If you are a party that wants courts to rigidly enforce delegation clauses – sending questions about even the validity of the agreement to arbitration – then you will appreciate a new decision from the Tenth Circuit. In Belnap v. Iasis Healthcare, __ F.3d __, 2017 WL 56277 (10th Cir. Jan. 5, 2017), the court refused to do even a spot check of whether defendant’s claims of arbitrability were accurate and enforced the parties’ delegation clause.

Belnap involved a surgeon suing a medical center, its parent company, four doctors on its Medical Executive Committee, and its “risk manager,” for notifying data banks that he had been suspended, but not notifying all relevant organizations when it later vacated his suspension.  The surgeon’s agreement with the medical center had a dispute resolution clause that called for first mediation and then arbitration “administered by JAMS and conducted in accordance with its” rules.  Relying on that agreement, all defendants moved to compel arbitration.  The district court found the medical center could compel arbitration of one of the seven claims, but that the other six were outside the scope of the arbitration clause.  The district court rejected the non-signatories’ attempt to compel arbitration and rejected the argument that the parties had delegated questions of scope to the arbitrator.

On appeal, the Tenth Circuit began its analysis, as it should, with the question of who should decide whether the claims are arbitrable. On that question, it found that by incorporating the JAMS Rules into the agreement, the surgeon and the medical center had shown a clear and unmistakable intent to delegate questions of arbitrability to an arbitrator.  It also took exception to the fact that “some courts have suggested that the Tenth Circuit is the only federal appellate court that has deviated from this consensus.” (The consensus being that referencing arbitral rules which delegate arbitrability to an arbitrator is clear and unmistakable agreement to alter the default rule that courts decide those issues.)  It clarified a 1998 decision that had led other courts to that conclusion, thereby appearing to mend any alleged circuit split on that issue.

After finding the arbitrator should decide arguments about scope, however, the 10th Circuit still had to address another of the surgeon’s arguments supporting the court’s review.  The surgeon asked the 10th Circuit to “adopt the ‘wholly groundless’ approach of the Fifth, Sixth, and Federal Circuits.”    That approach allows a district court, after finding the parties delegated arbitrability, to conduct a smell test of sorts: whether the assertion of arbitrability is “wholly groundless.”  The idea is, let’s not let parties with delegation clauses go around enforcing them willy nilly, even in instances where there is no legitimate basis for the claim to be arbitrated.  That would force the plaintiffs to waste time and resources going to arbitration, just to be sent back to court again (we hope).

However, the 10th Circuit “decline[d] to adopt the ‘wholly groundless’ approach.”  It found it is in tension with the inflexible language of SCOTUS’s decisions.  It also cited multiple cases from other federal circuits that require enforcement of a delegation clause, but in fairness it appears that the “wholly groundless” approach was not presented to those appellate courts.  Therefore, there is now a split among the federal circuits regarding whether a court can at least spot-check a defendant’s claim of arbitrability before enforcing a delegation clause.

Finally, to end its arbitrability tome, the Tenth Circuit addressed whether the defendants who were not parties to the arbitration clause could also compel arbitration of the surgeon’s claims because they are “principals and agents” of the medical center. The court found against the non-signatories, finding Utah law did not support binding a parent company to an arbitration clause signed by its subsidiary, and that Utah law also did not support the individuals’ ability to compel arbitration.

Just three weeks into the year and already my pile of arbitration cases is a skyscraper! So, I will cover a lot of ground in this update.

First, the headline. Kimberly, Kourtney, and Khloe Kardashian moved to compel arbitration, although they were not signatories to the arbitration agreement.  Kroma Makeup EU v. Boldface Licensing + Branding, 2017 WL 192690 (11th Cir. Jan. 18, 2017).  Despite their celebrity status, they lost in both the Florida district court and the 11th Circuit.  The problem was that the claims they wanted to arbitrate were not within the scope of the arbitration clause, because the clause was limited to “disputes arising between [the Parties]” and they were not parties.  The court had a lot of fun with the fact that the dispute was over makeup companies, writing:

“Like makeup, Florida’s doctrine of equitable estoppel can only cover so much.  It does not provide a non-signatory with a scalpel to re-sculpt what appears on the face of a contract.”

