Noah's Ark Processors v. UniFirst Corp., 310 Neb. 896

Background

UniFirst and Nebraska Prime Group LLC (Prime) executed a 2013 customer service agreement (CSA) with a broad arbitration clause covering “all disputes” and a provision requiring a purchaser to assume the CSA on sale/transfer.
Noah’s Ark acquired Prime’s plant assets by foreclosure and began operating the plant on January 2, 2015; it did not notify UniFirst of the ownership change and UniFirst continued providing services and invoicing under the name "Nebraska Prime."
Noah’s used UniFirst services, paid invoices (often via third-party management), requested new quotes/services, and the Noah’s CFO acknowledged remaining term on the CSA; Noah’s then sent a termination letter in January 2018.
UniFirst demanded arbitration in June 2018 seeking damages; Noah’s sued in district court seeking a declaration that, as a nonsignatory, it was not bound by the CSA or its arbitration provision.
After a bench trial the district court found Noah’s conduct constituted concealment/false representation causing UniFirst to reasonably rely to its detriment, held Noah’s equitably estopped from denying the CSA and arbitration, rejected waiver and hearsay objections, lifted the stay, and ordered Noah’s to arbitrate; the Nebraska Supreme Court affirmed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Noah’s is bound by the CSA/arbitration via equitable estoppel	Noah’s: nonsignatory; no deception, no knowledge, no detrimental reliance	UniFirst: Noah’s conduct (continued use, payments, invoices in Prime’s name, CFO statements, requests for services) caused UniFirst to believe Prime remained the customer and to rely	Court: Affirmed equitable estoppel; Noah’s estopped from denying CSA and arbitration
Whether certain billing disputes fall outside arbitration scope	Noah’s: some garments/items not in CSA so court should decide	UniFirst: CSA’s arbitration clause is broad (“all disputes”) and Noah’s is estopped, so disputes belong to arbitrator	Court: Arbitration clause covers the disputes; no carve-out; directed arbitration
Whether equitable estoppel was unpled / decided without notice	Noah’s: trial court relied on an unpled estoppel theory, causing prejudice	UniFirst: estoppel was pleaded as an affirmative defense and litigated; Noah’s had notice	Court: UniFirst pleaded estoppel; Noah’s had notice and was not prejudiced; claim properly decided
Admissibility of several statements/documents over hearsay objections	Noah’s: phone call, CFO statements, letters, and records were improper hearsay	UniFirst: statements admissible to show effect on listener, as party-opponent/agent admissions, or as business records	Court: No abuse of discretion; statements admissible or went to weight; no substantial prejudice to Noah’s

Key Cases Cited

Amend v. Nebraska Pub. Serv. Comm., 298 Neb. 617, 905 N.W.2d 551 (Neb. 2018) (appellate court need not decide issues unnecessary to resolution)
Good Samaritan Coffee Co. v. LaRue Distributing, 275 Neb. 674, 748 N.W.2d 367 (Neb. 2008) (questions whether arbitration should be compelled are questions of law reviewed de novo)
Cullinane v. Beverly Enters.-Neb., 300 Neb. 210, 912 N.W.2d 774 (Neb. 2018) (two-step arbitrability analysis: formation and scope are for the court)
Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (U.S. 2009) (courts decide gateway questions of arbitrability unless parties clearly delegate them)
PRM Energy Sys., Inc. v. Primenergy, L.L.C., 592 F.3d 830 (8th Cir. 2010) (nonparty cannot accept benefits under a contract and simultaneously repudiate its obligations)
Eletech v. Conveyance Consulting Group, 308 Neb. 733, 956 N.W.2d 692 (Neb. 2021) (appellate courts will not consider arguments raised for the first time on appeal)
O’Brien v. Cessna Aircraft Co., 298 Neb. 109, 903 N.W.2d 432 (Neb. 2017) (standard for abuse of discretion in evidentiary rulings)
SFI Ltd. Partnership 8 v. Carroll, 288 Neb. 698, 851 N.W.2d 82 (Neb. 2014) (addressing notice of affirmative defenses)