Appeal from the United States District Court for the Eastern District of Pennsylvania (Civ. No. 03-cv-04731) District Judge: Hon. John P. Fullam.
The opinion of the court was delivered by: McKEE, Circuit Judge
Before: McKEE and AMBRO, Circuit Judges, and ALDISERT, Senior Circuit Judge.
This action (the"Bellevue action")is one of six similar antitrust actions challenging the practices of prescription benefits managers that have been transferred by the Judicial Panel on Multidistrict Litigation for coordinated proceedings before the Honorable John P. Fullam of the United States District Court for the Eastern District of Pennsylvania under the caption: In re Pharmacy Benefit Managers Antitrust Litigation, MDL Docket No. 1782. The Bellevue action had initially been assigned to Judge Eduardo C. Robreno of the same Court. In an order entered on August 24, 2004, before the Bellevue action was transferred to Judge Fullam, Judge Robreno granted the defendant's motion to compel arbitration and stayed the action pending arbitration. Judge Fullam subsequently vacated Judge Robreno's order compelling arbitration, and that order is the subject of this appeal. The Appellant is AdvancePCS,*fn1 the defendant in the Bellevue action. Because we hold that Judge Fullam's order violated the law of the case doctrine, we will vacate that order and remand with directions to reinstate Judge Robreno's order compelling arbitration.
I. FACTS AND PROCEDURAL HISTORY
Bellevue Drug Co., Inc., Robert Schreiber, Inc., d//b/a Burns Pharmacy, and Rehn-Heurbinger Drug Co., d/b/a Parkway Drugs # 4 ("Pharmacy Plaintiffs"), are retail pharmacy businesses. The Pharmacy Freedom Fund and the National Community Pharmacists Association ("Association Plaintiffs") are associations of community pharmacies and pharmacists, respectively.
AdvancePCS is a prescription benefits manager ("PBM") for drug benefit plans sponsored by employers, unions, government agencies, insurance plans and others ("Plan Sponsors"). PBMs are retained by Plan Sponsors to efficiently manage their benefit plans and to achieve cost savings for Plan Sponsors and plan members who may be required to pay a portion of the drug cost, known as a co-payment. Efficiencies and cost savings are achieved by PBMs in a variety of ways, including negotiating discounts or rebates from drug manufacturers, providing mail order prescription service to plan members, contracting with retail pharmacies for reimbursement when prescriptions are filled for plan members, and electronic processing and paying of claims.
Here, the Pharmacy Plaintiffs entered into written agreements ("Pharmacy Provider Agreements" or "Agreements") with AdvancePCS to provide prescription drugs and related pharmacy services to persons covered by drug benefit plans administered by AdvancePCS. The Pharmacy Provider Agreements contain an "Arbitration Clause" which provides:
Arbitration. Any and all controversies in connection with or arising out of this Agreement will be exclusively settled by arbitration before a single arbitrator in accordance with the Rules of the American Arbitration Association. The arbitrator must follow the rule of law, and may only award remedies provided in this Agreement. The award of the arbitrator will be final and binding on the parties, and judgment upon such award may be entered in any court having jurisdiction thereof. Arbitration under this provision will be conducted in Scottsdale, Arizona, and Provider hereby agrees to such jurisdiction, unless otherwise agreed to by the parties in writing or mandated by Law, and the expenses of the arbitration, including attorneys' fees, will be paid by the party against whom the award of the arbitrator is rendered. This Section 9.5 and the parties' rights hereunder shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq.
Section 9.5 (App. 488-89). The Pharmacy Provider Agreements also contain a "Remedies Clause" which provides:
Remedies. Provider acknowledges that any unauthorized disclosure or use of [AdvancePCS] proprietary information would cause [AdvancePCS] immediate and irreparable injury or loss. Accordingly, should Provider fail to abide by this Section 6 [captioned "Intellectual Property Rights: Confidentiality"], [AdvancePCS] shall be entitled to specific performance including immediate issuance of a temporary restraining order or preliminary injunction enforcing this Agreement, and to judgment for damages (including attorneys' fees) caused by the breach and to all other remedies provided by this Agreement and applicable law. Section 6.4 (App. 487). In addition, the Agreements contain limitation of liability and indemnification provisions. The limitation of liability provision reads:
Limitation on Liability. [AdvancePCS] shall not be liable to Provider for any claim, injury, demand or judgment based upon contract, tort or other grounds (including warranty of merchantability) arising out of the sale, compounding, dispensing, manufacturing, or use of any drug or device dispensed by or any Pharmacy Services provided by Provider under this Agreement. In no event is either party liable to the other party for indirect, consequential or special damages or any nature (even if informed of their possibility), lost profits or savings, punitive damages, injury to reputation or loss of customers or business.
Section 7.1 (App. 487). The indemnification provision reads:
Indemnification. Provider agrees to indemnify and hold [AdvancePCS], its shareholders, directors, employees, agents and representatives free and harmless for, from and against any and all liabilities, losses, settlements, claims, demands, and expenses of any kind (including attorneys' fees), that may result or arise out of: (I) any actual or alleged malpractice, negligence or misconduct of Provider in the performance or omission of any act or responsibility assumed by Provider under this Agreement, or (ii) the sale, compounding, dispensing, ...