(A defendant was also unable to compel arbitration of a non-signatory class of plaintiffs in Jones v. Singing River Health Services Foundation v. KPMG, 2017 WL 65384 (5th Cir. Jan. 5, 2017).  There, the court found the plaintiff did not rely on the contract to make their claims.)

SCOTUS. On January 13, the U.S. Supreme Court agreed to wade into the issue of whether class arbitration waivers are a violation of the federal labor laws.  The National Labor Relations Board (under the Obama Administration) has repeatedly found that they are, but a split developed among the federal courts on whether the NLRB was correct.  ( You can read more about the three cases in which cert was granted at Scotusblog.  And, yes, normally SCOTUS action on arbitration would be my headline, but I couldn’t pass up a chance to see if the Kardashians led to more blog traffic…)

California’s exception that could swallow the rule. In Prima Paint, a 1967 case, SCOTUS found that a plaintiff’s claim that a contract was induced by fraud must be sent to arbitration if that contract has an arbitration clause, as long as there is no argument that that the arbitration clause itself was induced by fraud.  But this week the 9th Circuit affirmed a finding that, under California law, there was “fraud in the inception” of a contract, making it void and the arbitration provision unenforceable.  DKS, Inc. v. Corporate Business Solutions, Inc., 2017 167475 (9th Cir. Jan. 17, 2017).  If I were a plaintiff, I might just try variations on the theme, maybe a claim of “misrepresentation in the inducement”?

Florida voids arbitration agreement as against public policy.  Without any consideration of federal preemption (maybe the parties didn’t raise it?), the Supreme Court of Florida held that the arbitration agreement in a patient’s contract with her clinic was “void as against public policy” because it excluded required provisions of a Florida statute (the Medical Malpractice Act).  Hernandez v. Crespo, 2016 WL 7406537 (Fl. Dec. 22, 2016).  In particular, the court found the contract’s arbitration clause was less favorable to the patient than the statute would have been in six ways.

Alaska says suing to collect debt does not waive the right to compel arbitration in later statutory case.  Banks had litigated debt-collection actions with credit card holders and gotten default judgments.  Later, the card holders filed statutory claims against those banks and the banks moved to compel arbitration.  Applying federal waiver law, Alaska’s Supreme Court found the banks had not waived their right to arbitrate by litigating the debts.  Hudson v. Citibank, 2016 WL 7321567 (Alaska Dec. 16, 2016).

Alabama says “ripeness” is a question for the arbitrator.  In the context of litigation over a claim of indemnification that was made before the claimant had been determined liable, the Alabama Supreme Court found that the defendant’s defense of “ripeness” had to be determined in arbitration, not in court.  “As we have held that the subject matter of the dispute is clearly within the arbitration provision, any ripeness issue must be resolved by the arbitrator, not by this Court.”  FMR Corp. v. Howard, 2017 WL 127991 (Alabama Jan. 13, 2017).

As a teaser, the Tenth Circuit also issued a blockbuster opinion recently, but it deserves its own (future) post…

If I had drafted this annual summary post on November 7, 2016, it would have looked different. At that point, the year had produced numerous (final or proposed) federal regulations that significantly restricted the use of arbitration with consumers in large industries.  In addition, Justice Scalia’s death, along with the prospective election of Secretary Clinton, appeared poised to alter the make-up of the U.S. Supreme Court, which has voted 5-4 in many of the critical arbitration decisions in the last decade.

As I draft this post on January 4, 2017, it is still true that 2016 produced multiple federal regulations and some significant decisions that move away from the rigid arbitration-enforcement world view that Justice Scalia professed, but the election of Donald Trump, and the opening on the U.S. Supreme Court, may undo those pro-consumer changes.

