RUAG Ammotec GmbH v. Archon Firearms ( 2023 )

139 Nev., Advance Opinion HS
IN THE SUPREME COURT OFTÏIÈ STATE OF NEVADA
RUAG AMMOTEC GMBH, A FOREIGN No. 84142
COMPANY; RUAG HUNGARIAN
AMMOTEC, INC., A FOREIGN
COMPANY; RUAG AMMOTEC USA,
INC., A FOREIGN COMPANY; AND
RUAG HOLDING AG, A FOREIGN
F[LED
COMPANY,
Appellants,
vs.
ARCHON FIREARMS, INC., A
DOMESTIC CORPORATION; ARSENAL
FIREARMS LTD., A FOREIGN
COMPANY; AF PRO TECH GROUP
KFT, A FOREIGN COMPANY; AND
ARSENAL FIREARMS USA, LLC,
Respondents.
Appeal from district court orders denying motions to compel
arbitration. Eighth Judicial District Court, Clark County; Gloria Sturman,
Judge.
Reversed and remanded.
Hogan LoveIls US LLP and Christopher J. Cox and Tej Sitigh, Redwood
City, California, and Helen Y. Trac, San Francisco, California; Snell &
Wilmer, LLP, and Kelly H. Dove, Las Vegas,
for Appellants.
Law Office of Hayes & Welsh and Larson A. Welsh, Henderson,
for Respondent Archon Firearms, Inc.
Semenza Kircher Richard and Christopher D. Kircher and Katie L.
Cannata, Las Vegas,
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for Respondents Arsenal Firearms Ltd., AF Pro Tech Group KFT, and
Arsenal Firearms USA, LLC.
BEFORE THE SUPREME COURT, EN BANC.
OPINION
By the Court, LEE, J.:
It is clear from our caselaw that a nonsignatory to a contract
containing an arbitration clause can be • compelled to• participate in
arbitration under ordinary principles of agency and contract. We have yet
to consider, however, whether that nonsignatory can be compelled to
participate in arbitration by another nonsignatory. We conclude that,
under circumstances where the nonsignatory seeking to compel arbitration
demonstrates both the right to enforce the contract and that compelling
another nonsignatory to arbitration is warranted under standard principles
of contract law or estoppel, compelling arbitration is appropriate. We
therefore reverse the district court's order as to appellants' first motion to
compel arbitration, which concluded otherwise, and remand for the -district
court to consider whether the moving nonsignatory party in this•case can
demonstrate the conditions needed to compel the opposing nonsignatory
party to arbitration. And based on the considerations outlined in this
opinion for when a nonsignatory party can compel arbitration or be
compelled to arbitrate, we reverse the district court's order as td appellants'
second motion to compel arbitration and remand for the district court to
determine whether a binding arbitration agreement exists involving the
various nonsignatories.
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FACTS AND PROCEDURAL HISTORY
In 2017, Arsenal FirearM.s ' Ltd. (Arsenal) and RUAG
Hungarian Ammotec, Inc. (RUAG-Hungary) entered into three agreeMents
for the manufacture and distribution of a pistol designed by Arsenal: an
assembly agreement, a supply chain agreement, and a wholesale agreement
(collectively, the RUAG-Arsenal Contracts). Each of the, agreements
identified RUAG-Hungary and Arsenal as the only parties to the
agreern.ents, and each contained identical 'arbitration. provision.s providing
that the Party seeking judicial relief "shall apply for arbitration" and lajll
disputes' arising out of :or in conneCtion with the present Agreement shall
then be finally settled under the Rules of Arbitration of the International
Chamber of Commerce."
After executing the RUAG-Arsenal .Contracts, Arsenal and
other entities within its corporate family allegedly•contracted with Arsenal
Firearms .North America Corp. (Arsenal-North America) for Arsenal-North
Arnerica to be the exclusive distributor of the pistil in the United States:
Arsenal-North America then allegedly assigned its distribution rightS to
respondent Archon Firearms, Inc. (Archon). Purportedly, Arsenal Firearms
WAs rebranded as Archon to avoid a potential trademark dispute..1
RUAG-Hungary later sent letter§ to Arsenal terminating the
RUAG-Arsenal Contracts. Archon then filed a complaint alleging 11 caišes
of action against several RUAG and Arserial entities. Specifically, the
RUAG defendants were RUAG-Hungary, RUAG Ammotec GmbH (RUAG-
Germany), RUAG Ammotec USA (RUAG-USA), RUAG Holding AG'(RUAG-
lIt is unclear from the record to which Arsenal Firearms entity this
allegation refers.
