Thursday, May 18, 2017
This week the Supreme Court issued its decision in Kindred Nursing Centers Limited Partnership v. Clark, a case we covered earlier here. The vote was 7-1, with Justice Kagan writing the majority opinion, Justice Thomas dissenting based on his view that the Federal Arbitration Act does not apply to proceedings in state court, and Justice Gorsuch (who joined the Court after oral argument occurred) taking no part.
Justice Kagan’s opinion begins:
The Federal Arbitration Act (FAA or Act) requires courts to place arbitration agreements “on equal footing with all other contracts.” DIRECTV, Inc. v. Imburgia, 577 U. S. __, __ (2015) (slip op., at 6) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U. S. 440, 443 (2006)); see 9 U. S. C. §2. In the decision below, the Kentucky Supreme Court declined to give effect to two arbitration agreements executed by individuals holding “powers of attorney”—that is, authorizations to act on behalf of others. According to the court, a general grant of power (even if seemingly comprehensive) does not permit a legal representative to enter into an arbitration agreement for someone else; to form such a contract, the representative must possess specific authority to “waive his principal’s fundamental constitutional rights to access the courts [and] to trial by jury.” Extendicare Homes, Inc. v. Whisman, 478 S. W. 3d 306, 327 (2015). Because that rule singles out arbitration agreements for disfavored treatment, we hold that it violates the FAA.