Petition for Writ of Certiorari — Kindred Nursing Centers Limited Partnership, dba Winchester Centre for Health and Rehabilitation, nka Fountain Circle Health and Rehabilitation, et al., Petitioners v. Beverly Wellner, Individually and on Behalf of the Estate of Joe P. Wellner, Deceased

No.

In the Supreme Court of the United States

KINDRED NURSING CENTERS LIMITED PARTNERSHIP

DBA WINCHESTER CENTRE FOR HEALTH AND

REHABILITATION NKA FOUNTAIN CIRCLE HEALTH AND

REHABILITATION, ET AL.,

Petitioners,

v.

BEVERLY WELLNER, INDIVIDUALLY AND ON BEHALF OF

THE ESTATE OF JOE P. WELLNER, DECEASED, AND ON

BEHALF OF THE WRONGFUL DEATH BENEFICIARIES OF

JOE P. WELLNER,

Respondent.

On Petition for a Writ of Certiorari to the

Supreme Court of Kentucky

PETITION FOR A WRIT OF CERTIORARI

ANDREW J. PINCUS

Counsel of Record

ARCHIS A. PARASHARAMI

DANIEL E. JONES

Mayer Brown LLP

1999 K Street, NW

Washington, DC 20006

(202) 263-3000

apincus@mayerbrown.com

Counsel for Petitioners

i

QUESTION PRESENTED

This Court in Kindred Nursing Centers Limited

Partnership v. Clark, 137 S. Ct. 1421 (2017), reversed the Kentucky Supreme Court’s decision refusing to enforce arbitration agreements based on a

state-law rule that singled out arbitration agreements for discriminatory treatment—because Section 2 of the Federal Arbitration Act (FAA) requires

courts “to put arbitration agreements on an equal

plane with other contracts.” Id. at 1427.

On remand from this Court’s decision in Kindred,

the Supreme Court of Kentucky held that the power

of attorney granted to respondent Beverly Wellner

did not authorize her to agree to arbitration on behalf of her principal, even though (1) the power of attorney authorized her to make “contracts of every nature in relation to both real and personal property”;

and (2) legal claims are personal property under

long-settled Kentucky law. Instead, the court held

that a pre-dispute arbitration agreement relates

solely to the principal’s constitutional rights to a trial

by jury and to go to court, and does not relate to the

principal’s legal claims.

The question presented is:

Whether Section 2 of the FAA preempts the Kentucky Supreme Court’s newly-announced rule holding that a power of attorney authorizing the holder

to enter into “contracts of every nature in relation to

both real and personal property” does not encompass

arbitration agreements because those agreements

instead relate to rights to trial by jury and access to

court.

ii

RULE 29.6 STATEMENT

The parent corporations of Kindred Nursing Centers Limited Partnership are Kindred Nursing Centers East, LLC and Kindred Hospital Limited Partnership. The parent corporation of Kindred Nursing

Centers East, LLC is Kindred Healthcare Operating,

Inc.; and the parent corporations of Kindred Hospital

Limited Partnership are Kindred Hospital West,

LLC and Kindred Nursing Centers Limited Partnership. The parent corporation of Kindred Healthcare

Operating, Inc. is Kindred Healthcare, Inc.

Kindred Healthcare, Inc. is a publicly traded corporation with no parent corporation. No publicly

traded company owns 10% or more of the stock of

Kindred Healthcare, Inc.

iii

TABLE OF CONTENTS

Page

QUESTION PRESENTED..........................................i

RULE 29.6 STATEMENT......................................... ii

TABLE OF AUTHORITIES......................................iv

OPINIONS BELOW...................................................1

JURISDICTION .........................................................1

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED..................................1

STATEMENT .............................................................2

A. Factual Background. .....................................4

B. Respondent’s Lawsuit. ..................................5

C. This Court’s Reversal and Remand. .............7

D. The Kentucky Supreme Court’s

Decision on Remand. .....................................8

REASONS FOR GRANTING THE PETITION ......11

A. The Decision Below Conflicts With The

FAA And Defies This Court’s

Precedents....................................................12

B. Summary Reversal Is Appropriate. ............19

CONCLUSION .........................................................22

APPENDIX A – The Kentucky Supreme Court’s

opinion on remand

(November 2, 2017).........................1a

iv

TABLE OF AUTHORITIES

Page(s)

