PRECEDENTIAL
`
`
`UNITED STATES COURT OF APPEALS
`FOR THE THIRD CIRCUIT
`_____________
`
`No. 20-3460
`_____________
`
`In re: ROTAVIRUS VACCINES ANTITRUST
`LITIGATION
`
`SUGARTOWN PEDIATRICS, LLC;
`SCHWARTZ PEDIATRICS SC;
`MARGIOTTI & KROLL PEDIATRICS, PC
`
`v.
`
`MERCK SHARP & DOHME CORP.,
`Appellant
`
`
`_____________
`
`On Appeal from the United States District Court
`for the Eastern District of Pennsylvania
`(D.C. No. 2-18-cv-01734)
`District Judge: Honorable J. Curtis Joyner
`_____________
`
`Argued on September 24, 2021
`
`Before: CHAGARES, Chief Judge, HARDIMAN, and
`MATEY, Circuit Judges
`
`
`
`
`UNITED STATES COURT OF APPEALS
`FOR THE THIRD CIRCUIT
`_____________
`
`No. 20-3460
`_____________
`
`In re: ROTAVIRUS VACCINES ANTITRUST
`LITIGATION
`
`SUGARTOWN PEDIATRICS, LLC;
`SCHWARTZ PEDIATRICS SC;
`MARGIOTTI & KROLL PEDIATRICS, PC
`
`v.
`
`MERCK SHARP & DOHME CORP.,
`Appellant
`
`
`_____________
`
`On Appeal from the United States District Court
`for the Eastern District of Pennsylvania
`(D.C. No. 2-18-cv-01734)
`District Judge: Honorable J. Curtis Joyner
`_____________
`
`Argued on September 24, 2021
`
`Before: CHAGARES, Chief Judge, HARDIMAN, and
`MATEY, Circuit Judges
`
`
`
`
`
`
`(Filed: March 21, 2022)
`
`
`Ashley E. Bass [argued]
`Andrew D. Lazerow
`Mark W. Mosier
`Covington & Burling
`850 10th Street, N.W.
`One City Center
`Washington, DC 20001
`
`Lisa C. Dykstra
`Morgan Lewis & Bockius
`1701 Market Street
`Philadelphia, PA 19103
`Counsel for Appellant
`
`
`Leonardo Chingcuanco
`Daniel H. Silverman [argued]
`Daniel A. Small
`Cohen Milstein
`1100 New York Avenue, N.W.
`West Tower, Suite 500
`Washington, DC 20005
`
`Gary L. Azorsky
`Cohen Milstein
`1717 Arch Street
`3 Logan Square, Suite 3610
`Philadelphia, PA 19103
`
`Eric L. Cramer
`David A. Langer
`
`2
`
`
`
`
`
`Daniel J. Walker
`Berger Montague
`1818 Market Street
`Suite 3600
`Philadelphia, PA 19103
`
`Counsel for Appellees
`
`
`
`________________
`
`OPINION OF THE COURT
`________________
`
`
`HARDIMAN, Circuit Judge.
`
`
`
`This appeal comes to us from an order denying a motion
`
`to compel arbitration. Appellant Merck contends the District
`Court should have compelled Sugartown Pediatrics, Schwartz
`Pediatrics, and Margiotti & Kroll Pediatrics (the Pediatricians)
`to arbitrate their claim that Merck’s vaccine bundling scheme
`was anticompetitive. We agree. We will reverse and remand
`for the District Court to grant Merck’s motion to compel
`arbitration.
`
`I
`
`This case involves two types of contracts. Both are part
`of Merck’s loyalty program, whereby medical practices
`receive discounts if they buy sufficient vaccine quantities from
`Merck. The first type of contract is between Merck and
`Physician Buying Groups (PBGs). These loyalty contracts
`entitle PBG members to discounts if they buy a large enough
`percentage of their vaccines from Merck. The loyalty contracts
`also include an arbitration provision. The second type of
`
`3
`
`
`
`
`
`contract is between PBGs and medical practices. These
`membership contracts give medical practices discounts on
`Merck vaccines for enrolling in PBGs. PBGs thus form the
`bridge between medical practices and Merck, contracting with
`both Merck and medical practices. They are middlemen in all
`but one relevant sense: PBGs never possess the vaccines.
