Companies and employers have long favored arbitration as a means to reduce litigation costs and mitigate the threat of a “runaway jury.” But the law continues to shift when it comes to the questions of who decides whether a dispute is arbitrable and when a court’s decision about arbitrability may be appealed. In its recent Henry Schein v. Archer and White Sales and Lamps Plus v. Varela decisions, the U.S. Supreme Court moved the goalposts in opposite directions on these related questions.
In Schein, the Court expanded the scope of arbitrable matters by finding that even “wholly groundless” motions to compel arbitration should be decided in the first instance by arbitrators, not courts, where the parties’ agreement delegates the question of arbitrability to the arbitrator. In Schein, the plaintiff sought injunctive and other relief in connection with alleged antitrust violations. The defendant moved to compel arbitration under the parties’ agreement, which incorporated an AAA rule authorizing the arbitrator to decide the question of arbitrability. The district court denied the motion, finding that it was “wholly groundless” because the agreement precluded arbitration of injunctive claims. After the Fifth Circuit affirmed, the Supreme Court granted certiorari to resolve a circuit split about whether the “wholly groundless” exception runs afoul of the Federal Arbitration Act.
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