Court Compels Arbitration Because Non-Signatory “Knowingly Exploited” and Obtained Benefits of Agreement

The Eastern District of Pennsylvania recently compelled arbitration involving a claim by a plaintiff who had not signed a Comcast subscriber agreement on the ground that the plaintiff had used benefits under the agreement and exercised control over the Comcast account. The court held that the plaintiff was therefore equitably estopped from avoiding arbitration.

James Shelton’s father signed up for Comcast and agreed to Comcast’s subscriber agreement, which provided, among other things, that Mr. Shelton’s father was accepting the agreement “on behalf of all persons who use [Comcast’s] Equipment and/or Service(s) at the Premises” (i.e., the Shelton household) and that Mr. Shelton’s father had “sole responsibility for ensuring that all other users understand and comply with the terms and conditions of this Agreement and any applicable policies.” The agreement also contained an arbitration clause.

Mr. Shelton, who lived in the Shelton household, subsequently placed a service call to Comcast in which he acknowledged using Comcast’s services and setting up his account online. Mr. Shelton also “associated his own personal cell phone with the Shelton Household Account.”

Mr. Shelton later filed suit alleging that Comcast and other defendants violated the Fair Credit Reporting Act by “check[ing] his credit report without a permissible purpose.”

Comcast moved to compel arbitration pursuant to the subscriber agreement.

The U.S. District Court for the Eastern District of Pennsylvania granted Comcast’s motion. Applying Pennsylvania law, the court held that Mr. Shelton was “equitably estopped from avoiding the Arbitration Provision” in the subscriber agreement because, even though “other members of [Mr. Shelton’s] household ... originally contracted for Comcast’s services,” Mr. Shelton had “sought and obtained benefits under the agreement by ... not only using the Comcast services provided under the agreement at the Shelton Household, but also by exercising control over the account.” Mr. Shelton “‘did more than just passively benefit from the services.’”

Shelton v. Comcast Corp., No. 2:20-cv-01763 (E.D. Pa. Jan. 21, 2021).