`Medical practices buy their vaccines directly from Merck, but
`they receive discounts for belonging to a PBG.
`
`Though they were members of PBGs that contracted
`with Merck,1
`the Pediatricians never signed contracts
`containing an arbitration clause. So the Pediatricians filed
`federal suits alleging Merck’s vaccine bundling program was
`anticompetitive. Merck responded with a motion to compel
`arbitration based on the arbitration clause contained in its
`loyalty contracts with the PBGs, which the District Court
`denied under the summary judgment standard. In re Rotavirus
`Vaccines Antitrust Litig. (Rotavirus I), 362 F. Supp. 3d 255,
`261, 264–65 (E.D. Pa. 2019). The first time this case came
`before us, we vacated the order of the District Court, holding
`that it should have allowed discovery on arbitrability. In re
`Rotavirus Vaccines Antitrust Litig. (Rotavirus II), 789 F.
`App’x 934, 938 (3d Cir. 2019).
`
`After the parties conducted discovery, Merck renewed
`its motion to compel arbitration and the Pediatricians cross-
`moved for summary judgment on arbitrability. In re Rotavirus
`Vaccines Antitrust Litig. (Rotavirus III), 2020 WL 6828123, at
`*1 (E.D. Pa. Nov. 20, 2020). The District Court once again
`
`1 Schwartz was a member of Children’s Community
`Physicians Association Purchasing Partners (CCPAPP).
`Sugartown and Margiotti & Kroll were members of Main
`Street Vaccines (MSV).
`
`4
`
`
`
`
`
`denied Merck’s motion to compel arbitration and granted
`summary judgment for the Pediatricians. Id. at *15. The Court
`concluded, as relevant here, that the Pediatricians were not
`bound under an agency theory because they had not authorized
`the PBGs to enter into arbitration agreements. Id. at *13–14.
`This appeal followed.
`
`II
`
`the
`jurisdiction over
`The District Court had
`Pediatricians’ antitrust claims. See 28 U.S.C. § 1331; 15
`U.S.C. § 4. We have jurisdiction to review the order denying a
`motion to compel arbitration under 9 U.S.C. § 16(a)(1)(B). For
`jurisdictional purposes, motions to compel arbitration and
`motions for summary judgment on arbitrability—both of
`which are at issue in this appeal—are equivalent. See Bacon v.
`Avis Budget Grp., Inc., 959 F.3d 590, 598–99 & n.4 (3d Cir.
`2020).
`
`Our review of the District Court’s decision, including
`its legal conclusion that the PBGs were not the Pediatricians’
`agents, is plenary. O’Hanlon v. Uber Techs., Inc., 990 F.3d
`757, 766 n.5 (3d Cir. 2021). We apply the summary judgment
`standard, so “[t]he party opposing arbitration is given the
`benefit of all reasonable doubts and inferences that may arise.”
`Griswold v. Coventry First LLC, 762 F.3d 264, 270 (3d Cir.
`2014) (quoting Kaneff v. Del. Title Loans, Inc., 587 F.3d 616,
`620 (3d Cir. 2009)). No material facts are in dispute.
`
`III
`
`The Federal Arbitration Act (FAA) “‘declare[s] a
`national policy favoring arbitration’ of claims that parties
`contract to settle in that manner.” Preston v. Ferrer, 552 U.S.
`
`5
`
`
`
`
`
`346, 353 (2008) (quoting Southland Corp. v. Keating, 465 U.S.
`1, 10 (1984)). But courts must be sure that the parties have
`agreed to arbitrate their claims. After all, “[a]rbitration is
`strictly a matter of consent.” Lamps Plus, Inc. v. Varela, 139
`S. Ct. 1407, 1415 (2019) (quoting Granite Rock Co. v.
`Teamsters, 561 U.S. 287, 299 (2010)).
`
`to an arbitration
`Nonsignatories will be bound
`agreement only when “traditional principles of contract and
`agency law” so require. Hamilton Park Health Care Ctr. Ltd.