Cases

Allied-Bruce Terminix Cos. v. Dobson,

513 U.S. 265 (1995)..............................................21

Amgen Inc. v. Harris,

136 S. Ct. 758 (2016) (per curiam) ......................21

AT&T Mobility LLC v. Concepcion,

563 U.S. 333 (2011)..............................................13

Button v. Drake,

195 S.W.2d 66 (1946) .................................9, 14, 19

Citizens Bank v. Alafabco, Inc.,

539 U.S. 52 (2002) (per curiam) ..........................20

DIRECTV, Inc. v. Imburgia,

136 S. Ct. 463 (2015).................................... passim

Doctor’s Assocs., Inc. v. Casarotto,

517 U.S. 681 (1996)........................................11, 13

EEOC v. Waffle House, Inc.,

534 U.S. 279 (2002)..............................................12

Extendicare Homes, Inc. v. Whisman,

478 S.W.3d 306 (Ky. 2015)........................... passim

First Options of Chicago, Inc. v. Kaplan,

514 U.S. 938 (1995)..............................................13

Howlett v. Rose,

496 U.S. 356 (1990)..............................................19

Kindred Nursing Centers Limited

Partnership v. Clark,

137 S. Ct. 1421 (2017).................................. passim

v

TABLE OF AUTHORITIES—continued

Page(s)

KPMG LLP v. Cocchi,

565 U.S. 18 (2011) (per curiam) ..........................20

Logan v. Zimmerman Brush Co.,

455 U.S. 422 (1982)..............................................14

Marmet Health Care Ctr., Inc. v. Brown,

565 U.S. 530 (2012)........................................11, 20

Mastrobuono v. Shearson Lehman

Hutton, Inc.,

514 U.S. 52 (1995)................................................13

Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc.,

473 U.S. 614 (1985)..............................................17

Mullane v. Central Hanover Bank &

Trust Co.,

339 U.S. 306 (1950)..............................................14

Nitro-Lift Techs., LLC v. Howard,

568 U.S. 17 (2012) (per curiam) ..........................20

Perry v. Thomas,

482 U.S. 483 (1987)..............................................13

Ping v. Beverly Enterprises, Inc.,

376 S.W.3d 581 (Ky. 2012).................................5, 6

Scherk v. Alberto-Culver Co.,

417 U.S. 506 (1974)..............................................17

Southland Corp. v. Keating,

465 U.S. 1 (1984)..................................................17

vi

TABLE OF AUTHORITIES—continued

Page(s)

Volt Info. Scis., Inc. v. Bd. of Trs. of

Leland Stanford Junior Univ.,

489 U.S. 468 (1989)..............................................13

Statutes

9 U.S.C. § 2 ............................................................1, 13

28 U.S.C. § 1257(a)......................................................1

Ky. Rev. Stat. § 216.510 et seq. ...................................5

PETITION FOR A WRIT OF CERTIORARI

Petitioners Kindred Nursing Centers Limited

Partnership, et al. (“Kindred”) respectfully petition

for a writ of certiorari to review the judgment of the

Supreme Court of Kentucky in this case.

OPINIONS BELOW

The opinion of the Supreme Court of Kentucky

(App., infra, 1a-21a) is reported at 533 S.W.3d 189.

This Court’s prior opinion is reported at 137 S. Ct.

1421. The Supreme Court of Kentucky’s prior opinion

is reported at 478 S.W.3d 306.

JURISDICTION

The judgment of the Supreme Court of Kentucky

was entered on November 2, 2017. App., infra, 1a.

On January 22, 2018, Justice Kagan extended the

time for filing a petition for a writ of certiorari to and

including March 16, 2018. This Court’s jurisdiction

rests on 28 U.S.C. § 1257(a).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The Supremacy Clause of the Constitution, art.

VI, cl. 2, provides in pertinent part:

This Constitution, and the Laws of the United States which shall be made in Pursuance

thereof * * * shall be the supreme Law of the

Land; and the Judges in every State shall be

bound thereby, any Thing in the Constitution

or Laws of any State to the Contrary notwithstanding.

Section 2 of the Federal Arbitration Act (“FAA”),

9 U.S.C. § 2, provides in pertinent part:

2

A written provision in * * * a contract evidencing a transaction involving commerce to

settle by arbitration a controversy thereafter

arising out of such contract or transaction,

* * * or an agreement in writing to submit to

arbitration an existing controversy arising

out of such contract, transaction, or refusal,

shall be valid, irrevocable, and enforceable,

save upon such grounds as exist at law or in

equity for the revocation of any contract.

STATEMENT

This case arises from the Supreme Court of Kentucky’s continued refusal to adhere to this Court’s

precedents interpreting the Federal Arbitration

Act—including the Court’s prior opinion in this very

case, Kindred Nursing Centers Limited Partnership

v. Clark, 137 S. Ct. 1421 (2017). This Court held in

Kindred that the Kentucky Supreme Court’s clearstatement rule—that a “power of attorney could not

entitle a representative to enter into an arbitration

agreement without specifically saying so”—violated

the FAA’s mandate “to put arbitration agreements

on an equal plane with other contracts.” Id. at 1425,

1427 (emphasis in original).

This Court reversed the Kentucky Supreme

Court’s judgment in favor of Janis Clark, and it vacated and remanded the Kentucky court’s judgment

with respect to Beverly Wellner—the respondent

here—instructing the court below to determine

whether its prior construction of Wellner’s power of

attorney was “impermissibl[y] taint[ed]” by its erroneous, arbitration-specific rule. Id. at 1429.

