FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

KEVIN COMER, 

Plaintiff-Appellee,

v.

M No. 03-16560 ICOR, INC.; KENNETH C. SMITH;

ELLIOT H. WAGNER; BARBARA D.C. No.  ARBUCCI, CV-03-00818-SBA

Defendants, OPINION

and

SALOMON SMITH BARNEY, INC.,

Defendant-Appellant. 

Appeal from the United States District Court

for the Northern District of California

Saundra B. Armstrong, District Judge, Presiding

Argued and Submitted

October 18, 2005—San Francisco, California

Filed February 1, 2006

Before: Alex Kozinski and Ferdinand F. Fernandez,

Circuit Judges, and Terry J. Hatter, Jr.,* District Judge.

Opinion by Judge Kozinski

*The Honorable Terry J. Hatter, Jr., Senior United States District Judge

for the Central District of California, sitting by designation. 

1233
COUNSEL

Peter R. Boutin and Benjamin W. White, Keesal, Young &

Logan, P.C., San Francisco, California, for the defendantappellant. 

Daniel Feinberg and Thuy T. Le, Lewis & Feinberg, P.C.,

Oakland, California, for the plaintiff-appellee.

OPINION

KOZINSKI, Circuit Judge: 

We consider whether an ERISA-plan participant can be

compelled to arbitrate an ERISA claim brought on behalf of

the plan where the plan—but not the participant—has signed

an arbitration agreement. 

Facts

Kevin Comer was a participant in two ERISA plans operated by Micor, Inc. The plan trustees retained Salomon Smith

Barney, Inc. (Smith Barney) to provide investment advice.

The relationship between Smith Barney and the trustees is

governed by investment management agreements. The agreements contain arbitration clauses, pursuant to which “all

claims or controversies” between the trustees and Smith Barney “concerning or arising from” any of the trustees’ accounts

managed by Smith Barney must be submitted to binding arbitration. 

From 1999 through 2002, Smith Barney allegedly concentrated the plans’ assets in high-tech and telecom stocks. Even

after the bubble burst in early 2000, Smith Barney allegedly

maintained its concentrated positions. The plans suffered

heavy investment losses. 

1236 COMER v. SALOMON SMITH BARNEY
Comer sued Smith Barney under the Employee Retirement

Income Security Act of 1974, 29 U.S.C. §§ 1001-1461

(ERISA), for breach of fiduciary duty. See id. §§ 1104(a)(1)

(A)(i), 1109(a), 1132(a)(2).1 As the district court explained,

“by bringing suit under 29 U.S.C. § 1132(a)(2), Plaintiff is

seeking relief available under 29 U.S.C. § 1109 [for breach of

fiduciary duty], which provides for the making good to the

Plans—not to Plaintiff himself—of any losses incurred as a

result of [Smith Barney’s] alleged breach of fiduciary duty.”

Comer v. Micor, Inc., 278 F. Supp. 2d 1030, 1038 (N.D. Cal.

2003); see also Parker v. BankAmerica Corp., 50 F.3d 757,

768 (9th Cir. 1995) (“Although individual beneficiaries may

bring a breach of fiduciary duty claim against an ERISA plan

administrator, they must do so for the benefit of the plan.

‘Any recovery for a violation of [§ 1132(a)(2)] must be on

behalf of the plan as a whole, rather than inuring to individual

beneficiaries.’ ” (alteration in original) (quoting Horan v. Kaiser Steel Ret. Plan, 947 F.2d 1412, 1418 (9th Cir. 1991))).2

Smith Barney unsuccessfully petitioned the district court to

stay the proceedings against Smith Barney and compel arbitration, and it now appeals.3

Discussion

We have, in the past, expressed skepticism about the

arbitrability of ERISA claims, see Amaro v. Cont’l Can Co.,

1Smith Barney is a fiduciary under ERISA because it provided investment advice to the plans for a fee. See 29 U.S.C. § 1002(21)(A)(ii). 

2Smith Barney does not challenge Comer’s Article III standing, probably because Comer, as a plan participant, has alleged sufficient “injury in

fact” on account of Smith Barney’s investment advice and because Comer

would share in any recovery by the plans. See Friends of the Earth, Inc.

v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000). 

3Comer’s complaint also names Micor and the trustees as defendants.

The trustees joined in Comer’s opposition to Smith Barney’s petition to

compel arbitration. Comer, 278 F. Supp. 2d at 1032. Neither Micor nor the

trustees are parties to this appeal. 

