Young v. Solana Labs, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: October 20, 2025
• Docket: 24-6032
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION OCT 20 2025 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

MARK YOUNG, Nos. 24-6032

Plaintiff-Appellee, D.C. No. 5:22-cv-03912-NW v. Northern District of California, San Francisco SOLANA LABS, INC.; et al., MEMORANDUM* Defendants-Appellants.

Appeal from the United States District Court for the Northern District of California Rita Lin, District Judge, Presiding

Argued and Submitted October 8, 2025 San Francisco, California

Before: S.R. THOMAS, NGUYEN, and BRESS Circuit Judges.

Solana Labs, Inc. (“Solana”) appeals the district court’s denial of its motion

to compel arbitration. We have jurisdiction pursuant to 9 U.S.C. § 16(a)(1)(B) and

28 U.S.C. § 1291. “We review denial of a motion to compel arbitration de novo,

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. and review findings of fact underlying the district court’s decision for clear error.”

Lim v. TForce Logistics LLC, 8 F.4th 992, 999 (9th Cir. 2021) (internal citations

omitted). Because the parties are familiar with the history of this case, we need not

recount it here.

I

The district court correctly concluded that Exodus’s Terms of Use did not

delegate to the arbitrator the question of arbitrability with a non-signatory.

The Federal Arbitration Act (“FAA”) “limits federal court review of

arbitration agreements to two gateway arbitrability issues: (1) whether a valid

agreement to arbitrate exists, and if it does, (2) whether the agreement

encompasses the dispute at issue.” Bielski v. Coinbase, Inc., 87 F.4th 1003, 1009

(9th Cir. 2023) (internal quotation and citation omitted). Enforcement of an

arbitration agreement through equitable estoppel is one such gateway issue. See

Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042, 1045 (9th Cir. 2009).

“Delegation provisions further limits federal court review by assigning these

gateway issues to an arbitrator.” Bielski, 87 F.4th at 1009 (internal citations

omitted).

A federal court has jurisdiction to review delegation of arbitrability to an

arbitrator only where a party “challenges specifically the validity of the agreement

2 to arbitrate.” Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 70 (2010). Young

specifically challenged that the Terms of Use did not include an agreement to

arbitrate with non-signatories in his opposition to Solana’s motion to compel

arbitration. Therefore, the district court had jurisdiction to determine whether

arbitrability was delegated, id., and this Court can properly review that

determination. 9 U.S.C. § 16(a)(1)(B).

For arbitrability to be delegated to an arbitrator, the parties must “clearly

agree to submit the question of arbitrability to arbitration,” otherwise arbitrability

is “subject to independent review by the courts.” First Options of Chi., Inc. v.

Kaplan, 514 U.S. 938, 947 (1995) (holding that non-signatories to an arbitration

agreement did not clearly delegate arbitrability where their wholly owned

investment company signed an arbitration agreement). Courts should “hesitate to

interpret silence or ambiguity” as delegating arbitrability. Id. at 945.

The arbitration agreement within Exodus’s Terms of Use does not “clearly

and unmistakably” delegate arbitrability as it relates to non-signatories. See

Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1127 (9th Cir. 2013). In Kramer,

plaintiffs purchased Toyota vehicles from dealerships and their purchase

agreement contained an arbitration provision. Id. at 1124. The plaintiffs then

sought to sue the vehicle manufacturer, Toyota, for alleged defects. Id. Toyota

3 moved to compel arbitration and argued that arbitrability was delegated because a

delegation clause provided that the arbitration agreement “includes all claims and

disputes arising out of, or relating to, the vehicle.” Id. Toyota further argued, as

Solana does here, that the delegation provision applied to the dispute between

Toyota and plaintiffs because the provision stated that “[i]t also applies to any

claim or dispute about the interpretation and scope of this Arbitration Clause.” Id.

at 1125. We affirmed the district court’s denial of the motion to compel

arbitration, finding that the delegation provision was “expressly limited to

Plaintiffs and the Dealerships” based on the inclusion of “you” and “we”

throughout the contract despite its statement that it applied to disputes about

“interpretation and scope” of the agreement. Id. at 1125, 1127.

Similar to Kramer, Exodus’s Terms of Use provide that the arbitrator has

“exclusive authority” to “determine the scope and enforceability” of the arbitration

agreement. This delegation clause relates to “the rights and liabilities, if any, of

you and Exodus” and states that any award would be binding “upon you and us.”

Id. Further, the arbitration agreement provides that it is applicable to “any aspect

of your relationship with Exodus.

The arbitration agreement further provides that Exodus will pay relevant

filing, administrative, or hearing fees to Judicial Arbitration and Mediation

4 Services (“JAMS”) provided a party is unable to afford the fees or obtain a waiver

from JAMS. The arbitration agreement also incorporates JAMS rules. We

recently held that the “[i]ncorporation of JAMS arbitration rules by reference

constitutes clear and unmistakable evidence that the parties agreed to arbitrate

arbitrability.” Patrick v. Running Warehouse, LLC, 93 F.4th 468, 481 (9th Cir.

2024). We have not extended that holding to apply where the party seeking to

enforcement is not a signatory to the arbitration agreement.

Kramer governs this case. Incorporating the term “enforceability” and the

JAMS rules does not change the fundamental inquiry regarding whether the parties

to the litigation are the parties that also agreed to delegate arbitrability. See

Kramer, 705 F.3d 1128 (“The parties to this litigation did not agree to arbitrate

arbitrability.”) And despite “the law’s permissive policies in respect to arbitration,

. . . a party can be forced to arbitrate only those issues it specifically has agreed to

submit to arbitration,” and courts should “hesitate to interpret silence or ambiguity

on the [delegation question] as giving the arbitrators that power.” First Options of

Chi., Inc., 514 U.S. at 945. Nor does this case involve whether an arbitration

agreement extends to assignees or successors-in-interest to signatories.

