Interaction of Federal and State Law - Chapter 3 - AAA Yearbook on Arbitration and the Law - 30th Edition
Originally from the AAA Yearbook on Arbitration and the Law - 30th Edition
3.01 Commerce Clause Preemption of State Law by the FAA
Marmet Health Care Center Inc. v. Brown, 132 S. Ct. 1201 (2012)
State’s prohibition against pre-dispute agreements to arbitrate personal-injury or wrongful-death claims against nursing homes was a categorical rule which prohibited arbitration, and was therefore preempted by the FAA.
The question in this case was whether the FAA preempted a determination by West Virginia courts that, as a matter of state public policy, pre-dispute arbitration agreements are not enforceable with respect to claims made against nursing homes for injury or wrongful death claims. Family members of patients who died while in a nursing home brought separate suits against the nursing home, claiming that negligence caused the injuries or harm resulting in the patients’ death. In each case, a family member of a patient requiring extensive nursing care had signed an agreement with a nursing home on behalf of the patient. These agreements included a provision requiring the parties to arbitrate all disputes other than claims to collect late payments owed by the patient. The agreements also held the party filing the arbitration responsible for paying a filing fee in accordance with the Rules of the AAA fee schedules.
A state trial court dismissed the suits based on the arbitration clauses. The West Virginia Supreme Court of Appeals reversed on the ground that arbitration clauses were unenforceable as a matter of public policy. The state court determined that the FAA’s coverage was limited and not applicable to personal injury or wrongful death suits.
In a unanimous per curiam opinion, the U.S. Supreme Court vacated the decision of the West Virginia Supreme Court of Appeals, holding that the state public policy was preempted by the FAA. The Court unequivocally determined that state and federal courts must enforce the FAA with respect to all arbitration agreements covered by that statute. The Court further explained that the statute’s text includes no exception for personal-injury or wrongful-death claims. The Court decided that the Supreme Court of West Virginia misread and disregarded Supreme Court precedents interpreting the FAA.