*2 DUHÉ, Before BARKSDALE DENNIS, Judges. Circuit BARKSDALE, RHESA HAWKINS Judge: Circuit district is whether the Solely at issue by applying abused its discretion equitable estoppel on tortious interfer- an action centered an arbitration with a contract ence clause, brought by signatories con- the court non-signatories, tract that, this action inter- holding because with, upon, con- dependent twined tract, should be its arbitration AFFIRM. We given effect.

I. the Texas Chain Saw Massa-

“Return of 1993-94; (the movie) filmed was cre” Matthew MeConau- then actors” “obscure in it. acted Zellweger ghey and Renee Muchos, by Ultra produced The movie was Films, Inc. trust- City and River Grig- is Charles owners ee for movie’s son.

In October Ultra Muchos Muchos, and Riv- action ruled that Grigson, Ultra City er entered into a distribution City (Appellants) River equitably were Video, ment with Columbia TriStar Home estopped from relying upon Defendants’ Inc. It given exclusive distribution being non-signatories. This was based rights complete discretion on how to that, upon holding because the claims are *3 them; producers exercise the were to re- with, so intertwined dependent and upon, ceive a percentage gross the movie’s agreement, the distribution its arbitration And, by separate, revenue. earlier given clause should be According- effect. ment, the owners were to portion receive a ly, in light of the provi- forum selection producers’ of the percentage. clause, in the sion arbitration the court period dismissed the action so that parties in post-acting the movie 1996, (Los prior proceed and could in the fall of McConaughey mandated forum California). signed agency Angeles an County, contract with Creative Agency, Artists L.L.C. The movie’s distri- bution delayed by TriStar to take II. advantage Zellweger and McConau- Arbitration is favored in the law. ghey’s in subsequent success movies. See Moses H. Hosp. Cone Mem. v. Mercu however, Subsequently, gave TriStar ry 1, 24-25, Corp., Constr. 460 U.S. only a movie limited distribution. 927, (1983). S.Ct. 74 L.Ed.2d 765 Accord mid-1997, In district court in Grigson, ingly, parties to agreements such cannot trustee, Muchos, sued Ultra City, River avoid them by casting tort, their claims in and TriStar for breach of the distribution rather than in contract. e.g., See Acevedo But, agreement. Grigson quickly and vol- Indus., Inc., Maldonado v. PPG 514 F.2d untarily fall, had the action dismissed that (1st Cir.1975). Likewise, proceed sought when TriStar to enforce the distri- ings against parties non-parties to the agreement’s bution clause, arbitration arbitration stayed are pending which contains a forum selection provision arbitration, the outcome of when the action (Los California). Angeles County, against the non-party dependent upon In late a few months after the interpretation of the underlying contract.

