On January 8, 2019, in Henry Schein, Inc. v. Archer & White Sales, Inc., the US Supreme Court unanimously held that the "wholly groundless" exception to arbitrability is inconsistent with the Federal Arbitration Act (FAA) and its precedent ( (U.S. Jan. 8, 2019)).

Archer and White, which distributes dental equipment, entered into a contract with Pelton and Crane, a dental equipment manufacturer, to distribute its dental equipment. After disputes arose, Archer and White sued Pelton and Crane's successor-in-interest and Henry Schein, Inc. (collectively, Schein) in federal district court, alleging violations of federal and state antitrust law and seeking both money damages and injunctive relief.

Invoking the FAA, Schein requested that the district court refer the parties' antitrust dispute to arbitration. Archer and White objected, arguing that the parties' contract barred arbitration when the plaintiff sought injunctive relief. According to Archer and White, Schein's argument for arbitration was therefore wholly groundless and the district court could itself resolve the threshold question of arbitrability. The district court agreed with Archer and White and found that Schein's argument for arbitration was wholly groundless. It denied Schein's motion to compel and the US Court of Appeals for the Fifth Circuit affirmed.

The Supreme Court vacated the opinion, holding that the "wholly groundless" exception to arbitrability is inconsistent with the FAA and the Court's precedent. In its analysis, the Court looked at the wholly groundless exception created by some federal courts. These courts determined that the court rather than an arbitrator should decide the threshold arbitrability question if, under the contract, the argument for arbitration was wholly groundless, to block frivolous attempts to transfer disputes from the court system to arbitration. However, the Supreme Court concluded that the FAA does not expressly contain a "wholly groundless" exception, and the Court cannot rewrite the statute to create one and short-circuit the process. As a result, courts must respect the parties' decision as embodied in the contract and may not override a contract when the parties' contract delegates the arbitrability question to an arbitrator even when it thinks that the arbitrability claim is wholly groundless. This conclusion also follows the Court's precedent (see AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 649-50 (1986)).

Additionally, the Court rejected Archer & White's other counterarguments and remanded the case for the Fifth Circuit to address the question whether the contract at issue in fact delegated the arbitrability question to an arbitrator.