OPTUMRX INC v. ADVANT EDGE PHARMACY LLC RX LLC LLC LLC LLC LLC LLC LLC RX (2025)

OPINION

In this MDL case, the trial court granted a plea to the jurisdiction filed by pharmacies who had been sued by OptumRx, Inc. in 18 petitions to compel arbitration under section 4 of the Federal Arbitration Act (“FAA”). Concluding that the trial court erred in determining that it lacked subject-matter jurisdiction over these petitions, we reverse and remand.

I. Factual and Procedural Background

On March 29, 2022, appellant OptumRx, Inc. filed eighteen lawsuits in Texas district courts in sixteen counties against twenty pharmacies (collectively, the “Pharmacies”).¹ Optum filed suit in its own capacity and as the successor in interest to Catamaran Corporation. Each of the eighteen petitions (collectively the “Petitions”) was entitled “Petition to Compel Arbitration” and contained substantially similar language. Each of the Petitions contained the following statements:

1. This is a Petition under the Federal Arbitration Act, 9 U.S.C. § 4, for an order directing Respondent[2] to submit to arbitration its dispute with [Optum] regarding the amount of reimbursements for prescription drugs, in accordance with the parties’ written agreement to arbitrate.

2. Under their agreement, the parties not only agreed to arbitrate all disputes at issue here, but delegated to an arbitrator any questions as to the arbitrability of their disputes. The parties agreed to submit to binding arbitration before the American Arbitration Association.

3. Respondent has expressly refused to abide by the parties’ arbitration agreement and has stated it will only litigate the parties’ dispute in court, contrary to the parties’ agreement. The Court should compel Respondent to honor the parties’ agreement to arbitrate and grant any other relief the Court deems just and proper.

4. [Optum] is a pharmacy care services company (also referred to as a Pharmacy Benefits Manager or “PBM”), incorporated in California. [Optum] operates nationally to provide various pharmacy-related administrative services to a variety of clients in connection with various health and prescription drug plans and insurance programs. [Optum's] principal place of business is 2300 Main St., Irvine, California 92614.

5. In July 2015, [Optum] acquired Catamaran, also a PBM, and, as a consequence, succeeded to Catamaran's interests, including agreements with the Respondent.

․

7. This action arises under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, et seq.

8. [Optum's] claims fall within the Court's subject matter jurisdiction because the amount in controversy exceeds the Court's minimum jurisdictional limit.

In each of the Petitions, Optum described the relationship between Optum and the Respondent as follows:

12. Respondent does business with [Optum] as a participating pharmacy in [Optum's] pharmacy provider network. Respondent dispenses prescription drugs to members of health benefit plans for which [Optum] administers pharmacy benefit services.

13. By participating in [Optum's] pharmacy provider network, Respondent gains the business advantage and opportunity to both serve members of the plans for which [Optum] provides administrative services and obtain reimbursement by [Optum] for the prescription drugs Respondent dispenses to [Optum's] members.

14. Independent pharmacies may contract directly with [Optum] or via pharmacy services administration organizations (“PSAOs”), which function as agents of the independent pharmacies and use their significant bargaining power to, among other things, negotiate contracts with [Optum] on behalf [of] their affiliated pharmacies.

15. Many PSAOs are owned by large wholesalers, such as McKesson Corporation, Amerisource Bergen, and Cardinal Health.

16. Respondent became a participating provider in [Optum's] network by contracting with [Optum] and/or its predecessor Catamaran through one or more PSAOs.

17. The relationship between [Optum] and Respondent is governed by agreements consisting of both a Provider Agreement and a Provider Manual.

18. A Provider Agreement is a contract between a PSAO (of which Respondent is a member) and [Optum]. As will be explained further in [Optum's] forthcoming Memorandum of Points and Authorities, the Provider Agreement binds Respondent because the PSAO signed the Provider Agreement as Respondent's agent, and Respondent ratified the agreement.

19. The Provider Agreement references and incorporates the [Optum] Provider Manual, which sets forth the terms of the pharmacy's relationship with [Optum]. In addition to explaining logistical processes and requirements—for example, how pharmacies submit claims to [Optum] for reimbursement—the Provider Manual sets forth rights and obligations of both parties, one of which is an arbitration agreement. The Provider Manual binds Respondent for several reasons. First, it is incorporated into the Provider Agreement (which Respondent's agents signed on Respondent's behalf). Second, Respondent has ratified the Provider Manual by, among other things, submitting claims for reimbursement under the terms of the Provider Manual. Third, Respondent is estopped from claiming reimbursements under the Provider Manual and asserting claims for breach of the Provider Manual and then repudiating the arbitration agreement contained in that same agreement.

In each of the Petitions, Optum made the following allegations about the arbitration provision in the Provider Manual:

20. The Provider Manual, which is regularly updated, is made available to all participating pharmacies like Respondent, and is readily accessible online. [Optum] also sends updates to the Provider Manual directly to pharmacies like Respondent.[ ]

21. The most recent version of the Provider Manual supersedes all previous versions.

22. Following [Optum's] acquisition of Catamaran in 2015, the [Optum] Provider Manual became the operative Provider Manual.

23. Specifically, on November 6, 2015, [Optum] and Catamaran sent a Provider Manual Update to all contracting pharmacies, which informed the pharmacies of the revised Optum Rx Provider Manual and explained that it replaced and superseded the previous versions of [Optum's] and Catamaran's respective manuals. The Update stated that the Provider Manual was incorporated into the pharmacies’ agreements with [Optum] and Catamaran and that each pharmacy was responsible for understanding and complying with the Manual's terms and conditions.

24. The [Optum] Provider Manual contains a clear and unequivocal arbitration clause.[ ]

Optum asserted that the arbitration clause in the applicable Provider Manual (“Arbitration Clause”) requires the arbitration of all disputes related to (1) the formation, validity, scope, and interpretation of the Arbitration Clause, (2) the Provider Agreement, (3) the Provider Manual, or (4) the breach of either the Provider Agreement or the Provider Manual. According to Optum, the Arbitration Clause requires that these disputes be resolved exclusively by binding arbitration administered by the American Arbitration Association (“AAA”), in accordance with the AAA Commercial Arbitration Rules, and the Arbitration Clause prohibits any joint or consolidated action to resolve disputes between the parties. The Arbitration Clause requires that the arbitration be conducted in California in either Los Angeles County or Orange County. Optum asserted that the Provider Manual delegates any issues of arbitrability to the arbitrators both by language in the Provider Manual and by incorporation of the AAA Commercial Arbitration Rules. Optum contended that the 2022 Provider Manual requires the Pharmacies to arbitrate their disputes with Optum, or in the alternative that prior versions of the Provider Manual or substantially similar arbitration clauses in the Provider Agreements require arbitration of these disputes.

