October 25, 2017
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 16-cv-8694 -
Charles P. Kocoras, Judge.
Kanne and Sykes, Circuit Judges, and Darrow, District Judge.
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. 863 F.3d 748, 750 (7th Cir.
2017). We reiterate that holding here.
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-Mobile. 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.
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 Warciak's
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 estoppel law
should apply. And under Illinois law, he argued, he is not
bound by his mother's contracts.
district court applied federal law and granted Subway's
motion to compel arbitration. Warciak appealed.
material facts underlying this appeal are undisputed, thus we
review the district court's ruling de novo.
Scheurer, 863 F.3d at 751-52.
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., 363 U.S. 574, 582
(1960); Scheurer, 863 F.3d at 752. Nevertheless,
some "'traditional principles' of state law
allow a contract to be enforced by or against nonparties to
the contract." Arthur Andersen LLP v. Carlisle,
556 U.S. 624, 631 (2009) (quoting 21 Williston on Contracts
§ 57:19 (4th ed. 2001)). These traditional state law
principles include: assumption, agency, veil piercing, alter
ego, waiver, estoppel, third-party beneficiary, and
incorporation by reference. Scheurer, 863 F.3d at
Warciak and Subway have not agreed to arbitrate their
disputes. Yet Subway argues that promissory estoppel binds