ORDER

Daniel P. Jordan III, UNITED STATES DISTRICT JUDGE.

This ERISA case is before the Court on Defendant Jackson Lewis P.C.'s ("Jackson Lewis") Motion to Compel Arbitration and [for a] Stay of Proceedings [43]. Neither Jackson Lewis nor Plaintiff Vincent Sealey signed the contract containing the arbitration provision, and for the reasons that follow, the motion is denied.

I. Facts and Procedural History

The long and winding road that led to the filing of this case began in 2002, when Bruister & Associates, Inc. ("BAI"), following the legal advice of attorney David R. Johanson, established an Employee Stock Ownership Plan ("ESOP"). Between 2002 and 2005, BAI's owner, Herbert C. Bruister, sold 100% of BAI's shares to its employees through a series of transactions with the ESOP. Those transactions ultimately led to the filing of two lawsuits by the Secretary of Labor and two plan participants alleging that the transactions violated various ERISA provisions (the "ERISA lawsuits"). Following a 19-day bench trial on the consolidated cases, the Court entered judgment in favor of Plaintiffs and against Defendants Bruister, Amy O. Smith, Jonda C. Henry, and the Bruister Family Limited Liability Company ("BFLLC") for in excess of $6 million. Following the entry of judgment, the Court awarded the private Plaintiffs an additional $3.1 million in attorneys' fees and expenses.

At the time the ERISA lawsuits were filed, the plan fiduciaries (Bruister, Smith, and Henry), BAT, and the ESOP maintained fiduciary-liability insurance coverage through Defendants Beazley Insurance Company, Inc. ("Beazley") and Axis Insurance Company, Inc. ("Axis"). Bruister and BAI tendered the ERISA lawsuits to Beazley for coverage and defense, and Beazley sent a letter to Johanson reserving Beazley's rights and setting forth its coverage position.

The coverage dispute ultimately led to Bruister, Smith, Henry, the ESOP, BFLLC, and others filing a civil action against Beazley and Axis in this Court in August 2010. The parties to that action — Bruister; Smith; Henry; J. Michael Bruce; Robert Eddy; Southeastern Ventures, Inc. f/k/a BAI; the ESOP and related ERISA plans; BFLLC and other Bruister entities; Arthur J. Gallagher Risk Management Services, Inc.; Beazley; and Axis — settled the coverage lawsuit effective December 1, 2011, pursuant to a Confidential Settlement Agreement and Release (the "Agreement"). Under the Agreement, Beazley and Axis agreed to withdraw their reservations of rights and pay defense costs and any settlement or judgment in the ERISA lawsuits subject to reduced limits of liability under their respective policies. The parties also agreed that Johanson could serve as counsel to the defendants in the ERISA lawsuits.

Around the time that the Agreement was finalized, Johanson and his partner, Douglas A. Rubel, joined the Jackson Lewis law firm, with which they practiced through the entry of judgment in the ERISA lawsuits. Neither Johanson, Rubel, nor Jackson Lewis signed the Agreement. By the time the Court entered its judgment in the ERISA lawsuits, defense fees and expenses incurred by Johanson, Rubel, Jackson Lewis, and local counsel for the ERISA defendants had depleted all available insurance coverage under the Agreement.

On February 27, 2015, Sealey, the successful plan-participant plaintiff in the ERISA lawsuits, filed this action against Johanson, Bruister, Rubel, Jackson Lewis, Johanson Berenson, L.L.P., Beazley, and Axis. With respect to Jackson Lewis, Sealey asserts the following claims: (1) the Agreement constitutes a prohibited transaction under 29 U.S.C. § 1106(b); (2) Jackson Lewis knowingly participated in ERISA violations; (3) the Agreement is void as against public policy under 29 U.S.C. § 1110; (4) Jackson Lewis committed legal malpractice; and (5) Jackson Lewis committed fraud. Jackson Lewis answered [42] the Complaint and, relying on an arbitration provision contained in the Agreement, filed this Motion to Compel Arbitration and [for a] Stay of Proceedings [43]. Plaintiff responded [55], and Jackson Lewis filed a Rebuttal [61]. The Court has personal and subject-matter jurisdiction and is prepared to rule.