In each of the Petitions, Optum asserted that on December 16, 2021, counsel for Respondent sent Optum a letter entitled “Notification of Dispute on Behalf of Independent Pharmacies,” giving Optum written notice of disputes that over 500 independent pharmacies, including the Pharmacies, have with Optum's “practices and procedures.” Optum alleged that these disputes concerned the following:

• Reimbursements to the Pharmacies for prescription drugs below the contractual requirements set forth in Optum's Provider Manuals;

• Reimbursements made to the Pharmacies for general drugs below the wholesale prescription drug pricing benchmarks as required by the Provider Manual;

• Optum's reimbursements to the Pharmacies that violate applicable state laws, including, but not limited to, laws that require use of Maximum Allowable Cost (“MAC”) prices that are at or above the prices available to the Pharmacies from national wholesalers;

• Optum's use of multiple MAC lists and prices within a particular health insurance plan on the same date for the same prescription drug;

• Optum's MAC reimbursements to the Pharmacies below Optum's MAC reimbursements to other pharmacy providers operating in the same health insurance plan on the same date for the same prescription drugs;

• Optum's classification of prescription drugs as “brand” in its dealings with health insurance plans while classifying the same prescription drug as “generic” when reimbursing the Pharmacies;

• Retroactive adjustments (i.e., “claw backs”) in the form of deductions, withholdings, or any other reduction to the Pharmacies’ reimbursement on claims adjudicated and approved by Optum, including but not limited to Direct and Indirect Remuneration fees; and

• Optum's use of the patient information the Pharmacies were required to submit to obtain reimbursement, to redirect the Pharmacies’ patients to Optum's mail order pharmacy, in violation of the duty of good faith and fair dealing and applicable state laws

(collectively the “Disputes”). Optum alleged that the Disputes fall within the Arbitration Clause and therefore must be resolved by binding arbitration. Optum asserted that even though it notified each Respondent of this obligation to comply with the alternative dispute resolution provisions in the Provider Manual, each Respondent refused to arbitrate. The alternative dispute resolution provisions include the Arbitration Clause.

Optum alleged that each Respondent's refusal to abide by the arbitration agreements in the Provider Manuals and Provider Agreements constituted a failure, neglect, or refusal on their part to arbitrate in breach of the parties’ binding arbitration agreement. Unless compelled to arbitrate, Optum asserted that each Respondent would remain in violation of its contractual obligation to arbitrate its Disputes with Optum. In each of its Petitions, Optum asked the trial court for an order compelling the Respondent to arbitrate the Disputes between Optum and the Respondent.

In response to the Petitions, the Pharmacies filed a motion with the Judicial Panel on Multidistrict Litigation (“Panel”), asking the Panel to transfer the 18 cases to a Multidistrict Litigation (“MDL”) pretrial court for consolidation. Optum opposed the motion. In the motion, the Pharmacies stated that they “either have or will file counterclaims in all 18 cases for breach of contract, bad faith, and statutory violations.” While the motion to transfer was pending, the Pharmacies filed answers, and two of the Pharmacies filed counterclaims against Optum. In September 2022 the Panel determined that the cases were related and that transfer to an MDL pretrial court would result in more efficient pretrial of the cases. The Panel granted the motion to transfer and designated the 480th District Court of Williamson County, Texas as the MDL pretrial court (the “Trial Court”).

In November 2022 the two pharmacies who had filed counterclaims voluntarily dismissed them without prejudice, and the Pharmacies filed “Defendants’ Motion to Dismiss for Lack of Subject Matter Jurisdiction” (the “Plea to the Jurisdiction”) asking the Trial Court to dismiss the Petitions for lack of subject-matter jurisdiction on the following grounds: (1) section 171.081 of the Texas Civil Practice and Remedies Code confers subject-matter jurisdiction on Texas courts only to enforce arbitration agreements that provide for arbitration in Texas, and the arbitration agreements Optum seeks to enforce provide for arbitration only in California; and (2) even if Texas state courts had subject-matter jurisdiction, Optum would not be entitled to relief under section 4 of the FAA (“Section 4”) because the only court authorized by Section 4 to grant the relief Optum seeks is a United States District Court for the Central District of California.

Optum responded in opposition to the Plea to the Jurisdiction. In their reply the Pharmacies asserted that (1) the FAA does not vest Texas courts with subject-matter jurisdiction to compel arbitration in this case; (2) if the Pharmacies had asserted claims against Optum in Texas courts, Texas courts would have had authority to compel arbitration of those claims under Sections 3 and 4 of the FAA, but because the Pharmacies have filed no claims against Optum in Texas courts, the only procedure by which Optum may compel arbitration under the FAA is a petition to compel arbitration under Section 4 in a United States District Court for the Central District of California;³ and (3) Optum lacks standing because it is not an “aggrieved party” because the Pharmacies are not asserting any claims against Optum in the Trial Court and therefore the Trial Court lacks subject-matter jurisdiction. Optum also filed a Consolidated Motion to Compel Arbitration (“Consolidated Motion”) under Section 4 asking the Trial Court to issue an order compelling the Pharmacies to arbitrate their Disputes with Optum. The Pharmacies opposed the Consolidated Motion.

In February 2023 the Trial Court signed a final and appealable order granting the Plea to the Jurisdiction and dismissing the eighteen cases consolidated in the Trial Court for lack of subject-matter jurisdiction. In the order the Trial Court stated that it was relying on the persuasive authority of Cypress Drilling, LLC v. Medve Energy Ventures, LLC, No. 07-18-00288-CV, 2019 WL 5656471 (Tex. App.—Amarillo Oct. 31, 2019, no pet.). The Trial Court concluded that “neither the Federal Arbitration Act, nor the Texas Arbitration Act confers original jurisdiction over this case and that there is a lack of a ripe case or controversy between the parties.” The Trial Court “DENIED AS MOOT” all other pending motions that it had not specifically granted, which includes the Consolidated Motion.

Optum timely perfected this appeal. The Supreme Court of Texas ordered this case transferred from the Third Court of Appeals to this court.

II. Issues and Analysis

On appeal Optum asserts that the Trial Court erred in granting the Plea to the Jurisdiction and that the Trial Court had subject-matter jurisdiction over the Petitions. Optum also asserts that (1) Optum has been aggrieved by the Pharmacies’ refusal to arbitrate the Disputes; (2) these cases are ripe; and (3) Optum has standing to bring the Petitions challenging the Pharmacies’ refusal to arbitrate. No party has asserted and this court has not found any jurisdictional defect related to the Trial Court's status as the MDL pretrial court; therefore the question before the Trial Court, and this court on appeal, is whether each of the eighteen transferor district courts had subject-matter jurisdiction over the Petition to Compel Arbitration filed by Optum in that court. See Tex. Gov't Code Ann. 74.164 (West, Westlaw through 2023 4th C.S.) (stating that notwithstanding any other law to the contrary, an MDL pretrial court “may preside over the transferred action as if the transferred action were originally filed in the transferor court”); Jud. Admin. R. 13.6(b) (stating that the MDL pretrial court has the authority to decide, in place of the transferor trial court, all pretrial matters in all related cases transferred to the court, including jurisdiction); In re Volkswagen Clean Diesel Litigation, 557 S.W.3d 78, 87 (Tex. App.—Austin 2017, orig. proceeding).

A plea to the jurisdiction challenges a trial court's subject-matter jurisdiction. City of Dallas v. Carbajal, 324 S.W.3d 537, 538 (Tex. 2010). Whether a court has subject-matter jurisdiction is a question of law that is reviewed de novo. City of Elsa v. Gonzalez, 325 S.W.3d 622, 625 (Tex. 2010). Therefore, we review a ruling on a plea to the jurisdiction de novo. State v. Holland, 221 S.W.3d 639, 643 (Tex. 2007). When a plea to the jurisdiction challenges the pleadings, a reviewing court must construe the pleadings liberally in favor of the pleader and look to the pleader's intent. See Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). If the facts alleged affirmatively demonstrate the trial court's jurisdiction to hear the cause, the plea to the jurisdiction must be denied. See id. If the pleadings do not contain sufficient facts to affirmatively demonstrate the trial court's jurisdiction, but do not affirmatively demonstrate incurable defects in the jurisdiction, the issue is one of pleading sufficiency and the plaintiff ordinarily should be afforded the opportunity to amend. See id. If the pleadings affirmatively negate the existence of jurisdiction, then a plea to the jurisdiction may be granted without allowing an opportunity to amend. See id. at 227. When a party has filed a plea to the jurisdiction challenging the existence of jurisdictional facts, we consider relevant evidence submitted by the parties when necessary to resolve the jurisdictional issues raised, as the trial court is required to do. See id. If the evidence creates a fact question regarding the jurisdictional issue, then the plea to the jurisdiction must be denied. See id. at 227–28. But, if the relevant evidence is undisputed or fails to raise a fact question on the jurisdictional issue, then the court rules on the plea to the jurisdiction as a matter of law. Id. at 228.

