Apexxus LLC v. OptumRx, Inc.

Background

Apexxus LLC sued OptumRx, Inc. on behalf of claims assigned by independent pharmacies. Apexxus alleged that Optum, a pharmacy benefit manager, manipulated reimbursement claims and drug pricing, imposed improper fees, and failed to make prompt payments. The claims included breach of contract, breach of the duty of good faith and fair dealing, violations of California’s Unfair Competition Law and California Business and Professions Code section 17045, quantum meruit, and related state-law claims.

The parties’ agreements included Provider Manuals and Provider Agreements negotiated through pharmacy services administrative organizations. The Provider Manuals contained arbitration provisions, and the 2024 Provider Manual also contained a delegation clause—an agreement requiring an arbitrator, rather than a court, to decide questions about the arbitration agreement’s scope, validity, and interpretation.

Optum moved to compel arbitration. Apexxus opposed the motion, arguing that the pharmacies had not agreed to the relevant contracts and that the arbitration provisions and delegation clause were unconscionable, meaning unfairly imposed or excessively one-sided.

Contract Formation and Delegation

The court held that Apexxus was equitably estopped from denying consent to each Provider Manual version under which it sought to enforce contract claims. In plain terms, Apexxus could not claim the benefits of the contracts while denying the arbitration obligations in those same contracts.

The court found that most of the assigned claims involved pharmacies that had submitted reimbursement claims after July 1, 2024, when the 2024 Provider Manual became effective. For those claims, Apexxus was treated as unable to deny consent to the 2024 Provider Manual. But Optum did not prove that nine pharmacies had consented to that version. The motion to compel arbitration was therefore denied as to claims assigned by Ararat Pharmacy, Bullard Pharmacy, Cal Oaks II Health Mart Pharmacy, Doctor’s Choice Pharmacy, Green Pharmacy, Health Mart Bell Gardens, Ojai Rexall Drugs, Pharmacy Plus NCPDP 0592659, and Western Medical Pharmacy.

For the other 148 pharmacies, the court found that equitable estoppel applied. The court found that the 2024 Provider Manual’s delegation clause was clear and unmistakable for those pharmacies except the 38 Elevate-member pharmacies. The Elevate Provider Agreement provided for mediation and did not include mandatory arbitration, and the court found that the conflicting documents made delegation ambiguous for Elevate members. The court found delegation clear and unmistakable for the Health Mart-member pharmacies and the other non-Elevate pharmacies.

Unconscionability

The court enforced the delegation clause for all assigned claims except those involving the nine pharmacies that had not agreed to the 2024 Provider Manual and the 38 Elevate-member pharmacies. The court found a high degree of procedural unconscionability in the delegation clause because the agreements were presented on a take-it-or-leave-it basis, the pharmacies had little ability to negotiate, Optum could modify the Provider Manual unilaterally and retroactively, and notice of changes was incomplete or unsuccessful for some pharmacies.

The court nevertheless found that Apexxus had not shown substantive unconscionability of the delegation clause. Apexxus did not provide sufficient evidence establishing the likely cost of challenging arbitrability or showing that each affected pharmacy could not afford those costs. Because both procedural and substantive unconscionability were required, the court enforced the delegation clause for the pharmacies to which it applied. Issues concerning retroactivity, the enforceability of the arbitration agreement as a whole, and arbitration of public injunctive relief were delegated to the arbitrator for those pharmacies.

The court separately considered the arbitration agreement as a whole for the Elevate-member pharmacies because the delegation clause could not be enforced against them. It found the arbitration agreements unconscionable and unenforceable for those pharmacies. The court found high procedural unconscionability and some substantive unconscionability based on limits on discovery, a one-sided exception allowing Optum to sue in court to protect confidential information, broad confidentiality requirements, the agreement’s indefinite survival after termination, and other features. The court found that all Provider Manual versions briefed by the parties were unconscionable as to the claims assigned by the Elevate-member pharmacies.

Disposition

The court granted in part and denied in part Optum’s motion to compel arbitration. It denied the motion as to claims assigned by the nine pharmacies that did not submit claims after July 1, 2024, and the 38 Elevate-member pharmacies. It granted the motion as to claims assigned by the remaining pharmacies. The arbitrable portion of the case was stayed, while the non-arbitrable claims were allowed to proceed in court.

The court denied Optum’s request for broad arbitration discovery because Optum did not identify a material factual dispute requiring that discovery. The court granted Optum’s motion to seal exhibits and portions of exhibits containing confidential business, contract-negotiation, and pricing information. Optum’s motion for leave to file a reply in support of the sealing motion was denied as moot. Judge Donna M. Ryu also set an initial case-management conference for March 4, 2026.