COMER v. SALOMON SMITH BARNEY 1237
724 F.2d 747, 750 (9th Cir. 1984), but those doubts seem to

have been put to rest by the Supreme Court’s opinions in

Shearson/American Express Inc. v. McMahon, 482 U.S. 220,

226 (1987) (“[The] duty to enforce arbitration agreements is

not diminished when a party bound by an agreement raises a

claim founded on statutory rights.”), and Rodriguez de Quijas

v. Shearson/American Express, Inc., 490 U.S. 477, 481

(1989) (enforcing agreement to arbitrate claims arising under

the Securities Act of 1933 and stating that prior decisions

holding such clauses unenforceable had “fallen far out of step

with our current strong endorsement of the federal statutes

favoring this method of resolving disputes”). In fact, on the

force of McMahon, we have held other statutory claims arbitrable. See, e.g., Simula, Inc. v. Autoliv, Inc., 175 F.3d 716,

724 (9th Cir. 1999) (antitrust and Lanham Act claims). Curiously, however, we have echoed the doubts expressed in

Amaro without taking account of the intervening Supreme

Court cases. See Graphic Commc’ns Union, Dist. Council No.

2 v. GCIU-Employer Ret. Benefit Plan, 917 F.2d 1184, 1187

(9th Cir. 1990); Johnson v. St. Frances Xavier Cabrini Hosp.,

910 F.2d 594, 596 (9th Cir. 1990). 

We need not resolve this tension in our caselaw because the

parties seem to agree that ERISA claims are arbitrable. Nor

need we consider whether the scope of this particular arbitration clause, which does not mention statutory claims or

ERISA, is sufficiently broad to cover Comer’s claim. We

assume, as do the parties, that were this claim brought by the

trustees, rather than by Comer, it would have to be submitted

to arbitration.4

[1] We turn, then, to the single issue that was briefed and

argued by the parties: whether the arbitration agreements

apply to Comer’s ERISA claim against Smith Barney. In

Letizia v. Prudential Bache Securities, Inc., 802 F.2d 1185

4We do not express any opinion as to litigation that might ensue

between the trustees and Smith Barney. 

1238 COMER v. SALOMON SMITH BARNEY
(9th Cir. 1986), we explained that “nonsignatories of arbitration agreements may be bound by the agreement under ordinary contract and agency principles.” Id. at 1187-88.5

 Among

these principles are “1) incorporation by reference; 2)

assumption; 3) agency; 4) veil-piercing/alter ego; and 5)

estoppel.” Thomson-CSF, S.A. v. Am. Arbitration Ass’n, 64

F.3d 773, 776 (2d Cir. 1995). In addition, nonsignatories can

enforce arbitration agreements as third party beneficiaries. See

E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber &

Resin Intermediates, 269 F.3d 187, 195 (3d Cir. 2001). 

Smith Barney argues that Comer is bound by the arbitration

clauses as a matter of equitable estoppel and as a third party

beneficiary. Equitable estoppel “precludes a party from claiming the benefits of a contract while simultaneously attempting

to avoid the burdens that contract imposes.” Wash. Mut. Fin.

Group, LLC v. Bailey, 364 F.3d 260, 267 (5th Cir. 2004). In

the arbitration context, this principle has generated two lines

of cases. 

[2] Under the first of these lines, nonsignatories have been

held to arbitration clauses where the nonsignatory “knowingly

exploits the agreement containing the arbitration clause

despite having never signed the agreement.” DuPont, 269

F.3d at 199 (citing Thomson-CSF, 64 F.3d at 778). Under the

second line of cases, signatories have been required to arbitrate claims brought by nonsignatories “at the nonsignatory’s

insistence because of the close relationship between the enti5Our holding in IT Corp. v. General American Life Insurance Co., 107

F.3d 1415 (9th Cir. 1997), is not to the contrary. There, we held that “a

fiduciary’s contract with an employer cannot get it off the hook with the

employees who participate in the ERISA plan. They did not sign a contract exonerating the fiduciary.” Id. at 1418 (emphasis added). Unlike an

exoneration clause—which has the drastic effect of extinguishing a claim

entirely—an arbitration clause merely determines where, not whether, a

claim will be heard. We do not read IT Corp. as casting doubt on Letizia’s

core holding that a nonsignatory can be bound by an arbitration agreement

under ordinary contract and agency principles. 

COMER v. SALOMON SMITH BARNEY 1239
ties involved.” Id. (quoting Thomson-CSF, 64 F.3d at 779

(quoting Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10

F.3d 753, 757 (11th Cir. 1993))) (internal quotation marks

omitted). 

[3] Because Smith Barney is invoking equitable estoppel

against a nonsignatory, it is the first line of cases that is relevant. The insurmountable hurdle for Smith Barney, however,

is that there is no evidence that Comer “knowingly exploit[ed]

the agreement[s] containing the arbitration clause[s] despite

having never signed the agreement[s].” Id. at 199. Prior to his

suit, Comer was simply a participant in trusts managed by

others for his benefit. He did not seek to enforce the terms of

the management agreements, nor otherwise to take advantage

of them. Nor did he do so by bringing this lawsuit, which he

bases entirely on ERISA, and not on the investment management agreements. Smith Barney’s attempt to shoehorn

Comer’s status as a passive participant in the plans into his

“knowing[ ] exploit[ation]” of the investment management

agreements fails. 

