Petition for Writ of Certiorari — Henry Schein, Inc., Applicant v. Archer and White Sales, Inc.

INDEX TO THE APPENDIX

Appendix A:

Court of appeals opinion,

August 14, 2019 ..................................1a

Appendix B:

District court order,

April 2, 2019 ...................................15a

Appendix C:

District court order,

October 1, 2019 .................................19a

Appendix D:

District court order,

January 3, 2020 .................................21a

Appendix E:

Court of appeals order,

January 8, 2020 .................................23a

Appendix F:

Court of appeals order

denying petition for rehearing en banc,

December 6, 2019 ................................24a

1a

Appendix A

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

United States Court of Appeals

Fifth Circuit

No. 16-41674

ARCHER AND WHITE SALES, INCORPORATED,

FILED

August 14, 2019

Lyle W. Cayce

Clerk

Plaintiff - Appellee

v.

HENRY SCHEIN, INCORPORATED; DANAHER CORPORATION;

INSTRUMENTARIUM DENTAL, INCORPORATION; DENTAL

EQUIPMENT, L.L.C.; KAVO DENTAL TECHNOLOGIES, L.L.C.; DENTAL

IMAGING TECHNOLOGIES, CORPORATION,

Defendants - Appellants

Appeals from the United States District Court

for the Eastern District of Texas

ON REMAND FROM THE UNITED STATES SUPREME COURT

Before HIGGINBOTHAM, GRAVES, and HIGGINSON, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

In light of the Supreme Court’s decision, we consider anew the question

of whether the parties in this dispute delegated the threshold arbitrability

determination to an arbitrator. After being sued for antitrust violations,

defendants in this suit sought to enforce an arbitration agreement. Initially,

the magistrate judge granted a motion to compel arbitration, concluding that

the question of arbitrability of the claims itself belonged to an arbitrator. The

district court disagreed, holding that the arbitrability question was one for the

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courts. This panel affirmed. 1 We determined that we need not reach the issue

of whether the arbitration provision delegated the issue of arbitrability to an

arbitrator because of a then-established narrow exception: where an assertion

of arbitrability was “wholly groundless,” a court was not required to submit the

issue of arbitrability to an arbitrator. Determining defendants’ arguments for

arbitrability were wholly groundless, we affirmed the district court’s holding

that the claims were not arbitrable.

The Supreme Court reversed, holding that the “wholly groundless”

exception was inconsistent with the Federal Arbitration Act. 2 The Court

declined to opine on whether the contract in this case in fact delegated the

threshold arbitrability question to an arbitrator, remanding for this court to

make that determination in the first instance. It reminded that “courts ‘should

not assume that the parties agreed to arbitrate arbitrability unless there is

clear and unmistakable evidence that they did so.’” 3 Tasked with interpreting

the arbitration clause anew, we conclude that the parties have not clearly and

unmistakably delegated the question of arbitrability to an arbitrator.

Accepting that the district court had the power to decide arbitrability, we now

hold that the district court correctly determined that this case is not subject to

the arbitration clause and affirm.

I.

The origins of this dispute are well-known; the complaint in this case

was filed nearly seven years ago. 4 Plaintiff-Appellee Archer and White Sales,

Inc. is a family-owned company that distributes, sells, and services dental

equipment. It brought this antitrust suit against Defendant-Appellants Henry

1 Archer & White Sales, Inc. v. Henry Schein, Inc., 878 F.3d 488 (2017), rev’d, 139 S.

Ct. 524 (2019).

2 Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 528 (2019).

3 Id. at 531 (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995)).

4 Id. at 528–29; Archer & White, 878 F.3d at 491.

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Schein, Inc., Danaher Corporation, and a number of subsidiaries who

distribute and manufacture dental equipment. Archer claims that defendants

entered into an anticompetitive agreement to restrict Archer’s sales and to

boycott Archer. Archer’s complaint alleges violations of federal and Texas

antitrust law and seeks money damages and injunctive relief.

The contract between Archer and Pelton and Crane, one of the

defendant’s predecessors-in-interest, (the “Dealer Agreement”) contains an

arbitration clause that is at the heart of this dispute. It provides:

Disputes. This Agreement shall be governed by the

laws of the State of North Carolina. Any dispute

arising under or related to this Agreement (except for

actions seeking injunctive relief and disputes related

to trademarks, trade secrets, or other intellectual

property of Pelton & Crane), shall be resolved by

binding arbitration in accordance with the arbitration

rules of the American Arbitration Association [(AAA)].

The place of arbitration shall be in Charlotte, North

Carolina.

After the case was referred to a magistrate judge, defendants invoked the

Federal Arbitration Act and moved to compel arbitration. Archer opposed that

motion, arguing that its complaint sought injunctive relief and the arbitration

clause explicitly excluded actions seeking such relief.