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Holding), and RUAG Schweiz AG (RUAG-Schweiz). The Arsenal
defendants were Arsenal: AP Pro Tejh •GrouP KFT (AF-PTG), and Arsenal
Firearms USA, LLC (Arsenal-USA). In the initial complaint, Archon
alleged that the RUAG defendants failed to manufacture the number of
pistols promised and that the pistols that had been manufactured required
repairs to make them merchantable. Archon's complaint directly referenced
oral and/or written contracts entered into around 2017 between the RUAG
and Arsenal defendants for the naanufacture and sale of the pistol, arid
Archon requested declaratory relief •that it was an intended third.party
beneficiary of the contracts. Additionally, Archon alleged that it foreseeably
relied on the contracts and suffered damages as a result of the purported
breach.
Subsequently, Archon filed an amended complaint. An:tong
other things, the amended complaint removed the breach-of-contract cauSe,
of actiOn:and the declaratory relief cauSe of action, and itomitted allegations
that Archon was a third-party beneficiary of the contracts.2. • RUAG-
Germany moved to dismiss or stay the action and coMpel arbitration with
Archon under the RUAG-Arsenal Contracts (the first motion to donipel
arbitration). Although I:WAG-Germany was a nonsignatory to the RUAG-
Arsenal Contracts, it maintained that it could comPel Archon, anaher
nonsignatory, to arbitrate under the. instruments -because RUACK4ermany
was an agent of RUAG-Hungary,3 a signatory, and because it was à third-
2The amended complaint also • reinoved RUAG-SchWeiz' as a
defendant.
3RUAG-Hungary was dismissed for lack of personal jurisdiction at the
same time the district court considered the first Motion to compel
arbitration.
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party beneficiary of the contracts. RUAG-Germany also argued that
r
Archon's claims related fd Or aroSe i'rom obligations imposed under the
RUAG-Arsenal Contracts and that ArChon •received a direct benefit from the
cOntracts. The district court denied the first motion to compel arbitration
because neither RLTAG-Germany nor Archon were parties to the RUAG-
Arsenal Contracts.
The Arsenal defendants tiled an answer to Archon's amended
complaint and asserted seven crossclaims against the RUAG defendants.
During the pending litigation and before RUAG-Hungary was dismissed for
lack of personal jurisdiction, RUAG-Hungary and RUAG-Gerraany entered
into a settlement agreement with Arsenal, AF-PTG, and nonparty •Arsenal
Collection s.r.o. (the .Settlement Agreement). The Settlement Agreement
prOvided the following:
Subject to the duties Under this Agreement, the •
• Parties shall consider to be fulfilled . by . this.
Agreement • all existing obligations, rights and
clairns arising from the IR:VAG-Arsenal Contracts]
and from all Orders. • related to the mentioned .
• agreements and the Pistols. There are no further
claims and rightš from one Party to the other and •
all. disputed points and claims in connection with.
• their business relationship to the Pistols are
regarded as finally settled.
Like the RUAG-Arsenal Contracts, • the Settle/Tient Agreement also
contained language that, should a party want judiCial relief, the party "shall
apply forarbitration," and "[a]il dispUtes arising out of kir in connection with
this Agreement shall then be finally settled under the Rqleš.. of Arbitration
of the International Chamber of Commerce." Following execution. of the
Settlement Agreement, the Arsenal defendants filed amended crossclaims,
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maintaining claims for equitable or implied indemnity and contribution
against the RUAG deiendants.
The RUAG defendants moVed to dismiss or stay the crossclaims
and to compel the Arsenal defendants to arbitrate under the RUAG-Arsenal
Contracts and the Settlement Agreement (the second motion to cOmpel
arbitration). The district court denied the second motion to compel
arbitration, relying in part on the fact that three of the parties were not part
of the Settlement Agreement (Arsenal-USA, RUAG-Holdirig, and RUAG-
USA) and on its conclusion that the crossclaims fell outside the scope of the
Settlement Agreement. The RUAG defendants appeal the district court's
orders denying both the first and second motions to compel arbitration.
