First Circuit 2025 Arbitration Update: Key Decisions Focus on Enforceability, Delegation, and Stays Pending Arbitration

A review of the year’s most impactful arbitration-related rulings in the First Circuit

Federal courts within the First Circuit issued numerous decisions in 2025 that reflect important trends for the enforceability of arbitration provisions and the arbitration process generally. These decisions include the enforceability of online agreements, the status of court proceedings while arbitration is pending, and issues related to delegation and unilateral amendment. Below, we highlight some of the most impactful decisions from 2025.

1. Morales-Posada v. Cultural Care, Inc., 141 F.4th 301 (1st Cir. 2025):

Ruling: In a FLSA wage and hour collective action, the named plaintiffs were foreign nationals who had signed a contract with a Swiss company. The First Circuit held that because the defendant was not a signatory to the contract, it had no right to enforce the contract’s arbitration provisions, including the delegation clause, against the named plaintiffs. The First Circuit rejected defendant’s arguments that it should be allowed to enforce the agreements as a third party beneficiary of the contract and under a theory of equitable estoppel.

Takeaway: To enforce an arbitration agreement, and particularly a delegation clause, in a contract to which the movant was not a signatory, the moving party must show that one of the contracting parties assigned their rights under the contract to the moving party or show that the moving party was an unambiguous third-party beneficiary of the arbitration agreement itself (as opposed to other portions of the contract or the contract more generally).

2. Watkins v. Musk, 786 F. Supp. 3d 337 (D. Mass. 2025)

Ruling: The Court compelled plaintiffs to arbitrate their claims and stayed those claims pending arbitration. The Court held that even though neither party had specifically requested a stay, the rationale of the Supreme Court’s decision in Smith v. Spizzirri required a stay instead of dismissal. Plaintiffs asked the Court to reconsider its decision and order a dismissal so that they could appeal, but the Court held that because the defendant specifically requested a stay in the motion for reconsideration briefing, the Court no longer had discretion and was obligated to order a stay under Spizzirri.

Takeaway: Even if the parties do not specifically request a stay of court proceedings pending arbitrations, courts in the First Circuit are trending towards ordering a stay of the proceedings rather than a dismissal. Such decisions will delay any appeals of decisions granting motions to compel arbitration.

3. Pizza Hazel, Inc. v. American Express Co. (D. Mass. 2025)

Ruling: The Court ruled that an arbitration agreement is unenforceable where the contract permits one party to unilaterally amend the arbitration agreement without adequate notice to the other party. Because the agreement allowed the party moving to compel arbitration to amend  “at any time” without directly notifying customers, the Court held that the arbitration agreement was illusory and unenforceable under Massachusetts and New York law.

Takeaway: Companies should review their arbitration agreements to confirm that any unilateral amendment provides notice and an opt-out to counterparties. Companies should also avoid giving retroactive effect to amendments.

4. Portes v. Polaris Industries, Inc., 2025 WL 3186991 (D.N.H. 2025)

Ruling: Applying First Circuit precedent, the Court ruled that a “clickwrap” agreement containing an arbitration provision and delegation clause was enforceable. Plaintiff argued that the agreement, which was provided to her on an electronic tablet, lacked mutual assent because she did not knowingly agree to its terms. The Court held that because she had affirmatively clicked a box on the tablet stating that she had read the agreement and understood that she was “waiving certain legal rights by signing this agreement,” she was bound by the agreement.

Takeaway: Courts in the First Circuit, including in Massachusetts, Maine, Puerto Rico, and now New Hampshire, have held that “clickwrap” agreements containing arbitration clauses are generally enforceable so long as they provide clear and conspicuous notice that the customer will be bound by the agreement.

Conclusion: Arbitration Enforcement Remains Fact-Dependent in the First Circuit

The First Circuit’s 2025 arbitration decisions reinforce that enforceability remains a fact-intensive inquiry grounded in contract terms and case posture. The decisions underscore two recurring themes. First, arbitration provisions must be carefully drafted to avoid illusory amendment language and retroactive modifications that undermine mutuality. Second, courts remain willing to enforce clearly presented clickwrap agreements where the record demonstrates affirmative assent. Taken together, these rulings confirm that arbitration remains a powerful defense tool in the First Circuit, but one that depends on precise drafting, thoughtful implementation, and strategic motion practice.