II. Analysis

Jackson Lewis filed its motion pursuant to the Federal Arbitration Act, which provides:

9 U.S.C. § 3. "Arbitration is a matter of contract between the parties, and a court cannot compel a party to arbitrate unless the court determines the parties agreed to arbitrate the dispute in question." Pennzoil Exploration & Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061, 1064 (5th Cir. 1998).

Ford Motor Co. v. Ables, 207 Fed.Appx. 443, 446 (5th Cir.2006) (citations and quotation marks omitted). And while the FAA represents a strong federal policy in favor of arbitration, "[t]he federal policy favoring arbitration does not extend to a determination of who is bound because, as stated by the Supreme Court, the purpose of the [FAA] is `to make arbitration agreements as enforceable as other contracts, but not more so.'" Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1074 n. 5 (5th Cir.2002) (quoting Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 n. 12, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967)).

A. Contract Terms

The Court must first determine "whether there is a valid agreement to arbitrate between the parties...." Ables, 207 Fed.Appx. at 446. In this case, neither Jackson Lewis nor Sealey actually signed the Agreement. Nevertheless, there are times when a nonsignatory like Jackson Lewis may still compel arbitration. And that inquiry begins with the contract language. See Niolet v. Rice, 20 So.3d 31, 34 (Miss.Ct.App.2009) (citing Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 382 (5th Cir.2008)).

Paragraph 47 of the Agreement provides as follows:

Agreement [66] ¶ 47 (emphasis added). Neither Jackson Lewis nor Sealey was a "Settling Party" under the Agreement, but the ESOP was.

Jackson Lewis describes this language as providing "a broad arbitration provision." Def.'s Mem. [45] at 3. If true, then it would "only [be] necessary that the dispute `touch' matters covered by the contract to be arbitrable." Smith v. Captain D's, LLC, 963 So.2d 1116, 1121 (Miss.2007) (citation omitted). But "[b]road arbitration language governs disputes `related to' or `connected with' a contract, and narrow arbitration language requires arbitration of disputes that directly `arise out of' a contract." Pennzoil Exploration & Prod. Co., 139 F.3d at 1067 (quoted in MS Credit Ctr., Inc. v. Horton, 926 So.2d 167, 175-76 (Miss.2006)); see also Niolet, 20 So.3d at 33.

The instant language applies to claims "arising out of[] this Agreement" without including the "related to" type language. It is therefore a narrow provision. And narrow provisions generally do not cover "collateral issues." Niolet, 20 So.3d at 33. In other words, "if the clause is `narrow,' arbitration should not be compelled unless the court determines that the dispute falls within the clause." Sedco, Inc. v. Petroleos Mexicanos Mexican Nat'l Oil Co. (Pemex), 767 F.2d 1140, 1145 n. 10 (5th Cir. 1985) (quoting Prudential Lines, Inc. v. Exxon Corp., 704 F.2d 59, 65 (2d Cir. 1983)).

The Agreement controls claims among the "Settling Parties," Jackson Lewis is not a Settling Party, and there is no reference to claims with third parties. Moreover, the claims against Jackson Lewis are collateral to the Agreement. So as a matter of contract construction, the Agreement is too narrow to allow Jackson Lewis, as a nonsignatory, to compel arbitration.

B. Equitable Estoppel

Though the contract is narrow, that does not end the inquiry. Jackson Lewis alternatively argues that Plaintiff should be equitably estopped from avoiding the arbitration provision. This argument raises a threshold issue regarding choice of law.

1. Choice of Law

There is no dispute that the FAA applies in this case. But within that framework, courts recognize various forms of estoppel as means for compelling arbitration when not all parties are signatories to the agreement containing the arbitration provision. As to this question, the parties dispute whether the Court should follow Mississippi or federal common law. According to Sealey, the Mississippi standards apply, whereas Jackson Lewis urges a federal standard.

The United States Supreme Court answered this question in Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009). There, the Court reversed the Sixth Circuit's conclusion that "nonparties to a contract are categorically barred from § 3 relief," holding instead that "traditional principles of state law allow a contract to be enforced by or against nonparties to the contract through [various theories including] ... estoppel." Id. at 631, 129 S.Ct. 1896 (citation and quotation marks omitted). The Court stopped short of deciding whether "the relevant state contract law recognizes equitable estoppel as a ground for enforcing contracts against third parties," concluding that the issue could be addressed on remand. Id.

