White v. Sunoco, Inc.

• Decision Date: 05 September 2017
• Docket Number: No. 16-2808.,16-2808.
• Citation: 870 F.3d 257
• Parties: Donald WHITE, On behalf of himself and all others similarly situated v. SUNOCO, INC., Appellant
• Court: U.S. Court of Appeals — Third Circuit

870 F.3d 257

Donald WHITE, On behalf of himself and all others similarly situated

v.SUNOCO, INC., Appellant

No. 16-2808.

United States Court of Appeals, Third Circuit.

Argued: January 24, 2017

Opinion Filed: September 5, 2017

Seamus C. Duffy (ARGUED), Kathryn E. Deal, Meredith C. Slawe, Katherine L. Villanueva, Drinker Biddle & Reath, 18th & Cherry Streets One Logan Square, Suite 2000 Philadelphia, PA 19103 Counsel for Appellant

David J. Stanoch (ARGUED), Richard M. Golomb, Ruben Honik, Kenneth J. Grunfeld, Golomb & Honik, 1515 Market Street, Suite 1100, Philadelphia, PA 19102 Counsel for Appellee

Before: CHAGARES, RESTREPO, and ROTH, Circuit Judges.

OPINION

CHAGARES, Circuit Judge.

Sunoco, Inc. appeals from the District Court's denial of its motion to compel arbitration, arguing that Donald White, who brought this lawsuit against Sunoco alleging fraud on behalf of a putative class, must arbitrate his claims pursuant to a credit card agreement that White signed with a third party who is not named in the lawsuit. At issue in this appeal is whether Sunoco, a non-signatory to the credit card agreement and who is not mentioned in the agreement, can compel White to arbitrate. After examining the relevant state law and applying it to the facts here, we will affirm the District Court's judgment.

I.

Appellant Sunoco is a Pennsylvania corporation that markets and sells gasoline through approximately 4,900 retail operations in 26 states. This lawsuit involves the "Sunoco Rewards Program," which Sunoco advertised through various promotional materials. The Sunoco Rewards Program offered customers who buy gas at Sunoco locations using a Citibank-issued credit card (the "Sunoco Rewards Card") a 5–cent per gallon discount either at the pump or on their monthly billing statements. The promotional materials included a "Terms and Conditions of Offer" sheet, indicating that Citibank, N.A. is the issuer of the Sunoco Rewards Card. Joint Appendix ("J.A.") 45, 52. They also stated that approval for the card was dependent on meeting Citibank's creditworthiness criteria and that by applying for the card, the applicant authorized Citibank to "share with Sunoco® and its affiliates experiential and transactional information regarding your activity with us." J.A. 52. Finally, the promotion explained, "When you become a cardmember, you will receive the full Sunoco Rewards Card Program Terms and Conditions, which may change at any time for any reason upon thirty (30) days prior written notice." Id. Although Sunoco and White disagree as to whether Sunoco and Citibank jointly marketed the credit card, it is undisputed that Sunoco was not a corporate affiliate of and had no ownership interest in Citibank and vice versa.

Appellant White is a Florida resident who applied for and obtained a Sunoco Rewards Card from Citibank in 2013. He made fuel purchases with the card at various Sunoco-branded gas station locations. White alleges that "[c]ontrary to its clear and express representations, Sunoco does not apply a 5¢/gallon discount on all fuel purchases made by cardholders at every Sunoco location. Sunoco omits this material information to induce customers to sign-up for the Sunoco Rewards Credit Card so they frequent Sunoco locations." J.A. 31. White avers that but for the representations regarding the 5–cent per gallon discount, he "would not have become [a] Sunoco Credit Card cardholder[ ] and/or would have purchased gasoline at cheaper prices and/or elsewhere." J.A. 37. He brings claims of fraud and fraudulent inducement, negligent misrepresentation, unjust enrichment, and violation of the Florida Deceptive and Unfair Trade Practices Act. White's claims are against Sunoco only, and he alleges no misconduct by Citibank.¹

White's Sunoco Rewards Card is governed by a Card Agreement, which he received when he first obtained the card from Citibank and again when he requested additional copies of the agreement from Citibank on April 30, 2014 and June 1, 2015. The Card Agreement explicitly states that "we, us, and our mean Citibank, N.A., the issuer of your account" and that "you, your, and yours mean the person who applied to open this account." J.A. 88.

It is undisputed that Sunoco is not a signatory to the Card Agreement, to which White and Citibank are the only parties. The Card Agreement does not mention the word "Sunoco"; it also makes no mention of the 5–cent per gallon discount. However, the account statements mailed to White bear the Sunoco logo and include e-mail and mailing information for Sunoco. The Card Agreement also contains a "Governing Law and Enforcing Our Rights" section that states that the "terms and enforcement" of the agreement are governed by "[f]ederal law and the law of South Dakota, where [Citibank is] located." J.A. 92.

