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West Virginia’s Arbitration Ruling Could Not Stay Under SCOTUS’ FAA Preemption Radar

By Liz Kramer | February 21, 2012 in Validity of Arbitration Agreement

The U.S. Supreme Court today vacated the West Virginia Supreme Court of Appeals’ decision from last June, holding that pre-dispute arbitration clauses in nursing home contracts will not be enforced in that state.  The content of the decision is not surprising, as it relies on notions of federal preemption and follows the analysis in Concepcion.  The only mildly surprising thing about today’s decision in Marmet Health Care Center, Inc. v. Brown is the Court’s tone.

Today’s per curiam decision from the Court appears intended to serve as a stern warning to state courts: Follow our FAA case law or face reversal.  The Supreme Court was especially perturbed that the West Virginia court had very publicly criticized the Court’s arbitration case law.  The West Virginia court considered whether its conclusion (that its state public policy prevented the enforcement of pre-dispute arbitration clauses in nursing home agreements) was preempted by federal law, but rejected preemption based on its analysis that the Supreme Court’s interpretation of the Federal Arbitration Act was “created from whole cloth.”  The state court might as well have hired MIA to dance on the steps of the Supreme Court and flip the Justices the bird. 

In no uncertain terms, the Court wrote: “When this Court has fulfilled its duty to interpret federal law, a state court may not contradict or fail to implement the law so established.”  The West Virginia court will get a second chance to find the nursing home agreements unenforceable, however, as the Court remanded for consideration of their unconscionability.

Given this decision, it will be interesting to see if the Court also vacates related cases from the Florida Supreme Court, which distinguished various SCOTUS precedent to find that arbitration agreements in nursing home admission contracts were unenforceable because they did not comport with state statutes.

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