Managed Health Care Admin., Inc. v. Blue Cross & Blue Shield of Ala., 249 So. 3d 486

Background

Blue Cross contracted with MHCA/APS for behavioral-health services (relationship dating to 1986); MHCA became contracted vendor under successive agreements including a 2006 contract containing an AAA arbitration clause.
In 2013 Blue Cross contracted with New Directions, which could sub-delegate duties; New Directions sub-delegated to MHCA by a 2013 New Directions–MHCA contract that also included an AAA arbitration clause.
MHCA/APS sued Blue Cross in state court (2015) for fraud, implied contract, promissory estoppel; Blue Cross later asserted counterclaims including breach of the 2006 contract.
MHCA filed an AAA demand and moved in state court (June 2016) to compel arbitration under the 2006 contract and the New Directions–MHCA 2013 contract; Blue Cross opposed, arguing it was not bound, arbitration was waived, and the 2006 clause had not survived termination.
The Jefferson Circuit Court denied the motion to compel and entered a permanent injunction enjoining arbitration; plaintiffs appealed.
The Alabama Supreme Court reversed, holding arbitrability questions delegated to arbitrator under the 2006 contract (via incorporation of AAA Commercial Rules) and remanded with instruction to compel arbitration and stay proceedings.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether arbitrability issues (scope, survival of clause, waiver) are for court or arbitrator	2006 contract incorporates AAA rules; that delegation clause makes arbitrability for arbitrator	Circuit court should decide threshold arbitrability; Blue Cross not bound to New Directions–MHCA contract and 2006 clause terminated; plaintiffs waived arbitration	Held for plaintiffs: incorporation of AAA Commercial Rules is "clear and unmistakable" to delegate arbitrability to arbitrator; court erred in deciding those issues
Whether 2006 arbitration clause survives termination and covers current claims	Plaintiffs: clause covers disputes "arising out of or relating to" the agreement; survival/coverage is an arbitrability question for arbitrator	Blue Cross: clause did not survive termination and claims do not arise from 2006 contract	Held: survival and scope are for arbitrator to decide; court improperly ruled otherwise
Whether plaintiffs waived arbitration by litigating in court and extensive discovery	Plaintiffs: waiver is an arbitrability issue delegated to arbitrator by AAA rules	Blue Cross: plaintiffs substantially invoked litigation and waived arbitration	Held: waiver question delegated to arbitrator; court should not have ruled on waiver
Whether permanent injunction enjoining arbitration was proper	Plaintiffs: injunction was improper because arbitration right exists	Blue Cross: injunction appropriate given court's findings	Held: injunction vacated as it was based on erroneous denial of arbitration; remand to compel arbitration and stay proceedings

Key Cases Cited

Ex parte Shamrock Food Serv., 514 So.2d 921 (Ala. 1987) (broad arbitration clause required arbitrator to decide contract termination questions)
Anderton v. The Practice–Monroeville, P.C., 164 So.3d 1094 (Ala. 2014) (incorporation of AAA rules constitutes clear intent to delegate arbitrability to arbitrator)
Federal Ins. Co. v. Reedstrom, 197 So.3d 971 (Ala. 2015) (reiterating that AAA Rule 7(a) delegates arbitrability questions to arbitrator when incorporated)
Bugs "R" Us, LLC v. McCants, 223 So.3d 913 (Ala. 2016) (interpreting similar AAA-rule incorporation as delegating arbitrability to arbitrator)
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (parties can agree to have arbitrator decide arbitrability)
Polaris Sales, Inc. v. Heritage Imports, Inc., 879 So.2d 1129 (Ala. 2003) (questions of arbitrability include scope, interpretation, and waiver)