Henry Schein, Inc. v. Archer & White Sales, Inc.
The Federal Arbitration Act (FAA) authorizes parties “aggrieved” by the “failure, neglect, or refusal of another to arbitrate under a written agreement” to “petition” for an order compelling arbitration. In some cases, however, parties do not agree about whether their agreement requires a dispute to be arbitrated. In such a case, an important issue is whether the court or an arbitrator should decide whether the parties have agreed to arbitrate. Generally, the courts decide issues of arbitrability, unless the parties have clearly agreed to delegate that question to the arbitrator.
In this case, the defendant asked the court to compel arbitration and argued that the agreement delegated to the arbitrator the question whether the parties had agreed to arbitrate the underlying dispute. Affirming a district court ruling denying the defendant’s motion, the Fifth Circuit held that the defendant’s position that the parties’ agreement provided for arbitration of the dispute was not “plausible,” “without merit,” and “wholly groundless.”
In 2018, the Supreme Court accepted the case to consider the question whether the FAA requires a court to compel arbitration of an issue of arbitrability when the assertion that the dispute before the court is subject to arbitration is wholly groundless. Public Citizen filed an amicus brief in support of the respondent (plaintiff below). Our brief argued that the FAA does not require courts to compel arbitration when the arbitrators would exceed their powers if they asserted authority over a dispute, and that compelling arbitration of a groundless claim of arbitrability would be contrary to the principle that FAA arbitration is a matter of consent.
In a decision issued on January 8, 2019, however, the Supreme Court held otherwise. The Court held that if the parties’ contract delegated the arbitrability question to an arbitrator, the lower court could not override the contract to decide arbitrability, even if the court thinks that the arbitrability claim is wholly groundless. The Court stated that the issue whether the parties’ contract delegated the arbitrability question to the arbitrator was one to be addressed on remand.