In Kindred, Supreme Court to Revisit Mandatory Arbitration Clauses

Professor Adam Zimmerman offers his thoughts on Kindred Nursing Centers v. Clark, scheduled for oral arguments before the U.S. Supreme Court on Wednesday, Feb. 22.

Kindred involves one of the latest challenges to mandatory arbitration clauses that bar class actions.  The Supreme Court in a series of cases since Concepcion has broadly permitted corporations to require that consumers enter arbitration agreements waiving rights to bring class actions in any forum.  But long before Concepcion, the Court also drew an important distinction for parties challenging arbitration agreements.  In Buckeye Check Cashing, the Court said a party who challenges the terms of an agreement that includes an arbitration provision has to raise that problem in the arbitration itself.  But when a party challenges whether or she entered into an arbitration agreement at all, the Court suggested that's something for courts to decide under state law.  

Nursing home cases raise that problem because many people in nursing homes may rely on someone else to enter into the nursing home contract using a power-of-attorney.  The lower court found that, as a matter of state law, it could decide whether those mandatory arbitration agreements signed by those using a power of attorney were invalid and ultimately found they were.  The Supreme Court will now decide whether, under the logic of cases like Concepcion, the Kentucky Supreme Court should have enforced the arbitration agreement under the Federal Arbitration Act, or instead, whether a party can raise state law challenges to entering such an agreement.