I am a true arbitration nerd. But, when SCOTUS takes a THIRD arbitration case for its upcoming term, I wonder if the Justices are more obsessed with arbitration than I am. (Reminder of the other two here.) If they hear about the same total number of cases as this year (69), arbitration will make up more than 4% of their docket. Now, 4% isn’t huge. For reference, intellectual property cases made up less than 4% of cases filed in federal district courts last year, and there were three I.P. cases decided by SCOTUS (two on inter partes review and the WesternGeco case). At least I.P. cases have a category in the annual judiciary report, though. That’s more than arbitration can say. And still, it has three cases before the Supremes.
Enough stats, what is this case? It is Henry Schein Inc. v. Archer and White Sales Inc., in which SCOTUS is going to resolve the circuit split over the “wholly groundless” doctrine. Given how the NLRB decision just came out, I don’t think I’m stepping too far out on a limb if I predict: “wholly groundless” will be grounded. (Maybe even “grounded wholly?” Seriously, there has got to be some good word play possible, but I am too tired from watching the World Cup to develop it.) Put simply, that doctrine will not stand in the way of any future delegation clauses.
(Thanks to Mark Kantor for being the first to tell me certiorari was granted in this case.)
Switching gears, there are three new decisions from state high courts on the arbitrability of claims against nursing homes. Two enforce the arbitration clauses, and one decidedly does not.
Nebraska and Colorado issued the pro-arbitration decisions, in both cases reversing a trial court’s refusal to enforce arbitration agreements. In Colorow Health Care, LLC v. Fischer, 2018 WL 2771051 (Colo. June 11, 2018), the district court denied the nursing home’s motion to compel arbitration because it was not in bold text, as required by a state statute. Without any discussion of the FAA (which would have been a much easier ground for reversal), the Colorado Supreme Court found that the statute only requires substantial compliance, and the defendant had substantially complied (by including the right language, in a larger font size than required, just not in bold). In Heineman v. Evangelical Lutheran Good Samaritan Society, 300 Neb. 187 (June 8, 2018), the district court had found the arbitration agreement lacked mutuality, violated the state arbitration statute, and violated public policy (because of the CMS rule on arbitration). On appeal, the Supreme Court of Nebraska found mutuality, found the FAA applied and preempted the state arbitration statute, and noted that the CMS rule had been enjoined.
A week later, though, Nebraska rejected arbitrability in a different case against a nursing home. In Cullinane v. Beverly Enterprises-Nebraska, Inc., 300 Neb. 210 (June 15, 2018), the issue was whether the arbitration agreement signed by the deceased’s husband was enforceable. He admitted he signed all the admission documents, but stated in an affidavit that he understood he had to agree to arbitrate for his wife to be admitted to the facility. He also stated that he did not understood he was waiving his wife’s right to a jury trial, and would not have signed if he had known that and that arbitration was optional. Applying the FAA and state contract law, the Nebraska Supreme Court found the district court was not “clearly wrong” when it found the husband was fraudulently induced to executing the arbitration agreement for his wife. Critically, the facility had not introduced any affidavit contradicting the alleged statements made at the time of admission.