Petition for Writ of Certiorari — Old Republic Home Protection Company, Inc., Petitioner v. William B. Sparks, et al.

Supreme Court briefAug 25, 2020

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No. 20-____

IN THE

Supreme Court of the United States

————

OLD REPUBLIC HOME PROTECTION COMPANY, INC.,

Petitioner,

WILLIAM B. SPARKS, et al.,

Respondents.

————

On Petition for a Writ of Certiorari to the

Supreme Court of Oklahoma

————

PETITION FOR A WRIT OF CERTIORARI

————

MICHAEL D. LEFFEL

FOLEY & LARDNER LLP

150 East Gilman Street

Madison, WI 53703

(608) 258-4216

JAY N. VARON

Counsel of Record

FOLEY & LARDNER LLP

3000 K Street, N.W.

Washington, D.C. 20007

(202) 672-5380

jvaron@foley.com

AARON R. WEGRZYN

FOLEY & LARDNER LLP

777 East Wisconsin Avenue

Milwaukee, WI 53202

(414) 297-5156

KENDALL E. WATERS

FOLEY & LARDNER LLP

555 South Flower Street

Los Angeles, CA 90071

(213) 972-4899

Counsel for Petitioner

August 25, 2020

WILSON-EPES PRINTING CO., INC. – (202) 789-0096 – WASHINGTON, D. C. 20002

QUESTION PRESENTED

In Epic Systems, Corporation v. Lewis, 138 S. Ct.

1612 (2018), this Court “rejected efforts to conjure

conflicts between the [Federal] Arbitration Act and

other federal statutes[,]” as it has done with “every

such effort to date[.]” Id. at 1627 (emphasis in

original).

The state supreme court in this case conjures a

conflict, this time purporting to preempt the FAA

based on the Oklahoma Arbitration Act and

(mis)application of the McCarran–Ferguson Act. Its

opinion deepens a split in authority involving other

state courts of last resort and federal courts of appeals

analyzing these same issues, and it is at odds with this

Court’s precedent. The two-part question presented is:

Whether, in a case involving interstate commerce

and a written contract with an arbitration provision

that expressly requires application of the FAA, a state

arbitration statute that by its terms “shall not apply

***

contracts which reference insurance”

(a) qualifies as a “law enacted by [a] State for the

purpose of regulating the business of insurance”

under the McCarran–Ferguson Act, and (b) can

support reverse preemption of the FAA based on an

asserted impairment of such a state law.

(i)

PARTIES TO THE PROCEEDING

Old Republic Home Protection Company, Inc.,

petitioner on review, was the defendant-appellant in

the Supreme Court of Oklahoma.

William B. Sparks and Donna Sparks, respondents

on review, were the plaintiffs-appellees in the

Supreme Court of Oklahoma.

CORPORATE DISCLOSURE STATEMENT

Petitioner Old Republic Home Protection

Company, Inc. is a wholly owned subsidiary of ORHP

Management

Company.

ORHP

Management

Company is a wholly owned subsidiary of Old

Republic General Insurance Group, Inc., which in

turn is wholly owned by Old Republic International

Corporation, a publicly traded corporation. No

publicly traded corporation, other than Old Republic

International Corporation, owns 10% or more of Old

Republic Home Protection Company, Inc.’s stock.

TABLE OF CONTENTS

Page

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

PARTIES TO THE PROCEEDING ........................... ii

CORPORATE DISCLOSURE STATEMENT ............ ii

TABLE OF AUTHORITIES ....................................... v

PETITION FOR A WRIT OF CERTIORARI ............. 1

INTRODUCTION ....................................................... 1

OPINIONS BELOW ................................................... 4

STATEMENT OF JURISDICTION ........................... 5

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED .............................. 5

STATEMENT OF THE CASE.................................... 6

Factual Background ......................................... 6

The Revised Uniform Arbitration Act

and Oklahoma’s Enactment ............................ 9

Proceedings Below ........................................... 9

REASONS FOR GRANTING THE WRIT ............... 13

I. REVIEW IS WARRANTED BECAUSE THE

DECISION BELOW REFLECTS A SPLIT IN

AUTHORITY ON ANALYZING WHETHER,

UNDER FEDERAL LAW, STATE ARBITRATION

STATUTES REGULATE THE BUSINESS OF

INSURANCE. .......................................................... 13

II. REVIEW IS WARRANTED BECAUSE THE

DECISION BELOW IS AT ODDS WITH THIS

COURT’S PRECEDENT AND IT IS INDICATIVE

(iii)

TABLE OF CONTENTS – Continued

Page

OF INCONSISTENT DECISIONS FROM

APPELLATE COURTS ADDRESSING WHEN, IF

EVER, ENFORCEMENT OF THE FAA IMPAIRS

A STATE STATUTE ENACTED FOR THE

PURPOSE OF REGULATING INSURANCE. ................ 21

III. THE QUESTION PRESENTED IS RECURRING

AND IMPORTANT.................................................... 28

CONCLUSION.......................................................... 31

Appendix A: Supreme Court of Oklahoma,

Opinion, May 27, 2020 ........................................ 1a

Appendix B: Court of Civil Appeals of the

State of Oklahoma, Opinion, November 19,

2018 .................................................................... 25a

Appendix C: District Court of Cleveland

County, Oklahoma, Summary Order,

February 7, 2017 ............................................... 54a

Appendix D: ORHP Motion to Stay and

Compel Arbitration, District Court of

Cleveland County, Oklahoma, January 19,

2017 .................................................................... 55a

Appendix E: Declaration of Coverage Issued by

ORHP to Donna Sparks .................................... 63a

Appendix F: Oklahoma Home Warranty ............... 66a

TABLE OF AUTHORITIES

Page

CASES

Allied-Bruce Terminix Cos. v. Dobson,

513 U.S. 265 (1995) ............................................... 2

American Bankers Ins. Co. v. Inman,

436 F.3d 490 (5th Cir. 2006) ............................... 20

American Guar. & Liab. Ins. Co. v.

Abram Law Grp., LLC, No. 1:11-cv3483-SCJ, 2013 WL 12099359

(N.D. Ga. Feb. 20, 2013) ...................................... 16

American Heritage Life Ins. Co. v. Orr,

294 F.3d 702 (5th Cir. 2002) ............................... 22

American Int’l Grp., Inc. v. Siemens

Building Techs., Inc., 881 So. 2d 7

(Fla. Ct. App. 2004) ............................................. 22

AT&T Mobility LLC v. Concepcion,

563 U.S. 333 (2011) ............................... 1, 2, 11, 28

Bixler v. Next Fin. Grp., Inc.,

858 F. Supp. 2d 1136 (D. Mont. 2012) ................ 16

Brown v. Cassens Transp. Co.,

546 F.3d 347 (6th Cir. 2008) ............................... 24

Buckeye Check Cashing, Inc. v.

Cardegna, 546 U.S. 440 (2006) ............................. 2

C&L Enter., Inc. v. Citizen Band

Potawatomi Indian Tribe of Okla.,

532 U.S. 411 (2001) ............................................... 2

Citizens Bank v. Alafabco, Inc.,

539 U.S. 52 (2003) ................................................. 2

TABLE OF AUTHORITIES – Continued

Page

Dean Witter Reynolds, Inc. v. Byrd,

470 U.S. 213 (1985) ............................................... 1

Department of Treasury v. Fabe,

508 U.S. 491 (1993) ....................................... 14, 26

DiMercurio v. Sphere Drake Ins., PLC,

202 F.3d 71 (1st Cir. 2000) .................................. 26

DirectTV v. Imburgia,

136 S. Ct. 463 (2015) ............................................. 2

Doctor’s Assocs., Inc. v. Casarotto,

517 U.S. 681 (1996) ............................................... 2

Epic Sys., Corp. v. Lewis,

138 S. Ct. 1612 (2018) ........................................... 2

Gilmer v. Interstate/Johnson Lane

Corp., 500 U.S. 20 (1991) .................................... 29

Green Tree Fin. Corp. v. Bazzle,

539 U.S. 444 (2003) ............................................... 2

Greene v. United States,

440 F.3d 1304 (Fed. Cir. 2006)............................ 24

Hamilton Life Ins. Co. v. Republic Nat’l

Life Ins. Co., 408 F.2d 606

(2d Cir. 1969) ....................................................... 18

Hammer v. Dep’t of Health and Human

Servs., 905 F.3d 517 (7th Cir. 2018) ................... 27

Hart v. Orion Ins. Co.,

453 F.2d 1358 (10th Cir. 1971) ........................... 18

Henry Schein, Inc. v. Archer and White

Sales, Inc., 139 S. Ct. 524 (2019) ........................ 29

vii

TABLE OF AUTHORITIES – Continued

Page

Humana Inc. v. Forsyth,

525 U.S. 299 (1999) ...................................... passim

International Ins. Co. v. Duryee,

96 F.3d 837 (6th Cir. 1996) ........................... 14, 27

Kentucky Ass’n of Health Plans v.

