On Remand the Elder 3-Panel in the Fifth Defy the Mandated Suggestion for Arbitration, rebuffing the U.S. Supreme Court…will it bring ‘Chaos’ to the Federal Courts?
In Part, the Rebellious 3-panel opined:
The Supreme Court reversed, holding that the “wholly groundless” exception was inconsistent with the Federal Arbitration Act. The Court declined to opine on whether the contract in this case in fact delegated the threshold arbitrability question to an arbitrator, remanding for this court to make that determination in the first instance.
It reminded that “courts ‘should not assume that the parties agreed to arbitrate arbitrability unless there is clear and unmistakable evidence that they did so.’”
Tasked with interpreting the arbitration clause anew, we conclude that the parties have not clearly and unmistakably delegated the question of arbitrability to an arbitrator. Accepting that the district court had the power to decide arbitrability, we now hold that the district court correctly determined that this case is not subject to the arbitration clause and affirm.
Background to the January 2019 Supreme Court Ruling
The Supreme Court’s newest justice, Brett Kavanaugh, issued his first opinion on Tuesday in a unanimous ruling that could help companies keeps disputes in third-party arbitration.
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— LawsInTexas (@lawsintexasusa) August 16, 2019
“We must interpret the Act as written, and the Act in turn requires that we interpret the contract as written,” Kavanaugh said from the bench while giving a summary of the court’s ruling.
“When the parties’ contract delegates the arbitrability circumstances, a court possesses no power to decide the arbitrability issue.”
The dispute stems from a lawsuit Archer & White Sales Inc., a medical equipment distributor, brought against a business competitor, Henry Schein Inc., alleging Schein violated federal and state antitrust laws.
Schein asked the district court to refer the matter to arbitration under a contractual agreement between the two parties, but Archer & White said the dispute was not subject to arbitration.
Schein argued that arbitrators, not the courts, should decide whether the arbitration agreement applies under the rules governing the contract.
In a 9-0 ruling, the justices agreed.
“When the parties’ contract delegates the arbitrability question to an arbitrator, the courts must respect the parties’ decision as embodied in the contract,” Kavanaugh, President Trump‘s second appointee to the court, said from the bench.
The case was remanded for further proceedings in the 5th Circuit Court of Appeals consistent with the court’s ruling.