Henry\nSchein Inc. v. Archer and White Sales Inc., No.\n17-1272 (Jan. 8, 2019)<\/a><\/em><\/strong>. (This \u201ctradition\u201d is only\nhalf-hearted because the justices don\u2019t appear to go too far out of their way\nto follow it. For example, the late Justice Antonin Scalia dissented from\nJustice Elena Kagan\u2019s first opinion for the Court in January 2011.) <\/p>\n\n\n\n Henry\nSchein <\/em>is an arbitration case. As the Update noted in the December issue, the\narbitration-or-litigation fight \u2014 i.e., <\/em>whether\nthe parties will resolve their differences in a contractually agreed upon\nprivate forum or the public forum provided by the appropriate state or federal\ncourt \u2014 has been ongoing for years. And because the contracts containing\narbitration agreements almost always touch on interstate commerce, the Federal\nArbitration Act is the governing statutory authority for these cases. So it is\nhere in Henry Schein<\/em>.<\/p>\n\n\n\n Right off the bat in this opinion,\nJustice Kavanaugh straightforwardly breaks down the issue: \u201cWhen a dispute\narises, the parties sometimes may disagree not only about the merits of the\ndispute but also about the threshold arbitrability question \u2014 that is,\nwhether their arbitration agreement applies to the particular dispute. Who\ndecides that threshold arbitrability question?\u201d The answer lies, Justice\nKavanaugh explains, in what the parties\u2019 contract says. That is, if the parties\nagreed, ex ante<\/em>, that the arbitrability\nof any dispute would be decided by an arbitrator, then an arbitrator must\ndecide whether the dispute is arbitrable. This all seems simple enough \u2014\nindeed, this already was the law, based on precedents from as early as 1995 and\nas recent as 2010. <\/p>\n\n\n\n Nevertheless, some courts have declined\nto enforce agreements delegating questions of arbitrability to an arbitrator if\nthe court concludes that the claim of arbitrability is \u201cwholly groundless.\u201d In\nother words, under that approach, if a court concludes that there is no merit\nto the argument that the dispute is actually arbitrable, even if the parties\u2019\ncontract delegates that decision to an arbitrator, the court may keep the case\nwithout allowing for an arbitrator to even consider the matter. (Recall that\nplaintiffs typically prefer to stay in the court forum, where discovery and\nother litigation rules are generally more favorable.) The problem with this\napproach, however, is that finds no support in the Federal Arbitration Act or\nin the precedent of the Supreme Court. As a result, Justice Kavanaugh concludes\nfor the unanimous Court, regardless of whether the court thinks the claim of\narbitrability is wholly groundless, partially groundless, or fully grounded,\n\u201cwhen the parties\u2019 contract delegates the arbitrability question to an\narbitrator, the courts must respect the parties\u2019 decision as embodied in the\ncontract.\u201d <\/p>\n\n\n\n
This decision, as you probably have\ngathered if you\u2019re still reading, is not sexy. But it is important. First, with\nrespect to arbitration agreements in particular, it re-centers the law on the\ntext of the statute, which provides private parties the right to enter into\nagreements to order their affairs on the front end. For businesses, this brings\nan important level of certainty to risk management. Second, this unanimous\nopinion, however small and seemingly obscure it may be, represents a bulwark\nagainst judges refashioning the law based on policy preferences. Not that\nCongress is a model of efficient operation, but our system of government vests\nin Congress, not the judiciary, the power to make federal law. <\/p>\n\n\n\n
In perhaps the biggest upcoming case\ntesting the limits of the administrative state, in Kisor v. Wilkie<\/em>, No. 16-1929<\/strong>,\nthe Court has agreed to reconsider what is known as the Auer<\/em> doctrine. Under that doctrine, federal courts will defer to an\nagency\u2019s reasonable interpretation of its own ambiguous regulation. In the last\nseveral years, this doctrine has come under attack from Justices Thomas and\nGorsuch among others, as one pernicious effect has been to allow agencies to\npromulgate ambiguous regulations and yet maintain the power to alter the\nmeanings of those regulations without notice to the individuals and businesses\naffected. For example, as Justice Thomas explained in a 2015 case, in 2006 the\nDepartment of Labor construed certain of its regulations to exclude \u201cmortgage-loan\nofficers\u201d from the definition of \u201cemployees whose primary duty is selling\nfinancial products.\u201d But in 2010, the Department of Labor reversed course,\nconcluding exactly the opposite. Thus, as Justice Thomas warned, if courts are to\naccord controlling weight to both the 2006 and 2010 interpretations, pursuant\nto the Auer <\/em>doctrine, then the\nregulated entities are subject to two opposite legal rules imposed under the\nsame regulation.<\/p>\n\n\n\n In Kisor<\/em>,\nthis doctrine is squarely in the Court\u2019s crosshairs. This case involves a\ndecision from the Department of Veterans Affairs to refuse to provide certain\ndisability benefits for service-related PTSD, based on the VA\u2019s own\ninterpretation of its own ambiguous regulation. The veteran\u2019s legal argument\nbefore the Supreme Court turns on the basic proposition that the courts, not\nthe VA, should have the final say in what that regulation actually means. If\nthe fundamental truth of our Constitution \u2014 that the Legislature makes the\nlaws, the Executive enforces the laws, and the Judiciary interprets the laws \u2014\ncarries the day in this case, I think there is a good possibility that the\nCourt will overrule Auer <\/em>and dispose\nof the doctrine. <\/p>\n\n\n\nCharles W. Prueter is a trial and appellate\nlawyer at Waller Lansden Dortch & Davis, LLP, in Birmingham. He can be\nreached by email at charles.prueter@wallerlaw.com<\/a>.\n<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"by Charles W. Prueter Unanimous opinions in cases concerning relatively mundane matters generally are not the stuff of the nightly news. These are not the hot-button cases that capture the nation \u2014 one obvious and important exception is Brown v. Board of Education, in which the Court spoke with one voice to strike down the separate but equal doctrine. One recent unanimous opinion, however, is notable both for its relevance to the financial services industry and for its author. Carrying on a half-hearted tradition, Justice Brett Kavanaugh\u2019s first opinion is a unanimous opinion \u2014 Henry Schein Inc. v. Archer and White […]<\/p>\n","protected":false},"author":1,"featured_media":1151,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[19,28,23],"tags":[],"class_list":["post-1527","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-breaking","category-legal","category-publications","has_thumb"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/albanknews.com\/wp-content\/uploads\/2018\/03\/scotus-graphic.jpg?fit=100%2C100&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p4Y3P2-oD","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/posts\/1527","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1527"}],"version-history":[{"count":1,"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/posts\/1527\/revisions"}],"predecessor-version":[{"id":1529,"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/posts\/1527\/revisions\/1529"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/media\/1151"}],"wp:attachment":[{"href":"https:\/\/albanknews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1527"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1527"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1527"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}