The magistrate judge granted the motion, determining that the

arbitrability question should be left to an arbitrator because the Dealer

Agreement incorporated the AAA rules and there was at least a “plausible

construction” that would compel arbitration. Three years later, the district

court vacated that order and held that the court could decide the threshold

arbitrability question, reasoning that this action fell squarely within the

arbitration clause’s express exclusion of actions seeking injunctive relief.

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We affirmed. Relying on an exception then operative in at least four

circuits, 5 we concluded that defendants’ argument for arbitration was wholly

groundless. In our view, there was “no plausible argument that the arbitration

clause” applied to an action seeking injunctive relief. 6 Applying our precedent

in Douglas v. Regions Bank, 7 we determined that because the assertion of

arbitrability was implausible, the threshold arbitrability question should be

decided by the district court. 8 The Supreme Court reversed, eliminating that

exception and abrogating Douglas. Relying on the text of the Federal

Arbitration Act, the Supreme Court held that if a “contract delegates the

arbitrability question to an arbitrator, a court may not override the contract.” 9

The Court reaffirmed its holding in First Options, that “parties may delegate

threshold arbitrability questions to the arbitrator, so long as the parties’

agreement does so by ‘clear and unmistakable’ evidence.” 10 Sending the case

back to us, the Court instructed this court to determine whether clear and

unmistakable evidence of the parties’ delegation exists here. 11

II.

We review a ruling on a motion to compel arbitration de novo. 12 Our

inquiry proceeds in two steps. The first is a matter of contract formation—

“whether the parties entered into any arbitration agreement at all.” 13 Next we

turn to the question of contract interpretation and ask whether “this claim is

5 See Henry Schein, 139 S. Ct. at 528–29 (collecting cases from the Fourth, Fifth, Sixth,

and Federal Circuits applying the exception).

6 Archer, 878 F.3d at 497.

7 757 F.3d 460 (2014).

8 Archer, 878 F.3d at 497.

9 Henry Schein, 139 S. Ct. at 529.

10 Id. at 530 (quoting First Options, 514 U.S. at 944).

11 While both parties read the tea leaves in the questions asked by the Justices at oral

argument, attempting to shepherd them to support their own positions, the Court declined

to decide whether this agreement in fact delegated the arbitrability question.

12 Kubala v. Supreme Prod. Servs., Inc., 830 F.3d 199, 201 (5th Cir. 2012).

13 Id.

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No. 16-41674

covered by the arbitration agreement.” 14 While ordinarily both steps are

questions for the court, 15 the parties can enter into an arbitration agreement

that delegates to the arbitrator the power to decide whether a particular claim

is arbitrable. 16 The Supreme Court has repeatedly made clear that “parties can

agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the

parties have agreed to arbitrate or whether their agreement covers a particular

controversy.” 17

When considering whether there was a valid delegation, “the court’s

analysis is limited.” 18 As always, we ask if the parties entered into a valid

agreement. If they did, we turn to the delegation clause and ask “whether the

purported delegation clause is in fact a delegation clause—that is, if it evinces

an intent to have the arbitrator decide whether a given claim must be

arbitrated.” 19 When determining that intent, “[c]ourts should not assume that

the parties agreed to arbitrate arbitrability unless there is ‘clear and

unmistakable’ evidence that they did so.” 20 If there is a valid delegation, the

court must grant the motion to compel. 21

The parties agree that there is a valid arbitration clause. With respect

to delegation, the parties’ arguments on remand sing a familiar tune. Archer

contends that there is no clear and unmistakable evidence that the parties

delegated arbitrability disputes to an arbitrator. The way the agreement is

14 Id.

15 Id. (citing Will-Drill Res., Inc. v. Samson Res. Co., 352 F.3d 211, 214 (5th Cir. 2003)).

16 Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002).

17 Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68–69 (2010) (citing Howsam, 537

U.S. at 83–85).

18 Kubala, 830 F.3d at 202.

19 Id.

20 First Options, 514 U.S. at 944 (internal citation and alterations omitted).

21 Kubala, 830 F.3d at 202. Of course, Kubala’s statement that “the motion to compel

arbitration should be granted in almost all cases”—where the argument for arbitration was

not wholly groundless—should now be read without the “almost.”

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written, Archer asserts that the AAA rules (and resulting delegation) only

apply to disputes that fall outside of the arbitration clause’s carve-out for

actions seeking injunctive relief. Under their reading, if a case falls within the

carve-out, the agreement does not incorporate the AAA rules and the gateway

arbitrability question is not delegated to an arbitrator. On the other hand,

defendants argue that the agreement’s incorporation of the AAA rules ends the

inquiry. They maintain that the carve-out for actions seeking injunctive relief

does not trump the parties’ delegation. Defendants warn that to read the

contract as Archer suggests would require the court to make a merits

determination about the scope of the carve-out—whether this is indeed an

action seeing injunctive relief—to answer the delegation question, precisely

the category of inquiries a court is precluded from making in answering the

delegation question.