voluntary action, dismissal of the first See Subway Equip. Leasing Corp. v. Grigson, joined by now Ultra Muchos and Forte, (5th Cir.1999). River filed this City, action in state court Similarly, as infra, discussed in certain against McConaughey and Creative Artists instances, limited pursuant to an (Defendants) for, alia, inter tortious inter- estoppel doctrine, a non-signatory-to-an- agreement, ference with distribution arbitration-agreement-defendant can nev claiming that such interference occurred ertheless arbitration sig McConaughey’s between signing with natory-plaintiff. Creative Artists the movie’s limited In the agreement, distribution distribution. In this Ultra regard, Defendants Muchos, City, River allegedly pressured TriStar TriStar to limit the they release because viewed it im- any dispute or controversy relating proper exploitation of McConaughey’s suc- any of the matters referred to in cess post-acting the movie. (d)(i),(ii), (iii), above, clauses shall be After decided the action was a Renb-A-Judge, mutually removed to federal (or, court on the selected diversity parties basis they citizen- if can- Defendants, ship, although agree, by non-signatories Presiding Judge of the Court) to the agreement, distribution Angeles moved to Los Superior appointed compel arbitration under the agreement. accordance with California Code of The same district court permitted that had Civil Procedure sitting Section with- the voluntary dismissal of Grigson’s first out a jury, Angeles Los County Cali- County Bldg. Corp., Sch. submit to Clark hereby fornia, the Parties Cir.1981). (7th 836, 841 n. 9 court. of such jurisdiction that this agree this action The has taken The Eleventh Circuit arbitration, equivalent procedure un estoppel in applying equitable lead Federal subject which would also intertwined-claims basis. See der The Act, seq. § 1 et 9 U.S.C. Arbitration Triangle Planning & Dev. Co. v. McBro provi- referenced clauses Co., 741 F.2d 342 Elec. Constr. Cir. sion concern 1984). test, rejects the narrow of this (i) interpretation validity and by Appellants, see Sun urged strictures (ii) by the performance kist, 757-58, nicely by is framed 10 F.3d at respective obligations of their Parties Corp. circuit MS Dealer Serv. (iii) hereunder, causes of all other *4 (11th Franklin, Cir. 177 F.3d (whether in contract or sounding action 1999): tort) to this relating arising out or Existing case demonstrates that law Agreement.... nonsignatory a estoppel equitable allows compensation the owners seek Because in two different compel arbitration Grig- agreement, the distribution through First, estoppel equitable circumstances. a benefi- that he is third son admits signatory when the vnitten applies that, there- agreement; that ciary of containing an arbitration agreement fore, signatory- as are required, he is rely on the terms clause must with TriStar all to arbitrate producers, asserting agreement its written Ap- agreement. that concerning disputes nonsignatory. When against the claims however, contend, they are pellants claims signatory’s of a each Defendants, arbitrate required to pre- reference to or nonsignatory makes to the distri- they are not because written existence of the sumes the because, in the al- agreement; and bution claims signatory’s arise agreement, fall within ternative, do not Defendants to the written directly relate out of and quite limited view as the Appellants what appropri- and arbitration is agreement, estoppel equitable application for bases Second, equitable application ate. special re- either a compel arbitration: signato- when the estoppel is warranted lationship to the distribution containing an arbitra- contract ry to the out the carrying a role in signatories, allegations sub- clause raises Artists obligations. Creative agreement’s concerted interdependent and stantially that, because counter McConaughey nonsignatory both the misconduct inter- is charged-tortious interference signatories to the and one or more of distribution with the twined pro- the arbitration Otherwise contract. entitled, through application of they are signatories two between the ceedings compel arbitration. estoppel, equitable meaningless be rendered would for impression an issue of first This is policy favor of federal have, in a few circuits our circuit. Other thwarted. effectively to a instances, non-signatory allowed (Internal marks quotation citations and to com with an arbitration added.) omitted; emphasis equitable estoppel under pel arbitration intertwined-claims agree with the inter We action is including when the theory, Circuit. Eleventh formulated with, that con test upon, dependent twined course, facts. case, turns on its Drinks, Inc. v. Each E.g., tract. Sunkist Soft much more estoppel equitable Growers, 757 Such Sunkist presents the case denied, applicable when (11th readily Cir.1993), 513 U.S. cert. by the (1994); advanced independent bases 190, 130 L.Ed.2d 123 both 115 S.Ct. the inter- applying Co., Eleventh Circuit Masonry Inc. Greater Hughes 947; twined-claims doctrine. That is the Corp., situa- Hughes F.3d at Masonry linchpin equitable tion here. The es- 659 F.2d at 838-39. Again, to allow toppel equity For the case at such positions inconsistent would be ineq- —fairness. hand, uitable, apply this say intertwined-claims the least. fly arbitration would basis to Moreover, noted, it would be fairness. face of especially inequitable where, here, above-quoted statement For the from signatory non-defendant is charged with Corp. Dealer Serv. es- interdependent and concerted misconduct applied in order to fulfill toppel is federal with a non-signatory defendant. In such pro-arbitration policy, Eleventh Circuit instances, essence, signatory, be quoted from our court’s decision in Sam party, loss, comes a with resulting inter Eteco, Import Son Co. v. S.A. Reisfeld alia, of time and money because its Cir.1976), which required participation in the proceeding. used an intertwined-claims rationale for Concomitantly, detrimental reliance staying judicial proceedings against two that signatory cannot be denied: it and defendants, third, to a with links pending signatory-plaintiff had to arbi plaintiff. arbitration with Unlike third- tration in lieu of litigation (generally far defendant, the other two were not signato- costly more in terms of time expense); *5 ries to the agreement arbitration with but, plaintiff is seeking to avoid that held, plaintiff. Our court accordingly, that agreement by bringing the against action the district court had stay “discretion” to non-signatory charged acting in con judicial proceedings as to all three cert with that signatory. non-defendant defendants, noted, even though, as two course, Of detrimental reliance is one of were not to the agree- arbitration the elements for the application usual charges ment: “[t]he these two equitable estoppel. E.g., In re Coastal defendants were based on the opera- same Plains, 197, Cir.1999), 179 F.3d tive facts and inherently were inseparable — denied, U.S.-, cert. 936, 120 S.Ct. against” third-defendant, from the claims (2000). 