DISCUSSION
We are presented With a legal question not previously
considered by this court: whether a nonsignatory to a contract containing
an arbitration clause can compel another nonsignatory to participate in
arbitration pursuant to the contract. In answering that question, we must
keep in mind our state's "fundamental policy favoring the enforceability of
arbitration a.greements." Uber Techs., Inc. v. Royz, 138 Nev., Adv. Op. 66,
517 P.3d 905, 908 (2022) (internal quotation marks omitted). And because
the RUAG-Arsenal Contracts and the Settlement.• Agreement involve
interstate commerce, our analysis is governed. by the Federal Arbitration
Act (FAA) and Supreme Court precedent that interprets the VAA. Id.; U.S.
Home Corp. v. Michael Ballesteros Tr., 134 Nev. 180, 186, 415 P.3d 32, 38
(2018) (quoting 9 U.S.C. § 2). We review de novo the district court's denial
of a motion to compel arbitration. See Royz, 138 Nev., Adv. Op.•66;517 P.3d
at 908.
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"Under the FAA, arbitration iS a matter of contract, arid courts
.•
must• enforce arbitratien Cc:thtracts aCCording to their terms." Id. at . 909
(internal quotation marks omitted). "Generally, the contractual right to
compel arbitration may not be invoked by one who is not a party to the
agreement and does not otherwise possess the right to compel arbitration."
Kramer v. Toyota Motor Corp., 705 F.3d 1122, 1126 (9th Cir. 2013) (internal
quotation marks omitted). However, "nonsignatories of arbitration
•
agreements may be bound by the agreement under ordinary contract• and
agency principles:" •Corner v. Micor, Inc., 436 F.8c11098, 1101 (9th Cir. 2006)
(quotation rnarks omitted); ,see also El Jen Med. Hosp. v. Tyler,. 139 Nev.,
Adv. Op: 36, 535 P.3d 660, 666 (2023) ("[N]onsignatories to an agreement
subject to the FAA may be bound to an arbitration clause when rules of law
or equity wOuld bind them to the contract generally." (quoting In re Labatt
Food Serv,, 279 S.W.3d. 640, 643 (Tex. 2009))). And courts must apply
state law in determining whether these "traditional •principles . . allow
contract tO be enforced by or against nonparties to the contract:" Arthur
Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009) (internal quotation
marks omitted). Therefore, in considering whether a nonsignatory can
enfOrce an arbitration 'clause against another nonsignatoiy, we rely on the
substantive law of this state:
First motion to compel arbitration
The first motion to compel arbitration was premised on
arbitration clauses in the RIJAG-Arsenal Contracts. Thp arbitration
clanses in the RUAG-Arsenal Contracts incorporated the International
Chamber of Commerce (ICC) Rules of Arbitration. ICC Rules, Article 6(3)
states in relevant part, "[i]f any party against which a claim has been
made . raises one or mere pleas concerning the existence, validity or scope
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of the arbitration agteernent. . the arbitration shall proceed and any
question of jurisdidi6n . •shall be • 'AeCided directly by the arbitral
tribunal." Thus, the arbitration agreements included a delegation
provision. See Portland Gen. Elec. Co. v. Liberty Mut. Ins. Co., 862 F.3d 981,
985 (9th Cir. 2017) (concluding the incorporation of the ICC Rules is clear
evidence that the parties delegated questions of arbitrability to the
arbitrator). "A delegation [provision] is 'an agreement to arbitrate
threshold issues concerning the arbitration agreement . . . •such as Whether
the parties have agreed to arbitrate or whether their agreement covers a
particular controversy." Royz, 138 Nev.,' Adv. Op. 66, 517 P.3d at 909
(enaphais added) (quoting Rent-A-Ctr., W,- Inc. v. Jackson, 561 .U.S. 63, 68-
69 (2010)). Where threshold questions cf arbitrability are delegated to an
arbitrator, "a court possesses no power to decide the arbitrability issue."
