Crawford Professional Drugs, Inc. v. CVS Caremark Corp.
748 F.3d 241
| 5th Cir. | 2014Background
- Plaintiffs operate 23 Mississippi drug stores; suit against Caremark entities and CVS entities alleging trade-secret misappropriation and Any Willing Provider Law violations.
- Two Plaintiffs signed Provider Agreements with Caremark; Provider Manual contains arbitration clause; other Plaintiffs are non-signatories to any Provider Agreement.
- Defendants moved to compel arbitration under FAA; district court ordered arbitration against all four Defendants.
- Appellate issues include whether non-signatories can compel arbitration, scope of arbitration, and validity of arbitration clauses.
- Choice-of-law: Arizona law under Provider Agreement governs arbitral questions; whether to apply state or federal law for enforceability.
- Court affirms district court’s judgment compelling arbitration and addresses arbitrability, unconscionability, and equitable estoppel under applicable law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May non-signatories compel arbitration against signatories? | Plaintiffs argue no arbitration with non-signatories. | Defendants rely on equitable estoppel under chosen law. | Yes; Arizona law would permit estoppel-based arbitration against signatories. |
| Scope of arbitration clause—do Provider Agreement provisions cover Plaintiffs' claims? | Plaintiffs contend claims fall outside arbitration. | Arbitration clause covers disputes arising out of Provider Agreement. | Arbitration clause governs disputes arising from the Provider Agreement. |
| Are the arbitration provisions procedurally or substantively unconscionable under Arizona law? | Arbitration terms are procedurally/substantively unconscionable. | Terms are not unconscionable. | Neither procedurally nor substantively unconscionable. |
| Who decides arbitrability—court or arbitrator? | Court should decide arbitrability. | Arbitrator should decide arbitrability per AAA Rules. | Arbitrator decides arbitrability in the first instance. |
Key Cases Cited
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (Supreme Court 2009) (FAA and state-law background principles govern enforceability of arbitration against nonparties)
- Grigson v. Creative Artists Agency L.L.C., 210 F.3d 524 (5th Cir. 2000) (federal common law on arbitration by estoppel modified by Arthur Andersen)
- First Options of Chi., Inc. v. Kaplan, 514 U.S. 938 (Supreme Court 1995) (agreements to arbitrate arbitrability—threshold questions go to arbitrator if agreed)
- Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., 687 F.3d 671 (5th Cir. 2012) (incorporation of AAA Rules constitutes agreement to arbitrate arbitrability)
- Goldman v. KPMG LLP, 92 Cal. Rptr. 3d 534 (Cal. Ct. App. 2009) (nonsignatory may compel arbitration where claims are founded in the agreement; test informs state law analysis)