THE ROLE OF DELEGATION CLAUSES IN MOTIONS TO COMPEL ARBITRATION WHEN YOUR FAMILY MEMBER SIGNS AN ARBITRATION AGREEMENT
It happens every so often: someone signs an agreement to arbitrate legal claims, the agreement has a solid clause delegating arbitrability issues to an arbitrator, and then a member of that person’s family files a claim in court against the other party to the agreement. The clever litigant will evaluate whether the claimant, despite being a non-signatory to the arbitration agreement, can be compelled to arbitrate its claims. Two recent decisions, one from the Eleventh Circuit Court of Appeals and another from Florida’s Third District Court of Appeal, shed light on the issues that may arise in such a situation.
Let’s begin with the more recent and shorter decision, Meikle v. U-Haul Co. of Florida 905, LLC, 2025 WL 97476 (Fla. 4th DCA Jan. 15, 2025). There, the claimant was the minor son of a mother who had rented moving equipment from U-Haul. The mother signed an agreement whereby she agreed to arbitrate any claims against U-Haul. When her son was injured by the equipment, the son filed suit in court and U-Haul moved to compel arbitration of the claim. The minor son argued that the arbitration agreement was not valid, and even if it were valid, it could not be enforced against a non-party to the rental contract. The trial court granted the motion to arbitrate. In its decision reversing, the District Court first noted that the trial court “correctly” applied the arbitration agreement’s delegation clause. Meikle, at *1. Before addressing the reason for the reversal, a primer on the delegation clauses of arbitration agreements is appropriate.
A primer on the delegation clauses of arbitration agreements.
Parties may agree to arbitrate all or some disputes, such as the merits of their claims or whether their claims are even arbitrable. See Attix v. Carrington Mortg. Servs, LLC, 35 F.4th 1284, 1288 (11th Cir. 2022). Arbitrability refers to the “gateway” or “threshold” questions about whether the merits of any claims arising from a contract, such as the “enforceability, scope, or applicability of the parties’ agreement to arbitrate their claims,” are subject to arbitration. Attix, 35 F.4th at 1295 (quotation omitted). See also Airbnb, Inc. v. Doe, 336 So. 3d 698, 703 (Fla. 2022) (quoting Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68-69 (2010)) (describing arbitrability as “whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.”). Unless the parties agree to delegate such functions to the arbitrator, courts decide arbitrability issues under both Federal law, see Attix, at 1395, and Florida law. See Romano v. Goodlette Office Park, Ltd., 700 So.2d 62, 64 (Fla. 2d DCA 1997) (arbitrability issues are decided by courts “unless the parties have entered an agreement stating otherwise.”) (citation omitted); § 682.02(2), Fla. Stat. (“The court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate.”).
The presence of a delegation clauses doesn’t mean that a non-signatory automatically loses a motion compelling it to arbitrate.
In Meikle, the arbitration agreement delegated questions of arbitrability to the arbitrator, leading the trial court to conclude that the arbitrator had to decide whether the parties agreed to arbitrate. But the trial court seemingly overlooked the first of “three elements for courts to consider in ruling on a motion to compel arbitration of a given dispute: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived.” Seifert v. U.S. Home Corp., 750 So. 2d 633, 636 (Fla. 1999)).
The District Court’s reversal of the order compelling arbitration is rooted in the “undisputed” fact that the minor “was not a party to the rental contract, and a non-contracting party generally cannot be bound by an arbitration agreement.” Meikle, at *1 (citing Seifert, 750 So. 2d at 636 (“[N]o party may be forced to submit a dispute to arbitration that the party did not intend and agree to arbitrate.”)). The minor’s mother signed the agreement on her own behalf only. See id.
