Craig Arnold v. Irongate Services, LLC

• Court: Court of Appeals for the Ninth Circuit
• Decided: February 19, 2019
• Docket: 18-35222
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION FEB 19 2019 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

CRAIG ARNOLD; et al., No. 18-35222

Plaintiffs-Appellees, D.C. No. 1:17-cv-00032-TJC

v. MEMORANDUM* IRONGATE SERVICES, LLC,

Defendant-Appellant,

and

PHILIP MORRIS USA, INC.; et al.,

Defendants.

Appeal from the United States District Court for the District of Montana Timothy J. Cavan, Magistrate Judge, Presiding

Argued and Submitted February 6, 2019 Seattle, Washington

Before: IKUTA and CHRISTEN, Circuit Judges, and CHOE-GROVES,** Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Jennifer Choe-Groves, Judge for the United States Court of International Trade, sitting by designation. Irongate Services, LLC (“Irongate”) appeals the denial of its motion to

compel Craig Arnold and other nonsignatories to the Master Services Agreement

(collectively referred to herein as “Individual Plaintiffs”) to arbitrate their claims

against Irongate. We have jurisdiction under 9 U.S.C. § 16 and review “the district

court’s decision to deny the motion to compel arbitration de novo.” Davis v.

Nordstrom, Inc., 755 F.3d 1089, 1091 (9th Cir. 2014).

The question whether the Individual Plaintiffs are bound to arbitrate their

claims against Irongate under principles of equitable estoppel is governed by

Montana law. See Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631–32 (2009).

Our cases applying a federal test to this issue have been superseded by Arthur

Andersen, and are no longer applicable. See id.; Kramer v. Toyota Motor Corp.,

705 F.3d 1122, 1130 n.5 (9th Cir. 2013).

Irongate has not established that the Individual Plaintiffs are bound to

arbitrate their claims against Irongate as a matter of Montana law.1 Irongate failed

to allege that any of the six elements of Montana’s equitable estoppel test are met.

See Turner v. Wells Fargo Bank, N.A., 291 P.3d 1082, 1089–90 (Mont. 2012).

While the Montana Supreme Court has applied California law to hold that

1 Because we decide on this basis, we do not reach the question whether the arbitration agreement covers the dispute at issue. See Kilgore v. KeyBank, Nat’l Ass’n, 718 F.3d 1052, 1058 (9th Cir. 2013) (en banc). 2 nonsignatories can compel signatories to arbitrate under certain circumstances, see

Peeler v. Rocky Mountain Log Homes Canada, Inc., 431 P.3d 911, 926–28 (Mont.

2018), no Montana case has held that signatories can compel nonsignatories to

arbitrate. Irongate argues that California appellate courts have held that signatories

to an arbitration agreement can compel nonsignatories to arbitrate when there are

certain types of preexisting relationships between the parties, see Cty. of Contra

Costa v. Kaiser Found. Health Plan, Inc., 47 Cal. App. 4th 237, 242–43 (1996).

But even if the Montana Supreme Court adopted this test, Irongate has not

demonstrated that there is a preexisting relationship between the Individual

Plaintiffs and Irongate that would meet California’s requirements.

Contrary to Irongate’s argument, neither the Montana Supreme Court’s

unpublished opinion in Stewart v. Hauptman, 169 P.3d 405 (Mont. 2007), nor

section 28-2-503(2) of the Montana Code addresses whether a party who has not

entered into a contract to arbitrate can be bound by its terms. Because Hauptman

is unpublished, under Montana rules it may not be cited as precedent. 169 P.3d at

¶ 1. In any event, Hauptman held that when the parties to a contract agree to share

in the costs and benefits of subsequently acquired leases, a party that accepts the

benefits of such subsequently acquired assignments of leases is deemed to be

bound by such assignments. Id. at ¶ 27. Irongate does not argue that the

3 Individual Plaintiffs have entered into any analogous arrangement. Nor does

section 28-2-503(2) help Irongate, as that section addresses contract formation, and

provides that a party that voluntarily accepts the benefit of a transaction may be

deemed to have consented to the contract and be bound by its terms. Irongate has

not shown that the Individual Plaintiffs have entered into the MSA either expressly

or by implication.

AFFIRMED.