A federal appeals court has affirmed a district court ruling that the husband of a former Starbucks employee could not be compelled to arbitrate based on an employment agreement signed by his wife.
In the December 16 ruling, the U.S. Court of Appeals for the 11th Circuit held that the Middle District of Florida ruling in favor of Raphyr Lubin was proper. Lubin had argued Starbucks sent deficient health-insurance notices under the Employee Retirement Income Security Act as amended by the Consolidated Omnibus Budget Reconciliation Act.
Starbucks moved to compel arbitration based on the employment agreement signed by Lubin’s wife, but Lubin opposed it and argued he was not a party to his wife’s employment agreement.
The district court denied Starbucks’ motion to compel arbitration for Lubin, finding that he was not a party to his wife’s employment agreement and was not suing to enforce it. Instead, it said Lubin sought to enforce his own statutory right to an adequate COBRA notice. The district court said no equitable doctrine of Florida contract law required Lubin to arbitrate and that Starbucks waived its argument that Lubin’s rights were derivative of his wife’s rights.
In affirming that decision, the 11th Circuit Court of Appeals said Lubin could not be compelled to arbitrate because he was not a party to the arbitration agreement. The appeals court also said the arbitration agreement’s delegation clause did not apply to Lubin for the same reason. The appeals court also rejected Starbucks’ arguments based on equitable estoppel, third-party beneficiary doctrine and the derivative claim theory, concluding that none of these principles required Lubin to arbitrate his claim. The court affirmed the district court’s order denying Starbucks’s motion to compel arbitration.
According to court filings, Lubin obtained coverage under Starbucks’ Welfare Benefits Plan because his wife worked for Starbucks, and she elected to cover Lubin as her spouse. Starbucks terminated Lubin’s wife in February 2019, which was a qualifying event that triggered Lubin’s right to a COBRA notice.
Starbucks’ COBRA administrator, Alight Solutions, mailed Lubin the allegedly deficient COBRA notice.
“Importantly, because Lubin never was employed at Starbucks, he never signed an employment agreement or an arbitration agreement with Starbucks,” the 11th Circuit ruling states. “Rather, Lubin’s wife signed the employment agreement, which included an arbitration clause. Starbucks believes that Lubin must arbitrate in light of his wife’s employment agreement.”
In its appeal, Starbucks argued that the district court erred in “ignor(ing) the strong presumption in favor of arbitration.” Lubin countered that he is not a party to the arbitration agreement and his claim has nothing to do with his wife’s employment agreement.
“And because he never signed an arbitration agreement with Starbucks, he is not required to arbitrate a matter concerning his rights under federal law,” the opinion states. “We agree with Lubin.
“Lubin never signed or otherwise agreed to the arbitration agreement with Starbucks. Because he was not a party to the agreement, the court cannot compel him to adhere to the terms of the agreement.”
Starbucks says this outcome creates a loophole for its employees to stage an end run around their arbitration agreements. But the appeals court says Lubin’s wife is not a party to this action.
“If she were, she would be bound by the arbitration agreement,” the opinion states. “In contrast to his wife, Lubin is a non-party to the arbitration agreement, and he seeks to vindicates his rights, not his wife’s. Starbucks argues, however, that the arbitration agreement’s delegation clause grants exclusive jurisdiction to an arbitrator to determine whether Lubin must arbitrate.”
U.S. Court of Appeals for the 11th Circuit case number 21-11215 (U.S. District Court for the Middle District of Florida case number 8:20-cv-01311