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Arbitration agreements are not what they used to be, at least not as far as Sunoco is concerned.
The gasoline company sought to compel arbitration in an alleged fraud involving Citibank, claiming the plaintiff Donald White signed an arbitration agreement with the credit card company. White alleged Sunoco induced him to sign up for a rewards card but did not give him promised discounts.
The U.S. Third Circuit Court of Appeals said Sunoco wasn't part of the arbitration agreement in White v. Sunoco, Inc. The proposed class-action will move forward.
No Party, No Privity
White alleged that Sunoco falsely induced customers to sign up for the rewards card, but he only sued the gasoline company for its false claims. Sunoco moved to compel arbitration because of the credit card agreement, but the trial court denied the motion.
On appeal, the Third Circuit said the credit card company was not a party to the case and the gasoline company was not a party to the contract.
"The Card Agreement is an unambiguous and complete contract between White and Citibank; we are aware of no basis for looking outside it to search for a broader 'contract' with Sunoco," the appeals court said. "Because Sunoco has advanced no colorable argument on this front, it cannot compel arbitration."
In the 2-1 decision, Judge Jane Richards Roth did not agree. She said the claims arose out of an agreement between White, Sunoco and Citibank, and Sunoco should be able to compel arbitration.
Roth said the majority failed to apply contract principles that show Sunoco was a party to a single, integrated contract. She said the gasoline company and the credit card company worked together on the promotion.
"(T)he promotional materials and Card Agreement together state the definite terms of the contract and are clearly part of a single transaction; accordingly, both should be considered together as one contract," Roth wrote.
Citing Restatement (Second) of Contracts Section 26 (1981), she said "basic contract law" dictates that the promotional process could not create two separate contracts. Roth said promotional materials are not considered offers that can be accepted through application -- "especially when the application is explicitly subject to approval."