Miller, 538 U.S. 329 (2003) ................................. 25

Kindred Nursing Ctr. Ltd. P’ship v.

Clark, 137 S. Ct. 1421 (2017) .......................... 2, 21

Kong v. Allied Prof’l Ins. Co.,

750 F.3d 1295 (11th Cir. 2014) ........................... 17

KPMG LLP v. Cocchi,

565 U.S. 18 (2011) ................................................. 2

Little v. Allstate Ins. Co.,

705 A.2d 538 (Vt. 1997) ........................... 14, 15, 24

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

565 U.S. 530 (2012) ........................................... 1, 2

Mastrobuono v. Shearson Lehman

Hutton, Inc., 514 U.S. 52 (1995)...................... 1, 26

Miller v. Nat’l Fidelity Life Ins. Co.,

588 F.2d 185 (5th Cir. 1979) ............................... 21

Milliman, Inc. v. Roof,

353 F. Supp. 3d 588 (E.D. Ky. 2018)............. 14, 26

Minnieland Private Day School, Inc. v.

Applied Underwriters Captive Risk

Assurance Co., 867 F. 3d 449

(4th Cir. 2017).......................................... 18, 19, 20

viii

TABLE OF AUTHORITIES – Continued

Page

Monarch Consulting, Inc. v. Nat’l Union

Fire Ins. Co., 47 N.E.3d 463

(N.Y. 2016) ..................................................... 23, 24

Munich Am. Reinsurance Co. v.

Crawford, 141 F.3d 585

(5th Cir. 1998)...................................................... 14

Mutual Reinsurance Bureau v. Great

Plains Mutual Ins. Co.,

969 F.2d 931 (10th Cir. 1992) ............................. 25

Nitro-Lift Techs., L.L.C. v. Howard,

568 U.S. 17 (2012) ................................................. 2

Oklahoma Oncology & Hematology P.C.

v. U.S. Oncology, Inc., 160 P.3d 936

(Okla. 2007) ......................................................... 17

Ommen v. Milliman, Inc.,

941 N.W.2d 310 (Iowa 2020) ......................... 23, 26

Perry v. Thomas,

482 U.S. 483 (1987) ............................................... 1

Preston v. Ferrer,

552 U.S. 346 (2008) ..................................... 1, 2, 28

Saunders v. Farmers Ins. Exch.,

537 F.3d 961 (8th Cir. 2008) ............................... 24

Southern United Fire Ins. Co. v.

Howard, 775 So. 2d 156 (Ala. 2000) ................... 18

Southland Corp. v. Keating,

465 U.S. 1 (1984) ............................................. 1, 29

TABLE OF AUTHORITIES – Continued

Page

Standard Security Life Ins. Co. v. West,

267 F.3d 821 (8th Cir. 2001) ............................... 25

CONSTITUTION AND STATUTES

U.S. Const. Art. VI, Cl. 2 ............................................ 5

9 U.S.C. 2 ................................................................ 1, 5

15 U.S.C. 1012(b) ............................................... passim

28 U.S.C. 1257(a) ........................................................ 5

Ariz. Rev. Stat. § 12-3003(B)(2) ................................ 30

Ark. Code Ann. § 16-108-233(b)(3) ........................... 30

Ga. Code Ann. § 9-9-2(b)(3) ...................................... 30

Haw. Rev. Stat. § 431:10-221(a)(2) ........................... 30

Iowa Code § 507C.21(1)(l) ......................................... 23

Ky. Rev. Stat. Ann. § 417.050................................... 30

La. Rev. Stat. Ann. § 22-868 ..................................... 30

Mass. Gen. Laws ch. 175, § 22 ................................. 31

Md. Code Ann., Cts. & Jud. Proc. § 3206.1 ..................................................................... 31

Me. Rev. Stat. Ann. tit. 24-A, § 2433 ....................... 31

Mo. Rev. Stat. § 435.350 ........................................... 31

Mont. Code Ann. § 27-5-114(2)(c) ............................. 31

Neb. Rev. Stat. § 25-2602(f)(4) ................................. 31

Okla. Stat. Ann. tit. 12, §§ 1851-1880 ........................ 9

TABLE OF AUTHORITIES – Continued

Page

Okla. Stat. Ann. tit. 12, § 1855(D) .................... passim

Okla. Stat. Ann. tit. 15, §§ 15-141.1 et

seq. ......................................................................... 7

Okla. Stat. Ann. tit. 15, § 15-141.2(17)(f)................. 11

Okla. Stat. Ann. tit. 36, §§ 6752 et seq. ...................... 7

Okla. Stat. Ann. tit. 36, § 6752(9) ............................ 11

R.I. Gen. Laws § 10-3-2 ............................................ 31

S.C. Code Ann. § 15-48-10(b)(4) ............................... 31

S.D. Codified Laws § 21-25A-3 ................................. 31

Va. Code Ann. § 38.2-312.................................... 19, 31

Vt. Stat. Ann. tit. 12, § 5653 ............................... 15, 31

Wash. Rev. Code § 48.18.200 .................................... 31

OTHER AUTHORITIES

Benedict M. Lenhart, et al., Arbitration

of Coverage Disputes, 1 New

Appleman on Insurance Law Library

Edition § 7.03 (2020) ........................................... 29

Black’s Law Dictionary (11th ed. 2019) ................... 14

David M. Adlerstein, et al., 2 Successful

Partnering Between Inside and

Outside Counsel § 25A:70

(Apr. 2020 supp.) ................................................. 28

TABLE OF AUTHORITIES – Continued

Page

Insurance Information Institute, 2019

International Insurance Fact Book

(2019), available at

https://www.iii.org/sites/default/files/d

ocs/pdf/insurance_factbook_2019.pdf.................. 28

Revised Uniform Arbitration Act (Unif.

Law Comm’n 2000) .......................................... 9, 17

Steven Plitt, et al., 15 Couch on

Insurance § 209:1 (3d ed. June 2020

supp.) .................................................................... 28

PETITION FOR A WRIT OF CERTIORARI

Old Republic Home Protection Company, Inc.

(ORHP) respectfully petitions for a writ of certiorari

to review the decision of the Supreme Court of

Oklahoma in this case.

INTRODUCTION

Congress enacted the Federal Arbitration Act

(FAA) in 1925 “to overrule the judiciary’s

longstanding refusal to enforce agreements to

arbitrate.” Dean Witter Reynolds, Inc. v. Byrd, 470

U.S. 213, 219-20 (1985). The FAA declares 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 * * * shall be valid, irrevocable, and

enforceable, save upon such grounds as exist at law or

equity for the revocation of any contract.” 9 U.S.C. 2.

Consistent with that well-recognized federal

policy, this Court, time and again, has reiterated that

“[w]hen state law prohibits outright the arbitration of

a particular type of claim, the analysis is

straightforward: The conflicting rule is displaced by

the FAA.” AT&T Mobility LLC v. Concepcion, 563 U.S.

333, 341 (2011).1 This Court also has repeatedly

1 See also Marmet Health Care Ctr., Inc. v. Brown, 565 U.S. 530,

533 (2012) (preemption of state law prohibiting arbitration of

certain claims against nursing homes); Preston v. Ferrer, 552

U.S. 346, 356 (2008) (preemption of state law providing state

commissioner jurisdiction to decide issues subject to arbitration);

Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 56

(1995) (preemption of state law requiring punitive damages

claims to be resolved by judicial proceeding); Perry v. Thomas,

482 U.S. 483, 491 (1987) (preemption of state law requiring a

judicial forum for wage disputes); Southland Corp. v. Keating,

rejected attempts to construe other federal statutes to

render arbitration agreements unenforceable despite

the FAA. See Epic Sys., 138 S. Ct. at 1627 (collecting

cases).

