KINDRED NURSING CENTERS LIMITED PARTNERSHIP, DBA WINCHESTER CENTRE FOR HEALTH AND REHABILITATION, NKA FOUNTAIN CIRCLE HEALTH AND REHABILITATION, ET AL., PETITIONERS
JAMS E. CLARK ET AL.
February 22, 2017
WRIT OF CERTIORARI TO THE SUPREME COURT OF KENTUCKY
Beverly Wellner and Janis Clark-the wife and daughter,
respectively, of Joe Wellner and Olive Clark-each held a
power of attorney affording her broad authority to manage
her family member's affairs. When Joe and Olive moved
into a nursing home operated by petitioner Kindred Nursing
Centers L. P., Beverly and Janis used their powers of
attorney to complete all necessary paperwork. As part of
that process, each signed an arbitration agreement on her
relative's behalf providing that any claims arising
from the relative's stay at the facility would be
resolved through binding arbitration. After Joe and Olive
died, their estates (represented by Beverly and Janis)
filed suits alleging that Kindred's substandard care
had caused their deaths. Kindred moved to dismiss the
cases, arguing that the arbitration agreements prohibited
bringing the disputes to court. The trial court denied
Kindred's motions, and the Kentucky Court of Appeals
agreed that the suits could go forward.
Kentucky Supreme Court consolidated the cases and affirmed.
The court initially found that the language of the Wellner
power of attorney did not permit Beverly to enter into an
arbitration agreement on Joe's behalf, but that the
Clark document gave Janis the capacity to do so on behalf
of Olive. Nonetheless, the court held, both arbitration
agreements were invalid because neither power of attorney
specifically entitled the representative to enter
into an arbitration agreement. Because the Kentucky
Constitution declares the rights of access to the courts
and trial by jury to be "sacred" and
"inviolate, " the court determined, an agent
could deprive her principal of such rights only if
expressly provided in the power of attorney.
The Kentucky Supreme Court's clear-statement rule
violates the Federal Arbitration Act by singling out
arbitration agreements for disfavored treatment. Pp. 4-10.
The FAA, which makes arbitration agreements "valid,
irrevocable, and enforceable, save upon such grounds as
exist at law or in equity for the revocation of any
contract, " 9 U.S.C. §2, establishes an
equal-treatment principle: A court may invalidate an
arbitration agreement based on "generally applicable
contract defenses, " but not on legal rules that
"apply only to arbitration or that derive their
meaning from the fact that an agreement to arbitrate is at
issue, " AT&T Mobility LLC v. Conception,
563 U.S. 333, 339. The Act thus preempts any state rule
that discriminates on its face against arbitration or that
covertly accomplishes the same objective by disfavoring
contracts that have the defining features of arbitration
Kentucky Supreme Court's clear-statement rule fails to
put arbitration agreements on an equal plane with other
contracts. By requiring an explicit statement before an
agent can relinquish her principal's right to go to
court and receive a jury trial, the court did exactly what
this Court has barred: adopt a legal rule hinging on the
primary characteristic of an arbitration agreement. Pp.
In support of the decision below, respondents argue that
the clear-statement rule affects only contract formation,
and that the FAA does not apply to contract formation
questions. But the Act's text says otherwise. The FAA
cares not only about the "enforce [ment]" of
arbitration agreements, but also about their initial
"valid[ity]"-that is, about what it takes to
enter into them. 9 U.S.C. §2. Precedent confirms the
point. In Conception, the Court noted the
impermissibility of applying a contract defense like duress
"in a fashion that disfavors arbitration." 563
U.S., at 341. That discussion would have made no sense if
the FAA had nothing to say about contract formation,
because duress involves "unfair dealing at the
contract formation stage." Morgan Stanley Capital
Group Inc. v. Public Util. Dist. No. 1 of Snohomish
Cty., 554 U.S. 527, 547. Finally, respondents'
view would make it trivially easy for States to undermine
the Act. Pp. 7-9.
