Commercial Litigation and Arbitration

Arbitration — Non-Signatory Parent Company Cannot Compel Arbitration Pursuant to Employee’s Agreement with Subsidiary to Work for Both Parent and Subsidiary.

From Kimberlin v. Renasant Bank, 2008 U.S. App. LEXIS 20754 (6th Cir. Sept. 25, 2008), in which the plaintiff employee sued the parent bank for which he worked pursuant to an employment agreement (the “Dual Employment Contract”) with an insurance company subsidiary. Held, because the parent was not a signatory to the arbitration agreement, it could not appeal denial of its motion to compel arbitration pursuant to 9 U.S.C. § 16:

1. Two Circumstances in Which a Non-Signatory May Be Permitted Appeal on an Equitable Estoppel Theory. “The first is when a signatory relies on the term of the written agreement in asserting its claims against a non-signatory. The second is when the signatory raises allegations of substantially interdependent and concerted misconduct by the non-signatory and at least one signatory.”

2. Otherwise, a Writing Is a Statutory Prerequisite to Appellate Jurisdiction. The appellate jurisdiction of U.S.C. § 16(a)(1) is limited to appeals "taken from an order (A) refusing a stay of any action under section 3 of this title, [or] (B) denying a petition under section 4 of this title to order arbitration to proceed...." Both § 3 and § 4 explicitly require a written agreement to arbitrate. 9 U.S.C. § 3 ("If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, . . ."); 9 U.S.C. § 4 ("A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court . . .").

Held: “Because the [parent] Bank is not a signatory to the Dual Employment Contract entered into between [plaintiff] Kimberlin and [subsidiary] The Peoples Insurance Agency, we ... have no jurisdiction to consider the Bank's appeal from the denial of its motion to compel Kimberlin to submit his claims against the Bank pursuant to the arbitration provision in the Contract.”

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