`v. 1199 SEIU United Healthcare Workers E., 817 F.3d 857,
`864 (3d Cir. 2016) (quoting E.I. DuPont de Nemours & Co. v.
`Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269 F.3d
`187, 194 (3d Cir. 2001)). Pennsylvania contract law recognizes
`“five theories for binding nonsignatories to arbitration
`agreements,” including agency. Allstate Settlement Corp. v.
`Rapid Settlements, Ltd., 559 F.3d 164, 170 (3d Cir. 2009)
`(quoting Trippe Mfg. Co. v. Niles Audio Corp., 401 F.3d 529,
`532 (3d Cir. 2005)). A principal will be bound by his agent’s
`acts—including an agreement to arbitrate—if the agent has
`actual or apparent authority. Wisler v. Manor Care of
`Lancaster PA, LLC, 124 A.3d 317, 323 (Pa. Super. Ct. 2015).
`
`A
`
`Merck argues that the Pediatricians granted the PBGs
`actual authority to consent to the arbitration clauses on the
`Pediatricians’ behalf. We agree, at least as to Schwartz
`Pediatrics.
`
`Under Pennsylvania law, “the three basic elements of
`agency are: [1] the manifestation by the principal that the agent
`shall act for him, [2] the agent’s acceptance of the
`undertaking[,] and [3] the understanding of the parties that the
`
`6
`
`
`
`
`
`the undertaking.”
`in control of
`to be
`is
`principal
`Commonwealth v. Britton, 229 A.3d 590, 598 (Pa. 2020)
`(quoting Basile v. H & R Block, Inc., 761 A.2d 1115, 1120 (Pa.
`2000)).
`
`Schwartz’s contract with its PBG satisfies the first two
`prongs of this test. Its 2016 PBG membership contract made
`the PBG Schwartz’s “non-exclusive agent to arrange for the
`purchase of goods and services,” Rotavirus III, 2020 WL
`6828123, at *9; and a previous version of the membership
`agreement, effective in 1999, contained a similarly explicit
`provision, see App. 2412 (“Each Limited Partner hereby
`appoints the Partnership as its agent for the purpose of
`negotiating and entering into Vendor Arrangements, and the
`Partnership hereby accepts such appointment.”). By agreeing
`to these terms, Schwartz manifested an intent to have the PBG
`act for it, and the PBG accepted that responsibility. The PBG
`acted on this authority in 2012 by executing the loyalty
`contract with Merck that included the arbitration clause. Thus,
`the first two elements of the agency test are satisfied here for
`Schwartz.
`
`Accordingly, the only remaining question is whether
`Schwartz exercised sufficient control over its PBG to meet the
`control requirement of the Pennsylvania agency test. See
`Britton, 229 A.3d at 598.
`
`1
`
`Although the parties dispute how it applies here,
`Pennsylvania agency law is clear on the control requirement.
`“[A]n agency relationship is established only when the
`principal exercises control over the action at hand.” Id.; see
`also Menichini v. Grant, 995 F.2d 1224, 1233 n.14 (3d Cir.
`
`7
`
`
`
`
`
`1993). The principal can control the agent by “prescribing what
`the agent shall or shall not do before the agent acts,” or by
`directly controlling the agent during performance. Smalich v.
`Westfall, 269 A.2d 476, 480–81 (Pa. 1970) (quoting
`Restatement (Second) of Agency § 14 cmt. a (Am. L. Inst.
`1958)). The question in this appeal is whether Schwartz—the
`alleged principal—had the right or ability to control its PBG,
`the alleged agent. See Commonwealth v. Minds Coal Mining
`Corp., 60 A.2d 14, 20 (Pa. 1948) (“[C]ontrol over the means
`of performance is not the test of agency.”).
`
`Here, Schwartz exercised control over its PBG by
`circumscribing the PBG’s authority. Schwartz made the PBG
`its agent only for the limited purpose of vaccine purchases.
`Rotavirus III, 2020 WL 6828123, at *9 (2016 CCPAPP
`membership contract, limiting agency to “the purchase of
`goods and services as set forth herein”); App. 2412 (1999
`membership contract “appoint[ing] the [PBG] as [Schwartz’s]
`agent for the purpose of negotiating and entering into Vendor
`Arrangements”). Thus, Schwartz simultaneously demonstrated
`its intent to create an agency relationship and exercised control
`over the scope of the PBG’s agency by contract.