Sunoco filed a motion to compel arbitration based on the arbitration clause contained in the Card Agreement. The arbitration clause provides in relevant part,

PLEASE READ THIS PROVISION OF THE AGREEMENT CAREFULLY. IT PROVIDES THAT ANY DISPUTE MAY BE RESOLVED BY BINDING ARBITRATION. ARBITRATION REPLACES THE RIGHT TO GO TO COURT, INCLUDING THE RIGHT TO A JURY AND THE RIGHT TO INITIATE OR PARTICIPATE IN A CLASSACTION OR SIMILAR PROCEEDING. IN ARBITRATION, A DISPUTE IS RESOLVED BY AN ARBITRATOR INSTEAD OF A JUDGE OR JURY. ARBITRATION PROCEDURES ARE SIMPLER AND MORE LIMITED THAN COURT PROCEDURES.

Agreement to Arbitrate: Either you or we may, without the other's consent, elect mandatory, binding arbitration for any claim, dispute, or controversy between you and us (called "Claims").

J.A. 91. The arbitration clause also defined the claims that are subject to arbitration as those "relating to your account, a prior related account, or our relationship ... including Claims regarding the application, enforceability, or interpretation of this Agreement and this arbitration provision." Id. The provision adds that relevant claims are subject to arbitration "no matter what legal theory they are based on or what remedy ... they seek." Id. Finally, a paragraph titled "Whose Claims are subject to arbitration?" states, "[n]ot only ours and yours, but also claims made by or against anyone connected with us or you or claiming through us or you, such as a co-applicant or authorized user of your account, an employee, agent, representative, affiliated company, predecessor or successor, heir, assignee, or trustee in bankruptcy" are subject to arbitration. Id. The arbitration provision also sets forth the steps for invoking arbitration: "At any time you or we may ask an appropriate court to compel arbitration of Claims, or to stay the litigation of Claims pending arbitration, even if such Claims are part of a lawsuit, unless a trial has begun or a final judgment has been entered."² Id.

The District Court denied Sunoco's motion to compel arbitration. The court began its analysis by noting that "traditional principles of state law allow a contract to be enforced by or against nonparties to the contract" and that such principles apply to arbitration agreements. J.A. 11 (quoting Griswold v. Coventry First LLC, 762 F.3d 264, 271 (3d Cir. 2014) ). It determined that it would apply Third Circuit authority on compelling arbitration, explaining that neither party raised choice-of-law issues, and that it believed the outcome would be the same regardless of which law the court applied.

Examining the arbitration provision itself, the District Court observed that there was no dispute as to the validity of the provision and that the provision could only be enforced by signatories to it unless contract, agency, or estoppel principles dictated otherwise. The District Court examined all three and determined that none applied. It concluded that as to contract and agency law, Sunoco was not a third-party beneficiary of the Cardholder Agreement and its arbitration provision, and that Sunoco was not an agent, owner, or subsidiary of Citibank or vice versa. As to estoppel, the District Court concluded that the two-part "alternative estoppel" test discussed in E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269 F.3d 187 (3d Cir. 2001), was not met because 1) there was no close relationship between Sunoco and Citibank, and 2) the claims alleged against Sunoco did not relate to the terms or obligations in the Cardholder Agreement. Finally, the District Court rejected Sunoco's argument that because White had benefitted from the Cardholder Agreement, he should be estopped from bypassing its arbitration clause in this suit. The District Court reasoned that because a dispute that arises under the Cardholder Agreement is distinct from any dispute arising from a separate agreement with Sunoco, the estoppel principle does not apply to White.

Sunoco timely appealed.

II.

The District Court had jurisdiction pursuant to 28 U.S.C. § 1332(d). Our appellate jurisdiction over the District Court's denial of Sunoco's motion to compel arbitration derives from 28 U.S.C. § 1291 and the Federal Arbitration Act ("FAA"), 9 U.S.C. § 16(a)(1)(B). See Griswold, 762 F.3d at 268. "We exercise plenary review over the District Court's order on a motion to compel arbitration." Flintkote Co. v. Aviva PLC, 769 F.3d 215, 219 (3d Cir. 2014). We use the standard for summary judgment under Federal Rule of Civil Procedure 56(a) when reviewing the underlying motion "because the district court's order compelling arbitration is in effect a summary disposition of the issue of whether or not there had been a meeting of the minds on the agreement to arbitrate." Id. (quoting Century Indem. Co. v. Certain Underwriters at Lloyd's, London, 584 F.3d 513, 528 (3d Cir. 2009) ). Thus, a motion to compel arbitration should only be granted if there is no genuine dispute as to any material fact and, after viewing facts and drawing inferences in favor of the non-moving party, the party moving to compel is entitled to judgment as a matter of law. Id. We note that under the FAA, "the...