SCOTUS to Consider Delegation of “Wholly Groundless” Arbitrability Claims

Disputing Blog
by Karl Bayer, Victoria VanBuren, and Holly Hayes

The Supreme Court of the United States has granted certiorari in another arbitration case.  In Henry Schein, Inc. v. Archer and White Sales, Inc., No. 17-1272, a dental equipment distributor, Archer, filed a lawsuit against a dental equipment manufacturer and distributor along with its wholly-owned subsidiaries alleging the companies committed federal and state antitrust violations.  The case was referred to a magistrate judge and the defendants filed a motion to compel arbitration based on a dealer agreement that Archer entered into with a predecessor in interest for one of the companies.

Following a hearing, the magistrate judge issued a Memorandum Order holding that: (1) the incorporation of the AAA Rules in the arbitration clause clearly evinced an intent to have the arbitrator decide questions of arbitrability; (2) there is a reasonable construction of the arbitration clause that would call for arbitration in this dispute; and (3) the Grigson equitable estoppel test, which both sides agree is controlling in their dispute, required arbitration against both signatories and non-signatories to the Dealer Agreement.

 

The district court vacated the magistrate judge’s order and held that the court could decide the question of arbitrability, and that the dispute was not arbitrable because the plain language of the arbitration clause expressly excluded suits that involved requests for injunctive relief. The court declined to reach the question of equitable estoppel.

On appeal, the Fifth Circuit affirmed the district court’s decision stating “it had the authority to rule on the question of arbitrability and the claims at issue were not arbitrable.” The defendants then filed a petition for certiorari with the U.S. Supreme Court.

On Monday, the Supreme Court agreed to consider the dispute in the upcoming October 2018 term.  The Question Presented in the case is:

Whether the Federal Arbitration Act permits a court to decline to enforce an agreement delegating questions of arbitrability to an arbitrator if the court concludes the claim of arbitrability is “wholly groundless.”

 

The high court’s opinion will resolve a split among the Circuit Courts of Appeal regarding whether a court may decide the issue of arbitrability in situations where the arbitration claim is groundless.

Please stay tuned to Disputing for future developments in this case!

                        author

Beth Graham

Beth Graham received a J.D. from the University of Nebraska College of Law in 2004 and a M.A. in Information Science and Learning Technologies from the University of Missouri in 2006. She also holds a B.S. in Public Administration from the University of Nebraska-Omaha. She is licensed to practice law… MORE >

Featured Mediators

ad
View all

Read these next

Category

We Don’t Need No Stinkin’ Blawg 100: Great Blogs In The Year 2008

No, I did not make the ABA's Blawg 100 this year, but my good online buddy, the brilliant and energetic Susan Cartier Liebel of Build a Solo Practice and Solo...

By Victoria Pynchon
Category

Ethical Codes and the Commercial Mediator

From the blog mediator blah...blah...Over at ADR Prof Blog, Michael Moffit posts a PowerPoint presentation by Dwight Golann and Ellen Waldman on Ethical Codes and the Commercial Mediator.The underlying message...

By Geoff Sharp
Category

Mediator May Continue To Help The Parties Reach A Voluntary Agreement

The opinions of the Mediator Ethics Advisory Committee are rendered pursuant to the authority of rule 10.900, Florida Rules for Certified and Court-Appointed Mediators and are based on the specific...

By Florida Mediator Ethics Advisory Committee

Find a Mediator

X
X
X