       IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA

                            January 2017 Term

                                                                 FILED
                                                            February 9, 2017
                                                                released at 3:00 p.m.
                                No. 16-0209                   RORY L. PERRY, II CLERK
                                                            SUPREME COURT OF APPEALS
                                                                 OF WEST VIRGINIA




             WEST VIRGINIA CVS PHARMACY, LLC, ET AL.,
                     Defendants Below, Petitioners


                                    V.


                 MCDOWELL PHARMACY, INC., ET AL.,
                     Plaintiffs Below, Respondents



              Appeal from the Circuit Court of McDowell County
                    Honorable Booker T. Stephens, Judge
                          Civil Action No. 11-C-144
                       REVERSED AND REMANDED



                        Submitted: January 18, 2017
                          Filed: February 9, 2017

Robert B. Allen                      Marvin W. Masters
Pamela C. Deem                       April D. Ferrebee
Kay Casto & Chaney PLLC              The Masters Law Firm lc
Charleston, West Virginia            Charleston, West Virginia
Robert H. Griffith                   H. Truman Chafin
Foley & Lardner LLP                  The H. Truman Chafin Law Firm
Chicago, Illinois                    Charleston, West Virginia
Michael D. Leffel                    Anthony J. Majestro
Foley & Lardner LLP                  Powell & Majestro
Madison, Wisconsin                   Charleston, West Virginia
Attorneys for the Petitioners           Attorneys for the Respondents

J. Mark Adkins
S. Andrew Stonestreet
Bowles Rice LLP
Charleston, West Virginia
Attorneys for Amicus Curiae,
West Virginia Pharmacists Association

JUSTICE DAVIS delivered the Opinion of the Court.
                              SYLLABUS BY THE COURT



              1.     When an appeal from an order denying a motion to dismiss and to

compel arbitration is properly before this Court, our review is de novo.



              2.     “A choice of law provision in a contract will not be given effect when

the contract bears no substantial relationship with the jurisdiction whose laws the parties

have chosen to govern the agreement, or when the application of that law would offend the

public policy of this state.” Syllabus point 1, General Electric Co. v. Keyser, 166 W. Va.

456, 275 S.E.2d 289 (1981).




                                             i
Davis, Justice:

              This appeal originates from a dispute between a pharmacy network

administrator and various West Virginia pharmacies that are network members. Stemming

from an order of the Circuit Court of McDowell County that refused to compel arbitration,

this appeal raises three dispositive issues challenging the circuit court’s rulings as to: (1)

whether a contractual choice of law provision should be enforced; (2) whether, under the law

of the State of Arizona, arbitration agreements were adequately incorporated by reference

into the subject contracts; and (3) whether incorporation of the rules of the American

Arbitration Association into an arbitration agreement is sufficient to demonstrate that the

contracting parties have clearly and unmistakably agreed to a delegation provision contained

therein. We find that the circuit court erred in each of these challenged rulings, and,

therefore, we remand for the entry of an order dismissing this case and compelling

arbitration. Because we find that the parties delegated questions of arbitrability to the

arbitrator, we do not address the remaining issues raised.1




              1
             Additional issues raised in this appeal pertain to whether the arbitration
agreement applies to the claims asserted, whether the arbitration agreement is
unconscionable, and whether the individual plaintiffs are subject to arbitration.

                                              1
                                             I.

                     FACTUAL AND PROCEDURAL HISTORY

              Petitioners, defendants below, are Caremark, LLC; various companies affiliated

with Caremark, LLC; and four individuals who are pharmacists-in-charge at certain CVS

pharmacies (collectively referred to as “CVS/Caremark”).2 Caremark offers pharmacy

benefit management (“PBM”) services to insurers, third party administrators, business

coalitions, and employer sponsors of group health plans. Among the services offered by

Caremark are the administration and maintenance of pharmacy networks.



              Respondents, plaintiffs below, include six West Virginia retail pharmacies:

McDowell Pharmacy, Inc. (“McDowell”); McCloud Family Pharmacy, Inc. (“McCloud”);

Waterfront Family Pharmacy, LLC (“Waterfront”); T & J Enterprises (“T & J”); Johnston

& Johnston, Inc. (“Johnston”); and Griffith & Feil Drug, Inc. (“Griffith”). Respondents also

include six individuals who are licensed pharmacists who practice in West Virginia and are

affiliated with the aforementioned pharmacies. All of the respondents in this appeal will be

collectively referred to as “Plaintiff Pharmacies.”




              2
              CVS/Caremark explains how the corporate defendants are affiliated with
Caremark and with each other: “CVS Caremark Corporation (which in 2014 changed its
name to CVS Health Corporation) is the corporate parent of CVS Pharmacy, Inc. . . ., which
is the sole member of Caremark Rx, L.L.C. Caremark Rx, L.L.C. is the sole member of
Caremark. West Virginia CVS Pharmacy, L.L.C. is a subsidiary of CVS Pharmacy.”

                                              2
              Each of the six West Virginia pharmacies listed above has an agreement with

Caremark.3 Three of the pharmacies, McDowell, McCloud, and Waterfront, each signed a

“Provider Agreement” directly with Caremark Rx, LLC (“Caremark”). Accordingly, we

refer to these three pharmacies collectively as “the Direct Contract Pharmacies.” The

“Provider Agreement” signed by the Direct Contract Pharmacies contained a choice of law

provision and further stated, in relevant part, that “[t]his Agreement, the Provider Manual,

and all other Caremark Documents constitute the entire agreement between Provider and

Caremark, all of which are incorporated by this reference as if fully set forth herein and

referred to collectively as the ‘Provider Agreement’ or ‘Agreement’.” Pursuant to an

arbitration agreement contained in the referenced “Provider Manual,” arbitration would be

governed by the rules of the American Arbitration Association (“AAA”). The AAA rules

contain a delegation provision. Additional facts pertaining to the choice of law provision,

arbitration agreement, and delegation provision are set out below in the “Discussion” section

of this opinion.



              The three remaining pharmacies, T & J, Johnston, and Griffith, did not have

signed agreements directly with Caremark. We collectively refer to these three pharmacies

as “Indirect Contract Pharmacies.” More detailed facts relating to the agreements executed


              3
               Stated simply, it appears that the Plaintiff Pharmacies would sell particular
prescription drugs to customers whose prescription drug plans were administered by
Caremark, and then would receive reimbursement from Caremark for claims submitted on
behalf of said customers.

                                             3
by the Indirect Contract Pharmacies will be set out below, in connection with our discussion

of those agreements. However, we do note here that the agreements contained an arbitration

clause electing the AAA rules to govern arbitration.



              In August of 2011, the Plaintiff Pharmacies filed a complaint against

CVS/Caremark. The complaint sought injunctive relief for violations of W. Va. Code § 30-

5-7 (1995) (Repl. Vol. 1998);4 alleged violations of West Virginia Code § 33-16-3q (2003)

(Repl. Vol. 2011)5 and W. Va. Code § 33-11-4 (2002) (Repl. Vol. 2011);6 and also alleged

tortious interference, fraud, and violations of W. Va. Code § 47-18-3 (1978) (Repl. Vol.

2015).7 Punitive damages also were sought.



              Following an attempted removal to and remand from federal court,

CVS/Caremark filed a motion to dismiss the complaint and to compel arbitration. After a




              4
              W. Va. Code § 30-5-7 (1995) (Repl. Vol. 1998) is titled “Grounds for
suspension or revocation of license or disciplinary proceedings; penalties and procedures;
temporary suspensions; reporting of disciplinary action.”
              5
              W. Va. Code § 33-16-3q (2003) (Repl. Vol. 2011) is titled “Required use of
mail-order pharmacy prohibited.”
              6
               W. Va. Code § 33-11-4 (2002) (Repl. Vol. 2011) is titled “Unfair methods
of competition and unfair or deceptive acts or practices defined.”
              7
               W. Va. Code § 47-18-3 (1978) (Repl. Vol. 2015) is titled “Contracts and
combinations in restraint of trade.”

