Late last month, the Ninth Circuit reversed a decision out of the Western District of Washington finding that a third party was not able to assert an arbitration provision. The underlying claim revolved around premium text messaging services, and a putative class action was brought against the companies that serve as billing aggregators for the content providers. The billing aggregators filed a motion to compel arbitration, attempting to utilize an arbitration provision contained in the terms and conditions of a content provider. The lower court denied the motion to compel arbitration, finding that the billing aggregators were not intended third-party beneficiaries to the terms and conditions and, therefore, could not assert the arbitration provision contained in a contract to which they were not a party.
On appeal, the Ninth Circuit issued a per curiam opinion holding that the district court was incorrect and that it was possible for third parties to claim the benefits of a contract under Washington law, so long as “the terms of the contract necessarily require the promisor to confer a benefit upon a third person.” Here, the terms and conditions between the content providers and consumers provided in one section that the consumer waived all claims “against . . . any of the content provider’s suppliers,” and provided in another section that “any dispute will be resolved by binding arbitration.” Given that the terms and conditions could reasonably be interpreted to inure to the benefit of the content provider’s suppliers, the Ninth Circuit returned the case to the lower court for determinations of whether the billing aggregators were the content provider’s suppliers and whether the consumer assented to the terms and conditions.
Geier v. m-Cube Inc., No. 13-36080 (9th Cir. May 26, 2016) (per curiam).
