels enforcement of arbitration. See Murphy v. DirecTV Inc., 724 F.3d 1218 (9th Cir. 2013) (holding Best Buy could not “piggy-back” onto DirecTV’s arbitration clause); In re Carrier IQ, Inc. Consumer Privacy Litig., No. 12-md- 2330, 2014 U.S. Dist. LEXIS 42624 (N.D. Cal. Mar. 28, 2014) (mobile telephone manufacturer and tracking application developer could not enforce arbitration provisions in wireless provider contracts); Kramer v. Toyota Motor Corp., 705 F.3d 1122 (9th Cir. 2013) (automotive manufacturer could not enforce arbitration clauses between buyers and dealers); Galitski v. Samsung, No. 12-cv-4782, 2013 WL 6330645 (N.D. Tex. Dec. 5, 2013) (Samsung, a mobile telephone manufacturer, could not enforce arbitration contract between consumers and their mobile carriers); Rajagopalan v. NoteWorld, LLC, 718 F.3d 844 (9th Cir. 2013) (payment processor could not enforce arbitration agreement between debtor and debt settlement program); Laumann v. NHL, 989 F. Supp. 2d 329 (S.D.N.Y. 2013) (Comcast could compel arbitration against only its own subscribers’ disputers, not those of DirecTV customers); Jay Wolfe Used Cars of Blue Springs, LLC v. Jackson, 428 S.W.3d 683 (Mo. Ct. App. 2014) (defendant’s motion to compel arbitration denied when defendant was a separate legal entity, registered to do business in a different state, from the entity that was party to plaintiff’s contract; contractual rights and obligations could not be imputed to defendant); Allscripts Healthcare Solutions Inc. v. Pain Clinic of Northwest Fla. Inc., No. 3D13-716, 2014 WL 3930150 (Fla. Ct. App. Aug. 13, 2014) (defendant-software firm could not compel arbitration of plaintiff-doctors’ claims because their claims did not rely on or require reference to plaintiffs’ agreements with defendant’s subsidiary).
Numerous post-Concepcion cases also have dealt with contract formation issues related to a nonparty signing the subject arbitration agreement on behalf of a vulnerable plaintiff, commonly someone who is incapacitated, a dependent minor, or a decedent. Defendants in these cases often seek to enforce the agreement under theories of agency, equitable estoppel, or intended third-party benefit. Courts have demonstrated reluctance to grant defendants’ motions to compel arbitration absent a clear correlation between the arbitration clause and the signatories’ authority or intended benefit at the time of execution. GGNSC Omaha Oak Grove, LLC v. Payich, 708 F.3d 1024 (8th Cir. 2013) (contract signed by son when admitting decedentmother to defendant-nursing home could not be enforced against decedent’s estate, as no valid contract was formed between decedent and defendant and son lacked authority to act on her behalf); SSC Montgomery Cedar Crest Operating Co., LLC v. Bolding, 130 So. 3d 1194 (Ala. 2013) (plaintiff-resident’s status as incompetent ruled out theory of apparent authority when daughter purported to be plaintiff’s legal representative and signed arbitration agreement with defendant); Walton v. Johnson, 66 A.3d 782 (Pa. Sup. Ct. 2013) (plaintiff-patient’s negligence claims for post-surgery treatment were not subject to arbitration agreement signed by plaintiff’s mother at time of admission to hospital, as mother was not plaintiff’s agent and plaintiff did not know or should have known mother signed agreement); Ping v. Beverly Enters., 376 S.W.3d 581 (Ky. 2012) (decedent’s child’s power of attorney limited to financial and health care decisions, thus long-term care facility could not compel arbitration under optional agreement with regard to estate’s wrongful death claims); State ex rel. AMFM, LLC v. King, 740 S.E.2d 66 (W. Va. 2013) (same); Barrow v. Dartmouth House Nursing Home Inc., 14 N.E.3d 318 (Mass. Ct. App. 2014) (same).