A. Do the district courts have subject-matter jurisdiction over the Petitions unless the Pharmacies show that a statute divests these courts of jurisdiction?

District courts are the Texas court system's only court of general jurisdiction. See S.C. v. M.B., 650 S.W.3d 428, 436 (Tex. 2022). The Texas Constitution provides that the jurisdiction of a district court “consists of exclusive, appellate, and original jurisdiction of all actions, proceedings, and remedies, except in cases where exclusive, appellate, or original jurisdiction may be conferred by this Constitution or other law on some other court, tribunal, or administrative body.” Tex. Const. art. V, § 8. By statute, district courts have “the jurisdiction provided by Article V, Section 8, of the Texas Constitution,” and “may hear and determine any cause that is cognizable by courts of law or equity.” Tex. Gov't Code Ann. §§ 24.007(a), 24.008 (West, Westlaw through 2023 4th C.S.). District courts also have subject-matter jurisdiction over civil matters in which the amount in controversy exceeds $500, exclusive of interest. See Tex. Gov't Code Ann. 24.007(b) (West, Westlaw through 2023 4th C.S.). Each of the eighteen cases is a civil matter, and in each case Optum's pleading establishes that the amount in controversy is more than $500, exclusive of interest.⁴ See Tex. Gov't Code Ann. 24.007(b); In the Interest of C.B.W., No. 09-22-00202-CV, 2024 WL 1101152, at *7 (Tex. App.—Beaumont Mar. 14, 2024, no pet.) (mem. op.); Guimond v. Integrated Genetics Lab Corp Specialty Testing Group, No. 14-16-00567-CV, 2017 WL 3272292, at *5, n.11 (Tex. App.—Houston [14th Dist.] Aug. 1, 2017, pet. denied) (mem. op.). Thus, the district courts have subject-matter jurisdiction over the Petitions under Government Code section 24.007(b) unless a statute divests the district courts of that jurisdiction. See Tex. Gov't Code Ann. 24.007(b). See Miranda, 133 S.W.3d at 224 n.4; Guimond, 2017 WL 3272292, at *5, n.11.

In addition to this presumptive subject-matter jurisdiction under Government Code section 24.007(b), another presumption of subject-matter jurisdiction applies because each of the eighteen trial courts is a court of general jurisdiction. As a court of general jurisdiction, a district court has subject-matter jurisdiction to resolve disputes unless the United States Congress or the Texas Legislature have divested the district court of that jurisdiction. See In re Oncor Elec. Deliv. Co., 630 S.W.3d 40, 44 (Tex. 2021); Dubai Petroleum Co. v. Kazi, 12 S.W.3d 71, 75 (Tex. 2000). We presume that the district courts have subject-matter jurisdiction over the Petitions under article V, section 8, of the Texas Constitution and Government Code section 24.007(a), and the burden to demonstrate that a statute has divested the district court of this jurisdiction falls on the Pharmacies as the parties challenging the district courts’ jurisdiction.⁵ See Tex. Const. art. V, § 8; Tex. Gov't Code Ann. 24.007(a); In re Oncor Elec. Deliv. Co., 630 S.W.3d at 44–45; Dubai Petroleum Co., 12 S.W.3d at 75. Though a statutory restriction on a district court's subject-matter jurisdiction need not be express, courts “resist classifying a provision as jurisdictional absent clear legislative intent to that effect.” S.C., 650 S.W.3d at 436 (quoting Crosstex Energy Servs., L.P. v. Pro Plus, Inc., 430 S.W.3d 384, 391 (Tex. 2014)). Absent a compelling showing to the contrary, we presume that the subject-matter jurisdiction of the district court has not been divested and remains undisturbed. See S.C., 650 S.W.3d at 436. In sum, the district courts have subject-matter jurisdiction over the Petitions under article V, section 8 of the Texas Constitution and Government Code section 24.007 unless a statute divests the district courts of that jurisdiction.

B. Does a statute divest the district courts of subject-matter jurisdiction over the Petitions?

1. Does section 171.081 of the Texas Civil Practice and Remedies Code divest the district courts of subject-matter jurisdiction over the Petitions?

The Pharmacies and the Trial Court rely on section 171.081 of the Texas Civil Practice and Remedies Code, which is part of the Texas Arbitration Act (“TAA”). See Tex. Civ. Prac. & Rem. Code Ann. § 171.081 (West, Westlaw through 2023 4th C.S.). This provision provides in its entirety as follows:

The making of an agreement described by Section 171.001 that provides for or authorizes an arbitration in this state and to which that section applies confers jurisdiction on the court to enforce the agreement and to render judgment on an award under this chapter.

Tex. Civ. Prac. & Rem. Code Ann. § 171.081.⁶ The parties have not cited and research has not revealed a case from the Supreme Court of Texas, the Third Court of Appeals, or this court interpreting section 171.081 in the context of jurisdictional challenges like those in today's case.

We review the trial court's interpretation of applicable statutes de novo. See Johnson v. City of Fort Worth, 774 S.W.2d 653, 655–56 (Tex. 1989). In construing a statute, our objective is to determine and give effect to the Legislature's intent. See Nat'l Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525, 527 (Tex. 2000). If possible, we must ascertain that intent from the language the Legislature used in the statute and not look to extraneous matters for an intent the statute does not state. Id. If the meaning of the statutory language is unambiguous, we adopt the interpretation supported by the plain meaning of the provision's words. St. Luke's Episcopal Hosp. v. Agbor, 952 S.W.2d 503, 505 (Tex. 1997).

The unambiguous language of section 171.081 provides that the making of an arbitration agreement described by section 171.001 that provides for or authorizes an arbitration in this state and to which section 171.001 applies confers jurisdiction on the court to enforce the arbitration agreement under the TAA and to render judgment under the TAA on an arbitration award pursuant to the arbitration agreement. See Tex. Civ. Prac. & Rem. Code Ann. § 171.081. The TAA, including section 171.001, does not apply to the agreements described in section 171.002 of the Texas Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. § 171.002 (West, Westlaw through 2023 4th C.S.). By requiring that section 171.001 apply to the arbitration agreement and by using the phrase “under this chapter,” which means “under the TAA,” the Texas Legislature made it clear that section 171.081 addresses the enforcement of arbitration agreements under the TAA and does not address the enforcement of arbitration agreements under Texas common law ⁷ or under the FAA. See Tex. Civ. Prac. & Rem. Code Ann. §§ 171.001, 171.002, 171.081; In re Drobny, No. 01-15-00435-CV, 2016 WL 4537076, at *4 (Tex. App.—Houston [1st Dist.] Aug. 30, 2016, orig. proceeding) (stating that “under this chapter” when used in a section of the TAA, means “under the TAA”).