145 L.Ed.2d 814 signatory agreement. to the Id. Accord- Accordingly, whether to utilize ingly, our court concluded that the district equitable estoppel in this fashion is within court had not abused its discretion. discretion; district court’s we review Although not apply equita- does Reisfeld to only determine whether it has been se, estoppel per ble its ratio decidendi E.g., abused. Scholle Corp. v. Blackhawk comports application with that for of that Molding doctrine to allow a defendant non-signato- (Fed.Cir.1998); Babbitt, Hoefler ry agreement to an arbitration compel (9th Cir.), denied, cert. 525 U.S. arbitration with a plaintiff-signatory. (1998). S.Ct. L.Ed.2d 55 See short, although arbitration is a matter of Plains, Inc., In re Coastal 179 F.3d at 205 cannot, general, contract and in be re- (judicial estoppel). To constitute an abuse for a matter quired involving an arbitra- discretion, the district court’s decision agreement non-signatory, signatory must be premised either application on an cannot, in agreement that those instanc- erroneous, of the law that is or on an es in described MS Dealer Corp., Serv. assessment of the evidence that clearly is cannot, “have it it ways”: both on the one erroneous. hand, seek to non-signatory hold the liable pursuant to imposed by duties agree- The district court did not abuse ment, which contains an provi- arbitration its discretion concluding “that Plaintiffs’ sion, but, hand, deny on the other arbitra- claims are so depen intertwined with and tion’s applicability because the defendant dent upon Agreement the Distribution is a non-signatory. Dealer Serv. agreement within the Dis- and distribut- exploiting, promoting, in ef- given Agreement tribution added.) (Emphasis ing” movie. compelled is This conclusion fect”. (the operative complaint comparing foregoing, is As obvious the motion purposes of facts concluded, allega- these the district arbitration) agree- distribution with the with, and are intertwined and claims tions is (an This complaint). exhibit ment upon, distribution dependent with but amply demonstrated quickly relying on Appellants In addition ment. examples. a few asserting in agreement of the the terms are claims, and Defendants TriStar not the distribution The and concert- interdependent charged with tortious interfer- for which only misconduct. ed Artists is also Creative is claimed. ence with McCo- in such interference describ- charged agreement, The distribution for the movie two movie, Zellweger arid actor’s contract lists naughey’s ing he is (another it; complaint); McConaughey exhibit “starring” others that contract. the movie are charged rights with breach All not so listed. required he was things, TriStar; and, making to it Among subject other given to “his use of con- to allow expenditure actor’s contract minimum required release, ... for commercial TriStar photographs theatrical name and with the nection concerning the ex- advertising purposes”. discretion has “absolute any and all [movie] of the ploitation specific require- uses complaint added.) (Emphasis media”. describing actor’s contract ment in the obviously lies provision, In that (as release defined how, for the theatrical action, Appellants heart of this agreement) mandated in the distribution judgment good TriStar that the agree[d] by the distribution faith *6 affecting any matter regarding [TriStar] distribute Chainsaw to planned had be shall [movie] the exploitation featuring posters prominently movie [Appellants] upon conclusive and binding and, McConaughey and likeness name determination, ([TriStar] make the shall reflecting fact, posters printed had discretion, whether its sole within Artists, acting for plan. Creative this given in a the [movie] to release not Tris- Columbia McConaughey, contacted territory). given in a media and/or re- it to successfully pressured tar includes, added.) “Territory” (Emphasis on the posters for the plan its treat uni- entire exceptions, “[t]he some fame McConaughey’s that grounds includes, but is verse”, “media” while in such manner exploited not be to, theaters. limited movie movie. the Chainsaw connection with noted, agree- And, the distribution charged of the interfer- part is but This inter pertains, ment’s arbitration alleges addition, complaint In ence. distribu- alia, [the “interpretation ini- delayed was theatrical release performance ... agreement, tion] Zellweger’s advantage take tially to obligations respective Parties of movie, also success in another post-movie causes of [there]under, ... all other TriStar; changed plan that the released (whether contract or sounding in action success; advantage both actors’ take to to this tort) relating out of or arising Artists, on behalf McCo- that Creative added.) (Emphasis Agreement”. not make TriStar naughey, “pressured” distribution, short, scope of the instead, and, In movie major release “discretion”, “absolute” both one, Appellants’ only a to make limited TriStar, “good and its “sole”, that, vested detriment; be- financial great of this center are at the actions, judgment” faith “TriStar of Defendants’ cause TriStar is things, Among other dispute. good judgment exercise its faith failed possibilities movie]", charged with, [the nancial as a result of the claimed ("pressure"), using goes saying interference its then advised: "It without "good judgment". Although making [TriStar] faith not sued has absolute discretion in (an attempt those determinations but this does not obvious to make an end-run clause, change my obligation my around the arbitration as discussed investors to infra), see that those decisions are based on what TriStar nevertheless will be in- extensively-and, doubt, quite (Emphasis added.) volved no is best for this film". expensively-in dispute, including promptly this When TriStar moved performed properly arbitration, whether it under the the owners and cross-claim agreement. producers quickly distribution folded their tents. The action, filed in district court on 9 June stated, foregoing As are but a few prejudice examples intertwining was dismissed without on of the of the claims September agreement, including with the distribution the claimed concerted actions Defen- The action at hand was filed two and (non-signatories), TriStar, sig- dants later, one-half months on 22 December natory. possible damages might How time, 1997. This it was filed in state court. computed, light of the detailed "ac- longer TriStar was no a defendant. Its counting" provisions of the earlier-charged failure to use its contractu- example. hut another ally required "good judgment" faith quite Grigsbn's alleged by "pres- This action is similar to now to have been caused action-against TriStar, defendants, first discussed be- sure" from the new Creative quickly instituting voluntary McConaughey. reality, low. After Artists and In action, essence, dismissal of that when TriStar two actions are the same. compel arbitration, Appellants moved to brought TriStar is a defendant. Each action turns against McConaughey meaning this one on the of the distribution Artists, non-signatories intricate-provi- and Creative to ment's numerous-often agreement, for, alia, the distribution inter sions, unique which are to the film indus- interfering agreement. try, with that As not- and on TriStar's conduct in relation to ed, quite obvious, blatant, agreement. this is a if not attempt bypass agreement's arbitra- Arguably, posi tion clause. the inconsistent by Grigson producers *7 tions and the two Grigson's action, against In first the two bump up on, the first and second actions if producers (who joined Grigson in this sec- satisfy, prerequisites indeed do not the action) TriStar, Grigson charged ond judicial estoppel. See In re Coastal TriStar, alleged as it is also to have done Plains, (purpose 179 F.3d at 205-07 of hand, "breach[ing] in the action at with the prevent parties "playing doctrine is to fast `good judgment' faith . of the courts"). and loose with the Judicial es- agreement". distribution In the alterna- toppel raised; but, is not because that tive, charged TriStar was with fraud. protects judicial system,Id., doctrine the And, producers, charged failing the to apply sponte we can it sua in certain in exploit the movie in breach of their con- stances. See United States For Use of owners, tract with the cross-claimed Am. Bank v. C.I.T. Constr. against TriStar. One of the exhibits to the 253, (5th Cir.1991). 258 complaint January is a 7 1997 letter to persons owning any event, comparison TriStar from one of the of the two rights movie, demonstrates, quite vividly, why to the in which he stated that actions similarly-situated person court, presided he and another the district over both (who movie) actions, had also directed the were did not abuse its discretion in "very eager being compelling second, by [was] to know what arbitration in the fully explore applying equitable estoppel [TriStar] done the fi- doctrine