`
`The Pediatricians counter that this case is like Basile,
`where the Pennsylvania Supreme Court held that no agency
`relationship exists where the alleged agent merely presents an
`opportunity to the alleged principal. Basile, 761 A.2d at 1121.
`In Basile, H & R Block offered its customers the opportunity
`to obtain loans from a third party. Id. at 1117. The court held
`that H & R Block’s “mere facilitation” of the loan did not
`create an agency relationship. Id. at 1121. “Rather, the action
`[giving rise to the agency relationship] must be a matter of
`consequence or trust, such as the ability to actually bind the
`principal or alter the principal’s legal relations.” Id. (emphasis
`
`8
`
`
`
`
`
`omitted). Because such action was lacking, there was no
`agency relationship.
`
`The Pediatricians’ reliance on Basile is inapt. In that
`case, the customers did not contractually designate H & R
`Block as their agent. So the court looked to the parties’ conduct
`to determine whether an agency relationship existed. In doing
`so, the Basile court distinguished “mere facilitation” of an
`opportunity from an agency relationship. Id. Unlike in Basile,
`here Schwartz signed a membership contract that expressly
`designated the PBG as its purchasing agent. Because of the
`explicit authority delegated by that contract, Merck need not
`rely on the relationship between the parties to establish an
`agency relationship.
`
`2
`
`The Pediatricians also argue that the PBGs were not
`
`acting as their agents because they did not notify the
`Pediatricians about the arbitration clauses. The Pediatricians
`claim that the PBGs had no authority to agree to “undisclosed
`terms” with Merck. This argument also rests on a flawed
`analogy to Basile.
`
`To exercise the requisite degree of control, the principal
`must be adequately
`informed of
`the agent’s actions.
`Accordingly, the agent has a fiduciary duty to keep the
`principal informed of “all relevant information.” Id. at 1120.
`Because of the agent’s duty to disclose, the agent’s knowledge
`is imputed to the principal. W.C.A.B. v. Evening Bulletin, 445
`A.2d 1190, 1192 (Pa. 1982); see also Restatement (Third) of
`Agency § 5.03 (Am. L. Inst. 2006) (“[N]otice of a fact that an
`agent knows or has reason to know is imputed to the principal
`
`9
`
`
`
`
`
`if knowledge of the fact is material to the agent’s duties to the
`principal.”).
`
`But what if the agent does not fulfill its fiduciary duties?
`An agency relationship still exists even if the agent fails to
`notify
`the principal of all relevant
`information. See
`Restatement (Third) of Agency § 5.03 cmt. b (Am. L. Inst.
`2006) (“A principal may not rebut the imputation of an agent’s
`notice of a fact by establishing that the agent kept silent.”). Put
`more simply, an agent might fail to perform his duty but remain
`the principal’s agent. In such a case, the proper recourse for the
`principal is an action against the agent for breach of fiduciary
`duty or malpractice; but the principal will nevertheless be
`bound by the agent’s actions. See, e.g., Patel v. Mericle Com.
`Real Est. Grp., 2017 WL 11144107, at *4 (M.D. Pa. 2017)
`(allowing malpractice and breach of fiduciary duty claims
`against an agent to proceed based on the agent’s failure to
`disclose material information).
`
`the
`ignorance of
`the Pediatricians claim
`Here,
`arbitration clause. Based on that fact, the District Court
`concluded that the Pediatricians were not bound by the
`arbitration clause because the PBGs were not acting within the
`scope of their agency authority when they agreed to the
`arbitration clauses. Rotavirus III, 2020 WL 6828123, at *14
`(“[W]e are constrained to conclude that the member practices[]
`granted only very limited authority to their PBGs to enter into
`those terms and conditions of the Merck contracts which had
`been communicated to them.”).
