IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

IN RE: :

 : 06-md-01782-JF

PHARMACY BENEFIT MANAGERS :

ANTITRUST LITIGATION :

 

 

BELLEVUE DRUG CO, et al. : CIVIL ACTION

 :

v. :

 : 

ADVANCE PCS : NO. 03-cv-04731-JF

MEMORANDUM AND ORDER

Fullam, Sr. J. December 18, 2006

This purported class action charging the defendant with

having violated the antitrust laws was filed on August 15, 2003. 

The judge originally assigned to the action, my colleague Judge

Robreno, entered an Order staying the action pending submission

to an arbitrator, as contemplated in the “Provider Agreement”

which some of the plaintiffs had entered into with the defendant. 

Judge Robreno later denied a motion for reconsideration of that

ruling. Plaintiffs then filed a motion asking that the stay be

lifted so that they could voluntarily dismiss the action, and

thus gain the ability to appeal Judge Robreno’s rulings to the

Third Circuit Court of Appeals. 

At that point, the Judicial Panel on Multidistrict

Litigation entered an Order transferring this case, along with

five other cases from around the country, to the undersigned

pursuant to 28 U.S.C. § 1407. In the Opinion accompanying the

Case 2:03-cv-04731-CDJ Document 80 Filed 12/18/06 Page 1 of 5
2

Transfer Order, the panel opined that “centralizing these actions

is desirable in order to avoid duplication of discovery, prevent

inconsistent or repetitive pretrial rulings (especially on the

issue of class certification), and conserve the resources of the

parties, their counsel and the Judiciary.” In re Pharmacy

Benefit Managers Antitrust Litigation, Dkt. No. 1782 (Aug. 24,

2006). I am therefore required to address the plaintiff’s motion

in captioned case. 

As a general proposition, a transferee judge under the

Multidistrict statute may vacate or modify any order of a

transferor court bearing upon pretrial matters. See, e.g., In re

Upjohn Co. Antibiotic Cleocin Products Liability Litigation, 664

F.2d 114 (6 Cir. 1981). See generally Manual for Complex th

Litigation, Fourth, § 20.132. Indeed, it is clear that the

transferee judge may enter orders which have the effect of

terminating the action, for example by granting a motion to

dismiss, or by approving a settlement. Thus, it is clear that,

since plaintiffs have expressed a desire to terminate this

lawsuit rather than submit to arbitration, it is undoubtedly

within the authority of the undersigned, as a transferee judge,

to grant the pending motions, notwithstanding “law of the case”

principles. The real issue, as I see it, is whether the course

proposed by plaintiffs would be consistent with the efficient

pretrial management of this case, pursuant to the mandate of the

Case 2:03-cv-04731-CDJ Document 80 Filed 12/18/06 Page 2 of 5
3

Judicial Panel on Multidistrict Litigation. I conclude that it

would not. 

Judge Robreno’s Orders compelling arbitration were

clearly appropriate under the Federal Arbitration Act and the

Congressional policies reflected in that statute. It is

particularly noteworthy that Judge Robreno did not actually

decide that the issues involved in the present case were

arbitrable, or even whether the arbitration agreement relied upon

was enforceable; he merely, in accordance with the general policy

of favoring arbitration, required that all such issues be

submitted initially to the arbitrator for decision. But in view

of the later action of the Multidistrict Panel (which clearly

assumed that the stay or proceedings did not preclude coordinated

pretrial proceedings), I conclude that this court may now diverge

from Judge Robreno’s Orders to the limited extent of considering

whether any useful purpose would be served in submitting all

preliminary determinations to the arbitrator. For the reasons

which follow, I believe that, as a matter of law, the arbitrator

would be bound to determine that the arbitration agreement relied

upon is unenforceable, at least as to the antitrust issues raised

in this litigation.

In the first place, the arbitration clause is buried on

page seven of a twelve-page Agreement in extremely small print

(by actual measurement, approximately 1/20th of an inch). There

is strong reason to conclude that this is a contract of adhesion. 

Case 2:03-cv-04731-CDJ Document 80 Filed 12/18/06 Page 3 of 5
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But of greater importance, the Arbitration Agreement itself

specifically provides: “The arbitrator must follow the rule of

law, and may only award remedies provided in this Agreement.” In

other words, the arbitrator is precluded from considering the

antitrust claims asserted by plaintiff in this litigation. 

I therefore have no difficulty in concluding either

that the parties never intended this type of dispute to be

submitted to arbitration, or that the Arbitration Agreement is

unenforceable because it violates public policy. 

For all of these reasons, I conclude that the task

assigned to me as transferee judge can best be performed by

expediting the decision which, I believe, would necessarily have

been reached by the arbitrator with respect to the procedural

aspects of this litigation. 

The stay previously entered will therefore be

dissolved. Plaintiff’s motion to dismiss will be dismissed as

moot. 

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

IN RE: :

 : 06-md-01782-JF

PHARMACY BENEFIT MANAGERS :

ANTITRUST LITIGATION :

 

 

BELLEVUE DRUG CO, et al. : CIVIL ACTION

 :

v. :

 : 

ADVANCE PCS : NO. 03-cv-04731-JF

ORDER

AND NOW, this 18 day of December 2006, IT IS ORDERED: th

1. That the Order of August 20, 2004 ordering

arbitration and entering a stay of proceedings pending

arbitration, is VACATED. 

2. Plaintiff’s motion to dismiss this action is

DISMISSED, without prejudice, as MOOT.

BY THE COURT:

/s/ John P. Fullam 

John P. Fullam, Sr. J.

Case 2:03-cv-04731-CDJ Document 80 Filed 12/18/06 Page 5 of 5