531 circuit, I re- this precedents and the are The claims situations. for such crafted dissent. spectfully upon, the with, dependent intertwined including, but not Kap distribution v. Chicago, Inc. Options In First (non-signatories) to, 1920, Defendants 938, 131 lan, limited 115 U.S. S.Ct. 514 be- (non-defendant signatory) (1995), Court Supreme and TriStar 985 L.Ed.2d and con- interdependent arbitra contractual ing charged important reaffirmed (1) action is Indeed, this Governs Contract principles: misconduct. certed Liti- Is Arbitrable Or Dispute for when A situation Whether quintessential a matter simply is gahle: “[AJrbitration applied. should be doctrine way it is parties; between only dis those disputes-but those resolve III. agreed to sub have parties putes-that reasons, judgment foregoing For who has “[A] mit to arbitration.”2 is normally have will to arbitrate agreed not decision about a court’s right

AFFIRMED. (2) State-Law disputel]”3 of its merits Standing And Principles Govern Contract dissenting: DENNIS, Judge, Circuit deciding To Arbitrate: “When Obligation estop- can be called anything “[NJearly to arbitrate a agreed whether does judge or a lawyer pel. When ... generally ... courts matter certain his name to give what other know principles ordinary state-law apply way, in a certain' a case to decide decision of contracts.”4 govern the formation 1 The trou- estoppel.” is an says there he (3) Parity Contractual Enforcement: Of estoppel use. of the that kind ble with in this area all, objective the basic “After making majority in this case by the quickest label disputes to resolve seriously will it precedent circuit par no matter what possible, manner the basic upholding court this wishes,5 hinder ensure commer ties’ but right to has a con person other that a like principle agreements, cial arbitration ‘ of a dis- according merits about “are decision tracts enforced court’s ’6 it to intentions terms,” according submit he has unless pute (4) Re Standard decision majority parties[.J”7 Because arbitration. a district ... “[RJeview recent view: Supreme Court’s with the conflicts award confirming decision principle, of that affirmations emphatic Univ., 489 Junior Williston, Leland Trustees Pro- 4 ALI of Samuel Statement Stanford 1. 1248, 475-76, 468, 103 S.Ct. (1926) 109 (quoted by 4 Rich- U.S. ceedings 89-90 8.5, Thomas, (1989); § Perry at A. L.Ed.2d Lord, on Contracts Williston ard ed.1992)) [hereinafter 107 S.Ct. n. 492-93 U.S. Williston]. (1987); M. 1 Gabriel L.Ed.2d Wilner, 943, 115 S.Ct. Options, 514 U.S. First 4:04, (Rev. at 15 Arbitration Domke Comm Technologies, v. Com Inc. (citing AT&T *8 1993)) [hereinafter Ed. Domke]. 643, 649, Workers, 106 475 U.S. munications (1986); 1415, Mastro 648 L.Ed.2d 89 S.Ct. 947, Wit (citing Dean S.Ct. 1920 Id. at 5. 115 Inc., Hutton, 514 Lehman v. Shearson buono 213, 219- Byrd, U.S. Reynolds, v. 470 ter 20, Inc. 1212, 9, 52, 131 115 and n. S.Ct. 57-58 U.S. (1985)). 1238, 158 84 L.Ed.2d 105 S.Ct. (1995); Terminix Allied-Bruce 76 L.Ed.2d 265, 271, Dobson, 115 S.Ct. U.S. 513 v. Cos. 834, 54, (1995); Mastrobuono, Mo U.S. at 115 Mitsubishi (citing L.Ed.2d 753 514 130 Id. 6. Inc., Sciences, Chrysler-Plymouth, Corp. v. Soler (quoting tors Volt S.Ct. 1212 Information 3346, 614, 625-26, 87 1248)). 105 S.Ct. 479, 473 U.S. 109 S.Ct. U.S. at 489 (1985)). 444 L.Ed.2d Motors, U.S. at 473 (citing Id. Mitsubishi 7. 942, 1920. S.Ct. Id. at 115 3. Allied-Bruce, 3346; U.S. 626, 513 S.Ct. 105 834). 271, 944, (citing at 115 S.Ct. Mastrobuo S.Ct. 1920 115 1212; 9, no, S.Ct. & n. 115 U.S. at 62-63 514 Sciences, v. Board Inc. Volt Information 532

on ground that the agreed Id.; or contract. Options, First 514 U.S. arbitration, submit dispute 944, 115 should at S.Ct. 1920. proceed review of any like other district Courts recognized have a number of the finding agreement decision an be- arising ories out of common law principles parties, e.g., tween accepting findings of of contract and agency law under which fact that not ‘clearly are erroneous’ but non-signatories may be bound to the arbi deciding (In- questions lawof de novo.”8 agreements tration of others. For exam footnotes). ternal placed citations 1) ple, 2) reference; incorporation by as Miller, Air Line Pilots Ass’n v. 523 U.S. 3) sumption conduct; 4) agency; veil- 866, 1761, 118 S.Ct. 140 L.Ed.2d 1070 5) piercing/alter ego; and estoppel. See (1998), strongly confirmed principles these Thomson-CSF, S.A. v. American Arbitra in holding that non-union pilots challeng Ass’n, 773, (2d tion 64 F.3d 776-80 Cir. ing the agency fee collected by the union 1995) (citing examples Matter Arbi could not be required to arbitrate their tration Between Keystone Shipping Co. & challenges they because agreed had not Co., Texport 28, Oil 782 F.Supp. 31 do “Ordinarily, so: ‘arbitration is a matter (S.D.N.Y.1992)(incorporation by bill of lad of contract and a required cannot be ing); Lines, Gvozdenovic v. United Air to submit to arbitration any dispute which Inc., 1100, (2d 933 F.2d 1105 Cir.)(assump ” he has not agreed so to submit.’ Id. at by conduct), denied, 910, cert. 502 U.S. 876, 118 1761 (citing S.Ct. Steelworkers v. 305, 112 S.Ct. (1991); 116 L.Ed.2d 248 Co., Warrior & 574, Nav. 363 U.S. Gulf Cayman Interbras Co. v. Victory Orient 582, 1347, 80 S.Ct. 4 (1960)); L.Ed.2d 1409 Co., S.A., Shipping (2d 663 F.2d 6-7 see also Options, First 514 U.S. at Cir.1981) (agency); Carte (Sing Blanche (“a S.Ct. 1920 party who has not Pte., apore) Ltd. v. Diners Club Int’l. arbitrate normally will a right have to a (2d 2 F.3d 26 Cir.1993)(veil-piercing); court’s decision about the merits of its Wm. Passalacqua Builders, Inc. v. Res dispute”).

. S., Inc., nick Developers 933 F.2d general rule, As a an arbitration clause (2d Cir.1991)(same); 138-39 Deloitte No cannot be invoked a non-party to the raudit Sells, v. Deloitte A/S Haskins contract, arbitration and only parties to U.S., (2d Cir.1993)(non- agreement arbitration are bound to signatory bound to arbitration contract arbitrate. See Gabriel M. WilneR, estoppel)). 10:00, 1at Domiíe Comm Arbitration (Rev. Ed.1993) alia, (citing, theory, inter Dayhoff under ordinary state-law Inc. (3d H.J. Heinz principles F.3d 1287 and promissory es- Cir.1996); Gingiss Bormet, toppel, Int’l v. a non-party to a contract contain- (7th Cir.1995); ing United States v. Har arbitration may invoke the Builders, Inc., kins F.3d Cir. clause and compel a signatory party to 1995)) [hereinafter Domke]. The federal arbitrate when the signatory reasonably policy favoring arbitration strong, but it expected that, have because his alone cannot authorize a non-party to in conduct, statements or the non-signatory voke arbitration or require non-signatory would be rely induced to justifiably on the Nonetheless, arbitrate. See id. a non- contract and injured would be thereby if signatory may be bound by or acquire signatory refused recognize the non- rights under an un signatory’s rights or entitlements with re- *9 der ordinary state-law principles of agency spect However, to the contract.9 there 947-48, 8. Options, First See, Williston, 514 U.S. at 115 e.g., S.Ct. supra 1, 9. §§ note 8.3 and 8.4; 1920 (citing Kaplan Options v. First Chica Of Contracts (Second) Restatement of Inc., go, 90(1) ("A (3d § 1994)). promise promisor 1509 Cir. which the reasonably expect to induce action or