                                             4
period of three years of discovery, the circuit court heard arguments on CVS/Caremark’s

motion and denied the same by order entered on January 19, 2016. This appeal followed.



                                             II.

                               STANDARD OF REVIEW

              CVS/Caremark herein appeals a circuit court order denying its motion to

dismiss and to compel arbitration. This Court previously has held that “[a]n order denying

a motion to compel arbitration is an interlocutory ruling which is subject to immediate appeal

under the collateral order doctrine.” Syl. pt. 1, Credit Acceptance Corp. v. Front, 231 W. Va.

518, 745 S.E.2d 556 (2013). In addition, we repeatedly have recognized, and now expressly

hold, that when an appeal from an order denying a motion to dismiss and to compel

arbitration is properly before this Court, our review is de novo. See Citibank, N.A. v. Perry,

No. 15-1121, 2016 WL 6677944, at *3, ___ W. Va. ___, ___, ___ S.E.2d ___, ___ (Nov. 10,

2016) (“‘When an appeal from an order denying a motion [to] dismiss is properly before this

Court, our review is de novo.’” (quoting Credit Acceptance, 231 W. Va. at 525, 745 S.E.2d

at 563)); Schumacher Homes of Circleville, Inc. v. Spencer, 237 W. Va. 379, ___, 787 S.E.2d

650, 657 (2016) (“Because the circuit court’s ruling denied Schumacher’s motion to dismiss,

we review the circuit court’s order de novo.” (footnote omitted)). Accord Geological

Assessment & Leasing v. O’Hara, 236 W. Va. 381, 385, 780 S.E.2d 647, 651 (2015).




                                              5
              Moreover, to the extent that our resolution of this appeal necessitates our

review of contractual issues,“‘we apply a de novo standard of review to [a] circuit court’s

interpretation of [a] contract.’” Finch v. Inspectech, LLC, 229 W. Va. 147, 153, 727 S.E.2d

823, 829 (2012) (quoting Zimmerer v. Romano, 223 W. Va. 769, 777, 679 S.E.2d 601, 609

(2009) (per curiam)).

              Having set out the proper standards for our consideration of the instant appeal,

we now address the dispositive issues raised.



                                             III.

                                       DISCUSSION

              Three dispositive issues must be addressed to resolve this appeal: (1) whether

the parties agreed to apply Arizona law, (2) whether arbitration agreements were

incorporated by reference into the subject contracts, and (3) whether the parties have clearly

and unmistakably agreed to a delegation provision. We address each issue in turn.8




                            A. Law Applicable to the Contract


              8
               We recognize the participation of Amicus Curiae, the West Virginia
Pharmacists Association, who filed a brief in support of the Plaintiff Pharmacies. We
appreciate its contribution and will consider its brief in conjunction with the parties’
arguments.

                                              6
              The provider agreements executed between Direct Contract Pharmacies and

Caremark each contain the following clause specifying that the law of Arizona governs the

contract:



              Lawful Interpretation and Jurisdiction. Whenever possible,
              each provision of the Agreement shall be interpreted so as to be
              effective and valid under applicable Law. Should any provision
              of this Agreement be held unenforceable or invalid under
              applicable Law, the remaining provisions shall remain in full
              force and effect. Unless otherwise mandated by applicable Law,
              the Agreement will be construed, governed, and enforced in
              accordance with the laws of the State of Arizona without regard
              to choice of law provisions.

(Italicized emphasis added). The provider agreements governing the Indirect Contract

Pharmacies also contains a choice of law provision electing Arizona law:

              Jurisdiction. Unless otherwise specifically provided herein or
              mandated by applicable Law, this Agreement will be construed,
              governed and enforced in accordance with the laws of the State
              of Arizona without regard to its choice of law provisions.



              The circuit court acknowledged that, in West Virginia, a choice of law

provision must bear a substantial relationship to the chosen jurisdiction. The circuit court

discussed the relationships of states other than Arizona to the provider agreements, and the

significant relationship West Virginia has to the provider agreements. Based upon this

analysis, the circuit court concluded there was no substantial relationship between the

provider agreements and the State of Arizona and applied West Virginia law.


                                             7
              CVS/Caremark argues that the circuit court erred in disregarding Arizona law,

as contractually chosen by the parties, and instead applying West Virginia law to

CVS/Caremark’s motion to compel arbitration. With respect to Arizona’s substantial

relationship to the provider agreements, CVS/Caremark relies on the deposition testimony

of Daniel Pagnillo, who is Caremark’s Director of Network Account Management and

Compliance. Caremark summarizes Mr. Pagnillo’s deposition testimony thusly:

              Communications with pharmacies in Caremark’s network
              originate from Caremark’s Arizona offices. Caremark personnel
              in Arizona process claims from the pharmacies within
              Caremark’s network (including the Pharmacy Plaintiffs) and
              handle administrative matters related to those pharmacies. Each
              of the Provider Manuals sent to the Pharmacy Plaintiffs were
              sent from Caremark’s Arizona offices. Likewise, any contracts
              or other documents the Pharmacy Plaintiffs sign are returned to
              the Arizona offices, where they are stored.

(Citations to record omitted). CVS/Caremark additionally asserts that it should prevail, i.e.,

the arbitration agreement should be enforced, under the application of either West Virginia

or Arizona law.



              The Plaintiff Pharmacies contend that the circuit court’s application of West

Virginia law is not reversible error. First, the Plaintiff Pharmacies assert that “Defendants

have consistently contended that there is no difference between West Virginia law and

Arizona law.” According to the Plaintiff Pharmacies, choice of law clauses do not apply

where, as here, the clause is limited to contract claims and the disputes arise out of tort



                                              8
claims. In support of this proposition, the Plaintiff Pharmacies cite Work While U-Wait, Inc.

v. Teleasy Corp., No. CIV. A. 2:07-00266, 2007 WL 3125269 (S.D.W. Va. Oct. 24, 2007).



              We find that Arizona law applies pursuant to the choice of law provisions

contained in the various provider agreements executed by the Plaintiff Pharmacies for the

following reasons. First, this Court has held that “[a] choice of law provision in a contract

will not be given effect when the contract bears no substantial relationship with the

jurisdiction whose laws the parties have chosen to govern the agreement, or when the

application of that law would offend the public policy of this state.” Syl. pt. 1, General Elec.

Co. v. Keyser, 166 W. Va. 456, 275 S.E.2d 289 (1981). Stated another way, “[t]his Court has

recognized the presumptive validity of a choice of law provision, (1) unless the provision

bears no substantial relationship to the chosen jurisdiction or (2) the application of the laws

of the chosen jurisdiction would offend the public policy of this State.” Manville Pers.

Injury Settlement Tr. v. Blankenship, 231 W. Va. 637, 644, 749 S.E.2d 329, 336 (2013)

(citing Bryan v. Massachusetts Mut. Life Ins. Co., 178 W. Va. 773, 777, 364 S.E.2d 786, 790

(1987); Syl. pt. 1, General Elec. Co. v. Keyser, 166 W. Va. 456, 275 S.E.2d 289).



              There is sufficient evidence in the record submitted on appeal to meet the

General Electric test. In addition to the unchallenged deposition testimony offered by Mr.