Henry Schein, Inc. v. Archer and White Sales, Inc., 586 U.S. ; 139 S.
Ct. 524, 529 (2019);•see also Royt, 138 Nev., Adv. Op. 66, 517 P.3d at 909-
10.
Although the arbitration clauses in the RUAG-Altenal
Contracts include a delegation provision, the factual circumstances give us
pause about whether the court, not an arbitrator, should determine if
RUAG-Germany, a nonsignatory, can compel another nonsignatory,
Archon, to arbitration. Courts appear split on whether an arbitration
agreement's enforceability as•to. a nonsignatory is an arbitrability question
delegable to an arbitrator. Compare Blanton v. Dornino's PiZza.Franchising
LLC, 962 F.3d 842, 852 (6th Cir. 2020) (concluding "the arbitrator should
decide .f6r itself whether [the nonsignatory] can enforce the arbitration
agreenient" based on incorporation of a delegation clause), Brittania-U
Nigeria, Ltd. v. Chevron USA, Inc., 866 F:3d 709,• 715 (5th .Cir. 2017)
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(determining that incorporated delegation clause applied to claims against
nonsignatories), Eckeri/ Wordell Arckitecis, Inc. v. FJM Props. of Willmar,
LLC, 756 F.3d 1098, 1100 (8th Cir. 2014) (concluding that whether an
arbitration provision could be used to compel arbitration between a
nonsignatory and a signatory was a threshold question of arbitrability
subject to delegation), and De Angelis v. Icon Entm't Grp. Inc., 364 F. Supp:
3d 787, 797 (S.D. Ohio 2019) (deciding that "[w]hether a nonsignatory can
enforce the arbitration agreement is a question of the enforceability of the
arbitration clause" that could be delegated), with Newman v. Plains All Am.
Pipeline, L.P., 23 F.4th 393, 398 (5th Cir. 2022) •(holdingAhe court "must
decide whether [the nonsignatoryl can enforce the . . . arbitration
agreement; hot an arbitrator" and "[w]hen a court decides whether an
arbitration agreement exists, it necessarily decides its enforceability
between parties"), and QPro Inc. v. RTD Quality Servs. USA, Inc., 761 F.
Supp. 2d 492, 497 (S.D. Tex. 2011) ("When, as here, the issue iš whether a
nonsignatory to an arbitration clause mAy enforce it 'against a signatory,
the courts have viewed that as a matter for the court to decide.").
We are persuaded that the issue is one of contract forthation
that must be decided by the courts in the first instancb. See In re StockX
Castomer Data Sec. Breach Litig., 19 F.4th 873, 879 (6th Cir. 2021)
(collecting Supreme Court cases and concluding issues regarding the
formation of a contract are always for the courts to decide, even where "a
delegation provision purports to require arbitration" of such issues). Where
a nonsignatory is involved in a mOtion to compel arbitration under a
contract, there is a question as to the very existence bf an agreement
involving the nonsignatory. See Schoenfeld v. Mercedes-Benz USA, LLC,
532 F. Supp. 3d 506, 510 (S.D. Ohio 2021) (Concluding that nonsignatory
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and signatory "never agreed ,to arbitrate any claims •that might arise
between them"); Jody James Farms, ill v. Altinan Grp., Inc., 547 SAV.3d
624, 632 (Tex. 2018) ("The question is not whether [the signatory] agreed to
arbitrate with someone, but whether a •binding arbitration agreement exists
between [the signatory] and the [nonsignatory]."). And it remains with the
courts to decide whether such an agreement exists. See Henry Schein, 586
U.S. at , 139 S. Ct. at 530 ("To be sure, before referring a dispute to an
arbitrator, the court determines whether a valid arbitration• agreement
exists."); Lloyd's Syndicate 45.7 v. FloaTEC, L.L.C., 921 .F.3c1.508, 515 n.4
(5th Cir. 2019) ("[Henry Schein] did not change—to • the ccintrary, it
reaffirmed—the rule that courts must first decide Whether an arbitration
agreement exists at all."); see also Am. Builder's Ass'n v. Au-Yang, 276 Cal.
