The United States Court of Appeals for the Eighth Circuit has decided that arbitration agreements are not necessarily the silver bullet that will dispose of antitrust claims five retail groceries (the “Retailers”) are asserting against two of the largest wholesale grocers in the United States – SuperValu Inc. and C&S Wholesale Grocers Inc. (the “Wholesalers”).

While the Eighth Circuit reversed the ruling of the U.S. District Court for the District of Minnesota in In re: Wholesale Grocery Products Antitrust Litigation that the doctrine of “equitable estoppel” makes the arbitration agreements a bar to the Retailers’ claims against the “Wholesalers,” the appellate court remanded the claims to the lower court to decide if the arbitration agreements might still bar those claims under a successor-in-interest theory.

The Retailers accuse the Wholesalers of inflating prices through an asset exchange agreement, under which they agreed not to compete for customers already under supply and arbitration agreements at the time of the exchange.

While each Retailer had an arbitration agreement with one of the Wholesalers, each Retailer only sued the Wholesaler with which it did not have an arbitration agreement.  The district court dismissed the Retailers’ claims, finding that they were equitably estopped from refusing arbitration because their claims were so intertwined with the arbitration agreements.

However, the Eighth Circuit ruled that equitable estoppel does not apply because the alleged antitrust violations were not sufficiently related to the contracts with the arbitration clauses.  The court found that the Retailers’ antitrust conspiracy claims “exist independent of the supply and arbitration agreements.”  The court also noted that “the Retailers’ antitrust claims are premised on paying artificially inflated prices, but since none of the Retailers’ contracts with the Wholesalers specify price terms, the Retailers’ claims do not involve alleged violation of any terms of those contracts.”

Judge Duane Benton dissented from the decision, arguing that the majority had misread the arbitration agreements.  According to the dissent, the Retailers’ antitrust claims were coved by the arbitration clauses, which required arbitration for “any dispute arising between the parties,” not just disputes related to the supply agreement.

Although the Eighth Circuit reversed the dismissal of the Retailers’ claims, that court left open the question of whether the district court on remand should compel arbitration on a successor-in-interest theory.  Such a theory would make the Retailers’ subject to the arbitration agreements because the Wholesalers essentially inherited each other’s arbitration agreements.  That theory will now be decided by the district court on remand.

On remand, the fate of the Retailers’ claims will be especially uncertain given the district court’s prior rulings.  After dismissing the Retailers’ claims, the district court denied class certification to the remaining plaintiffs, and subsequently granted summary judgment on the remaining plaintiffs’ antitrust claims.  The lower court found that the antitrust claims were not viable because the Wholesalers’ price increases stemmed not from an antitrust violation, but from contract violations that occurred after the Wholesalers swapped facilities.  Both of these orders are being appealed to the Eighth Circuit.