533 to arbi- signatory a compel standing to a in which cases few, any, if been have justiciable a trate, litigate, rather than invoked an successfully has non-signatory if, in addi- non-signatory, against the claim signato party a clause arbitration factors, ais there significant other tion to ordinary equitable under the contract ry to and signatory relationship between a close In principles. estoppel promissory or signatory’s and the entities non-signatory eases, non-sig a arbitration relatively few is inter- non-signatory against the claim has agreement arbitration natory to dispute under an arbitrable a twined under arbitration allowed been However, in those facts the contract. peculiar when the theory estoppel spurious “close” relationships which made cases interlocking circumstances or integrated viz., “intertwined,” dis- claims con related relationships, parties’ formation knowing voluntary and putants’ responsibili assigned contractually tracts, under) interlocking or (and performance allow conduct, would ties, disputes contracts, for bargained their integrated non-signa signatory inference perfor- promises exchanges and/or implied agreement by an have tory parties others, themselves between mances by the reciprocally bound in fact become parent- and, Ryan, J.J. in Sunkist which contract or the arbitration relationship, indicate subsidiary corporate Corp. Dealer Service See part. it is a in fact implied of an Cir.1999); existence (11th Franklin, 942 v. or ordinary equitable than an rather ment Drinks, Grow Inc. v. Sunkist Sunkist Soft estoppel. (11th Cir.), promissory cert. Inc., ers, F.3d 753 10 869, 115 S.Ct. denied, U.S. 513 ‘found- fact is implied in agreement “An Sons, (1994); Ryan & J.J. which, 123 L.Ed.2d minds, al- meeting of a ed upon S.A., Textile, 863 Rhone Poulenc Inc. v. con- express in an though not embodied Planning Cir.1988); (4th McBro 315 F.2d fact, inferred, from conduct a tract, as Triangle Elec. v. Development Co. of the light shoyving, (11th Cir. Co., F.2d 342 741 Const. un- circumstances, tacit surrounding ” v. Inc. Great Masonry 1984); Hughes Hercules, Inc. v. United derstanding.’ 659 Corp., Bldg. County School er Clark 417, 424, 116 S.Ct. States, U.S. 516 Cir.1981); 1 Domke F.2d 836 (1996) (quoting Baltimore cf. 47 L.Ed.2d 10:07, § at 18-20. States, 261 U.S. United R. Co. v. & Ohio 43 S.Ct. 592, 597, 58 Ct.Cl. however, facts and truth, the bases (1923)).10 equi- The doctrine L.Ed. in those the courts upon reasoning a “that provides estoppel generally table to an signatory a cases ordered existing fact past or representation awith dispute a to arbitrate agreement it reason- upon who relies party made to aof earmarks have non-signatory by the denied be may not thereafter ably implied an foundation permit- if representation making the party or ordinary an than fact rather injury or result would denial ting the opin- In the courts’ estoppel. promissory who relies.”11 so damage to have is said non-signatory ions may be stated promise indicates that .... promisee or part of the on the forbearance partly wholly or may inferred be induce such which does words person and third is, in by conduct injustice binding if contract conduct .... forbearance action or .... the essence, of the only by enforcement in fact implied avoided can be cases, breach remedy granted Restatement, numerous promise. The well as the requires.”); justice may abundantly limited clear.” concept cf. make 10.07, at § 8.4. 24-25; §§ 8.3 and 4 Williston Domke see also 1.5, (citing, § at 18-20 1 Williston 10. See 8.3, (citing, inter at 28-30 11. 4 Williston alia, S.W. 397 Ingram, 275 Wood v. inter (Tex. Samuels, alia, S.W.2d 490 Morton w.o.j.)), and dism (Tex.Civ.App.1924)(writ n.r.e.)). Civ.App.1954,writref'd (Second)[Of Con stating: "The Restatement a; a] & comment 4 §§ & comment tracts *10 widely accepted general statement of struction contractor entered a contract promissory estoppel, which developed with the owner of the proposed facility against the backdrop of estoppel, containing an arbitration clause. The by is set forth Of same contract designated a non-signatory (Second) Restatement 90(1): § promise “A which as construction manager ContRacts out- promisor should reasonably expect to in- lined the owner, duties of construction duce action or forbearance on part contractor, of and, construction manager, in the promisee or a person third case, architect, one respect with does induce such action or forbearance is construction project. The construction binding if injustice can be only avoided by managers in both cases signed had of promise. enforcement The remedy agreement owner-contractor but had granted for breach may jus- be limited as signed separate contracts simi- containing requires.” tice In determining whether lar arbitration clauses with either own- person is by bound either an agreement er or the owner’s By perform- architect. implied in or by fact the ordinary princi- ing accepting duties and benefits under the ples of equitable or promissory estoppel, it interlocking integrated system con- kept be in mind “[j]ust struction contracts and relationships the may assent be by manifested words or impliedly contractors agreed to be bound conduct, other sometimes including silence, disputes arbitrate with the construction so intention to promise make a may managers concerning performance manifested in language or implication the managers’ duties assigned by per- circumstances, from other including course formed under the owner-contractor of dealing usage of trade or ment, course of although the managers only had performance.”12 A brief review signed the related but separate contract McBro, Hughes, Sunkist and MS Dealer documents between themselves and the ample shows evidence of assents and owner or its architect. promises may have more appropriate- In Sunkist a non-signatory parent cor-