The arbitration agreements in the Provider Manuals and the Provider Agreements do not provide for or authorize arbitration in Texas because these agreements require the arbitration to be conducted in California. Thus, these arbitration agreements do not confer jurisdiction on Texas courts under section 171.081 to enforce any of the arbitration agreements under the TAA. See Tex. Civ. Prac. & Rem. Code Ann. § 171.081.

But Optum has not sought to compel arbitration or enforce the alleged arbitration agreements under the TAA. Section 171.081 is not the sole basis for a district court to have subject-matter jurisdiction over petitions to compel arbitration, and section 171.081 does not provide that district courts lack subject-matter jurisdiction over petitions to compel arbitration based on arbitration agreements (1) that provide for or authorize arbitration outside of Texas, or (2) that are governed by the FAA or Texas common law. See id. The failure of section 171.081 to provide a basis for district courts to have subject-matter jurisdiction over the Petitions does not stop article V, section 8 of the Texas Constitution or sections 24.007 and 24.008 of the Government Code from providing such a basis. See Tex. Const. art. V, § 8; Tex. Gov't Code Ann. §§ 24.007, 24.008; John M. O'Quinn, P.C. v. Wood, Nos. 12-06-00151-CV, 12-06-00188-CV, 2006 WL 3735617, at *4–5 (Tex. App.—Tyler Dec. 20, 2006, orig. proceeding) (mem. op.) (holding that district court had subject-matter jurisdiction under article V, section 8 of the Texas Constitution to rule on attorney's motion to vacate arbitration award as to class determination) (mem. op.); Grand Homes 96, L.P. v. Loudermilk, 208 S.W.3d 696, 701–702 (Tex. App.—Fort Worth 2006, pet. denied) (holding that district court had subject-matter jurisdiction under article V, section 8 of the Texas Constitution over lawsuit including motion to compel arbitration). Under its unambiguous language, section 171.081 does not divest the district courts of their jurisdiction under these provisions to consider the Petitions. See Tex. Const. art. V, § 8; Tex. Civ. Prac. & Rem. Code Ann. § 171.081; Tex. Gov't Code Ann. §§ 24.007, 24.008.

Both the Trial Court and the Pharmacies rely on the Seventh Court of Appeals's opinion in Cypress Drilling, LLC v. Medve Energy Ventures, LLC. See No. 07-18-00288-CV, 2019 WL 5656471 (Tex. App.—Amarillo Oct. 31, 2019, no pet.). According to the Pharmacies the Cypress court held that (1) section 171.081 vests Texas courts with jurisdiction to enforce an arbitration agreement, but only if the agreement provides for or authorizes that the arbitration take place in Texas; and (2) a trial court lacks jurisdiction to order the parties to arbitration when (a) the arbitration agreement does not provide for or authorize an arbitration in Texas and (b) the party seeking to invoke jurisdiction does not file an application for an order including a judgment or decree. In that case, Cypress appealed the trial court's order dismissing for lack of subject-matter jurisdiction Cypress's petition seeking an order compelling Medve to arbitrate its disputes with Cypress in Louisiana based on an arbitration clause. See id. at *1. Cypress did not allege in its petition that Medve had refused to arbitrate in accordance with the parties’ arbitration agreement, and Cypress did not present any evidence that Medve refused to arbitrate. See id. at *3. Instead, at a hearing on Medve's motion to dismiss Cypress's petition based on forum non conveniens, Cypress represented to the trial court that the parties had agreed to resolve their disputes through arbitration in Louisiana, and the parties stated that they fully intended to arbitrate their disputes in Louisiana. See id. at *2. At the end of the hearing the trial court dismissed Cypress's petition for lack of subject-matter jurisdiction. See id.

In today's case Optum alleged and submitted evidence of the Pharmacies’ refusal to arbitrate. None of the Pharmacies has responded to Optum's petition to compel arbitration by stating that it agrees to resolve the Disputes with Optum through arbitration under the Provider Manual or the Provider Agreement, nor did any of the Pharmacies represent to the Trial Court that it fully intends to arbitrate the Disputes. Instead the Pharmacies opposed Optum's Consolidated Motion to Compel Arbitration. For these reasons, Cypress is not on point. See id. at *2–3.

Even though the parties in Cypress agreed to arbitrate and there was no real case or controversy, the Cypress court additionally stated that “[j]urisdiction to enforce an arbitration agreement and render judgment on an arbitration award is conferred on Texas Courts by ‘[t]he making of an agreement described by Section 171.001 that provides for or authorizes an arbitration in this state.’ ” Id. at *2 (quoting and adding emphasis to Tex. Civ. Prac. & Rem. Code Ann. § 171.081). Significantly, the Cypress court made no reference to the phrases “to which that section applies” and “under this chapter” that the Legislature used in section 171.081. See Tex. Civ. Prac. & Rem. Code Ann. § 171.081; Cypress Drilling, LLC, 2019 WL 5656471, at *1–3. Additionally, the Cypress court did not consider other provisions that may give a district court jurisdiction to enforce an arbitration clause as discussed elsewhere: (1) article V, section 8, of the Texas Constitution; and (2) or sections 24.007 and 24.008 of the Government Code. See Tex. Const. art. V, § 8; Tex. Gov't Code Ann. §§ 24.007, 24.008. Nor did the Cypress court address Texas precedent concluding that Texas district courts have the power to compel arbitration under Texas common law or under Section 4 of the FAA. See Royston, Rayzor, Vickery & Williams, LLP v. Lopez, 467 S.W.3d 494, 499 (Tex. 2015); Lawson v. Archer, 267 S.W.3d 376, 380–81 & n.4, 385 (Tex. App.—Houston [14th Dist.] 2008, no pet.); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. McCollum, 666 S.W.2d 604, 606–10 (Tex. App.—Houston [14th Dist.] 1984, writ ref'd n.r.e.). Instead the Cypress court analyzed the appeal as if section 171.081 was the only possible basis on which a Texas district court might have subject-matter jurisdiction over a petition to compel arbitration. See Cypress Drilling, LLC, 2019 WL 5656471, at *1–3. We do not find the Cypress opinion persuasive.

We conclude that section 171.081 does not divest the district courts of their jurisdiction under article V, section 8 of the Texas Constitution or under sections 24.007 and 24.008 of the Government Code to consider the Petitions under Section 4. See Tex. Const. art. V, § 8; Tex. Civ. Prac. & Rem. Code Ann. § 171.081; Tex. Gov't Code Ann. §§ 24.007, 24.008.

2. Does Section 4 divest the district courts of subject-matter jurisdiction over these cases?

The FAA authorizes parties to arbitration agreements to file certain actions in federal court—most prominently, petitions to compel arbitration (under Section 4) and applications to confirm, vacate, or modify arbitral awards (under sections 9 through 11). See Badgerow v. Walters, 596 U.S. 1, 8, 142 S.Ct. 1310, 1316, 212 L.Ed.2d 355 (2022). But those provisions, the United States Supreme Court has held, do not themselves support federal jurisdiction. See id. A federal court may entertain an action brought under the FAA only if the action has an independent jurisdictional basis. Id. That means a party seeking, for example, to vacate an arbitration award under section 10 of the FAA must identify a grant of jurisdiction, apart from section 10 itself, conferring “access to a federal forum.” Id. (quoting Vaden v. Discover Bank, 556 U.S. 49, 59, 129 S.Ct. 1262, 1271, 173 L.Ed.2d 206 (2009)). If the party cannot, the action belongs in state court. Badgerow, 596 U.S. at 8, 142 S.Ct. at 1316. The FAA requires those courts, too, to honor arbitration agreements; and the United States Supreme Court has long recognized the “prominent role” of state courts in the enforcement of arbitration agreements. See id. The United States Supreme Court has held that the FAA's core substantive requirement—section 2's command to enforce arbitration agreements like other contracts—applies in state courts, just as it does in federal courts.⁸ See 9 U.S.C. § 2; Badgerow, 596 U.S. at 8 n.2, 142 S.Ct. at 1316 n.2. The United States Supreme Court has also concluded that state courts are required to grant stays of litigation under section 3 of the FAA (“Section 3”).⁹ See Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 26, 103 S.Ct. 927, 942, 74 L.Ed.2d 765 (1983); In re Bruce Terminix Co., 988 S.W.2d 702, 704 n.2 (Tex. 1998).