Because the Kentucky Supreme Court invalidated the
Clark-Kindred arbitration agreement based exclusively on
the clear-statement rule, the court must now enforce that
agreement. But because it is unclear whether the
court's interpretation of the Wellner document was
wholly independent of its rule, the court should determine
on remand whether it adheres, in the absence of the rule,
to its prior reading of that power of attorney. Pp. 9-10.
478 S.W.3d 306, reversed in part, vacated in part, and
J., delivered the opinion of the Court, in which ROBERTS, C.
J., and Kennedy, Ginsburg, Breyer, Alito, and Sotomayor, JJ.,
joined. THOMAS, J., filed a dissenting opinion. GORSUCH, J.,
took no part in the consideration or decision of the case.
Federal Arbitration Act (FAA or Act) requires courts to place
arbitration agreements "on equal footing with all other
contracts." DIRECTV, Inc. v. Imburgia, 577
U.S.__, __ (2015) (slip op., at 6) (quoting Buckeye Check
Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006));
see 9 U.S.C. §2. In the decision below, the Kentucky
Supreme Court declined to give effect to two arbitration
agreements executed by individuals holding "powers of
attorney"-that is, authorizations to act on behalf of
others. According to the court, a general grant of power
(even if seemingly comprehensive) does not permit a legal
representative to enter into an arbitration agreement for
someone else; to form such a contract, the representative
must possess specific authority to "waive his
principal's fundamental constitutional rights to access
the courts [and] to trial by jury." Extendicare
Homes, Inc. v. Whisman, 478 S.W.3d 306, 327 (2015).
Because that rule singles out arbitration agreements for
disfavored treatment, we hold that it violates the FAA.
Kindred Nursing Centers L. P. operates nursing homes and
rehabilitation centers. Respondents Beverly Wellner and Janis
Clark are the wife and daughter, respectively, of Joe Wellner
and Olive Clark, two now-deceased residents of a Kindred
nursing home called the Winchester Centre.
times relevant to this case, Beverly and Janis each held a
power of attorney, designating her as an
"attorney-in-fact" (the one for Joe, the other for
Olive) and affording her broad authority to manage her family
member's affairs. In the Wellner power of attorney, Joe
gave Beverly the authority, "in my name, place and
stead, " to (among other things) "institute legal
proceedings" and make "contracts of every nature in
relation to both real and personal property." App.
10-11. In the Clark power of attorney, Olive provided Janis
with "full power ... to transact, handle, and dispose of
all matters affecting me and/or my estate in any possible
way, " including the power to "draw, make, and sign
in my name any and all ... contracts, deeds, or
agreements." Id., at 7.
Olive moved into the Winchester Centre in 2008, with Beverly
and Janis using their powers of attorney to complete all
necessary paperwork. As part of that process, Beverly and
Janis each signed an arbitration agreement with Kindred on
behalf of her relative. The two contracts, worded
identically, 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 14, 21.
Joe and Olive died the next year, their estates (represented
again by Beverly and Janis) brought separate suits against
Kindred in Kentucky state court. The complaints alleged that
Kindred had delivered substandard care to Joe and Olive,
causing their deaths. Kindred moved to dismiss the cases,
arguing that the arbitration agreements Beverly and Janis had
signed prohibited bringing their disputes to court. But the
trial court denied Kindred's motions, and the Kentucky
Court of Appeals agreed that the estates' suits could go
forward. See App. to Pet. for Cert, l25a-l26a, l37a-l38a.
Kentucky Supreme Court, after consolidating the cases,
affirmed those decisions by a divided vote. See 478 S.W.3d,
at 313. The court began with the language of the two powers
of attorney. The Wellner document, the court stated, did not
permit Beverly to enter into an arbitration agreement on
Joe's behalf. In the court's view, neither the
provision authorizing her to bring legal proceedings nor the
one enabling her to make property-related contracts reached
quite that distance. See id., at 325-326; supra,
at 2. By contrast, the court thought, the Clark power of
attorney extended that far and beyond. Under that document,
after all, Janis had the capacity to "dispose of all
matters" affecting Olive. See supra, at 2.
"Given this extremely broad, ...