The US Supreme Court ruled Tuesday in Henry Schein Inc. v. Archer and White Sales Inc., in favor of a strict application of the Federal Arbitration Act (FAA) to a contract dispute involving a mandatory arbitration clause.
Archer and White Sales Inc., a small dental supply business, entered into a contract to sell the products produced by Pelton and Crane (later acquired by Henry Schein Inc.). However, the relationship between the companies deteriorated, and Archer and White sued for antitrust violations, requesting injunctive relief and monetary damages from the federal district court of Texas. The contract between the companies contained an arbitration agreement that provided that any legal disputes between the parties would be resolved by entering into binding arbitration proceedings instead of being resolved through the court system. The agreement also provided that arbitration was not required in cases “seeking injunctive relief and disputes related to trademarks, trade secrets, or other intellectual property.” Archer and White argued that since they sought an injunction, their case fell into the exceptions and was not compelled to arbitration proceedings. The district court and Fifth Circuit Court of Appeals agreed. Henry Schein then appealed to the Supreme Court, stating that the FAA permits an arbitrator to determine whether the antitrust count should be subject to the arbitration clause regardless of the exceptions.
In the unanimous decision issued Tuesday, the Supreme Court reversed the holdings of the district and appeals courts, stating that the FAA should be strictly interpreted and enforced unless the contract clearly states otherwise. In his first opinion for the court, Justice Brett Kavanaugh stated that the court “must respect the parties’ decision as embodied in the contract.” Since the contract did not include an exception to the arbitration clause in the case of antitrust suits, Kavanaugh stated that it would be “impossible” for the Supreme Court to allow the case to be exempt from the mandatory arbitration.