“Unless the parties clearly and unmistakably provide otherwise, the

question of whether the parties agreed to arbitrate is to be decided by the court,

not the arbitrator.” 22 A contract need not contain an express delegation clause

to meet this standard. As we held in Petrofac, an arbitration agreement that

incorporates the AAA Rules “presents clear and unmistakable evidence that

the parties agreed to arbitrate arbitrability.” 23 Under AAA Rule 7(a), “[t]he

arbitrator shall have the power to rule on his or her own jurisdiction, including

any objections with respect to the existence, scope, or validity of the arbitration

agreement or to the arbitrability of any claim or counterclaim.” 24

It is undisputed that the Dealer Agreement incorporates the AAA rules,

delegating the threshold arbitrability inquiry to the arbitrator for at least some

22 AT&T Technologies, Inc. v. Commc’n Workers of Am., 475 U.S. 643, 649 (1986).

23 Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., 687 F.3d 671, 675 (5th

Cir. 2012).

24 AM. ARBITRATION ASS’N, COMMERCIAL ARBITRATION RULES AND MEDICATION

PROCEDURES 13 (2013), https://www.adr.org/sites/default/files/Commercial%20Rules.pdf.

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category of cases. The parties dispute the relationship of the carve-out clause—

exempting actions seeking injunctive relief—and the incorporation of the AAA

rules. The agreement states that “[a]ny dispute arising under or related to this

Agreement (except for actions seeking injunctive relief and disputes related to

trademarks, trade secrets, or other intellectual property of [the predecessor]),

shall be resolved by binding arbitration in accordance with the arbitration rules

of the American Arbitration Association.”

The agreement in Petrofac explicitly covered “all claims and disputes,”

containing no carve-out provision. 25 We have previously applied Petrofac to

arbitration provisions that do contain carve-out provisions. In Crawford, we

considered an arbitration agreement that incorporated the AAA Rules and also

contained a carve-out that nothing in the arbitration provision “shall prevent

either party from seeking injunctive relief for breach of th[e Agreement].” 26

Without specifically discussing the carve-out, we held that the Crawford

agreement’s incorporation of the AAA rules was “clear and unmistakable

evidence that the parties to the [] Agreement agreed to arbitrate

25 Petrofac, 687 F.3d at 674.

26 Crawford Prof’l Drugs, Inc. v. CVS Caremark Corp., 748 F.3d 249, 256 (5th Cir.

2014). In that case, the Provider Agreement read as follows:

Any and all disputes in connection with or arising out of the Provider

Agreement by the parties will be exclusively settled by arbitration before a

single arbitrator in accordance with the Rules of the American Arbitration

Association. The arbitrator must follow the rule of Law, and may only award

remedies provided for in the Provider Agreement . . . . Any such arbitration

must be conducted in Scottsdale, Arizona, and Provider agrees to such

jurisdiction, unless otherwise agreed to by the parties in writing. The expenses

of arbitration, including reasonable attorney's fees, will be paid for by the party

against whom the award of the arbitrator is rendered . . . . Arbitration shall be

the exclusive and final remedy for any dispute between the parties in

connection with or arising out of the Provider Agreement; provided, however,

that nothing in this provision shall prevent either party from seeking

injunctive relief for breach of this Provider Agreement in any state or federal

court of law . . . .

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arbitrability.” 27 Under the terms of that agreement, the gateway arbitrability

question was delegated to the arbitrator. The Ninth Circuit considered a

similar agreement in Oracle Am., Inc. v. Myriad Group A.G. 28 The arbitration

clause adopted arbitration rules delegating arbitrability issues to the

arbitrator and contained a carve-out for certain intellectual property and

licensing claims. 29 Because the claims carved-out by that agreement “ar[ose]

out of or relat[ed] to” the Source License, and the agreement explicitly provided

that any claim arising out of the Source License was subject to arbitration, the

Ninth Circuit held that Oracle’s carve-out argument “conflate[ed] the scope of

the arbitration clause . . . with the question of who decides arbitrability.” 30

The Second Circuit has also considered an arbitration clause that

incorporated the AAA rules and exempted certain claims from arbitration. 31

27 Id. at 263.

28 724 F.3d 1069, 1072–75 (9th Cir. 2013).

