The U.S. Supreme Court rules that the Federal Arbitration Act bars Kentucky from requiring a power of attorney document to include a clear statement allowing the authorization of arbitration agreements in order for an arbitration agreement signed by an agent under the power of attorney to be valid. Kindred Nursing Centers Limited Partnership v. Clark (U.S., No. 16-32, May 15, 2017).
Beverly Wellner was an agent under a power of attorney for her husband, and Janis Clark held a power of attorney for her mother. The Wellner power of attorney gave Ms. Wellner the authority to institute legal proceedings and enter into contracts in relation to real and personal property. The Clark power of attorney authorized Ms. Clark to sign contracts on her mother's behalf. Ms. Wellner's husband and Ms. Clark's mother entered the same nursing home, and Ms. Wellner and Ms. Clark signed arbitration agreements on their behalves.
After Ms. Wellner's husband and Ms. Clark's mother died in the nursing home, both estates brought suits against the nursing home for negligence. The nursing home moved to dismiss the cases, arguing that the arbitration agreements prohibited the estates from suing in court. A Kentucky trial court and court of appeals allowed the suits to continue. The Kentucky Supreme Court consolidated the cases and ruled that a power of attorney could not authorize a representative to enter into an arbitration agreement without specifically saying so in the document. The nursing home appealed to the U.S. Supreme Court.
In a 7-1 ruling, the U.S. Supreme Court reverses, holding that the rule the Kentucky Supreme Court enunciated requiring a power of attorney to include a clear statement allowing the authorization of arbitration agreements violates the Federal Arbitration Act because it does not "put arbitration agreements on an equal plane with other contracts." Delivering the opinion for the majority, Justice Kagan wrote, "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."
For the full text of this decision, go to: https://www.supremecourt.gov/opinions/16pdf/16-32_o7jp.pdf
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