SCOTUS (Yet Again) Affirms FAA Preemption

Maybe West Virginia didn’t get the memo.  In Marmet Health Care Center, Inc. v. Brown, the U.S. Supreme Court, once again, held that state and federal courts must enforce the Federal Arbitration Act as to all arbitration agreements it covers.  This should sound very familiar to our readers.  After all, the Court’s statement in AT&T Mobility LLC v. Concepcion last year was quite clear:  “When state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA.”

In Marmet, however, the Supreme Court of Appeals of West Virginia ignored the U.S. Supreme Court’s recent dictates on enforceability of arbitration agreements under the FAA (SPOILER ALERT:  they don’t take kindly to that).  So, three plaintiffs brought actions against West Virginia nursing homes, alleging that the nursing home’s negligence resulted in the death of a family member.  Each decedent had been cared for by the nursing home pursuant to contracts that required the parties to arbitrate all disputes.  The Supreme Court of Appeals of West Virginia, citing public policy under state law, held that all pre-dispute arbitration agreements that apply to claims alleging personal injury or wrongful death against nursing homes are unenforceable. The court concluded that Congress could not have intended the FAA to apply to personal injury or wrongful death suits that are only tangentially related to a contract.

Not so, said SCOTUS:

West Virginia’s prohibition against predispute agreements to arbitrate personal-injury or wrongful-death claims against nursing homes is a categorical rule prohibiting arbitration of a particular type of claim, and that rule is contrary to the terms and coverage of the FAA.

Interestingly, the Supreme Court remanded for further consideration of the “alternative” holding the West Virginia Supreme Court suggested in its opinion–namely, that the arbitration provisions were unconscionable under state common law.   Care to guess how SCOTUS will rule on that argument?

About Bose McKinney & Evans LLP

Bose McKinney & Evans LLP is a business law firm, headquartered in Indianapolis, Indiana, serving both publicly held and privately held businesses, governmental entities and high-growth industries. Our clients include Fortune 100 companies, international manufacturers, national and regional financial institutions, agribusinesses, sports teams, university-incubated start-ups, media, utilities, cities and schools, to name a few. We strive to build strong relationships with our clients as key business advisors, to exceed expectations in the quality of our work, to be knowledgeable about our clients’ businesses and sectors, to be responsive to service needs and to continually seek to improve the delivery of client services. Our ultimate focus is on our clients.
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