Schein v. Archer
The Federal Arbitration Act (FAA) allows parties to a contract to resolve their disputes via arbitration rather than in court. However, in passing the FAA, Congress also generally left to the courts the power to decide arbitrability—that is, whether the parties agreed to arbitrate their dispute in the first place. In this case, Petitioner Henry Schein Inc. and Respondent Archer and White Sales, Inc. disagree over whether a court or arbitrator should decide the arbitrability of their ongoing antitrust dispute.
The contract at issue in this case provides for arbitration to resolve any dispute between the parties except for disputes seeking injunctive relief, and it stipulates that any arbitration abide by the rules of the American Arbitration Association (AAA). The AAA rules mentioned in the contract contain a jurisdictional clause stating that an arbitrator may decide the question of arbitrability, and the petitioner has used that clause to argue that any dispute over arbitrability must be decided by an arbitrator. Respondent disagrees, arguing that the dispute at issue falls under the carve-out of “disputes seeking injunctive relief.” The U.S. Court of Appeals for the Fifth Circuit agreed with the respondent, and the Supreme Court granted petitioner’s request for review.
CAC filed an amicus curiae brief in support of respondent arguing that the Supreme Court should affirm the Fifth Circuit’s decision, but on the ground that a mere reference to arbitral rules that contain a jurisdictional provision is not enough to delegate all questions of arbitrability to an arbitrator. Our brief first explains that while Congress passed the FAA to permit parties to arbitrate their disputes outside of the courts, it also left the crucial role of deciding arbitrability to the courts as a general matter. As a result, if parties to a contract want to opt out of the presumption that courts decide arbitrability and instead delegate that question to an arbitrator, there must be clear and unmistakable evidence of that intent.
Our brief then argues that the incorporation in a contract of AAA rules containing a jurisdictional provision is not clear and unmistakable evidence that the parties wished to delegate all questions of arbitrability exclusively to an arbitrator. The contract itself says nothing about arbitrability, and the mere reference to AAA rules, which contains a jurisdictional provision among dozens of other provisions, cannot itself be enough to delegate arbitrability. Indeed, the AAA provision says only that an arbitrator may decide arbitrability, not that the arbitrator has exclusive jurisdiction or that courts are precluded from deciding arbitrability. Moreover, many contracts incorporate arbitral rules like those of the AAA, and a presumption that inclusion of those rules constitutes clear and unmistakable evidence of an intent to designate all questions of arbitrability to an arbitrator would undermine Congress’s plan that the courts generally decide such questions.
Finally, our brief argues that the decisions in lower courts holding that various references to arbitral rules with ambiguous jurisdictional provisions meet the clear-and-unmistakable standard rely on weak reasoning. The Supreme Court should correct these courts’ mistakes and hold that a cross-reference to ambiguous arbitral rules is not sufficient to provide clear and unmistakable evidence of the parties’ intent to arbitrate arbitrability.
October 20, 2020
CAC files amicus curiae briefSup. Ct. Amicus Br.
December 8, 2020
The Supreme Court will hear oral argument