The U.S. Supreme Court Decides New Arbitration Case
The United States Supreme Court recently decided a new arbitration case involving the Federal Arbitration Act in the nursing home context. See Kindred Nursing Centers v. Clark, 2017 WL 2039160 (2017). Kentucky courts had held that certain arbitration agreements were invalid because the “powers of attorney” at issue did not specifically entitle the representatives to enter into the arbitration agreements. This was called the “clear statement” rule. In other words, an agent could not deprive her principal of the right to “jury trial” unless it was expressly provided for in the power of attorney. The Supreme Court reversed, finding that Kentucky’s “rule” violated the FAA because it singled out arbitration agreements for disfavored treatment. The Court made it clear that the Federal Arbitration Act cares not only about the “enforcement” of arbitration agreements, but also about their “initial validity,” or “what it takes to enter into them.” The Court stated that “[a] rule selectively finding arbitration contracts invalid because improperly formed fares not better under the Act than a rule selectively refusing to enforce those agreements once properly made.” The decision reinforces the strength of the Federal Arbitration Act, even in state court proceedings. The Court remanded for further consideration of the power of attorney.