Rptr. 262, 265 (Ct. App. 1990) ("The question of whether a nonsignatory is
a party to an arbitration agreement is one for the trial court in the .first
instance."). For "[e]ven the most sweeping delegation cannot send the
contract-formation issue to the arbitratör, because, until the court rules
that a contract exists, there •is simply no agreement to arbitrate." K.F.C. v.
Snap Inc., 29 F.4th 835, 837 (7th.Cir. 2022);,see also Jody James Farms,
547 S.W.3d at 632 (holding that, even where a• delegation provision. has been
incorporated, "questions related to the existence of an arbitration
agreement with a non-signatory are for the• court, not the arbitrator")..
Therefore, the district court properly considered whether RUAG-Germany,
a nonsignatory, could compel another nonsignatory,. Archon, to arbitration
pursuant to the RUAG-Arsenal Contracts:
In Truck Insurance Exchange• v. Palmer J. Swanson, Inc„ we
held a nonsignatory may be obligated to arbitrate "if so dictated by the
ordinary principles of contract and• agency." 124 Nev.• 629, 634, 189 P.3d
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656, 660 (2008) (quotation marks omitted). In that case, .we listed five
theories for bindini - a qionsigna.to6 to an arbitration agreement:
"1) incorporation by reference; 2) assumption; 3) agency; 4) veil -
piercing/alter ego; and 5) estoppel." Id. at 634-35; 189 P.3d at 660 (internal
quotation marks omitted). Therefore, under established Nevada caselaw, a
nonsignatory to an arbitration agreement can be obligated to arbitrate if
one of the five theories is satisfied.
We likewise conclude these same five theories should be used to
determine whether a nonsignatorY has the right to enforce an arbitration
agreement. See.Arthur Andersen, 556 U.S. at 631 ("[Tlraditional princiPles
of state law allow a contract to be enforced by or against nonparties to the
contract...." (emphasis added) (internal quotation Marks omitted));
Awuah v. Coverall N. Am.., Inc., 703 F.3d 36, 42-43 (1st Cir. 2012) (same);
Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042, 1045 (9th Cir. 2009)
("General contract and agency •principles apply in determining the
enfOrcement of an arbitration agreement by or againSt. nOnsigriatories..");
Ross v. Am. Express Co., 478 F.3d 96, 99 (2d din 2007) ("[W]e haVe
recognized a number of common iaw principles of contract law that may
allow non-signatories to enforde an arbitration agreement. ."); Paper
v. Schwabedissen Maschinen & Anlagen, .206 F.3d 411; 416-17 (4th Cir.
2000) ("Well-established common law principles dictate that in an
appropriate case a nonsignatory can enforce, or be bound by, an arbitration
provision within a contract executed by other parties.")'; see alSo Dr.' Robert
L. Meinders, D.C., Ltd. v. United Healthcare Servs. Inc., 7 F.4th 555, 563
(7th Cir. 2021) ("Illinois courts have reasoned that, if nohsignatories May
be bound to arbitrate under [theories of contract], then:" it would folloW as a
cOrollary that the same types of theories could afford a basis for a
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nonsignatory to invoke an arbitration agreement signed by others." (quoting
Equistar Chems., LP v. Hartford Stei:un. 136iler Inspection & Ins. Co. of
Conn., 883 N.E.2d 740, 747-48 (Ill. App. Ct. 2008))). Therefore, if a
nonsignatory seeking to compel arbitration can establish a right to enforce
the contract under any one of these theories, it has shown a right to enforce
the arbitration agreement within the contract.
Although Truck Insurance Exchange considered a situation
where a signatory sought to compel•a nonsignatory, we take the opportunity
to clarify that a nonsignatory can be compelled to arbitrate by another
nonsignatory after demonstrating both the right to enforce tile contract and
that compelling another nonsignatory to arbitration is warranted under one
of the five theories. We determine such a result is provided for by principles
of contract and agency law because, whether it is a signatory or
nonsignatory seeking to compel the arbitration, the justification for
compelling a nonsignatory to arbitration is the same. Thus, the five theories
for binding a nonsignatory to an arbitration agreement apply whether it is
a signatory or nonsignatory seeking to compel arbitration.