Incorporating the JAMS rules, particularly with Exodus’s promise to pay

relevant fees, and the term “enforceability” does not unambiguously resolve the

5 delegation of arbitrability in Solana’s favor given the other language limiting the

arbitration agreement to Young and Exodus. Therefore, the arbitration agreement

in Exodus’s Terms of Use does not “clearly and unmistakably” delegate

arbitrability with non-signatories. See, e.g., Kramer, 705 F.3d at 1127; First

Options of Chi., Inc., 514 U.S. at 945-46.

II

Having determined that Exodus’s Terms of Use do not delegate arbitrability

as it relates to non-signatories, we now turn to whether Solana can invoke

Exodus’s Terms of Use through equitable estoppel. The district court correctly

concluded that Solana may not invoke Exodus’s Terms of Use through equitable

estoppel to require Young to arbitrate his claims.

Litigants who are “not a party to an arbitration agreement may invoke

arbitration under the FAA if the relevant state contract law allows the litigant to

enforce the agreement.” Kramer, 705 F.3d at 1128. The doctrine of equitable

estoppel applies “when a signatory must rely on the terms of the written agreement

in asserting its claims against the nonsignatory or the claims are ‘intimately

founded in and intertwined with’ the underlying contract.” Id. (internal citations

6 Equitable estoppel focuses on whether the cause of action is rooted in the

contract because the “fairness rationale” of equitable estoppel prevents plaintiffs

from pursuing “a lawsuit to vindicate contractual provisions beneficial to them yet

avoid[ing] an agreement to arbitrate, either by couching their claims as actions

unrelated to the contract or by suing the nonsignatory.” Ford Motor Warranty

Cases, 17 Cal.5th 1122, 1133 (2025). Equitable estoppel applies where a plaintiff

must “depend on or invoke” the terms of the contract that contains an arbitration

agreement to state a cause of action. Id. This invocation must be beyond a “mere

reference” to the agreement, such as reference to the price term included in the

contract. Kramer, 705 F.3d at 1132.

The causes of action in this case are violations of the Securities Act and

analogous state law claims under the California Corporations Code for the sale of

unregistered securities. In alleging these claims, the Consolidated Amended Class

Action Complaint does not reference Exodus or Exodus’s Terms of Use. Plaintiffs

do not bring any breach of contract claim invoking the Terms of Use against

Exodus or any party to this lawsuit. The initial Class Action Complaint does

mention that Young purchased SOL tokens on Exodus, but it does not reference

Exodus’s Terms of Use. Therefore, in stating his claim, Young does not invoke

any contractual obligations in Exodus’s Terms of Use. The purchase of the SOL

7 token on Exodus merely satisfies a predicate condition for the claim, but it does not

result in Young’s claims relying upon Exodus’s Terms of Use. See, e.g., Kramer,

705 F.3d at 1130-32 (holding that proof of purchase and the price term cannot

alone form a basis for invoking an arbitration agreement contained in the Purchase

Agreement); In re Henson, 869 F.3d 1052, 1060-61 (9th Cir. 2017) (holding that

equitable estoppel did not apply where plaintiff’s allegation of wrongdoing against

defendant, Turn, was predicated on the Customer Agreement between plaintiffs

and Verizon).

Young’s claims are also not “intimately founded in and intertwined with the

underlying” Terms of Use. Kramer, 705 F.3d at 1128 (internal quotations and

citations omitted).

In Herrera, we held that plaintiffs were required to arbitrate a refund claim

against an airline despite the airline contract lacking an arbitration clause. Id. at

710. The airline was able to invoke the arbitration clause contained within the

travel broker’s terms and conditions because plaintiffs’ refund claim turned on

whether the travel broker abided by its terms and conditions in its role as “middle

man.” Id. at 709. The refund claim was sufficiently intertwined with the travel

broker’s terms and conditions because it turned on how two sets of contract

obligations “interact as a whole.” Id. Critically, the airline issued the ticket to the

8 travel broker initially, so the airline was entitled, by its terms, to refund either to

the plaintiffs or to the travel broker. Id. 707-08. Therefore, whether plaintiffs were

entitled to relief depended upon both the travel broker’s conduct and obligations

within its terms and conditions, which contained the arbitration clause. Id. at 708.

In contrast, neither party has placed Exodus’s conduct at issue or invoked

any obligation in Exodus’s Terms of Use. If Young is entitled to relief, the relief

would be from Solana, not Exodus. See 15 U.S.C. § 77l; Cal. Corp. Code § 25503.

The cause of action depends upon statutory requirements rather than contractual

obligations, so equitable estoppel is inapplicable. Stafford v. Rite Aid Corp., 998

F.3d 862, 866-67 (9th Cir. 2021) (holding defendant was not entitled to equitable

estoppel where plaintiffs complaint alleged violations of California statutes

regarding cost of prescription drugs); see also Ford Motor Warranty Cases, 17

Cal.5th at 1133 (“Plaintiffs’ warranty claims ‘arise from a statutory scheme

separate and apart from the contracts.’” (internal citation omitted)). Solana cannot

invoke equitable estoppel solely because Exodus processed the relevant transaction

that forms the basis of Young’s claim that SOL is an unregistered security.

III

9 Because Solana has no right to compel arbitration, we need not consider the

issue of contract formation between Young and Exodus. In sum, we affirm the

district court’s order denying Solana’s motion to compel arbitration.

AFFIRMED.