In Kindred Nursing Centers Limited Partnership v. Clark,1 the U.S. Supreme Court is poised to decide whether the Federal Arbitration Act (FAA), 9 U.S.C. §1 et seq., preempts a state rule that requires a power of attorney agreement to expressly refer to arbitration agreements, rather than contracts generally, before the agent can bind the principal to a predispute arbitration agreement. Section 2 of the FAA makes arbitration agreements “valid, irrevocable, and enforceable” except on “such grounds as exist … for the revocation of any contract.”2 Congress enacted the FAA “to reverse the longstanding judicial hostility to arbitration agreements” and “to place arbitration agreements upon the same footing as other contracts.”3
Numerous Supreme Court decisions have held that the FAA preempts state law rules that disfavor arbitration agreements or otherwise fail the “same” or “equal footing” principle. More than 20 years ago, in Doctor’s Associates v. Casarotto,4 the court held that the FAA preempted a state statute that required notice of an arbitration commitment to appear on the first page of a contract. The court explained that the FAA “preclude[s] States from singling out arbitration provisions for suspect status.”5 Just last year, the court reversed a decision of a California court finding an arbitration agreement unenforceable, based on an interpretation it would not have had “in any other context other than arbitration.”6 These decisions are not outliers. The court has not hesitated to strike down state rules that hamper arbitration.7 Kindred Nursing Centers presents the court with an opportunity either to reinforce that arbitration agreements are to be enforced to the same extent as other agreements or to take a different tack, permitting state courts to make decisions that limit the enforceability of arbitration agreements, perhaps giving special recognition to the nursing home context and the limits of powers of attorney agreements in that context.
Underlying Facts
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