We also take a moment to address the fifth theory recognized in
Truck Insurance Exchange: estoppel. "Equitable estoppel precludes a party
from claiming the benefits of a contract while simultaneously attempting to
avoid the burdens that contract imposes." Comer, 436 F.3d at 1101 (internal
quotation omitted); see also In re Harrison Living Tr., 121 Nev. 217, 223,
112 P.3d 1058, 1061-62 (2005) (recognizing le]quitable estoppel functions
to prevent the assertion of legal rights that in equity and good conscience
should not be available due to•a party's conduct"). The test for establishing
estoppel depends on whether the theory is being used to bind a nonsignatory
tó arbitration or whether a nonsignatory is seeking to compel arbitration
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based on the theory. If it is the forther, we made clear iri Truck Insurance
Exchange that "a nonsignatUy is estopped fi-oin refusing to comply with an
arbitration clause when it receives a direct benefit from a contract
containing an arbitration clause." 124 Nev. at 636, 189 P.3d at 66.1 (quoting
Int'l Paper, 206 F.3d at 418); see also MAG Portfolio Consult, GmbH v.
Merlin Biomed Group LLC, 268 F.3d 58, 61 (2d Cir. 2001) (recognizing the
"direct benefit" test for binding a nonsignatory under a theory of estoppel
and commenting that "[t]he •benefits must be direct—which is to say, flowing
directly from the agreement"). We recently expounded upon the direct
benefits estoppel doctrine in El Jen and stated that "a nonsignatory is not
bound to an arbitration agreement simply because its claim relates to a
contract containing the arbitratidn provision," as the doctrine applies only
when "the nonsignatory party seeks, through the claim, to derive a direct
benefit from the contract containing the arbitration provision." 139 Ne\r.,
Adv. Op. 36, 535 P.3d at 670; see also Thornson-CSF, S.A. v. Am.*Arbitration
Ass'n, 64 F.3d 773, 778-80 (2d Cir. 1995) (holding that a nonsignatorÿ
cannot be bound to arbitrate without receiving a direct benefit from, or
pursuing a claim integrally related to, the agreement Containing the
arbitration provision).
If it is the latter scenario---a nonsignatory seeking to coinpel
arbitration based on a theory of estoppel—it is "essential... that the
subject matter of the dispute [be] intertwined with the contract •providing
for arbitration." Sokol Holdings Inc. v. .BMB Munai, Inc:, 542 F.3d 354, 361
•(2d Cir. 2008). Although used in a situation where a nonsignatory sought
to compel a signatory to arbitration, we adopt the test outlined in MS Deciler
Service Corp. v. Franklin, 177 F.3d 942, 947 (11th Cir. 1999), abrogated on
other grounds by Arthur Andersen, 556 U.S. at 631. Under that test, a
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nonsignatory seeking to compel arbitration can satisfy a theory of estoppel
(1) where the claims tely on the terms' of th6 Written agreement containing
the arbitration provision or "arise out of and relate directly to the written
agreement," or (2) where the claims involve "allegations of substantially
interdependent and concerted misconduct by both the nohsignatory
[seeking to compel arbitration] and one or more of the signatories to the
contract." Brantley v. Republic Mortg. Ins. Co., 424 F.3d 392, 395-96 (4th
Cir. 2005). To ensure the test serves the purpose of equitable estoppel, we
understand the second• method to require that the allegations be "founded
in or • intimately connected with the obligations of the underlying
agreement." Kramer, 705 F.3d at 1129.
• We acknowledge that "[a]rbitration agreements apply to
nonsignatories only in rare circumstances." Bridas S.A.P.I.C..v. Gov't of
Turkmeniitan, 345 F:3d 347, 358 (5th Cir. 2003). We also acknowledge that
caselaw considering whether a nonsignatory can compel arbitration or
whether a nonsignatory can be compelled to arbitrate generally
contemplates a scenario where a signatory is involved. •But we find no clear
requirement that such be the case. See McBro Plan,ning & Dev. Co. v.
