Oral Argument October 29: Arbitration Again

On Monday, the Court started its newest argument session by hearing arguments for two cases revolving around the Federal Arbitration Act (FAA). The FAA compels parties that contract for arbitration to resolve that dispute with an arbitrator instead of a court. In recent years, the Court has read the FAA expansively, including last Term.  

The first case, Henry Schein Inc. v. Archer and White Sales Inc., both Schein and Archer manufacture and sell dental equipment. Archer accused Schein of violating the Sherman Act and various other antitrust laws. Here, the Court must decide if courts can refuse to hear a question of arbitrability even if the claim is wholly “wholly groundless.” Petitioner Henry Schein Inc. argues that the Court has already decided issue of arbitration, and that this case clearly falls outside that scope. Respondent Archer & White Sales Inc. argue they cannot be forced into arbitration because they only contracted for arbitration for “damages,” and the current action before the Court is for injunctive relief. Bloomberg reports that Daniel Geyser, counsel for Archer stated during oral arguments that it is more efficient for courts to decide if claims are frivolous before they go before an arbitrator. In response, Justice Sotomayor stated if this position was accepted, “we’re now inviting this fight in every motion to compel arbitration,” and “it’s not clear to me that your solution is more efficient in a meaningful way.”

The second case, Lamps Plus Inc. v. Varela, is an FAA dispute between an employer and employee regarding a data breach class action lawsuit. Lamps Plus has a requirement all employees sign a standard binding arbitration agreement as a term of employment, which it argues precludes class actions suits in court and in arbitration.  As the New York Times  reports, the actual language in the agreement is ambiguous and doesn’t specifically mention class action suits. Varela argues that due to the ambiguity he and other workers should be able to bring the class case in arbitration. Check out CNBC and Jurist for more information on this case.

This post was written by ISCOTUS Fellow Clayburn Arnold, Chicago-Kent Class of 2021, edited by Matthew Webber, ISCOTUS Editorial Coordinator, Chicago-Kent Class of 2019, and overseen by ISCOTUS Co-Director Carolyn Shapiro.


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