29 The agreement at issue stated, in relevant part:

Any dispute arising out of or relating to this License shall be finally settled by

arbitration as set out herein, except that either party may bring any action, in

a court of competent jurisdiction (which jurisdiction shall be exclusive), with

respect to any dispute relating to such party’s Intellectual Property Rights or

with respect to Your compliance with the TCK license. Arbitration shall be

administered: (i) by the American Arbitration Association (AAA), (ii) in

accordance with the rules of the United Nations Commission on International

Trade Law (UNCITRAL) (the “Rules”) in effect at the time of arbitration as

modified herein; and (iii) the arbitrator will apply the substantive laws of

California and United States. Judgment upon the award rendered by the

arbitrator may be entered in any court having jurisdiction to enforce such

award.

Id. at 1071.

30 Oracle, 724 F.3d at 1076. The clause in Oracle provided that “any claim arising out

of the Source License shall be settled by arbitration” but exempted “any dispute relating to

such party’s Intellectual Property Rights or with respect to [Myriad’s] compliance with the

TCK license.” Id. at 1075–76. The court noted that the issue with Oracle’s carve-out argument

was that the two categories of exempted claims by definition were claims arising out of or

relating to the Source License, which were explicitly subject to arbitration. Id. at 1076. No

such circularity exists in the contract at issue here.

31 NASDAQ OMX Grp., Inc. v. UBS Securities, LLC, 770 F.3d 1010 (2d Cir. 2014).

That agreement provided in relevant part:

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The court noted that it had “found the ‘clear and unmistakable’ provision

satisfied where a broad arbitration clause expressly commits all disputes to

arbitration, concluding that all disputes necessarily includes disputes as to

arbitrability.” 32 However, the parties in NASDAQ had not clearly and

unmistakably delegated arbitrability “where a broad arbitration clause is

subject to a qualifying provision that at least arguably covers the present

dispute.” 33 Because there was ambiguity as to whether the parties intended to

have arbitrability questions decided by an arbitrator—because the dispute

arguably fell within the carve-out—the court held the arbitrability question

was for the court to decide. 34

Defendants urge that Crawford controls and the only difference between

that arbitration agreement and the one here is syntax—the ordering of words.

But that is precisely the point—the placement of the carve-out here is

dispositive. We cannot re-write the words of the contract. 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-

A. Except as may be provided in the NASDAQ OMX Requirements, all claims,

disputes, controversies, and other matters in question between the Parties to this

Agreement and the Parties’ employees, directors, agents and associated persons

arising out of, or relating to this Agreement, or to the breach hereof, shall be settled

by final binding arbitration in accordance with this Agreement and the following

procedure or such other procedures as may be mutually agreed upon by the Parties.

B. Except as otherwise provided herein or by agreement of the Parties, any arbitration

proceeding shall be conducted in accordance with the Commercial Arbitration Rules

of the American Arbitration Association or in accordance with such other rules and

procedures as are agreed to by the Parties.

Id. at 1016.

32 Id. at 1031.

33 Id.

34 Id. at 1032.

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out. Given that carve-out, we cannot say that the Dealer Agreement evinces a

“clear and unmistakable” intent to delegate arbitrability.

We are mindful of the Court’s reminder that “[w]hen the parties’ contract

delegates the arbitrability question to an arbitrator, the courts must respect

the parties’ decision as embodied in the contract.” 35 But we must also heed its

warning that “courts ‘should not assume that the parties agreed to arbitrate

arbitrability unless there is clear and unmistakable evidence that they did

so.’” 36 The parties could have unambiguously delegated this question, but they

did not, and we are not empowered to re-write their agreement.

III.

In addition to disputing whether an arbitrator must decide the gateway

question of arbitrability, the parties disagree about whether the underlying

dispute is arbitrable at all. Accepting that the district court had the power to

decide arbitrability, we next examine whether it correctly determined that the

instant action is not subject to the arbitration clause. We do so against the

backdrop of a strong presumption in favor of arbitration, 37 yet we also remain

mindful of the fact that the FAA “does not require parties to arbitrate when

they have not agreed to do so, nor does it prevent parties who do agree to

arbitrate from excluding certain claims from the scope of their arbitration

agreement.” 38

The magistrate judge found that while “[o]n the most superficial level,

this lawsuit is clearly an action seeking injunctive relief since it does seek that

35 Henry Schein, Inc., 139 S. Ct. at 531.

36 Id. (quoting First Options, 514 U.S. at 944).

37 See, e.g., Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25

(1983) (“[A]s a matter of federal law, any doubts concerning the scope of arbitrable issues

should be resolved in favor of arbitration . . . .”).

38 Volt Info. Scis., Inc. v. Bd. Of Trustees of Leland Stanford Junior Univ., 489 U.S.

468, 478 (1989) (internal citations omitted).

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relief,” there was also “a plausible construction [of the Dealer Agreement]

calling for arbitration.” The magistrate judge read the contract to leave open

“the question of whether the exception for actions seeking injunctive relief

should be limited to actions for an injunction in aid of arbitration or to enforce

an arbitrator’s award.”

