192 A.D.3d 127
N.Y. App. Div.2020Background
- Darrelle Revis and his wholly owned LLC (Shavae) sued Neil Schwartz, Jonathan Feinsod, and Schwartz & Feinsod, LLC alleging breach of fiduciary duty, breach of contract, fraud, conversion and related claims arising from a Standard Representation Agreement (SRA) and an alleged separate oral marketing & endorsements (M&E) agreement.
- The SRA (signed by Revis and Schwartz) incorporated by reference the NFLPA Regulations, which in turn adopt the AAA Voluntary Labor Arbitration Rules. The SRA’s "Disputes" clause refers disputes "of this Agreement" to the NFLPA arbitration procedures.
- Defendants moved to compel arbitration under CPLR 7503, arguing (inter alia) that incorporation of the AAA rules shows a clear-and-unmistakable delegation of threshold arbitrability questions to the arbitrator.
- Supreme Court granted the motion; the Appellate Division (majority) affirmed, holding there was clear and unmistakable delegation and that nonsignatories (Feinsod, S&F and Shavae) were bound/enforceable under agency/estoppel theories.
- Judge Dillon (dissent) argued the SRA limits incorporation to disputes "of this Agreement," that the M&E was a separate (oral) agreement and factual questions (e.g., whether Schwartz acted as attorney vs. contract advisor) precluded forcing arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Delegation of arbitrability | Revis: No clear-and-unmistakable delegation; arbitration limited to SRA disputes | Defendants: Incorporation of NFLPA and AAA rules (which authorize arbitrator to decide jurisdiction) is clear-and-unmistakable delegation | Majority: Delegation exists; courts may not decide arbitrability where properly delegated to arbitrator (affirmed) |
| Scope of arbitration (do the complaint claims fall within arbitration) | Revis: Claims (including M&E, fraud, fiduciary claims) are separate from SRA and outside its scope | Defendants: NFLPA clause is broad (fees, advisor activities) and covers these claims | Majority: Court may not decide scope because arbitrability was delegated; compel arbitration of Revis v. Schwartz claims and stay proceedings |
| Nonsignatory enforcement (Feinsod / S&F) | Revis: Nonsignatories are not parties and cannot compel arbitration | Defendants: Complaints allege agency/partnership and that work was done on behalf of Schwartz; agency theory allows nonsignatories to enforce | Majority: Feinsod and S&F can enforce arbitration given allegations they acted for/with Schwartz (affirmed) |
| Binding of Shavae (nonsignatory LLC) | Revis/Shavae: Shavae did not sign SRA and cannot be compelled | Defendants: Direct-benefits estoppel — Shavae knowingly sought/received benefits under SRA and relies on its terms | Majority: Shavae bound under direct-benefits estoppel to arbitrate claims tied to the SRA (affirmed); Dissent: factual ambiguity defeats compulsion |
Key Cases Cited
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (if parties clearly delegate arbitrability to arbitrator, courts may not decide arbitrability)
- Rent-A-Center West, Inc. v. Jackson, 561 U.S. 63 (2010) (parties may agree to arbitrate gateway arbitrability questions)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (courts apply ordinary state‑law contract principles to determine agreement to arbitrate)
- Life Receivables Trust v. Goshawk Syndicate 102 at Lloyd's, 14 N.Y.3d 850 (N.Y. 2010) (incorporation of arbitral rules can delegate arbitrability to arbitrator)
- Contec Corp. v. Remote Solution Co., Ltd., 398 F.3d 205 (2d Cir. 2005) (incorporation of AAA rules constitutes clear-and-unmistakable evidence of delegation)
- Matter of Belzberg v. Verus Inv. Holdings Inc., 21 N.Y.3d 626 (N.Y.) (direct‑benefits estoppel may bind nonsignatories to arbitration)
- Hirschfeld Prods. v. Mirvish, 88 N.Y.2d 1054 (N.Y.) (agents/principals: nonsignatories may invoke arbitration where misconduct relates to agent capacities)