`
`The District Court’s conclusion does not follow from its
`premise. The Pediatricians’ lack of notice is relevant to the
`adequacy of the PBGs’ performance as agents, but it does not
`answer the antecedent question of whether an agency
`
`10
`
`
`
`
`
`relationship existed. See Restatement (Third) of Agency § 5.03
`cmt. b (Am. L. Inst. 2006). Unlike in Basile, where there was
`no contract conferring agency on H & R Block, the contracts
`between the PBGs and the Pediatricians clearly established the
`agency relationship, and the authority to agree to an arbitration
`clause is part and parcel of the agency relationship in
`commercial contexts. See Dye v. Tamko Bldg. Prods., Inc., 908
`F.3d 675, 684–86 (11th Cir. 2018); see also HealthplanCRM,
`LLC v. AvMed, Inc., 458 F. Supp. 3d 308, 335 (W.D. Pa. 2020)
`(noting that Dye “provides persuasive guidance consistent with
`Pennsylvania law”). Subsequent actions, such as the PBGs’
`alleged failure to notify, go only to whether the PBGs fulfilled
`their fiduciary duties. Even if the PBGs breached their duties
`to the Pediatricians, that does not release the Pediatricians from
`their obligations under the arbitration clause. If this case were
`more like Basile, and there was no explicit contract conferring
`agency on the PBGs, then the Pediatricians would be correct—
`we would look to the parties’ conduct to determine the
`existence and scope of their agency relationship. But here, a
`written contract created an agency relationship that included
`the implied authority to accept an arbitration provision.
`
`For these reasons, Schwartz Pediatrics is bound to
`arbitrate because it granted actual authority to its PBG.
`
`B
`
`Sugartown and Margiotti & Kroll’s contract with their
`PBG would have established actual authority had it been
`signed earlier. That contract authorized the PBG to “act as a
`purchasing agent for [PBG members] to enter into contracts
`with third-party vendors to furnish goods or services to [PBG
`members].” Rotavirus III, 2020 WL 6828123, at *11. But that
`language was not inserted into the membership contract until
`
`11
`
`
`
`
`
`2019, years after the PBG executed its 2012 loyalty contract
`with Merck. The earlier contracts between
`the
`two
`Pediatricians and their PBG were less explicit about the PBG’s
`agency but still contained provisions from which agency could
`be inferred. See App. 2347 (stating that the Pediatricians
`“accept[] the conditions and terms offered in the [PBG-Merck]
`contract” and wish to “participate”); see also App. 2224–25
`(testimony by MSV president that MSV acts as members’
`“limited agent” and has “always negotiated the contracts on
`behalf of [its] members”). In any event, we need not decide
`whether those earlier contracts sufficed to establish actual
`agency authority because, at a minimum, the PBG had apparent
`authority to act for Sugartown and Margiotti & Kroll.
`
`An agent has apparent authority if “the principal, by
`word or conduct, causes people with whom the alleged agent
`deals to believe that the principal has granted the agent
`authority to act.” Wisler, 124 A.3d at 324 (quoting Walton v.
`Johnson, 66 A.3d 782, 786 (Pa. Super. Ct. 2013)). In
`Pennsylvania, “apparent authority [may] be established with a
`showing of: (1) limited authority given to the agent by the
`principal; and (2) conduct of the agent which demonstrates to
`the third-party the agent’s apparent authority to bind the
`principal.” Leidigh v. Reading Plaza Gen., Inc., 636 A.2d 666,
`667–68 (Pa. Super. Ct. 1994) (citation omitted).
`
`Both prongs of the test for apparent authority are met
`here. The District Court found “the member practices[] granted
`only very limited authority to their PBGs.” Rotavirus III, 2020
`WL 6828123, at *14. Testimony in the District Court
`confirmed that Sugartown and Margiotti & Kroll’s PBG acted
`on their behalf. See, e.g., id. at *9 (describing testimony by
`MSV’s president that “if a practice was enrolling in the [MSV]
`program
`through
`completion
`of
`their Enrollment
`
`12
`
`
`
`
`
`Form/Membership Agreement, they were also enrolling into
`the contract which [MSV] had with Merck and agreeing that
`they would abide by the terms and conditions of this contract”);
`App. 2224–25 (testimony by MSV’s president that MSV acts
`as members’ “limited agent” and has “always negotiated the
`contracts on behalf of [its] members”). At a minimum, this
`testimony justified the District Court’s finding that the
`Pediatricians delegated “very limited authority” to their PBGs.