ly warranted basing those decisions on poration granted was standing to arbitrate agreements implied fact, or perhaps on disputes arising out of the performance of ordinary promissory estoppel, rather than a contract containing an arbitration clause upon the highly abstract new theory of an between the parent’s wholly owned subsid- “estoppel” loosely based on “close” rela- iary and the other signatory to the con- tionships, claims, “intertwined” and other tract. The court relied only on the variable factors. close relationships the entities and the facts McBro and Hughes were close resemblance arbitrable highly suggestive of an implied in fact litigable claims but also on a form of cor- “ between the to be mu- porate veil piercing: ‘When the charges tually bound the contract containing the parent company and its subsid- arbitration clause.13 In each case a con- iary are based on the same facts and are and performing under that contract. Thus (Second) 12. Restatement Of Contracts 4,comment § a. just court could put well have the result terms consent. That say, Hospital is to 13. See II Ian R. Macneil al„ et Federal Arbitra- and McBro could have reasonably understood (Supp.1999) 18.2.3 (analyzing the Law, Triangle’s contracting hospital with the Eleventh Circuit cases of Planning McBro knowledge terms of Hospital- Development Inc., Triangle Co. v. Elec. Const. McBro Triangle contract that consenting (11th Cir.1984) 741 F.2d 342 and ac- to be bound the arbitration clause. The knowledging opinion's heavy reliance on decision probably most useful simply Hughes Masonry Co. v. County Greater Clark broadening consent, conceptions out Bldg. Corp., Sch. rather Cir.1981), 659 F.2d 836 than in introducing any truly separate the editors conclude: doc- “It should be noted that trine.”). estopping the action Triangle was apparently contracting its Hospital place in the first *11 arbitrate, to Franklin compel to refer court may a court inseparable, inherently arbi- in an and resulted granted was which to arbitration parent the against claims of Burke and in favor award formally a tration parent the though even ” Burke. against the suit of state dismissal Sunkist, 10 the arbitration.’ to federal dis- in Franklin sued Dealer MS F.2d Ryan, 863 J.J. (quoting at F.3d her arbitrate her to compel to trict in J.J. 320-21). Circuit Fourth The appeals The court of it. against claims piercing veil foregoing on the Ryan relied of court’s dismissal district the reversed and opinion from its quoted language de- the granted and petition Dealer’s MS same that the passing noted in merely and action stay the to motion fendants’ theory of under reached been result had arbitration. J.J. See in McBro. estoppel that court, concluding F.2d at Dealer Ryan, The MS estopped equitably was Franklin agreed Dealer, Franklin Sharon In MS Dealer, stat- with MS avoiding arbitration Burke Motors from Jim a car purchase to ed: with Burke. order buyer’s signed and Franklin’s to note that important It is refer- incorporated order buyer’s The charge the pay obligation $990.00 between contract installment ence a retail that and Buyers Order under arose that provided which and Burke Franklin Dealer MS alleges that specifically she for charged being $990.00 Franklin Burke Jim with hand-in-hand worked Dealer MS which under contract service this Corporation Credit Chrysler and designat- (apparently Corporation Service “allega- Her scheme. fraudulent alleged order) agreed buyer’s ed name collusive be- pre-arranged, such of (The tions car. Franklin’s for services provide claims [her] that ] havior establish! - MS that suggests opinion appeal’s court of intimately are] Dealer [MS written contract oral or Dealer entered obli- with the intertwined and founded to provide or both or Franklin with Burke [Buyers Order].” by the imposed gations car.) buyer’s Franklin’s services Boyd (quoting Dealer, at 948 an arbitration MS contained order F.Supp. con- Legend, and disputes “all v. Homes provided of (M.D.Ala.1997)). be- and nature every kind of troversies Motors, Inc. Burke Jim buyer and tween McBro, circum- Hughes and As with in connection of or arising out con- integrated and interlocking stances be resolved will this vehicle purchase that both inference allow would tracts Also, passage, in another arbitration.” had Dealer MS and Franklin disputes “[a]ll buyer’s order stated aris- them between dispute any arbitrate nature and every kind and controversies Franklin’s connected out of or ing arising out hereto Indeed, between the automobile. purchase shall contract” with this inor connection reason- order contract buyer’s ambiguous Dealer MS arbitration. submitted include construed could be ably in- or the order buyer’s Dealer, sign did hereto.” “parties one contract. stallment have reasonably should Further, Franklin pro- agreed to Dealer that MS in understood MS Dealer Burke and sued Franklin exchange for contract in the service vide im- MS Dealer claiming state court under to receive it was compensation colluded conspired properly retail install- buyer’s order Corporation, Chrysler Credit Burke her upon would call contract ment con- installment retail of the assignee forma- related dispute any arbitrate by impos- her to defraud tract, ain scheme con- service of the performance tion or charge $990.00 ing an excessive alle- Franklin’s Moreover, because tract. excess dividing the service overcharging fraudulent Burke’s gations in state a motion filed Burke amount. for the service contract was clearly an incorporating the arbitration clause and *12 dispute arising arbitrable out of and con- the contract, retail installment which incor- nected with purchase vehicle, the of the porated the service contract with MS Deal- alleged MS Dealer’s conspiracy er, collu- were all parts of the bargain of which sion with Burke in the Franklin, fraudulent over- Dealer, MS and Burke were charge part was an essential of the arbitra- aware or should have been aware before dispute ble between Franklin and Burke. they entered the agreement; that, if MS Dealer was a co-conspirator with Nevertheless, the Eleventh Circuit Burke in defrauding Franklin as she al- chose to use spurious the estoppel theory leged, her claim against MS Dealer was and, or label decision, justifying its at- part of dispute Burke, her with whom tempted to draw the case some ab- she was a co-signatory of the arbitration “equitable stract estoppel” explanatory agreement. See id. at 947-49. principles: First, equitable estoppel applies when hand, On the other the Circuit, Second the signatory to a written agreement Thomson-CSF, A-S'. v. Am. Arbitration containing an arbitration clause “must Ass’n, (2d Cir.1995), refused to rely on the terms the agree written accept short “[a]nything of requiring a full ment in asserting against [its] claims” showing of some accepted theory under the non-signatory. Drinks, Sunkist Soft agency or law” before compelling 10 F.3d at 757. each of a signato When arbitration a between signatory and a non- ry’s claims a non-signatory signatory. Id. at Thomsorir-CSF, 780. In “makes “presumes reference to” or the the court of appeals reversed the district of’ existence the written court’s order compelling a non-signatory signatory’s claims ] out of and “arisef parent corporation to arbitrate a dispute directly to agree ] the [written] relatef with a third under an arbitration ment,” and arbitration is appropriate. agreement signed