Delegation Clauses and Equitable Estoppel Do Not Let a Signatory Force a Nonsignatory Courier Into Arbitration When the Contract Is Only With the Courier’s LLC

I. Introduction

Abdisalam v. Strategic Delivery Solutions, LLC (1st Cir. Mar. 17, 2026) addresses a recurring structure in “independent contractor” work arrangements: a company requires individuals to form their own business entities, contracts only with those entities, and later seeks to enforce arbitration provisions against the individuals personally.

Abdulkadir Abdisalam performed courier services for Strategic Delivery Solutions, LLC (“SDS”), a healthcare delivery company. He later sued SDS under Massachusetts wage-and-classification laws—principally the Massachusetts independent contractor statute, Mass. Gen. Laws ch. 149, § 148B, and the Massachusetts Wage Act, Mass. Gen. Laws ch. 149, § 148—alleging SDS misclassified couriers as independent contractors and failed to pay wages and reimburse expenses.

SDS sought to stay the case and compel arbitration based on an arbitration clause in a form “Independent Vendor Agreement for Transportation Services” (the “Vendor Agreement”) between SDS and “Abdul Courier, LLC,” an LLC SDS required Abdisalam to form. The key issues were:

  • Who decides arbitrability when the person resisting arbitration says he never became a party to the contract (court vs. arbitrator)?
  • Whether Abdisalam personally signed (or otherwise became bound by) the Vendor Agreement’s arbitration provision.
  • Whether equitable doctrines (direct benefits estoppel, intertwined claims estoppel, or successor-in-interest) can bind a nonsignatory individual to arbitrate.

II. Summary of the Opinion

The First Circuit affirmed the district court’s denial of SDS’s motion to compel arbitration. Applying Massachusetts contract law (as chosen by the Vendor Agreement), the court held:

  1. The court—not an arbitrator—must decide the “gateway” question whether Abdisalam is bound by the arbitration agreement, because he disputes the very existence of any arbitration agreement between him and SDS.
  2. Abdisalam did not sign in his personal capacity; the Vendor Agreement unambiguously was “by and between” SDS and Abdul Courier, LLC, and its arbitration clause applied only to “the parties.”
  3. SDS could not compel arbitration through direct benefits estoppel, intertwined claims estoppel, or successor-in-interest theories on this record and under Massachusetts law.

III. Analysis

A. Precedents Cited (and How They Shaped the Result)

1. The “gateway” arbitrability question (court vs. arbitrator)

  • Air-Con, Inc. v. Daikin Applied Latin Am., LLC: The panel relied on this case for the core FAA premise that arbitration is “a matter of contract” and that the movant bears the burden to show “that a valid agreement to arbitrate exist[ed].” This framing mattered because SDS’s problem was not scope—it was formation/binding.
  • Henry Schein, Inc. v. Archer & White Sales, Inc.: Cited (via Air-Con) for enforcing arbitration agreements “according to their terms,” including delegation clauses—but only once an agreement binds the parties.
  • Walker v. Collyer (quoting Mass. Highway Dep't v. Perini Corp.): Central Massachusetts authority establishing that whether a person is bound by an arbitration agreement is a “gateway dispute” for the court. The panel treated Walker as decisive on Massachusetts law when the resisting party challenges the existence of any agreement binding them.
  • DK Joint Venture 1 v. Weyand: Used within Walker’s reasoning to underscore that when a party “attacks the very existence of an agreement,” courts must decide arbitrability.
  • Morales-Posada v. Cultural Care, Inc. and Bossé v. N.Y. Life Ins. Co.: The panel invoked these to reject SDS’s attempt to use the contract’s delegation clause against someone who contests being a party. The point: enforcing delegation is “respect[ing] the parties’ decision”—but a nonsignatory is not yet established as a “party.”
  • Arthur Andersen LLP v. Carlisle: SDS invoked it; the panel distinguished it. The case stands for the proposition that the FAA does not alter state contract law about “who is bound,” and that nonsignatories may sometimes enforce arbitration under state-law doctrines. Here, SDS tried to use it to bind (not be bound), and without a recognized Massachusetts doctrine fitting the facts.
  • Apollo Comput., Inc. v. Berg and Casa Arena Blanca LLC v. Rainwater by Est. of Green: Distinguished because they involved enforcement against signatories or identified third-party beneficiaries/assignees—settings where “who is bound” was not in genuine doubt.
  • Becker v. Delek US Energy, Inc.: Distinguished as involving a signatory who needed to challenge the delegation clause specifically. The First Circuit stressed that Abdisalam—asserting no contract at all—was not required to mount a delegation-specific challenge.