The Kentucky Supreme Court’s opinion on remand—and the dissenting opinion in response—

3

leave no doubt that its interpretation of the Wellner

power-of-attorney reflects precisely this “impermissible” anti-arbitration sentiment.

The Wellner power of attorney broadly authorizes the attorney-in-fact (the agent) to make “contracts

of every nature in relation to both real and personal

property” of the principal. 137 S. Ct. at 1425 (emphasis added). The majority below acknowledged that as

a matter of settled Kentucky law, the term “personal

property” includes legal claims (and personal-injury

claims in particular). But the majority nonetheless

held that respondent Beverly Wellner lacked authority to enter into arbitration agreements because, in

its view, a pre-dispute arbitration agreement does

not relate to the principal’s legal claims but instead

solely to his or her constitutional rights to a jury trial

and to go to court—thereby placing arbitration

agreements outside of the scope of Wellner’s power of

attorney. App., infra, 7a.

As Justice Hughes’s powerful dissent explains,

the majority’s reasoning makes no sense.1 The majority’s rationale “divorce[s] an arbitration agreement from the reality of what it is and what it does”

(App., infra, 14a)—providing a mechanism for the

resolution of legal claims. Echoing this Court’s holding that the clear-statement rule previously adopted

by the Kentucky court was “arbitration-specific”—

because its applicability outside the arbitration context reached only the legal equivalent of “black

swans” (137 S. Ct. at 1427-28)—Justice Hughes exJustice Hughes was also the principal dissenter in the Kentucky Supreme Court’s prior opinion. Justice Lisbeth Hughes

Abramson changed her name to Lisbeth Tabor Hughes in the

time between the Kentucky court’s two opinions.

1

4

plained that the majority below “returns to black

swan territory by a different route.” App., infra, 17a.

Indeed, the majority below followed the exact

path that this Court rejected as incompatible with

the FAA in DIRECTV, Inc. v. Imburgia, 136 S. Ct.

463 (2015). The holding below, like the lower court

decision reversed in DIRECTV, rests on a “unique”

determination “restricted to th[e] field” of arbitration, in order to avoid enforcing an arbitration

agreement. Id. at 469. This Court reversed in DIRECTV, and it should do so here as well. Indeed, the

Kentucky court’s transparent defiance of this Court’s

precedents is so clear as to warrant summary reversal.

A. Factual Background.

Petitioners Kindred Nursing Centers Limited

Partnership, et al. (“Kindred”) operate nursing

homes and rehabilitation centers, including the Winchester Centre for Health and Rehabilitation (a/k/a

Fountain Circle Health and Rehabilitation). See Extendicare Homes, Inc. v. Whisman, 478 S.W.3d 306,

317 (Ky. 2015). Respondent Beverly Wellner represents herself and the estate of Joe Wellner, a former

resident of the Winchester Centre.

Before Mr. Wellner was admitted to the Winchester Centre, he had executed a power of attorney

designating Beverly Wellner as his attorney-in-fact.

This power of attorney conferred broad authority to

enter into transactions and agreements relating to

Mr. Wellner’s affairs. Specifically, as relevant here, it

authorizes Beverly Wellner to “make, execute and

deliver deeds, releases, conveyances and contracts of

every nature in relation to both real and personal

property.” App., infra, 7a (emphasis added).

5

When Mr. Wellner was admitted to the Winchester Centre, Beverly Wellner signed the admission

paperwork on his behalf. Beverly Wellner also executed a separate, optional arbitration agreement.

Whisman, 478 S.W.3d at 318. This arbitration

agreement provided that any disputes arising out of

the “[r]esident’s stay at the Facility” would be resolved in arbitration. Id. at 317. It also explained

that “execution of this [arbitration] Agreement is not

a precondition to the furnishing of services to the

Resident by the Facility.” Ibid.

B. Respondent’s Lawsuit.

Respondent Beverly Wellner brought suit against

Kindred, asserting state statutory and common-law

claims arising out of Mr. Wellner’s death while residing at the Winchester Centre. Respondent asserted

causes of action for wrongful death, personal injury,

and violations of Ky. Rev. Stat. § 216.510 et seq.,

which enumerates various rights of long-term care

residents. Whisman, 478 S.W.3d at 312. Kindred

moved to dismiss or stay the lawsuit, seeking to enforce the arbitration agreement between Kindred

and Mr. Wellner. Ibid.

1. The state trial court initially dismissed the action in favor of arbitration. Subsequently, the Supreme Court of Kentucky held in Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581, 592-94 (Ky. 2012),

that a power of attorney expressly authorizing the

attorney-in-fact to manage the principal’s “financial

affairs” and “health-care decisions” was limited to

those express provisions, and did not include the authority to bind the principal to an optional arbitration agreement.

