(Arbitration) Signatory plaintiff cannot avoid arbitrating claims against nonsignatory defendant where claims were intimately intertwined with agreement containing arbitration clause

(Arbitration) Signatory plaintiff cannot avoid arbitrating claims against nonsignatory defendant where claims were intimately intertwined with agreement containing arbitration clause. Molecular Analytical Systems v. Ciphergen Biosystems Inc., (No. H032845 California Courts of Appeal, Second Appellate District July 9, 2010).

In this matter, an Appeals Court found that a nonsignatory to an arbitration agreement is not bound to it and may not invoke it; however, a nonsignatory may invoke an arbitration clause to compel a signatory plaintiff to arbitrate under the doctrine of equitable estoppel, if the claims against the nonsignatory are “intimately founded and intertwined with the underlying contract obligations”.  In this case, the plaintiff’s claims against a nonsignatory defendant were each subject to arbitration because they derived from, relied on, or were intimately intertwined with the contract that had the arbitration agreement.  Thus, the plaintiff could not avoid arbitrating its claims against the defendant.

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