Pagnillo detailing the many connections between Arizona and the provider agreements, we

further observe that in at least seven different places the “Provider Manual” directs

                                               9
pharmacies to contact Caremark at its Scottsdale, Arizona, address for various reasons such

as inquiries, grievances, requested changes, disputed claims, questions about data files,

providing notice of potentially fraudulent prescriptions, and claims submission for certain

Medicare claims. Thus it is clear that the agreement between CVS and the Plaintiff

Pharmacies bears a substantial relationship to Arizona. Moreover, the Plaintiff Pharmacies

have not raised any public policy that is offended by application of Arizona law.



              Next, we are persuaded by the fact that other courts interpreting nearly

identical clauses in other CVS/Caremark litigation have applied Arizona law. See Crawford

Prof’l Drugs, Inc. v. CVS Caremark Corp., 748 F.3d 249, 257-58 (5th Cir. 2014) (observing

that “Defendants . . . note that their business operations are located in Arizona and highlight

that the Provider Manual requires the Plaintiffs to (1) direct any inquiries, grievances, or

requested changes to Caremark’s Scottsdale, Arizona office; (2) dispute a claim or request

that a claim be adjusted via Caremark’s Scottsdale office; and (3) appeal any audit Caremark

conducts to ensure claims accuracy to Caremark’s audit manager, located in the company’s

Scottsdale office” and concluding that “[i]n the absence of evidence to the

contrary . . . Plaintiffs have failed to demonstrate that Arizona has no substantial relationship

to the parties or the transaction . . . .” (quotations and citation omitted)); Burton’s Pharmacy,

Inc. v. CVS Caremark Corp., No. 1:11CV2, 2015 WL 5430354, at *4 (M.D.N.C. Sept. 15,

2015) (Mem. Op. & Recommendation of United States Magistrate Judge) (“With respect to

Plaintiffs’ argument that Arizona has no substantial relationship to the parties or the

                                               10
transactions at issue, Defendants have proffered that Arizona is the ‘hub’ of Caremark’s

PBM operations. This is reflected in the provider agreements and Provider Manuals. For

example, the CVS/Caremark Provider Manual provides the contact address for Caremark

Network Management in Scottsdale, Arizona, and the address for Caremark Part D Medicare

Claims Processing is also in Scottsdale.”), report and recommendation adopted, No.

1:11CV2, 2015 WL 5999386 (M.D.N.C. Oct. 14, 2015) (order). See also Grasso Enters.,

LLC v. CVS Health Corp., 143 F. Supp. 3d 530, 537 (W.D. Tex. 2015) (“Here, the very same

documents that were at issue in [Crawford Prof’l Drugs, Inc. v. CVS Caremark Corp., 748

F.3d 249, 257-58 (5th Cir. 2014)], are before this Court. Both provider agreements clearly

state that “the Agreement[s] will be construed, governed, and enforced in accordance with

the laws of the State of Arizona.” . . . Additionally, both parties agree that Arizona law

applies. . . . For these reasons, the Court will apply Arizona law in analyzing the arbitration

clause.”).



                Finally, we find the Plaintiff Pharmacies’ reliance on Work While U-Wait, Inc.

v. Teleasy Corp., No. CIV.A. 2:07-00266, 2007 WL 3125269, to be misplaced. In that case,

the United States District Court for the Southern District of Virginia addressed whether a

choice-of-law provision applied to a plaintiff’s fraud claim. The Work While U-Wait court

observed that

                [t]he choice-of-law provision in question is of such narrow
                scope as to be inapplicable to plaintiff’s fraud claim. It does not
                purport to govern all disputes arising under the contract or

                                                11
               between the parties; the provision merely state[d] that the
               agreement, itself, is to be “governed by and construed in
               accordance with” New York law.

2007 WL 3125269, at *6. Both of the choice-of-law clauses in the provider agreements at

issue in the instant appeal are broader than that addressed in Work While U-Wait insofar as

they direct that the agreement will not only be governed and construed, but also enforced,

in accordance with the law of Arizona. More importantly, however, we note that the

question presently at issue does not pertain to the Plaintiff Pharmacies’ underlying claims,

but, rather, to whether those claims must be resolved by arbitration pursuant to the arbitration

clause contained in each of their agreements. The question of arbitration is indisputably

contractual.



               Based upon the foregoing analysis, we conclude that the circuit court erred by

failing to apply Arizona law pursuant to the choice-of-law clause in the relevant agreements.



          B. Incorporation of Arbitration Agreement and Delegation Provision

               The remaining issues in this appeal pertain to an arbitration agreement and a

delegation provision. The delegation provision, which was purportedly incorporated by

reference into the arbitration clause, broadly directs that “[t]he arbitrator shall have the power

to rule on his or her own jurisdiction, including any objections with respect to the existence,

scope, or validity of the arbitration agreement or to the arbitrability of any claim or

counterclaim.” The United States Supreme Court has

                                               12
              recognized that parties can agree to arbitrate “gateway”
              questions of “arbitrability,” such as whether the parties have
              agreed to arbitrate or whether their agreement covers a particular
              controversy. . . . An agreement to arbitrate a gateway issue is
              simply an additional, antecedent agreement the party seeking
              arbitration asks the federal court to enforce, and the FAA
              operates on this additional arbitration agreement just as it does
              on any other.

Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68-70, 130 S. Ct. 2772, 2777-78, 177 L. Ed. 2d

403 (2010) (internal citations omitted). When a dispute arises over the enforceability of a

delegation provision, the question becomes whether the parties clearly and unmistakably

agreed to the provision:

                      Generally, in deciding whether to compel arbitration, a
              court must determine two “gateway” issues: (1) whether there
              is an agreement to arbitrate between the parties; and (2) whether
              the agreement covers the dispute. Howsam v. Dean Witter
              Reynolds, Inc., 537 U.S. 79, 84, 123 S. Ct. 588, 154 L. Ed. 2d
              491 (2002). However, these gateway issues can be expressly
              delegated to the arbitrator where “the parties clearly and
              unmistakably provide otherwise.” AT & T Techs., Inc. v.
              Commc’ns Workers of Am., 475 U.S. 643, 649, 106 S. Ct. 1415,
              89 L. Ed. 2d 648 (1986) (emphasis added); see also First
              Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115
              S. Ct. 1920, 131 L. Ed. 2d 985 (1995) (“Courts should not
              assume that the parties agreed to arbitrate arbitrability unless
              there is ‘clea[r] and unmistakabl[e]’ evidence that they did so”).

Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). Accord Sena v. Uber Techs.

Inc., No. CV-15-02418-PHX-DLR, 2016 WL 1376445, at *3 (D. Ariz. Apr. 7, 2016),

reconsideration denied, No. CV-15-02418-PHX-DLR, 2016 WL 4064584 (D. Ariz. May 3,

2016). Thus, the fundamental questions this Court must determine relate to whether the

parties clearly and unmistakably chose to submit to the arbitrator certain gateway issues

                                             13
pertaining to their agreement to arbitrate. In the case sub judice, these issues have been

framed in the context of whether the arbitration agreement, itself, as well as the delegation

provision, were properly incorporated into the agreements signed by the respective parties,

thereby demonstrating their clear and unmistakable assent to those provisions. In making

these determinations, we apply federal and Arizona law.9 Our discussion will be divided into

three sections: (1) the arbitration agreement as to the Direct Contract Pharmacies, (2) the

arbitration agreement as to the Indirect Contract Pharmacies, and (3) incorporation of the

delegation provision.



