From Judge Terry Doughty’s opinion yesterday in Hines v. Stamos (W.D. La.) (already being appealed), rejecting defendants’ motion to compel arbitration:
Hines is a … co-Director of Health Freedom Louisiana, a consumer and human rights advocacy organization. Hoft is … the founder, owner, and operator of the news website, The Gateway Pundit. Hines and Hoft allege their … First Amendment [rights] … were violated by the censorship and/or suppression of their views on social media platforms….
Defendants [who are involved with the Stanford Internet Observatory and other similar organizations] are alleged to have worked closely and/or collaborated with state and federal government officials to urge, pressure, and coerce social media platforms to monitor and censor disfavored speakers and content….
According to Hines and Hoft, they do not seek to enforce Facebook, Twitter and/or YouTube’s terms of service (which included an arbitration agreement) against the social media platforms, but they instead intend to challenge the pressure, coercion, cooperation, and entwinement of these outside persons and entities working with government officials to suppress and/or remove free speech from social media platforms….
No party disputes an arbitration clause exists in the Facebook and Twitter terms of service agreements. Also, no party disputes that the Defendants were neither parties nor signatories to the arbitration agreements entered into by Hines and Hoft. In an attempt to enforce the arbitration clause and the choice of law provisions in the Hines and Hoft terms of service agreement, Defendants attempt to use an equitable estoppel legal theory….
In Grigson v. Creative Artists Agency, LLC (5th Cir. 2000), the United States Court of Appeals for the Fifth Circuit held that a non-signatory to an arbitration agreement can compel arbitration under equitable estoppel in two circumstances: (1) when a signatory must rely on the terms of the written agreement in asserting its claims against the non-signatory; or (2) when the signatory to a contract containing an arbitration clause raises allegations of substantially independent and concerted misconduct by both the non-signatory and one or more of the signatories to the contract.
The Court finds that Defendants are not entitled to the use of equitable estoppel to enforce arbitration for a number of reasons. First, Hines and Hoft are not relying on the terms of the Facebook and/or Twitter terms of service agreement to assert their claims.
Second, Hines and Hoft have not named either Facebook or Twitter in their lawsuit as the lawsuit only alleges that Defendants have worked closely with and collaborated with state and federal government officials to urge, pressure, and coerce the social media platforms to censor disfavored speakers and content. {The alleged concerted misconduct is between Defendants and government officials, not between Defendants and Facebook and/or Twitter.}
Third, because the application of equitable estoppel is discretionary and based upon equitable fairness considerations, the Court finds that Defendants do not have the “clean hands” required for the application of equitable estoppel…. Based upon the allegations contained in the First Amended Complaint, it would be inequitable to allow Defendants to compel arbitration. According to the allegations, both of the signatories to the terms of the service agreement are victims of Defendant and government collusion and pressure to violate Plaintiffs’ free speech rights. To allow Defendants to take advantage of an arbitration agreement against the two alleged victims would be inequitable.
Additionally, the Defendants are alleged to have violated the Plaintiffs’ fundamental constitutional right of free speech, as guaranteed by the First Amendment. To allow Defendants to avoid a court proceeding based upon an arbitration agreement they did not sign would also be inequitable, especially when a fundamental right is at issue.
The terms of the service agreement state the agreement is governed by California law. In Hernandez v. Meridian Management Services, LLC (Cal. App. 2023), the California court held that where a signatory to an arbitration agreement sues a non-signatory, there is no unfairness in allowing the suit to proceed….
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