The U.S. District Court for the Northern District of California has ruled that a third party may compel arbitration if the issues in dispute are “intertwined with the agreement” to arbitrate.
The case — Henson, et al. v. Turn, Inc. — involves two Verizon subscribers in a putative New York class action who sued Turn to prevent it from monitoring Verizon subscriber activity via “secret supercookies.” Turn is an online marketing platform that has an agreement with Verizon to use subscriber data in order to deliver targeted ads to those subscribers.
In a motion to dismiss the suit or stay the action, Turn invoked an arbitration clause within the service agreement between Verizon and its subscribers, even though Turn itself was not a signatory to those agreements. Verizon’s service agreement did disclose that Verizon partners with other companies to provide targeted ads to subscribers.
The plaintiffs argued that Turn could not compel arbitration because it was not a party to the arbitration agreement. However, the court found that the plaintiff’s claims regarding the alleged unlawful use of “supercookies” by Turn were “inextricably intertwined” with the arbitration agreement. Applying New York law, which governs the Verizon service agreements, the court held that the plaintiffs could be compelled to arbitrate because signatories cannot avoid arbitration with a nonsignatory when the issues in dispute “are intertwined with the agreement.”
The court sent the case to arbitration and stayed the dispute pending the outcome of the arbitration.
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