The Supreme Court held that the Federal Arbitration Act preempts state law governing contract formation where a state rule discriminates against arbitration, a holding with broad implications for state-court decisions that treat the formation of an arbitration agreement as purely a state-law matter. Kindred Nursing Centers Ltd. P'ship v. Clark, No. 16-32, 2017 WL 2039160 (May 15, 2017). In a 7–1 opinion authored by Justice Elena Kagan, the Court overruled the Kentucky Supreme Court and invalidated Kentucky’s “clear-statement rule,” which provided that agents holding a power of attorney cannot waive their principal’s rights to access the court and trial by jury unless expressly permitted. The Court was not persuaded by the argument that the FAA applies only to the enforcement of arbitration agreements, not to formation, and held that the FAA preempts the clear-statement rule.
Petitioner Kindred Nursing Centers L.P. operates nursing homes and rehabilitation centers. Respondents Beverly Wellner and Janis Clark held powers of attorney for two of their family members who were Kindred residents prior to their deaths. Both respondents had broad powers of attorney enabling them to enter contracts for the principals. Respondents moved their family members into the nursing home using their powers of attorney, and signed several contracts with Kindred, including arbitration agreements on behalf of their relatives. Both relatives died shortly thereafter, and respondents instituted legal actions against Kindred alleging that Kindred delivered substandard care, causing their family members’ deaths.
Kindred moved to dismiss these cases based on the arbitration agreements. The trial court, Kentucky Court of Appeals, and Kentucky Supreme Court each rejected Kindred’s motions to dismiss. The Kentucky Supreme Court held that a general grant of power of attorney does not permit the representative...