2. Contract interpretation and who signed

  • Holyoke Mut. Ins. Co. in Salem v. Vibram USA, Inc.: Provided the Massachusetts “plain language” approach to contract interpretation. It anchored the court’s text-first analysis: the agreement’s first sentence and consistent defined terms (“Vendor,” “the parties”) controlled.
  • Marshall v. Stratus Pharms., Inc. (quoting Porshin v. Snider), and Brennan v. Carvel Corp.: These supplied the agency/contract principle that a person signing for a disclosed principal does not become a party absent agreement otherwise. They drove the conclusion that “Owner” signature blocks bound the LLC, not the individual.
  • Hogan v. SPAR Grp., Inc.: Used by analogy: where arbitration is confined to disputes “between the Parties” and “Parties” are defined, courts will not expand the clause to nonsignatories.
  • Mowbray v. Moseley, Hallgarten, Estabrook & Weeden, Inc.: Supported the inference that a sophisticated drafter’s omission (here, failing to include “Vendor Support Personnel” in the arbitration clause) is purposeful.
  • Cullinane v. Uber Techs., Inc.: Cited for the procedural posture—drawing facts from the complaint and arbitration-related submissions—illustrating the limited record often present at the motion-to-compel stage.
  • Air-Con, Inc. v. Daikin Applied Latin Am., LLC: Also cited to construe disputed facts in favor of the non-movant, reinforcing why SDS’s arguments about disputed background facts could not overcome the contract text.

3. Nonsignatory theories: direct benefits, intertwined claims, successor liability

  • Walker v. Collyer and MAG Portfolio Consult, GMBH v. Merlin Biomed Grp. LLC: These cases define “direct benefits estoppel” and its limits: the benefit must be knowingly accepted and must “flow[] directly from the agreement,” not merely from a relationship the agreement facilitated.
  • Ribadeneira v. New Balance Athletics, Inc.: A modern First Circuit application of Massachusetts law that reinforced the same distinction and illustrated when an owner can be estopped (e.g., when he personally seeks to enforce contractual terms). It also supplied the successor-liability framework the panel later applied.
  • Dickey v. Inspectional Servs. Dep't of Bos.: Used to emphasize LLC separateness under Massachusetts law—critical to rejecting the notion that benefits to the LLC are automatically benefits to the member/owner.
  • Cavallaro v. Wilmer Cutler Pickering Hale & Dorr, LLP: Offered as a comparator: owners were estopped where they personally relied on the contract for individual claims/benefits—highlighting what was missing here.
  • Everett v. Paul Davis Restoration, Inc.: SDS’s key out-of-state authority; the panel distinguished it on facts (personal-capacity signature demanded; collusion to evade restrictions) and on the equitable posture. The court declined to import Everett’s approach into Massachusetts law absent comparable circumstances.
  • Milliken & Co. v. Duro Textiles, LLC (quoting Demoulas v. Demoulas): Cited for equity’s flexibility, but used to justify restraint: equitable doctrines are fairness tools, not a license to rewrite SDS’s chosen contracting architecture.
  • Machado v. System4 LLC and InterGen N.V. v. Grina (quoting Thomson-CSF, S.A. v. Am. Arbitration Ass'n): Together, these informed the court’s refusal to apply “intertwined claims estoppel” offensively (signatory forcing a nonsignatory). Machado involved a nonsignatory compelling a signatory; InterGen stressed federal courts’ hesitancy to estop nonsignatories into arbitration.
  • Hanna v. Plumer: Reinforced the Erie constraint: a federal court in diversity should not materially change outcomes by expanding state law. This supported the panel’s refusal to be the first to extend Massachusetts intertwined-claims estoppel to bind nonsignatories.
  • Smith v. Kelley: Provided the “mere continuation” successor-liability test—continuity of ownership/management/assets/operations—and emphasized the doctrine’s fact-specific nature.