Here were the big arbitration developments I saw in 2016:

  • The death of Justice Antonin Scalia in February. He authored arbitration blockbusters like Buckeye Check Cashing v. Cardegna (2006); Rent-A-Center, West v. Jackson (2010); AT&T Mobility v Concepcion (2011); American Express Co. v. Italian Colors Restaurant (2013).
  • Courts created uncertainty for the enforcement of delegation clauses. Enforced in Mohamed v. Uber Technologies, Inc., __ F.3d __, 2016 WL 4651409 (9th Cir. Sept. 7, 2016) and Regions Bank v. Rice, 2016 WL 3031357 (Ala. May 27, 2016). Rejected in Morgan v. Sanford Brown Institute, 2016 WL 3248016 (N.J. June 14, 2016) and Smith v. D.R. Horton, Inc., 2016 WL 3660720 (S.C. July 6, 2016).
  • Courts also created uncertainty regarding who decides availability of class arbitration. Chesapeake Appalachia, LLC v. Scout Petroleum, LLC, 2016 WL 53806 (3d Cir. Jan. 5, 2015) (parties’ incorporation of AAA rules is insufficient to delegate the availability of classwide arbitration to arbitrators); Sandquist v. Lebo Automotive, Inc., 376 P.3d 506 (Cal. July 28, 2016) (arbitrator decides); Dell Web Communities, Inc. v. Carlson, 2016 WL 1178829 (4th Cir. Mar. 28, 2016) (court decides).
  • FAA allows no special treatment for famous athletes. Arbitral awards against Tom Brady and Adrian Peterson, which had been vacated in federal district courts, were un-vacated by federal appellate courts.
  • Finn got under my skinn. The high court in New Hampshire got creative in Finn v. Ballentine Partners, LLC, __ A.3d __, 2016 WL 3268852 (NH June 14, 2016). After finding no avenue for vacating an arbitration award in the FAA, it concluded the FAA’s sections regarding confirming and vacating awards do not apply in state courts and vacated the award under its state arbitration act.  Threw me into a tizzy.
  • 7th Circuit supported NRLB on arbitration. The NLRB has ruled that arbitration agreements which prohibit class actions violate the federal labor laws. But, five federal circuit courts have disagreed with the Board. This year, the 7th Circuit stood up for the Board in Lewis v. Epic Systems Corp., 2016 WL 3029464 (7th Cir. May 26, 2016). Watch for SCOTUS to weigh in on this issue in the near future.

 

  • Agencies engaged in rule-making aimed at eliminating pre-dispute arbitration clauses in many types of contracts.
    • May 2016: CFPB proposed 2 arbitration rules for financial services industry and received almost 13,000 comments in 90 days. The rules would allow financial consumers to participate in class actions in court, even if the governing agreements call for arbitration generally, and would require providers of arbitration services to submit redacted copies of arbitration pleadings to the CFPB for its continuing monitoring. (The rule is rumored to be finalized just before president-elect Trump is inaugurated.)
    • September 2016: the Center for Medicare and Medicaid Services issued a rule that will prohibit the use of pre-dispute arbitration agreements in most long term care facilities.
    • October 2016: the Federal Communications Commission indicated that it was developing a proposed rule to address “mandatory arbitration agreements” in contracts between communication service providers and consumers.
    • October 2016: the U.S. Department of Education banned pre-dispute arbitration agreements for all “Direct Loan borrowers.”

Where does that leave us, after this year of significant change? And why do I say the election could undo much of what you just read?

I am no administrative law scholar (this blog is not called RegulationNation, thank goodness), but I do know that these agency rules can be rescinded more easily than an act of Congress or even a precedential holding from SCOTUS. (See http://www.wsj.com/articles/reversing-rule-by-regulation-1479342822.)  I predict the Trump Administration will act to roll back some or all of these regulations. (I have not seen any pronouncements from the President-elect, but base my prediction on my general Spidey sense, as well as Mr. Trump’s motions to compel arbitration in litigation against his companies, and his pro-business positions.)  I also predict that SCOTUS will again become a 5-4 majority in favor of strict enforcement of arbitration clauses.