Courts, like the Supreme Court of Oklahoma here,

nevertheless continue to invent “new devices and

formulas” evincing “antagonism toward arbitration.”

Id. at 1623; see also Concepcion, 563 U.S. at 342. This

Court has not hesitated to grant petitions for writs of

certiorari to review state court decisions that

undermine the FAA.2

465 U.S. 1, 16 (1984) (“In creating a substantive rule [in favor of

arbitration] applicable in state as well as federal courts,

Congress intended to foreclose state legislative attempts to

undercut the enforceability of arbitration agreements.”).

2 See, e.g., Kindred Nursing Ctr. Ltd. P’ship v. Clark, 137 S. Ct.

1421 (2017) (reviewing decision of the Kentucky Supreme Court);

DirectTV v. Imburgia, 136 S. Ct. 463 (2015) (reviewing decision

of the California Court of Appeal); Nitro-Lift Techs., L.L.C. v.

Howard, 568 U.S. 17 (2012) (per curiam) (reviewing decision of

the Supreme Court of Oklahoma); Marmet Health Care Ctr., Inc.

v. Brown, 565 U.S. 530 (2012) (reviewing decision of the West

Virginia Supreme Court of Appeals); KPMG LLP v. Cocchi, 565

U.S. 18 (2011) (per curiam) (reviewing decision of the Florida

District Court of Appeal); Preston v. Ferrer, 552 U.S. 346 (2008)

(reviewing decision of the California Court of Appeal); Buckeye

Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (reviewing

decision of the Florida Supreme Court); Citizens Bank v.

Alafabco, Inc., 539 U.S. 52 (2003) (per curiam) (reviewing

decision of the Alabama Supreme Court); Green Tree Fin. Corp.

v. Bazzle, 539 U.S. 444 (2003) (reviewing decision of the Supreme

Court of South Carolina); C&L Enter., Inc. v. Citizen Band

Potawatomi Indian Tribe of Okla., 532 U.S. 411 (2001)

(reviewing decision of the Court of Civil Appeals of Oklahoma);

Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681 (1996) (reviewing

decision of the Montana Supreme Court); Allied-Bruce Terminix

The Court should grant this Petition for the

following reasons:

First, in order to find reverse preemption under the

McCarran–Ferguson Act, the Supreme Court of

Oklahoma interpreted a generally applicable state

arbitration statute to be a law “enacted * * * for the

purpose of regulating the business of insurance”

under 15 U.S.C. 1012(b). It did so despite the fact that

the Oklahoma arbitration statute expressly states

that it “shall not apply to * * * contracts which

reference insurance[.]” Okla. Stat. Ann. tit. 12,

§ 1855(D). The conclusion that the Oklahoma statute

“regulat[es] the business of insurance” is directly at

odds with this Court’s precedents regarding the

McCarran–Ferguson Act, as well as decisions by other

state courts of last resort and federal courts of

appeals—some interpreting virtually identical

statutory provisions. Clarifying this Court’s earlier

rulings and resolving this split in authority involves

an important question of federal law that is deserving

of this Court’s review.

Second, the decision below is at odds with this

Court’s precedent. The McCarran–Ferguson Act only

permits reverse preemption when a federal law

“invalidate[s], impair[s], or supersede[s]” a state law

enacted to “regulat[e] the business of insurance.” 15

U.S.C. 1012(b). This Court has made clear that, where

a State has “chosen not to regulate” a particular aspect

of the business of insurance, federal laws that do

regulate in that domain do not “impair” state law.

Humana Inc. v. Forsyth, 525 U.S. 299, 309 (1999)

Cos. v. Dobson, 513 U.S. 265 (1995) (reviewing decision of the

Alabama Supreme Court).

(emphasis in original) (citation omitted). Because the

Oklahoma law does not regulate in this area, but

rather carves out insurance contracts from the

general state arbitration act—as do the arbitration

acts of many other States—the decision below is at

odds with this Court’s McCarran–Ferguson Act

precedent. Nonetheless, there is a split in authority to

be resolved as to what it means to “impair” state

insurance law in the arbitration context. That split

has, on the one hand, the Supreme Court of Oklahoma

simply assuming reverse preemption applies and

other courts similarly ignoring the high-bar for

McCarran–Ferguson

Act

“impairment”

when

addressing arbitration and, on the other hand, other

courts finding no impairment at all.

Finally, the Court should grant this Petition

because it presents important issues of federal law

that are likely to reoccur. Arbitration agreements are

common throughout the insurance industry. There

are 18 States other than Oklahoma that have enacted

either similar provisions carving out insurance

contracts from their general state arbitration acts or

statutes that purport to prohibit outright arbitration

of insurance disputes. Guidance from this Court on

these important federal questions can help inform

conduct in the industry and avoid inappropriate

forum shopping.

OPINIONS BELOW

The opinion of the Supreme Court of Oklahoma,

Pet. App. 1a-24a, is reported at 467 P.3d 680 (Okla.

2020). The opinion of the Court of Civil Appeals of

Oklahoma, Pet. App. 25a-53a, is unreported. The

District Court of Cleveland County, Oklahoma’s

summary order denying ORHP’s motion to compel

arbitration, Pet. App. 54a, is unreported.

STATEMENT OF JURISDICTION

The Supreme Court of Oklahoma issued its opinion

on May 27, 2020. Pet. App. 1a. ORHP invokes this

Court’s jurisdiction under 28 U.S.C. 1257(a).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

This case involves the Supremacy Clause of the

United States Constitution, the FAA, the McCarran–

Ferguson Act, and the Oklahoma Arbitration Act.

The Supremacy Clause, U.S. Const. 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 FAA, 9 U.S.C. 2, provides in

pertinent part:

A written provision in any maritime

transaction or contract evidencing a

transaction involving commerce to settle

by arbitration a controversy thereafter

arising out of such contract or transaction,

or the refusal to perform the whole or any

part thereof, or an agreement in writing to

submit to arbitration an existing

controversy arising out of such a contract,

transaction, or refusal, shall be valid,

irrevocable, and enforceable, save upon

grounds as exist at law or in equity for the

revocation of any contract.

The McCarran–Ferguson Act, 15 U.S.C. 1012(b),

provides in pertinent part:

No Act of Congress shall be construed to

invalidate, impair, or supersede any law

enacted by any State for the purpose of

regulating the business of insurance, or

which imposes a fee or tax upon such

business, unless such Act specifically

relates to the business of insurance[.]

The Oklahoma Arbitration Act, Okla. Stat. Ann.

tit. 12, § 1855(D), provides in pertinent part:

The [Oklahoma] Arbitration Act shall not

apply to collective bargaining agreements

and contracts which reference insurance,

except for those contracts between

insurance companies.

STATEMENT OF THE CASE

Factual Background

ORHP sells home service contracts covering

residential properties, often in connection with real

estate transactions. Under the terms of its contracts,

ORHP arranges and pays for the repair or

replacement of certain covered appliances and

fixtures (e.g., refrigerators, HVAC equipment,

oven/ranges, and washer dryers).

Respondent Donna Sparks originally purchased a

home service contract from ORHP in 2009 and

subsequently renewed it for consecutive one-year

terms, including the final term beginning September

15, 2015. The “Declaration of Coverage” issued by

ORHP to Ms. Sparks is included at Pet. App. 63a-65a.

This Declaration of Coverage incorporated the terms,

conditions, and limitations detailed in the

accompanying “Oklahoma Home Warranty” 3 provided

by ORHP to Ms. Sparks, which is attached at Pet.

App. 66a-102a.

The one-page Declaration of Coverage also

informed Ms. Sparks that “this Contract will be

subject to the Arbitration Provision outlined on Page

9” of the service contract. Pet. App. 64a. It explained

that Ms. Sparks would be “giving up certain rights to

have a dispute settled in court” and that if she did “not

want to agree to this provision, [she could] cancel [her]

Plan by contacting [ORHP] within 30 days of purchase

of [her] Home Protection Plan.” Pet. App. 64a-65a.

