Amrish Rajagopalan v. Noteworld, Llc
2013 U.S. App. LEXIS 10055
| 9th Cir. | 2013Background
- Rajagopalan sued NoteWorld LLC in the Western District of Washington alleging RICO and Washington state-law claims arising from a debt-relief program contract with First Rate Debt Solutions.
- NoteWorld, though not a signatory to the contract containing the arbitration clause, sought to compel arbitration or stay litigation based on the arbitration clause.
- The arbitration clause provides Florida law and Broward County venue and appears in the First Rate contract; NoteWorld claimed it could enforce as a third-party beneficiary or via equitable estoppel.
- The district court denied NoteWorld’s motion to compel arbitration, finding the arbitration clause substantively unconscionable and that NoteWorld could not invoke it as a third-party beneficiary or through equitable estoppel.
- The Ninth Circuit affirmed, holding NoteWorld is not a third-party beneficiary and cannot invoke the arbitration clause through equitable estoppel, so arbitration could not be compelled.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can NoteWorld compel arbitration as a non-signatory third-party beneficiary? | Rajagopalan argues NoteWorld is not a third-party beneficiary. | NoteWorld contends it is a third-party beneficiary of the contract. | No; not a third-party beneficiary under Washington law. |
| Can NoteWorld compel arbitration via equitable estoppel against the signatory plaintiff? | Rajagopalan disputes that equitable estoppel applies here because claims arise independently from statutory provisions. | NoteWorld asserts equitable estoppel allows non-signatories to compel arbitration when disputes are intertwined with the contract. | No; equitable estoppel does not apply to permit arbitration in this case. |
Key Cases Cited
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (federal policy favoring arbitration)
- Coneff v. AT&T Corp., 673 F.3d 1155 (9th Cir. 2012) (de novo review of arbitration provision validity)
- Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042 (9th Cir. 2009) (estoppel and contract-related arbitrability)
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009) (state-law principles govern nonparty contract enforcement)
- Powell v. Sphere Drake Ins. PLC, 988 P.2d 12 (Wash. Ct. App. 1999) (statutory claims distinct from contract-based remedies)
- Burke & Thomas, Inc. v. International Org. of Masters, 600 P.2d 1282 (Wash. 1979) (third-party beneficiary requirements under Washington law)
- Tooley v. Stevenson Co-Ply, Inc., 724 P.2d 368 (Wash. 1986) (indirect reference alone does not create beneficiary status)