And what will our feisty state courts do in reaction to more rigid enforcement of arbitration clauses by SCOTUS and federal agencies? I think they will again get creative with their interpretations of state contract laws and even their application of the Federal Arbitration Act in state courts (a la Finn), just like was happening before SCOTUS issued the Concepcion decision. There was less of a reason for the state courts to do that over the past year, as they saw the federal government regulation stepping in.  Watch this blog to see if my predictions are accurate… And feel free to send me your thoughts if you disagree!

 

In a fight over whether a single lending transaction involved interstate commerce, the Supreme Court of Nebraska found the Federal Arbitration Act (FAA) applied and preempted its state arbitration act.  Wilczewski v. Charter West Nat’l Bank, __ N.W.2d__ (Neb. Dec. 9, 2016).

The case involved buyers who purchased a home from a bank (who owned it after a foreclosure) and then sued the bank alleging misrepresentation and fraud.  The bank moved to compel arbitration.  In response, the buyers argued (among other things) that the purchase agreement did not comply with the notice provision in Nebraska’s arbitration act.  The bank conceded that fact, but argued that the FAA applied, so it was immaterial.

The buyers pointed out that the real estate was in Nebraska, the buyers were residents of Nebraska, and the alleged statements were made in Nebraska.  Therefore, they argued, the purchase did not “affect interstate commerce.”  Nebraska’s courts disagreed.  Its highest court issued a well-reasoned analysis (with citations in footnotes!  Go Bryan Garner!) concluding that “there does not have to be a multi-state transaction for the FAA to be applicable.”  Instead, it pointed out the broad and nationwide impact of residential real estate lending was the critical factor in implicating the FAA.  Although the bank had briefed the multi-state nature of the homeowner’s insurance, title insurance, cashier’s check, etc., the court called those “tangential details” and did not rely on them in reaching its conclusion.

The court also distinguished opinions from other courts that refused to compel arbitration of disputes from individual residential real estate transactions.  It commented “none of the cases declining to compel arbitration involved a comprehensive practice or activity of lending money on residential real estate, enforcing liens, acquiring title, and reselling…. We need not decide and do not suggest whether the FAA applies to a simple contract for the sale of residential real estate.”

Having done the heavy lifting of finding the FAA applied, the court easily concluded that the buyers’ claims fell within the scope of the arbitration clause and therefore affirmed the lower court’s decision to compel arbitration.

If you ever wanted an “Exhibit A” for how drafting arbitration agreement(s) could go very, very wrong, the Tenth Circuit has just provided it. In Ragab v. Howard, __ F.3d __, 2016 WL 6832870 (10th Nov. 21, 2016), a majority of the panel concluded that because the parties had six differing arbitration agreements, they had never reached a meeting of the minds on arbitration and their dispute would stay in court.

The parties had six agreements that governed their business relationship. Each agreement had an arbitration agreement.  But, those arbitration agreements did not provide for the same set of rules to govern the arbitration, or the same method of choosing an arbitrator, or the same notice period before arbitration, or the same opportunity to recover attorneys’ fees.  Even so, when Mr. Ragab sued the defendants for misrepresentation and statutory violations, the defendants moved to compel arbitration.

Mr. Ragab’s claims fell within the scope of all six arbitration agreements, so the differing terms could not be brushed aside by implicating just a few agreements. Applying Colorado contract law, the district court found that there was no meeting of the minds as to how claims would be arbitrated, and denied the motion to compel.

The Tenth Circuit noted that “whether parties can be compelled to arbitrate given conflicting arbitration provisions” was a novel question under Colorado law, but that New Jersey, Florida, and California courts had already concluded that “irreconcilable” differences across arbitration provisions made them unenforceable. It reasoned that the courts that have granted motions to compel in similar circumstances found “the contracts themselves provided the solution,” via a merger clause.  Because the six agreements at issue in this case did not allow one to override the others, the court found it could not “arbitrarily pick one to enforce because doing so could violate the other five.”  Therefore, it concluded “there was no meeting of the minds” on arbitration, and affirmed the district court.