The district court, on the other hand, found that the carve-out for

“‘actions seeking injunctive relief’ is clear on its face—any action seeking

injunctive relief is excluded from mandatory arbitration.” Thus, the provision’s

plain language includes all actions seeking injunctive relief, not a more limited

category of cases. 39 In so holding, the district court pointed out that the carveout clause is not part of the AAA’s suggested language, and that “[s]uch an

intentional drafting effort . . . is worthy of the court’s notice.” The court declined

to “re-write the terms of the Parties’ agreement to accommodate a party—

notably the party that drafted the agreement—that could have negotiated for

more precise language,” and held that the arguments for arbitrability were

“wholly without merit based on the plain language of the arbitration clause

itself.”

Defendants urge that, where an arbitration clause contains a carve-out

for injunctive relief and one party files a complaint seeking both injunctive

relief and damages, the court should read the carve-out to permit injunctive

relief only as a preliminary matter to preserve the status quo pending

arbitration or on a permanent basis after the plaintiff secures an arbitration

award in its favor. They suggest that the court must send the damages clause

to arbitration, even if it results in piecemeal litigation. In their view, that

39 The district court observed, “no textual basis exists for reading the phrase ‘actions

seeking injunctive relief’ as ‘actions seeking injunctive relief if such injunctions are in aid of

arbitration.’ Further, the clause does not limit the exclusion to actions seeking ‘only’

injunctive relief, and the Court also declines to read that limitation into the document.”

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reading of the clause preserves the parties’ right to arbitrate the damages

claims while preserving the court’s role in any injunctive proceedings. They

warn that Archer’s interpretation allows a party to “tack on” a vague request

for injunctive relief to evade arbitration.

Archer counters that the plain language of the clause makes clear that

the parties did not agree to arbitrate actions that include a request for

injunctive relief—therefore there is no plausible argument that the arbitration

clause applies. Archer emphasizes that arbitration agreements are as

enforceable as other contracts, but not more so, and the court cannot reach

beyond the plain and unambiguous language in the agreement.

We note first that the arbitration clause creates a carve-out for “actions

seeking injunctive relief.” It does not limit the exclusion to “actions seeking

only injunctive relief,” nor “actions for injunction in aid of an arbitrator’s

award.” Nor does it limit the carve-out to claims for injunctive relief. Such

readings find no footing within the four corners of the contract. Under North

Carolina law, “[w]hen the language of a contract is clear and unambiguous,

effect must be given to its terms, and the court, under the guise of construction,

cannot reject what the parties inserted or insert what the parties elected to

omit.” 40 The mere fact that the arbitration clause permits Archer to avoid

arbitration by adding a claim for injunctive relief does not change the clause’s

plain meaning. “While ambiguities in the language of the agreement should be

resolved in favor of arbitration, we do not override the clear intent of the

parties, or reach a result inconsistent with the plain text of the contract, simply

40 Procar II, Inc. v. Dennis, 721 S.E.2d 369, 371 (N.C. Ct. App. 2012) (quoting Taylor

v. Gibbs, 268 N.C. 363, 365, (1966)).

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because the policy favoring arbitration is implicated.” 41 Fundamentally,

defendants ask us to rewrite the unambiguous arbitration clause. We cannot.

Defendants urge that this reading would lead to absurd results, where

one party could unilaterally evade the agreement to arbitrate with an

attenuated request for injunctive relief. This argument overreaches. Even if

we re-wrote the carve-out clause to apply only to actions seeking significant

injunctive relief—which we cannot—this particular action would still fall

within that exception. Archer’s complaint alleges multiple continuing

violations of federal and state antitrust laws. 42 As the district court correctly

noted, the proper vehicle to argue Archer failed to state a claim for relief is a

motion under Rule 12. We cannot address the underlying merits of Archer’s

claim at this stage. It is enough to note that the current action is indeed an

“action seeking injunctive relief.”

E.E.O.C. v. Waffle House, 534 U.S. 279, 294 (2002) (emphasis added) (internal

citations omitted).

42 In their initial briefing to this court and in their supplemental brief on remand,

defendants contend that Archer is no longer entitled to injunctive relief because, during the

pendency of this litigation, their contractual relationship with Archer ended. In support of

this proposition, defendants cite cases where this court has held that plaintiffs are no longer

entitled to injunctive relief. In Hendricks, the court held that enjoining a plaintiff’s former

employer from future ERISA violations was not appropriate. Hendricks v. UBS Fin. Servs.,

Inc., 546 F. App’x 514, 520 (5th Cir. 2013) (per curiam). In Glanville, a district court found

the plaintiffs had no standing to pursue a claim for declaratory and injunctive relief based on

their purported misclassification as independent contractors because they no longer had any

employment relationship with the defendants and thus could not allege future harm.

