By: Nate Roy
The Supreme Court at times can be perplexing, especially when it decides to review issues that seemingly require no further review. Given the Court’s recent decisions regarding arbitration, almost of all of which staunchly support arbitration agreements, it is difficult to ascertain why the Court agreed to hear oral arguments in yet another arbitration-related case.[1] The case itself involves a dispute over the enforceability of an arbitration agreement implemented by a nursing home against individuals holding power-of-attorney; more precisely, whether the Kentucky Supreme Court properly held that the agreement was unenforceable under Kentucky’s arbitration law.[2] For the Court, the case presents new facts, but will likely be reduced to a familiar question: whether the Federal Arbitration Act (“FAA”) preempts state arbitration law.[3]
On February 22, 2017, the Supreme Court heard oral argument in the case of Kindred Nursing Centers Ltd. v. Clark.[4] The parties included Kindred Nursing Centers (“the Center”) and an attorney-in-fact on behalf of a former patron of the Center.[5] The case was consolidated with other arbitration-related cases before the Supreme Court of Kentucky.[6] Prior to placing her mother at the Center, Janis Clark, daughter of Olive Clark, was granted power-of-attorney and signed paperwork to admit Olive into the Center. In doing so, signed a four-page document purporting to be an optional arbitration agreement.[7] Upon the death of her mother, Janis Clark brought a wrongful death claim against the Center, alleging, among other things, personal injury.[8]
Although a lower state court initially compelled the parties to arbitrate pursuant to the agreement Clark signed at the time her mother was admitted, the same court, upon further consideration, reversed its original decision to comport with precedent established by the state’s Supreme Court.[9] The Supreme Court of Kentucky determined that the power-of-attorney, which implicitly provides the holder authority to enter into arbitration agreements on behalf of the grantor, does not in and of itself confer power to waive an individual’s fundamental constitutional rights, unless such waiver is expressly and unambiguously identified in the document.[10] Among these fundamental rights is the right to a jury trial.[11]
According to Ronald Mann,eporter for SCOTUSBlog, the arguments presented before the U.S. Supreme Court on behalf of Clark did not appear to be well-received by the Justices.[12] Beyond arguing that the arbitration agreement is enforceable, the Center’s attorney argued that “the decision of the Kentucky Supreme Court must be reversed if it failed to put arbitration contracts on an ‘equal footing’ with contracts in general.”[13] The questions posed by the Court, according to Mann, indicate its disdain for the Supreme Court of Kentucky, namely its effortless attempt to hide its disgust for arbitration in general.[14]
This case will likely frustrate the Court because the Kentucky high court expressly deviated from recent Court precedent highlighting the importance of arbitration agreements and the FAA’s dominance over state arbitration law.[15] However, if the Court disregards its most recent precedent, the case might potentially trigger other state courts to follow the Kentucky court’s decision. As the Center posited, a favorable ruling for Clark could undermine the FAA and compel other state courts to dismantle arbitration agreements generally, imposing their own set of principles in a wholly unpredictable fashion.[16] Furthermore, while some struggle to see the difference between the Kentucky high court’s decision and Supreme Court precedent, the Kentucky court specifically focused on the validity of the arbitration agreement itself, which might prompt the Court to find this case slightly unique.[17] Nonetheless, the Court is likely going to follow its precedent, upholding the preemptive capacity of the FAA over state arbitration law.
[1] See Robert Mann, Argument Preview: Justices to Consider (Once Again) State-Court Decision Limiting Pre-Dispute Arbitration Contracts, SCOTUSBlog (Feb. 15, 2017, 12:03 PM) (noting that the Supreme Court decided this issue in previous cases), https://www.scotusblog.com/2017/02/argument-preview-justices-consider-state-court-decision-limiting-pre-dispute-arbitration-contracts/.
[2] Emily Field, Justices to Mull If FAA Preempts State Arbitration Law, LAW360 (Oct. 28, 2016), https://www.law360.com/articles/857225/justices-to-mull-if-faa-preempts-state-arbitration-law.
[3][3] See Mann, supra note 1 (explaining that the Supreme Court will need to decide whether the FAA preempts the decision issued in the Supreme Court of Kentucky).
[4] Ronald Mann, Argument Analysis: Justices Dubious of State-Court Decision Limiting Pre-Dispute Arbitration Contracts, SCOTUSBlog (Feb. 23, 2017, 10:44 AM).
[5] Extendicare Homes, Inc. v. Whisman, 478 S.W.3d 306, 317 (Ky. 2014).
[6] Id. at 312.
[7] Id. at 317.
[8] Id. at 317.
[9] See id. (noting that after the lower court’s initial decision, the court determined that the power of attorney possessed by Janis Clark did not authorize her to discard her mother’s right to a jury trial) (citing Ping v. Beverly Enters., Inc., 376 S.W.3d 581, 581 (2012)).
[10] See id. at 328 (noting that the power of attorney agreement must unambiguously express the individual’s authority to waive an individual’s constitutional rights).
[11] Id. at 328.
[12] See Mann, supra note 4 (noting that the Court appeared to favor the Center’s arguments).
[13] Id.
[14] See id. (noting that the Justices’ questions demonstrated “skepticism that the Kentucky opinion could be read as an evenhanded treatment of arbitration.”).
[15] See Mann, supra note 1 (noting that Clark’s representatives “strain[ed] mightily” to distinguish this case from the Court’s recent arbitration precedent).
[16] Fields, supra note 2.
[17] See Whisman, 478 S.W.3d at 312 (noting that the “central issue is whether, based upon the language of the particular power-of-attorney instrument, an arbitration agreement was validly formed . . . .”).
