In re: REMICADE v.
938 F.3d 515
| 3rd Cir. | 2019Background
- RDC (a direct purchaser wholesaler) bought Remicade from J&J under a 2015 Distribution Agreement that set sales at the product Wholesale Acquisition Cost (WAC) and designated RDC as an Authorized Distributor of Record.
- RDC sued J&J and Janssen Biotech under Sections 1 and 2 of the Sherman Act, alleging a “Biosimilar Readiness Plan” that maintained Remicade’s monopoly and caused RDC to pay artificially inflated prices.
- The Distribution Agreement contains a broad arbitration clause covering any “controversy or claim arising out of or relating to this agreement.”
- J&J moved to compel arbitration; the District Court denied the motion, finding RDC’s antitrust claims were separate from and could be resolved without the Agreement.
- J&J appealed; the Third Circuit reversed, holding RDC’s antitrust claims arise out of or relate to the Agreement and must be arbitrated.
Issues
| Issue | Plaintiff's Argument (RDC) | Defendant's Argument (J&J) | Held |
|---|---|---|---|
| Governing law for clause scope | State contract law should govern scope; FAA doesn’t displace ordinary state-law interpretation | Federal law controls scope; federal presumption of arbitrability applies | State law governs scope in the first instance; federal policy favoring arbitration informs ambiguities and can preempt state rules that single out arbitration |
| Are the antitrust claims arbitrable ("arising out of or relating to")? | Claims are independent of the Agreement and can be resolved without it | Claims are intertwined with the Agreement because alleged overcharges stem from the WAC/pricing under the Agreement | Held arbitrable: claims arise out of or relate to the Agreement because RDC’s injury depends on prices and requires reference to the Agreement |
| Does New Jersey’s Atalese “clear and unambiguous” waiver rule bar arbitration of statutory rights? | Arbitration must clearly and unambiguously waive statutory/constitutional rights | Atalese applies to consumer/employment adhesion contracts, not to negotiated commercial contracts between sophisticated parties | Atalese doesn’t apply to this commercial, negotiated Agreement between sophisticated parties, so it does not narrow the arbitration clause |
| Does federal preemption of state rules affect result? | (Implicit) State-level clarity rules might invalidate arbitration waivers | FAA preempts state rules that single out arbitration or obstruct FAA objectives | Court noted preemption can apply where a state rule targets arbitration, but did not need to resolve preemption here because Atalese was inapplicable to these parties |
Key Cases Cited
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S. 2006) (FAA makes arbitration agreements enforceable like other contracts)
- Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (U.S. 2019) (ambiguities about arbitration scope resolved in favor of arbitration; federal rules can preempt state rules that conflict with FAA)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (courts should apply ordinary state-law principles to whether parties agreed to arbitrate arbitrability)
- Volt Information Sciences, Inc. v. Board of Trustees, 489 U.S. 468 (U.S. 1989) (state contract law governs arbitration clause interpretation but federal policy must be given due regard)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S. 2011) (FAA preempts state-law rules that single out arbitration agreements for disfavored treatment)
- China Minmetals Materials Import & Exp. Co. v. Chi Mei Corp., 334 F.3d 274 (3d Cir. 2003) (discusses interplay of federal and state law in arbitration clauses)
- Moon v. Breathless, Inc., 868 F.3d 209 (3d Cir. 2017) (Third Circuit precedent holding state law governs arbitration-clause scope)
- JLM Industries, Inc. v. Stolt–Nielsen S.A., 387 F.3d 163 (2d Cir. 2004) (antitrust claims arbitrable where injury derives from contract price terms)
- EPIX Holdings Corp. v. Marsh & McLennan Cos., 982 A.2d 1194 (N.J. Super. Ct. App. Div. 2009) (New Jersey court holding broad "arising out of or relating to" clause encompasses antitrust overcharge claims)
- Atalese v. U.S. Legal Services Group, 99 A.3d 306 (N.J. 2014) (New Jersey rule requiring clear and unmistakable waiver of statutory or constitutional rights in consumer/employment contexts)