Glanville v. Dupar, Inc., 727 F.Supp.2d 596, 602 (S.D. Tex. 2010). In its initial brief, Archer

responded that these cases are inapposite because they do not involve antitrust violations.

Archer notes that other circuits have upheld injunctive relief in private antitrust actions even

where the specific conspiracy alleged has ended. See Wilk v. Am. Med. Ass’n, 895 F.2d 352,

378 (7th Cir. 1990) (affirming the grant of an injunction aimed at remedying lasting effects

of an illegal boycott). We need not decide this question here, as the arbitrability question

turns only on whether the existing action as a whole constitutes an “action seeking injunctive

relief.”

41

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IV.

Because this action is not subject to mandatory arbitration, we do not

reach Archer’s alternative argument that third parties to the arbitration clause

cannot enforce such an arbitration clause. We affirm the district court’s order

denying defendants’ motions to compel arbitration.

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Appendix B

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

MARSHALL DIVISION

ARCHER AND WHITE SALES, INC.,

§

§

§

§

§

§

§

§

§

§

§

§

§

§

§

§

Plaintiff,

v.

HENRY SCHEIN, INC., DANAHER

CORPORATION, INSTRUMENTARIUM

DENTAL INC., DENTAL EQUIPMENT

LLC, KAVO DENTAL

TECHNOLOGIES, LLC, DENTAL

IMAGING TECHNOLOGIES,

CORPORATION, PATTERSON

COMPANIES, INC., BENCO DENTAL

SUPPLY CO.,

CIVIL ACTION NO. 2:12-CV-00572-JRG

Defendants.

ORDER

Before the Court is Defendants’ Motion to Stay Pending Appeal (the “Motion to Stay”),

(Dkt. No. 409), and Plaintiff’s Motion to Set Docket Control Order (the “Motion to Set DCO”),

(Dkt. No. 410). Having considered the briefing and relevant authorities, the Court hereby

GRANTS the Motion to Stay and DENIES the Motion to Set DCO for the reasons set forth herein.

On March 2, 2018, the above-captioned case was stayed pending the filing and disposition

of a petition for a writ of certiorari to the Supreme Court of the United States. (Dkt. No. 399.) On

June 25, 2018, the petition for writ of certiorari was granted, (Dkt. No. 406), and the Supreme

Court issued its judgment on January 8, 2019. See Henry Schein, Inc. v. Archer & White Sales,

Inc., 139 S. Ct. 524 (2019). The stay was subsequently lifted. (Dkt. No. 399.)

In Schein v. Archer & White, the Supreme Court reversed the Fifth Circuit’s holding that

even if the parties delegate the threshold question of arbitrability to the arbitrator, the district court

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may, in its discretion, decline to send the arbitrability issue to the arbitrator if it finds the assertion

of arbitrability to be “wholly groundless.” 139 S. Ct. at 529. The Court held that “[w]hen the

parties’ contract delegates the arbitrability question to an arbitrator, a court may not override the

contract” and “remanded for further proceedings consistent with this opinion.” Id. at 531. The

Court “express[ed] no view about whether the contract at issue in this case in fact delegated the

arbitrability question to an arbitrator” and explained that “[o]n remand, the Court of Appeals may

address that issue in the first instance, as well as other arguments that Archer and White has

properly preserved.” Id.

On February 13, 2019, the Fifth Circuit ordered the parties to file supplemental briefs

addressing the impact of the Supreme Court’s decision on the remaining arbitration issues. See

Archer and White Sales, Inc. v. Henry Schein, Inc., et al, No. 16-41674 (5th Cir. 2016). Briefing

has been completed and oral argument is set before the Fifth Circuit for May 1, 2019. Id.

Defendants move for a stay to permit the Fifth Circuit to address the remaining arbitration

issues on remand. They explain that the “primary issue remanded to the Fifth Circuit [is] whether

[the parties’] contract’s invocation of the AAA’s rules constitutes an express delegation of the

question of arbitrability to the arbitrator.” (Dkt. No. 409 at 4.) Defendants explain that nearly

every circuit, including the Fifth Circuit, has held that arbitration agreements “clearly and

unmistakably delegate arbitrability to the arbitrator when it incorporates arbitration rules that

provide for such delegation.” (Id. at 4.) Defendants argue that should the Fifth Circuit find that

the parties did delegate this threshold inquiry to the arbitrator and “decide to refer the case to

arbitration, [then] all of the issues before this Court would be moot.” (Id. at 3.) Otherwise,

Defendants contend they will have to suffer the expense and time of a trial to then have the claims

sent to arbitration. (Id.)

