Henry Schein, Inc. v. Archer & White Sales, Inc., No. 17–1272.

• Court: United States Supreme Court
• Writing for the Court: Justice KAVANAUGH delivered the opinion of the Court.
• Citation: 202 L.Ed.2d 480,139 S.Ct. 524
• Parties: HENRY SCHEIN, INC., et al., Petitioners v. ARCHER AND WHITE SALES, INC.
• Docket Number: No. 17–1272.
• Decision Date: 08 January 2019

139 S.Ct. 524
202 L.Ed.2d 480

HENRY SCHEIN, INC., et al., Petitioners
v.
ARCHER AND WHITE SALES, INC.

No. 17–1272.

Supreme Court of the United States

Argued Oct. 29, 2018.
Decided Jan. 8, 2019.

Kannon K. Shanmugam, Esq., Washington, DC, for Petitioners.

Daniel L. Geyser, Esq., Dallas, TX, for Respondent.

Paul F. Schuster, Cynthia Keely Timms, Locke Lord LLP, Dallas, TX, Richard C. Godfrey, Barack S. Echols, Kirkland & Ellis LLP, Chicago, IL, Kannon K. Shanmugam, Liam J. Montgomery, Charles L. McCloud, William T. Marks, Matthew J. Greer, Williams & Connolly LLP, Washington, DC, for Petitioners.

Daniel L. Geyser, Geyser P.C., Lewis T. LeClair, Charles E. Fowler, Jr., Chelsea A. Priest, McKool Smith, P.C., Dallas, TX, for Respondent.

Justice KAVANAUGH delivered the opinion of the Court.

Under the Federal Arbitration Act, parties to a contract may agree that an arbitrator rather than a court will resolve disputes arising out of the contract. When a dispute arises, the parties sometimes may disagree not only about the merits of the dispute but also about the threshold arbitrability question—that is, whether their arbitration agreement applies to the particular dispute. Who decides that threshold arbitrability question? Under the Act and this Court's cases, the question of who decides arbitrability is itself a question of contract. The Act allows parties to agree by contract that an arbitrator, rather than a court, will resolve threshold arbitrability questions as well as underlying merits disputes. Rent–A–Center, West, Inc. v. Jackson, 561 U.S. 63, 68–70, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010) ; First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943–944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995).

Even when a contract delegates the arbitrability question to an arbitrator, some federal courts nonetheless will short-circuit the process and decide the arbitrability

139 S.Ct. 528

question themselves if the argument that the arbitration agreement applies to the particular dispute is "wholly groundless." The question presented in this case is whether the "wholly groundless" exception is consistent with the Federal Arbitration Act. We conclude that it is not. The Act does not contain a "wholly groundless" exception, and we are not at liberty to rewrite the statute passed by Congress and signed by the President. When the parties' contract delegates the arbitrability question to an arbitrator, the courts must respect the parties' decision as embodied in the contract. We vacate the contrary judgment of the Court of Appeals.

I

Archer and White is a small business that distributes dental equipment. Archer and White entered into a contract with Pelton and Crane, a dental equipment manufacturer, to distribute Pelton and Crane's equipment. The relationship eventually soured. As relevant here, Archer and White sued Pelton and Crane's successor-in-interest and Henry Schein, Inc. (collectively, Schein) in Federal District Court in Texas. Archer and White's complaint alleged violations of federal and state antitrust law, and sought both money damages and injunctive relief.

The relevant contract between the parties provided:

"Disputes . This Agreement shall be governed by the laws of the State of North Carolina. 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 of [Schein] ), shall be resolved by binding arbitration in accordance with the arbitration rules of the American Arbitration Association [ (AAA) ]. The place of arbitration shall be in Charlotte, North Carolina." App. to Pet. for Cert. 3a.

After Archer and White sued, Schein invoked the Federal Arbitration Act and asked the District Court to refer the parties' antitrust dispute to arbitration. Archer and White objected, arguing that the dispute was not subject to arbitration because Archer and White's complaint sought injunctive relief, at least in part. According to Archer and White, the parties' contract barred arbitration of disputes when the plaintiff sought injunctive relief, even if only in part.

The question then became: Who decides whether the antitrust dispute is subject to arbitration? The rules of the American Arbitration Association provide that arbitrators have the power to resolve arbitrability questions. Schein contended that the contract's express incorporation of the American Arbitration Association's rules meant that an arbitrator—not the court—had to decide whether the arbitration agreement applied to this particular dispute. Archer and White responded that in cases where the defendant's argument for arbitration is wholly groundless—as Archer and White argued was the case here—the District Court itself may resolve the threshold question of arbitrability.

Relying on Fifth Circuit precedent, the District Court agreed with Archer and White about the existence of a "wholly groundless" exception, and ruled that Schein's argument for arbitration was wholly groundless. The District Court therefore denied Schein's motion to compel arbitration. The Fifth Circuit affirmed.

In light of disagreement in the Courts of Appeals over whether the "wholly groundless" exception is consistent with the Federal Arbitration Act, we granted certiorari, 585 U.S. ––––, 138 S.Ct. 2678, 201 L.Ed.2d 1071 (2018). Compare 878 F.3d 488 (C.A.5 2017) (case below); Simply Wireless, Inc.

139 S.Ct. 529

v. T–Mobile US, Inc., 877 F.3d 522 (C.A.4 2017) ; Douglas v. Regions Bank, 757 F.3d 460 (C.A.5 2014) ; Turi v. Main Street Adoption Servs., LLP, 633 F.3d 496 (C.A.6 2011) ; Qualcomm, Inc. v. Nokia Corp., 466 F.3d 1366 (C.A.Fed.2006), with Belnap v. Iasis Healthcare, 844 F.3d 1272 (C.A.10 2017) ; Jones v. Waffle House, Inc., ...