Henry Schein, Inc. v. Archer & White Sales, Inc. (17-1272)

argument 17-1272

Henry Schein, Inc. v. Archer & White Sales, Inc.

Supreme Court of the United States 58 min 6 speakers 8 chapters transcribed 7 days ago official recording ↗

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What is the Federal Arbitration Act’s rule on enforcing arbitration agreements?

John G. Roberts 0:00

We'll hear argument first this morning in Case 17-1272, Shine v. Archer and White Sales. Mr. Shanmugam.

Unknown 0:08

Thank you, Mr. Chief Justice, and may it please the Court. The Federal Arbitration Act requires courts to enforce arbitration agreements according to their terms. This case involves a straightforward application of that principle in the context of arbitrability, specifically where the parties have agreed to delegate to the arbitrators. the authority to decide whether claims are subject to arbitration. Where the parties have so agreed, the Arbitration Act requires a court to honor that agreement. A court does not have the power to decide the issue of arbitrability for itself and to short-circuit the arbitrator's ability to do so. Mr. Sanmugam, can we back up and have you explain why we even get to a question, the question presented, because —

Unknown 0:56

Shine has no arbitration agreement with Archer. So what is this agreement? It's not between Archer and Shine. How does Shine get to claim the benefit of an agreement Shine did not make? Justice Ginsburg, there is a question in the case concerning non-parties. The agreements in question are agreements with some of the defendants, not all of them. And so therefore, as to the non-signatory defendants, there is a question reserved by the Court of Appeals about the doctrine of equitable estoppel, and that would be an issue for the Court of Appeals to address on remand if this Court agrees with us on the question presented. That is obviously a discrete issue, not reached by the Court of Appeals in the decision below, and again, an issue that would be open on remand.

Unknown 1:53

But on the question presented, I think our submission is quite straightforward. The wholly groundless exception on which the Court of Appeals relied has no footing in the text of the Arbitration Act. Where the parties have agreed to delegate the issue of arbitrability to the arbitrator, the merits of that issue are for the arbitrator and wholly for the arbitrator to decide. Sections 2, 3, and 4 of the Arbitration Act all point in the same direction. where you have a valid delegation that is treated, as this Court has indicated, like an antecedent agreement to arbitrate. And all there is for a Court to do is to determine, first, that that provision is itself valid, and second, to determine whether the opposing party is, in fact, resisting the enforcement of that provision.

Unknown 2:43

I'm not sure your

John G. Roberts 2:44

answer to Justice Ginsburg is totally responsive. The question of whether or not there is a valid arbitration agreement between the parties is antecedent to an order compelling arbitration. The Court makes that decision. And I wonder why this isn't a similar question. I mean, your friend on the other side makes the argument that, well, parties would not have agreed to submit wholly groundless questions to the arbitrator, and so you should treat it as the same type of question. Thank you.

Unknown 3:16

So, Mr. Chief Justice, I think there are two parts to your question. First, to pick up on my response to Justice Ginsburg, we are certainly not disputing that the issue of equitable estoppel, the issue of which parties are bound, is an issue that goes to validity. It's an issue for the Court to decide. So again, on remand, that would be a question for the Court of Appeals in the first instance. The Court of Appeals explicitly did not reach that question because of its holding on the wholly groundless exception. It said that the a requirement that arbitrability goes to the arbitrator was not enforceable as to anyone, even as to the signatories to the agreement. I think as to the second part of your question, again, we think that the question of whether or not there is a valid agreement more generally is a question for the Court.

Unknown 4:05

And so if, for instance, there were some question about the validity of the delegation provision, say a question about whether the delegation provision is itself unconscionable, that would again be a question for the Court to decide. But I think that on the issue of arbitrability, this Court has said time and again, most recently in the first options case, that arbitrability can be delegated where there is a sufficiently clear delegation, and once the issue is delegated, it is for the arbitrator.