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Plaintiff “agrees that a trial should not occur before the Fifth Circuit issues its opinion,”

but “does not agree that the pending appeal should prevent the Court from issuing a new Docket

Control Order setting a pretrial schedule and motions hearing, or from reserving a potential trial

date.” (Dkt. No. 413 at 1; Dkt. No. 410 (Motion to Set DCO).) Plaintiff argues that Defendants

are not likely to succeed on appeal and that the Fifth Circuit will likely find that the contract does

not delegate the threshold inquiry to the arbitrator. (Dkt. No. 413 at 3.) Plaintiff argues that

denying a stay will not cause Defendants irreparable harm because Plaintiff “asks only that the

Court reserve dates on its calendar for hearings and a trial pending the Fifth Circuit’s decision”

and is amendable to pushing those dates should the appeal remain pending. (Id.)

In exercising its discretion to control its own docket, the Court finds that a stay is

appropriate in this particular case. Landis v. N. Am. Co., 299 U.S. 248, 254 (1936); TQP Dev.,

LLC v. 1-800-Flowers.com, Inc., No. 2:11CV248, 2012 WL 12830187, at *2 (E.D. Tex. May 18,

2012). The issues before the Fifth Circuit are set for oral argument on May 1, 2019 and their

resolution on appeal could potentially moot all claims pending before this Court. Moreover,

Plaintiff has represented that it “does not expect the Court to rule on any pending motions while

the arbitration issue is pending [on appeal].” (Dkt. No. 410 at 1.) Accordingly, the Court does

not find it necessary to “reserve” potential pretrial and trial dates before the Fifth Circuit issues a

decision on remand.

Based on the foregoing, the Court hereby GRANTS Defendants’ Motion to Stay Pending

Appeal, (Dkt. No. 409), and DENIES Plaintiff’s Motion to Set Docket Control Order, (Dkt. No.

410). It is ORDERED that all pending deadlines in Case No. 2:12-cv-00572-JRG are STAYED

pending a future order lifting the same. When the Fifth Circuit issues its decision addressing the

arbitration issues on remand from the Supreme Court in Case No. 16-41674, the Parties may seek

3

18a

.

to lift the stay if the Circuit’s opinion provides a basis for such relief. Further, when the Fifth

Circuit has issued its decision, the Parties are ORDERED to file a Joint Status Report with the

Court that (1) notifies the Court of the Fifth’s Circuit’s decision and (2) identifies all motions,

issues, claims or portions thereof which are rendered moot by the Fifth’s Circuit decision

and setting forth a complete list of surviving motions, issues, claims, or portions thereof

which remain live for the Court.

SIGNED this 19th day of December, 2011.

So ORDERED and SIGNED this 1st day of April, 2019.

____________________________________

RODNEY GILSTRAP

UNITED STATES DISTRICT JUDGE

4

19a

Appendix C

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

MARSHALL DIVISION

ARCHER AND WHITE SALES, INC.,

Plaintiff,

v.

HENRY SCHEIN, INC.,

DANAHER

CORPORATION, INSTRUMENTARIUM

DENTAL INC., DENTAL EQUIPMENT

LLC, KAVO DENTAL TECHNOLOGIES,

LLC,

DENTAL

IMAGING

TECHNOLOGIES,

CORPORATION,

PATTERSON COMPANIES, INC., BENCO

DENTAL SUPPLY CO.,

Defendants.

§

§

§

§

§

§

§

§

§

§

§

§

§

§

§

§

CIVIL ACTION NO. 2:12-CV-00572-JRG

ORDER

This Court issues this Order sua sponte. Previously, the Court stayed the above-captioned

case pending the Fifth Circuit’s decision in Case No. 16-41674. (Dkt. No. 418.) On August 14,

2019, the Fifth Circuit issued an opinion in Case No. 16-41674, applying the recent Supreme Court

opinion Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019), holding that the

above-captioned case is not subject to mandatory arbitration. 1 The Defendants have petitioned the

Fifth Circuit for an en banc review (the “En Banc Petition”) of that decision.

Having received no clear indication from the Fifth Circuit regarding the En Banc Petition

and considering the lengthy period of time already consumed in this litigation since 2012, the Court

LIFTS THE STAY of the above-captioned case. Furthermore, the parties are hereby ORDERED

1

Archer and White Sales, Inc. v. Henry Schein, Inc., 935 F.3d 274 (5th Cir. 2019).

20a

to appear-in person for a Pre-trial Conference on JANUARY 22, 2020 at 9:00 A.M. The parties

are further ORDERED to appear for Jury Selection and Trial on FEBRUARY 3, 2020.

So Ordered this

Sep 30, 2019

2

21a

Appendix D

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

MARSHALL DIVISION

ARCHER AND WHITE SALES, INC.,

Plaintiff,

v.

