Last week, the Second Circuit affirmed Judge Schofield’s decision last year to to deny the motion by Donald Trump, the Trump Corporation, and other Trump family members to compel arbitration of claims related to the multi-level marketing scheme ACN (see our previous coverage here). Defendants argued that, because the plaintiffs had agreed to arbitrate any claims they might have against ACN, the same arbitration clause should force arbitration of any claims against the Trump defendants related to their endorsement of ACN.
The Second Circuit agreed that equitable estoppel did not apply:
In order to establish equitable estoppel in the present context so as to bind a signatory of a contract (here, the plaintiffs) to arbitrate with one or more nonsignatories (here, the defendants), there must be a close relationship among the signatories and non-signatories such that it can reasonably be inferred that the signatories had knowledge of, and consented to, the extension of their agreement to arbitrate to the non-signatories. Here, there neither is nor was such a relationship. There was no corporate relationship between the defendants and ACN of which the plaintiffs had knowledge, the defendants do not own or control ACN, and the defendants are not named in the IBO agreements between ACN and the plaintiffs.
Our complete coverage of the case is here.