Matthew Warciak v. Subway Restaurants, Inc.
United States Court of Appeals, Seventh Circuit
Matthew Warciak’s mother had a T-Mobile cell phone plan that contained an arbitration clause. Matthew was an authorized user on his mother’s plan; however, he was not a party to the agreement with T-Mobile. In 2016, Matthew received a spam text message promoting a Subway sandwich. He sued Subway under federal and state consumer protection statutes. Subway moved to compel arbitration; however, because Subway and Matthew had never agreed to arbitrate, Subway based its motion on the agreement between T-Mobile and Matthew’s mother. The court applied federal estoppel law and granted Subway’s motion to compel arbitration. Matthew appealed.
The United States Court of Appeals for the Seventh Circuit reversed and remanded. Generally, a court can’t compel a party to arbitrate a dispute unless that party has agreed to do so. Here, Matthew and Subway did not agree to arbitrate. The Court applied state promissory estoppel principles to determine whether Matthew, a non-party to the arbitration agreement with T-Mobile, should be bound. In Illinois, a claim of estoppel exists if a person, by statements or conduct, induced a second person to rely, to his or her detriment, on the statements or conduct of the first person. Subway could not show detrimental reliance, so Matthew was not bound to arbitrate.