Case Information
*1 Before WIENER, CLEMENT, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
Sеveral independent retail pharmacies appeal the district court’s grant of a motion to compel arbitration of their RICO and misappropriation of trade secrets claims against several CVS entities. A recent decision from our circuit has almost entirely disposеd of the issue. Consequently, we AFFIRM.
FACTS AND PROCEDURAL BACKGROUND
The plaintiffs are independent retail pharmacies in Texas that filed claims against several CVS entities for racketeering, trade secret misappropriation, and violations of the Texas Any Willing Provider Law [1] in September 2010. In their RICO/trade secret claims, thе plaintiffs alleged CVS used the plaintiffs’ patients’ names and health information to market CVS products and services to the plaintiffs’ customers. The plaintiffs claim those names and the information were trade secrets and that CVS misappropriated them.
The defendants moved to compel arbitration pursuant to an arbitration provision in the provider agreements. Only one of the defendants was a signatory; all of the plaintiffs were signatories. The defendants based their motion on equitable estoppel, contending that the plaintiffs should not be allowed to raise claims based on the provider agreements while simultaneously avoiding the arbitration provision. There was no dispute that Arizona law controlled the interpretation of the provider agreements. Applying Arizona law, the magistrate judge recommended against compelling arbitratiоn for the non-signatory defendants because he found that the claims could be litigated without reference to the contracts containing the arbitration provision. The magistrate judge stated: “The only relevance of the provider agreements to these claims is to explain hоw [the] [d]efendants obtained the information in the first place.”
The district court adopted the magistrate judge’s memorandum and recommendations. It ordered arbitration between the plaintiffs and the lone signatory defendant, Caremark, L.L.C. It stayed claims against the non- signatory defendants – CVS Carеmark, CVS Pharmacy, and Caremark Rx – pending the completion of arbitration to avoid inconsistent outcomes and comply with the Federal Arbitration Act.
The non-signatory parties appealed to this court. We affirmed in a short, unpublished opinion, holding that under the abuse of discretion stаndard, the district court did not err in denying the motion to compel arbitration with regard to the non-signatories. Muecke Co. v. CVS Caremark Corp. , 512 F. App’x 395 (5th Cir. 2013) (“ Muecke I ”).
The plaintiffs did not initiate arbitration. Instead, they waited until the time expired for the defendants to seek review of by the United States Supreme Court. Once that period ended, they moved to dismiss the claims that were to be arbitrated against Caremark, L.L.C. After briefing on both the voluntary dismissal and lifting of the stay pending arbitration, the district court granted the dismissal of the sole signatory defendant, Caremark, L.L.C., and lifted the stay as to the other defendants. The district court reminded the plaintiffs that if they later raised any issue related to the contracts the court would again compel arbitration even with regard to the remaining non- signatories.
In April 2014, this court issued a precedential opinion in a related case.
See Crawford Prof’l Drugs, Inc. v. CVS Caremark Corp.
,
The plaintiffs argued that they should not be compelled to
arbitrate claims against non-signatories, their claims were not subject to the
provider agreements, and the provider agreements and the provider manual’s
arbitration clause were procedurally and substantively unconscionable under
Mississippi law.
Id.
at 254-55. This court recognized, as did the district court
in , that the Supreme Court has held that the Federal Arbitration Act
permits state-law contract theories such as equitable estoppel to compel
arbitration against nonparties.
Arthur Andersen LLP v. Carlisle
,
The court found that Arizona case law on equitable estoppel
was unhelpful, so it followed the Arizona Supreme Court’s direction to consider
California law in the absence of relevant Arizona law.
Id.
at 260. It identified
a California Suрreme Court decision advising courts to consider whether
“‘claims against the [non-signatory defendants] are founded in and inextricably
bound up with the obligations imposed by the agreement containing the
arbitration clause’” when determining whether to apply equitable estoppel to
an arbitration agreement.
Id.
(quoting
Goldman v. KPMG LLP
, 92 Cal. Rptr.
3d 534, 541 (Cal. Ct. App. 2009)). The court held that under the elements of
the plaintiffs’ trade secret claims, they needed to prove the defendants gained
the secrets through “breach of a confidential relationship or discover[y] by
improper means.” at 261 (citatiоn and quotation marks omitted). Because
the plaintiffs alleged they voluntarily gave the information to the defendants,
the plaintiffs would have to demonstrate that the defendants’ use of the
information had “exceeded the scope of their permitted use . . . .” in the provider
agreemеnts. Thus, the plaintiffs’ claims were “‘inextricably bound up with
the obligations imposed by the agreement containing the arbitration clause.’”
Id.
(quoting
Goldman
,
The remaining defendants in the current case, relying on , filed a motion for reconsideration of the court’s decision on arbitration. The magistrate judge recоmmended reconsideration because it found that was an intervening change in the law. The magistrate judge had used a “derived-benefit standard” to determine that the plaintiffs were not claiming any benefit under the contract, but the Crawford court held that the elements of the plaintiffs’ trade secret misappropriation claims should be considered. The magistrate judge recognized that the elements for trade secret misappropriation in Texas, like those in Mississippi, require a plaintiff to show the “secrets are discovered through improper means.” Because it would bе necessary to show how the defendants acquired their information, the misappropriation claims were “‘founded in and inextricably bound up with’ the terms and conditions of the provider agreements.”