Page 9 of the contract sets out—in a black-outlined

text box on the right side of the document—the

following arbitration provision:

Arbitration: By entering into this

Agreement the parties agree and

acknowledge that all disputes they have

that involve us, or arise out of actions that

we did or did not take, shall be arbitrated

3 While Ms. Sparks’ service contract is entitled an “Oklahoma

Home Warranty” in accordance with the lay terminology within

the industry, the service contracts issued by ORHP in Oklahoma

are regulated by two separate statutory schemes, the Oklahoma

Service Warranty Act, Okla. Stat. Ann. tit. 15, §§ 15-141.1 et seq.,

and the Oklahoma Home Service Contract Act, Okla. Stat. Ann.

tit. 36, §§ 6752 et seq.

as set forth herein as long as the claim is

in excess of the applicable small claims

court jurisdictional limit. The parties

further agree that they are giving up the

right to a jury trial, and the right to

participate in any class action, private

attorney general action, or other

representative or consolidated action,

including any class arbitration or

consolidated arbitration proceeding.

***

The parties expressly agree that this

Agreement and this arbitration

provision

involve

and

concern

interstate

commerce

and

are

governed by the provisions of the

Federal Arbitration Act (9 U.S.C. § 1,

et seq.) to the exclusion of any

different or inconsistent state or local

law, ordinance or judicial rule.

Pet. App. 99a-100a (italicized emphasis in original

and bolded emphasis added).

The Sparks assert that faulty repairs to their air

conditioning system caused it to malfunction in March

2016, resulting in damage to their home. They allege

the independent contractors dispatched by ORHP

repeatedly failed to repair their air conditioning

system to their satisfaction, that ORHP engaged in a

pattern and practice of hiring unqualified

independent contractors to perform repair work, and

that ORHP is liable for breach of contract, negligence,

and “bad faith,” such that punitive damages are

warranted.

The Revised Uniform Arbitration Act

and Oklahoma’s Enactment

Central to the proceedings below is the fact that

Oklahoma, like many States, has enacted a general

state arbitration act enforcing agreements to arbitrate

disputes and establishing various rules for how

arbitrations shall be conducted if state law applies.

The Oklahoma Arbitration Act was enacted in 2006

and is virtually identical to the Uniform Law

Commission’s Revised Uniform Arbitration Act, which

was published in 2000. Compare Okla. Stat. Ann. tit.

12, §§ 1851-1880 with Revised Uniform Arbitration

Act §§ 1-33.

Section 1855(D) contains one of the few provisions

of the Oklahoma Arbitration Act that deviates from

the Revised Uniform Arbitration Act. Compare Okla.

Stat. Ann. tit. 12, § 1855(D) with Revised Uniform

Arbitration Act § 4. Oklahoma’s statute provides that

it “shall not apply to collective bargaining agreements

and contracts which reference insurance, except for

those contracts between insurance companies.” Okla.

Stat. Ann. tit. 12, § 1855(D). At least 18 other States

have enacted statutory provisions that either exempt

insurance contracts from the scope of their general

state arbitration acts or purport to prohibit outright

insurance disputes from being arbitrated. See p. 30

n.10, infra (compiling state statutes).

Proceedings Below

In 2016, the Sparks filed this lawsuit in the

District Court of Cleveland County, Oklahoma. Based

on the parties’ agreement and the FAA, ORHP

responded by moving to compel arbitration and stay

litigation. Pet. App. 61a (“[A]s provided by the FAA, a

stay of these proceedings is appropriate until the

arbitration has been conducted as the parties

agreed.”). The trial court entered a summary order

denying ORHP’s motion, without explaining its

reasons. Pet. App. 54a.

A divided three-judge panel of the Court of Civil

Appeals of Oklahoma affirmed, ruling that the

Oklahoma Arbitration Act rendered the arbitration

provision in the parties’ contract unenforceable. Pet.

App. 41a. The majority, “based on an interpretation of

the McCarran–Ferguson Act,” rejected ORHP’s

argument that the Oklahoma Arbitration Act is

preempted by the FAA. Pet. App. 28a-29a. Notably,

the dissenting judge explained that reverse

preemption was inappropriate because the FAA does

not impair any Oklahoma law “regulating the

business of insurance” within the meaning of the

McCarran–Ferguson Act. Pet. App. 45a-53a.

The Supreme Court of Oklahoma granted a

petition for certiorari to review the decision. Pet. App.

3a ¶1. On May 27, 2020, the court issued its decision

without any further briefing or oral argument. Pet.

App. 1a-2a. It began by claiming that the McCarran–

Ferguson Act “bestows upon states absolute authority

over matters relating to the regulation of insurance.”

Pet. App. 11a-12a ¶15 (emphasis in original); but see

Humana, 525 U.S. at 308 (“We reject any suggestion

that Congress intended to cede the field of insurance

regulation to the States, saving only instances in

which Congress expressly orders otherwise.”). Despite

acknowledging the controlling legal questions before

it, the Supreme Court of Oklahoma failed to conduct a

substantive analysis of the interaction between the

FAA, the Oklahoma Arbitration Act, and the

McCarran–Ferguson Act. Instead, the court

denigrated the parties’ agreement, characterizing it

as a forced arbitration clause because the provision

was part of a pre-printed contract that the court

assumed was drafted by ORHP and not separately

negotiated. Pet. App. 3a ¶¶1-2, 18a ¶29.4

In reaching its conclusion, the Supreme Court of

Oklahoma did not engage in the type of analysis this

Court has required to determine if McCarran–

Ferguson Act reverse preemption applies. The court

did not analyze whether the Oklahoma legislature

enacted the Oklahoma Arbitration Act for the purpose

of regulating the business of insurance nor whether

the FAA operates “to invalidate, impair, or supersede”

any part of Oklahoma law. Instead, it simply

concluded “that state laws involving the business of

insurance take precedence over the competing federal

law, FAA[,] favoring arbitration.” Pet. App. 14a ¶21.5

Even though it acknowledged that the Oklahoma

Arbitration Act “exempts ‘contracts which reference

insurance,’” the court apparently assumed this meant

4 As this Court has recognized, under the FAA, the mere fact that

an arbitration clause is contained in a form contract does not

render it unenforceable. See Concepcion, 563 U.S. at 346-47

(noting that “the times in which consumer contracts were

anything other than adhesive are long past”).

5 In determining that Ms. Sparks purchased a contract “which

reference[s] insurance” for purposes of the Oklahoma Arbitration

Act, Pet. App. 19a-22a, the Supreme Court of Oklahoma also cast

aside the Oklahoma legislature’s declaration that home service

contracts and warranty contracts “are not insurance in

[Oklahoma] or otherwise regulated under the [Oklahoma]

Insurance Code.” Okla. Stat. Ann. tit. 15 § 15-141.2(17)(f); Okla.

Stat. Ann. tit. 36, § 6752(9).

it invalidated arbitration agreements in such

contracts and that “the state law must prevail over

the” FAA. Pet. App. 15a ¶23 (emphasis added). For

this latter proposition, the court cited cases where

“courts have concluded that state laws invalidating

arbitration provisions in insurance contracts reverse

preempt the FAA.” Pet. App. 15a ¶22 (emphasis

added).

After recognizing that the Oklahoma Arbitration

Act does not apply to arbitration provisions in

contracts referencing insurance, and using that as a

basis for reverse preemption of the FAA, the court

went on to support its conclusion with its common law

precedent singling out arbitration agreements for

unfavorable treatment:

[F]or more than half a century, this Court

has held that an insurance company’s

insertion of forced arbitration in an

insurance contract deprived the insured of

a judicial examination and determination

of the issues and such policy provision was

contrary

public

policy

and

unenforceable.

Pet. App. 16a ¶24 (citing Boughton v. Farmers

Ins. Exch., 354 P.2d 1085, 1089 (Okla. 1960)).

Nowhere did the Supreme Court of Oklahoma

acknowledge that common law rulings by courts do

not justify reverse preemption under the McCarran–

Ferguson Act. See 15 U.S.C. 1012(b) (applying only to

laws “enacted by any State”) (emphasis added).

REASONS FOR GRANTING THE WRIT

As this Court has explained, the McCarran–

Ferguson Act “precludes application of a federal

statute in the face of state law ‘enacted * * * for the

purpose of regulating the business of insurance,’ if the

federal measure does not ‘specifically relat[e] to the

business of insurance,’ and would ‘invalidate, impair,

or supersede’ the State’s law.” Humana, 525 U.S. at

307 (citing Department of Treasury v. Fabe, 508 U.S.