HENRY SCHEIN, INC., DANAHER

CORPORATION, INSTRUMENTARIUM

DENTAL INC., DENTAL EQUIPMENT

LLC, KAVO DENTAL TECHNOLOGIES,

LLC, DENTAL IMAGING

TECHNOLOGIES, CORPORATION,

PATTERSON COMPANIES, INC.,

BENCO DENTAL SUPPLY CO.,

Defendants.

§

§

§

§

§

§

§

§

§

§

§

§

§

§

§

§

CIVIL ACTION NO. 2:12-CV-00572-JRG

ORDER

Before the Court is Defendant Henry Schein, Inc’s (“Schein”) Motion for a Stay Pending

Decision on Petition for Certiorari and Request for Expedited Briefing (the “Motion”). (Dkt. No.

458.) In the Motion, Schein represents that it intends to file a petition for writ of certiorari in the

United States Supreme Court seeking review of the Fifth Circuit’s decision affirming this Court’s

denial of the motions to compel arbitration. (Id. at 1.) Accordingly, Schein requests that this Court

stay the trial in this action pending the Supreme Court’s decision on such forthcoming petition for

writ of certiorari. (Id. at 4.)

Having reviewed both the Motion and Plaintiff Archer and White Sales, Inc’s response to

the same, the Court is not inclined to presume that Schein will file a petition for writ of certiorari

prior to the trial date in this case of February 3, 2020. Nor will the Court presume that the Supreme

Court is inclined to grant such a petition should it be filed prior to the fast-approaching trial date.

Furthermore, should the Supreme Court feel a stay is warranted, a mechanism for Schein to seek

22a

such a stay from the Supreme Court exists and is open to it. See SUP. CT. R. 23. In light of the

foregoing, the Court is of the opinion that the Motion should be and hereby is DENIED.

So ORDERED and SIGNED this 3rd day of January, 2020.

____________________________________

RODNEY GILSTRAP

UNITED STATES DISTRICT JUDGE

2

23a

Appendix E

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

___________________

No. 16-41674

___________________

ARCHER AND WHITE SALES, INCORPORATED,

Plaintiff - Appellee

v.

HENRY SCHEIN, INCORPORATED; DANAHER CORPORATION;

INSTRUMENTARIUM DENTAL, INCORPORATION; DENTAL

EQUIPMENT, L.L.C.; KAVO DENTAL TECHNOLOGIES, L.L.C.; DENTAL

IMAGING TECHNOLOGIES, CORPORATION,

Defendants - Appellants

_______________________

Appeal from the United States District Court

for the Eastern District of Texas

_______________________

Before HIGGINBOTHAM, GRAVES, and HIGGINSON, Circuit Judges.

PER CURIAM:

IT IS ORDERED that appellant, Henry Schein, Incorporated’s opposed

motion to recall this Court’s mandate for the limited purpose of staying the

district court proceedings pending the Supreme Court’s decision on Henry

Schein’s forthcoming petition for writ of certiorari is DENIED.

24a

Appendix F

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 16-41674

ARCHER AND WHITE SALES, INCORPORATED,

Plaintiff - Appellee

v.

HENRY SCHEIN, INCORPORATED; DANAHER CORPORATION;

INSTRUMENTARIUM DENTAL, INCORPORATION; DENTAL

EQUIPMENT, L.L.C.; KAVO DENTAL TECHNOLOGIES, L.L.C.; DENTAL

IMAGING TECHNOLOGIES, CORPORATION,

Defendants - Appellants

Appeal from the United States District Court

for the Eastern District of Texas

ON PETITION FOR REHEARING EN BANC

(Opinion August 14, 2019, 5 Cir.,---~ _ _ _ F.3d _ _ _ )

Before HIGGINBOTHAM, GRAVES, and HIGGINSON, Circuit Judges.

PERCURIAM:

~ Treating the Petition for Rehearing En Banc as a Petition for Panel

Rehearing, the Petition for Panel Rehearing is DENIED. No member of

the panel nor judge in regular active service of the court having

requested that the court be polled on Rehearing En Banc (FED. R. APP.

P. and 5TH CIR. R. 35), the Petition for Rehearing En Banc is DENIED.

25a

( )

Treating the Petition for Rehearing En Banc as a Petition for Panel

Rehearing, the Petition for Panel Rehearing is DENIED. The court

having been polled at the request of one of the members of the court

and a majority of the judges who are in regular active service and not

disqualified not having voted in favor (FED. R. APP. P. and 5TH CIR. R.

35), the Petition for Rehearing En Banc is DENIED.

ENTERED FOR THE COURT:

~ l 1,l.:~;,J.,~

CIRCUIT JUDGE

*Judge James L. Dennis did not participate in the consideration of the rehearing en

bane.