              1. Direct Contract Pharmacies Arbitration Agreement. The three Direct

Contract Pharmacies each signed a provider agreement that contained a clause referencing

separate documents, including the “Provider Manual.” That clause contained the following

language: “Entire Agreement. This Agreement, the Provider Manual, and all other

Caremark Documents constitute the entire agreement between Provider and Caremark, all

of which are incorporated by this reference as if fully set forth herein and referred to

collectively as the ‘Provider Agreement’ or ‘Agreement.’ . . .” Additionally, above the

signature of each of the Direct Contract Pharmacies on their respective provider agreements




              9
               Because, as discussed above in Section III.A. of this opinion, the parties
elected to have their contractual agreements governed by Arizona law, we do not apply West
Virginia law to the substantive issues herein raised. See infra note 11.

                                             14
was the following statement: “By signing below, Provider agrees to the terms set forth above

and acknowledges receipt of the Provider Manual.” (Emphasis added).



              The circuit court concluded that

              there was no mutual assent between the Plaintiffs and Caremark.
              McDowell, McCloud, and Waterfront Provider Agreements at
              the time were referencing a 2004 Caremark Provider Manual
              which had an arbitration provision and allowed for amendments
              to be made so long as proper notice was given. Caremark
              amended the Provider Manual for McDowell, McCloud, and
              Waterfront in 2007 and 2009, which had arbitration provisions.
              While the McDowell, McCloud, and Waterfront Provider
              Agreements mention the Provider Manual, incorporated by
              reference in Paragraph 11 entitled Entire Agreement and these
              three Plaintiffs had to acknowledge receipt of the Provider
              Manual with a signature, these three Provider Agreements
              (signed by the three Plaintiffs) never mention arbitration.
              Having an arbitration clause in a distinctly separate and lengthy
              document and not having to agree specifically to the terms in the
              arbitration provision, there was no mutual assent among the
              parties. The Plaintiffs were not aware of the ramifications of the
              arbitration clause, the arbitration would need to take place in
              Arizona, the time and expense of arbitration, and how arbitrating
              would mean that a potential court case could not be litigated in
              West Virginia, where they are located. Without this complete
              awareness of arbitration, and Defendants[’] lack of explanation
              of arbitration, the Court finds that the Plaintiffs did not assent
              and therefore there was no mutual assent to the terms of the
              arbitration provision. These three Plaintiffs did not even have
              to sign new Provider Agreements when the Provider Manual
              was modified in 2007 and 2009. Newer versions of the manual
              were distributed to the Plaintiffs and thus there was no mutual
              assent with (no physical or verbal proof) as to the acceptance of
              the modifications/arbitration provision made in the newer
              versions of the Provider Manual.



                                             15
(Footnotes omitted).



              CVS/Caremark contends that the circuit court erred by finding that the parties

did not validly incorporate the “Provider Manual’s” arbitration provision into their provider

agreements because the incorporation by reference contained in the pertinent agreements met

the “clear and unequivocal language” test that is applicable under Arizona law. Moreover,

contrary to the circuit court’s rejection of the arbitration agreement on the ground that it was

not specifically mentioned in the signed agreement, Arizona courts have rejected the view

that an arbitration agreement must be specifically referenced in the language incorporating

by reference another document containing an arbitration agreement. Finally, CVS/Caremark

notes that the provider agreements signed by the three Direct Contract Pharmacies repeatedly

referenced the “Provider Manual” and each of the Direct Contract Pharmacies acknowledged

their receipt of the “Provider Manual” as well as their acceptance of its terms by signing the

“Provider Agreement.”



              Plaintiff Pharmacies assert that CVS/Caremark failed to establish that the

Plaintiff Pharmacies agreed to the arbitration clause. Citing only West Virginia law, which

we have found to be inapplicable to this matter, the Plaintiff Pharmacies contend that the

standard for incorporation by reference has not been met because the arbitration clause was

buried in the complex “Provider Manual” that had as its main purpose instructions for

processing claims. Plaintiff Pharmacies submit that nothing in the provider agreements

                                              16
signed by three Direct Contract Pharmacies indicated they were agreeing to arbitrate non-

contractual disputes in Arizona.



              We find that, under Arizona law, the arbitration agreement was incorporated

by reference. In Weatherguard Roofing Co. v. D.R. Ward Construction Co., 214 Ariz. 344,

346, 152 P.3d 1227, 1229 (Ct. App. 2007),10 the Court of Appeals of Arizona explained that

              [i]t is a basic rule of contract construction that to incorporate by
              reference: “[T]he reference must be clear and unequivocal and
              must be called to the attention of the other party, he must
              consent thereto, and the terms of the incorporated document
              must be known or easily available to the contracting
              parties . . . . While it is not necessary that a contract state
              specifically that another writing is “incorporated by this
              reference herein,” the context in which the reference is made
              must make clear that the writing is part of the contract.”




              10
                 The Plaintiff Pharmacies argue that this Court should not apply Weatherguard
Roofing Co. v. D.R. Ward Construction Co., 214 Ariz. 344, 346, 152 P.3d 1227, 1229 (Ct.
App. 2007), insofar as it is a decision of the Court of Appeals of Arizona. According to the
Plaintiff Pharmacies, it has been recognized that “decisions by the Arizona Court of Appeals,
published or not, are not binding authority. Nevertheless, they are illustrative.” Custom
Homes By Via LLC v. Bank of Oklahoma, No. CV-12-01017-PHX-FJM, 2013 WL 5783400,
at *5 (D. Ariz. Oct. 28, 2013), aff’d sub nom. Custom Homes By Via, LLC v. Bank of
Oklahoma, NA, 637 F. App’x 356 (9th Cir. 2016). Instead, the Plaintiff Pharmacies contend
that this Court should apply a stricter standard announced in 1974 in Allison Steel
Manufacturing Co. v. Superior Court, 22 Ariz. App. 76, 523 P.2d 803 (1974). Because
Allison Steel also is a decision of the Court of Appeals of Arizona, and because that decision
was distinguished by the Weatherguard Court on the ground that it involved indemnification
of a general contractor by a subcontractor, we find our reliance on Weatherguard to be
appropriate in this instance, particularly where, as here, the Supreme Court of Arizona has
not squarely addressed the issue at hand.

                                              17
(Emphasis added) (quoting United California Bank v. Prudential Ins. Co. of Am., 140 Ariz.

238, 268, 681 P.2d 390, 420 (Ct. App. 1983)).11 Here, the reference in the “Provider

Agreement” was clear in stating that the entire agreement included, inter alia, the “Provider

Manual.”    By signing the “Provider Agreement,” the Direct Contract Pharmacies

acknowledged their receipt of the 2004 “Provider Manual”; thus, the terms of the “Provider

Manual” were “easily available” to them. Weatherguard Roofing, 214 Ariz. at 346, 152 P.3d

at 1229. Although CVS/Caremark seeks to enforce an arbitration agreement contained in a

subsequent, 2009, version of the “Provider Manual,” the 2004 “Provider Manual” contained

a provision allowing amendments:



              11
               We note that this standard differs from the West Virginia standard for
incorporation by reference. West Virginia law recognizes that,

                      [i]n the law of contracts, parties may incorporate by
              reference separate writings together into one agreement.
              However, a general reference in one writing to another
              document is not sufficient to incorporate that other document
              into a final agreement. To uphold the validity of terms in a
              document incorporated by reference, (1) the writing must make
              a clear reference to the other document so that the parties’ assent
              to the reference is unmistakable; (2) the writing must describe
              the other document in such terms that its identity may be
              ascertained beyond doubt; and (3) it must be certain that the
              parties to the agreement had knowledge of and assented to the
              incorporated document so that the incorporation will not result
              in surprise or hardship.