Readers may be surprised that Meikle concluded, without much discussion, that the arbitration agreement’s delegation clause did not apply to the non-signatory minor.1 After all, delegation clauses confer upon the arbitrator—not the court—the power to adjudicate whether a claim is arbitrable. Perhaps it was unnecessary for Meikle to address the non-applicability of the delegation clause because of one simple reason: delegation clauses may be inconsequential when one seeks to enforce an arbitration agreement against a non-signatory. This much is evident from the lengthier decision, Rubin v. Starbucks Corp., 122 F.4th 1314 (11th Cir. Dec. 16, 2024), which did address the matter, though not without the disapproval of its concurrence. See 122 F.4th at 1324-25 (Tjoflat, J. Concurring).
Does there exist a valid written agreement to arbitrate—and if so, is the agreement at issue in the action?
In Rubin v. Starbucks Corp., the claimant was the husband of a former Starbucks employee. The claimant filed suit in court based on the allegation that Starbucks sent him, upon his wife’s termination, a deficient health-insurance notice under the Employee Retirement Income Security Act of 1974, as amended by the Consolidated Omnibus Budget Reconciliation Act (COBRA). See 29 U.S.C. § 1166(a); 29 C.F.R. § 2590.606-4.2 Starbucks moved to compel arbitration, citing his wife’s employment agreement, whose delegation clause conferred upon the arbitrator “exclusive authority to resolve any dispute regarding the formation, interpretation, applicability, enforceability, or implementation of [the] Agreement.” Id. at 1318. However, the husband did not sign the agreement and had never even worked for Starbucks. Thus, the Eleventh Circuit had to determine whether the husband had to arbitrate his claims in light of his wife’s agreement. See id. at 1317-18.
The district court denied Starbucks’s motion to compel arbitration, noting that the husband “was neither a party to his wife’s employment agreement nor did he sue to enforce the employment agreement.” Id. 1318. Instead, the husband sought to enforce his own statutory right to an adequate COBRA notice. Id. at 1318 (citing 29 U.S.C. § 1166(a)(4)). The Circuit Court agreed, citing the well-established principle that “the threshold question of whether an arbitration agreement exists at all is ‘simply a matter of contract.’” Id. at 1319 (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995)). This principle trumped Starbucks’s argument that the delegation clause granted an arbitrator the exclusive jurisdiction to determine the threshold question of whether the non-signatory husband must arbitrate his statutory claims:
Moreover, [husband] is not a party to the delegation clause. And absent an agreement between [husband] and Starbucks, “a court cannot compel the parties to settle their dispute in an arbitral forum.” Bazemore, 827 F.3d at 1329 (quoting Klay, 389 F.3d at 1200). Arbitration agreements are no more enforceable than an average contract, and we “may not devise novel rules to favor arbitration over litigation.” Morgan v. Sundance, Inc., 596 U.S. 411, 418, 142 S.Ct. 1708, 212 L.Ed.2d 753 (2022). The delegation clause, just like every other clause in the arbitration agreement, was between Starbucks and [husband’s] wife, not [husband]. We thus conclude that the terms of the arbitration agreement do not require Lubin to arbitrate his claim against Starbucks, absent another principle of law or equity.
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1 The brevity of Meikle is also rendered conspicuous by the fact that it did not address the various well-established common law doctrines for compelling nonparties to arbitrate (e.g., equitable estoppel and third-party beneficiary). It is likely that those theories were not raised at the trial level.
2 Starbucks’s termination of the claimant’s wife was a “qualifying event” that triggered the husband’s right to a COBRA notice. 29 U.S.C. §§ 1163(2), 1166(a)(4). Accordingly, Starbucks’s COBRA administrator mailed the allegedly deficient COBRA notice. See Lubin, at 1318.
Id. at 1320-21 (emphasis added).3 In other words, because the wife’s arbitration agreement was not even at issue, the husband could not be compelled to arbitrate.
The Circuit Court in Rubin moved on to analyze three common law doctrines to determine whether the husband must be compelled to arbitrate despite being a non-signatory to the arbitration agreement. It found none of them applicable. See id. at 1321-24. But the concurrence thought the end of the analysis should have been that the husband’s claim was entirely statutory.
