The November argument session begins with yet another case under the Federal Arbitration Act — Henry Schein Inc. v. Archer & White Sales Inc. With Henry Schein, New Prime Inc. v. Oliveira (from October) and Lamps Plus Inc. v. Varela (later on Monday morning), the court will have three FAA cases under its belt before the first of November – almost a match for the Armed Career Criminal Act!
The issue in this case is straightforward: who decides whether a particular dispute should be decided in arbitration rather than a court. As you might expect, the baseline expectation is that a court gets to decide whether to send a dispute from its docket to a private arbitrator. The Supreme Court has recognized, though, that the arbitrator decides those “gateway” issues of arbitrability if the parties “clearly” and “unmistakably” agree that the arbitrator should do so. The parties might agree, for example, that the arbitrator would decide whether a particular dispute does – or does not – “arise out of” the contract that includes the arbitration clause. And if they make such an agreement, the arbitrator will assess whether any particular dispute is sufficiently related to the contract to warrant arbitration.
That brings us to this case, which involves an exception to that treatment of gateway issues for cases in which a court finds a claim of arbitrability “wholly groundless.” Specifically, under the law of the U.S. Court of Appeals for the 5th Circuit (applied in this case), a court will not send a case to an arbitrator to decide the question of arbitrability, even if the parties have clearly and unmistakably agreed that the arbitrator should decide such questions, if the court finds the claim of arbitrability “wholly groundless.”
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