Richard Geier v. M-Qube Inc
824 F.3d 797
9th Cir.2016Background
- Pow! Mobile offered a subscription mobile game (“Bid and Win”) billed $9.99/month to subscribers’ wireless bills; Pow! Mobile is not a party in this appeal.
- Defendants m-Qube and Mobile Messenger are billing/connection aggregators that route and bill premium SMS services for content providers; they moved this case from state to federal court under CAFA.
- Margaret Wells (plaintiff Geier’s wife) allegedly subscribed to the service; defendants contend she accepted Pow! Mobile’s online Terms and Conditions (which include an arbitration clause); Geier disputes assent and contends the subscription was unauthorized.
- The Terms define “Company” as Pow! Mobile and include (1) a waiver of claims against “any of Company’s suppliers” and (2) a clause requiring binding arbitration and barring classwide arbitration.
- The district court denied defendants’ motion to compel arbitration on the ground that defendants are not intended third‑party beneficiaries entitled to enforce the arbitration clause.
- The Ninth Circuit reversed and remanded, holding the Terms manifest intent to benefit the Company’s suppliers, so defendants may be able to enforce arbitration if (a) Wells assented and (b) defendants qualify as Pow! Mobile’s suppliers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants may enforce the arbitration clause as third‑party beneficiaries | Geier: defendants are not intended beneficiaries and thus cannot enforce arbitration | Defendants: Paragraph 11’s waiver of claims against “Company’s suppliers” shows intent to benefit suppliers, permitting enforcement | Court: Terms create a direct obligation to Company’s suppliers; suppliers are intended third‑party beneficiaries, so defendants may enforce arbitration if other elements met |
| Whether arbitration should be compelled in this case | Geier: Wells did not assent to the Terms, so agreement to arbitrate is absent | Defendants: Wells assented upon subscription; if defendants are suppliers they may invoke the clause | Court: Remanded to district court to determine (1) whether Wells assented and (2) whether defendants are Pow! Mobile’s suppliers; reversed denial and remanded for further proceedings |
Key Cases Cited
- Nagrampa v. MailCoups, Inc., 469 F.3d 1257 (9th Cir. 2006) (standard for reviewing arbitration clause validity and scope)
- Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126 (9th Cir. 2000) (Federal Arbitration Act compels arbitration when a valid agreement covers the dispute)
- Rajagopalan v. NoteWorld, LLC, 718 F.3d 844 (9th Cir. 2013) (third‑party beneficiary requires intent to confer direct benefit; indirect reference insufficient)
- Gibson v. Wal‑Mart Stores, Inc., 181 F.3d 1163 (10th Cir. 1999) (nonsignatory can enforce arbitration as third‑party beneficiary where contract confers benefit)
- MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942 (11th Cir. 1999) (third‑party beneficiary theory supports nonsignatory enforcement of arbitration agreement)
- Lonsdale v. Chesterfield, 662 P.2d 385 (Wash. 1983) (en banc) (under Washington law, contract terms that necessarily require promisor to confer benefit establish intended third‑party beneficiary)