If a claim is statutory, as in Rubin, it is unnecessary to analyze delegation clauses to determine whether a non-signatory can be compelled to arbitrate under an arbitration agreement.
Having agreed with the majority that the husband “was not a party to his wife’s arbitration agreement and that his claim arises under federal statute,” the concurrence found “it unnecessary to engage any further with principles of federal and state law that do not control this case.” Id. at 1324 (Tjoflat, J. Concurring). Calling for a much shorter decision, the concurrence reasoned as follows:
… I find it unnecessary to engage any further with principles of federal and state law that do not control this case.
This is a statutory case: Lubin sues to enforce a federal statutory right, the right to an adequate COBRA notice. See 29 U.S.C. § 1166(a); 29 C.F.R. § 2590.606-4. His claim is not the product of any bargained-for exchange with Starbucks. That is why Starbucks cannot compel him to arbitrate under an agreement that is not his own….
The Court’s holding should be read narrowly to apply only where a party to an arbitration agreement seeks to compel a non-party to arbitrate, and only where the non-party’s claim arises directly under federal law, as here. Any discussion in the Court’s opinion that could be read more broadly is unnecessary to the resolution of this dispute. Therefore, it is either dictum, which carries no precedential value, or an alternative holding, which I do not join.
For instance, I do not join the Court’s discussion of the arbitration agreement’s delegation clause. See Maj. Op. at 1319-21. The Court provides a well-reasoned explanation for why that clause does not apply in the first place: Lubin is not a party to the agreement. See Maj. Op. at 1319-20, 1320-21….
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3 The court also held that an exclusion clause within the employment agreement rendered the arbitration agreement ambiguous as to the question of whether the delegation clause applies (contrary to the requirement that delegation clauses must be “clear and unmistakable”. See Lubin, at 1320 (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (quoting AT & T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 649 (1986).
Id. at 1324-25 (Tjoflat, J. Concurring; citations omitted; emphasis added). The concurrence in Rubin may thus validate the brevity of the Meikle decision, for this reason: while delegation clauses often loom large in motions to compel arbitrations, they may be inconsequential in motions against nonparties to an arbitration agreement.
The U.S. Supreme Court long ago held that “[u]nless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.” AT & T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 649 (1986). It cannot be said that there is “clear and unmistakable evidence” that someone who did not sign an arbitration agreement nevertheless agreed to delegate arbitrability questions to an arbitrator under that arbitration. Kaplan, 514 U.S. at 944 (alterations adopted) (quoting AT & T, 475 U.S. at 649). Thus, the fact that Meikle involved a delegation clause did not mean that the claimant, who did not sign the arbitration agreement, had agreed to any such thing—much less clearly and unmistakably, which is what the U.S. Supreme Court requires.
Rubin’s other takeaways—when nonparties can be compelled to arbitration.
The concurrence in Rubin also explained that because the claim is statutory—not contractual—it was also unnecessary to analyze common law doctrines to determine whether a non-signatory can be compelled to arbitrate under an arbitration agreement. See, e.g., Rubin at 1325 (Tjoflat, J. Concurring) (“I do not join the Court’s discussion of the third-party beneficiary doctrine. Once again, the Court provides an excellent explanation for why the doctrine does not apply: Lubin sues to enforce his statutory rights, not to obtain the benefits of a contract.”) (internal citations omitted). But since the majority decision did analyze these common law doctrines, let’s address why the majority held them inapplicable.
1. Equitable Estoppel.
“[E]quitable estoppel precludes a party from claiming the benefits of some of the provisions of a contract while simultaneously attempting to avoid the burdens that some other provisions of the contract impose.” Bahamas Sales Assoc., LLC v. Byers, 701 F.3d 1335, 1342 (11th Cir. 2012). Under this doctrine, Starbucks could have forced the husband to abide by his wife’s agreement if it showed that the husband was “relying on the [employment] agreement to assert [his] claims” and that “the scope of the arbitration clause covers the dispute.” Rubin, at 1321 (quoting See Kroma Makeup EU, LLC v. Boldface Licensing + Branding, Inc., 845 F.3d 1351, 1354 (11th Cir. 2017)). See also Allied Pros. Ins. v. Fitzpatrick, 169 So. 3d 138, 142 (Fla. 4th DCA 2015) (“the plaintiffs cannot claim they are entitled to the benefit of the policy’s coverage provision while simultaneously attempting to avoid the burden of the policy’s arbitration provision.”).