6

Respondent moved for reconsideration of the

dismissal order. The trial court granted reconsideration and reversed its prior ruling, holding that the

arbitration agreement was unenforceable because respondent lacked authority to bind Mr. Wellner to arbitration. Whisman, 478 S.W.3d at 312.

2. Kindred sought interlocutory review in the

Kentucky Court of Appeals. That court denied relief

in both cases, holding that in light of Ping, respondents lacked authority under their powers of attorney

to bind their principals to arbitration. Ibid.

Kindred then applied to the Supreme Court of

Kentucky for interlocutory relief. Ibid. The state supreme court consolidated the case with two others

presenting similar issues.

3. A divided Supreme Court of Kentucky affirmed the Court of Appeals’ orders denying interlocutory relief to compel arbitration, by a 4-3 vote.

In an opinion by Justice Venters, the majority

first considered whether the powers of attorney at issue appeared on their face to authorize the attorneys-in-fact to agree to arbitration on their principals’ behalf. It held that the power of attorney in

Wellner did not give such authorization. Although

the Wellner power of attorney authorized the attorney-in-fact to make “contracts” related to “personal

property,” which the majority acknowledged includes

legal claims, the majority concluded that an arbitration agreement does not “relate” to personal property, but rather solely to the principal’s “constitutional

right to access the courts and to trial by jury.”

Whisman, 478 S.W.3d at 326.

The majority held that the power of attorney in

Clark, another of the consolidated cases involving pe-

7

titioners, did convey the necessary authority, concluding that in light of its broad language, “it would

be impossible to say that entering into a pre-dispute

arbitration agreement was not covered.” Id. at 327.

The majority then proceeded to consider, in

Clark “as well as the other cases,” the “extent to

which the authority of an attorney-in-fact to waive

his principal’s fundamental constitutional rights to

access the courts, to trial by jury, and to appeal to a

higher court, can be inferred from a less-than-explicit

grant of authority.” Ibid. It held that only an express

grant of authority to enter into arbitration agreements is sufficient to authorize an attorney-in-fact to

agree to arbitration. The majority emphasized that

the drafters of the Kentucky Constitution had

“deemed the right to a jury trial to be inviolate, a

right that cannot be taken away; and, indeed, a right

that is sacred, thus denoting that right and that right

alone as a divine God-given right.” Id. at 329 (last

emphasis added).

C. This Court’s Reversal And Remand.

Kindred petitioned for certiorari in Clark and

Wellner. This Court granted certiorari (137 S. Ct. 368

(2016)) and reversed in part and vacated in part (see

Kindred Nursing Centers Ltd. P’ship v. Clark, 137 S.

Ct. 1421, 1424 (2017) (“Kindred I”)). The Court concluded that the Kentucky court’s clear-statement

rule “fails to put arbitration agreements on an equal

plane with other contracts” (id. at 1426-27) because

it “hing[ed] on the primary characteristic of an arbitration agreement—namely, a waiver of the right to

go to court and receive a jury trial” (id. at 1427).

“Such a rule is too tailor-made to arbitration agreements,” the Court explained, “to survive the FAA’s

8

edict against singling out those contracts for disfavored treatment.” Id. at 1427.

The Court reversed the judgment in Clark, because the Kentucky court’s interpretation of that

contract “was based exclusively on the clearstatement rule that we have held violates the FAA.”

Id. at 1429. With respect to Wellner, this Court held

that the Kentucky court was less clear about the role

that the clear-statement rule had played in its ruling

that Beverly Wellner lacked the authority to agree to

arbitration. “If that interpretation of the document is

wholly independent of the court’s clear-statement

rule,” this Court explained, “then nothing we have

said disturbs it. But if that rule at all influenced the

construction of the Wellner power of attorney, then

the court must evaluate the document’s meaning

anew.” Ibid. The Court vacated the judgment in

Wellner and remanded for further proceedings. Ibid.

D. The Kentucky Supreme Court’s Decision

On Remand.

On remand, the Kentucky court once again divided 4-3, and the majority, once again in an opinion

by Justice Venters, held that Wellner’s power of attorney did not authorize Beverly Wellner to enter into an arbitration agreement. The majority announced that its interpretation of the Wellner power

of attorney is “pur[e] from the taint of antiarbitration bias.” App., infra, 5a. Instead, the majority said, its interpretation was “the manifestation of

our profound respect for the right of access to the

Court of Justice explicitly guaranteed by the Kentucky Constitution and the right to trial by jury designated as ‘sacred’ by Section 7 of the Kentucky Constitution.” Ibid.

9

Addressing the language of the power of attorney

authorizing Beverly Weller to make contracts “in relation to both real and personal property,” the majority acknowledged that Kentucky law has long established that “‘a personal injury claim is a chose-inaction, and therefore constitutes personal property.’”

App., infra, 7a (quoting Whisman, 478 S.W.3d at

325-26) (citing in turn Button v. Drake, 195 S.W.2d

66, 69 (1946)). It followed, the majority recognized,

that “the power to make contracts relating to personal property authorizes the agent to arbitrate [a]

principal’s personal injury claim” after it arises.