by parent’s subsid Second, Id. at 758. “application equi iary corporation prior to the parent’s ac table estoppel is warranted ... when quisition of the subsidiary. The district signatory [to contract containing court had determined that the claims of the arbitration clause] raises allegations party, S, third E & did not fall within of ... substantially interdependent and any of the traditional theories for binding concerted misconduct both non- a non-signatory, but nevertheless ordered signatory and one or more signa of the Thomson, the non-signatory, to arbitrate a tories to the contract.” Boyd, 981 dispute S, with E & a applying “hybrid F.Supp. at 1433. approach” based on Thomson’s conduct in Dealer, 177 F.3d at 947. The remain- voluntarily becoming an affiliate of its sub der of MS Dealer opinion, however, in sidiary, Rediffusion, on the degree of con painstaking its analysis of the facts and trol Thomson exercised Rediffusion, over reasoning based on all the circum- and on the interrelatedness of the issues. involved, stances indicates no intention doing, so held, Second Circuit “the that the foregoing principles should ap- district court improperly extended the law plied free-standing rules of law. The of this Circuit diluted protections Eleventh Circuit concluded that Franklin afforded nonsignatories by the ‘ordinary was compelled to arbitrate her dispute principles of contract and agency.’ A non- with MS Dealer only after pointing out signatory may not be bound to arbitrate facts indicating that both actu- had except as dictated some accepted theo ally manifested their mutual ry assent to a under agency or contract law.” Id. at bargain in which they exchanged promises 780 (quoting Bros., McAllister Inc. v. A & performances with each other S Transp. (2d Motors; Jim Burke buyer’s Cir.1980))(internal that the order omitted). citation safe- approach dilutes hybrid court’s addressed The Thomson-CSF non-signatory afforded to guards seeks signatory in which situation agen- of contract ‘ordinary principles inverse of non-signatory, parent Sunkist, protect Dealer, Ryan, adequately cy’ J.J. and fails in MS pattern Nonetheless, have Thom of which the subsidiaries Hughes. companies, McBro and agreements.” the conclusion support into entered lends son-CSF of cases line Hughes-McBro at 780. *13 princi ordinary basis a lacked valid “ordi- to adherence The Circuit’s Second com for veil-piercing or estoppel ples agency” and contract nary principles with to arbitrate signatories pelling the with the Su- consistent Thomsorir-CSF Instead, as Thom non-signatories. the it example and admonition preme Court’s Deal in MS suggests, implicitly son-CSF application the Options in First to set valid only the Hughes, er, and McBro of contracts principles law ordinary state ar to signatories the compelling for basis to parties agreed whether the determine to was that non-signatories the bitrate with As mentioned certain matter. a arbitrate in the reticu knowing participation their Options instruct- above, in First the Court arrangements, transactional lated ed: thereunder, conduct performance parties the whether deciding When to they agreed inference the allowed (in- certain matter arbitrate a to agreed includ the contract mutually bound be generally courts arbitrability), cluding taking After clause. ing the arbitration discuss we qualification (though into ac McBro Sunkist, Ryan, and J.J. below) ordinary state-law apply should in Thomsoiu- count, Circuit Second the formation of the govern to inapposite principles them distinguished CSF law .The relevant state in grounds, contracts... several it on case the before the require here, would (1) example, Re- acquired Thomson when cluding: objec- explic whether the to see subsidiary, Thomson court its diffusion as the to submit the an intent under obligations tively revealed any itly disavowed arbitration, [citing arbitra to including arbitrability the issue agreement, working E of the state and & the law clause, Illinois case for Rediffusion an between (2) 777; Thomson-CSF, the workout governed 64 F.3d at S, whose law see fact the are case for Pennsylvania determinations piercing ment and “[v]eil ob- Kaplans the circum the ‘differ[ state where ] law of the specific ”, 777-78 Id. at arbitrability] case.’ each jected stances of ABv. Corp. Protein American (quoting 944, 115 S.Ct. at Options, First U.S. (2d Cir.), de cert. Volvo, F.2d omitted). (internal citations nied, 109 S.Ct. 488 U.S. suit present brought plaintiffs The dem (1988)); has not “E & S L.Ed.2d 109 McConaughey Artists against Creative the de exerted that Thomson onstrated Texas asserting a state court in a Texas necessary Rediffusion control over gree of with con- interference tort claim state veil.”, Id. corporate justify piercing princi- law Thus, ordinary state tract. (3) be es- ... 778; cannot “Thomson at formation governing of Texas ples anof the existence denying topped from to determine applied contracts signatory it is a clause which arbitrate plaintiffs whether the point no exists. At such clause because no trial The with the defendants. matter this to arbi willingness indicate did Thomson neither acknowledged that (4) court 779; “[t]he at E S.” Id. with & trate con- signatories were defendants extended improperly ... district and Columbia plaintiffs tract between this Court upon limited theories not find court did trial TriStar. The an arbitration willing enforce had entered and defendants plaintiffs district non-signatory. against a fact, express or implied promise reliance on the must be reason- (5) the tortious able, arbitrate interference with promise will be enforced Instead, claim. trial court if necessary to injustice. avoid (citing cases). that the plaintiffs determined were bound Texas by equitable estoppel to arbitrate mat- Applying the Texas state-law principles ter with defendants. appeal On governing formation of contracts and rely solely defendants also on promissory estoppel, it is evident that thé estoppel. plaintiffs compelled should not be to arbi- jurisdictions All American adopt and ap trate their tortious interference with con- ply theory of promissory estoppel tract claim with Creative Artists and grounded in section 90 of the contracts McConaughey. There was no agreement Holmes, restatements. 3 ERic Mills Cor- between parties, express these implied, 8.12, (Joseph M. ContraCts, bin on to arbitrate that dispute. None of the *14 ed.1997) ed., Perillo rev. [hereinafter Cor- requisites of section 90 of the Restatement bin], theory This an outgrowth of and (Seoonb) Of Contracts or of the Texas includes the earlier doctrine of three-prong promissory estoppel have 1 estoppel. See E. AllaN Farnsworth, been established. There is no evidence 2.19, § at 137- Farnsworth on Contracts that the plaintiffs promised the defendants (1990 40 8.11, § and Supp.1998); 3 Corbin anything, that they could any foresee reli- at 46. Recent Texas decisions cite and by defendants, ance the or that the defen- apply § the second Restatement 90. See 3 promise dants relied on a by the plaintiffs 8.12, § (citing City at 188 Beau Corbin of to defendants’ detriment.14 Constructors, mont Inc., v. Excavators & 123, 136, 870 S.W.2d (Tex.App.1993, 154 reasons, For all of these I believe that denied) writ (citing Restatement (Seoond) the majority has fallen into a number of Traco, 90); serious, Inc. v. Arrow of ContraCts legal harmful errors in present the Co., Inc., (Tex. Glass 814 S.W.2d case. The amorphous, misnamed estoppel App.1991, denied); writ First State Dealer, Bank Sunkist, theories of McBro, MS City Archer v. Schwarz Hughes S.W.2d and conflict with and endanger the n.r.e.)). 