The Decision Was Not A Surprise.
Kindred Nursing Centers L.P v. Clark, No. 16-32 (US S.Ct. 5/15/17) (Kagan, J.) holds that Kentucky's "clear-statement rule" violates the Federal Arbitration Act by singling out arbitration agreements for disfavored treatment. Kentucky's "clear-statement rule" provides that, because the Kentucky constitution declares rights of access to the courts and trial by jury to be "sacred" and "inviolate", an agent can deprive her principal of such rights only if expressly provided in the power of attorney.
Relatives of Joe Wellner and Olive Clark had executed powers of attorney with arbitration clauses on behalf of Joe and Olive before Joe and Olive moved into a nursing home. After Joe and Olive died, their relatives filed suits against the nursing home, alleging substandard care. The issue presented was whether the powers of attorney were invalid because they failed to specifically entitle the representative to enter into the arbitration agreement.
SCOTUS distinguished between the two separate powers of attorney. One was struck down improperly because the Kentucky courts relied on the clear-statement rule to invalidate the arbitration provision, thus colliding with FAA preemption. However, on the facts, it was unclear why the other power of attorney had been invalidated. It is possible that the state courts relied on the clear-statement rule, but it is also possible that the state courts relied on an interpretation that did not implicate the clear-statement rule. Therefore, SCOTUS directed the court on remand dto determine whether it adhered to its prior reading of the second power of attorney in the absence of the clear-statement rule.
As is his wont, Justice Thomas dissented. He has consistently been of the opinion that the FAA does not apply to proceedings in state court.
COMMENT: On February 23, 2017, Professor Ronald Mann of Columbia Law School correctly predicted the outcome. See my February 23, 2017 post.
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