App., infra, 9a.

But the court then held that a “pre-dispute arbitration agreement” has “nothing at all to do with”

“institut[ing] legal proceedings” or “even settling existing claims by arbitration or litigation,” nor did it

“relate to any property rights” of the principal. App.,

infra, 9a. Instead, the Kentucky court held that such

an arbitration agreement relates solely to the principal’s “fundamental constitutional rights” of access to

court and trial by jury. Ibid.

The majority also stated in a footnote that Kindred had waived any challenge to this interpretation

by purportedly failing to raise before this Court any

challenge to the majority’s “construction of the

Wellner POA beyond its criticism of the clear statement rule.” Id. at 4a n.3.

The majority concluded that its determination

“that the Wellner [power of attorney] was insufficient

to vest [respondent] with the power to execute a predispute arbitration agreement * * * was wholly independent of the clear statement rule decried by the

United States Supreme Court. Therefore, as stated

by the United States Supreme Court, that aspect of

10

the * * * decision remains undisturbed.” App., infra,

10a.

Justice Hughes, joined by Justices Minton and

VanMeter, again “strongly dissent[ed],” stating that

“the majority has failed to follow the United States

Supreme Court’s directive in * * * forcefully reversing the original majority opinion in this case.” App.,

infra, 10a, 21a. As she put it, “[t]he [Kentucky]

Court’s distinction between pre-dispute arbitration

agreements as not pertaining to a principal’s property rights but rather only his constitutional jury right

vis-à-vis post-dispute (or perhaps active dispute) arbitration agreements, which they concede necessarily

affect property rights, is simply another attempt to

single out arbitration for ‘hostile’ treatment under

the guise of Kentucky contract and agency law.” Id.

at 11a-12a (emphasis added).

“[A]n arbitration agreement is about property

rights,” Justice Hughes continued, “because without

a claim regarding such rights it has no meaning or

purpose.” App., infra, 14a. That is because an arbitration agreement “derives its entire meaning from

the fact that the signatories may have or do have a

dispute and they agree on the forum for disposing of

that claim, whenever it arises.” Id. at 12a. She concluded that “[t]he majority’s view of arbitration as

contrary to the ‘sacred’ right to a jury trial (a point

which it continues to emphasize in the current majority) clearly underlies its willingness to divorce an

arbitration agreement from the reality of what it is

and what it does.” Id. at 14a.

The dissent summarized: “today’s holding returns to black swan territory by a different route,” by

“narrow[ly] focus[ing] on the constitutional jury right

11

to the exclusion of the reality of an arbitration

agreement.” App., infra, 17a.

REASONS FOR GRANTING THE PETITION

This Court has made clear that the FAA prohibits two approaches that lower courts have utilized to

refuse to enforce arbitration agreements. First, the

FAA bars courts from adopting broad legal rules that

single out arbitration agreements for suspect status.

See, e.g., Marmet Health Care Ctr., Inc. v. Brown,

565 U.S. 530, 533 (2012); Doctor’s Assocs., Inc. v.

Casarotto, 517 U.S. 681, 687 (1996). Second, the FAA

prohibits courts from achieving the same impermissible result by interpreting contract terms in the arbitration context differently from the interpretation

given to the same terms in other kinds of contracts.

See, e.g., Imburgia, 136 S. Ct. at 469.

In its initial decision in this case, the Supreme

Court of Kentucky tried the first avenue, and this

Court reversed. Unfazed, the Kentucky court has

now employed both approaches in refusing to enforce

the Wellner arbitration agreement. Its latest decision

warrants the same fate.

The Kentucky court’s refusal to compel arbitration on remand rests on a single proposition—that a

pre-dispute arbitration agreement relates only to

“constitutional rights” and not to “personal property.” But that ad hoc reasoning does not withstand

even minimal scrutiny: in Kentucky, legal claims (including personal injury claims) are personal property, and the fundamental purpose of an arbitration

agreement is to provide a mechanism for the resolution of the parties’ legal claims. The Kentucky court’s

attempt to turn a blind eye to this reality was nothing more than a transparent attempt to circumvent

12

this Court’s ruling in Kindred I and avoid enforcing

the arbitration agreement that Beverly Wellner entered into on behalf of her principal.

Moreover, the Kentucky court majority’s characterization of an arbitration agreement as relating only to jury trials and access to court is a transparent

attempt to craft a new rule limiting the scope of powers of attorney tied to unique characteristics of arbitration agreements. Just as the “clear statement

rule” invalidated by this Court in Kindred I was justified by “the primary characteristic of an arbitration

agreement—namely, a waiver of the right to go to

court and receive a jury trial” (137 S. Ct. at 1427),

the rule applied by the majority on remand is tied to

those very same characteristics. It is invalid for the

very same reason.