491, 501 (1993)). While the FAA does not relate

specifically to the business of insurance, review by

this Court is justified to address the other two

requirements of McCarran–Ferguson Act reverse

preemption in the context of arbitration agreements.

REVIEW IS WARRANTED BECAUSE THE DECISION

BELOW REFLECTS A SPLIT IN AUTHORITY ON

ANALYZING WHETHER, UNDER FEDERAL LAW,

STATE ARBITRATION STATUTES REGULATE THE

BUSINESS OF INSURANCE.

The Supreme Court of Oklahoma necessarily

concluded that the Oklahoma Arbitration Act was

enacted for the purpose of “regulating the business of

insurance,” 15 U.S.C. 1012(b), even though the statute

clearly states by its own terms that it “shall not apply

to * * * contracts which reference insurance[.]” Okla.

Stat. Ann. tit. 12, § 1855(D). Nothing in the text of the

Oklahoma Arbitration Act purports to render

arbitration provisions in insurance contracts void,

revocable, or unenforceable, or otherwise expresses

any legislative attempt to regulate the insurance

industry or reverse preempt the FAA. Indeed, the

Oklahoma Arbitration Act does just the opposite,

declining to regulate arbitration in “contracts which

reference insurance” by excluding such contracts from

its scope. Okla. Stat. Ann. tit. 12, § 1855(D); see also

Regulate, Black’s Law Dictionary (11th ed. 2019) (“To

control (an activity or process) esp. through the

implementation of rules.”).

When determining whether a law was enacted for

the purpose of regulating the business of insurance,

this Court has explained that the law must “possess

the ‘end, intention, or aim’ of adjusting, managing or

controlling the business of insurance.” Department of

the Treasury v. Fabe, 508 U.S. 491, 505 (1993)

(quoting Black’s Law Dictionary 1236, 1286 (6th ed.

1990)). As several courts have recognized, specific

application of this test post-Fabe has proven difficult.6

The confusion over the applicable standard has

predictably led to divergent outcomes.

a. Analyzing identical McCarran–Ferguson

reverse preemption arguments considered by the

Supreme Court of Oklahoma here, the Vermont

Supreme Court rejected reverse preemption in Little

v. Allstate Insurance Company, 705 A.2d 538 (Vt.

1997). Little involved a state arbitration statute

nearly identical to Oklahoma’s. Specifically,

Vermont’s arbitration law provides that it “does not

apply to labor interest arbitration, nor to arbitration

6 See, e.g., Munich Am. Reinsurance Co. v. Crawford, 141 F.3d

585, 592 (5th Cir. 1998) (“Fabe’s holding in this respect is simply

unclear.”); International Ins. Co. v. Duryee, 96 F.3d 837, 839 (6th

Cir. 1996) (“It is not clear from the majority opinion in Fabe how

far its holding extends.”); Milliman, Inc. v. Roof, 353 F. Supp. 3d

588, 601 (E.D. Ky. 2018) (“[D]etermining whether a law

‘regulates the business of insurance’ has proved difficult.”).

agreements contained in a contract of insurance.” Vt.

Stat. Ann. tit. 12, § 5653.

The Vermont Supreme Court held that the

Vermont Arbitration Act’s exclusion of insurance

contracts from its scope meant that it was not a law

enacted for the purpose of regulating the business of

insurance within the meaning of the McCarran–

Ferguson Act. Little, 705 A.2d at 541. In reaching that

conclusion,

the

Vermont

Supreme

Court

distinguished between state arbitration acts that

exempt arbitration agreements in insurance contracts

from those that affirmatively invalidate arbitration

provisions:

All the insurance contract exclusion from

the [Vermont Arbitration Act] has done is

to allow insurance arbitration agreements

to continue to be governed by the common

law. Thus, the [Vermont Arbitration Act]

regulates those arbitration agreements

subject to its terms. Those that are

excluded are not regulated by the

[Vermont Arbitration Act].

We emphasize that the Vermont

Legislature has not specifically acted to

make insurance arbitration agreements

revocable. * * * Instead, the Legislature

has chosen not to regulate arbitration

agreements at all.

Id. (emphasis in original, internal citation

omitted).

Based on this conclusion, the Vermont Supreme

Court held that the FAA preempted the state statute

and “the agreement to arbitrate is irrevocable.” Id. at

539, 541; see also American Guar. & Liab. Ins. Co. v.

Abram Law Grp., LLC, No. 1:11-cv-3483-SCJ, 2013

WL 12099359 (N.D. Ga. Feb. 20, 2013) (following the

Vermont Supreme Court’s decision in Little); Bixler v.

Next Fin. Grp., Inc., 858 F. Supp. 2d 1136, 1146 & n.5

(D. Mont. 2012) (rejecting McCarran–Ferguson Act

reverse preemption because it was “highly unlikely”

that an arbitration statute—which by its terms “does

not apply to * * * any agreement concerning or

relating to insurance policies or annuity contracts”—

“was enacted for the purpose of regulating the

business of insurance”) (citing Northwestern Corp. v.

Nat’l Union Fire Ins. Co., 321 B.R. 120 (D. Del. Bankr.

2005)).

b. Here however, the Supreme Court of Oklahoma

reached the exact opposite conclusion when presented

with a virtually indistinguishable state statute. Like

the Vermont Arbitration Act, the Oklahoma

Arbitration Act does not apply to “contracts which

reference insurance.” Okla. Stat. Ann. tit. 12,

§ 1855(D). Despite acknowledging this exemption, the

Supreme Court of Oklahoma concluded that the

statute “is a state law regulating the business of

insurance.” Pet. App. 15a ¶23. It failed to provide any

explanation for its conclusion.

Although the Supreme Court of Oklahoma

purported to consider whether the contract before it is

one “which reference[s] insurance” notwithstanding

that the Oklahoma legislature had determined the

contracts were not insurance (see p. 11 n.5, supra),

that is not the dispositive question under the

McCarran–Ferguson Act, which asks whether the

state law was “enacted * * * for the purpose of

regulating the business of insurance.” 15 U.S.C.

1012(b). Without proper analysis, the court simply

assumed that the Oklahoma Arbitration Act was

somehow enacted to regulate insurance and therefore

qualified for reverse preemption under the

McCarran–Ferguson Act.

Neither the Revised Uniform Arbitration Act nor

the Oklahoma Arbitration Act regulate the business

of insurance. Instead, these laws provide default

arbitration rules in the event that the parties’

arbitration agreement does not specifically spell out

particular procedures, but § 1855(D) simply declined

to provide those procedures for “contracts which

reference insurance.” Moreover, the drafters of the

Revised Uniform Arbitration Act expressly recognized

that the “emphatically pro-arbitration provision

perspective [of Congress in the FAA] will be applicable

in both federal and state courts,” such that “state law

of any ilk, including adaptations of the [Revised

Uniform Arbitration Act], mooting or limiting

contractual agreements to arbitrate must yield to the

pro-arbitration policy voiced in Sections 2, 3, and 4 of

the FAA.” Revised Uniform Arbitration Act Preface at

2 (Unif. Law Comm’n 2000); see also Oklahoma

Oncology & Hematology P.C. v. U.S. Oncology, Inc.,

160 P.3d 936, 947 (Okla. 2007) (“Both the FAA and the

[Oklahoma Arbitration Act] require the courts to

honor private parties’ agreements to settle their

‘controversies’ in the arbitral forum.”).

c. Contrary to the approach taken by the Supreme

Court of Oklahoma, federal courts of appeals have

explained that state arbitration laws, which apply

generally to all contracts, do not regulate the business

of insurance. See, e.g., Kong v. Allied Prof’l Ins. Co.,

750 F.3d 1295, 1304 (11th Cir. 2014) (state arbitration

statute that applied to “all arbitration agreements,

not just those found in insurance contracts” did not

regulate the business of insurance under the

McCarran–Ferguson Act); Hart v. Orion Ins. Co., 453

F.2d 1358, 1360 (10th Cir. 1971) (holding that state

laws of “general application pertaining to the method

of handling contract disputes” do not “regulate the

business of insurance” for McCarran–Ferguson Act

purposes); Hamilton Life Ins. Co. v. Republic Nat’l

Life Ins. Co., 408 F.2d 606, 611 (2d Cir. 1969) (“It is

quite plain that arbitration statutes * * * are not

statutes regulating the business of insurance, but

statutes regulating the method of handling disputes

generally.”). And other state courts of last resort have

explained that where a general arbitration act is

incorporated by reference into the state insurance

code, this act of incorporation does not transform the

state arbitration act into a law regulating “insurance

so as to reverse-preempt the FAA under the provisions

of the McCarran–Ferguson Act.” Southern United Fire

Ins. Co. v. Howard, 775 So. 2d 156, 164 (Ala. 2000).

d. There are other federal and state courts that

have concluded that arbitration statutes or insurance

statutes that specifically address the arbitrability of

insurance related disputes are state laws enacted for

the purpose of regulating insurance. The Supreme

Court of Oklahoma relied on several of these

decisions, although they are distinguishable and

apply at best a cursory analysis of the requisite

McCarran–Ferguson Act elements. Pet. App. 14a-15a

¶¶21-22.