`Rotavirus III, 2020 WL 6828123, at *14.
`
`So we turn to the second prong of the test: the conduct
`of the agent. Pennsylvania law tilts in favor of finding that an
`agent has apparent authority. Third parties dealing with an
`agent need only exercise “reasonable diligence to ascertain the
`agent’s authority.” Bolus v. United Penn Bank, 525 A.2d 1215,
`1222 (Pa. Super. Ct. 1987). Moreover, “[a]n admitted agent is
`presumed to be acting within the scope of his authority where
`the act is legal and the third party has no notice of the
`limitations on the agent’s authority.” Id. at 1222.
`
`Here, Merck was justified in believing that the PBGs
`were the Pediatricians’ agents because the PBGs represented
`themselves as agents in their contracts with Merck. App. 2141
`(Merck-CCPAPP contract, warranting that CCPAPP had “the
`authority of
`the [Pediatricians]
`to participate
`in
`this
`Agreement”); App. 2157 (Merck-MSV contract with identical
`language). Additionally, the Merck-PBG contracts required
`each PBG to meet the federal definition of a “group purchasing
`organization.” App. 2145 (Merck-CCPAPP contract); App.
`2161
`(Merck-MSV
`contract).
`“Group
`purchasing
`organization” is defined by federal regulation as “an entity
`authorized to act as a purchasing agent” for medical providers.
`42 C.F.R. § 1001.952(j)(2). By purchasing vaccines at the rates
`specified in the Merck-PBG contracts, the Pediatricians
`
`13
`
`
`
`
`
`confirmed the impression that the PBGs were acting as their
`agents. Thus, Merck had reason to believe the PBGs were the
`Pediatricians’ agents.
`
`The Pediatricians’ best argument to the contrary is
`based on a supposed concession by Merck. Merck represented
`to the District Court that, until the Pediatricians submitted their
`contracts with the PBGs, “Merck did not have sufficient
`information about the nature of the relationship between the
`PBGs and their members to assert that the PBGs acted as
`agents for the members with respect to Merck’s contracts.”
`App. 124 n.6. Such a concession would defeat an apparent
`authority theory because Merck could not have believed the
`PBGs were the Pediatricians’ agents if Merck did not know
`about the “nature of the relationship between the PBGs and [the
`Pediatricians].” Id.
`
`Merck claims this footnote did not concede anything
`substantive;
`it merely recognized a procedural hurdle.
`Specifically, Merck explains it could not prove an agency
`relationship based solely on the Pediatricians’ complaint and
`needed the Pediatricians to incorporate the agreements into the
`complaint, which they eventually did. Merck’s explanation is
`plausible since the Pediatricians’ complaint devotes only a few
`paragraphs to their relationship with their PBGs. However,
`Merck’s District Court briefing states that “Merck did not have
`sufficient information,” not just that the Pediatricians’
`complaint lacked sufficient information. Id. So even if we do
`not fully accept Merck’s explanation, Merck knew something
`about the “nature” of the PBG-Pediatrician relationship
`because of (1) the PBGs’ contractual representations that they
`were the Pediatricians’ agents and (2) the Pediatricians’
`subsequent purchases of discounted vaccines. That gave Merck
`sufficient reason
`to believe
`that
`the PBGs were
`the
`
`14
`
`
`
`
`
`Pediatricians’ agents, even if it never saw the PBG-Pediatrician
`contracts before this litigation.
`
`Because both prongs of the apparent authority test are
`satisfied here, Sugartown and Margiotti & Kroll must arbitrate
`their disputes with Merck.
`
`C
`
`In a final attempt to avoid arbitration, the Pediatricians
`
`that
`the arbitration clause’s
`language does not
`argue
`encompass them or their claims. The clause reads: “Any
`controversy, claim or dispute arising out of or relating to the
`performance, construction, interpretation or enforcement of
`this Agreement shall, if not resolved through negotiations
`between the parties, be submitted to mandatory binding
`arbitration pursuant to the Federal Arbitration Act, 9 U.S.C.
