Henry Schein, Inc. v. Archer & White Sales, Inc.
139 S. Ct. 524
| SCOTUS | 2019Background
- Archer & White sued Henry Schein and related parties for federal and state antitrust violations, seeking money damages and injunctive relief.
- The parties’ distribution agreement required arbitration for disputes “arising under or related to” the agreement but expressly excluded “actions seeking injunctive relief.”
- The agreement incorporated AAA rules, which empower arbitrators to decide questions of arbitrability.
- Schein moved to compel arbitration under the Federal Arbitration Act (FAA); Archer & White argued the dispute (at least in part) sought injunctive relief and thus was excepted from arbitration.
- The district court and Fifth Circuit applied a “wholly groundless” exception and held courts may decide arbitrability when an arbitration defense is wholly groundless; the Supreme Court granted certiorari to resolve that rule.
Issues
| Issue | Archer & White (Plaintiff) Argument | Schein (Defendant) Argument | Held |
|---|---|---|---|
| Who decides threshold arbitrability when the contract delegates that question to an arbitrator? | Courts may decide arbitrability if the defendant’s invocation of arbitration is “wholly groundless.” | The FAA and the contract (via incorporated AAA rules) delegate arbitrability to the arbitrator; court must enforce that delegation. | The “wholly groundless” exception is inconsistent with the FAA; if the contract clearly delegates arbitrability to the arbitrator, courts must send the question to arbitration. |
| Whether the FAA’s §§3–4 require courts to decide arbitrability in all cases | Sections 3 and 4 mean courts must determine arbitrability before referring matters to arbitration. | First Options and Rent‑A‑Center allow parties to delegate arbitrability to arbitrators by clear and unmistakable evidence. | §§3–4 do not override parties’ contractual delegation; courts first confirm a valid arbitration agreement exists, but cannot decide arbitrability delegated to an arbitrator. |
| Whether §10 (judicial review for arbitrator exceeding powers) supports a front‑end judicial gatekeeping role | Because courts can review arbitrators under §10, courts should be able to preclude arbitration on front‑end arbitrability grounds. | §10’s back‑end review does not justify a front‑end rewrite of the FAA; parties may assign arbitrability to arbitrators and courts then review awards under §10. | §10 does not authorize courts to usurp parties’ clear delegation at the front end; Congress chose the statutory scheme and courts must follow it. |
| Policy justification for a “wholly groundless” exception (efficiency, deterrence of frivolous motions) | Exception saves time/money and deters frivolous motions to compel arbitration. | The FAA contains no such exception; arbitrators can quickly dispose of frivolous arbitrability claims and impose sanctions; creating the exception would rewrite the statute and likely generate collateral litigation. | Court rejects the policy justification and will not engraft a ‘‘wholly groundless’’ exception onto the FAA. |
Key Cases Cited
- Rent‑A‑Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (parties may delegate gateway arbitrability questions to an arbitrator and such delegation must be enforced)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (clear and unmistakable evidence required to show parties agreed to arbitrate arbitrability)
- AT&T Technologies, Inc. v. Communications Workers, 475 U.S. 643 (1986) (courts may not decide merits questions assigned to arbitrators even if claims appear frivolous)
- Steelworkers v. American Mfg. Co., 363 U.S. 564 (1960) (arbitration agreements require submission of grievances to arbitrators, not courts)
- Exxon Mobil Corp. v. Allapattah Services, Inc., 545 U.S. 546 (2005) (courts must apply statutory text; may not judicially rewrite statutes to accommodate policy preferences)