Have you ever participated in an activity in which the organizer asks you to sign a release or waiver? As you might imagine, such documents are designed to help minimize the organizer’s legal liability in the event you are injured. One way to do this is by restricting your ability to file a personal injury lawsuit; instead, the waiver or release may require you to submit to binding arbitration.
Atlanta Concorde Fire Soccer Association, Inc. v. Graham
How far can an arbitration agreement go? For instance, can the agreement bind third parties who did not actually sign the release? The Georgia Court of Appeals recently addressed such a case, albeit one that applied California law to the subject.
This case involves a minor who participated in a youth soccer league. The league itself is a non-profit entity. Before she could play, the child’s parents had to sign a waiver and release with the league, which included a binding arbitration clause. The agreement itself was governed by California law.
One day, two employees of the child’s team–not the league–met with the parents in a public place. During this meeting, the parents alleged that the team employees informed them their child “had used her cell phone to send and receive nude pictures while on the team bus.” The child was then dismissed from the team and she was subsequently “unable to join another top tier youth soccer club” due to the allegations made by the team employees.
The parents then filed a defamation lawsuit against the team and the employees. The defendants insisted they were protected by the arbitration agreement the parents signed with the league. On that basis, they asked a Georgia judge to issue an order compelling arbitration. The judge declined to do so, prompting the defendants to appeal.
The Court of Appeals sided with the parents and the trial judge. As the appeals court explained, under California law, none of the defendants were actually parties to the arbitration agreement. As noted above, the agreement was with the league, not the individual teams, which appeared to be distinct legal entities. Nor was the league itself named as a co-defendant.
While there are cases where a third party may “benefit” from an arbitration agreement, this was not one of them. The Court of Appeals noted that in California, there must be some proof that the third party was an intended beneficiary. In this case, the league’s waiver and release did not “expressly state that it is for the benefit of its affiliated clubs or the directors or employees of their affiliated clubs.” Similarly, the Court said the team could not attempt to enforce the arbitration agreement as an “agent” of the league.
Finally, the Court rejected the defense’s position that an arbitrator should have been authorized to decide if the arbitration agreement applied, as opposed to the trial court. While many arbitration agreements do include such provisions, once again the issue here was that the defendants were never parties to the agreement in the first place. There was nothing to suggest the child’s parents ever agreed “to arbitrate arbitrability.”