More Arbitration Argument Before SCOTUS

Today, the U.S. Supreme Court (SCOTUS) has oral arguments in two arbitration cases. In the first matter, Henry Schein, Inc. v. Archer & White Sales, Inc., the justices consider if a judge or an arbitrator should decide if a particular dispute should be resolved in arbitration rather than in court. In the second case, Lamps Plus Inc. v. Varela, the issue is whether the Federal Arbitration Act (FAA) precludes state law interpretation of arbitration contracts allowing for class arbitration and who decides whether a particular dispute should be decided in arbitration rather than a court. SCOTUS has already recognized that arbitrators decide issues of arbitrability if the parties clearly and unmistakably agree the arbitrator can assess whether any particular dispute is sufficiently related to the contract to warrant arbitration. Apparently, the U.S. Court of Appeals for the 5th Circuit will not send a case to the arbitrator decide the question of arbitrability, even if the parties have agreed that the arbitrator should decide such questions, if the court finds the claim of arbitrability wholly groundless. The contract in the first case mentioned above provided for arbitration of any dispute arising under or related to the contract, except for actions seeking injunctive relief. The complaint sought damages for Sherman Act violations, as well as injunctive relief. The defendants sought arbitration, arguing the thrust of the complaint was to seek damages, and that injunctive relief could issue after the arbitrator ruled on the merits. Lower courts refused to send the matter to arbitration, finding the request for arbitration groundless because of the inclusion in the complaint of a count for injunctive relief. Because SCOTUS already decided parties can delegate issues of arbitrability to an arbitrator in precedents that do not include exceptions for cases in which courts regard the request for arbitration as groundless, a reversal is likely given recent trends in favor of arbitration. The second case hinges on whether the U.S. Court of Appeals for the 9th Circuit correctly held that an employer did consent to class arbitration when it included language in the arbitration contract that committed the parties to use arbitration in lieu of any and all lawsuits or other civil legal proceedings. This case too may find itself going back, but on procedural grounds as the FAA dictates that an appeal may not be taken from an interlocutory order directing arbitration to proceed. See more here-- https://bit.ly/2AzcN6e and https://bit.ly/2JodgdX and https://bit.ly/2w5K2O8

SCOTUS Kicks Arbitration Case

This month, the U.S. Supreme Court kicked a Kindred Healthcare arbitration case, declining to review the case for a second time. Last year, the High Court sided with Kindred in Kindred Nursing Ctrs. LP v. Clark, which related to whether an arbitration agreement signed by a Power Of Attorney (POA) is enforceable if not granted explicit permission to sign such a document in the POA. Kindred petitioned for certiorari this time arguing the Kentucky Supreme Court failed to adhere to the decision in its favor. The long term care provider asserted the state refused to honor the Justices’ interpretation of the Federal Arbitration Act (FAA). The state court declined to honor the arbitration agreement signed by power of attorney, without the nursing home resident giving express authority to sign away the right to a trial. The nursing home relied on two provisions in the power of attorney, one giving power to demand or collect money and institute legal proceedings, and another giving the power to make contracts “in relation to both real and personal property.” The court found that the arbitration agreement “was not the enforcement…of something then due or to become due” “nor was it the making of a contract…pertaining to” property. As a result, “that aspect of the Extendicare decision remains undisturbed.” The case rejected by the Supreme Court was one of three others consolidated under Clark, and was bounced back to Kentucky. Interestingly, the Kentucky high court just became the first state to find employers may not require employees to sign arbitration agreements as a condition of their employment, indicating a hostility toward FAA preemption and the arbitration process that may bleed over into this area of law as well. See more here-- https://bit.ly/2S2Wzsx and https://bit.ly/2R28ju1