[4] Smith Barney argues an alternate theory—that Comer

is bound by the arbitration clauses as a third party beneficiary.

“To sue as a third-party beneficiary of a contract, the third

party must show that the contract reflects the express or

implied intention of the parties to the contract to benefit the

third party.” Klamath Water Users Protective Ass’n v. Patterson, 204 F.3d 1206, 1211 (9th Cir. 2000). Smith Barney has

not produced any evidence that the signatories to the investment management agreements intended to give every beneficiary of the plans, such as Comer, the right to sue under the

agreements.6 It follows that Comer cannot be bound to the

terms of a contract he didn’t sign and is not even entitled to

enforce. A third party beneficiary might in certain circum6We note, once again, that Comer’s lawsuit is not based on contract law,

but on a statutory provision that allows him to bring suit under ERISA on

behalf of the plans. 

1240 COMER v. SALOMON SMITH BARNEY
stances have the power to sue under a contract; it certainly

cannot be bound to a contract it did not sign or otherwise

assent to. See Motorsport Eng’g, Inc. v. Maserati SPA, 316

F.3d 26, 29 (1st Cir. 2002); Abraham Zion Corp. v. Lebow,

761 F.2d 93, 103 (2d Cir. 1985).7

[5] Finally, we consider the Third Circuit’s position that

“whether seeking to avoid or compel arbitration, a third party

beneficiary has been bound by contract terms where its claim

arises out of the underlying contract to which it was an

intended third party beneficiary.” DuPont, 269 F.3d at 195

(emphasis added).8 One problem with the Third Circuit’s

approach is that it is not grounded in “ordinary contract and

agency principles.” Letizia, 802 F.2d at 1187. As discussed

above, neither principles of equitable estoppel nor third party

beneficiary apply here. Nor can the Micor trustees be said to

have acted as Comer’s agents in entering into the investment

management agreements. See Restatement (Second) of Trusts

§ 8 (“An agency is not a trust.”). Similarly, there is no evidence that Comer’s “subsequent conduct indicates that [he] is

assuming the obligation to arbitrate.” Thomson-CSF, 64 F.3d

at 777. Nor has Comer “entered into a separate contractual

relationship with [Smith Barney] which incorporates the

existing arbitration clause.” Id. And theories of veil-piercing

7Trust law provides a similar answer. Under trust law, the beneficiary

of a trust “is not personally liable upon contracts made by the trustee in

the course of the administration of the trust.” Restatement (Second) of

Trusts § 275 (1959). In contrast to agents—who can subject their principals to personal liability—“a trustee cannot subject the beneficiary to such

liabilities.” Id. § 8 cmt. c (emphasis added). 

8This principle, or something like it, was applied by a New Jersey district court in Bevere v. Oppenheimer & Co., 862 F. Supp. 1243 (D.N.J.

1994), a case that involved facts quite similar to our own. There, the district court held that “individuals who are not direct signatories to an arbitration agreement may nevertheless be bound by it when their claims arise

from the very contract that contains the arbitration clause.” Id. at 1249

(emphasis added). For the reasons discussed below, we do not consider

Bevere’s holding persuasive. 

COMER v. SALOMON SMITH BARNEY 1241
and alter ego are inapplicable, given the absence of either

fraud or a failure to observe corporate formalities. Because

the Third Circuit’s “arises out of” test is not grounded in any

principle of contract or agency law of which we are aware, we

are precluded by Letizia from adopting it. 

[6] Even if the Third Circuit’s test were grounded in ordinary principles of contract or agency law, it appears to have

been superseded by EEOC v. Waffle House, Inc., 534 U.S.

279 (2002). In Waffle House, the Supreme Court held that “an

agreement between an employer and an employee to arbitrate

employment-related disputes [did not bar] the Equal Employment Opportunity Commission . . . from pursuing victimspecific judicial relief.” Id. at 282, 294. The EEOC’s suit in

Waffle House, on behalf of a Waffle House employee, “arose

from” an employment agreement containing an arbitration

clause. Nevertheless, the EEOC was not required to arbitrate

its claim. Id. at 294. 