The United States Supreme Court has not yet decided whether Section 4 or sections 9 through 11 of the FAA also apply in state courts. See Badgerow, 596 U.S. at 8 n.2, 142 S.Ct. at 1316 n.2. The Pharmacies argue that Section 4 only allows petitions to compel arbitration under that section to be filed in federal courts and that these petitions may not be filed in Texas state court. Optum asserts that petitions under Section 4 may be filed in Texas courts and cites the Supreme Court of Texas's opinion in Venture Cotton Cooperative v. Freeman as a case in which the court applies Section 4 ¹⁰ in Texas court. See 435 S.W.3d 222 (Tex. 2014). The Venture Cotton court noted that the agreements at issue in that case “provide[d] for arbitration of all disputes under the Federal Arbitration Act, 9 U.S.C. §§ 1–16” and that Venture Cotton moved to stay the litigation and compel arbitration under the FAA. See id. at 224, 226. The high court stated that the appeal from the trial court's interlocutory order denying those motions was taken under section 51.016 of the Texas Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. § 51.016 (West, Westlaw through 2023 4th C.S.). This statute provides that “[i]n a matter subject to the [FAA], a person may take an appeal ․ to the court of appeals from the judgment or interlocutory order of a district court ․ under the same circumstances that an appeal from a federal district court's order or decision would be permitted by 9 U.S.C. Section 16.” Id. Two of these circumstances under which section 51.016 provides for an appeal from a Texas district court's order in a matter subject to the FAA are: “an order ․ refusing a stay of any action under section 3 of [the FAA],” and “an order ․ denying a petition under section 4 of [the FAA] to order arbitration to proceed.” 9 U.S.C. § 16(a)(1)(A)&(B); In re Hart of Texas Cattle Feeders, LLC, No. 07-16-00194-CV, 2016 WL 3180436, at *1–2 (Tex. App.—Amarillo Jun. 2, 2016. orig. proceeding) (concluding that under section 51.016 of the Texas Civil Practice and Remedies Code, relators had a right to appeal the trial court's interlocutory order denying their motion to compel arbitration based on Section 4) (mem. op.). Thus, section 51.016 of the Texas Civil Practice and Remedies Code permits an appeal to be taken from a Texas district court's order in a matter subject to the FAA in those same circumstances.

In conducting its analysis the Venture Cotton court stated that “[t]he FAA thus requires a court to make at least a threshold determination of arbitrability—that the dispute is subject to an enforceable agreement to arbitrate—before enforcing the arbitration agreement by compelling arbitration or staying litigation. 9 U.S.C. §§ 3–4.” Venture Cotton Cooperative, 435 S.W.3d at 227. The high court also stated: “Under FAA § 3, when a party moves to stay litigation pending arbitration, the court shall grant the motion ‘upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement.’ 9 U.S.C. § 3. Section 4 requires a court to grant a motion to compel arbitration ‘upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue.’ Id. § 4.” Id. at 227, n.5. In Venture Cotton, no party argued that Section 4 of the FAA did not apply, and these statements do not constitute a holding that this section applied. If these statements are binding judicial dicta, then we are bound by the proposition that Texas district courts have the power to compel arbitration under Section 4. See Elledge v. Friberg-Cooper Water Supply Corp., 240 S.W.3d 869, 870 (Tex. 2007). We presume for the purposes of our analysis that these statements are non-binding obiter dicta rather than judicial dicta. Therefore, we must examine our precedent in Merrill Lynch, Pierce, Fenner & Smith, Inc. v. McCollum, another case on which Optum relies. See id.; McCollum, 666 S.W.2d at 606–10.

In McCollum this court held the district court had the power to compel arbitration under Section 4. See id. at 608–10. The parties have not cited and research has not revealed (1) a precedent from the Supreme Court of the United States, the Supreme Court of Texas, or this court sitting en banc that addresses this issue; or (2) an intervening and material change in the statutory law. Ordinarily these propositions would mean that we are bound to apply the holding from McCollum under the doctrine of horizontal stare decisis. See Mitschke v. Borromeo, 645 S.W.3d 251, 256–57 (Tex. 2022); Glassman v. Goodfriend, 347 S.W.3d 772, 781 (Tex. App.—Houston [14th Dist.] 2011, pet. denied) (en banc). But because this appeal was transferred to this court from the Third Court of Appeals, we must apply precedent from that court rather than the McCollum holding if a decision based on McCollum would be inconsistent with the Third Court of Appeals's precedent. See Tex. R. App. P. 41.3 (stating that “[i]n cases transferred by the Supreme Court [of Texas] from one court of appeals to another, the court of appeals to which the case is transferred must decide the case in accordance with the precedent of the transferor court under principles of stare decisis if the transferee court's decision otherwise would have been inconsistent with the precedent of the transferor court”); Mitschke, 645 S.W.3d at 258. The parties have not cited and research has not revealed a precedent from the Third Court of Appeals that conflicts with the McCollum holding, and two cases from the Third Court of Appeals are consistent with the McCollum holding. See Mainthia Technologies, Inc. v. Recruiting Force, LLC, No. 03-20-00402-CV, 2021 WL 520451, at *2 (Tex. App.—Austin Feb. 12, 2021, no pet.) (citing Section 4 in analysis of whether trial court should have granted motion to compel arbitration if the FAA applied) (mem. op.); In re Pisces Foods, L.L.C., 228 S.W.3d 349, 350–51 (Tex. App.—Austin 2007, orig. proceeding) (quoting Section 4 in determining whether the trial court abused its discretion in refusing to compel arbitration under the FAA).

Optum filed the Petitions in sixteen different counties ¹¹ that fall within the geographic jurisdiction of seven courts of appeals: the Second Court of Appeals, the Third Court of Appeals, the Fifth Court of Appeals, the Seventh Court of Appeals, the Eighth Court of Appeals, the Tenth Court of Appeals, and the Eleventh Court of Appeals (collectively the “Appellate Courts”). Because the Trial Court presides over the transferred actions “as if the transferred action were originally filed in the transferor court,” we presume, without deciding, that as to each of the eighteen transferred cases, the Trial Court was required to decide the Plea to the Jurisdiction in accordance with the precedent of the court of appeals for the transferor court under principles of stare decisis if the Trial Court's decision under the Third Court of Appeals's precedent otherwise would have been inconsistent with the precedent of the transferor court's court of appeals. See Tex. Gov't Code Ann. 74.164. The parties have not cited and research has not revealed a precedent from any of the Appellate Courts that conflicts with the McCollum holding.

Though applying the doctrine of horizontal stare decisis in today's case has been complicated by multiple transfers, under that doctrine we are bound to apply McCollum. See Mitschke, 645 S.W.3d at 256–58; Glassman, 347 S.W.3d at 781. Texas district courts have the power to compel arbitration under Section 4. See McCollum, 666 S.W.2d at 608–10.