Triangle Elec. Constr. Co., 741 F.2d 342, 343-44 (11th Cir. 1984) (requiring
a contractor and construction manager to arbitrate, where no written
agreement between the two existed but each had an •arbitration agreement
with the owner, after considering the cloSe relationshiP of the three entities
and of the construction managêr's alleged wrOngS with respect to his
•
contractual obligations), abrogated on other grounds by Lawscin v. Life df
the S. In.s. Co., 648 F.3d 1166, 1171 (11th Cir. 2011). Rather, the five
theories outlined above can be used • in Accordance with our state law
principles of contract and agency, notwithstanding the fact that a signatory
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is not involved. Accordingly, where a nonsignatory te a contract containing
an arbitration provision moves to compel another nonsignatory to arbitrate,
the nonsignatory seeking- to compel arbitration must demonstrate the right
to enforce the arbitration agreement and show, in law or equity, that
compelling the other nonsignatory to arbitration is warranted. Cf. D.R.
Horton, Inc. v. Green, 120 Nev. 549, 553, 96 P.3d 1159, 1162 (2004) ("The
party moving to enforce an arbitration clause has the burden of persuading
the district court that the clause is valid.").
Having outlined when a nonsignatory can compel arbitration
and when a nonsignatory can be compelled to arbitrate, we turn back to the
matter before us—whether RUAG-Germany (a nonsignatory) éan compel
Archon (a nonsignatory) to arbitration. It is clear from the record that the
district court denied. the first motion to compel arbitration solely because
RUAG-Germany and Archon were nonsignatories to the RUAG-Arsenal
Contracts. The district court did not consider or make any findings relevant
to whether they nonetheless could be bound by the arbitration agreethents
under general theories such as agency and equitable estoppel. See, e.g.,
Harrison Living•Tr., 121 Nev. at 222, 112 P.3d at 1061 (holding "[w]hether
the party seeking to establish equitable estoppel has met his or her burden
is . . . generally a question of fact" for the district court to consider). We
therefore reverse the district court's order as to the first motion to compel
arbitration and remand for the distiict court to reconsider that motion
consistent with this opinion.
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Second rnotion to compel arbitration
The second motion to compel arbitration, where the RUAG
•
cl6fendants sought to dmiael the Arsenal defendants to arbitrate their
crossclaims, was premised in part on the Settlement Agreement. The
Settlement Agreement contained a delegation provision identical to those
in the RUAG-Arsenal Contracts. Unlike the first motion to ccanpel
arbitration, the RUAG defendants sought to compel both nonsignatories
and signatories to arbitration under the terms of the Settlement
Agreement.
With regard to RUAG-Germany, Arsenal, and AF-PTG, the
district court erred by denying the motion to Compel because those parties
signed the Settlement Agreement and the agreement contained a delegation
provision. Therefore, the district court was without power to determine
threshold questions of arbitrability, such as the scope of thè arbitration
provision. See Henry Schein, 5 U.S. at , 139 S. Ct. at 529; see also Poyz,
138 Nev., Adv. Op. 66, 517 P.3d at 909-10.
As to the nonsignatories to the Settlement Agreement (Arsenal-
USA, RUAG-Holding, and RUAG-USA), consistent with our opinion today,
it is left to the district court to determine in the first instance whether a
binding arbitration agreement involving the nonsignatories exists.4 We
4Our opinion does not alter the tenet that, should an arbitration
agreement unquestionably exist between the parties that clearly and
unmistakably delegates threshold issues of arbitrability to the arbitrator,
the question of whether a particular claim falls within the scope of the
arbitration is for the arbitrator to resolve. See Royz, 138 Nev., Adv. Op. 66,
517 P.3d at 910 (concluding "the district court may not bypass contract
language delegating threshold issues to the arbitrator bY finding that the
arbitration agreement does not apply to the dispute"); see also CMB
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•
therefore reverse the district courfs order denying the second motion to
compel arbitration and remand the matter for the district court to grant
that motion as to the signatories to th6 Šettlement Agreement and to
reconsider that motion as to the nOnsignatories.
J.
Lee
We ,concilt:
"XV:44-,0 ,
Stiglich
0.
Cadish
PiekuuAf
'
Pickering
J.
Parraguirre
, J.
Infrastructure Group IX, LP v. Cobra Energy Inv. Fin., Inc., 572 F. Supp. 3d
950, 975 (D. Nev. 2021).
SUPREME COURT
OF
NEVADA
40.
17
(0) 1947.4