`Sec. 1, et. seq.” Rotavirus III, 2020 WL 6828123, at *2.
`
`1
`
`The Pediatricians insist their antitrust claims against
`
`Merck do not “arise out of or relate to” the contracts between
`Merck and the PBGs. Ped. Br. 25–26. Pennsylvania law
`suggests otherwise. When confronted with an arbitration
`clause nearly identical to this one—with the same “arising out
`of or relating to” language—the Pennsylvania Supreme Court
`concluded that it was framed in the “broadest conceivable
`language,” and inferred “that the parties intended the scope of
`the submission to be unlimited.” Borough of Ambridge Water
`Auth. v. Columbia, 328 A.2d 498, 501 (Pa. 1974); see also
`Battaglia v. McKendry, 233 F.3d 720, 727 (3d Cir. 2000)
`(“[W]hen phrases such as ‘arising under’ and ‘arising out of’
`
`15
`
`
`
`
`
`appear in arbitration provisions, they are normally given broad
`construction.”).
`
`The Pediatricians rely on a case where a more limited
`arbitration clause was at issue. See CardioNet, Inc. v. Cigna
`Health Corp., 751 F.3d 165, 173–74 (3d Cir. 2014) (“[O]nly
`those disputes ‘regarding the performance or interpretation of
`the Agreement’ must be arbitrated.” (emphasis added)). In
`CardioNet, we held that the arbitration agreement did not cover
`the plaintiffs’ claims. Id. at 179. But in doing so, we
`distinguished a case where an “undisputedly broader”
`arbitration clause was at issue. Id. at 176 (citing Sweet Dreams
`Unlimited, Inc. v. Dial-A-Mattress Int’l, Ltd., 1 F.3d 639, 642–
`43 (7th Cir. 1993)). That broader clause required arbitration for
`disputes “arising out of” the contract—the same language
`contained in the arbitration clause at issue here. Sweet Dreams,
`1 F.3d at 642. So CardioNet undermines the Pediatricians’
`arguments.
`
`For these reasons, we hold that the Pediatricians’
`antitrust claims are covered by the arbitration clause.
`
`2
`
`The Pediatricians also claim they are not “parties”
`
`within the meaning of the contractual language. We disagree.
`First, it is not clear that the scope of the arbitration provision is
`limited to the “parties.” The portion of the clause which
`mentions “the parties” applies only
`to pre-arbitration
`negotiations: “Any controversy . . . arising out of or relating to
`. . . this Agreement shall, if not resolved through negotiations
`between the parties [be arbitrated].” Rotavirus III, 2020 WL
`6828123, at *2 (emphasis added). The operative provision of
`the arbitration clause, on the other hand, is not limited to “the
`
`16
`
`
`
`
`
`parties.” See id. (requiring arbitration of “[a]ny controversy,
`claim or dispute arising out of or relating to [the contract]”).
`
`And even if the Pediatricians were right that the
`
`arbitration provision is limited to “the parties,” they would still
`be covered under agency principles. The PBGs were acting as
`their agents, who stand “in the shoes” of their principals,
`including when they “alter the legal relations between the
`principal and third persons.” Tribune-Review Publ’g Co. v.
`Westmoreland Cnty. Hous. Auth., 833 A.2d 112, 120 (Pa.
`2003) (cleaned up). When the PBGs signed the agreement in
`their capacity as agents, they bound the Pediatricians.
`
`For these two independently sufficient reasons, we hold
`
`that the Pediatricians are covered by the arbitration provision.
`
`*
`
`*
`
`*
`
`The District Court erred when it denied Merck’s motion
`to compel arbitration. Schwartz Pediatrics made the PBG its
`agent by contract, then the PBG used its authority to bind
`Schwartz to an arbitration clause. Sugartown and Margiotti &
`Kroll must arbitrate because their PBG had apparent authority
`to bind them to the arbitration clause with Merck. We will
`reverse the order of the District Court and remand with the
`instruction that the Court grant Merck’s motion to compel
`arbitration.
`
`17
`
`
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