The court heavily relied on Minnieland Private

Day School, Incorporated v. Applied Underwriters

Captive Risk Assurance Company, 867 F. 3d 449 (4th

Cir. 2017), but that reliance (misplaced as it was)7

only highlights why clarification from this Court is

necessary.

While the Supreme Court of Oklahoma described

the Virginia law at issue in Minnieland as similar to

§ 1855(D) of the Oklahoma Arbitration Act, Pet. App.

14a-15a ¶21, the texts of the two laws differ in

significant ways. The Virginia statute provides that

“[n]o insurance contract delivered or issued for

delivery” in Virginia “shall contain any condition,

stipulation or agreement * * * [d]epriving the courts

of [Virginia] of jurisdiction in actions against the

insurer,” and rendered any such provision “void.”

Minnieland, 867 F.3d at 455 (quoting Va. Code Ann.

§ 38.2-312).

By contrast, the Oklahoma Arbitration Act does

not include any language rendering arbitration

provisions in insurance contracts “void,” nor does it

mention contractual provisions that “deprive” state

courts of their “jurisdiction.” Oklahoma’s law merely

excludes “contracts which reference insurance” from

its scope. Okla. Stat. Ann. tit. 12, § 1855(D). Nowhere

does it purport to render such provisions void,

unenforceable, or revocable, or otherwise prohibit

7 Notably, despite the Supreme Court of Oklahoma’s suggestion

that Minnieland supported reverse preemption of the FAA, the

Fourth Circuit did not reach the issue, stressing in its opinion

that the appellant did not raise it. Id. at 454. As a result, the

court’s decision and holding focused exclusively on the

appellant’s argument that the delegation language of the parties’

contract required the arbitrator, rather than the district court, to

determine the arbitrability question. Id.

agreements that would “deprive” Oklahoma state

courts of their “jurisdiction.”

Similarly, the Supreme Court of Oklahoma relied

on American Bankers Insurance Company v. Inman,

436 F.3d 490 (5th Cir. 2006). Pet. App. 14a n.14, 15a

¶22. But that case, like Minnieland, involved a state

statute that expressly proscribed any “provision

requiring arbitration arising under” any uninsured

motorist endorsement and provided that “[t]he

insured shall not be restricted or prevented in any

manner from employing legal counsel or instituting or

prosecuting to judgment legal proceedings.” Inman,

436 F.3d at 493 (quoting Miss. Code Ann. § 83-11-109).

The text of the Oklahoma Arbitration Act lacks any

language similar or even close to that, and nothing in

it can plausibly be read to prohibit, invalidate, or void

arbitration agreements in insurance contracts.

***

Review by this Court can resolve the split in

authority and lack of clarity regarding whether (or

when) an arbitration statute that excludes from its

coverage arbitration of insurance related contracts is

a law “enacted * * * for the purpose of regulating the

business of insurance,” such that reverse preemption

under the McCarran–Ferguson Act is possible.

II. REVIEW IS WARRANTED BECAUSE THE DECISION

BELOW IS AT ODDS WITH THIS COURT’S

PRECEDENT AND IT IS INDICATIVE OF

INCONSISTENT DECISIONS FROM APPELLATE

COURTS ADDRESSING WHEN, IF EVER,

ENFORCEMENT OF THE FAA IMPAIRS A STATE

STATUTE ENACTED FOR THE PURPOSE OF

REGULATING INSURANCE.

a. A “key question” under the McCarran–Ferguson

Act is whether application of federal law would

“invalidate, impair, or supersede” a state law

regulating the business of insurance. Humana, 525

U.S. at 307-08.8 Indeed, this Court in Humana made

clear that reverse preemption under the McCarran–

Ferguson Act is inapplicable when federal law does

not impair a state law regulating the business of

insurance. Id. at 309.

This Court has not hesitated to grant review of a

state supreme court decision that is directly at odds

with this Court’s precedent interpreting federal law.

See, e.g., Kindred Nursing Ctr. Ltd. P’ship v. Clark,

137 S. Ct. 1421, 1427 (2017) (reviewing state supreme

court’s application of the FAA and explaining that

“the court did exactly what [AT&T Mobility LLC v.

Concepcion, 563 U.S. 333 (2011)] barred” by “singling

out [arbitration] contracts for disfavored treatment”).

And that is the case here.

8 See also Miller v. Nat’l Fidelity Life Ins. Co., 588 F.2d 185, 187

(5th Cir. 1979) (explaining that the “test under McCarran–

Ferguson is not whether a state has enacted statutes regulating

the business of insurance, but whether such state statutes will

be invalidated, impaired, or superseded by application of federal

law”).

The FAA does not “impair” any Oklahoma statute,

certainly not any that regulate insurance, and the

Supreme Court of Oklahoma’s contrary conclusion is

at odds with decisions of this Court and various

appellate courts.

Because the Oklahoma Arbitration Act does not

apply to “contracts which reference insurance[,]”

Okla. Stat. Ann. tit. 12, § 1855(D), application of the

FAA to such contracts does not impair the Oklahoma

Arbitration Act. As this Court has explained, where a

State has “chosen not to regulate” a particular aspect

of the business of insurance, federal laws that do

regulate in that domain do not “impair” state law.

Humana, 525 U.S. at 309 (emphasis in original).

Interpreting the meaning of “impair” as used in the

McCarran–Ferguson Act, this Court has explained:

When federal law does not directly conflict

with state regulation, and when

application of the federal law would not

frustrate any declared state policy or

interfere with a State’s administrative

regime, the McCarran–Ferguson Act does

not preclude its application.

Id. at 310.9

Though not expressly stating it, the Oklahoma

Supreme Court necessarily concluded that application

9 To qualify for McCarran–Ferguson Act reverse preemption, the

state law must be one “enacted” by the state legislature, 15

U.S.C. 1012, not merely a policy announced by a government

officials, see American Heritage Life Insurance Company v. Orr,

294 F.3d 702, 709 (5th Cir. 2002), or common law doctrine, see

American International Group, Incorporated v. Siemens Building

of the FAA would “impair” the Oklahoma Arbitration

Act in order to find McCarran–Ferguson Act reverse

preemption. But that conclusion is directly at odds

with the holding in Humana. A state arbitration

statute that simply provides that it does not apply to

an insurance contract cannot, by definition, be

impaired by a federal statute that permits arbitration

to be enforced in accordance with the parties’ express

written agreement, even if it is believed to resemble

insurance.

b. The decision below is also at odds with several

other appellate court decisions rejecting impairment

by the FAA under similar circumstances. Earlier this

year, the Iowa Supreme Court held that “[i]f there is

no conflict, McCarran–Ferguson’s reverse preemption

is inapplicable.” Ommen v. Milliman, Inc., 941

N.W.2d 310, 319 (Iowa 2020). In Ommen, the court

ruled that McCarran–Ferguson Act reverse

preemption did not apply because the FAA did not

impair the Iowa Liquidation Act. The Iowa statute

permitted a liquidator to “continue to prosecute and to

institute * * * any and all suits and other legal

proceedings.” Iowa Code § 507C.21(1)(l). It did not

preclude arbitration of such claims and did not conflict

with the FAA: “Requiring arbitration only alters the

forum in which the liquidator may pursue his common

law tort claims.” Ommen, 941 N.W.2d at 320.

New York’s highest court reached a similar

conclusion in Monarch Consulting, Incorporated v.