The magistrate judge also held that changes in the factual development in the case warranted reconsideration because the changes demonstrated that “interpretation of the information-usage terms of the provider agreements is inescapable for the claims in this case.” The magistrate judge recommended the district court compel the plaintiffs to arbitrate their claims against the non- signatory defendants. The district court agreed, adopted all recommendations, granted the motion to compel arbitration on all claims, and dismissed the case. The plaintiffs appealed.
DISCUSSION
The plaintiffs contend that the district court erred by granting
reconsideration and compelling arbitration. We review a district court’s
decision to grant a motion to reconsider under Federal Rule of Civil Procedure
59(e) for abuse of discretion.
Miller v. BAC Home Loans Servicing, L.P.
, 726
F.3d 717, 721-22 (5th Cir. 2013). “‘To the extent that a ruling was a
reconsideration of a question of law, however, thе standard of review is
de
novo
.’” at 722 (quoting
Pioneer Natural Res. USA, Inc. v. Paper, Allied
Indus., Chem. & Energy Workers Int’l Union Loc. 4-487
,
A. Whether reconsideration was warranted
The plaintiffs argue that the law-of-the-case doctrine or, alternatively,
the mandate rule prevents the district court from reconsidering its previous
order denying the defendants’ motion to compel arbitration. The law-of-the-
case doctrine “is not a jurisdictional rule, but a discretionary practice” that
“merely expresses the practice of courts generally to refuse to reopen what has
been decided, not a limit to their power.”
United States v. Matthews
, 312 F.3d
652, 657 (5th Cir. 2002) (citation and quotation marks omitted). Unpublished
opinions are precedential for purposes of the law of the case. 5 TH C IR . R. 47.5.4.
The same theory and rules apply to the mandate rule, which “provides that a
lower court on remand must implement both the letter and the spirit of the
appellate court’s mandate and may not disregard the explicit directives of that
court.”
Matthews
,
The district court concluded that Crawford represented an intervening chаnge in the law, fitting within an exception to the law-of-the case doctrine and the mandate rule. The plaintiffs contend that decision was incorrect because the Crawford panel did not consider the provider agreements’ no non- party rights provision. That provision states that “no term or provision . . . is for the benefit of any person who is not a party to the [p]rovider [a]greement . . . .” The plaintiffs have argued throughout this litigation that this provision prohibits the non-signatory defendants from compelling arbitration. The Crawford panel did not address that provision. The plaintiffs make no other attempt to distinguish the facts of this case from those in . They also argue that Crawford could not overrule , citing several cases in which we held that one panel of this court cannot overrule another even if it perceives error in the precedent.
The magistrate judge specificаlly concluded that required a different analysis than the one used when first considering the issue. The Crawford court considered California precedent to find the relevant law. In Muecke I , the magistrate judge had only applied Arizona law. Because an intervening precedential Fifth Circuit decision used a distinctly different analysis for the same contract, the magistrate judge here concluded there was an intervening change of law by a controlling authority.
We agree that represents an intervening change of law by a
controlling authority. It is a published opinion in which the court applied а
completely different analysis than the one the district court used prior to our
decision in
Muecke I
. Moreover, we need not determine whether the law-of-
the-case doctrine or mandate rule applies because they are merely procedural.
See Matthews
,
B. Whether the district court erred in granting thе defendants’ motion to compel arbitration
The plaintiffs argue that incorrectly applied Arizona law and incorrectly held that California law required compelling arbitration under the equitable estoppel doctrine. They urge this court to ignore and apply an analysis similаr to that in the district court decision. Crawford is controlling precedent, however, and the decision shaped the Fifth Circuit’s equitable estoppel analysis as applied to Arizona contracts.
The analysis, discussed at length above, leads to the conclusion
that the non-signatory defendаnts here may compel arbitration under the
equitable estoppel doctrine because the elements for the plaintiffs’ claims are
bound up with the provider agreements.
See Crawford
,
The no non-party rights provision does not affect the analysis. Equitable estoppel is based on the premise that “[o]ne should not be permitted to rely on an agreement containing an arbitration clause for its claims, while at the same time repudiating the arbitration provision contained in the same contract.” at 260 (citation and quotation marks omitted). Equitable estoppel, therefore, overrides a no non-party rights provision in the same way that it overrides an arbitration provision stating that it only applies to disputes between parties. Equitable estoppel recognizes that a non-signatory to the provider agreemеnts would not be able to exercise rights to compel arbitration but for the opposing party’s use of the contract for its claims. Because the plaintiffs are suing the defendants as if the defendants were parties to the contract, the plaintiffs cannot then claim the defendants are not parties to other portions of the contract.
Furthermore, the plaintiffs have not directed us to any case law in which a no non-party rights provision barred the application of equitable estoppel. The general equitable estoppel or cоntract interpretation cases the plaintiffs cite do not discuss such provisions. controls the equitable estoppel analysis. The district court did not err in granting the motion to compel.
AFFIRMED.
Notes
[*] Pursuant to 5 TH C IR . R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5 TH C IR . R. 47.5.4.
[1] The plaintiffs have since dismissed the only defendant to which their Texas Any Willing Provider claim applied.