However, the spouse in Rubin did not have his proverbial cake and eat it too. The Court agreed that his claim arose “under his independent statutory right to an adequate COBRA notice.” Rubin, at 1321. Since Starbucks’s notice duties under 29 U.S.C. § 1166(a)(4) and 29 C.F.R. § 2590.606-4—the basis of his claim—did “not arise out of any provision of his wife’s employment contract”, the Circuit Court held that the equitable estoppel doctrine did not apply. Id.
2. Third-Party Beneficiary Doctrine
Under Florida law, the third-party beneficiary exception to the general rule against binding a non-party arises when “a third-party beneficiary sues to enforce a contract between other parties.” Jacocks v. Cap. Com. Real Est. Grp., Inc., 310 So. 3d 71, 73 (Fla. 4th Dist. Ct. App. 2021). In other words, the doctrine “does not apply when a third-party beneficiary brings a claim other than to enforce the contract.” Rubin, at 1322 (quoting Jacocks, 310 So. 3d at 73). In Rubin, because the spouse did not sue to enforce a duty owed by Starbucks under its employment contract with his wife but instead, he sued “under federal law, alleging that Starbucks violated statutory duties that it owed him under COBRA”, the doctrine did not apply. Id. (citing 29 U.S.C. § 1166(a); 29 C.F.R. § 2590.606-4).
3. Derivative
In some cases, Florida law requires a non-signatory claimant to arbitrate when the underlying action is “derivative” of a wrong committed against a signatory to an arbitration agreement. Id. at 1322-23 (citing Laizure v. Avante at Leesburg, Inc., 109 So. 3d 752, 759-62 (Fla. 2013). Derivative claims are those where the claimant’s right to recover is predicated on, or flows from, another party’s right to recover. Laizure at 760.
The facts of Rubin are far different from cases like Laizure. There, the non-signatory heirs of a decedent were required to arbitrate a wrongful death claim because their claim was derivative of the wrong committed against the decedent, who had signed an arbitration agreement. Id. at 759–62. By its nature, a wrongful-death claim is “dependent on a wrong committed against the decedent,” not the plaintiff. By contrast, the spouse’s COBRA claim in Rubin was entirely dependent on his own statutory rights under 29 U.S.C. § 1166(a)(4). See id. at 1323-24 (citing Seifert, 750 So. 2d at 638 (“the mere fact that the dispute would not have arisen but for the existence of the contract and consequent relationship between the parties is insufficient by itself to transform a dispute into one ‘arising out of or relating to’ the agreement. … [F]or a tort claim to be considered ‘arising out of or relating to’ an agreement, it must, at a minimum, raise some issue the resolution of which requires reference to or construction of some portion of the contract itself.”).4
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4 It bears repeating that Meikle did not address any common law doctrines for evaluating whether a non-signatory can be compelled to arbitrate (as those issues may not have been before the court).
Concluding remarks.
It bears repeating that the Third District’s Meikle decision did not address any common law doctrines for evaluating whether a non-signatory can be compelled to arbitrate (as those issues may not have been before the court). That is the only apparent reason from the short decision. No such dilemma is presented by Rubin, however. There, the doctrines were addressed, but it was arguably unnecessary to address them, as explicated in the concurrence. A takeaway from these two recent decisions is this: just because a non-signatory’s claim is related to an arbitration agreement—even one with a delegation clause—does not mean that the non-signatory must be compelled to arbitrate any aspect of the claim or its arbitrability.