Case Summary: Henry Schein v. Archer and White Sales, Inc. (17-1272)

Overview

• Case Topic: Arbitration
• Justice Kavanaugh delivered the opinion of the court.
• Main Issue: Whether the "wholly groundless" exception is consistent with the Federal Arbitration Act.

Background

• Federal Arbitration Act (1925):
  • Arbitration is a matter of contract.
  • Courts must enforce arbitration contracts as per their terms.
  • Parties can delegate the decision of arbitrability to an arbitrator.

Court Findings

• Wholly Groundless Exception:
  • Some courts held that courts should decide arbitrability when the arbitration argument is wholly groundless.
  • Reasoning: To prevent frivolous attempts to move disputes to arbitration from the court system.
• Supreme Court's Conclusion:
  • The wholly groundless exception is NOT consistent with the Federal Arbitration Act.
  • Courts must interpret the Act and contracts as written.
  • If a contract delegates arbitrability to an arbitrator, the court cannot override this.

Legal Principles

• Arbitrability Decisions:
  • Courts cannot rule on merits of underlying claims designated for arbitration.
  • Same principle applies to threshold issues of arbitrability.

Arguments and Reasoning

• Archer & White's Perspective:
  • Belief that disputes not subject to arbitration will return to district court.
  • Argument against wasting resources on arbitration.
• Court's Rejection:
  • No statutory basis for the wholly groundless exception.
  • Could lead to collateral litigation, bogging down the system.
  • Different adjudicators might view arbitrability differently.

Court's Decision

• Wholly Groundless Exception Rejected:
  • Confuses the question of who decides arbitrability with who prevails.
  • Respect the contractual decision on arbitrability delegation.
• Remand to Court of Appeals: Fifth Circuit Judgment Vacated
  • No opinion on whether the specific contract delegated arbitrability.
  • Court of Appeals to decide on contract's delegation of arbitrability and other preserved arguments.

Conclusion

• Unanimous Decision by the Supreme Court
  • Admonishes adding exceptions not present in statute.
  • Reinforces adherence to the contractual delegation of arbitration issues.