The dissenting judge pointed out that there is no “doubt that the parties before [the court] did intend to arbitrate. All six – yes, six – of the parties’ interrelated commercial agreements contain arbitration clauses.”  That judge urged a solution whereby the court would treat the procedural details surrounding arbitration as nonessential terms, and enforce the basic agreement to arbitrate.

For anyone involved with drafting contracts, this is an important lesson.  If the parties intend their choice of arbitration to be binding and enforceable, the arbitration agreements in interrelated agreements must be compatible.

Editors of the ABA Journal  have selected ArbitrationNation as one of the top 100 best “blawgs” for a legal audience.  This marks the fifth consecutive year that this blog has made the cut.  (See the full list here.)  It remains the only arbitration blog on the list.

Thank you to everyone who nominated Arbitration Nation and also to everyone who shares my passion for arbitration law.  Your feedback and nudges and comments often give me the energy I need to keep writing.

In a complete embarrassment of riches, I also received this award this week.

p.s. If this is your first time visiting ArbitrationNation – Welcome! If you want to know what it’s all about, these “listicles” are a good place to start: Five biggest surprises in arbitration law; Five states most hostile to arbitration; Five arbitration cases you should know; Five biggest surprises in the arbitration process; Five things that should really be in your arbitration agreement.

A per curiam opinion from the 8th Circuit last week highlights that even if an arbitration goes off the rails, the only remedy is vacating (or confirming) the award.  The parties cannot recover from the administrator of the arbitration.

In Owens v. American Arbitration Association, Inc., 2016 WL 6818858 (8th Cir. Nov. 18, 2016), a terminated CEO filed for arbitration against his former company.  The AAA administrated the arbitration and a three member panel was chosen.  One of the arbitrators disclosed that he had been consulted in a different matter handled by the same firms that were representing the CEO and the company.  No party objected to that arbitrator’s continued involvement or asked follow up questions.

The panel issued an initial award of over $3 million to the former CEO.  At that point, the company moved to remove the arbitrator who had made the disclosure, alleging the disclosure was incomplete.  The AAA did not have a rule or published procedure for addressing the removal of an arbitrator.  It allowed the CEO to respond, but did not inform any of the arbitrators that a motion had been made or allow the arbitrator whose disclosure was at issue to respond.  The AAA eventually removed the arbitrator who made the disclosure, and the remaining two arbitrators issued a final award in favor of the CEO.

The company moved to vacate the award, and a state court trial judge granted the motion.  At that point, the CEO sued the AAA in Minnesota state court for “breach of contract, unjust enrichment, [and] tortious interference with contract.”  The AAA removed the case to federal court, and the federal district court dismissed the claims based on arbitral immunity.

On appeal, the 8th Circuit made quick work of this messy case.  It first recognized that arbitrators, like judges, have immunity.  And, that immunity can extend to “organizations that sponsor arbitrations” and all of the acts within the arbitral process.  Second, it cited a previous case in which the 8th Circuit concluded that “arbitral immunity bars claims against a sponsoring organization based on the appointment of a biased arbitrator.”  (Even if the organization failed to follow its own rules in appointing the arbitrator.)  Third, it extended that rule, concluding that the removal of arbitrators is also protected by arbitral immunity.

p.s. In honor of the all-Minnesota nature of this case, I give you a photo I took of the prize-winning giant pumpkins at the Minnesota State Fair.  Happy Thanksgiving!

The highest state court in West Virginia just found that a credit card company did not waive its right to arbitrate, despite initially choosing a court forum and waiting almost five years to raise its right to arbitrate.  That is a somewhat surprising decision from a court that has been repeatedly willing to buck SCOTUS precedent in order to let parties avoid arbitration.

It was the right decision under current precedent though. The parties in Citibank, N.A. v. Perry, __ S.E.2d __, 2016 WL 6677944 (W. Va. Nov. 10, 2016), had an arbitration provision that could be enforced at any time.  It said a party who starts a court proceeding “may elect arbitration with respect to any Claim advanced in that proceeding by any other party.”  It also stated that “[a]t any time you or we may ask an appropriate court to compel arbitration of Claims…unless a trial has begun or a final judgment has been entered.”  And finally, the arbitration provision had a class action waiver and said it could not be waived without a written agreement.