[7] Smith Barney tries in vain to distinguish Waffle House

by arguing that, whereas Comer is suing in an entirely derivative capacity, the EEOC was suing in a non-derivative capacity. We agree that the EEOC in Waffle House was not suing

in a wholly derivative capacity. See, e.g., id. at 297 (“[I]t simply does not follow from the cases holding that the employee’s conduct may affect the EEOC’s recovery that the

EEOC’s claim is merely derivative. We have recognized several situations in which the EEOC does not stand in the

employee’s shoes.”); id. at 298 (“The fact that ordinary principles of res judicata, mootness, or mitigation may apply to

EEOC claims does not . . . render the EEOC a proxy for the

employee.”). But that doesn’t help Smith Barney because our

own precedents hold that an ERISA claimant also sues in a

non-derivative capacity. See Landwehr v. DuPree, 72 F.3d

726, 732-33 (9th Cir. 1995). 

In Landwehr, we considered whether the statute of limitations for an ERISA claim ran from when the individual plain1242 COMER v. SALOMON SMITH BARNEY
tiff, rather than the plan, became aware of the claim. Citing

the “unfairness” that would result from a rule that extinguished a plaintiff’s claim where the plan became aware of

the claim—and did nothing—long before the individual plaintiff had notice of it, we held that the statute of limitations ran

from the time when the individual plaintiff had actual knowledge of the claim. Id. at 732. In so holding, we expressly

declined to treat the “real plaintiff” as the plan. See id. Even

though money recovered on the ERISA claim would go to the

plan, we held that the cause of action belonged to the individual plaintiff.9

 Comer’s cause of action is materially indistinguishable from the EEOC’s suit in Waffle House, which

appears to have overruled the Third Circuit’s approach. 

* * *

[8] Because Smith Barney’s petition comes within the general rule that a nonsignatory is not bound by an arbitration

clause,10 Comer is not required to arbitrate his ERISA claim

9The Court in Waffle House relied on a similar precedent in determining

that the EEOC was not suing in a wholly derivative capacity. See Waffle

House, 534 U.S. at 287 (“[W]e recognized the difference between the

EEOC’s enforcement role and an individual employee’s private cause of

action in Occidental Life Ins. Co. of Cal. v. EEOC, 432 U.S. 355 (1977)

. . . . Occidental presented the question whether EEOC enforcement

actions are subject to the same statutes of limitations that govern individuals’ claims.”). 

10We note in passing that Waffle House made a number of categorical

statements that cannot be taken at face value. For example, the Court’s

statement that “[i]t goes without saying that a contract cannot bind a nonparty,” Waffle House, 534 U.S. at 294, and its statement that “[t]he [Federal Arbitration Act] directs courts to place arbitration agreements on

equal footing with other contracts, but it ‘does not require parties to arbitrate when they have not agreed to do so,’ ” id. at 293 (quoting Volt Info.

Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468,

478 (1989)), would, if taken literally, jettison hundreds of years of common law under which nonparties can be contractually liable under ordinary contract and agency principles. See pp. 1238-39 supra. We thus join

many of our sister circuits who, in the wake of Waffle House, have recogCOMER v. SALOMON SMITH BARNEY 1243
against Smith Barney.11

AFFIRMED.

nized that contract and agency principles continue to bind nonsignatories

to arbitration agreements. See, e.g., CD Partners, LLC v. Grizzle, 424 F.3d

795, 799 (8th Cir. 2005); Zurich Am. Ins. Co. v. Watts Indus., Inc., 417

F.3d 682, 687 (7th Cir. 2005); Wash. Mut. Fin. Group, LLC, 364 F.3d at

267; Intergen N.V. v. Grina, 344 F.3d 134, 145 (1st Cir. 2003); Merrill

Lynch Inv. Managers v. Optibase, Ltd., 337 F.3d 125, 129 (2d Cir. 2003)

(per curiam); Javitch v. First Union Sec., Inc., 315 F.3d 619, 629 (6th Cir.

2003). But cf. Miles v. Naval Aviation Museum Found., Inc., 289 F.3d

715, 720 (11th Cir. 2002) (holding that, under Waffle House, nonsignatory

could not be bound by contractual exculpation clause). 

11Although we agree with Smith Barney that the Federal Arbitration Act

reflects “a liberal federal policy favoring arbitration agreements,” that policy is best understood as concerning “the scope of arbitrable issues.”

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25

(1983). The question here is not whether a particular issue is arbitrable,

but whether a particular party is bound by the arbitration agreement.

Under these circumstances, the liberal federal policy regarding the scope

of arbitrable issues is inapposite. See Fleetwood Enters., Inc. v. Gaskamp,

280 F.3d 1069, 1073 (5th Cir. 2002) (“[The] federal policy favoring arbitration does not apply to the determination of whether there is a valid

agreement to arbitrate between the parties; instead ‘[o]rdinary contract

principles determine who is bound.’ ” (second alteration in original) (quoting Daisy Mfg. Co. v. NCR Corp., 29 F.3d 389, 392 (8th Cir. 1994))). 

1244 COMER v. SALOMON SMITH BARNEY