On January 25, 2021, the United States Supreme Court dismissed, as “improvidently granted,” a writ of certiorari it had previously granted on a petition asking it to consider “[w]hether 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.” Henry Schein, Inc. v. Archer & White Sales, Inc., 592 U.S.___ (2021) (“Henry Schein II”). The petitioner in Henry Schein II argued that the Fifth Circuit erred in holding that the carve-out in the parties’ arbitration provision negated the parties’ delegation of the question of arbitrability to an arbitrator, stating the decision “defies common sense” and “deepens a conflict among” the courts that will encourage and reward forum shopping. The Supreme Court’s rare dismissal of a previously granted cert petition means that the justices have declined to reconsider the Fifth Circuit’s decision refusing to send the underlying dispute to arbitration. Therefore, litigants and practitioners in the Fifth Circuit should continue to look to the Fifth Circuit’s decision for guidance in determining “who” decides whether a claim is arbitrable.
The History of Henry Schein II and the Fifth Circuit’s Decision That Arbitrability Must Be Determined by a Court Under the Carve-Out at Issue.
The parties in the underlying dispute, a manufacturer and a distributor of dental equipment, entered into a dealer agreement that included the following arbitration provision:
Any dispute arising under or related to this Agreement (except for actions seeking injunctive relief and disputes related to trademarks, trade secrets, or other intellectual property ...), shall be resolved by binding arbitration in accordance with the arbitration rules of the American Arbitration Association [(“AAA”].
The distributor filed suit against the manufacturer in federal district court alleging antitrust violations and seeking damages and injunctive relief, and the manufacturer moved to compel arbitration under the Federal Arbitration Act. The distributor argued that the inclusion of its request for injunctive relief brought the case under the carve-out in the arbitration provision. The Fifth Circuit denied the motion to compel arbitration in a confusing decision that found a valid delegation clause but applied an exception for “wholly groundless” assertions of arbitrability.
This is now the second time this case has been before the...
