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Henry Schein, Inc. v. Archer & White Sales, Inc.

Supreme Court of the United States

October 29, 2018, Argued; January 8, 2019, Decided

No. 17-1272.

Opinion

 [**484] Justice Kavanaugh delivered the opinion of the Court.

Under the Federal Arbitration Act, parties to a contract may agree that an arbitrator rather than a court will resolve disputes arising out of the contract. When a dispute arises, the parties sometimes may disagree not only about the merits of the dispute but also about the threshold arbitrability question—that is, whether their arbitration agreement applies to the  [**485]  particular dispute. Who decides that threshold arbitrability question? Under the Act and this Court’s cases, the question of who decides arbitrability is itself a question of contract. The Act allows parties to agree by contract that an arbitrator, rather than a court, will resolve threshold arbitrability questions as well as underlying merits disputes. Rent-A-Center, West, Inc. v. Jackson, 561 U. S. 63, 68-70, 130 S. Ct. 2772, 177 L. Ed. 2d 403 (2010); First Options of Chicago, Inc. v. Kaplan, 514 U. S. 938, 943-944, 115 S. Ct. 1920, 131 L. Ed. 2d 985 (1995).

Even when a contract delegates the arbitrability question to an arbitrator, some federal courts nonetheless will short-circuit the process and decide the arbitrability  [*528]  question themselves if the argument that the arbitration agreement applies to the particular dispute is “wholly groundless.” The question presented in this case is whether the “wholly groundless” [***5]  exception is consistent with the Federal Arbitration Act. We conclude that it is not. The Act does not contain a “wholly groundless” exception, and we are not at liberty to rewrite the statute passed by Congress and signed by the President. When the parties’ contract delegates the arbitrability question to an arbitrator, the courts must respect the parties’ decision as embodied in the contract. We vacate the contrary judgment of the Court of Appeals.

Archer and White is a small business that distributes dental equipment. Archer and White entered into a contract with Pelton and Crane, a dental equipment manufacturer, to distribute Pelton and Crane’s equipment. The relationship eventually soured. As relevant here, Archer and White sued Pelton and Crane’s successor-in-interest and Henry Schein, Inc. (collectively, Schein) in Federal District Court in Texas. Archer and White’s complaint alleged violations of federal and state antitrust law, and sought both money damages and injunctive relief.

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139 S. Ct. 524 *; 202 L. Ed. 2d 480 **; 2019 U.S. LEXIS 566 ***; 169 Lab. Cas. (CCH) P11,141; 2019-1 Trade Cas. (CCH) P80,627; 27 Fla. L. Weekly Fed. S 610; 2019 WL 122164

HENRY SCHEIN, INC., et al., Petitioners v. ARCHER AND WHITE SALES, INC.

Notice: The LEXIS pagination of this document is subject to change pending release of the final published version.

Prior History:  [***1] ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

Archer & White Sales, Inc. v. Henry Schein, Inc., 878 F.3d 488, 2017 U.S. App. LEXIS 26215 (5th Cir. Tex., Dec. 21, 2017)

Disposition: 878 F. 3d 488, vacated and remanded.

CORE TERMS

arbitrability, groundless, delegates, parties, frivolous, merits, threshold, courts, cases, arbitration agreement, district court, questions, compel arbitration, disputes

Business & Corporate Compliance, Alternative Dispute Resolution, Arbitration, Arbitrability, Federal Arbitration Act, Arbitration Agreements, Governments, Legislation, Interpretation, Orders to Compel Arbitration, Stay Pending Arbitration, Pretrial Matters, Judicial Review