The Supreme Court has emphasized that the Federal Arbitration Act (FAA) “declare[s] a national policy favoring arbitration[.]” Nitro-Lift Techs. v. Howard, 133 S.Ct. 500, 503 (2012) (citation omitted). In its seminal decision in AT&T Mobility v. Concepcion, the court held that the FAA requires that courts “place arbitration agreements on an equal footing with other contracts and enforce them according to their terms[,]” and, thus, the FAA preempts any state rule discriminating on its face against arbitration—for example, a “ law prohibit[ing] outright the arbitration of a particular type of claim.” 563 U.S. 333, 339 (2011).

Since then, some state courts, including the New Jersey Supreme Court in Atalese v. U.S. Legal Services Group, 219 N.J. 430 (2014), cert. denied, 135 S.Ct. 2804 (2015), have issued decisions invalidating arbitration provisions that seemingly circumvent the high court's directives. The Supreme Court's recent decision in Kindred Nursing Centers P'Ship v. Clark, 137 S.Ct. 1421 (2017), reflects a palpable frustration with efforts to undermine the FAA and discriminate against arbitration. Although Kindred Nursing specifically addressed and invalidated the Kentucky Supreme Court's “clear statement” rule that an agent's authority to waive the principal's constitutional right to a jury must be clearly expressed by the principal, Kindred Nursing has potentially broader implications for jurisdictions, like New Jersey, that have repeatedly tested the scope of the court's jurisprudence in declining to enforce arbitration agreements. In addition, the decision suggests that pending legislation in New Jersey would run afoul of federal law.

The 'Kindred Nursing' Decision

The Kindred Nursing case involved two now-deceased residents of a nursing home and their respective holders of power-of-attorney, one resident's wife and one resident's daughter, who brought wrongful death actions against the nursing home. The arbitration agreements “provided that '[a]ny and all claims or controversies arising out of or in any way relating to … the Resident's stay at the Facility' would be resolved through 'binding arbitration' rather than a lawsuit.” Id. at 1425. The Kentucky Supreme Court held that both arbitration agreements were invalid, on the grounds that a general grant of power of attorney does not permit a legal representative to enter into an arbitration agreement for someone else, and that specific authority was required to waive a right to trial by jury. Id. at 1426.