Justices to Weigh Court Powers in Arbitration Cases

(CN) – The Supreme Court agreed Monday to consider whether the Federal Arbitration Act allows a court to decline to enforce an arbitration agreement that gives the mediator power to decide whether specific disputes are barred due to legislation or judicial authority.

The case comes to the court from the Fifth Circuit and stems from a dispute between Henry Schein Inc., a manufacturer of dental equipment, and Archer and White Sales, which accused the manufacturer of violating the Sherman Antitrust Act and Texas antitrust law.

Archer and White Sales claims Henry Schein boycotted it and restricted its sales territories under various distribution agreements. Henry Schein sought to have the dispute heard by an arbitrator, but Archer and White argued the case should be heard by a jury.

In the end, a Texas magistrate judge sided with Henry Schein, but after Archer and White appealed the case, a federal judge said the magistrate had erred and the case should be heard in court. The Fifth Circuit later affirmed that ruling.

As is their custom, the justices did not explain their rationale for taking up the case, but in their petition for a writ of certiorari, attorneys for Henry Schein said the “case presents a recognized and vitally important circuit conflict concerning the interpretation of the Federal Arbitration Act.

“Under the FAA, parties can agree to arbitrate ‘’gateway’ questions of ‘arbitrability,’ such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.” the filing says. “This Court has held that [a]n agreement to arbitrate a gateway issue is simply an additional, antecedent agreement the party seeking arbitration asks the federal court to enforce, and the FAA operates on this additional arbitration agreement just as it does on any other.”

“The question presented is whether the FAA permits a court to decline to enforce an agreement delegating questions of arbitrability to an arbitrator if the court concludes the claim of arbitrability is “wholly groundless,” the writ says.

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