The case started in 2010 with Citibank filing a debt collection action against the credit cardholder. The consumer appeared to acknowledge the debt, and Citibank filed a motion for judgment on the pleadings.  But the trial court never ruled.  In December of 2014, Citibank served discovery and got a scheduling order in place.  In May of 2015, the consumer filed a class counterclaim.  In response, Citibank asked the court to compel individual arbitration of the claims.  The district court found Citibank had waived its right to arbitration.

On appeal, Citibank argued that under the plain terms of its arbitration agreement, it could compel arbitration at any time before trial or judgment, unless the opposing party could show actual prejudice. The court was not willing to base its decision on the language of the agreement, however, citing federal cases that refuse to allow “no waiver” clauses to alter the usual waiver analysis.  Instead, it focused on whether Citibank’s conduct demonstrated that it had intentionally relinquished its right to arbitrate. Critically, the court turned the tables and said that in a situation where the consumer waited 4.5 years to assert a counterclaim, “we will not attribute the lengthy duration of activity…solely to Citibank.”  The court noted that the counterclaim changed the character of the case, and after that happened, Citibank timely filed a motion to compel arbitration.

____

In the “Don’t get too cute” category… An exotic dancer just won her right to keep her wage-and-hour claims in court, despite an arbitration agreement in her contract. Why?  Because the club styled her contract as a landlord/tenant arrangement in which she leased the stage.  Because the arbitration clause applied only to disputes arising out of the agreement, and the agreement purported to be a lease, the court refused to find its scope broad enough to cover her FLSA claims. Herzfeld v. 1416 Chancellor, Inc., 2016 WL 6574075 (3d Cir. Nov. 7, 2016).

In most circumstances, the Federal Arbitration Act requires that the losing party move to vacate an arbitration award within three months.  However, the Ninth Circuit recently ruled that the three-month timeline can be tolled, especially for something as significant as the chair lying about being a licensed attorney.

In Move, Inc. v. Citigroup Global Markets, Inc., 2016 WL 6543522 (9th Cir. Nov. 4, 2016), Move started a FINRA arbitration against Citigroup, alleging the mismanagement of $131 million.  Move expressed its strong desire to have an experienced attorney as chair, given the complexity of the claims.  So, it gave top ranking to “James H. Frank,” who certified to FINRA that he had a law degree and was licensed in three states.  Mr. Frank then served as the chair of the three person panel, signing a unanimous award denying Move’s claims in December of 2009.

However, the person who served as chair had lied about his qualifications and was not even a licensed attorney.  (He was impersonating a retired California attorney.)  Move discovered that fact in 2014.  (By reading The AmLaw Litigation Daily, which should now use this in its subscription sales pitches.)  Move then filed a motion to vacate the arbitration award.

The district court denied the motion, but the Ninth Circuit reversed.  First, it held “that the FAA is subject to equitable tolling.”  It appears to be the first federal appellate court to reach that result, with the Fifth Circuit having held the opposite in an unpublished case in 1993.  Although part of the lure of arbitration is its finality, the court noted “the general pro-arbitration policy relies on the assumption that the forum is fair, and therefore cannot justify special deference to arbitration outcomes in the face of a colorable claim that the forum was unfair in a particular case.” (Citing the 6th Circuit.)

Having concluded that it could address the substance of the vacatur motion, the court then found that the false information about the chairperson’s professional qualifications  constituted “misbehavior by which the rights of any party have been prejudiced” and therefore the award should be vacated under Section 10(a)(3).  Because Move made clear in the selection process that having an attorney as chair was critical, and the chair was “an impostor,” the parties’ contractual rights to arbitrate before a panel of three qualified FINRA arbitrators was prejudiced and Move “was deprived of a fundamentally fair hearing.”  The court was not swayed by arguments that the other two members of the panel had voted for the award as well, noting that “there is simply no way to determine” whether the chair influenced the other panelists.