453 (Tex.App.1985,writ ref d The basic principles that the Supreme Court three-prong current promissory Texas es- has held must be adhered to in compelling toppel however, requisites, were person fashioned a to submit to commercial arbitra- from the tion, (1) first Restatement viz., in the 1960s: person a cannot be required (1) (2) a promise, of foreseeability reliance to submit to any arbitration dispute which by (3) promisor, the substantial reli (2) he has submit, not so to a ance promisee the to its person detriment. who has not agreed to arbitrate will Fischer, (citing, e.g., English v. 660 S.W.2d normally a right have to a court’s decision (Tex.1983); v. Randle NCNB Tex about (3) merits of its dispute, and Bank, as Nat’l 812 S.W.2d (Tex.App. ordinary state-law principles governing the 1991); Aubrey Workman, v. W.O. 384 formation of contracts should applied S.W.2d 395 (Tex.Civ.App.1964, writ when deciding whether the parties agreed n.r.e.)). ref'd (4) Later decisions added: to arbitrate a certain matter. court is This apparently The district court assignor's relied on rights and duties under a contract Sunkist, decisions, McBro and two Texas Car assumes and is bound the arbitration lin v. 3V (Tex.App.— S.W.2d 291 assignee contract when as- 1996, writ) [14th Houston Dist.] no and Fridl serts a breach of contract claim under the Cook, (Tex.App. 908 S.W.2d 507 Paso — El other signatory w.o.j.). writ dism’d These decisions are the contract. Fridl is irrelevant because its present not relevant to the case. Sunkist and holding main simply was that a breach of inapposite McBro are for the reasons stated contract claim based containing on contract inapt earlier. Carlin is its because essential an subject arbitration clause is to arbitration. holding simply assignee that an of an an unleashes indetermi- theory, planatory deci- appeals’ of by the court bound application in its capable precedent line of cases nate Hughes-McBro sions parties’ disputes sweeping follow countless them. attempt and should without even semblance into arbitration at- erroneously However, majority ordinary state- agreement under of their and com- Dealer MS to follow tempts contracts, agency eq- principles law Deal- mistaking MS error pounds its estoppel. uitable “equitable explanatory abstract highly er’s Cir- the Eleventh principles estoppel” applica majority also The misstates Conse- ratio decidendi. complete cuit’s review, the error although ble standard signifi- overlooks majority quently, any upon had effect its may not have upon facts material cance of the Options, Supreme In First decision. actually based. Dealer decision MS held that the standard Court uncomplicated present contrast reviewing a apply should when appeals integrated case, an Dealer involved refuses to va court decision that district an- agreements interlocking network award or confirms arbitration cate containing an buyer’s order in a chored findings by accepting proceed signatories agreement. clearly erroneous but are not fact order, and Jim Franklin buyer’s de novo. See of law deciding questions Motors, non-signatory of Burke S.Ct. First 514 U.S. Options, Dealer, documents, MS struck those two majority ... believe *15 1920. “We agreed to person in which each bargain of saying in that courts right Circuits performance of promises exchange ordinary, special, appeals apply (Second) of the others. See Restatement court reviewing district when standards par- § of three 17. Each Contracts arbitration awards. upholding decisions bar- assent manifested mutual ties to make it is thing, undesirable For one by inten- promises exchanges gain or by proliferating complicated the law more knew or she he conduct tional good reasons.” without review standards parties the other reason to know or had in Options First followed court This See infer such would assent. Restate- Equities Pamela Corp. v. Motors General 18, §§ 19. (Seoond) of Contracts ment Cir.1998) (5th 242, and F.3d 246 Corp., 146 including Franklin parties, Each of the Assocs., Inc. v. Demech F.C. Schaffer know reason to knew or had particular, (5th 40, Contractors, Ltd., 43 101 F.3d arbi- contained an buyer’s order that the Cir.1996). the standard Accordingly, incorporated by and agreement tration in this case be same review should installment the retail reference a district court’s reviewing are which we Thus, contract. the vehicular service sub either to compels decision can be viewed Dealer rationale of MS (that con they to arbitration dispute mit a even facts and by its limited material submit) agreed to so or they have not tend im- agreement of an enforcement as an a court’s decision right to abandon if MS Dealer Consequently, in fact. plied dispute. Previous merits of the about the implied merely enforces and others have this circuit decisions of principles fact, it does no violence or denial of the grant review said that we forced to submit cannot that a de novo. See compel arbitration motion to that he has dispute Inc., 252, F.3d 257 Investacorp, 89 v.Webb according ap- so submit agreed to v. (5th Cir.1996); Corp. Tools Snap-On principles state-law ordinary plication (5th Cir.1994); 1261, Mason, 1264 18 F.3d of contracts. the formation govern Am., 72 Co. Armijo v. Prudential Ins. hand, by disre- majority, on other (10th Cir.1995); Kidd v. F.3d un- material facts important garding Soc’y Assurance Equitable Dealer; by adopting derlying Life (11th 516, States, 518 Cir. F.3d ex- United skeletal that decision’s only applying 1994); Sunkist, 756; 10 F.3d at Britton v. In the Matter of: Consolidated Lewis Co-op. Banking Group, F.3d Corp., Investment Debtor. (9th Cir.1993); Indus., Trap Rock Inc. v. Local Int’l Operating Union Engi Co., Appellee- Ford Motor Credit AFL-CIO, neers, (3d Appellant, Cross Cir.1992); MidAmerica Federal Sav. Loan Ass’n v. Ex Shearson/American press, Cir. Marguerite Hawking; Lewis Arthur 1989). Paradoxically, majority opinion Lewis, III; Cullen Alexis Voorhies states that we review to only determine Lewis; Patricia Ann Williams, Lewis whether the district court has abused its Appellees, Cross in applying equitable discretion estoppel, but application that an of law that is erro neous, or an assessment of the evidence erroneous, clearly constitutes an Consolidated Corp., Lewis Investment abuse of discretion. These contradictory Appellant-Cross Appellee. only statements the standard can lead to my opinion, confusion. In abuse of discre No. 98-30991. belong does not in our standard for

reviewing whether ordinary state-law United States Court of Appeals, requisites promissory es- Fifth Circuit. met, toppel have been but the district may well have discretion limiting 4,May the remedy justice requires. See Re 90(1). (Second) statement of ContRacts

Marguerite HAWKING, Lewis Plaintiff,

v. CO.; FORD MOTOR CREDIT al., et Defendants. Fidelity Bank, National Plaintiff,

v. Lewis Corp., Consolidated Investment Defendant-Counter Claimant-

Appellant-Cross Appellee, Marguerite Hawking; Lewis Arthur Lewis, III;

Cullen Alexis Voorhies Lewis; Patricia Ann Williams, Lewis

Defendants-Counter Claimants-Cross Appellees,

Ford Motor Credit Defendant-Counter dant-Appellee-C Defen Appellant. ross