104 F.4th 702
9th Cir.2024Background
- The Herreras purchased international round-trip flights from Cathay Pacific through the third-party ASAP Tickets (operated by ITN), agreeing to ASAP's Terms & Conditions, which included an arbitration clause.
- Cathay Pacific’s contract (General Conditions of Carriage, GCC) specified refund procedures for canceled flights but did not contain an arbitration clause between Cathay and the Herreras.
- After Cathay canceled their return flight, the Herreras sought a refund via ASAP, but only received an offer for expiring travel vouchers, which they declined due to COVID-19 travel restrictions.
- The Herreras sued Cathay Pacific for breach of contract, claiming Cathay failed to issue the required refund under the GCC.
- Cathay Pacific moved to compel arbitration under the ASAP Tickets arbitration clause, arguing equitable estoppel. The district court denied the motion, reasoning the claim was based on Cathay’s own contract, not ASAP's.
- On appeal, the Ninth Circuit considered whether Cathay, as a nonsignatory, could enforce the arbitration clause against the Herreras.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May a nonsignatory compel arbitration under equitable estoppel? | The claim is based solely on Cathay’s own contract (GCC), not ASAP's T&Cs. | The claim is intertwined with ASAP’s T&Cs since refund processing involved ASAP’s role. | Yes; the claim is “intimately founded in and intertwined with” ASAP’s T&Cs, so arbitration can be compelled. |
| Does 14 C.F.R. § 253.10 bar compelling arbitration? | Regulation bars enforcement of arbitration here. | The regulation only restricts choice-of-forum provisions in the carrier's contract, not customer/third-party arbitration agreements. | No, the regulation does not bar arbitration in these circumstances. |
| What is the standard of review for denying nonsignatory motions to compel arbitration under equitable estoppel? | Abuse of discretion or de novo. | Should be de novo because involves mixed law and fact; equitable estoppel from nonsignatory. | De novo review applies. |
| Should the action be stayed or dismissed pending arbitration? | Not directly contested. | All claims are subject to arbitration, so dismissal or stay warranted. | Remanded for district court to determine whether to stay or dismiss. |
Key Cases Cited
- Kramer v. Toyota Motor Corp., 705 F.3d 1122 (9th Cir. 2013) (addresses equitable estoppel and when a nonsignatory may enforce an arbitration agreement under California law)
- Franklin v. Cmty. Reg’l Med. Ctr., 998 F.3d 867 (9th Cir. 2021) (discusses application of equitable estoppel in arbitration and the standard of review)
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009) (FAA permits nonsignatories to enforce arbitration agreements where permitted by state contract law)
- Goldman v. KPMG LLP, 173 Cal. App. 4th 209 (Cal. Ct. App. 2009) (explains California’s standard for equitable estoppel in arbitration)