Schein, Inc. v. Archer And White Sales, Inc

139 S. Ct. 524 (2019)

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Nature of the Case

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Facts

Archer (P) sued Schein (D) alleging violations of federal and state antitrust law and seeking both money damages and injunctive relief. 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. P entered into a contract with Pelton and Crane, a dental equipment manufacturer, to distribute Pelton and Crane’s equipment. P sued Pelton and Crane’s successor-in-interest D. 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 [D]), 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.” D invoked the Federal Arbitration Act and asked the District Court to refer the parties’ antitrust dispute to arbitration. According to P, the parties’ contract barred arbitration of disputes when the plaintiff sought injunctive relief, even if only in part. D contends 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. P claimed that in cases where D’s argument for arbitration is wholly groundless, the District Court itself may resolve the threshold question of arbitrability.

The District Court agreed with the “wholly groundless” exception and ruled that D’s argument for arbitration was wholly groundless. It denied D’s motion to compel arbitration. The Fifth Circuit affirmed. The Supreme Court granted certiorari.