Opinion analysis

Justices dismiss arbitrability dispute

The Supreme Court on Monday issued a one-sentence order revoking its decision to review Henry Schein Inc. v. Archer and White Sales Inc. as “improvidently granted.” After an argument at which few of the justices sympathized with the position of Archer and White Sales, the dismissal is a resounding victory for Archer and White, as it leaves in place the decision of the U.S. Court of Appeals for the 5th Circuit that a federal district court – rather than an arbitrator – should decide whether the dispute with Henry Schein is subject to arbitration. Because the district court already held once that the case is not arbitrable, Archer and White has to like its chances back in that forum.

It often is difficult to know why the court occasionally chooses to dismiss a case as improvidently granted – a procedural dodge known informally as a “DIG.” After picking a case for review out of the thousands of petitions they receive each year, wading through briefs of the parties and amici, and hearing oral argument, why would the justices decide that they’d have been better off leaving the case alone in the first place? In this particular case, I can offer a guess informed by discussion at the oral argument.

The case arose out of a long-running dispute between two companies involved in the sale and distribution of dental equipment. In 2019, the 5th Circuit decided two questions. First, it concluded that the companies’ contract called for arbitration of the “gateway question” of whether a dispute is arbitrable (a victory for Henry Schein, which wanted arbitration). Second, it concluded that a court (rather than an arbitrator) should determine whether this particular dispute fell within an exception from the contract’s arbitration clause (a victory for Archer and White, which opposed arbitration). When Henry Schein urged the Supreme Court to review the second question (which it had lost), Archer and White filed a “cross-petition,” asking the Supreme Court to review the first question (which it had lost).

Because the question that Archer and White lost is logically closely related to the question that it won, it would have made a great deal of sense for the justices to review both questions or nothing at all. It made much less sense for them to review one question but not the other. Hence, it was no surprise that Archer and White spent a great deal of time in its briefs and at the oral argument contending that the provisions calling for arbitration of the gateway question of arbitrability were too vague to support the 5th Circuit’s ruling on that question.

Although the justices on occasion were inhospitable to Archer and White’s emphasis at the oral argument (as my analysis mentioned), it appears that the effort bore fruit. Thus, it seems likely that the justices ultimately decided that they couldn’t sensibly say anything about this matter without addressing the question of whether the contract called for arbitration of the gateway question. Because they had declined to call for briefs on that question, it did not make sense to address it here. A logical course of action, then, was to dismiss the matter from the docket, providing a rare victory for a party opposing arbitration.