The Pharmacies suggest that McCollum is not on point because the trial court in that case granted relief under Sections 3 and 4 of the FAA, but Optum seeks relief only under Section 4. See id. at 605, 608. That is not a material distinction. The McCollum court held that the district court had the power to compel arbitration under Section 4 and did not hold that a Texas trial court only has the power to compel arbitration under Section 4 if the trial court grants a stay under Section 3. See id. at 608–10. The Pharmacies appear to base this argument on their stated belief that if claims subject to arbitration are pending in a trial court, the court may both stay the pending claims and compel arbitration under Section 3, rendering Section 4 superfluous. The apparent basis for this argument is incorrect. Under its plain text, Section 3 does not authorize a court to compel arbitration; Section 3 authorizes only a stay, not an order compelling arbitration. See 9 U.S.C. §§ 3, 4; Vaden, 556 U.S. at 58 & n.8, 129 S.Ct. at 1271 & n.8; Moses H. Cone Mem. Hosp., 460 U.S. at 26, 103 S.Ct. at 942 (concluding that “state courts, as much as federal courts, are obliged to grant stays of litigation under § 3 of the Arbitration Act. It is less clear, however, whether the same is true of an order to compel arbitration under § 4 of the Act.”) (footnote omitted).

The Pharmacies assert that for a court to have authority to entertain a petition to compel arbitration under Section 4, a claim subject to arbitration must have been asserted in a court or submitted in an arbitration that is unable to proceed without a court order. The Pharmacies cite no case in which a court holds that such a requirement exists, and this requirement would contradict the plain text of Section 4 and opinions interpreting it. See 9 U.S.C. § 4 (stating that “A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition ․ for an order directing that such arbitration proceed in the manner provided for in such agreement ․ [U]pon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement”); Vaden, 556 U.S. at 63, n.13, 65, 129 S.Ct. at 1274, n.13, 1275.

The Pharmacies also assert that Section 4 requires that (1) a district court may only compel an arbitration that will be held in the district in which the court sits; and (2) the arbitration must be held in accordance with the parties’ agreement. See 9 U.S.C. § 4 (stating that “[t]he hearing and proceedings, under such agreement, shall be within the district in which the petition for an order directing such arbitration is filed ․ [U]pon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.”); Ansari v. Qwest Comm'n Corp., 414 F.3d 1214, 1219–20 (10th Cir. 2005). Thus, the Pharmacies contend that if the parties have agreed to arbitrate in a particular forum, only a district court in that forum may grant a Section 4 petition, and therefore only a United States District Court for the Central District of California may grant the Petitions (the “Argument”).¹² See Ansari, 414 F.3d at 1219–20.

The parties have not cited and research has not revealed any precedent from the Supreme Court of the United States, the Supreme Court of Texas, or this court addressing the Argument. Nonetheless, we need not and do not address the Argument because the FAA does not confer subject-matter jurisdiction, and even if the Argument were well-founded and applicable to today's case, the Argument would not provide a basis for affirming the Trial Court's order dismissing the Petitions for lack of subject-matter jurisdiction. See Badgerow, 596 U.S. at 8, 142 S.Ct. at 1316; 1mage Software, Inc. v. Reynolds and Reynolds Co., 459 F.3d 1044, 1051–55 (10th Cir. 2006) (affirming Colorado district court's order compelling the parties to arbitrate in Ohio and holding that (1) the Argument is a waivable venue argument rather than an argument that the trial court lacks subject-matter jurisdiction; and (2) appellant waived the Argument); Dumont v. Saskatchewan Gov't Ins., 258 F.3d 880, 887 (8th Cir. 2001) (treating the Argument as a venue argument); Doctor's Assocs., Inc. v. Stuart, 85 F.3d 975, 983 (2d Cir. 1996) (concluding that the Argument is a venue argument).

We conclude that Section 4 does not divest the district courts of subject-matter jurisdiction over the Petitions. See McCollum, 666 S.W.2d at 608–10. It is presumed that a district court has subject-matter jurisdiction over the Petitions, and the Pharmacies bore the burden of making a compelling showing that a statute has divested the district courts of subject-matter jurisdiction over the Petitions. See S.C., 650 S.W.3d at 436; In re Oncor Elec. Deliv. Co., 630 S.W.3d at 44–45. We conclude that the Pharmacies have not made this showing. The Trial Court concluded that it lacked subject-matter jurisdiction over the Petitions because “neither the [FAA], nor the [TAA] confers original jurisdiction over this case.” But the failure of the FAA and the TAA to confer subject-matter jurisdiction over the Petitions does not stop article V, section 8 of the Texas Constitution or sections 24.007 and 24.008 of the Government Code from providing a basis for district courts to have subject-matter jurisdiction over the Petitions. See Tex. Const. art. V, § 8; Tex. Gov't Code Ann. §§ 24.007, 24.008; Williams v. Jimglo Yellowstone, LLC, No. 14-21-00375-CV, 2022 WL 4354114, at *1–2 (Tex. App.—Houston [14th Dist.] Sep. 20, 2022, no pet.) (mem. op.); Credigy Receivables, Inc. v. Mahinay, 288 S.W.3d 565, 566–68 (Tex. App.—Houston [14th Dist.] 2009, no pet.); John M. O'Quinn, P.C., 2006 WL 3735617, at *4–5.

We conclude that the Trial Court erred to the extent it dismissed the Petitions for lack of subject-matter jurisdiction on the ground that (1) neither the FAA nor the TAA confers on district courts subject-matter jurisdiction over the Petitions; or (2) the Texas Constitution and Texas statutes do not provide district courts with subject-matter jurisdiction over the Petitions. See Tex. Const. art. V, § 8; Tex. Gov't Code Ann. §§ 24.007, 24.008; Credigy Receivables, Inc., 288 S.W.3d at 566–68 (concluding that Harris County civil court at law had subject-matter jurisdiction over action to confirm arbitration award under statute giving court jurisdiction over “civil cases in which the matter in controversy exceeds $500 but does not exceed $100,000, excluding interest, statutory or punitive damages and penalties, and attorney's fees and costs, as alleged on the face of the petition”); Williams, 2022 WL 4354114, at *1–2 (holding that party challenging subject-matter had not rebutted the presumption that the district court had subject-matter jurisdiction over a claim by showing that a statute provided that the court had no jurisdiction over that claim); John M. O'Quinn, P.C., 2006 WL 3735617, at *4–5.

C. Did the Trial Court err in dismissing the Petitions on the ground that they are not ripe?

The Trial Court also dismissed the Petitions for lack of subject-matter jurisdiction on the ground that “there is a lack of a ripe case or controversy between the parties.” For a court to have subject-matter jurisdiction over a case, the plaintiff's claims must be ripe. Southwestern Elec. Power Co. v. Lynch, 595 S.W.3d 678, 683 (Tex. 2020). Ripeness is a threshold issue that implicates subject-matter jurisdiction and emphasizes the need for a concrete injury for a justiciable claim to be presented. Id. In determining whether a case is ripe, the focus is on whether the facts have been sufficiently developed “so that an injury has occurred or is likely to occur, rather than being contingent or remote.” Id. (quoting Patterson v. Planned Parenthood of Hous. & Se. Tex., Inc., 971 S.W.2d 439, 442 (Tex. 1998)). If the plaintiff's claimed injury is based on “hypothetical facts, or upon events that have not yet come to pass,” then the case is not ripe, and the court lacks subject-matter jurisdiction. Id. (quoting Patterson, Inc., 971 S.W.2d at 442).

