Arbitration in the context of antitrust class action litigation continues to be a front and center issue for the federal appeals courts.  (See this blog’s discussion of a Third Circuit decision from late last year, In re Pharmacy Benefit Managers Antitrust Litig. (Case No. 12-1430).) 

The Eighth Circuit recently weighed in on arbitration issues, holding that a non-signatory to an arbitration agreement cannot force a signatory into arbitration where there is not a close relationship between the persons, wrongs, and issues.  In re Wholesale Grocery Products Antitrust Litig., 2013 WL 514758 (8th Cir. Feb. 13, 2013). 

The plaintiffs in Wholesale Grocery are retail grocers, some of whom have supply and arbitration agreements with some of the wholesale grocer defendants.  To avoid arbitration, each plaintiff brought antitrust claims only against the wholesaler-defendant with which it did not have a supply and arbitration agreement.  The district court granted the wholesaler-defendants’ motion to dismiss the antitrust claims on the basis that the non-signatory wholesaler could invoke equitable estoppel to compel the retailers to enter arbitration, regardless of whether the wholesalers and retailers were parties to an arbitration agreement. 

On appeal, the Eighth Circuit explained the scope of equitable estoppel:

Equitable estoppel typically relies, at least in part, on the claims being so intertwined with the agreement containing the arbitration clause that it would be unfair to allow the signatory to rely on the agreement in formulating its claims but to disavow availability of the arbitration clause of that same agreement.  (citing PRM Energy Sys., Inc. v.Primenergy, L.L.C., 592 F.3d 830, 835 (8th Cir. 2010).)

Applying this rule,  the Court found that the plaintiffs’ claims against the non-signatory wholesalers are not intertwined with the supply and arbitration agreements because statutory-based antitrust claims exist independent of the agreements.  Of significant importance to the Court was the fact that none of the contracts with the wholesalers contained price terms and the antitrust claims are premised on paying artificially inflated prices. 

Whether other Circuits agree with this analysis remains to be seen.  Notably, Judge Benton dissented from the majority because the arbitration agreement covers all disputes “including but not limited to those arising out of or relating to any agreement between the parties.”  Judge Benton criticized the majority for relying on cases in which plaintiffs’ claims arose directly from the contract, while this case presented a broader arbitration agreement that is not tied solely to claims under a specific contract.