Tuesday, December 2, 2014

Arbitration Agreement Enforceable by Nonparty Defendant

The court granted defendant's motion to compel arbitration and dismiss plaintiff's infringement action and rejected the argument that defendant could not seek arbitration because it was not a party to the arbitration agreement. "[A]lthough [defendant] did not sign the License Agreement, it has 'consented to arbitrate' by seeking arbitration in the pending case. The Second Circuit has recognized that a defendant who was not a party to the original arbitration agreement has 'created a separate binding agreement to arbitrate' the dispute 'by consenting to arbitration.'. . . A non-signatory 'seeking to compel a signatory to arbitrate a dispute' can do so through 'the principle of equitable estoppel" . . . [T]he issues that [defendant] seeks to arbitrate and that Plaintiff seeks to litigate are intertwined with the License Agreement. . . . Because the parties' disputes arise directly out of and are closely related to the License Agreement, Plaintiff 'should be estopped from denying an obligation to arbitrate a similar dispute with the adversary which is not a party to the arbitration agreement.'"

Kastner v. Vanbestco Scandanavia, AB et al, 5-14-cv-00141 (VTD November 25, 2014, Order) (Reiss, J.)

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