Eleventh Circuit Clarifies the Limits of Non-Signatory Enforcement of Arbitration Clauses under Florida Law

Introduction

In Jesus Santiago, Jr. v. Neno Research LLC, the United States Court of Appeals for the Eleventh Circuit addressed whether a non-signatory data vendor—Neno Research, LLC (“Neno”)—could compel arbitration against an employee, Jesus Santiago, Jr. (“Santiago”), who had executed an arbitration agreement only with a different entity, Turn Technologies, Inc. (“Turn”). The dispute arose out of Santiago’s claim that Neno, acting as a background-check data provider, supplied erroneous criminal information in violation of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681e(b). After the district court denied Neno’s motion to compel arbitration, the Eleventh Circuit affirmed, holding that neither equitable estoppel nor third-party beneficiary theories allowed Neno to invoke the arbitration clause.

The ruling adds a significant gloss on Florida law governing arbitration and has national resonance because the Eleventh Circuit squarely delineates the boundaries within which non-signatories may compel arbitration in consumer and employment contexts.

Summary of the Judgment

• The Court conducted a de novo review of the denial of Neno’s motion to compel arbitration, reaffirming the standard stated in Jones v. Waffle House, Inc., 866 F.3d 1257 (11th Cir. 2017).
• Applying Florida law (unchallenged below), the Court concluded that:
• Equitable Estoppel does not apply because Santiago’s FCRA claim does not rely on the contract with Turn and does not allege “substantially interdependent and concerted misconduct” between Turn and Neno.
• Third-Party Beneficiary status fails because the arbitration clause’s reference to “beneficiaries” covers users of Turn’s background reports, not upstream data vendors such as Neno.
• Accordingly, the district court’s denial of the motion to compel arbitration was affirmed.

Analysis

Precedents Cited

1. Jones v. Waffle House, Inc., 866 F.3d 1257 (11th Cir. 2017) – Sets the de novo standard for reviewing refusals to compel arbitration.
2. Lawson v. Life of the South Insurance Co., 648 F.3d 1166 (11th Cir. 2011) – Clarifies that state law determines whether a non-signatory can enforce an arbitration clause.
3. Kroma Makeup EU, LLC v. Boldface Licensing + Branding, Inc., 845 F.3d 1351 (11th Cir. 2017) – Describes Florida’s contract-based equitable estoppel doctrine requiring a claim to rely on the contract containing the arbitration clause.
4. Koechli v. BIP International, Inc., 870 So. 2d 940 (Fla. 1st DCA 2004) – Adds a second prong of equitable estoppel for “substantially interdependent and concerted misconduct.”
5. Other supportive authority on choice-of-law waiver: Stone v. Wall, 135 F.3d 1438 (11th Cir. 1998).

Collectively, these precedents frame a two-track inquiry: (1) Does the plaintiff’s claim derive from rights/duties in the underlying contract? (2) Does the complaint allege concerted misconduct between signatory and non-signatory defendants?

Legal Reasoning

1. Equitable Estoppel

The Court distinguished Santiago’s statutory FCRA claim from contract-based claims that would “rely on the terms of the written agreement.” Because the FCRA imposes an independent duty on furnishers of credit information, Santiago’s cause of action exists wholly apart from his arbitration agreement with Turn.

Turning to the “concerted misconduct” prong, the panel underscored that Santiago pleaded two separate acts: (i) Neno’s data-gathering and (ii) Turn’s purchase and reporting of that data. Absent allegations of collusion or a common fraudulent scheme, the misconduct was not “inextricably intertwined.” This analytical separation mirrors the Florida courts’ insistence on a close nexus before equitable estoppel collapses signatory status.

2. Third-Party Beneficiary Theory

The arbitration clause broadly covered “beneficiaries of Services or Sites,” but the Court applied basic contract interpretation principles to confine that phrase to downstream beneficiaries—i.e., employers and agencies that receive Turn’s completed background reports. Neno, by contrast, is an upstream vendor supplying raw court records to Turn; it “cannot reasonably be understood as a user or beneficiary” of the employee report created for Santiago’s employer. Consequently, Neno lacked enforcement rights under standard beneficiary doctrine.

Impact

The decision is poised to influence multiple fronts:

• Background-Check Industry: Data brokers and subcontractors cannot casually invoke arbitration clauses signed between screening companies and employees/applicants. They must negotiate their own arbitration agreements if they want that protection.
• Drafting of Arbitration Clauses: Companies may now revisit wording to expressly include upstream service providers if they intend to extend arbitration rights. The Eleventh Circuit’s textual approach signals that generic terms like “agents” or “affiliates” may be insufficient without contextual support.
• FCRA and Consumer-Protection Litigation: Plaintiffs suing information furnishers have a clearer pathway to keep their statutory claims in court, limiting defendants’ ability to divert them into private arbitration.
• Pre-Litigation Strategy: Defendants will scrutinize complaint allegations for “concerted misconduct” more closely, and plaintiffs can strategically draft complaints to avoid such allegations where arbitration is undesirable.
• Choice-of-Law Waiver: The case reiterates that failure to raise a conflict-of-laws argument below forecloses its consideration on appeal.

Complex Concepts Simplified

• Arbitration Clause: A contract provision requiring disputes to be resolved in private arbitration rather than court.
• Non-Signatory: A person or entity that did not sign the contract but seeks to enforce or avoid its terms.
• Equitable Estoppel (Florida variant): A doctrine allowing a non-signatory to compel arbitration when either (a) the plaintiff’s claim depends on the contract, or (b) the plaintiff alleges tightly interwoven misconduct by a signatory and the non-signatory.
• Third-Party Beneficiary: Someone for whose benefit a contract is made who may, under certain circumstances, enforce the contract despite not being a party.
• Concerted Misconduct: Coordinated wrongful acts by multiple parties such that one actor’s liability is inseparable from another’s.
• Fair Credit Reporting Act (FCRA): A federal statute that regulates the collection and dissemination of consumer credit information, imposing duties of accuracy and reasonable procedures on “furnishers.”
• De Novo Review: An appellate standard in which the court gives no deference to the lower court’s conclusions of law.

Conclusion

The Eleventh Circuit’s decision in Jesus Santiago, Jr. v. Neno Research LLC crystallizes the doctrinal boundaries for non-signatories seeking to compel arbitration in Florida-governed contracts. The Court’s meticulous application of equitable estoppel and beneficiary principles reaffirms that:

• Statutory claims independent of contractual duties resist arbitration enforcement by outsiders, and
• “Beneficiary” language must unequivocally encompass the party claiming enforcement rights.

Beyond its immediate effect—keeping Santiago’s FCRA suit in court—the ruling signals to businesses that expansive arbitration policies have limits, especially where statutory rights and separate commercial tiers are involved. In the broader legal landscape, the decision provides a roadmap for litigants and courts grappling with the increasingly common scenario of non-signatory entities surfacing in complex contractual ecosystems.