Review and summary reversal are warranted to

make clear that such defiance of this Court’s precedents is impermissible.

A. The Decision Below Conflicts With The

FAA And Defies This Court’s Precedents.

Congress enacted the FAA to “reverse the

longstanding judicial hostility to arbitration agreements,” “to place [these] agreements upon the same

footing as other contracts,” and to “manifest a liberal

federal policy favoring arbitration agreements.”

EEOC v. Waffle House, Inc., 534 U.S. 279, 289 (2002)

(quotation marks omitted); accord Kindred I, 137 S.

Ct. at 1428 (noting the “hostility to arbitration that

led Congress to enact the FAA”) (quotation marks

omitted). This Court has stated repeatedly that the

“primary purpose” of the FAA is to “ensur[e] that

private agreements to arbitrate are enforced accord-

13

ing to their terms.” Volt Info. Scis., Inc. v. Bd. of Trs.

of Leland Stanford Junior Univ., 489 U.S. 468, 479

(1989); see also Casarotto, 517 U.S. at 687; First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 947

(1995); Mastrobuono v. Shearson Lehman Hutton,

Inc., 514 U.S. 52, 53-54 (1995).

Section 2 of the FAA therefore commands that

“[a]n agreement to arbitrate is valid, irrevocable, and

enforceable as a matter of federal law, * * * ‘save upon such grounds as exist at law or in equity for the

revocation of any contract.’” Perry v. Thomas, 482

U.S. 483, 492 n.9 (1987) (quoting 9 U.S.C. § 2). “Congress precluded States from singling out arbitration

provisions for suspect status” (Casarotto, 517 U.S. at

687) or from invalidating arbitration provisions on

the basis of state-law rules that “apply only to arbitration or that derive their meaning from the fact

that an agreement to arbitrate is at issue.” Kindred

I, 137 S. Ct. at 1426 (quoting AT&T Mobility LLC v.

Concepcion, 563 U.S. 333, 339 (2011)); see also Perry,

482 U.S. at 492 n.9. In addition, Section 2 precludes

States from discriminating against arbitration

agreements by interpreting contractual language in

a “unique” manner that is “restricted to th[e] field” of

arbitration. Imburgia, 136 S. Ct. at 469.

The decision below is a paradigmatic example of

both types of Section 2 violations

First, just as in Imburgia, the proclamation of

neutrality by the majority below cannot be taken at

face value.

Beverly Wellner’s power of attorney granted her

broad authority to “make * * * contracts of every nature in relation to both real and personal property.”

App., infra, at 7a. Under Kentucky law, as the major-

14

ity below readily acknowledged, legal claims (including personal injury claims) are personal property. Id.

at 9a.; see also Button, 195 S.W.2d at 69. 2 That

should have been the end of the analysis: because a

legal claim is personal property under Kentucky law,

then it follows that an arbitration agreement—which

binds the parties to resolve any legal claims in arbitration, rather than in court—“relat[es] to” personal

property.

But the majority rejected this straightforward

analysis. It concluded that a pre-dispute arbitration

agreement—the most common kind of arbitration

agreement—relates solely to the principal’s constitutional rights of access to court and trial by jury rather than the principal’s personal property (including

the principal’s legal claims). App., infra, 5a, 9a.

As Justice Hughes’ dissent explains in detail, the

majority’s characterization of an arbitration agreement makes no sense, because the point of such an

agreement is to address the resolution of the legal

claims of the parties—claims that the majority concedes are personal property under settled Kentucky

law. As the dissent put it, “[a]n arbitration agreement, regardless of when signed or whether characterized as pre- or post-dispute, has absolutely no reason to exist unless there is a current or potential

claim to be pursued or defended against.” App., infra,

12a (Hughes, J., dissenting).

2 This Court has also recognized “that a cause of action is a species of property protected by the Fourteenth Amendment’s Due

Process Clause.” Logan v. Zimmerman Brush Co., 455 U.S. 422,

428 (1982) (citing Mullane v. Central Hanover Bank & Trust

Co., 339 U.S. 306, 313 (1950)).

15

Indeed, the very first sentence of the arbitration

agreement calls for the resolution by arbitration of

“[a]ny and all claims or controversies * * *, whether

existing or arising in the future.” App., infra, 12a

(Hughes, J., dissenting) (quoting the agreement)

(emphasis added). The majority’s conclusion that the

arbitration agreement does not relate to Joe

Wellner’s legal claims is therefore impossible to

square with both reality and the text of the agreement.

The concession by the majority below that “the

power to make contracts relating to personal property authorizes the agent to arbitrate the principal’s

personal injury claim” after a dispute has arisen

(App., infra, 9a) confirms the contrived nature of its

attempted distinction between legal claims and constitutional rights to a jury trial and to go to court.

The only possible basis for that distinction could be a

view that future legal claims that have not yet accrued cannot be considered “property.”

