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<xTITLE>SCOTUS on Henry Schein II Certiorari Grant: “Never Mind!”</xTITLE>

SCOTUS on Henry Schein II Certiorari Grant: “Never Mind!”

by George Friedman
January 2021 George Friedman

This article first appeared on the Securities Arbitration Alert (SAA) Blog, here.

The Supreme Court has reversed in a summary dismissal its decision to grant Certiorari in its second look at Henry Schein, despite having heard oral argument in December.

One of the late Gilda Radner’s many characters was Emily Litella, who would give misguided editorial replies that were inevitably based on her misunderstanding of the facts. When the error was pointed out, she would exclaim, “Oh, that’s very different. Never mind!” Channeling Ms. Litella, after hearing oral argument last December SCOTUS has walked back its decision to hear the arbitration-centric Henry Schein, Inc. v. Archer and White Sales, Inc., No. 19-963 (Henry Schein II).

A Succinct Review

We refer readers to SAA 2020-47 (Dec. 17) for our analysis of the oral argument (ed: see the transcript and audio recording.) As we reported in SAA 2020-23 (Jun. 17), the Supreme Court in June 2019 agreed to review an open issue from its ruling in Henry Schein, Inc. v. Archer and White Sales, Inc.,139 S. Ct. 524 (2019), where the Court held unanimously that there is no delegation carveout under the Federal Arbitration Act for “wholly groundless” assertions of arbitrability. The predispute arbitration agreement (“PDAA”) provided for AAA arbitration of: “Any dispute arising under or related to this Agreement (except for actions seeking injunctive relief and disputes relating to trademarks, trade secrets or other intellectual property of [the manufacturing company]) ….” (brackets in original). Left unresolved after the first trip to SCOTUS was whether this PDAA constituted clear and unmistakable delegation of all issues of arbitrability or carved out injunctive relief. The issue for review in Schein’s granted Petition for Certiorari was: “Whether a provision in an arbitration agreement that exempts certain claims from arbitration negates an otherwise clear and unmistakable delegation of questions of arbitrability to an arbitrator.”

SCOTUS Validates our Views

Our take after the oral argument was: “To us, a very obvious common theme was the sense that members of the Court realized that, in retrospect, they might have taken up the related issue of whether incorporating the AAA’s Rules constitutes clear and unmistakable evidence of delegation. While we usually make bold predictions on where the Court may land, this one is murky at best. If forced, we would say the odds favor Schein, but we’re not betting on it.” SCOTUS evidently harbored second-thoughts, because in a one-line per curiam Order the Court decides: “The writ of certiorari is dismissed as improvidently granted.” Or, as Ms. Litella would say, “Never mind!”

What it Means

We endorse the views expressed in the January 25 CPR blog: “The immediate effect is that respondent Archer and White Sales sees a big win: It will get the determination of whether its long-running case over a medical equipment contract dispute is to be arbitrated made by a judge, not an arbitrator. A Fifth U.S. Circuit Court of Appeals decision now stands. See Archer & White Sales, Inc. v. Henry Schein, Inc., 935 F.3d 274 (5th Cir. 2019) ….

(ed: *Dismissals by the Court after oral argument are relatively rare, but they happen. See, for example, And After All That Work!: The Dreaded U.S. Supreme Court “DIG,” The Washington Legal Foundation’s The Legal Pulse (Jan. 31, 2013). We can’t recall SCOTUS ever taking similar action in an arbitration-related case. If anyone has contrary recollections, email us at Help@SecArbAlert.com. **An Alert h/t to CPR’s Russ Bleemer for quickly blogging on this one.)

 

Biography


George H. Friedman is the publisher and Editor-in-Chief of the Securities Arbitration Alert, a weekly online publication covering the latest developments in financial services arbitration and mediation. He is also the principal of George H. Friedman Consulting, LLC, providing expert advice on arbitration and mediation in general and the FINRA dispute resolution forum in particular.

He is former Executive Vice President - Dispute Resolution of the Financial Industry Regulatory Authority (“FINRA”), a position he held through January 2013. He held the same title at NASD, which consolidated with NYSE Member Regulation to form FINRA in 2007. In this capacity, he was in overall charge of FINRA's dispute resolution program, carried out by the company's four regional offices and 72 hearing locations in the United States and abroad, 200 employees, and an annual budget of $50 million. He also served as Secretary of the Securities Industry Conference on Arbitration. He has been referred to by the U.S. Court of Appeals—4th Circuit as a “leading arbitration expert.” He is a member of the American Arbitration Association's National Roster of Neutrals.

Mr. Friedman is an Adjunct Professor of Law at Fordham Law School, where he has taught a course on alternative dispute resolution since 1996. He is Chairman of the Board of Directors of Arbitration Resolution Services, Inc. of Coral Springs, Florida. Arbitration Resolution Services is an innovative online arbitration services company facilitating an affordable alternative to costly courtroom litigation and in-person arbitration for resolving Business-to-Business, Business-to-Individual, and Vehicle and Property Damage disputes. ARS is unique in that its entire process can be completed online through the company website.

In his extensive dispute resolution career, he previously held a variety of positions of responsibility at the American Arbitration Association, most recently as Senior Vice President from 1994 to 1998. He joined NASD in 1998 as Senior Vice President of NASD's Dispute Resolution Division, and was named Executive Vice President in 2002.

Mr. Friedman received a B.A. in Political Science from Queens College, and a Juris Doctor from Rutgers Law School - Newark, where he was an editor of the Law Review. He is admitted to the New York and New Jersey Bars and the United States Supreme Court, and is a Certified Regulatory and Compliance Professional. Mr. Friedman is a member of the Securities Experts Roundtable, and of several bar associations. He is past chair of the Committee on Alternative Dispute Resolution of the New York County Lawyers Association. He is a member of the Banking Advisory Committee of Bergen (NJ) Community College.

Mr. Friedman has lectured extensively on the subject of alternative dispute resolution, and has the distinction of being one of the architects of the American Arbitration Association’s Due Process Fairness Protocols for both employment arbitration and health care dispute resolution, and assisted in creating the Consumer Due Process Protocol. He has published often, with articles appearing in the Securities Arbitration Commentator, the ABA's Dispute Resolution Magazine, the New York Law Journal, the Rutgers Law Review, and the National Law Journal. He has blogs at Arbitration Resolution Services, Inc., the Securities Arbitration Commentator, and the World Future Society, among others.



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