Express Scripts v. Aegon Direct Marketing Services

Decision Date13 February 2008
Docket NumberNo. 07-1971.,07-1971.
Citation516 F.3d 695
PartiesEXPRESS SCRIPTS, INC., Plaintiff-Appellee, v. AEGON DIRECT MARKETING SERVICES, INC., Defendant-Appellant.
CourtU.S. Court of Appeals — Eighth Circuit

Alan S. Breckenridge, argued, St. Louis, MO, Jennifer A. Bierman, and James R. Crossweller and Gordon B. Conn, Jr., Minneapolis, MN, on the brief, for Appellant.

JoAnn T. Sandifer, argued, St. Louis, MO, Bryce J. Bartlett, on the brief, for Appellee.

Before MURPHY, MELLOY, and SMITH, Circuit Judges.

MURPHY, Circuit Judge.

Express Scripts, Inc. (ESI) brought this action against Aegon Direct Marketing Services, Inc. (Aegon) seeking a declaratory judgment that a 2000 oral agreement terminated an earlier agreement to arbitrate contractual disputes and injunctive relief against Aegon's demand for arbitration. Aegon moved to dismiss or for a stay pending arbitration. The district court1 denied Aegon's motion, and it appeals. We affirm.

On June 1, 1995 predecessors of Aegon and ESI entered into a pharmaceutical sales agreement (the 1995 Agreement), under which ESI's predecessor, Diversified Pharmaceutical Services, Inc. (Diversified), agreed to provide pharmacy benefit management services to Aegon's predecessor, Monumental General Insurance Group (Monumental). Aegon succeeded to Monumental's entire interest in the 1995 Agreement before ESI acquired Diversified on April 1, 1999. Section 9.5 of the 1995 Agreement is an arbitration provision which states that "[i]f any dispute relating to this Agreement arises between Diversified and Contractor [Monumental] which cannot be resolved through good faith negotiation, the dispute shall be resolved by binding arbitration in accordance with the rules of the American Arbitration Association [AAA]." AAA Rule 1, which was in effect when the parties' predecessors entered into the 1995 Agreement, states that "[t]hese rules and any amendment of them shall apply in the form obtaining at the time the demand for arbitration is received by the AAA."

On January 26, 2000 ESI and Aegon amended the 1995 Agreement to change certain retail pricing terms. They also began negotiating a new pharmaceutical sales agreement under which ESI would continue to provide pharmacy benefit management services to Aegon. ESI claims that on March 28, 2000, the parties orally agreed to a new contract (the 2000 Agreement) and that they operated under its terms and pricing structure beginning June 1, 2000. Aegon claims on the other hand that the 2000 Agreement never went into effect and that the 1965 Agreement is the only contract between the parties. The only copy of a 2000 Agreement included in the record is not signed by either ESI or Aegon, and ESI does not dispute that no signed copy exists. The unsigned contract does not include an arbitration provision and states that it supersedes all preceding agreements.

In 2005 a dispute arose after Aegon audited ESI's billings and concluded that ESI had overbilled it by approximately $5 million. Aegon demanded repayment of the excess amounts, and ESI rejected the audit findings and refused to pay. Aegon filed a demand for arbitration with AAA on September 8, 2006, attaching a copy of the arbitration provision in the 1995 Agreement (§ 9.5). At the time that AAA received Aegon's arbitration demand, its rules included one giving arbitrators the power to rule on their own jurisdiction even if any party objects to the existence, scope, or validity of the arbitration agreement. ESI responded to Aegon's arbitration demand by filing this declaratory judgment action in state court on September 22, 2006, seeking injunctive relief.

Aegon removed the case to federal court on October 10, 2006 and moved to dismiss ESI's motions under Fed.R.Civ.P. 12(b)(6) or to stay the motions pending arbitration pursuant to 9 U.S.C. § 3. After several months went by without a court hearing on the parties' motions, Aegon requested on February 8, 2007 that AAA move forward with arbitration. AAA advised the parties that it would proceed unless it received a contrary indication from the court. On February 28, 2007 ESI filed a motion for a temporary restraining order to enjoin the arbitration.

The district court heard arguments on the parties' motions on March 1, 2007, after which it denied Aegon's motion for dismissal or stay and dismissed ESI's motion for a restraining order as moot. The court cited AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986), for the proposition that "[u]nless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator." In its view nothing in the 1995 Agreement provided clear, unmistakable evidence that the parties had agreed to arbitrate the issues of whether a subsequent agreement superseded the original contract or whether a billing dispute would be subject to arbitration: and it was therefore for the court to determine arbitrability. Aegon appeals under 9 U.S.C. § 16(a)(1)(A), and we have jurisdiction to review the district court's order under 28 U.S.C. § 1294(1).

Aegon argues that where one party challenges the validity of an agreement as a whole, but does not expressly dispute the validity of an arbitration provision within it, that provision is severed and generally serves as clear, unmistakable evidence that the parties intended to arbitrate any dispute over the contract's validity. See, e.g., Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 449, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967). ESI responds that it does explicitly challenge the continuing applicability of the earlier arbitration provision as well as the rest of the 1995 Agreement, which it says was superseded by a 2000 Agreement.