B. Legal Reasoning

1. Delegation clause could not leapfrog contract formation

SDS argued that the Vendor Agreement’s delegation language (“the issue of arbitrability shall be determined by the arbitrator”) required the arbitrator to decide whether Abdisalam was bound. The court treated this as circular: the delegation clause binds only “the parties,” and whether Abdisalam is a “party” is the very dispute. Under Massachusetts law (as articulated in Walker v. Collyer), the court must decide that threshold.

2. Textual clarity: “Vendor” and “parties” meant SDS and the LLC, not the owner

The court’s analysis was fundamentally textual. The Vendor Agreement:

  • opens by naming only “ABDUL COURIER LLC” and “Strategic Delivery Solutions, LLC” as counterparties;
  • defines the LLC as the “Vendor” and consistently treats SDS and the Vendor as “the parties”;
  • distinguishes “Vendor Support Personnel” (including officers, agents, employees, etc.) from the “Vendor,” yet the arbitration clause does not include “Vendor Support Personnel.”

Against that structure, Abdisalam’s signature “as the ‘Owner’ of Abdul Courier, LLC” did not create a personal obligation to arbitrate. The court applied the standard Massachusetts rule (from Marshall v. Stratus Pharms., Inc. and Porshin v. Snider) that signing for a disclosed principal does not make the agent a party absent contrary agreement.

3. Direct benefits estoppel failed because any benefits were to the LLC (and were, at most, indirect to Abdisalam)

Direct benefits estoppel requires that the nonsignatory knowingly accept benefits that flow directly from the agreement itself (Walker v. Collyer; MAG Portfolio Consult, GMBH v. Merlin Biomed Grp. LLC; Ribadeneira v. New Balance Athletics, Inc.).

SDS framed operational advantages (motor carrier authority, insurance arrangements, cargo-liability limitations) as “direct benefits” to Abdisalam. The court held these benefits, as pleaded and supported, ran to the contracting entity—Abdul Courier, LLC—not to Abdisalam individually. LLC separateness (Dickey v. Inspectional Servs. Dep't of Bos.) blocked SDS’s implicit attempt to treat the owner and the LLC as the same recipient of benefits. Notably, SDS did not pursue veil piercing.

SDS also argued that after the LLC’s dissolution, Abdisalam must have been the “only possible beneficiary” of the agreement. The court rejected this on burden-of-proof and record-development grounds and suggested an alternative inference: post-dissolution performance may reflect a new implied-in-fact arrangement rather than continued acceptance of benefits under the original Vendor Agreement.

4. Intertwined claims estoppel was not extended to bind a nonsignatory

The court treated Massachusetts intertwined-claims estoppel as primarily a doctrine allowing a nonsignatory defendant to compel a signatory plaintiff (as in Machado v. System4 LLC). It emphasized the “significant distinction” recognized in Walker v. Collyer between allowing a nonsignatory to compel a signatory and forcing a nonsignatory to arbitrate. Federal common law similarly shows reluctance to estop nonsignatories (InterGen N.V. v. Grina; Thomson-CSF, S.A. v. Am. Arbitration Ass'n).

Critically, the First Circuit declined, under Erie principles (Hanna v. Plumer), to expand Massachusetts law to permit SDS’s requested maneuver absent clear state authority.