State ex rel. U-Haul Co. of W. Virginia v. Zakaib, 232 W. Va. 432, 752 S.E.2d 586 (2013).
Thus, the outcome of this case may be different were we to apply U-Haul. As we explained
above, however, we are bound to apply the contracting parties’ choice-of-law to this matter.
Accordingly, we apply the law of Arizona.

                                              18
                      From time to time, Caremark may amend the Provider
               Agreement, including the Provider Manual or other Caremark
               Documents, by giving notice to Provider of the terms of the
               amendment and specifying the date the amendment becomes
               effective. If Provider submits claims to Caremark after the
               effective date of any notice or amendment, the terms of the
               notice or amendment will be deemed accepted by Provider and
               will be considered part of the Caremark Provider Agreement.

Such a provision is enforceable under Arizona law. As one Arizona court has explained,

                      In Arizona, to effectively modify a contract, “there must
               be: (1) an offer to modify the contract, (2) assent to or
               acceptance of that offer, and (3) consideration.” Demasse v. ITT
               Corp., 194 Ariz. 500, 506, ¶ 18, 984 P.2d 1138, 1144 (1999);
               see Angus Med. Co. v. Digital Equip. Corp., 173 Ariz 159, 164,
               840 P.2d 1024, 1029 (App. 1992) (“One party to a written
               contract cannot unilaterally modify it without the assent of the
               other party.”). A modification is merely an offer for a revised
               contract and cannot bind both parties until it is accepted. See
               Goodman v. Physical Res. Eng’g, Inc., 229 Ariz. 25, 28, ¶ 7,
               270 P.3d 852, 855 (App. 2011). An offer cannot be accepted
               unless the offeree actually knows of the offer’s existence.
               Douglas v. U.S. Dist. Ct. for Cent. Dist. of Cal., 495 F.3d 1062,
               1066 (9th Cir. 2007).

Capital One Bank (USA), N.A. v. Davey, No. 1 CA-CV 13-0109, 2013 WL 6729261, at *5

(Ariz. Ct. App. Dec. 19, 2013). The Capital One court went on to clarify that “[c]onduct,

such as the . . . continued use of [a credit] card following . . . notifications, can be sufficient

to manifest acceptance of an offer or acquiescence in a modification.” Id. (citing Ancell v.

Union Station Assocs., Inc., 166 Ariz. 457, 460, 803 P.2d 450, 453 (Ct. App. 1990)). See

Ancell v. Union Station Assocs., Inc., 166 Ariz. 457, 460-61, 803 P.2d 450, 453-54 (Ct. App.

1990) (recognizing that “‘[c]onduct can manifest acceptance of an offer or acquiescence in

a modification.’” (quoting Adair Homes, Inc. v. Jarrell, 59 Or. App. 80, 85, 650 P.2d 180,

                                                19
183 (1982))). See also Grasso Enters., LLC v. CVS Health Corp., 143 F. Supp. 3d 530, 538

(W.D. Tex. 2015) (“CVS/Caremark do not have the ability to unilaterally amend the Provider

Manual and bind pharmacies to those amendments. The Provider Manual requires that

CVS/Caremark give notice of the terms of any amendment and the effective date. . . . Then,

if a pharmacy does not agree to the new terms, it may simply reject the amendment by

ceasing to submit claims to CVS/Caremark . . . . There is mutuality of obligation here.”); The

Muecke Co., Inc. v. CVS Caremark Corp., No. CV V-10-78, 2012 WL 12535439, at *19

(S.D. Tex. Feb. 22, 2012) (“Plaintiff Muecke received the 2009 manual . . . subject to

the . . . acceptance process . . . . Plaintiff Muecke continued to submit claims, which signaled

acceptance of all new terms. . . . After Caremark sent the 2009 Caremark Provider Manual,

Plaintiff Muecke became a party to the included arbitration agreement.”), report and

recommendation adopted sub nom. Muecke Co., Inc. v. CVS Caremark Corp., No. CV

V-10-78, 2012 WL 12535440 (S.D. Tex. Mar. 29, 2012), aff’d, 512 F. App’x 395 (5th Cir.

2013), and on reconsideration, No. CV V-10-78, 2014 WL 11281393 (S.D. Tex. Sept. 30,

2014), aff’d, 615 F. App’x 837 (5th Cir. 2015).



              The record submitted on appeal in the instant case demonstrates that

CVS/Caremark followed the amendment procedure agreed to by the parties. It is undisputed

that the 2009 “Provider Manual,” which contains the arbitration agreement CVS/Caremark

seeks to enforce, was mailed to, and received by, each of the Direct Contract Pharmacies in

advance of its effective date. It also is undisputed that, after receiving the 2009 “Provider

                                              20
Manual,” each of the Direct Contract Pharmacies signaled their acceptance of the

amendments therein offered by Caremark by submitting claims after the effective date of the

2009 “Provider Manual.”



             The circuit court further concluded, however, that the Direct Contract

Pharmacies were not subject the arbitration clause because the “Provider Agreements (signed

by the three Plaintiffs) never mention arbitration.” Arizona courts have rejected this

reasoning as explained by the Weatherguard court:

             Language incorporating by reference an arbitration provision
             from another contract must be clear, and such language must be
             interpreted to carry out the intentions of the parties. But,
             contrary to Weatherguard’s argument, no specific word or
             phrase – such as a specific reference to arbitration – is required.

                     Therefore, when a court is asked to interpret a contract,
             whether the issue concerns arbitration or indemnification, it
             must examine the language used by the parties and construe
             their words as imposing obligations or granting rights that
             “reasonably appear to have been intended by the parties.”
             Grubb & Ellis, 213 Ariz. at 88, ¶ 17, 138 P.3d at 1215. Just as
             there is no requirement that any specific word or phrase be used
             to protect an indemnitee against his own negligence, an
             arbitration clause contained in one agreement may be
             incorporated by reference in another agreement even if the
             incorporating language does not specifically mention
             arbitration. Such an omission is not fatal if the parties’
             agreement to resort to arbitration is otherwise clear.

Weatherguard, 214 Ariz. at 348, 152 P.3d at 1231 (emphasis added).




                                             21
              Based upon the foregoing analysis, we conclude that, pursuant to Arizona law,

the arbitration agreements were successfully incorporated by reference into the provider

agreements executed between the Direct Contract Pharmacies and Caremark. Thus, the

Direct Contract Pharmacies clearly and unmistakably agreed to the arbitration clause

included in the CVS “Provider Manual.” The circuit court’s contrary rulings are in error.

We next consider the provider agreements executed by the Indirect Contract Pharmacies.



              2. Indirect Contract Pharmacies Arbitration Agreement. The three

Indirect Contract Pharmacies did not execute a provider agreement directly with Caremark.

Instead, their agreement took a different path.



              Two of the Indirect Contract Pharmacies, Johnston and Griffith, initially signed

provider agreements with PCS Health Systems, Inc. (“PCS”). Participation in the Caremark

network by the remaining Indirect Contract Pharmacy, T&J, was governed by a contract with

PCS through T&J’s pharmacy services administrative organization (“PSAO”), Medicine

Shoppe Internet, Inc. (“Medicine Shoppe”). T&J agreed to be bound by contracts executed




                                             22
on its behalf by Medicine Shoppe.12 The PCS provider agreements signed by or on behalf

of the Indirect Contract Pharmacies contained an arbitration agreement.



