Catamaran Corporation v. Towncrest Pharmacy
946 F.3d 1020
8th Cir.2020Background
- Catamaran, a pharmacy benefit manager, contracted with multiple pharmacies (members of AccessHealth) through two predecessor agreements; AccessHealth signed as attorney-in-fact.
- Both agreements contained broad arbitration clauses specifying arbitration under AAA rules but did not mention or authorize class arbitration.
- The pharmacies filed a demand for class arbitration; Catamaran sued in district court to prohibit class arbitration.
- The district court initially denied Catamaran’s summary-judgment motion; this Court in Catamaran I held that the question whether the agreements permit class arbitration is a substantive question for the court and remanded to determine whether a contractual basis for class arbitration exists.
- On remand the district court found no contractual basis for class arbitration, entered summary judgment for Catamaran, and this appeal followed.
Issues
| Issue | Plaintiff's Argument (Pharmacies) | Defendant's Argument (Catamaran) | Held |
|---|---|---|---|
| Whether the arbitration agreements provide a contractual basis for class arbitration | The agreements implicitly authorize class arbitration because one attorney-in-fact negotiated and signed for all pharmacies, the clauses are broad, and the pharmacies are treated as a single entity | The agreements are silent on class arbitration and silence/ambiguity cannot supply the requisite contractual consent | Held: No — there is no contractual basis for class arbitration; summary judgment for Catamaran affirmed |
| Whether silence in the arbitration clauses can be read to authorize class arbitration | Silence plus the contractual context supports an implicit term authorizing class arbitration | Silence generally indicates prohibition; fundamental differences between class and individual arbitration require explicit consent | Held: Silence/ambiguity insufficient to infer consent to class arbitration |
| Whether the question of class arbitration is delegated to an arbitrator | (Implicit) The pharmacies argued arbitration could proceed and/or delegation might apply under broad AAA rules | The issue of whether parties agreed to class arbitration is a substantive question for the court unless clearly delegated | Held: As held in Catamaran I, the question is presumptively for the court; on remand no clear delegation or contractual basis was found |
Key Cases Cited
- Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010) (a party cannot be compelled to class arbitration absent contractual basis)
- Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (2019) (ambiguity or silence cannot establish consent to class arbitration)
- Catamaran Corp. v. Towncrest Pharmacy, 864 F.3d 966 (8th Cir. 2017) (prior panel decision holding the class-arbitration question is for the court absent clear delegation)
- Dominium Austin Partners, L.L.C. v. Emerson, 248 F.3d 720 (8th Cir. 2001) (enforcing arbitration agreements according to their terms; silence does not imply class arbitration)