The Fifth Circuit considered Arthur Andersen in Crawford Professional Drugs, Inc. v. CVS Caremark Corp., noting that state law applies when considering estoppel in the arbitration context. 748 F.3d 249, 255 (5th Cir.2014). The Fifth Circuit added, "[c]oincidentally, we recognize that our prior decisions applying federal common law, rather than state contract law, to decide such questions, see Grigson v. Creative Artists Agency L.L.C., 210 F.3d 524 (5th Cir.2000), have been modified to conform with Arthur Andersen." Id.

Grigson is the seminal Fifth Circuit case on equitable estoppel involving claims against nonsignatory defendants, and Jackson Lewis relies heavily on it. But as stated, Grigson will not apply if inconsistent with Mississippi law. Id.; see also Growtech Partners v. Accenture LLP, 118 F.Supp.3d 920, 946 n. 4 (S.D.Tex.2015) (Rosenthal, J.) (citing Arthur Andersen and declining to apply Grigson where inconsistent with Texas law).

2. Application of Mississippi Estoppel Law

Starting with the basics, equitable estoppel in Mississippi "is an extraordinary remedy and should only be invoked to prevent unconscionable results." Harrison Enters., Inc. v. Trilogy Commc'ns, Inc., 818 So.2d 1088, 1095 (Miss.2002). It should therefore be "applied cautiously and only when equity clearly requires it." Id. (quoting Bright v. Michel, 242 Miss. 738, 137 So.2d 155, 159 (1962)).

Here, Jackson Lewis is a nonsignatory to the Agreement.1 While Mississippi did not always recognize a nonsignatory defendant's right to compel arbitration, see generally Parkerson v. Smith, 817 So.2d 529 (Miss.2002) (McRae, J.), the state eventually adopted various forms of equitable estoppel, beginning with B.C. Rogers Poultry v. Wedgeworth, 911 So.2d 483 (Miss.2005). In that case, a nonsignatory defendant attempted to compel a signatory plaintiff to arbitrate. The Mississippi Supreme Court acknowledged Grigson, finding it "instructive" but not binding, and then explained that Grigson establishes two avenues for a nonsignatory to compel a signatory to arbitrate. Id. at 491. The first occurs "`when the signatory to a written agreement containing an arbitration clause must rely on the terms of the written agreement in asserting its claims against a nonsignatory.'" Id. (quoting Grigson, 210 F.3d at 527). The second exists "`when the signatory to the contract containing an arbitration clause raises allegations of substantially interdependent and concerted misconduct by both the nonsignatory and one or more of the signatories to the contract.'" Id. (quoting Grigson, 210 F.3d at 527).

Because the first Grigson theory was not an issue in Wedgeworth, the court moved to the second Grigson theory and rejected it. Id. at 492 (citing Ervin v. Nokia, Inc., 349 Ill.App.3d 508, 285 Ill.Dec. 714, 812 N.E.2d 534 (2004)). Instead, the court held that interdependent-and-concerted misconduct might support arbitration if the interdependent-and-concerted misconduct occurred between a nonsignatory defendant and a signatory with which a "close legal relationship" existed. Otherwise, Mississippi's standard equitable estoppel test applies, which requires detrimental reliance. Id. Jackson-Lewis has not established the Wedgeworth requirements, and its interdependent-and-concerted-misconduct arguments premised on Grigson are nonstarters. It has likewise failed to show detrimental reliance.

But Jackson Lewis also asserts direct-benefit estoppel, which the Mississippi Supreme Court first addressed in Scruggs v. Wyatt, 60 So.3d 758 (Miss.2011) (en banc). In that case, an attorney (Wyatt) whose law firm was a member of a single-purpose joint venture sued another lawyer (Scruggs) whose firm was also a member of the joint venture, to recover a share of fees that had been distributed under a joint-venture agreement (JVA). Neither Wyatt nor Scruggs had signed the JVA. Nevertheless, the Court, apparently for the first time, adopted a direct-benefitestoppel theory:

Id. at 767-68. The court explained that the first prong dealing with direct benefits "is termed the `knowingly exploited' theory of direct benefits estoppel. To satisfy the knowledge requirement, the case law requires that the non-signatory have had actual knowledge of the contract containing the arbitration clause." Id. at 768 n. 12 (internal citation and quotation marks omitted).

