Matthew Warciak v. Subway Restaurants, Incorporat
Opinion
Should courts apply federal or state law to decide whether a contract’s arbitration clause binds a non-signatory? In
Scheurer v. Fromm Family Foods LLC,
we held that courts should apply state law.
I. Background
Matthew Warciak’s mother has a T-Mobile cell phone plan. In 2006, she signed an agreement with T-Mobile to begin her service, Then in 2012, she signed another agreement when she purchased a new phone. These agreements each contain arbitration clauses and govern the relationship between Warciak’s mother and T-Mo *872 bile. Although Warciak himself uses a phone on his mother’s plan and is an authorized user who can make changes to the account, he never signed either agreement nor is he otherwise a party to them.
In 2016, Warciak received a spam text message promoting a Subway sandwich. He sued Subway under federal and state consumer protection statutes. Subway moved to compel arbitration. But because Subway and Warciak had never agreed to arbitrate—in fact they had never agreed to anything—Subway based its motion on the agreements between T-Mobile and Warc-iak’s mother.
In the district court, the parties contested whether Warciak could be compelled to arbitrate and whether federal or state law should resolve the dispute. Subway argued that federal estoppel law required Warciak to arbitrate under the arbitration clauses contained in his mother’s contracts with T-Mobile. Warciak countered that Illinois es-toppel law should apply. And under Illinois law, he argued, he is not bound by his mother’s contracts.
The district court applied federal law and granted Subway’s motion to .compel arbitration. Warciak appealed.
II. Analysis
The material facts underlying this appeal are undisputed, thus we review the district court’s ruling
de novo. Scheurer,
Generally, a court cannot compel a party to arbitrate a dispute unless that party has agreed to do so.
See United Steelworkers v. Warrior & Gulf Nav. Co.,
Here, Warciak and Subway have not agreed to arbitrate their disputes. Yet Subway argues that promissory estoppel binds Warciak to his mother’s agreements with T-Mobile.
We recently clarified that—even in the arbitration context—the court must apply traditional state promissory estoppel principles to decide whether a non-party should be bound by the terms of another’s contract.
See Scheurer,
Looking to Illinois law, it‘is clear that Subway cannot rely on estoppel to enforce T-Mobile’s arbitration agreement against Warciak. In Illinois, “[a] claim of equitable estoppel exists where a person, by his or her statements or conduct, induces a second person to rely, to his or her detriment, on the statements or conduct of the first person.”
Ervin v. Nokia, Inc.,
*873 III. Conclusion
Subway sought to enforce against Warciak an arbitration agreement that neither party had signed. Because Illinois promissory estoppel does not bind Warciak to the arbitration agreements between T-Mobile and his mother, we REVERSE the district court’s order dismissing Warciak’s suit and compelling arbitration and REMAND for further proceedings.
Reference
- Full Case Name
- Matthew WARCIAK, Plaintiff-Appellant, v. SUBWAY RESTAURANTS, INC., Defendant-Appellee
- Cited By
- 25 cases
- Status
- Published