Case Involves Whether Arbitrability Delegation Clauses Must Be Enforced Under the Federal Arbitration Act Despite Carve-Out Language in Arbitration Agreement
CHICAGO – (September 1, 2020)— DRI – The Voice of the Defense Bar has filed an amicus brief with the U.S. Supreme Court in support of petitioner Henry Schein, Inc. in Henry Schein, Inc. v. Archer and White Sales, Inc. The brief was filed through DRI’s Center for Law and Public Policy.
The purpose of the Federal Arbitration Act (FAA) was to overcome the hostility of the courts to arbitration and to require them to enforce arbitration agreements according to their terms in order to ensure streamlined and efficient dispute resolution. This purpose applies equally to agreements to delegate to the arbitrator the preliminary issue of whether the parties’ dispute is even arbitrable.
In this case, plaintiff Archer and White Sales, Inc. sued defendant Henry Schein, Inc. and others alleging an antitrust conspiracy to exclude Archer and White from the distribution market for dental supplies. Henry Schein sought to compel arbitration of Archer and White’s claims and argued that under Archer and White’s arbitration agreement the arbitrability of the lawsuit must be decided by the arbitrator. Archer and White argued that language in the arbitration agreement exempted its claims from this delegation of decision-making to the arbitrator. The Fifth Circuit Court of Appeals affirmed the district court’s ruling agreeing with Archer and White. The U.S. Supreme Court has once again taken up the case.
DRI’s amicus brief argues that arbitrability delegation clauses are an increasingly common method of maximizing the efficiency of arbitration and avoiding the costs and delays of litigation. DRI’s brief then shows that U.S. Supreme Court precedent requires that valid arbitrability delegation clauses (i.e., those accompanied by clear and unmistakable evidence of the parties’ intent to delegate arbitrability to the arbitrator) must be enforced regardless of any separate language carving out particular issues from the scope of arbitrability. In other words, even if it is likely that the dispute is not arbitrable, a delegation of arbitrability to the arbitrator must still be honored.
Brief co-authors David M. Axelrad, Felix Shafir, and John F. Querio of Horvitz & Levy (Burbank, California) are available for interview or expert comment through DRI’s Communications Office. Public Policy. For the full text of the amicus brief, click here.