So following Scruggs, nonsignatories can be forced to arbitrate under direct-benefit estoppel. But this case presents an additional question: whether a nonsignatory defendant can invoke the theory. Scruggs speaks to this as well. Although the plurality in Parkerson opined that a nonsignatory like Jackson Lewis may not compel a signatory to arbitrate, 817 So.2d at 535, Scruggs took a different path. Citing federal precedents, the court held as to Wyatt's claims against the nonsignatory Scruggs:

Id. at 771-72 (additional internal citation omitted).

Breaking that down, the Scruggs court started the analysis in unison with other Mississippi cases by looking to the terms of the broad arbitration provision. Id. By contrast, the arbitration provision in this case is narrow. The Scruggs court remained on familiar turf when it noted that Scruggs owned SLF, Inc., the signatory. Id.; see also Wedgeworth, 911 So.2d at 492 (holding that nonsignatory could compel arbitration if in a "close legal relationship" with a signatory). But the court took a less familiar turn when noting that Wyatt's claims required "reference to" the arbitration-containing contract. See Scruggs, 60 So.3d at 772. In doing so, the Court augmented its holding that a nonsignatory defendant may enforce an arbitration provision with an estoppel-based theory.

Scruggs also touches another issue. As mentioned earlier, Jackson Lewis sometimes argues that Sealey is a signatory because he brings his claims on behalf of the ESOP, and Bruister signed the Agreement on behalf of the ESOP. Thus Plaintiff would be a signatory suing a nonsignatory, the circumstance Grigson addressed. 210 F.3d at 527. But Jackson Lewis also relies on direct-benefit estoppel, which typically deals with nonsignatory plaintiffs suing signatory defendants, the circumstance Noble Drilling addressed. 620 F.3d at 474. At least within the Fifth Circuit, the two tests are not exactly the same. Compare Noble Drilling, 620 F.3d at 474 (allowing estoppel when nonsignatory plaintiff "embraces" contract "by seeking to enforce the terms of that contract or asserting claims that must be determined by reference to that contract"), with Grigson, 210 F.3d at 527 (allowing estoppel "[w]hen each of a signatory's claims against a nonsignatory makes reference to or presumes the existence of the written agreement, ...." (citation omitted)).

In reaching its holding that the nonsignatory, Scruggs, could compel arbitration, the Mississippi Supreme Court did not make these types of distinctions. Instead, it cited Noble Drilling and its prior discussion on direct-benefit estoppel — neither of which normally applies to nonsignatory defendants — and simply said that Wyatt's claims against Scruggs were arbitrable, in part, because they required "reference to" the JVA. The "reference to" language appears in both Noble Drilling and Grigson.2

It may be reading too much into Scruggs to suggest that the Mississippi Supreme Court intentionally avoided the distinctions in Noble Drilling and Grigson, but it raises a bigger point. The labels attached to these theories are at times difficult to apply outside the facts of the reported case. See Grigson, 210 F.3d at 527 ("Each case, of course, turns on its facts."). And while the articulations may differ, both Mississippi and the Fifth Circuit share the core policy concerns that drove the Grigson and Scruggs opinions.

As the Fifth Circuit noted in Grigson, "[t]he linchpin for equitable estoppel is equity — fairness." Id. at 528. "[T]he result in Grigson and similar cases makes sense because the parties resisting arbitration had expressly agreed to arbitrate claims of the very type that they asserted against the nonsignatory." Bridas S.A.P.I.C. v. Gov't of Turkm., 345 F.3d 347, 361 (5th Cir.2003). In other words, courts must not allow a plaintiff to "`have it both ways': it cannot, on the one hand, seek to hold the non-signatory liable pursuant to duties imposed by the agreement, which contains an arbitration provision, but, on the other hand, deny arbitration's applicability because the defendant is a non-signatory." Grigson, 210 F.3d at 527 (quoted in Scruggs, 60 So.3d at 768); see also Simmons Hous., Inc., 36 So.3d at 1287 ("In the arbitration context, equitable estoppel prevents a party from embracing the benefits of a contract while simultaneously trying to avoid its burdens...."); Fradella v. Seaberry, 952 So.2d 165, 175 (Miss.2007) ("Because the Seaberrys rely on the document for their breach of contract claim, they cannot deny Fradella the benefit of the arbitration clause...."). Indeed the name of the theory itself suggests the need to find some direct benefit the plaintiff seeks from the contract while attempting to repudiate the arbitration provisions it contains.3

