March 12, 2019 Articles

U.S. Supreme Court Justices Unanimous on Threshold Arbitrability Issue

A unanimous Court finds the “wholly groundless” exception to arbitration agreement inconsistent with Federal Arbitration Act and Supreme Court precedent.

By Melinda G. Gordon

Deciding an important gateway issue that has divided the courts, the Supreme Court held in Henry Schein Inc., v. Archer and White Sales Inc. (Schein v. Archer & White), No. 17-1272, slip op. (Jan. 8, 2019), that the Federal Arbitration Act (FAA) requires courts to enforce arbitration agreements that delegate issues of arbitrability to the arbitrator even if they believe that the claim of arbitrability is “wholly groundless.” In a unanimous decision, the Supreme Court determined that the “wholly groundless,” exception to arbitrability, which would permit a court, instead of an arbitrator, to resolve the arbitrability issue, is inconsistent with the FAA. Relying on both the FAA and Supreme Court precedent, the Court found that the threshold question of arbitrability is a question for the arbitrator, not the courts, to decide. 

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