Let’s Schein Again!

The International Institute for Conflict Prevention and Resolution presents a CPR Speaks blog discussion of the 1/25/2021 U.S. Supreme Court per curiam decision dismissing Henry Schein Inc. v. Archer and White Sales Inc., No. 19-963, and a same-day order declining to hear Piersing v. Domino’s Pizza Franchising LLC, No. 20-695. Alternatives to the High Cost of Litigation Editor Russ Bleemer hosts Prof. Angela Downes, University of North Texas-Dallas College of Law, and arbitrator-advocates contributors Richard Faulkner, also of Dallas, and Philip J. Loree Jr. in New York.

By Russ Bleemer

The panel returns to CPR Speaks and YouTube to analyze the Monday Henry Schein dismissal–a one-line decision–just a month after the Court heard oral arguments on the issue of how a contract carve-out removing injunctions from arbitration affects the delegation of the entire matter to arbitration.

In fact, the Dec. 8, 2020, Henry Schein oral argument repeatedly turned to an issue in the rejected Piersing case on the effectiveness of the incorporation by reference of arbitration rules in designating an arbitration tribunal to decide whether a case is arbitrated, rather than a court deciding whether the matter is to be arbitrated. A cross-petition by Archer and White asking for review of the incorporation by reference of the arbitration contract’s American Arbitration Association rules was declined by the Supreme Court the same day it agreed to hear the carve-out issue last June.

Our panel discussed these issues after the oral argument on this blog.  See “Schein II: Argument in Review,” CPR Speaks (Dec. 9) (available at http://bit.ly/2VXfyIa) (in which the panelists also discuss their work on an amicus brief in the case, a subject that arose in this post’s video).

You can see today’s per curiam decision on the Supreme Court’s website here.

Monday’s Henry Schein dismissal ends a long period of Supreme Court litigation in the case that also included a 2019 U.S. Supreme Court decision. For now, the case returns to the Fifth Circuit for proceedings on whether the parties properly intended to arbitrate the case.

Details on the Supreme Court’s Monday cert denial in Piersing v. Domino’s Pizza Franchising LLC, No. 20-695, are available on CPR Speaks here.

For more analysis on the Henry Schein dismissal, see Ronald Mann, “Justices dismiss arbitrability dispute,” Scotusblog (Jan. 25, 2021) (available at http://bit.ly/2Yh9U4O), in which the Columbia University professor and Scotusblog analyst concludes that

it seems likely that the justices ultimately decided that they couldn’t sensibly say anything about this matter without addressing the question of whether the contract called for arbitration of the gateway question. Because they had declined to call for briefs on that question, it did not make sense to address it here. A logical course of action, then, was to dismiss the matter from the docket, providing a rare victory for a party opposing arbitration.

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The author edits Alternatives for the CPR Institute.

Supreme Court Argument Preview: Looking Ahead to Round 2 on Schein and Arbitrability

Can a contract clause delegating a case to an arbitrator be preempted and sent to a court by words that exempt the consideration of specific issues, like injunctions, from the arbitrator?

That’s the question the U.S. Supreme Court will hear discussed in the Tuesday, Dec. 8 arguments in Henry Schein Inc. v. Archer and White Sales Inc., No. 19-963 (Supreme Court case page is at https://bit.ly/2EvKPx3).  So far, it’s the only arbitration case the U.S. Supreme Court has agreed to hear in the 2021 term.

It’s the case’s second trip to the nation’s top Court in under two years.  In Henry Schein Inc. v. Archer and White Sales Inc., 139 S. Ct. 524 (Jan. 19, 2019) (available at https://bit.ly/338gdLT), the Court held that the “wholly groundless” exception to arbitrability is inconsistent with the Federal Arbitration Act and the Court’s precedent. But it declined to determine “whether the parties agreed to arbitrate arbitrability” as indicated by “clear and unmistakable evidence” in a unanimous opinion by Associate Justice Brett Kavanaugh.

On remand the Fifth Circuit found that a clause delegated the arbitration to the arbitrator via the incorporation of American Arbitration Association rules to that effect. But the Court didn’t compel arbitration.  It said that the way the clause was drafted, the carve out for injunctions still applied, and once again refused to enforce arbitration. 

Henry Schein asked the Court to hear the case between the two medical equipment supply companies a second time, contending that the delegation should have sent the question of arbitrability to the arbitrator, not a court.

On June 15, the Court agreed to hear the case again, this time on the issue of “[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.”

At the same time, the Court declined to accept Archer and White’s cross petition on two issues that could eventually be before the Court—possibly in a guest appearance as soon as Tuesday’s oral argument:

(1) Whether an arbitration agreement that identifies a set of arbitration rules to apply if there is arbitration clearly and unmistakably delegates to the arbitrator disputes about whether the parties agreed to arbitrate in the first place; and

(2) whether an arbitrator or a court decides whether a nonsignatory to an arbitration agreement can enforce the arbitration agreement through equitable estoppel.

For background on Tuesday’s argument, see Heather Cameron, “Decided, Granted, Denied: A Look At 2020’s Supreme Court Arbitration Cases,” 38 Alternatives to the High Cost of Litigation 118 (September 2020) (available at https://doi.org/10.1002/alt.21852); Russ Bleemer & Heather Cameron, “Supreme Court Returns Schein to Its Docket, With a Focus on Arbitrability,” CPR Speaks (June 15, 2020) (available at https://bit.ly/3d4HOPt); Philip J. Loree Jr., “Schein Returns: Scotus’s Arbitration Remand Is Now Back at the Court, CPR Speaks (Feb. 19, 2020) (available at http://bit.ly/3bQXQgl); Mark Kantor, “Henry Schein Redux – The Appeals Court Decides ‘The Placement of the Carve-Out is Dispositive,’” CPR Speaks (Aug. 15, 2019) (available at http://bit.ly/2IZ3MqQ).

Linked above, Alternatives editor Russ Bleemer is joined for a preview of the second Henry Schein Supreme Court arguments by Angela Downes, Professor of Practice and Assistant Director of Experiential Education, of the University of North Texas-Dallas College of Law in Dallas, and arbitrator-advocates Philip J. Loree Jr., of New York (see his Arbitration Law Forum blog and website at https://loreelawfirm.com/blog/), and Richard Faulkner, of Dallas (see his LinkedIn page at https://bit.ly/3qh5U13).

Loree and Faulkner worked on an amicus brief that has been filed in this case, and is discussed at length in the video.  It is posted on the Supreme Court’s website here.

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