For a court to have subject-matter jurisdiction over a case, the plaintiff also must have standing to bring the lawsuit. See Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 849 (Tex. 2005). In considering the issue of standing, courts focus on whether a party has a sufficient relationship with the lawsuit so as to have a “justiciable interest” in its outcome. Id. at 848. A plaintiff has standing when it is personally aggrieved. Id. The standing doctrine requires that there be a real controversy between the parties that actually will be determined by the judicial relief sought. Id. at 849.

The Trial Court did not explain the basis for its conclusion that the Petitions were not ripe, but the Pharmacies have argued that the Petitions are not ripe because there has been no unequivocal refusal to arbitrate by any of the Pharmacies. Section 4 requires that a party filing a petition to compel arbitration have been “aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration.” 9 U.S.C. § 4. In the Petitions Optum alleged that the Disputes fall within the Arbitration Clause and that therefore each of the Disputes must be resolved by binding arbitration. Optum asserted that on December 16, 2021, counsel for the Pharmacies sent Optum a letter providing written notice of the Pharmacies’ Disputes with Optum. Optum asserted that even though it notified each of the Pharmacies of its obligation to comply with the alternative dispute resolution provisions in the Provider Manual, each of the Pharmacies refused to arbitrate. Optum asserted that the Pharmacies’ counsel told Optum's counsel that the Pharmacies would not arbitrate under the parties’ agreement and would not permit an arbitrator to resolve any threshold disputes over arbitrability. According to Optum, the Pharmacies’ counsel stated that the Pharmacies would only resolve the parties’ disputes in court. Optum asserted that the Pharmacies have expressly refused to abide by the parties’ arbitration agreement and have stated they will only litigate the parties’ disputes in court, contrary to the parties’ agreement. Optum alleged that the refusal of each of the Pharmacies to abide by the arbitration agreements in the Provider Manuals and Provider Agreements constitutes a failure, neglect, or refusal on their part to arbitrate, in breach of the parties’ binding arbitration agreement. Unless compelled to arbitrate, Optum contends that each of the Pharmacies will remain in violation of its contractual obligation to arbitrate its Disputes with Optum.

Michael Holecek, one of Optum's attorneys, testified in a declaration that the Pharmacies’ counsel told him in a phone call that the Pharmacies would not arbitrate:

On March 29, 2022, I participated in a phone call with [the Pharmacies’] counsel. On the call, my colleagues stated [Optum's] position that [the Pharmacies] are obligated to arbitrate their disputes with [Optum]. We asked [the Pharmacies’] counsel whether [the Pharmacies] would abide by their arbitration agreement. We also asked [the Pharmacies’] counsel whether [the Pharmacies] would arbitrate any threshold questions of arbitrability—including [the Pharmacies’] claim that the arbitration agreement was unconscionable. [The Pharmacies’] counsel stated that Respondents did not agree to arbitration and intended to litigate the parties’ disputes in court.

The Pharmacies have not submitted any evidence controverting Holecek's testimony or challenging the existence of the jurisdictional facts that Optum pleaded regarding the Pharmacies’ refusal to arbitrate.

Construing the allegations in the Petitions liberally in favor of Optum, Optum has alleged facts affirmatively showing that the Pharmacies refused to arbitrate the Disputes and that the facts have been sufficiently developed so that an injury to Optum has occurred or is likely to occur, rather than being contingent or remote. See Southwestern Elec. Power Co., 595 S.W.3d at 683–86; Miranda, 133 S.W.3d at 226; Kings River Trail Ass'n v. Pinehurst Trail Holdings, 447 S.W.3d 439, 443–44 (Tex. App.–Houston [14th Dist.] 2014, pet. denied). The uncontroverted testimony of Holecek also shows that on March 29, 2022, during a phone call with the Pharmacies’ counsel, the Pharmacies’ counsel stated that the Pharmacies did not agree to arbitration and intended to litigate the parties’ disputes in court, thus demonstrating that the Pharmacies refused to arbitrate the Disputes and that the facts have been sufficiently developed so that an injury to Optum has occurred or is likely to occur, rather than being contingent or remote. See Southwestern Elec. Power Co., 595 S.W.3d at 683–86; Kings River Trail Ass'n, 447 S.W.3d at 443–44. Therefore, each of the eighteen cases is ripe. See Southwestern Elec. Power Co., 595 S.W.3d at 683–86; Kings River Trail Ass'n, 447 S.W.3d at 443–44.

Based on Optum's allegations and Holecek's uncontroverted testimony,(1) Optum has a sufficient relationship with the eighteen cases so as to have a “justiciable interest” in their outcome; and (2) Optum has been personally aggrieved by the Pharmacies’ refusal to arbitrate, and there is a real controversy between the parties that actually will be determined by a ruling on the merits of the Petitions. See Austin Nursing Ctr., Inc., 171 S.W.3d at 848–49, 849–50; Curry v. Harris County Appraisal Dist., 434 S.W.3d 815, 824–25 (Tex. App.—Houston [14th Dist.] 2014, no pet.). Therefore, Optum has standing to bring the Petitions. See Austin Nursing Ctr., Inc., 171 S.W.3d at 848–49, 849–50; Curry, 434 S.W.3d at 824–25.

The Pharmacies assert that the statements made by their counsel during the March 29, 2022 phone call are insufficient to show that they refused to arbitrate or that Optum is an aggrieved party because the statements were “undocumented” given that no document, such as a letter or an email, confirmed the statements that were made on the call or confirmed that the Pharmacies refused to arbitrate. The Pharmacies cite no case in which a court holds that refusals to arbitrate must be documented in this way. Optum submitted a declaration proving the statements made by the Pharmacies’ counsel during this phone call. An intermediate court of appeals in Florida has determined that such a phone call was sufficient to show that certain pharmacies in Florida refused to arbitrate with Optum and to establish that Optum was aggrieved by this failure to arbitrate, even though the pharmacies questioned the sufficiency of the record regarding the phone call. See OptumRx v. King's Drug's, Inc., 385 So.3d 201, 206–07 (Fl. Ct. App. 2024). We conclude that a refusal to arbitrate made during a phone call may be sufficient to show that the party contending that the disputes should be arbitrated has been aggrieved by a refusal to arbitrate. See id.

The Pharmacies also argue that the Petitions were not ripe because Optum failed to follow the procedures required by the Arbitration Clause before a party may commence an arbitration under the Arbitration Clause. The Pharmacies cite OptumRx, Inc. v. A&S Drugs, LLC, and state that this case was also not ripe due to Optum's failure to follow these procedures. See No. 8:22-CV-00468-FLA, 2023 WL 6170802, at *3–5 (C.D. Cal. Sept. 20, 2023). Though the court in A&S Drugs dismissed without prejudice Optum's Section 4 petitions based on Optum's failure to follow these dispute-resolution procedures, the court did not find that the cases were not ripe or dismiss for lack of subject-matter jurisdiction. See id. In addition, courts have held that the failure of a party seeking to compel arbitration to comply with dispute-resolution procedures that the arbitration agreement requires before disputes may be arbitrated does not deprive a court of subject-matter jurisdiction over the party's action to compel arbitration. See Ace Am. Ins. Co. v. Huntsman Corp., 255 F.R.D. 179, 210–12 (S.D. Tex. 2008).

