From Ronald Mann
on January 25, 2021
at 5:25 pm
The Supreme Court on Monday issued a one-sentence order undoing its decision to review Henry Schein Inc. v Archer and White Sales Inc. as “improvised granted.” After a dispute with few judges sympathizing with the position of Archer and White Sales, the dismissal is a resounding victory for Archer and White as the U.S. 5th Circuit Court of Appeals ruling that a federal district court should – and not an arbitrator – decide whether the dispute with Henry Schein is subject to arbitration. Since the district court has ruled the case non-arbitrator before, Archer and White must estimate his chances in this forum.
It is often difficult to know why the court occasionally rejects a case as improvised – a procedural evasion informally known as “DIG”. After the judges selected a case for review from the thousands of petitions they receive each year, reviewed the pleadings of the parties and amici, and argued orally, why should the judges decide that the case would have been better in the? To leave the EU alone first place? In this particular case, I can make an assumption that will be communicated through discussion at the hearing.
The case arose out of a longstanding dispute between two companies involved in the sale and distribution of dental equipment. In 2019, the 5th circuit decided two questions. Initially, it concluded that the corporate agreement provided for the arbitration of the “gateway issue” as to whether a dispute is arbitral (a victory for Henry Schein, who wanted arbitration). Second, it concluded that a court (rather than an arbitrator) should decide whether that particular dispute falls under an exception to the treaty’s arbitration clause (a win for Archer and White, who opposed the arbitration). When Henry Schein asked the Supreme Court to consider the second question (which he lost), Archer and White filed a “cross petition” asking the Supreme Court to consider the first question (which he lost).
Since the question that Archer and White lost is logically closely related to the question they won, it would have made a lot of sense for the judges to check both questions or nothing at all. It made a lot less sense for her to check one question but not the other. It was therefore not surprising that Archer and White spent a lot of time in their pleadings and during the hearing that the provisions calling for arbitration of the gateway issue were too vague to allow the 5th Circle to decide to base on this question.
Although the judges were occasionally inhospitable to the emphasis on Archer and White at the hearing (as my analysis noted), it appears that the efforts have borne fruit. Therefore, it is likely that the judges ultimately decided that they had nothing reasonable to say on the matter without addressing whether the treaty provided for arbitration on the gateway issue. Since they had refused to solicit information on this matter, it did not make sense to bring them up here. So one logical course of action was to remove the matter from the record, which resulted in a rare victory for a party that opposed arbitration.