Since I am getting ready to teach Business Associations for the first time in three years, it is nice to have a case that reviews basic agency principles:

On November 25, 2013, a panel of the Seventh Circuit issued a per curiam decision in NECA-IBEW Rockford Local Union 364 Health and Welfare Fund v. A & A Drug Co. and upheld a district court’s grant of defendant’s motion to compel arbitration.  Plaintiff (the Fund) provides health benefits to a Rockford union of electrical workers (Local 364).  In 2002, it negotiated an agreement (the Local Agreement) with Sav-Rx, a provider of prescription drug benefits.  In 2003, Sav-Rx also negotiated a different agreement (the National Agreement) with the International Brotherhood of Electrical Workers, with which Local 364 is affiliated.  The National Agreement offers locals reduced charges, but it, unlike the Local Agreement, contains an arbitration clause.

While the Fund’s trustees never voted on the matter, the Fund accepted Sav-Rx services provided under the National Agreement between 2003 and 2011.  The process by which this occurred is unclear.  The Fund never actually signed the Local Agreement, but Sav-Rx began providing services under the agreement as of January 1, 2003.  After the National Agreement was announced at at a meeting attended by the Chair of the Fund’s Board of Trustees, the Chair requested that Sav-Rx reduce its rates to comport with those of the National Agreement.  Sav-Rx did so effective April 1, 2003.  Sav-Rx included Local 364 in its annual audits under the National Agreement, and the Fund’s administrative manager communicated with Sav-Rx about these annual audits.

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