Last month, the Second Circuit clarified its precedents on when a non-signatory to a contract that includes an arbitration clause may compel a signatory to arbitrate their dispute. Today, the court followed its decision in Sokol Holdings, Inc. v. BMB Munai, Inc., No. 07-2871 (2d Cir. Sept. 18, 2008), to turn back another non-signatory's effort to force a signatory into arbitration. Ross v. American Express Co., No. 06-4598-cv(L) (2d Cir. Oct. 21, 2008).
The plaintiffs sued American Express, MasterCard, VISA, Diners Club, and several card-issuing banks for conspiring to fix prices for currency exchange fees. None of the plaintiffs had American Express cards; they consisted entirely of MasterCard, VISA, and Diners Club cardholders. Amex nonetheless cited arbitration provisions in the cardholder agreements between plaintiffs and banks that issued MasterCard and VISA plastic rectangles. The district court held that Amex had a shot at bootstrapping the arbitration clauses as against the plaintiffs and set a trial to determine whether the facts supported such a maneuver. The Second Circuit disagreed, concluding that the "intertwining" doctrine didn't extend to a situation — as in Sokol Holdings — where the plaintiffs don't make allegations that treat the non-signatory defendant as if it were a party to the underlying agreement.
But it got weird before that — specifically in the court's brief discussion of why it had appellate jurisdiction. Although the federal Arbitration Act allows interlocutory appeals from refusals to enforce a "written" arbitration agreement between parties to the case, the panel provided hardly any analysis of whether jurisdiction existed where the party seeking to compel arbitration doesn't have an actual "written" agreement with a signatory and instead relies on equitable estoppel principles to take advantage of an agreement between others. The judicial trio instead dropped a footnote in which it mentioned that "a substantial split among the Circuit has now developed over this jurisdictional question." Ross, slip op. at 7 n.2 (citing Sourcing Unlimited, Inc. v. Asimco Int'l, Inc., 526 F.3d 38, 44 n.6 (1st Cir. 2008)).
The court then concluded that the "intertwined" nature of Amex's appeal (from denial of arbitration) and plaintiffs' separate appeal (from ordering trial of the estoppel question) gave it "pendent appellate jurisdiction". Id. at 8.