The dissent rightly criticized that line of reasoning as well. To begin with, the distinction finds no

support in the text of the arbitration agreement,

which expressly covers claims “arising in the future.”

App., infra, 12a. And there is also no indication that

the majority’s purported distinction applies to any

other kind of property apart from legal claims. The

dissent explains that as a matter of logic and common sense, the right to “collect debts,” for example,

“manifestly includes future debts”—and the same is

true of the authority to make contracts in relation to

personal property, which “includes future property of

the principal whether a stock dividend, a check for a

property insurance claim, an unexpected inheritance

16

or a run-of-the-mill refund in a consumer class action.” App., infra, 19a-20a.

It would be nonsensical to limit a power of attorney’s authority to make contracts in relation to personal property to the principal’s existing property interests. Such a rule would yield the illogical result,

for instance, that the attorney-in-fact could sell the

principal’s existing possessions at the time the power

of attorney was executed but not future possessions

that the principal has yet to acquire. Kentucky

courts would never hold that an agent’s authority to

sell a principal’s car under a power of attorney

signed in 2018 turns on whether the principal bought

the car in 2017 or 2019.

Second, having adopted this special arbitrationspecific, gerrymandered definition of “contracts of

every nature in relation to * * * property,” the majority went on to categorize arbitration agreements by

recycling the very same arbitration-specific approach

that this Court held unlawful in Kindred I.

The Kentucky court majority held in its initial

decision that a power of attorney authorized the

holder to enter into an arbitration agreement only if

the power clearly conferred that authority, because

an arbitration agreement waived the “sacred” constitutional right of trial by jury. 478 S.W.3d at 329,

This Court held that rule invalid under the FAA, because it “hing[ed] on the primary characteristic of an

arbitration agreement—namely, a waiver of the right

to go to court and receive a jury trial” (id. at 1427).

“Such a rule is too tailor-made to arbitration agreements,” the Court explained, “to survive the FAA’s

edict against singling out those contracts for disfavored treatment.” Ibid.

17

The Kentucky majority returned to this precise

impermissible rationale on remand. Rather than

characterizing an arbitration agreement as relating

to property—as its precedents equating legal claims

with property required—the lower court characterized arbitration agreements solely by reference to the

very same characteristics that this Court held out-ofbounds in Kindred I: that an arbitration agreement

relates to the principal’s “fundamental constitutional

rights” of access to court and trial by jury. App., infra, 9a.

It is true, of course, that an arbitration agreement relates to rights to a jury trial and to go to

court. Kindred I, 137 S. Ct. at 1427. But an arbitration agreement also relates to legal claims—which

are personal property in Kentucky—by specifying the

mechanism for the resolution of those claims. App.,

infra, 14a (Hughes, J., dissenting). This Court recognized over four decades ago that an arbitration

agreement is simply “a specialized kind of forumselection clause that posits not only the situs of suit

but also the procedure to be used in resolving the

dispute.” Scherk v. Alberto-Culver Co., 417 U.S. 506,

519 (1974) (emphasis added); see also, e.g.,

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614, 628 (1985) (explaining that by entering into an arbitration agreement, a party “submits to the[] resolution [of claims] in an arbitral, rather than a judicial, forum”); Southland Corp. v.

Keating, 465 U.S. 1, 10 (1984) (explaining that the

FAA prohibits States from requiring a judicial forum

for the resolution of claims which the contracting

parties agreed to resolve by arbitration”) (emphasis

added).

18

The two functions of an arbitration agreement—

“waiver of a right to go to court and receive a jury

trial” and establishing a mechanism relating to a

form of property, legal claims—cannot be separated;

both are equally “primary characteristic[s] of an arbitration agreement.” Kindred I, 137 S. Ct. at 1427.

In the words of the dissent, the majority’s contrary

holding therefore “divorce[s] an arbitration agreement from the reality of what it is and what it does.”

App., infra, 14a.

And the majority’s approach singles out arbitration contracts based on characteristics unique to an

arbitration—precisely what this Court found unlawful in Kindred I. As the dissent below explained, the

majority’s “narrow focus on the constitutional jury

right to the exclusion of the reality of an arbitration

agreement returns us to the realm of ‘utterly fanciful

contracts’ where arbitration agreements exist in a

vacuum independent of disputes and property

rights.” App., infra, 17a (quoting Kindred I, 137 S.

Ct. at 1427). It reaches the same, illegitimate “black

swan territory” of the Kentucky court’s initial ruling

“by a different route”: “narrow[ly] focus[ing] on the

constitutional jury right to the exclusion of the reality of an arbitration agreement.” Ibid.

Finally, the majority’s invocation of waiver (perhaps in an attempt to insulate its opinion from further review by this Court) plainly misstates the undisputed record—and thus serves only to underscore

the impermissible hostility to arbitration animating

the majority’s ruling. In both its petition for certiorari and its merits briefing before this Court, Kindred

expressly challenged as “not only nonsensical but also * * * preempted by the FAA” the Kentucky court’s

theory that “an agreement to arbitrate the principal’s

19

legal claims somehow did not relate to the claims,

but rather solely to the principal’s constitutional

right to trial by jury.” Kindred I Pet. 16-17 (quotation

marks and alterations omitted); see also Br. for Pet.

