Cross-Petition for Certiorari Seeks to “Schein” More Light on Delegation … and a Coronavirus Update
Posted on Categories Arbitration Agreements, Coronavirus, Non-Securities ArbitrationTags , , , , ,

By George H. Friedman, SAA Editor-in-Chief

The case that keeps on giving keeps on giving. With a Petition for Certiorari already having been filed by Henry Schein in late January, now comes Archer and White with a Cross-Petition for Cert. Also, "for the duration" we will add to each weekly blog post a Coronavirus update.

First, a review. In Henry Schein, Inc. v. Archer and White Sales, Inc., 139 S. Ct. 524 (2019), the Supreme Court held unanimously that there is no delegation carveout under the Federal Arbitration Act for “wholly groundless” assertions of arbitrability. SCOTUS, however, stopped short of deciding whether the arbitration agreement in question actually delegated the arbitrability question to an arbitrator. Instead, that issue was remanded for further consideration.

The Remand

So, what happened? We reported in SAA 2019-32 (Aug. 21) that the Fifth Circuit on August 14 in Henry Schein, Inc. v. Archer and White Sales, No. 16-41674, held that the parties did not clearly delegate arbitrability. Said the unanimous Court: “The most natural reading of the arbitration clause at issue here states that any dispute, except actions seeking injunctive relief, shall be resolved in arbitration in accordance with the AAA rules. The plain language incorporates the AAA rules – and therefore delegates arbitrability – for all disputes except those under the carve-out” (emphasis in original). With the Motion to compel arbitration denied, the parties were back at the trial court on Archer and White’s original antitrust suit against Henry Schein – pursuing in the Eastern District of Texas a Petition for injunctive relief filed over seven years ago.

Frenetic Last-Minute Activity

We reported in SAA 2020-03 (Jan. 22) that, on the eve of trial in Archer and White Sales, Inc. v. Henry Schein, Inc., No. 2:12-cv-572 (E.D. Texas), SCOTUS on January 24 issued an Order granting Henry Schein’s Motion for a stay pending the filing and disposition of a Petition for a Writ of Certiorari (Justice Ginsburg was the sole dissenter). We also reported in #03 that Schein committed to seeking Certiorari by January 31, and in SAA 2020-05 (Feb. 5) that they had fulfilled that commitment. Specifically, Schein’s timely Petition in case No. 19-963 identified this sole issue: “Whether a provision in an arbitration agreement that exempts certain claims from arbitration negates an otherwise clear and unmistakable delegation of questions of arbitrability to an arbitrator.”

But Wait, There’s More…

We thought that was it, but we were wrong. How so? On March 2, Archer and White filed a cross-Petition for Certiorari, raising two new questions: “1. Whether an arbitration agreement that identifies a set of arbitration rules to apply if there is arbitration clearly and unmistakably delegates to the arbitrator disputes about whether the parties agreed to arbitrate in the first place. 2. Whether an arbitrator or a court decides whether a nonsignatory to an arbitration agreement can enforce the arbitration agreement through equitable estoppel.” The Cross-Petition also regards Schein’s question as “unworthy of review.”

(ed: *The new case is Archer and White Sales Inc. v. Henry Schein Inc., No. 19-1080. **As we’ve said twice already, we’re betting that SCOTUS will grant Cert., most likely in both cases. ***We will certainly keep our eye on this one.) (SAC Ref. No. 2020-11-01)

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... SEC & SROs: FINRA has administratively postponed arbitration and mediation hearings through May 1. FINRA creates a dedicated Webpage on the pandemic…. FINRA issues guidance on event cancellations.… FINRA staff author Financial Peace of Mind in the Age of Coronavirus…. The Wall Street Journal reported on March 12 that the NYSE was evaluating plans to close the trading floor and switch to electronic systems…. CBOE Options Exchange temporarily shifts to fully electronic trading …. SEC issues two March 13 Press Releases: 1) SEC Staff Provides Guidance to Promote Continued Shareholder Engagement, Including at Virtual Annual Meetings, for Companies and Funds Affected by the Coronavirus Disease 2019 (COVID-19); and 2) SEC Takes Targeted Action to Assist Funds and Advisers, Permits Virtual Meetings and Provides Conditional Relief from Certain Filing Procedures…. Florida Office of Financial Regulation gives regulatory relief to the securities industry…. CFP Board announced on March 17 that it has postponed until July its certification exam…. COURTS: SCOTUS building is closed to the public until further notice…. SCOTUS postpones oral arguments for two months; first time since the Spanish Flu pandemic in 1918….Ninth Circuit cancels all en banc arguments and moves other oral arguments…. NJ announces 2-week suspension of municipal courts…New jury trials in NY postponed indefinitely…. NY State court systems suspends all but essential services…. Law360 issues Coronavirus: The Latest Court Closures and Restrictions…. CONGRESS: Senator Sherrod Brown (D-OH), the Senate Banking Committee's ranking member, on March 17 wrote to several federal financial industry regulators urging a moratorium on rulemaking not related to addressing the Coronavirus pandemic. The SEC was included in the recipient list. ADR PROVIERS: AAA releases COVID-19 Update addressing among other things hearings. While facilities are open, here’s the list of categories covering who may not attend hearings (ed: repeated verbatim): “Those with a fever, cough, shortness of breath, symptoms of respiratory distress, or other symptoms of an illness; Individuals travelling from an affected area experiencing COVID-19 outbreaks or widespread transmission as defined by organizations such as the World Health Organization and the Centers for Disease Control; and those who have been in direct contact with someone known to have COVID-19…. JAMS issues an advisory for visitors…. CPR issues CPR COVID-19 Update; offices remain open at this time…. FINANCIAL SERVICES INDUSTRY: “Edward Jones Suspends All Business Travel Until End-May”…. “Morgan Stanley, JPMorgan, Goldman Order Employees to Work from Home”…. Wells Fargo instructs employees to work from home if they don’t interact with the public…. OTHER: Fordham Law cancels face-to-face classes and gatherings for the rest of the semester; sure to impact securities arbitration clinics…. May 2020 NY CitiBar “Hot Topics” securities arbitration program postponed until the fall….