Opinion ID: 1035949
Heading Depth: 5
Heading Rank: 1

Heading: Reliance on the underlying contract

Text: Under the first Goldman prong, equitable estoppel applies when the plaintiff’s claims “are ‘intimately founded in and intertwined’ with the underlying contract obligations.” Jones v. Jacobson, 125 Cal. Rptr. 3d 522, 538 (Cal. Ct. App. 2011) (quoting Boucher v. Alliance Title Co., 25 Cal. Rptr. 3d 440, 446 (Cal. Ct. App. 2005)). “This requirement comports with, and indeed derives from, the very purposes of the doctrine: to prevent a party from using the terms or obligations of an agreement as the basis for his claims against a nonsignatory, while at the same time refusing to arbitrate with the nonsignatory under another clause of that same agreement.” Goldman, 92 Cal. Rptr. 3d at 543–44. MURPHY V. DIRECTV, INC. 19 Plaintiffs’ claims against Best Buy do not rely on, and are not intertwined with, the substance of the DirecTV Customer Agreement or Lease Addendum. Best Buy argues that, in addition to governing the general contours of the customerprovider relationship, the Customer Agreement clarifies that the leased equipment is not the property of the customer, cannot be transferred, and must be returned, rendering the existence of the Customer Agreement a necessary precondition for Plaintiffs’ claims. But the Customer Agreement itself merely provides that, if a customer is leasing his DirecTV equipment, it is non-transferable and must be returned upon cancellation. The Customer Agreement is factually irrelevant to Plaintiffs’ claims against Best Buy, which charge misrepresentations to customers at the point of sale. The complaint is replete with allegations of deceit by Best Buy that have nothing to do with the Customer Agreement. Among other allegations, Plaintiffs claim that Best Buy “sold DirecTV Equipment at Best Buy stores in a manner that reasonable consumers would find indistinguishable from any other sale which occurs at Best Buy”; that “Best Buy receipts given to customers memorializing the transaction contained the word ‘SALE’ at the top of the receipt in bold, capitalized letters”; and that oral “[r]epresentations were made to some purchasers that the DirecTV Equipment was for sale.” None of these allegations rely on the Customer Agreement or attempt to seek any benefit from its terms. Even if Best Buy is correct that Plaintiffs’ claims on some abstract level require the existence of the Customer Agreement, the law is clear that this is not enough for equitable estoppel. In California, equitable estoppel is inapplicable where a plaintiff’s “allegations reveal no claim of any violation of any duty, obligation, term or condition 20 MURPHY V. DIRECTV, INC. imposed by the [customer] agreements.” Id. at 551. Applying this principle in Kramer, we held that Toyota could not compel arbitration of a consumer class action on the basis of arbitration clauses contained in the Purchase Agreements customers entered into with their dealerships. See 705 F.3d at 1124–25. We expressly rejected Toyota’s argument that the plaintiffs’ claims were necessarily intertwined with the Purchase Agreements merely because the lawsuit was predicated on the bare fact that a vehicle purchase occurred. Id. at 1130–31. Rather, we held that the plaintiffs’ causes of action, which, as here, largely arose under California consumer protection law, were not sufficiently intertwined with the Purchase Agreements to trigger equitable estoppel. Id. at 1130–32. Likewise, here, the Customer Agreement proves at most the existence of a transaction; Plaintiffs’ claims do not depend on the Agreement’s terms. The UCL and CLRA allow Plaintiffs to sue Best Buy for misleading consumers regardless of whether or not they signed largely unrelated contracts with DirecTV.7 See Rajagopalan, — F.3d 7 We also note that many of the California cases permitting nonsignatories to compel arbitration under an equitable estoppel theory involve contract-based causes of action, such as tortious interference or breach of contract. See, e.g., Boucher, 25 Cal. Rptr. 3d at 447 (applying equitable estoppel where plaintiff relied on an employment agreement containing an arbitration clause to allege failure to pay accrued wages, breach of contract, and other claims that were intimately bound up with the substance of the contract); Metalclad, 1 Cal. Rptr. 3d at 337–38 (applying equitable estoppel where plaintiff’s claims turned on an alleged breach of the underlying contract and fraud in obtaining it). Here, in contrast, Plaintiffs do not seek any contract-related damages; rather, their claims are for violations of consumer protection laws. While we need not foreclose the possibility that a consumer class action might satisfy the requirements for equitable estoppel, the obvious contrast between these cases and Kramer suggests that equitable estoppel is particularly inappropriate where plaintiffs seek the protection of consumer protection MURPHY V. DIRECTV, INC. 21 at —, 2013 WL 2151193, at  (rejecting equitable estoppel theory under Washington law where the plaintiff’s lawsuit stated “statutory claims that are separate from the contract itself” (internal alteration and quotation marks omitted)). In short, Plaintiffs rely not on the Customer Agreement, but on Best Buy’s’ alleged words and deeds in the course of transactions leading to the acquisition of equipment they believed they purchased, but in fact leased. “Plaintiffs do not seek to simultaneously invoke the duties and obligations of [Best Buy] under the [Customer] Agreement, as it has none, while seeking to avoid arbitration. Thus, the inequities that the doctrine of equitable estoppel is designed to address are not present.” Kramer, 705 F.3d at 1134.