              In 2000, PCS was purchased by Advance Paradigm, Inc., creating

AdvancePCS. AdvancePCS notified pharmacies who had provider agreements with PCS,

including Johnston, Griffith, and the Medicine Shoppe on behalf of T&J, that their “PCS

Provider Agreement will apply with respect to all Advance PCS business with your

pharmacy and will be referenced as the ‘AdvancePCS Provider Agreement.’” Thus, the PCS

provider agreement signed by or on behalf of the Indirect Contract Pharmacies, which

contained the arbitration agreement, remained in effect between the Indirect Contract

Pharmacies and AdvancePCS and became known as the “AdvancePCS Provider Agreement.”



              Thereafter, in 2004, Caremark acquired AdvancePCS and created

CaremarkPCS. Caremark distributed an “Important Notice to Pharmacy Providers” to

Pharmacies and PSAOs that had provider agreements with AdvancePCS, including the

Indirect Contract Pharmacies. According to the notice, Caremark and CaremarkPCS would

use the “same base pharmacy provider agreement effective August 1, 2004. The new


              12
                 Medicine Shoppe’s contract with T&J specified that Medicine Shoppe “shall
solicit and use its best efforts to contract, on behalf of each participant . . .,
with . . . pharmacy benefit managers . . . .” (Emphasis added). The contract further required
that “[e]ach Participant must participate in each and every Group contract accepted by
Medicine Shoppe . . . .” Therefore, T&J was bound to participate in the PCS contract
accepted by Medicine Shoppe.

                                             23
agreement will consist of the AdvancePCS Provider Agreement,” along with certain exhibits

and attachments not relevant to our discussion. (Emphasis added). The pharmacies were

further advised that the “new agreement will apply to all of your CaremarkPCS . . . business

beginning August 2, 2004, and will be called the ‘Caremark Provider Agreement.’” Thus,

the AdvancePCS provider agreement, which had formerly been known as the “PCS Provider

Agreement” and had been signed by or on behalf of the Indirect Contract Pharmacies, and

which contained an arbitration agreement on its face, remained in effect between the Indirect

Contract Pharmacies and CaremarkPCS.13



              The Circuit Court found

                      Plaintiffs T&J, Johnston & Johnston, and Griffith & Feil
              also did not mutually assent to the arbitration provision in their
              agreements with Caremark.               These three Plaintiffs
              participated/had affiliation with pharmacy networks and through
              these affiliations eventually had an indirect arrangement with
              Caremark. Specifically, there are no direct agreements signed
              between these three Plaintiffs and Caremark. As corporations
              merged, notices were given to these Plaintiffs allegedly binding
              them to Caremark and arbitration. T&J did not even receive the
              notices directly, but rather their notices were sent to Medicine
              Shoppe. Based on the facts where Caremark did not keep copies
              of the notices that made the connection between these three
              Plaintiffs and Caremark, the three Plaintiffs did not have to sign
              the notices, and there are no signed agreements between each of
              the three Plaintiffs and Caremark explicitly binding the parties
              to arbitration, the Court finds there was no mutual assent from


              13
                Johnston and Griffith also participated in PSAOs. Johnston is affiliated with
PSAO Leader Drugstores, Inc., and Griffith is affiliated with PSAO Access Health. Johnston
and Griffith also were subject to contracts with Caremark through their respective PSAOs.

                                             24
              the parties agreeing that the arbitration clause was a term of the
              contract.



              CVS/Caremark contends that the circuit court ignored the fact that the provider

agreements governing the Indirect Contract Pharmacies actually contained arbitration

agreements. Thus, these three plaintiffs are subject to arbitration by virtue of their respective

contracts with Caremark.



              Plaintiff Pharmacies argue that, while the provider agreements signed by or on

behalf of the three Indirect Contract Pharmacies did include arbitration clauses, those

agreements were signed with PCS not Caremark.



              As set out in our description of the facts relevant to the agreements executed

by the Indirect Contract Pharmacies, Caremark is a successor to PCS and ultimately became

the successor to the rights and obligations set out in the provider agreements executed

between PCS and the Indirect Contract Pharmacies. As one federal court addressing this

issue has recognized, the “Pharmacy entered into agreements with PCS Health Systems, Inc.,

a predecessor to AdvancePCS, which was ultimately acquired by Caremark’s parent

company, Caremark Rx, in 2004. Caremark is the successor to PCS Health Systems’s rights

and obligations under the Provider Agreements.” Burton’s Pharmacy, Inc. v. CVS Caremark

Corp., No. 1:11CV2, 2015 WL 5430354, at *2 (M.D.N.C. Sept. 15, 2015), report and


                                               25
recommendation adopted, No. 1:11CV2, 2015 WL 5999386 (M.D.N.C. Oct. 14, 2015). See

also Schroeder v. CMC Real Estate Corp., 157 Ill. App. 3d 757, 762, 510 N.E.2d 1045,

1048-49 (1987) (observing “accepted practice in reorganizations; namely, that a successor

corporation is bound by the contracts of the predecessor company” (citing 15 W. Fletcher,

Cyclopedia Corporations § 7331, at 583 (1973))); Northeast Cmty. Sch. Dist. v. Easton

Valley Cmty. Sch. Dist., 857 N.W.2d 488, 494 (Iowa 2014) (recognizing “as a general rule

that a successor corporation in a merger or consolidation is bound by the contracts of the

predecessor corporations”). See generally 15 Carol A. Jones, Fletcher Cyclopedia of the Law

of Corporations § 7090, at 126-28 (2008 Rev. Vol.) (“Generally, by express provision of the

statute or agreement of merger or consolidation, and by implication, in the absence of

provision to the contrary, the surviving or consolidated corporation succeeds to and may

enforce the rights of the constituent or consolidating corporations under contracts made by

them before the consolidation. The surviving or consolidated corporation generally succeeds

to the rights and liabilities under contracts of the constituent or consolidating corporations

without any formal assignment.” (footnotes omitted)).



              In the instant case, Caremark took the step of expressly agreeing that its

business relationship with the Indirect Contract Pharmacies would be governed, in part, by

the terms of the “AdvancePCS Provider Agreement,” which had been adopted from the

original “PCS Provider Agreement,” as demonstrated by the “Important Notice to Pharmacy



                                             26
Providers” distributed by Caremark after its acquisition of AdvancePCS.14 Thus, the

provider agreements governing the Indirect Contract Pharmacies’ relationships with

Caremark contained an arbitration provision on its face. Therefore, we find the Indirect

Contract Pharmacies clearly and unmistakably agreed to the arbitration provision included

in their respective contracts. The circuit court erred in finding otherwise.



              Our analysis is not yet complete, however, as we now must determine whether

the Plaintiff Pharmacies clearly and unmistakably agreed to delegate the decision of certain

gateway issues to the arbitrator.



              3. Delegation Provision. The arbitration clause incorporated into the

agreements of the Direct Contract Pharmacies provided that “[a]ny and all disputes in

connection with or arising out of the Provider Agreement by the parties will be exclusively

settled by arbitration before a single arbitrator in accordance with the rules of the American

Arbitration Association.” (Emphasis added). The arbitration clause appearing in the

provider agreements governing the Indirect Contract Pharmacies similarly required that



              14
                The circuit court found that T&J did not receive the Caremark notice.
Because T&J’s contract with PCS had been negotiated by Medicine Shoppe, Medicine
Shoppe apparently received the Caremark notice. According to the record, however, T&J
authorized Medicine Shoppe to contract on its behalf and further agreed to participate in each
contract accepted by Medicine Shoppe. See supra note 12. There does not appear to be any
assertion that Medicine Shoppe did not accept the 2004 Caremark “Provider Agreement” that
effectively adopted the terms of the Medicine Shoppe’s earlier agreement with PCS.

                                             27
“[a]ny 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.” (Emphasis added).



