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Supreme Court Delivers Another Victory for Arbitration Agreements

In a unanimous opinion, the U.S. Supreme Court held this week that where an agreement gives an arbitrator authority to decide what disputes must be arbitrated, courts may not refuse to send a case to arbitration even if it is clear from the terms of the contract that the request to arbitrate is “wholly groundless.”FN1 The Supreme Court in Henry Schein Inc. v. Archer & White Sales Inc. reasoned that under the Federal Arbitration Act (“FAA”),FN2 “arbitration is a matter of contract, and courts must enforce arbitration contracts according to their terms.” FN3 Therefore, a court may not step in and deny a demand for arbitration simply because a matter plainly is not subject to arbitration.

The Henry Schein case gives further support for workplace and employment arbitration provisions, despite continued attacks at the state and federal level.FN4 The Supreme Court’s directives on arbitration clauses remain clear—where parties agree in writing to arbitrate disputes, courts must treat the agreement like any other contract and honor the plain terms of the agreement.FN5

Footnotes

FN1:      Henry Schein Inc. v. Archer & White Sales Inc., 586 U. S.      , *2 (2019), available at 2019 WL 122164 (2019). Henry Schein is the first Supreme Court opinion written by newly-appointed Justice Kavanaugh.

FN2:      9 U.S.C. §§ 1-16.

FN3:      Henry Schein, 2019 WL 122164, at *3-4. Henry Schein involved business-to-business antitrust claims, including a request for an injunction. The plaintiff sought to arbitrate the dispute even though the arbitration provision specifically stated injunctions were not subject to arbitrations. The district court and court of appeals held that the request for arbitration was “wholly groundless” given the agreement’s carveout for injunctions. The Supreme Court reversed, holding that the FAA did not permit courts to decide cases were not arbitrable simply because the request was “wholly groundless.”

FN4:      For a recent blog article discussing likely challenges to arbitrations in Colorado, see http://www.rockymountainemployersblog.com/blog/2019/1/3/colorados-2019-legislative-session-expected-to-bring-a-slew-of-workplace-bills.

FN5:      See also Rent-A-Center, West, Inc. v. Jackson, 561 U. S. 63, 68−70 (2010); First Options of Chicago, Inc. v. Kaplan, 514 U. S. 938, 943−944 (1995).