Arbitration Clause Can Apply to Nonsignatories

The Supreme Court on Tuesday ruled an arbitration clause can be applied against (or for the benefit of) persons who do not sign the clause, as long as governing state law makes that extension to nonsignatories possible. At issue in Arthur Anderson LLP v Carlisle was a tax shelter scheme gone bust, which in turn generated suits by individual investors who had put money into the tax shelters against the advisors and lawyers who recommended the illegal schemes.  Certain LLCs created for the purpose of facilitating the tax scheme (but not the individual investors themselves) signed contracts containing arbitration clauses with one or more of the defendant advisors.When the investors filed suit in federal district court, the defendants moved for a stay under Section 3 of the Federal Arbitration Act (FAA) on the ground that the issues in the suit were "referable to arbitration under an agreement in writing" under Section 3.  The plaintiff/investors fought this, contending that they are not individually bound by whatever clauses the LLCs had signed.The Supreme Court held that state law governs the issue of whether such clauses can be extended to nonsignatories, and there's nothing in the FAA itself that preempts or overrides whatever the outcome is under that state law.Note:  Washington state law is well-settled on the fact that nonsignatories can in certain circumstances be bound by -- or take advantage of -- arbitration clauses.  See McClure v. Davis Wright Tremaine, 77 Wn. App. 312 (1995).