23; Reply Br. 16-17 & n.10. The majority’s mischaracterization of the record to suggest the possibility of

waiver speaks volumes about the infirmity of the

Kentucky court’s underlying holding.

In short, in light of Kentucky’s long-standing

recognition that causes of action are personal property (see Button, 195 S.W.2d at 69), it is unthinkable

that Kentucky courts would interpret the phrase

“contracts * * * in relation to * * * personal property”

(App., infra, 7a) to exclude any other kind of agreement relating to an individual’s legal claims. The decision below is thus preempted by the FAA every bit

as much as the California Court of Appeal’s contractual interpretation in Imburgia.

B. Summary Reversal Is Appropriate.

Review is necessary in order to preserve the integrity of this Court’s precedents and deter lower

courts from following the lead of the Supreme Court

of Kentucky in defying the FAA and this Court’s

precedents.

In Imburgia, this Court emphatically stated that

“[l]ower court judges are certainly free to note their

disagreement with a decision of this Court. But the

‘Supremacy Clause forbids state courts to dissociate

themselves from federal law because of disagreement

with its content or a refusal to recognize the superior

authority of its source.’” Imburgia, 136 S. Ct. at 468

(quoting Howlett v. Rose, 496 U.S. 356, 371 (1990)).

Lower courts, this Court explained, therefore “must

20

follow” this Court’s “authoritative interpretation[s]”

of the FAA. Ibid.

The Court has enforced that imperative numerous times by granting review of, and summarily vacating or reversing, state court decisions that contravene the FAA. See Nitro-Lift Techs., LLC v. Howard,

568 U.S. 17, 20 (2012) (per curiam) (lower court “disregard[ed] this Court’s precedents on the FAA”);

Marmet, 565 U.S. at 531 (lower court erred “by misreading and disregarding the precedents of this

Court interpreting the FAA”); KPMG LLP v. Cocchi,

565 U.S. 18, 22 (2011) (per curiam) (lower court

“fail[ed] to give effect to the plain meaning of the

[FAA]”); see also Citizens Bank v. Alafabco, Inc., 539

U.S. 52, 56-58 (2002) (per curiam) (lower court refused to apply the FAA by taking an “improperly

cramped view of Congress’ Commerce Clause power”

that was inconsistent with this Court’s holdings).

And the Court has emphasized that because “[s]tate

courts rather than federal courts are most frequently

called upon to apply the * * * FAA,” “[i]t is a matter

of great importance * * * that state supreme courts

adhere to a correct interpretation of the legislation.”

Nitro-Lift, 568 U.S. at 17-18.

As Justice Hughes’s powerful dissent makes

clear, this Court’s repeated admonitions—including

in this very case—have fallen on deaf ears in Kentucky. And as the decision below demonstrates, state

courts intent on evading this Court’s precedents interpreting the FAA will resort to a variety of tactics

to achieve that goal. This Court should respond by

summarily reversing here and sending a clear mes-

21

sage that transparent attempts by lower courts to

evade this Court’s rulings will not be tolerated.3

Summary reversal is warranted not only in order

to preserve this Court’s authority as the ultimate interpreter of federal law, but to protect the uniformity

and consistency of federal arbitration law. This

Court has long recognized that “private parties have

likely written contracts relying on [its FAA precedent] as authority.” Allied-Bruce Terminix Cos. v.

Dobson, 513 U.S. 265, 272 (1995). Yet unreasoned,

ad hoc departures from the FAA’s principles like the

one embarked upon by the majority below will create

confusion about the application of arbitration agreements and lead to the defeat of the contracting parties’ expectations.

This Court has not hesitated in other contexts to summarily

reverse lower court decisions on a second round of review when

the lower court failed to adhere to this Court’s instructions in

remanding the case on the first round. For example, in Amgen

Inc. v. Harris, 136 S. Ct. 758 (2016) (per curiam), an ERISA

case, the Court previously vacated and remanded the Ninth

Circuit’s decision for reconsideration in light of an intervening

decision by this Court. Id. at 758. The Court then summarily

reversed after petitioner again sought review, explaining that

the Ninth Circuit “failed to assess” the complaint in the way it

had been instructed to do. Id. at 760.

3

22

CONCLUSION

The petition for a writ of certiorari should be

granted. The Court may wish to consider summary

reversal.

Respectfully submitted.

ANDREW J. PINCUS

Counsel of Record

ARCHIS A. PARASHARAMI

DANIEL E. JONES

Mayer Brown LLP

1999 K Street, NW

Washington, DC 20006

(202) 263-3000

apincus@mayerbrown.com

Counsel for Petitioners

MARCH 2018