Background
Plaintiff Cynthia Sessoms filed a putative class action in the Eastern District of North Carolina alleging that defendant USHealth Advisors violated the Telephone Consumer Protection Act by sending an unsolicited prerecorded call. USHealth moved to compel arbitration, arguing it was a third-party beneficiary of an online Terms of Use agreement between Sessoms and a lead generator named NextGen. The district court denied the motion, ruling that USHealth was not a third-party beneficiary because the benefit to USHealth was not material to the purpose of the contract between Sessoms and NextGen.
The court’s reasoning
The Fourth Circuit affirmed that a district court must decide whether a non-signatory can enforce an arbitration clause, rejecting the argument that an arbitrator should decide this threshold issue. However, the court reversed the district court’s conclusion on the merits of third-party beneficiary status. Applying Delaware law, the court found that the benefit to USHealth was material to the purpose of the contract because NextGen’s business model required marketing partners to provide the insurance quotes that users requested. The court distinguished the district court’s reasoning that NextGen would have contracted with Sessoms regardless of USHealth’s involvement, noting that the purpose of the contract included conferring the benefit of leads to marketing partners.
We are satisfied that the benefit of USHealth was material to the purpose of the Terms of Use agreement.
Sessoms v. USHealth Advisors, LLC, No. 25-2086 (4th Cir. May 21, 2026)
What it means going forward
The case is remanded to the district court to enter an order compelling arbitration and staying the federal court proceedings pending arbitration.
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