Archer and White Sales, Inc. v. Henry Schein, Inco
878 F.3d 488
5th Cir.2017Background
- Archer & White Sales, a dental-equipment distributor, sued Henry Schein, Danaher, and related entities for alleged antitrust conspiracies seeking damages and injunctive relief.
- Defendants sought to compel arbitration under a Dealer Agreement between Archer and Pelton & Crane that: (1) required arbitration of “[a]ny dispute arising under or related to this Agreement,” (2) carved out “actions seeking injunctive relief” and certain IP disputes, and (3) incorporated the AAA Rules.
- The magistrate judge compelled arbitration, finding incorporation of the AAA Rules delegated arbitrability to an arbitrator and that equitable estoppel could bind non‑signatories.
- The district court vacated that order, held the court could decide arbitrability, and ruled the carve-out for "actions seeking injunctive relief" rendered the suit non‑arbitrable.
- On interlocutory appeal, the Fifth Circuit reviewed de novo and applied the Douglas two‑step framework: (1) whether delegation to the arbitrator is clear and unmistakable; (2) whether any assertion of arbitrability is “wholly groundless.”
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability (delegation)? | Archer: the carve-out prevents delegation; court should decide. | Defs: incorporation of AAA Rules is clear and unmistakable delegation to arbitrator. | Court: incorporation could show delegation but ambiguity exists here; need not resolve because of step two. |
| Scope of carve-out for injunctive relief | Archer: plain, unambiguous carve-out excludes any "action seeking injunctive relief" from arbitration (no piecemeal). | Defs: carve-out permits litigating injunctive claims in court while arbitrating damages; clause permits arbitration of non‑injunctive claims. | Court: reading excluding all actions seeking injunctive relief is plain and controls; no plausible argument arbitration covers this action. |
| Application of Douglas “wholly groundless” exception | Archer: arguments for arbitrability are wholly groundless given plain text. | Defs: magistrate’s plausible constructions show not wholly groundless; arbitration policy favors arbitrability. | Court: the exception applies narrowly but fits here; defendants’ arbitrability arguments are wholly groundless. |
| Whether non‑signatories can enforce arbitration clause | Archer: N/A in detail. | Defs: equitable estoppel could bind non‑signatories. | Court: did not reach the enforceability-by-third-parties question because action is not arbitrable. |
Key Cases Cited
- Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., 687 F.3d 671 (5th Cir. 2012) (incorporation of arbitration rules can be clear-and-unmistakable evidence of delegation)
- Crawford Prof'l Drugs, Inc. v. CVS Caremark Corp., 748 F.3d 249 (5th Cir. 2014) (AAA Rules incorporation can delegate arbitrability despite carve-out language)
- Douglas v. Regions Bank, 757 F.3d 460 (5th Cir. 2014) (two-step test and ‘‘wholly groundless’’ exception to delegation)
- Kubala v. Supreme Prod. Servs., Inc., 830 F.3d 199 (5th Cir. 2016) (standard for reviewing motions to compel arbitration)
- IQ Prods. Co. v. WD-40 Co., 871 F.3d 344 (5th Cir. 2017) (discussion of scope and delegation inquiries)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (courts should not assume parties agreed to arbitrate arbitrability absent clear evidence)
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (2010) (parties may delegate arbitrability through an express clause)
- E.E.O.C. v. Waffle House, Inc., 534 U.S. 279 (2002) (courts must give effect to clear contract language)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (arbitration agreements are as enforceable as other contracts)