National Union Fire Insurance Company, 47 N.E.3d

463 (N.Y. 2016). The case addressed whether a

Technologies, Incorporated, 881 So. 2d 7, 11-12 (Fla. Ct. App.

2004).

California law requiring filing of certain insurance

related agreements with a state regulator would be

impaired by compelling arbitration under an

agreement that was not filed as required. Id. at 470.

The court held that the state law was not “impaired”

by application of the FAA because it did not purport

to “prohibit, limit, or regulate the use or form of

arbitration clauses in insurance contracts.” Id. at 471.

The same is undeniably true of the Oklahoma

Arbitration Act.

Clearly the rationale of the Vermont Supreme

Court in Little also supports a finding of nonimpairment, because it concluded that the state

statute simply did not apply to insurance contracts.

See Little, 705 A.2d at 541. It is axiomatic that a state

law that does not apply to insurance contracts cannot

be impaired by the application of the FAA to insurance

contracts.

Outside of the context of arbitration, lower courts

apply the Humana impairment test rigorously. Their

decisions stress the importance of carefully analyzing

the question based on the particular facts and legal

theories at issue. See, e.g., Brown v. Cassens Transp.

Co., 546 F.3d 347, 362 (6th Cir. 2008) (“Humana

treats the impairment consideration as an ‘as-applied’

challenge that looks to whether the federal statute

would impair the state statute in a particular

application.”); Saunders v. Farmers Ins. Exch., 537

F.3d 961, 967 (8th Cir. 2008) (“In applying Humana’s

fact-intensive interpretation of the word ‘impair,’ our

focus must be on the precise federal claims asserted.

Federal civil rights statutes are drafted broadly, so a

statute might ‘impair’ state insurance laws when

applied in some ways, but not in others.”); Greene v.

United States, 440 F.3d 1304, 1316 (Fed. Cir. 2006)

(“Given that the state statute is silent as to the

relative priority order of the federal government over

policyholders within the same class of claimants * * *

we can discern no ‘impairment’ here.”).

The Supreme Court of Oklahoma is not alone,

however, in ignoring the requirements of the Humana

test when it comes to arbitration agreements in the

insurance context. For example, in Standard Security

Life Insurance Company v. West, 267 F.3d 821 (8th

Cir. 2001) (per curiam), the Eighth Circuit did not

explain how Missouri’s state arbitration statute,

which exempts insurance contracts from its scope, is

invalidated, impaired, or superseded by application of

the FAA. Id. at 824. The Eighth Circuit reasoned that

the Missouri Arbitration Act’s exclusion of insurance

contracts regulated the business of insurance by

“spreading risk” in introducing the possibility of jury

verdicts. Id. at 823. This Court has subsequently held

that the prospect of punitive damages does not spread

a policyholder’s risk such as to “regulate” the

“business of insurance[.]” Kentucky Ass’n of Health

Plans v. Miller, 538 U.S. 329 (2003).

Likewise, in Mutual Reinsurance Bureau v. Great

Plains Mutual Insurance Company, 969 F.2d 931, 933

(10th Cir. 1992), the Tenth Circuit simply concluded,

without analysis, that the FAA impaired a Kansas

arbitration statute, which exempted insurance

contracts in similar fashion to the Oklahoma

Arbitration Act. The court just noted the exemption,

without explaining its impairment analysis further.

Id. at 933-34.

It is not clear that the FAA could ever “impair” a

state law regulating the business of insurance, given

that the FAA merely provides an alternative forum for

resolution of parties’ disputes and does not alter any

underlying substantive rights. In DiMercurio v.

Sphere Drake Insurance, PLC, 202 F.3d 71 (1st Cir.

2000), the First Circuit held that a Massachusetts

statute—nearly identical to the Virginia statute in

Minnieland discussed above, pp. 18-19—which

rendered “void” any “condition, stipulation, or

agreement [in an insurance policy] depriving the

courts of [Massachusetts] of jurisdiction of actions

against [the insurer,]” did not conflict with the FAA

because arbitration agreements do not actually

deprive courts of “jurisdiction.” Id. at 73-74, 77

(quoting Mass. Gen. Laws ch. 175, § 22); see also

Ommen, 941 N.W.2d at 320 (“Requiring arbitration

only alters the forum[.]”); Milliman, Inc. v. Roof, 353

F. Supp. 3d 588, 603 (E.D. Ky. 2018) (“Arbitration

does not deprive the [party] of any substantive rights,

only altering the forum in which the [party] may

pursue those rights.”); cf. Mastrobuono v. Shearson

Lehman Hutton, Inc., 514 U.S. 52 (1995) (harmonizing

choice-of-law provisions with arbitration provisions by

holding that the former control the “substantive

principles” while the latter control the authority of the

arbitrator). Enforcement of an arbitration provision

does not implicate any of the elements that this Court

has identified as the “business of insurance,” such as

spreading a policyholder’s risk or altering “an integral

part of the policy relationship[.]” Fabe, 508 U.S. at

497-98.

Courts recognize this lack of impairment when

confronting state statutes purporting to prohibit

insurers from removing lawsuits to federal court. See,

e.g., Hammer v. Dep’t of Health and Human Servs.,

905 F.3d 517, 534 (7th Cir. 2018) (“[I]t cannot fairly be

said that choice of forum between state and federal

court, within a state is ‘integral’ to the policy

relationship or the substantive concerns of the

McCarran–Ferguson Act.”); International Ins. Co. v.

Duryee, 96 F.3d 837, 840 (6th Cir. 1996) (holding that

a state statute prohibiting insurers from removing

lawsuits did not qualify for McCarran–Ferguson Act

reverse preemption because it was “not enacted so

much for the purpose of regulating the business of

insurance as for the parochial purpose of regulating a

foreign insurer’s choice of forum”). If state antiinsurance removal statutes are not “impaired” by

application of federal law for purposes of the

McCarran–Ferguson Act, there is no reason why state

anti-insurance arbitration statutes should be treated

differently.

Regardless, in this case it is clear that the FAA

does not impair any Oklahoma state law. The

Oklahoma Arbitration Act unambiguously states that

it does not apply to “contracts which reference

insurance.” Okla. Stat. Ann. tit. 12, § 1855(D). Under

this Court’s analysis in Humana, application of the

FAA to a contract which references insurance cannot

“impair” the Oklahoma Arbitration Act because the

Oklahoma legislature has “chosen not to regulate”

arbitration agreements in insurance contracts. 525

U.S. at 308 (emphasis in original).

The FAA and the McCarran–Ferguson Act

collectively require courts to honor contractual

arbitration arrangements unless application of the

FAA would impair a state law enacted for the purpose

of regulating the business of insurance. Here, given

the Oklahoma Arbitration Act is inapplicable by its

terms, the FAA does not impair it, and reverse

preemption is not proper under this Court’s decision

in Humana.

III. THE QUESTION PRESENTED IS RECURRING AND

IMPORTANT.

The insurance market in the United States is one

of the largest financial markets in the world. In 2017,

insurers in the United States underwrote

approximately $1.2 trillion in direct premiums,

accounting for just over 28 percent of the global

insurance industry. See Insurance Information

Institute, 2019 International Insurance Fact Book, at

(2019),

available

https://www.iii.org/sites/default/files/docs/pdf/insuran

ce_factbook_2019.pdf (last accessed August 24, 2020).

To put that number in perspective, the insurance

industry contributed $602.7 billion (or 3.1 percent) to

the United States’ gross domestic product in 2017. Id.

at 24.

Arbitration is common throughout the insurance

industry, see Steven Plitt, et al., 15 Couch on

Insurance § 209:1 (3d ed. June 2020 supp.), as it

(1) allows parties to design their own “efficient,

streamlined, procedures tailored to the type of

dispute” at issue, Concepcion, 563 U.S. at 344;

(2) provides “expeditious results” compared to

traditional litigation, Preston, 552 U.S. at 357-59; and

(3) “reduc[es] the cost of resolving disputes[,]”

Concepcion, 563 U.S. at 345. Property insurance

policies frequently contain arbitration clauses. David

M. Adlerstein, et al., 2 Successful Partnering Between

Inside and Outside Counsel § 25A:70 (Apr. 2020

supp.); see also Benedict M. Lenhart, et al.,

Arbitration of Coverage Disputes, 1 New Appleman on

Insurance Law Library Edition § 7.03 (2020) (“In the

insurance context, it is more common for the insurer

and the insured to agree to arbitration in advance of a

dispute.”).