The present case admittedly presents unique facts, and neither the parties nor the Court have found cases squarely on point. But it is not the typical case where a signatory tries to "have it both ways," seeking contract privileges or damages while at the same time renouncing the arbitration agreement. While the Complaint references the Agreement, the equities would look different if, as in cases like Scruggs, Sealey ultimately sought benefits under the Agreement. But Sealey is not seeking contract benefits and is not claiming that Jackson Lewis breached the Agreement. He claims instead that the agreement is void and should never have been signed. He specifically faults Jackson Lewis, contending that (1) the Agreement constitutes a prohibited transaction under 29 U.S.C. § 1106(b); (2) Jackson Lewis knowingly participated in ERISA violations; (3) the Agreement is void as against public policy under 29 U.S.C. § 1110; (4) Jackson Lewis committed legal malpractice; and (5) Jackson Lewis committed fraud.

In this way, the case at least resembles Simmons Housing, Inc., where the plaintiffs initially included a breach-of-contract claim, but offered to drop the claim and pursue "claims ... based on negligence, strict liability, and products liability." 36 So.3d at 1288. The court denied arbitration, concluding, inter alia, that "[s]uch claims are not dependent on the terms of the contract." Id.

This case likewise resembles Hill v. G E Power Systems, Inc., a Fifth Circuit case decided under Grigson, where the plaintiff signed an agreement terminating another contract and then sued nonsignatories to the termination agreement contending that they fraudulently induced the plaintiff to sign it. 282 F.3d 343, 346 (5th Cir.2002). Claiming that he was duped into signing the termination agreement obviously presumes its existence and "touch[es] matters covered by" it. Id. at 349. But that was not enough. Because the plaintiff did not "rely upon the express terms of the Termination Agreement in asserting its claims," the court held that "the first prong of the Grigson test [was] not met...." Id. at 348-49.

Again, though, each case must turn "on its facts." Grigson, 210 F.3d at 527. And as stated, equitable estoppel in Mississippi "is an extraordinary remedy [that] should only be invoked to prevent unconscionable results." Harrison Enters., 818 So.2d at 1095. It should therefore be "applied cautiously and only when equity clearly requires it." Id. (citation omitted). While it would certainly be easier for the Court to simply grant Jackson Lewis's motion, there is nothing unconscionable about allowing Sealey to proceed. Indeed it would be fundamentally unfair for a nonsignatory ESOP participant to lose his right to trial against another nonsignatory under these circumstances. Sealey is not "on the one hand, seek[ing] to hold the nonsignatory liable pursuant to duties imposed by the agreement, which contains an arbitration provision, but, on the other hand, deny[ing] arbitration's applicability because the defendant is a nonsignatory." Grigson, 210 F.3d at 528; see also Palmer Ventures LLC v. Deutsche Bank AG, 254 Fed.Appx. 426, 431-32 (5th Cir.2007) (refusing to apply estoppel and holding "Plaintiffs are not trying to `have it both ways' because Plaintiffs are not relying on the [agreement] to hold [defendant] liable") (citing Hill, 282 F.3d at 346).

As a final note, granting estoppel is a matter of discretion. In Hill, the Fifth Circuit noted that the defendants had established the second Grigson prong — i.e., the interdependent-and-concerted-misconduct theory. 282 F.3d at 349. Nevertheless, the Fifth Circuit affirmed, noting that "the point of applying [estoppel] to compel arbitration is to prevent a situation that would fly in the face of fairness." Id. (citation and quotation marks omitted). And because the district court applied the correct standard and was not clearly erroneous in its factual findings, the Court found no abuse of discretion in denying the motion to compel. Id. Granting Jackson Lewis's motion, even assuming it has established the technical requirements for estoppel, would not "prevent unconscionable results"; it would be unfair to Sealey. Harrison Enters., 818 So.2d at 1095.

III. Conclusion

The Court has considered all of the parties' arguments. Those not specifically addressed would not have changed the outcome. For the foregoing reasons, Jackson Lewis's Motion to Compel Arbitration and [for a] Stay of Proceedings [43] is denied. The parties are instructed to contact Magistrate Judge Ball within 10 days of the entry of this Order to set the case for a telephonic case management conference.

SO ORDERED AND ADJUDGED this the 29th day of March, 2016.