Although I trust that it is a very unusual case for arbitrators to lie about their qualifications, it may be that their disclosure forms list lesser inaccuracies.  What if it was simply that the chair had let his licensure lapse in one of the states?  What lessons does this case offer for lesser types of inaccuracies?  For advocates, it suggests it is useful to make a clear record of what arbitrator qualifications are important during the selection process, so that if there is a problem you can show prejudice.  For arbitrators, it suggests you must be exceedingly careful in the accuracy of the bio you provide.  And for arbitration administrators, like JAMS, AAA and FINRA, it shows that having a system for double-checking arbitrator qualifications is very important.  It is part of the service you are providing the parties.

In an atmosphere in which a federal judge has blocked the CMS rule precluding arbitration in nursing home agreements, and we have a president-elect who seems likely to roll back the other agency regulations of arbitration, we may see courts policing the fundamental fairness of arbitration proceedings more often.  It will be one way to address the public sentiment that arbitration is unfair and stacked in favor of large companies (see this recent editorial by Gretchen Carlson).

On October 28, the Supreme Court granted a cert petition in a case in which the Kentucky Supreme Court refused to enforce arbitration agreements in nursing home agreements.  (Kentucky recently topped my list of states hostile to arbitration precisely because of the language in the decision that will be reviewed…)

In Kindred Nursing Centers Limited Partnership v. Clark, three wrongful death cases were consolidated.  In each of them, someone with power of attorney for the decedent had signed admission documents that included an arbitration clause.  However, Kentucky requires that a power-of-attorney document specifically authorize the agent to waive a jury or court trial in order to validly form an arbitration agreement, and these three POAs did not have that language.  The Kentucky court refused to infer the agent’s “authority to waive his principal’s constitutional right to access the courts and to trial by jury” unless that power is “unambiguously expressed” in the power-of -attorney document.

In its application to SCOTUS, the nursing homes engaged experienced Supreme Court practitioners and framed the question presented as: “Whether the FAA preempts a state-law contract rule that singles out arbitration by requiring a power of attorney to expressly refer to arbitration agreements before the attorney-in-fact can bind her principal to an arbitration agreement.”

I am always happy when SCOTUS takes a new arbitration case, because it usually provides further evidence of the need for my continued existence as an arbitration blogger, advocate, and specialist.  However, this grant strikes me as a bit odd.  Why wouldn’t SCOTUS just grant, vacate, and reverse (GVR) this case? It had all the hallmarks of a case ripe for GVR?  It also doesn’t make sense for SCOTUS to use this as a vehicle to address the many state court decisions refusing to uphold arbitration agreements in nursing home contracts, since in just one month, the federal government will start prohibiting the use of arbitration agreements in nursing home admission documents.  In that sense, this type of case is almost moot.  Nor does it make sense to me to clarify the preemption doctrine of Concepcion, when the Court just had that opportunity 11 months ago in DIRECTV.

One possible explanation is that SCOTUS wants to define which formation issues are appropriate for courts to tackle on motions to compel arbitration.  Indeed, in a cert petition in another arbitration case that was also conferenced on Friday, the petitioner alleged that state courts are (falsely?) labeling many disputes as ones of contract formation in order to keep them in the courts.

As long as we’re talking about the SCOTUS docket, it always surprises me which cases are and are not appealed to the highest court in the land.  For example, that Finn case from New Hampshire’s high court that left me speechless in June, because it held that Sections 9-11 of the FAA do not apply in state court?  Apparently the party whose arbitration award got vacated did not petition for cert.  (Though that party probably made the right call, as earlier this month SCOTUS denied cert in a case asking whether the FAA’s judicial review standards apply in state court.)  Same thing seems true of the for-profit college case in which the NJ Supreme Court refused to enforce a delegation clause (no cert petition).  But, the new circuit split over whether putting class action waivers in employment arbitration agreements violates the NRLA is already a subject of multiple cert petitions (this, and this and this ).  That issue seems like a strong contender for getting a petition granted.