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A federal court in California ruled that nonsignatories could enforce an arbitration agreement because they were agents of the company that was a party to the agreement, the alleged wrongful acts related to the nonsignatories' behaviors as agents, and the claims arose out of the contract containing the arbitration agreement.
In Amisil Holdings Ltd. v. Clarium Capital Management LLC, No. C-06-5255 MJJ (EMC), 2006 WL 3949332 (N.D. Cal. Dec. 21, 2006), after becoming a minority member of Clarium, Amisil sued Clarium and several of its agents. Clarium and the individual defendants (i.e., the agents) asked the court to compel arbitration pursuant to an arbitration agreement in the Operating Agreement signed by Amisil and Clarium.
Amisil argued that its claims against the individual defendants were not subject to arbitration because the individuals were not signatories to the arbitration agreement. The Court disagreed and compelled arbitration of all claims, noting that the individual defendants could compel arbitration as agents of Clarium.
In the Ninth Circuit, "agents of a signatory can compel the other signatory to arbitrate so long as (1) the wrongful acts of the agents for which they are sued relate to their behavior as agents or in their capacities as agents and (2) the claims against the agents arise out of or relate to the contract containing the arbitration clause." See Letizia v. Prudential Bache Secs., Inc., 802 F.2d 1185 (9th Cir. 1986); Britton v. Co-op Banking Group, 4 F.3d 742 (9th Cir. 1993).
In this case, the agreement contemplated a business relationship between the individual defendants and Amisil. Additionally, Amisil was suing the individuals because of their positions with Clarium. Finally, the Court noted that all the claims brought by Amisil related to the agreement that contained the arbitration clause.
Amisil also argued that arbitration should not be compelled because the arbitration rules of the American Arbitration Association (AAA), which allow discovery at the discretion of the arbitrator, would substantially prejudice Amisil. However, the Court held that Amisil would not be substantially prejudiced because Amisil failed to show what prejudice, if any, it would suffer.
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