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The Delaware Court of Chancery ruled that the doctrine of equitable estoppel allowed a non-signatory to compel arbitration because the claims against the nonsignatory were intertwined with the contract and also alleged concerted misconduct between a signatory and the non-signatory.
In Wilcox & Fetzer, Ltd. v. Corbett & Wilcox, No. Civ.A.2037-N, 2006 WL 2473665 (Del. Ch. Aug. 22, 2006), Robert Wilcox and Kurt Fetzer were joint shareholders in Wilcox & Fetzer (W&F). Wilcox left the firm and sold his interest to Fetzer under an agreement that gave W&F rights to the name Wilcox & Fetzer. The agreement provided for arbitration of “any and all disputes or controversies arising out of or relating to” the agreement.
Shortly thereafter, Wilcox joined a new firm, which changed its name to Corbett & Wilcox (C&W). W&F sued C&W, alleging common law trademark violations. C&W moved to compel arbitration pursuant to the agreement. In opposing the motion, W&F argued that C&W could not enforce the arbitration clause because they were a nonsignatory.
The Court rejected this argument, citing Grigson v. Creative Arts Agency, 210 F.3d 524, 527 (5th Cir. 2000), which explains that the doctrine of equitable estoppel allows a non-signatory to compel arbitration under two circumstances: (1) where the signatory must rely on the terms of the written agreement in bringing suit against a non-signatory; or (2) where the signatory raises allegations of “substantially interdependent and concerted misconduct” by both the non-signatory and one or more of the signatories. The Court found that both circumstances were present because the claims against C&W were intertwined with the agreement and because W&F was alleging concerted misconduct by Wilcox (a signatory) and C&W (a non-signatory).
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