This case involves claims by two nursing home residents that inadequate care led to their deaths. The nursing home sought to send the claims to arbitration under agreements signed at the time of the residents’ admission by family members acting under powers of attorney. The Kentucky Supreme Court held that the powers of attorney did not confer authority to agree to arbitration. The nursing home sought review by the U.S. Supreme Court, which granted certiorari. The nursing home argues that the Kentucky Supreme Court’s ruling was hostile to arbitration and thus is preempted by the FAA. Public Citizen filed an amicus brief supporting the nursing home residents and arguing that the state court’s application of state agency law principles is not preempted by the FAA because it does not post an obstacle to fulfillment of the FAA’s purposes of fostering enforcement of arbitration only where the parties have actually consented to arbitration.
On May 15, 2017, the Supreme Court in an 8-1 opinion by Justice Kagan held that the Kentucky Supreme Court’s decision was preempted by the FAA to the extent that it applied a “clear statement” rule to determine whether an agent is authorized to enter into an arbitration agreement that it would not have applied to determine the agent’s authority to enter into other types of agreements.