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Do you have the right to demand arbitration even if you are not a party to the contract containing the arbitration clause?

Have you been sued by a plaintiff who entered into a contract containing an arbitration clause with another co-defendant? If that is the case, you may wonder whether you have the right to demand arbitration, even though you are not a party to the arbitration clause contract? The answer is: it depends on the claims asserted against you and whether the claims are premised upon the agreement containing the arbitration clause.

This issue was recently addressed by the Fourth District Court of Appeal in the case of Florida Woman Care LLC v. Nguyen. In Florida Woman Care, all of the defendants, including those that were not parties to the employment contract containing the arbitration agreement, moved to compel arbitration on the plaintiff’s claims for tortious interference, breach of contract, breach of fiduciary duty, equitable accounting, and civil conspiracy. The non-parties to the agreement moved to compel arbitration, arguing that the plaintiff’s claims asserted against them arose out of the employment contract containing the arbitration provision and involved the same basic allegations as asserted against the party to the contract. The trial court denied the motion to compel based on their “non-party” status, and the non-parties filed an appeal.

The Fourth District Court of Appeal identified two instances when non-parties could enforce an arbitration clause:

  • First, when the party to a written agreement containing an arbitration clause must rely on the terms of the written agreement in asserting its claims against the non-party.
  • Second, when the party to the contract containing an arbitration clause raises allegations of substantially related misconduct by both the non-party and one or more of the parties to the agreement.

In Florida Woman Care, the Fourth District ultimately overruled the trial court and allowed the non-parties to compel arbitration. The Fourth District reasoned that an arbitration provision is a procedural clause (analogizing it to a forum selection clause in a contract) and ruled that these types of dispute-related provisions are enforceable beyond expiration or termination of the contract, unless the contract expressly states otherwise. The Fourth District further ruled that the non-parties were permitted to compel arbitration even though the employment contract had terminated.

If you need assistance determining your contractual rights, including your right to compel arbitration, Rosenthal Law Group will assist you. Rosenthal Law Group has successfully litigated arbitration issues at trial and appellate levels.