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In re Wholesale Grocery Products Antitrust Litigation

United States Court of Appeals, Eighth Circuit

March 1, 2017

In re: Wholesale Grocery Products Antitrust Litigation
v.
SuperValu, Inc.; C&S Wholesale Grocers, Inc. Defendants-Appellants Millennium Operations, Inc.; JFM Market, Inc.; MJF Market, Inc. Plaintiffs - Appellees

          Submitted: May 17, 2016

         Appeal from United States District Court for the District of Minnesota - Minneapolis

          Before RILEY, Chief Judge, COLLOTON and KELLY, Circuit Judges.

          RILEY, Chief Judge.

         A number of retail grocers sued two large full-line wholesale grocers, alleging the wholesalers' contract to exchange retailer supply agreements constituted market allocation in violation of the Sherman Act, see 15 U.S.C. § 1. The retailers formed two putative classes, the Midwest Class and the New England Class. Each class had an Arbitration Subclass of retailers who had arbitration agreements with their current (post-swap) wholesaler. Each Arbitration Subclass sued only its previous wholesaler, with which it no longer had a current arbitration agreement. The district court[1]dismissed the Arbitration Subclasses from the case on the theory that the previous wholesalers, as "nonsignatory" defendants, could compel the retailers to arbitrate based on equitable estoppel. See In re Wholesale Grocery Prods. Antitrust Litig., No. 09-MD-2090, 2011 WL 9558054, at *3-4 (D. Minn. July 5, 2011).

         We reversed and then remanded for the district court to consider the wholesalers' alternate theory that the nonsignatory defendants could compel arbitration because they were successors-in-interest to the signatory defendants. See In re Wholesale Grocery Prods. Antitrust Litig., 707 F.3d 917, 919-20, 925 (8th Cir. 2013) (Wholesale Prods. I). The district court rejected the successors-in-interest theory, as well as the wholesalers' third alternate theory that they could directly enforce their previous arbitration agreements because some of the conduct at issue occurred when the previous agreements were still in effect. The wholesalers appeal.

         I. BACKGROUND

         In 2003, wholesale grocery suppliers SuperValu, Inc. (SuperValu) and C&S Wholesale Grocers, Inc. (C&S) (collectively, wholesalers or defendants) entered into an Asset Exchange Agreement (AEA). C&S had recently purchased Fleming Companies, Inc.'s (Fleming) Midwest wholesale grocery business assets out of bankruptcy. In the AEA, C&S sold Fleming to SuperValu and C&S purchased SuperValu's New England business. Among the assets exchanged were supply agreements and arbitration agreements between each wholesaler and its numerous retail customers (the swap). According to the parties, the AEA contained reciprocal non-compete provisions.[2] See id. at 920. Several retailers sued SuperValu and C&S, alleging the AEA unlawfully allocated the New England market to C&S and the Midwest market to SuperValu, in violation of the Sherman Act, 15 U.S.C. § 1. See Wholesale Prods. I, 707 F.3d at 920.

         The plaintiff retailers proposed two classes: Midwest SuperValu customers and New England C&S customers. Each class had an Arbitration Subclass of retailers who had arbitration agreements with SuperValu or C&S during the class period. Village Market (comprised of JFM Market, Inc. and MJF Market, Inc.) was the representative of the putative New England Arbitration Subclass and Millennium Operations, Inc. (Millennium) was the representative of the putative Midwest Arbitration Subclass. This appeal relates to the Arbitration Subclasses (collectively, retailers or plaintiffs).

         As the district court explained, the Arbitration Subclasses "each asserted an antitrust conspiracy claim against the wholesaler Defendant with whom it d[id] not [then] do business and d[id] not [then] have an arbitration agreement (the 'nonsignatory Defendant'). . . . Village Market . . . asserted an antitrust claim against SuperValu only, and Millennium . . . asserted an antitrust conspiracy claim against C&S only." The wholesalers moved to dismiss or stay the case, arguing equitable estoppel and successor-in-interest theories allowed the wholesalers to enforce the arbitration agreements to which they were no longer signatories. See id. at 920-21; Federal Arbitration Act, 9 U.S.C. § 1 et seq.

         In July 2011, the district court granted the partial motion to dismiss or stay, concluding the nonsignatory defendants could compel arbitration through equitable estoppel. See In re Wholesale Grocery Prods. Antitrust Litig., 2011 WL 9558054, at *3-4. "A non-signatory can 'force a signatory into arbitration under the [equitable] estoppel theory when the relationship of the persons, wrongs and issues involved is a close one.'" Wholesale Prods. I, 707 F.3d at 922 (alteration in original) (quoting CD Partners, LLC v. Grizzle, 424 F.3d 795, 799 (8th Cir. 2005)). "[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." Id. (alteration in original) (footnote omitted) (quoting PRM Energy Sys., Inc. v. Primenergy, L.L.C., 592 F.3d 830, 835 (8th Cir. 2010)).

         In February 2013, we reversed the district court's equitable estoppel ruling. See id. at 919. We concluded plaintiffs' claims against the nonsignatory defendants were not "'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.'" Id. at 923 (quoting PRM Energy Sys., 592 F.3d at 835). This is because plaintiffs' antitrust claims arose out of the Sherman Act, not alleged breaches of the parties' contracts themselves. See id. at 923-24. We remanded the case for the district court to consider the wholesalers' alternate successor-in-interest theory. See id. at 925.

         On remand, the wholesalers argued they could enforce each other's arbitration agreements under a "close relationship" exception because they "are successors-in-interest, standing in each other's shoes with respect to the supply and arbitration agreements they exchanged in the AEA." The district court first rejected this theory because SuperValu and C&S did not have the type of close, agency-like relationship that would give rise to an exception to the general rule that a nonsignatory cannot enforce an arbitration agreement.

          The district court also reasoned that the nonsignatory defendants were "predecessors-in-interest, not successors-in-interest, to the arbitration agreements they seek to enforce." That is, "SuperValu seeks to enforce the Village Market arbitration agreement that it assigned to C&S under the AEA, " so as the assignor, "SuperValu is the predecessor-in-interest." The same is true of C&S's attempt to enforce Millennium's arbitration agreement that C&S assigned to SuperValu. The district court observed the wholesalers had cited no authority supporting "the proposition that a predecessor-in-interest's assignment of rights creates a 'close relationship' with its assignee ...


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