Lenox MacLaren Surgical Corp. v. Medtronic, Inc.
449 F. App'x 704
10th Cir.2011Background
- LM designed and manufactures a bone mill and entered in April 2000 into a five-year exclusive licensing and distribution agreement (the Agreement) with MSD USA granting MSD USA marketing rights and imposing minimum purchase obligations.
- The Agreement included a dispute-resolution clause requiring arbitration for disputes arising under the Agreement; MSD USA's exclusivity lapsed when it stopped meeting minimum purchases in 2001.
- MSD USA recalled LM’s bone mills in 2006 after foreign doctor complaints; LM refused recall and MSD USA conducted its own recall, which LM alleged was improper and aimed at enabling a competing product to enter the market.
- After the recall, a related Medtronic stand-alone bone mill (Midas Rex Legend) was marketed to LM’s customers, allegedly benefiting from MSD USA’s recall actions.
- LM filed Lenox I in 2007 alleging patent, CCPA, and business disparagement claims; the arbitrators found no breach of the Agreement or patent infringement but held that MSD USA’s recall was wrongful and awarded damages tied to profits from Midas Rex sales.
- In the current suit LM asserted two antitrust claims against Medtronic entities (monopolization and attempted monopolization) and moved to avoid arbitration on the theory that non-signatories could be bound by the Agreement’s arbitration clause through equitable estoppel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether equitable estoppel allows a nonsignatory to compel arbitration of LM's antitrust claims. | LM contends the claims do not rely on the Agreement and are not intertwined. | Medtronic relies on MS Dealer/related authorities to show reliance on the contract or intertwined conduct. | Denied; estoppel not satisfied. |
| Whether LM's antitrust allegations are intimately founded in or intertwined with the Agreement. | LM's claims do not depend on the Agreement’s terms or its enforceability thereof. | LM's claims rely on and presuppose the Agreement and the parties' contract-related conduct. | Denied; not intimately founded; arbitration not compelled. |
Key Cases Cited
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (U.S. 2009) (state-law contract principles govern who may be bound to arbitration)
- MS Dealer Service Corp. v. Franklin, 177 F.3d 942 (11th Cir. 1999) (estoppel when reference to contract makes claims intertwined with contract)
- Grigson v. Creative Artists Agency L.L.C., 210 F.3d 524 (4th Cir. 2000) (unfair to rely on contract while denying arbitration when it advantages one party)
- In re Humana Inc. Managed Care Litig., 285 F.3d 971 (11th Cir. 2002) (equitable estoppel requires intimate intertwining with contract obligations)
- PRM Energy Sys., Inc. v. Primenergy, L.L.C., 592 F.3d 830 (8th Cir. 2010) (claims must be intimately founded in or intertwined with the contract)
- JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163 (2d Cir. 2004) (collusion allegations can be intertwined with contract terms)