              The AAA rules, in turn, contained a delegation provision. Specifically, under

Rule R-7(a) of the AAA “Commercial Arbitration Rules and Mediation Procedures,” “[t]he

arbitrator shall have the power to rule on his or her own jurisdiction, including any objections

with respect to the existence, scope, or validity of the arbitration agreement or to the

arbitrability of any claim or counterclaim.”



              The circuit court concluded that the parties did not effectively delegate issues

pertaining to the scope or validity of the arbitration agreement to the arbitrator. In reaching

this conclusion, the circuit court incorrectly applied West Virginia law and reasoned that

              the reference to the AAA rules becomes a second incorporation
              by reference where a U-Haul analysis is necessary. Looking to
              U-Haul’s three elements for valid incorporation, there are some
              issues in terms of the ease of finding the AAA rules. Caremark
              did not give instructions or website address in finding said
              website. Once getting to the website, there are many different
              sets of rules beyond the necessary rule regarding the powers
              designated to the arbitrator. Furthermore, a small independent
              owner of a pharmacy would have to read through all the rules to
              find the applicable rule to the case. The Rules are not written in
              plain language where an unsophisticated single business owner
              would be able to easily comprehend meaning.

                    Additionally, there is a chain of documents at issue as to
              whether they were incorporated by reference. Plaintiffs signed

                                               28
              a Provider Agreement either with Caremark or PCS Health
              Systems, Inc. which directly references or alternatively through
              Notices references a second document, the Caremark Manual.
              Once the arbitration clause is located in the lengthy Provider
              Manual, Plaintiffs have to go to a third document, the AAA
              rules which can be found on the internet to determine whether
              a court or an arbitrator would determine the scope of
              arbitrability. The Court finds that Plaintiffs’ assent to the
              reference of the AAA is not unmistakable (due to the effort and
              diligence necessary for individual pharmacies to get to the AAA
              rules, no further explanation of AAA rules in Caremark
              documents, and no signed agreement directly between the
              Plaintiffs and Caremark that specifically uses the word
              arbitration/has an arbitration clause). The Plaintiffs did not have
              full knowledge of the AAA rules and the impact and hardship
              these rules would have on potential lawsuits. Based on the
              reasoning above and looking solely at the delegation provision
              under Schumacher [Homes of Circleville, Inc. v. Spencer, 237
              W. Va. 379, 787 S.E.2d 650 (2016)], the above-captioned case
              fails to meet the second prerequisite of making an effective
              delegation provision: wherein the provision cannot be invalid,
              revocable, or unenforceable.


              CVS/Caremark argues that the circuit court erred in failing to give effect to the

parties’ incorporation of the AAA Commercial Rules and therefore refusing to defer to the

arbitrator to decide whether Plaintiffs’ claims are subject to arbitration. According to

CVS/Caremark, every federal court of appeals to squarely address the issue has held that the

express incorporation of the AAA Rules into the Caremark “Provider Manual” shows the

parties’ clear agreement to delegate the question of arbitrability to the arbitrator.



              The Plaintiff Pharmacies argue that the circuit court correctly applied

Schumacher Homes, 237 W. Va. 379, 787 S.E.2d 650, to conclude that the parties did not

                                              29
delegate the scope and enforceability of the arbitration agreement to the arbitrator. In

addition, the Plaintiff Pharmacies cite cases they say stand for the proposition that reference

to the AAA rules does not properly delegate arbitrability to the arbitrator.15



              We find that incorporation of the AAA rules into the arbitration agreements is

sufficient evidence that the parties clearly and unmistakably agreed to arbitrate arbitrability.


              15
                We find two of the cases cited by the Plaintiff Pharmacies are distinguishable
from the instant action. One is distinguishable because it involved an employer/employee
relationship and not a commercial relationship. See Ajamian v. CantorCO2e, L.P., 203 Cal.
App. 4th 771, 790, 137 Cal. Rptr. 3d 773, 789 (2012) (“In our view, while the incorporation
of AAA rules into an agreement might be sufficient indication of the parties’ intent in other
contexts, we seriously question how it provides clear and unmistakable evidence that an
employer and an employee intended to submit the issue of the unconscionability of the
arbitration provision to the arbitrator, as opposed to the court.” (emphasis added)). The other
case is inapposite because the sales agreement at issue allowed litigation. See 50 Plus
Pharmacy v. Choice Pharmacy Sys., LLC, 463 S.W.3d 457, 461 (Mo. Ct. App. 2015)
(finding no delegation provision where sales agreement unmistakably allowed partes to
litigate disputes in court).

               Another case cited by the Plaintiff Pharmacies, Moody v. Metal Supermarket
Franchising America, Inc., No. 13-CV-5098-PJH, 2014 WL 988811 (N.D. Cal. Mar. 10,
2014), found that incorporation of the AAA did not did not constitute clear and unmistakable
evidence of an intent to delegate arbitrability to an arbitrator; however, Moody was later
rejected “under the binding Ninth Circuit precedent of Brennan [v. Opus Bank, 796 F.3d
1125 (9th Cir. 2015)].” Interdigital Tech. Corp. v. Pegatron Corp., No. 15-CV-02584-LHK,
2016 WL 234433, at *6 (N.D. Cal. Jan. 20, 2016). Under Brennan, “incorporation of the
AAA rules is clear and unmistakable evidence of the parties’ intent to delegate arbitrability
to an arbitrator.” Interdigital Tech. Corp., 2016 WL 234433, at *6 (citing Brennan, 796 F.3d
at 1130-31).

              The final case cited by the Plaintiff Pharmacies, Tompkins v. 23andMe, Inc.,
No. 5:13-CV-05682-LHK, 2014 WL 2903752, at *11 (N.D. Cal. June 25, 2014), aff’d, 840
F.3d 1016 (9th Cir. 2016), actually supports enforcing the delegation provision and is quoted
in the body of this opinion.

                                              30
It has been recognized that, “[g]enerally, when the contracting parties are commercial

entities, incorporation of AAA rules in an arbitration agreement constitutes ‘clear and

unmistakable evidence’ that the parties intended to arbitrate arbitrability because . . . Rule

R-7(a) of the Commercial Arbitration Rules transfers that responsibility to the arbitrator.”

Tompkins v. 23andMe, Inc., No. 5:13-CV-05682-LHK, 2014 WL 2903752, at *11 (N.D. Cal.

June 25, 2014), aff’d, 840 F.3d 1016 (9th Cir. 2016) (emphasis added).



              The Ninth Circuit recently addressed an arbitration clause specifying that

“[e]xcept with respect to any claim for equitable relief . . . any controversy or claim arising

out of this [Employment] Agreement or [Brennan’s] employment with the Bank or the

termination thereof . . . shall be settled by binding arbitration in accordance with the Rules

of the American Arbitration Association.” Brennan v. Opus Bank, 796 F.3d 1125, 1128 (9th

Cir. 2015). The Brennan court held that the “incorporation of the AAA rules constituted

‘clear and unmistakable’ evidence of [the parties’] intent to submit the arbitrability dispute

to arbitration.” Id. at 1131. In reaching its holding, the Brennan court commented that

                     [i]n Oracle America, Inc. v. Myriad Group A.G., 724
              F.3d 1069 (9th Cir. 2013) we observed that “[v]irtually every
              circuit to have considered the issue has determined that
              incorporation of the [AAA] arbitration rules constitutes clear
              and unmistakable evidence that the parties agreed to arbitrate
              arbitrability.” Id. at 1074.

Brennan, 796 F.3d at 1130.




