The enforceability of an arbitration clause is often a hotly disputed issue in class action lawsuits. But may a party who is not a signatory to a contract invoke its arbitration provisions to compel the arbitration of claims brought by a party who is? The First Circuit recently held that a defendant was unable to meet the high burden to enforce an arbitration agreement based on a contract that it is not a party to in Morales-Posada v. Cultural Care, Inc., 2025 WL 1703513 (1st Cir. June 18, 2025).

The case discusses whether defendant Cultural Care, as a non-signatory to a contract that plaintiffs signed with another entity, can compel arbitration based on an arbitration provision within that contract. As a threshold matter, the court first declined to send the arbitrability of the dispute to the arbitrator to decide. The contract purportedly contains a delegation clause, which typically allows an arbitrator, instead of a court, to decide both the arbitrability of a dispute and its merits. Cultural Care argued that the delegation clause should be enforced as would be typical in cases involving the signatories of the contract. The court agreed that generally, when a contract contains a “clear and unmistakable” delegation by the parties of the question of arbitrability, “the courts must respect the parties’ decision as embodied in the contract.” However, the court found that this logic did not apply because Cultural Care was not a party to the contract, and the defendant failed to establish that it was entitled to enforce the delegation provision contained in the contract.

The court further analyzed whether Cultural Care could enforce the arbitration agreement as a third-party beneficiary. It concluded that Cultural Care could not do so, because the contract did not demonstrate with “special clarity” that the contracting parties intended for Cultural Care to benefit from the arbitration agreement. Cultural Care argued that several provisions in the contract, particularly the Release Clause, indicated that Cultural Care was a third-party beneficiary of the contract as a whole. But the court was unpersuaded, emphasizing that the critical fact is whether the contract “manifests an intent to confer specific legal rights upon the non-signatory.” Therefore, for Cultural Care to be able to enforce the arbitration agreement as a third-party beneficiary, the arbitration agreement itself must show intent to confer arbitration rights to Cultural Care, which it did not. The court further rejected Cultural Care’s arguments regarding equitable estoppel as none of the plaintiffs’ claims depended on the contract.

The court held that non-signatories faced a steep burden to demonstrate they were intended beneficiaries of an arbitration agreement, and that Cultural Care did not meet this burden. The decision provides a reminder that if contracting parties intend to confer the right to enforce an arbitration agreement on a third party, it is important to make this intent clear in the arbitration agreement itself.