5. Successor-in-interest theory did not fit: no reorganization into a successor entity

Drawing from successor-liability principles discussed in Ribadeneira v. New Balance Athletics, Inc. and the “mere continuation” framework in Smith v. Kelley, the court held SDS did not show that Abdisalam became a successor to the LLC.

Unlike settings where an entity transforms into another entity to avoid liabilities (as discussed in Milliken & Co. v. Duro Textiles, LLC), Abdul Courier, LLC was involuntarily dissolved and remained defunct; there was no new entity assuming its obligations. The court found Kelley inapposite because it involved “very unique circumstances” and a purposeful change intended “to avoid payment of the liabilities at issue”—facts not present here.

C. Impact

  • Limits on arbitration-by-LLC-proxy: Businesses that require individuals to contract through newly formed LLCs cannot assume they can later compel the individuals personally to arbitrate unless the agreement clearly binds them or a recognized equitable doctrine applies on a developed record.
  • Delegation clauses are not self-executing against nonsignatories: Parties cannot use delegation language to shift to the arbitrator the antecedent question of whether the resisting person ever agreed to arbitrate.
  • Text and drafting choices matter: The decision underscores that careful definitional drafting (“Vendor,” “Vendor Support Personnel,” “parties”) will be enforced as written; omitting workers/personnel from arbitration language can be dispositive.
  • Massachusetts-law conservatism on estoppel expansions: The First Circuit signaled that, in diversity cases, it will not be first to extend Massachusetts estoppel doctrines to force nonsignatories into arbitration without clear SJC direction—especially where doing so would materially change outcomes.
  • Practical litigation effect in wage/classification cases: In misclassification suits under Mass. Gen. Laws ch. 149, §§ 148, 148B, defendants may face more judicial proceedings (including class litigation) when their arbitration agreements are entity-to-entity rather than worker-to-company.

IV. Complex Concepts Simplified

  • Arbitrability (gateway question): The threshold issue whether a dispute must be arbitrated at all (including whether the person resisting arbitration ever agreed to arbitrate). Courts decide this unless the parties clearly delegated it—and even then, only if the resisting person is shown to be bound by the delegation.
  • Delegation clause: Contract language assigning the arbitrator, rather than a court, the power to decide issues about the arbitration clause’s enforceability/scope. It cannot bind someone who is not shown to be a party to the contract containing it.
  • Nonsignatory: A person who did not sign (and is not otherwise a party to) the contract. Nonsignatories sometimes can be bound under doctrines like estoppel, agency, assumption, veil piercing, or third-party beneficiary law—but those are exceptions requiring proof.
  • Direct benefits estoppel: Prevents a nonsignatory from avoiding arbitration when the nonsignatory knowingly accepts benefits that come directly from the contract with the arbitration clause (not merely from a relationship the contract makes possible).
  • Intertwined claims estoppel: Often used to stop a signatory from suing a nonsignatory over disputes that rely on the contract while simultaneously avoiding that contract’s arbitration clause. Massachusetts cases have applied it mainly to compel signatories, not nonsignatories.
  • Successor liability / “mere continuation”: A doctrine that can impose an entity’s liabilities on a successor entity when the successor is essentially the same business under a new form, often in contexts suggesting an attempt to evade obligations.
  • LLC separateness: An LLC is legally distinct from its members/owners. Obligations of the LLC are not automatically personal obligations of its owner.

V. Conclusion

The First Circuit’s decision establishes (and reinforces under Massachusetts law) a practical, contract-centered rule: when a company contracts only with a worker’s LLC, uses arbitration language limited to “the parties,” and omits personnel/owners from the arbitration clause, it generally cannot later compel the worker—personally and as a nonsignatory—into arbitration through a delegation clause or broad equitable estoppel theories. The court’s analysis is a strong reaffirmation that arbitration remains “strictly a matter of contract,” and that federal courts sitting in diversity will not expand state-law doctrines to create arbitration obligations where the contract text and established Massachusetts precedent do not.