                                              31
              In fact, the United States District Court for the Southern District of Texas has

addressed the same arbitration agreements presently before this Court and, after discussing

how other courts had resolved the issue, concluded that, “[b]acked by these and other cases

from all over the country, the court easily concludes that the parties clearly and unmistakably

intended to delegate arbitrability determinations to an arbitrator.” The Muecke Co., Inc. v.

CVS Caremark Corp., No. CV V-10-78, 2012 WL 12535439, at *2. We similarly observe

the rulings of numerous other courts finding that incorporation of the AAA rules furnishes

clear and unmistakable evidence that the parties intended to delegate gateway issues of

arbitrability to the arbitrator. See Belnap v. Iasis Healthcare, 844 F.3d 1272, 1283 (10th Cir.

2017) (“[A]ll of our sister circuits to address the issue have unanimously concluded that

incorporation of the . . . AAA Rules constitutes clear and unmistakable evidence of an

agreement to arbitrate arbitrability.”); Crawford Prof’l Drugs, Inc. v. CVS Caremark Corp.,

748 F.3d 249, 263 (5th Cir. 2014) (finding, based upon incorporation of AAA rules into

Caremark arbitration agreement, “there is clear and unmistakable evidence that the parties

to the Provider Agreement agreed to arbitrate arbitrability, and so we conclude that whether

the Plaintiffs’ claims are subject to arbitration must be decided in the first instance by the

arbitrator, not a court”); Fallo v. High-Tech Inst., 559 F.3d 874, 878 (8th Cir. 2009)

(concluding that “the arbitration provision’s incorporation of the AAA Rules . . . constitutes

a clear and unmistakable expression of the parties’ intent to leave the question of arbitrability

to an arbitrator”); McAllister v. Halls, No. CV-15-02204-PHX-DLR, 2016 WL 558551, at

*2 (D. Ariz. Feb. 12, 2016) (“The Court finds clear and unmistakable evidence that the

                                               32
parties intended to delegate the issue of arbitrability to the arbitrator. The arbitration

provision expressly provides that any ‘controversy or claim arising out of or relating to this

Agreement . . . shall be settled by arbitration . . . in accordance with the rules . . . of the

[AAA].’”); Lapina v. Men Women N.Y. Model Mgmt. Inc., 86 F. Supp. 3d 277, 283-84

(S.D.N.Y. 2015) (“It is well-settled that when an arbitration clause incorporates by reference

the [AAA] rule that arbitrators are to determine their own jurisdiction, this incorporation

serves as clear and unmistakable evidence of the parties’ intent to delegate such issues to an

arbitrator. Therefore, a party who signs a contract containing an arbitration clause and

incorporating by reference the AAA rules cannot [later] disown its agreed-to obligation to

arbitrate all disputes, including the question of arbitrability.” (internal quotations and citation

omitted)).



               In this same vein, the Court of Appeals of Arizona similarly has observed that

                       courts . . . have concluded that by agreeing to incorporate
               the AAA rules into their arbitration agreement, parties may
               “clearly and unmistakably” demonstrate their intent to commit
               to the arbitrator questions of the existence or scope of the
               arbitration agreement. E.g. Qualcomm Inc. v. Nokia Corp., 466
               F.3d 1366, 1373 (Fed. Cir. 2006); Terminix Int’l Co., LP v.
               Palmer Ranch Ltd. P’ship, 432 F.3d 1327, 1332 (11th Cir. 2005)
               (by incorporating AAA rules, “the parties clearly and
               unmistakably agreed that the arbitrator should decide whether
               the arbitration clause is valid”); Contec Corp. v. Remote
               Solution Co., 398 F.3d 205, 208 (2d Cir. 2005)
               (“when . . . parties explicitly incorporate rules that empower an
               arbitrator to decide issues of arbitrability, the incorporation
               serves as clear and unmistakable evidence of the parties’ intent
               to delegate such issues to an arbitrator); Johnson v. Polaris

                                                33
              Sales, Inc., 257 F. Supp. 2d 300, 308-09 (D. Me. 2003); Dream
              Theater, Inc. v. Dream Theater, 124 Cal. App. 4th 547, 549, 21
              Cal. Rptr. 3d 322 (2004) (“parties state a clear and unmistakable
              agreement that the arbitrator will decide whether the dispute is
              subject to arbitration when they incorporate into their agreement
              the AAA Commercial Arbitration Rules”); see also Brandon,
              Jones, Sandall, Zeide, Kohn, Chalal & Musso, P.A. v.
              MedPartners, Inc., 203 F.R.D. 677, 684-85 (S.D. Fla. 2001).

Scott Patrick, Inc. v. McMurdie, No. 1 CA-SA 07-0118, 2007 WL 5517488, at *5 (Ariz. Ct.

App. Aug. 30, 2007).



              Although the circuit court characterized the Plaintiff Pharmacies as being

unsophisticated, we do not agree. To the extent the Plaintiff Pharmacies are businesses, they

necessarily possess some level of experience in corporate dealings. Moreover, even if we

agreed that the Plaintiff Pharmacies were unsophisticated, their presumed lack of expertise

likely would not absolve them from application of the AAA rules. In this regard, the

Brennan court cautioned that its holding

              should not be interpreted to require that the contracting parties
              be sophisticated or that the contract be “commercial” before a
              court may conclude that incorporation of the AAA rules
              constitutes “clear and unmistakable” evidence of the parties’
              intent. Thus, our holding does not foreclose the possibility that
              this rule could also apply to unsophisticated parties or to
              consumer contracts. Indeed, the vast majority of the circuits that
              hold that incorporation of the AAA rules constitutes clear and
              unmistakable evidence of the parties’ intent do so without
              explicitly limiting that holding to sophisticated parties or to
              commercial contracts. See Petrofac, Inc. v. DynMcDermott
              Petroleum Operations Co., 687 F.3d 671, 675 (5th Cir. 2012);
              Republic of Arg. v. BG Grp. PLC, 665 F.3d 1363, 1371
              (D.C. Cir. 2012); Fallo v. High–Tech Inst., 559 F.3d 874, 878

                                             34
              (8th Cir. 2009); Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366,
              1373 (Fed. Cir. 2006); Terminix Int’l Co. v. Palmer Ranch LP,
              432 F.3d 1327, 1332 (11th Cir. 2005); Contec Corp. v. Remote
              Solution Co., 398 F.3d 205, 208 (2d Cir. 2005); Awuah v.
              Coverall N. Am., Inc., 554 F.3d 7, 10-12 (1st Cir. 2009).

Brennan v. Opus Bank, 796 F.3d at 1130-31.16



              In light of the abundant authority discussed above, we conclude that the

incorporation of the AAA rules into the arbitration agreements at issue herein constitutes

clear and unmistakable evidence that the parties have agreed to delegate questions of

arbitrability to the arbitrator. The circuit court erred in ruling otherwise.



                                              IV.

                                      CONCLUSION

              In accordance with our resolution of the dispositive issues herein raised, we

now reverse the January 19, 2016, order of the Circuit Court of McDowell County and

remand for the entry of an order dismissing this case and compelling arbitration.



              16
                We likewise reject the circuit court’s reliance on the fact that the provider
agreements contained only a general reference to the AAA rules rather than expressly
referencing the AAA Commercial Arbitration Rules. The various AAA rules are readily
accessible on the AAA website. See https://www.adr.org/aaa/ (last accessed February 6,
2017). While there are seven sets of rules available from the AAA website, it is obvious that
only one set, the Commercial Arbitration Rules, would apply to the arbitration of the instant
disputes. The remaining rules pertain to the construction industry, consumer arbitration,
employment arbitration, labor arbitration, international dispute resolution, and appellate
arbitration.

                                              35
     Reversed and Remanded.




36
