Recently, the Supreme Court granted certiorari in Henry Schein, Inc. v. Archer and While Sales, Inc. This is the second time that this case makes its way to the Supreme Court. The first time, the Court reversed the Fifth Circuit’s holding that when the argument that a claim is within the scope of an arbitration agreement is “wholly groundless” courts are allowed to decide the gateway issue of arbitrability, despite a valid clause delegating the question of arbitrability to the arbitrators. Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 202 L. Ed. 2d 480 (2019). The Court, however, “express[ed] no view about whether the contract at issue in th[e] case in fact delegated the arbitrability question to an arbitrator” and remanded the case to the Fifth Circuit. Id.
On remand, the Fifth Circuit doubled down holding that the contract at issue did not assign arbitrability to the arbitrator. See Archer & White Sales, Inc. v. Henry Schein, Inc., 935 F.3d 274 (5th Cir. 2019). The court agreed that there was a valid delegation clause, but found that because the claimant sought injunctive relief and the arbitration clause carved out actions seeking injunctive relief, the delegation provision did not clearly and unmistakably delegate the question of arbitrability to the arbitrators. Id.
The Court will now have the chance to resolve a circuit split on whether an arbitration clause containing a carve-out provision requires a court to determine whether the claims fall within the scope of the arbitration agreement before referring the case to arbitration pursuant to a valid delegation provision.
Meanwhile, parties to arbitration agreements that wish to delegate arbitrability to the arbitral tribunal, should make clear that all issues related to arbitrability are delegated to the arbitrators despite any “carve-out” provisions.