The Pharmacies also assert that these cases are not ripe for adjudication because the Pharmacies have not initiated any lawsuit against Optum and because no party has filed a demand for arbitration of the Disputes. But the United States Supreme Court has recognized that Section 4 enables a party to seek an order compelling arbitration even when the parties’ controversy is not the subject of any pending litigation. See Vaden, 556 U.S. at 68, n.16, 129 S.Ct. at 1276, n.16. We conclude that a petition to compel arbitration may be ripe if the defendant has refused to arbitrate, even if the defendant has not filed suit and no demand for arbitration has been filed. See id.

We conclude that the Trial Court erred to the extent it dismissed the Petitions for lack of subject-matter jurisdiction on the ground that (1) the cases are not ripe; (2) no justiciable case or controversy exists between Optum and each of the Pharmacies; or (3) Optum lacks standing to bring the Petitions. See Southwestern Elec. Power Co., 595 S.W.3d at 683–86; Austin Nursing Ctr., Inc., 171 S.W.3d at 848–50; Kings River Trail Ass'n, 447 S.W.3d at 443–44.

III. Conclusion

In each of the eighteen civil cases in which Optum filed a petition to compel arbitration, Optum's pleading is determinative and establishes that the amount in controversy is more than $500, exclusive of interest. The district courts have subject-matter jurisdiction over the Petitions based on article V, section 8 of the Texas Constitution and section 24.007 of the Texas Government Code, unless the United States Congress or the Texas Legislature has divested the district courts of that jurisdiction. The Pharmacies have not carried their burden of making a compelling showing that the United States Congress or the Texas Legislature has divested the district courts of that jurisdiction. The allegations in the Petitions and the evidence submitted by Optum show that (1) each of the eighteen cases is ripe; (2) a justiciable case or controversy exists between Optum and each of the Pharmacies; and (3) Optum has standing to bring the Petitions. The eighteen district courts, and thus the Trial Court, had subject-matter jurisdiction, and the Trial Court erred in dismissing all of Optum's claims for lack of subject-matter jurisdiction.¹³ Therefore, we reverse the Trial Court's order and remand for further proceedings consistent with this opinion.

FOOTNOTES

1.   The twenty pharmacies sued were appellees Advant-Edge Pharmacy; Allen Family Pharmacy LLC; Amarillo Diagnostic Clinic RX, Inc.; Brace Pharmacies LLC; Charles David Smith; Collins Family Pharmacy LLC; Duffey Drug Company, Inc.; Good News Wholesale, Inc.; Hyland's Pharmacy LLC; James McCoy's Drug Store, Inc.; James McCoy's Drug Store South LLC; James McCoy's Midtown Drug Store, Inc.; Jerry McWilliams Pharmacy, Inc.; Love Oak LLC; Martin Tipton Pharmacy LLC; Medicine Place Inc.; Moore Than Medicine LLC; Riddle Rx L.P.; Texas Community Pharmacy Services, Inc.; and The Medicine Place, Inc.

2.   Optum referred to each defendant as “Respondent.” In one petition there were three respondents.

3.   The Pharmacies asserted as follows: “If the underlying claim is filed in the state court, the procedure authorized by Sections 3 and 4 is to petition that court to compel arbitration. If no claim has been filed in the state court (and the party seeking to compel arbitration has been unable to arbitrate absent a court order), the procedure under Section 4 is to petition the appropriate federal court.” (italics in original).

4.   When court's subject-matter jurisdiction under a statute depends on the amount in controversy, jurisdiction generally is based on the allegations in the petition regarding the amount in controversy. See Miranda, 133 S.W.3d at 224 n.4; Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). In each of the Petitions Optum alleged that its claims fall within the trial court's subject-matter jurisdiction because the amount in controversy exceeds the trial court's minimum jurisdiction limit. None of the Pharmacies argued or established that the amount in controversy is $500 or less, exclusive of interest or that Optum's allegation to the contrary was made fraudulently for the purposes of obtaining jurisdiction. See Miranda, 133 S.W.3d at 224 n.4; Bland Indep. Sch. Dist., 34 S.W.3d at 554. Thus, Optum's pleading is determinative and establishes that the amount in controversy for each case is more than $500, exclusive of interest. See Tex. Gov't Code Ann. 24.007(b); Miranda, 133 S.W.3d at 224 n.4; Bland Indep. Sch. Dist., 34 S.W.3d at 554; In the Interest of C.B.W., 2024 WL 1101152, at *7; Guimond, 2017 WL 3272292, at *5, n.11.

5.   The Pharmacies assert that this presumption does not apply to actions based on a statute, and therefore this presumption does not apply to Optum's actions, which are based on Section 4. The only case the Pharmacies cite for this proposition is Dubai Petroleum Co. v. Kazi. See 12 S.W.3d 71, 75 (Tex. 2000). Though the Kazi court did say that the Supreme Court of Texas had previously held that the presumption that a district court has subject-matter jurisdiction did not apply to actions based on a statute, the high court said that these previous holdings were in Mingus v. Wadley, 115 Tex. 551, 285 S.W. 1084 (1926) and its progeny, a line of cases that the Supreme Court of Texas proceeded to overrule in Kazi. See id. at 75–76. Therefore, under current law this presumption applies to all actions, including those based on a statute. See In re Oncor Elec. Deliv. Co., 630 S.W.3d at 43, 44, 57, n.54 (applying this presumption to common-law claims and to claims under the Deceptive Trade Practices Act); Kazi, 12 S.W.3d at 75–76.

6.   Section 171.001 provides as follows:(a) A written agreement to arbitrate is valid and enforceable if the agreement is to arbitrate a controversy that:(1) exists at the time of the agreement; or(2) arises between the parties after the date of the agreement.(b) A party may revoke the agreement only on a ground that exists at law or in equity for the revocation of a contract.Tex. Civ. Prac. & Rem. Code Ann. § 171.001 (West, Westlaw through 2023 4th C.S.).

7.   Optum has not sought relief based on the common law of arbitration.

8.   Section 2 of the FAA provides as follows:A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract or as otherwise provided in chapter 4.9 U.S.C. § 2.

9.   Section 3 of the FAA provides as follows:If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.9 U.S.C. § 3.

10.   Section 4 of the FAA provides as follows:A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement. Five days’ notice in writing of such application shall be served upon the party in default. Service thereof shall be made in the manner provided by the Federal Rules of Civil Procedure. The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. The hearing and proceedings, under such agreement, shall be within the district in which the petition for an order directing such arbitration is filed. If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof. If no jury trial be demanded by the party alleged to be in default, or if the matter in dispute is within admiralty jurisdiction, the court shall hear and determine such issue. Where such an issue is raised, the party alleged to be in default may, except in cases of admiralty, on or before the return day of the notice of application, demand a jury trial of such issue, and upon such demand the court shall make an order referring the issue or issues to a jury in the manner provided by the Federal Rules of Civil Procedure, or may specially call a jury for that purpose. If the jury find that no agreement in writing for arbitration was made or that there is no default in proceeding thereunder, the proceeding shall be dismissed. If the jury find that an agreement for arbitration was made in writing and that there is a default in proceeding thereunder, the court shall make an order summarily directing the parties to proceed with the arbitration in accordance with the terms thereof.9 U.S.C. § 4.

11.   The Petitions were filed in Bell County, Castro County, Dallas County, Denton County, Eastland County, El Paso County, Mitchell County, Nolan County, Potter County, Parmer County, Robertson County, Scurry County, Swisher County, Taylor County, Wheeler County, and Williamson County.

12.   The arbitration clauses in the Provider Manuals and the Provider Agreements require the arbitration proceeding to be conducted in California in either Los Angeles County or Orange County.

13.   We do not address whether Optum is entitled to any of the relief that it seeks in any of the Petitions.

Randy Wilson, Justice