2019 CO 67
Colo.2019Background
- Current and former exotic dancers sued club owners and corporate parents alleging wage-and-hour and related labor-law violations tied to "Entertainment Lease" agreements labeling dancers as independent contractors.
- Dancers signed written agreements with arbitration clauses with the club-owner defendants; club owners successfully compelled arbitration of dancers’ claims.
- Corporate-parent defendants, nonsignatories to the leases, moved to compel arbitration too, invoking equitable estoppel because the same claims are pursued against signatories already in arbitration.
- A federal magistrate relied on the Colorado Court of Appeals’ decision in Meister v. Stout to recommend compelling arbitration against the nonsignatory parents without requiring detrimental reliance. Plaintiffs challenged that recommendation.
- The U.S. District Court certified the state-law question to the Colorado Supreme Court: whether a nonsignatory may invoke equitable estoppel to compel arbitration absent a showing of detrimental reliance.
- The Colorado Supreme Court accepted certification and reviewed Colorado’s traditional four-element equitable estoppel doctrine.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a nonsignatory can compel arbitration via equitable estoppel without proving detrimental reliance | Santich: Meister’s arbitration-specific estoppel allows enforcement without showing detrimental reliance | Corporate parents: equitable estoppel should apply here because claims are intertwined and Meister permits estoppel without reliance | Colorado Supreme Court: No. Nonsignatory must prove all four traditional elements of equitable estoppel, including detrimental reliance |
Key Cases Cited
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009) (arbitration enforceability governed by state contract principles)
- Jefferson Cty. Sch. Dist. No. R-1 v. Shorey, 826 P.2d 830 (Colo. 1992) (sets Colorado’s four-element test for equitable estoppel)
- V Bar Ranch LLC v. Cotten, 233 P.3d 1200 (Colo. 2010) (defines estoppel as arising from inducement to detrimentally change position in reliance)
- Dove v. Delgado, 808 P.2d 1270 (Colo. 1991) (explains doctrine of estoppel is not favored and requires clear proof of elements)
- Meister v. Stout, 353 P.3d 916 (Colo. App. 2015) (court of appeals adopted an arbitration-specific estoppel rule dispensing with detrimental reliance; disavowed by the Supreme Court)