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You are here: Home / Arbitration / Court Decisions / Eleventh Circuit Holds Arbitration Agreement Unenforceable Against Spouse of Former Employee

Eleventh Circuit Holds Arbitration Agreement Unenforceable Against Spouse of Former Employee

February 17, 2025 by Kenneth Cesta

In Lubin v. Starbucks Corp., the Eleventh Circuit Court of Appeals considered defendant Starbucks’ appeal of an order denying its motion to compel arbitration of the plaintiffs’ lawsuit alleging that Starbucks sent deficient health insurance notices under the Employee Retirement Income Security Act (ERISA) and the Consolidated Omnibus Budget Reconciliation Act (COBRA).

Plaintiffs Ariel Torres, a former Starbucks employee, and Raphyr Lubin, the husband of a former employee who had obtained spousal benefit plan coverage, filed a class action alleging that Starbucks sent them deficient enrollment notices under ERISA and COBRA. After Starbucks filed its motion to compel, Torres consented to arbitration and agreed that his claims were subject to the mandatory arbitration clause in his employment agreement. Lubin opposed the motion, arguing that his claims were not subject to arbitration since he did not sign an employment or arbitration agreement. The district court denied the motion to compel noting that, since Lubin did not sign an arbitration agreement and was seeking “to enforce his own, statutory right to an adequate COBRA notice,” his claims were not subject to mandatory arbitration.

Starbucks appealed on several grounds. First, Starbucks argued the district court should not have ignored the strong presumption in favor of arbitration. The court rejected this argument, relying on the fact that Lubin did not sign an arbitration agreement and cannot be compelled to arbitrate his own statutory claims when he is not subject to the mandatory arbitration clause his wife signed. Second, Starbucks argued the arbitration agreement included a delegation clause, which granted the arbitrator exclusive jurisdiction to determine whether Lubin’s claims were subject to arbitration. The court rejected this argument, noting that even though parties may agree to grant the arbitrator the authority to determine whether an arbitration agreement is enforceable, there must be “clear and unmistakable evidence that they did so,” which evidence the court concluded was not present here. The court found Lubin cannot be compelled to arbitrate his claims since the language of the arbitration agreement was ambiguous and Lubin is not a party to the agreement.

Starbucks raised three additional arguments that Florida contract law also requires that Lubin submit his claims to arbitration. The court rejected Starbucks’ contention that Lubin should be equitably estopped from avoiding arbitration. The court found equitable estoppel does not apply since Lubin’s claims sought to enforce his own statutory rights to adequate COBRA notice and were not brought under his wife’s employment agreement. The court also rejected Starbucks’ argument that the third-party beneficiary doctrine compels Lubin to arbitrate his claims, finding the doctrine does not apply when, like here, “a third-party beneficiary brings a claim other than to enforce the contract.” Finally, the court rejected the argument that Lubin’s claim is derivative of his wife’s claim, again relying on the fact that Lubin’s claim is based on an independent statutory right to notice. The court affirmed the district court’s order denying Starbucks’ motion to compel arbitration.

Lubin v. Starbucks Corp., No. 21-11215 (11th Cir. Dec. 16, 2024).

 

Filed Under: Arbitration / Court Decisions, Contract Interpretation

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