Court Rejects AT&T’s Attempt to Bind Non-Signatory to Arbitration

A non-signatory may not avoid arbitration when they have knowingly exploited an agreement that contains an arbitration clause by knowingly accepting the benefits of such an agreement.

This was AT&T Services Inc.’s (“AT&T”) principal argument in seeking a stay pending arbitration in Starling v. OnProcess Technology, Inc. et. al., a putative class action where Plaintiff alleged that AT&T violated the Telephone Consumer Protection Act (“TCPA”) by authorizing unsolicited, pre-recorded “robocalls” to her cellphone. Plaintiff’s sister had provided Plaintiff’s cellphone number as an alternate contact for the sister’s account with AT&T for internet services, governed by a Terms of Service agreement with an arbitration provision. When the sister contacted AT&T to cancel her account, Plaintiff received numerous robocalls seeking return of AT&T’s equipment—prompting the litigation.

AT&T initiated arbitration and moved to stay the case pending arbitration. Plaintiff was not a party to the sister’s agreement with AT&T, nor an authorized user of the sister’s account. AT&T argued nonetheless, under a theory of equitable estoppel, that Plaintiff should be bound to her sister’s agreement to arbitrate with AT&T. Plaintiff knowingly exploited the benefits of her sister’s agreement with AT&T by using the agreement to generate a claim against AT&T. She should therefore be bound by the arbitration provision, the theory goes. Essentially, Plaintiff’s TCPA claim would not exist but-for the sister’s agreement with AT&T.

The U.S. District Court for the District of Massachusetts disagreed and reminded AT&T that the “benefit” under this theory has to be direct. In other words, the benefit has to flow directly from the agreement. Plaintiff’s claim, the Court held, did not flow directly from the agreement but flowed from the TCPA, an independent cause of action created by Congress to protect consumers from receiving unsolicited prerecorded calls. On these facts, the Court was not persuaded that a non-signatory could be so bound.


Fitch Law Partners LLP reports news and insights on complex litigation topics. Clients, colleagues and friends may receive The Fitch Briefs by signing up here.