We review de novo a district court's denial of a motion to dismiss under Fed.R.Civ.P. 12(b)(6), Broadus v. O.K Industries, Inc., 226 F.3d 937, 941 (8th Cir. 2000), accepting the allegations contained in the complaint as true and drawing all reasonable inferences in favor of the non-moving party, Katun Corp. v. Clarke, 484 F.3d 972, 975 (8th Cir.2007). In its petition for declaratory judgment and injunctive relief ESI alleged that the 2000 Agreement became effective and superseded the 1995 Agreement and facts which could support that allegation. The district court thus did not err in denying Aegon's motion to dismiss ESI's petition. See id.

A district court's denial of a motion to stay pending arbitration under 9 U.S.C. § 3 is also reviewed de novo. FSP, Inc. v. Sociét é Générale, 350 F.3d 27, 30 (2d Cir.2003); Riley Mfg. Co., Inc. v. Anchor Glass Container Corp., 157 F.3d 775, 779 (10th Cir.1998); In re Complaint of Hornbeck Offshore (1984) Corp., 981 F.2d 752, 754 (5th Cir.1993); see also Enderlin v. XM Satellite Radio Holdings, Inc., 483 F.3d 559, 560 (8th Cir.2007) (arbitrability of dispute based on contract interpretation is a legal question reviewed de novo). Unlike our review of a motion to dismiss, however, we need not accept either party's allegations as true but instead must review the evidentiary record to determine whether the § 3 movant has offered sufficient proof to "satisf[y] [the court] that the issue involved is referable to arbitration under such an agreement," 9 U.S.C. § 3. If so, the motion for a stay pending arbitration should be granted.

In ruling on such a motion the district court does not determine the merits of the substantive issues since "in deciding whether the Parties have agreed to submit a particular grievance to arbitration, a court is not to rule on the potential merits of the underlying claims." AT & T, 475 U.S. at 649, 106 S.Ct. 1415. Aegon's very limited claim to the district court was that an arbitrator, not a court, should decide whether the 1995 Agreement was effective at the time AAA received Aegon's demand for arbitration and if it was, whether the billing dispute falls within the scope of the 1995 arbitration provision. In light of these questions, the district court did not abuse its discretion by not addressing ESI's claim that the 1995 Agreement was terminated by the purported 2000 Agreement.

ESI argues that ignoring evidence of the validity of the 2000 Agreement improperly elevates the 1995 Agreement and other similar arbitration agreements to "eternal, immutable, and interminable" status, citing Nissan North America, Inc. v. Jim M'Lady Oldsmobile, Inc., 307 F.3d 601 (7th Cir.2002). In Nissan the parties' arbitration agreement had a fixed term, however, which expired before the demand for arbitration was filed. To presume arbitrability under a plainly expired arbitration agreement "would make the contractual obligation to arbitrate limitless." Id. at 604. In contrast, there is here no allegation that the 1995 Agreement expired on its own terms. Instead ESI urges us to assume that the 1995 Agreement was terminated by the 2000 Agreement. The basis for this presumption was said to be a written but unsigned copy of the purported contract, related correspondence with Aegon representatives, and allegations that the parties operated under the terms of such agreement. The district court concluded that this evidence did not create a presumption that the 2000 Agreement superseded the earlier one, recognizing that both parties agree that the 1995 Agreement was valid and binding at some point in time but that any evidence that it is no longer effective goes to the underlying dispute between the parties.

The 1995 Agreement does contain an arbitration provision, and parties give up the right to have a court decide the merits of any dispute which they have agreed to arbitrate. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 942, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). Congress enacted the Federal...

To continue reading

Request your trial
57 cases
  • Giddings v. Media Lodge, Inc.
    • United States
    • U.S. District Court — District of South Dakota
    • March 13, 2018
  • Del. Dep't of Natural Res. & Envtl. Control v. U.S. Army Corps of Eng'rs
    • United States
    • U.S. Court of Appeals — Third Circuit
    • July 3, 2012
  • Monavie Llc v. Quixtar Inc.
    • United States
    • U.S. District Court — District of Utah
    • October 26, 2009
    ...to which the parties have not consented. As the Eighth Circuit recently observed in Express Scripts, Inc. v. Aegon Direct Marketing Services, Inc., 516 F.3d 695, 699–700 (8th Cir.2008): Before a district court may grant a motion to stay pending arbitration under 9 U.S.C. § 3, it “must engag......
  • Precision Press, Inc. v. Mlp U.S.A., Inc.
    • United States
    • U.S. District Court — Northern District of Iowa
    • June 1, 2009
    ...that the validity of the Sales Agreement must be decided by the arbitrators. See id.; see also Express Scripts, Inc. v. Aegon Direct Mktg.Servs., Inc., 516 F.3d 695, 700-01 (8th Cir.2008) ("The Buckeye line of cases stands for the proposition that where the parties dispute the validity of t......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT