Eleventh Circuit Refuses to Bind Nonsignatory to Arbitration Agreement

TCPA Connect

A nonsignatory to an agreement is not bound by an arbitration provision contained in the contract, the U.S. Court of Appeals, Eleventh Circuit determined in a case involving the Telephone Consumer Protection Act (TCPA).

Candy Ray’s husband signed a lease-to-own contract to purchase a bed from Progressive Leasing in September 2015. He provided Mrs. Ray’s cellphone number as the “mobile phone number” associated with the account. The lease agreement contained a provision requiring arbitration of “any claim under this arbitration provision.”

Not long after he signed the lease agreement, Mr. Ray had a billing dispute with Progressive Leasing that resulted in a “heated exchange.” At one point during the argument, Mrs. Ray intervened and spoke to the Progressive representative in an attempt to resolve the dispute. After that, the company made daily, repeated robocalls to Mrs. Ray’s cellphone in an attempt to collect the debt.

Mrs. Ray claims that in January and February 2016, she expressly revoked consent to receive robocalls from Progressive Leasing. However, the calls did not stop, with hundreds made—sometimes up to five per day—from over a dozen different phone numbers. Mrs. Ray sued, alleging the company violated the TCPA.

Progressive moved to compel arbitration pursuant to the provision in the lease agreement signed by Mr. Ray, who is not a party to the action. A Florida district court denied the motion, and the defendant appealed.

On appeal, Progressive argued that under Florida law, a nonsignatory can be bound by a broad arbitration agreement where it contains language such as “any controversy arising out of or related to.” But the federal appellate panel declined to address this state-law-based argument.

In the district court, the defendant cited only federal law in support of its argument that the broad language of the lease agreement bound Mrs. Ray, the court said, and did not cite any Florida cases. Even when Mrs. Ray responded to the motion and asserted that Florida law applied to the issue, Progressive did not file a reply.

“Progressive Leasing has therefore abandoned challenging the primary basis on which the district court ruled,” the court wrote. “Because Progressive Leasing essentially ignores the well-reasoned analysis of the district court’s order, we affirm the decision of the district court.”

To read the decision in Ray v. NPRTO Florida, LLC, click here.

Why it matters: While the Eleventh Circuit panel found the defendant abandoned its challenge to the district court’s ruling, the affirmation that a nonsignatory is not bound by the arbitration agreement doubles down on a May opinion from the court in Gamble v. New England Auto Finance, Inc., in which the panel held that an unsigned agreement ended the defendant’s attempt to compel arbitration of the TCPA action. It’s also a reminder for companies to be mindful of whose consent they have obtained, who is bound by the terms of the agreement and whom they are calling. In the Eleventh Circuit, at least, nonparties to the agreement, including in cases of reassigned phone numbers or incorrectly provided telephone numbers, are not likely bound by any arbitration provision.



pursuant to New York DR 2-101(f)

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