Medicine Shoppe International, Inc. v. Prescription Shoppes, LLC et al
Filing
40
OPINION, MEMORANDUM AND ORDER re: 18 ORDERED that Respondents' Motion to Dismiss Amended Petition or Compel Arbitration, [Doc. No. 18], is granted. FURTHER ORDERED that this matter is dismissed. Signed by Honorable Henry E. Autrey on 4/10/12. (CEL)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
MEDICINE SHOPPE INTERNATIONAL, INC.,)
)
Petitioner,
)
)
vs.
) Case No. 4:12CV159HEA
)
PRESCRIPTION SHOPPES, LLC, et al.,
)
)
Respondents.
)
)
OPINION, MEMORANDUM AND ORDER
This matter is before the Court on Respondents’ Motion to Dismiss
Amended Petition or Compel Arbitration, [Doc. No. 18]. Petitioner opposes the
motion, and the matter is fully briefed. For the reasons set forth below, the Motion
is granted.
Respondents initially move to dismiss the Amended Petition pursuant to
Rule12(b)(1) for lack of subject matter jurisdiction, arguing that the issues raised in
Petitioners’ Amended Petition relate not to arbitrability of the issues in dispute, but
rather, are procedural in nature and therefore are for the arbitrator to decide.
According to the Amended Petition, Respondents are parties to separate
arbitration agreements, but have filed a“putative collective arbitration demand.” 1
1
According to the Amended Petition, in December 2011 and January 2012, various
franchisees of the Medicine Shoppe franchise system commenced the following actions: (1) two
putative collective arbitrations before JAMS; (2) one putative collective arbitration before United
States Arbitration & Mediation Midwest, Inc.; (3) one putative collective arbitration before the
American Arbitration Association; (4) one individual arbitration before the American Arbitration
Association; and (5) two collective actions in the Eastern District of Missouri. Several
The Amended Petition seeks to have this arbitration demand action stayed in order
that Petitioner may proceed with individual arbitration proceedings pursuant to 9
U.S.C. § 4.
Respondents rely on the absence of the Court’s jurisdiction over the
Amended Petition for dismissal. Respondents contend that, because the issue of
whether the disputes should be arbitrated together, rather than individually, as
asserted by Petitioner, is a question of procedure, the arbitrator, not the Court, must
make that determination.
Clearly, the question of whether the parties’ disputes are arbitrable is not in
dispute. Petitioner takes the position that the arbitrations must be performed on an
individual basis. Respondents have joined together to arbitrate under the franchise
agreements together and have filed a single arbitration demand for several separate
franchisees. Thus, arbitrability, which is indisputably a question for the Court, is
not at issue.
[A] gateway dispute about whether the parties are bound by a
given arbitration clause raises a “question of arbitrability” for a court
to decide. See [First Options of Chicago, Inc. v. Kaplan, 514 U.S.
938, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995)] at 943-946, 115 S.Ct.
1920 (holding that a court should decide whether the arbitration
contract bound parties who did not sign the agreement); John Wiley &
Sons, Inc. v. Livingston, 376 U.S. 543, 546-547, 84 S.Ct. 909, 11
L.Ed.2d 898 (1964) (holding that a court should decide whether an
arbitration agreement survived a corporate merger and bound the
franchisees of the Medicap franchise system, filed a collective action in the Southern District of
Iowa. The amended petition relates to one of the four putative collective arbitrations.
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resulting corporation). Similarly, a disagreement about whether an
arbitration clause in a concededly binding contract applies to a
particular type of controversy is for the court. See, e.g., AT & T
Technologies, supra, at 651-652, 106 S.Ct. 1415 (holding that a court
should decide whether a labor-management layoff controversy falls
within the arbitration clause of a collective-bargaining agreement);
Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241-243, 82 S.Ct.
1318, 8 L.Ed.2d 462 (1962) (holding that a court should decide
whether a clause providing for arbitration of various “grievances”
covers claims for damages for breach of a no-strike agreement).
At the same time the Court has found the phrase “question of
arbitrability” not applicable in other kinds of general circumstance
where parties would likely expect that an arbitrator would decide the
gateway matter. Thus “ ‘procedural’ questions which grow out of the
dispute and bear on its final disposition” are presumptively not for the
judge, but for an arbitrator, to decide. John Wiley, supra, at 557, 84
S.Ct. 909 (holding that an arbitrator should decide whether the first
two steps of a grievance procedure were completed, where these steps
are prerequisites to arbitration). So, too, the presumption is that the
arbitrator should decide “allegation[s] of waiver, delay, or a like
defense to arbitrability.” Moses H. Cone Memorial Hospital, supra, at
24-25, 103 S.Ct. 927. Indeed, the Revised Uniform Arbitration Act
of 2000 (RUAA), seeking to “incorporate the holdings of the vast
majority of state courts and the law that has developed under the
[Federal Arbitration Act],” states that an “arbitrator shall decide
whether a condition precedent to arbitrability has been fulfilled.”
RUAA § 6(c), and comment 2, 7 U.L.A. 12-13 (Supp.2002). And the
comments add that “in the absence of an agreement to the contrary,
issues of substantive arbitrability ... are for a court to decide and
issues of procedural arbitrability, i.e., whether prerequisites such as
time limits, notice, laches, estoppel, and other conditions precedent to
an obligation to arbitrate have been met, are for the arbitrators to
decide.” Id., § 6, comment 2, 7 U.L.A., at 13 (emphasis added).
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84-85 (U.S.,2002).
The manner in which the arbitrations should be conducted is undeniably an
issue of procedure. It goes not to the merits of the disputes to be arbitrated.
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Indeed, not a single substantive finding can be made through joining like disputes
together. To the contrary, joining arbitrations is a procedural issue which
encompasses factors such as, effective use of time and resources and considerations
of consistency. Thus, because the precise remedy Petitioner seeks is one of
procedure, the matter is not properly before the Court.
Accordingly,
IT IS HEREBY ORDERED that Respondents’ Motion to Dismiss
Amended Petition or Compel Arbitration, [Doc. No. 18], is granted.
IT IS FURTHER ORDERED that this matter is dismissed.
Dated this 10th day of April, 2012.
______________________________
HENRY EDWARD AUTREY
UNITED STATES DISTRICT JUDGE
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