The frequency with which this Court grants

certiorari in similar cases involving the FAA

underscores the critical role commercial arbitration

occupies in the modern business world. Arbitration

agreements facilitate resolution of a multiplicity of

disputes amongst private litigants while avoiding the

costs associated with traditional litigation. A “timeconsuming sideshow” of litigation to determine

arbitrability is antithetical to the judicious resolution

of disputes expected by parties. Henry Schein, Inc. v.

Archer and White Sales, Inc., 139 S. Ct. 524, 531

(2019). Conflict among state and federal courts

concerning the implications of state arbitration

statutes will “encourage and reward forum shopping.”

Southland Corp. v. Keating, 465 U.S. 1, 15 (1984).

Plaintiffs may seek to capitalize on “judicial hostility

to arbitration agreements,” even where such

agreements unmistakably select the FAA as the

governing law. Gilmer v. Interstate/Johnson Lane

Corp., 500 U.S. 20, 24 (1991).

Thus, how the McCarran–Ferguson Act and FAA

“interact is an important legal question” implicating

arbitration agreements in interstate commerce

throughout the country. Robert H. Jerry II,

Explaining the Obvious: How Appraisals, Health

Care, and More Implement ADR in the Insurance

Field, 35 Alternatives to High Cost Litig. 115, 116

(Sept. 2017).

As shown above, there is widespread confusion

about how the basic elements of reverse preemption

under the McCarran–Ferguson Act should be

determined. There are inconsistent or cursory

analyses, directly conflicting decisions, and

unnecessary and improper hostility toward using

arbitration to resolve insurance related disputes.

Besides Oklahoma, at least 18 other States have

enacted their own statutes that either exempt

insurance contracts from the scope of their state

arbitration laws or purport to prohibit outright the

enforcement of arbitration agreements in insurance

related matters.10 Review by this Court is necessary

10 See Ariz. Rev. Stat. § 12-3003(B)(2) (providing that Arizona’s

arbitration act “shall not apply to an agreement to arbitrate any

existing or subsequent controversy * * * [c]ontained in a

contract of insurance”); Ark. Code Ann. § 16-108-233(b)(3)

(providing that Arkansas’s arbitration act “does not apply to

* * * [a]n insured or beneficiary under any insurance policy”);

Ga. Code Ann. § 9-9-2(b)(3) (providing that Georgia’s arbitration

act “shall not apply” to “[a]ny contract of insurance”); Haw. Rev.

Stat. § 431:10-221(a)(2) (“No insurance contract * * * shall

contain any condition, stipulation or agreement * * * [d]epriving

the courts of [Hawaii] of the jurisdiction of action against the

insurer[.]”); Ky. Rev. Stat. Ann. § 417.050 (providing that

Kentucky’s arbitration act “does not apply to * * * [i]nsurance

contracts”); La. Rev. Stat. Ann. § 22-868 (“No insurance contract

* * * shall contain any condition, stipulation, or agreement * * *

[d]epriving the courts of this state of the jurisdiction of action

against the insurer.”); Me. Rev. Stat. Ann. tit. 24-A, § 2433 (“No

conditions, stipulations or agreements in a contract of insurance

shall deprive the courts of this State of jurisdiction of actions

against foreign insurers[.]”); Md. Code Ann., Cts. & Jud. Proc.

§ 3-206.1 (“[A]ny provision in an insurance contract with a

consumer that requires arbitration is void and unenforceable.”);

to clarify the interaction between the FAA, the

McCarran–Ferguson Act, and state arbitration laws,

and once again to correct state courts’ continued

hostility toward arbitration.

CONCLUSION

This Petition for a Writ of Certiorari should be

granted. Alternatively, the Court should grant,

Mass. Gen. Laws ch. 175, § 22 (prohibiting provisions in “any

policy of insurance” that “depriv[es] the courts of the

commonwealth of jurisdiction of actions”); Mo. Rev. Stat.

§ 435.350 (exempting “contracts of insurance and contracts of

adhesion” from Missouri’s arbitration act); Mont. Code Ann. § 275-114(2)(c) (providing that Montana’s arbitration act “does not

apply to * * * any agreement concerning or relating to insurance

policies or annuity contracts”); Neb. Rev. Stat. § 25-2602(f)(4)

(providing that Nebraska’s arbitration act “does not apply to

* * * any agreement concerning or relating to an insurance

policy”); R.I. Gen. Laws § 10-3-2 (permitting insureds to opt out

of arbitration agreements “in all contracts of primary insurance”

if the arbitration provision “is not placed immediately before the

testimonium clause or the signature of the parties”); S.C. Code

Ann. § 15-48-10(b)(4) (providing that South Carolina’s

arbitration act “shall not apply to * * * any insured or

beneficiary under any insurance policy or annuity contract”);

S.D. Codified Laws § 21-25A-3 (providing that South Dakota’s

arbitration act “does not apply to insurance policies” and that

arbitration agreements in insurance policies are “void and

unenforceable”); Vt. Stat. Ann. tit 12, § 5653 (providing that

Vermont’s arbitration act “does not apply to * * * arbitration

agreements contained in a contract of insurance”); Va. Code Ann.

§ 38.2-312 (“No insurance contract * * * shall contain any

condition, stipulation or agreement * * * [d]epriving the courts

of [Virginia] of jurisdiction in actions against the insurer.”);

Wash. Rev. Code § 48.18.200 (rendering “void” any provision in

an insurance contract “depriving the courts of [Washington] of

the jurisdiction of action against the insurer”).

vacate, and remand in light of its decision in Humana

Inc. v. Forsyth, 525 U.S. 299, 309 (1999).

Respectfully Submitted,

MICHAEL D. LEFFEL

FOLEY & LARDNER LLP

150 East Gilman Street

Madison, WI 53703

(608) 258-4216

JAY N. VARON

Counsel of Record

FOLEY & LARDNER LLP

3000 K Street, N.W.

Washington, D.C. 20007

(202) 672-5380

jvaron@foley.com

AARON R. WEGRZYN

FOLEY & LARDNER LLP

777 East Wisconsin Ave.

Milwaukee, WI 53202

(414) 297-5156

KENDALL E. WATERS

FOLEY & LARDNER LLP

555 South Flower Street

Los Angeles, CA 90071

(213) 972-4899

Counsel for Petitioners

August 25, 2020

APPENDIX

APPENDIX A

IN THE SUPREME COURT OF

THE STATE OF OKLAHOMA

[Filed May 27, 2020]

————

No. 115,789

2020 OK 42

————

WILLIAM B. SPARKS and DONNA SPARKS,

Plaintiffs/Appellees,

vs.

OLD REPUBLIC HOME PROTECTION COMPANY, INC.,

Defendant/Appellant,

OLD REPUBLIC INTERNATIONAL and

ALL SEASON’S HEATING AND AIR, LLC,

Defendants.

————

ON WRIT OF CERTIORARI TO THE COURT

OF CIVIL APPEALS, DIVISION NO. II

¶0 Plaintiffs are homeowners who brought suit

against Old Republic Home Protection Company, Inc.,

for breach of contract and bad faith breach of contract

of their home warranty policy. Defendant filed a

motion to compel arbitration of the underlying dispute

pursuant to a contractual provision requiring resolution of disputes through binding arbitration. Plaintiffs

argued that mandatory arbitration provisions are prohibited by 12 O.S. 2011 § 1855 (D) in any contract that

references insurance and this matter should proceed

in district court. The court denied defendant’s motion

for arbitration. Defendant appealed from this interlocutory order and the Court of Civil Appeals affirmed

the District Court. We granted certiorari to address

the first impression question of whether this home

warranty contract constitutes an insurance contract.

We hold that the home warranty contract at issue

meets the definition of an insurance contract.

CERTIORARI PREVIOUSLY GRANTED;

OPINION OF THE COURT OF CIVIL APPEALS

VACATED; ORDER OF THE DISTRICT

COURT AFFIRMED; CAUSE REMANDED

FOR FURTHER PROCEEDINGS

Amy N. Bennett

John David Lackey

PAUL & LACKEY, P.C.

Tulsa, Oklahoma

For Defendants/Appellants

Mark E. Bialick

R. Ryan Deligans

DURBIN LARIMORE & BIALICK

Oklahoma City, Oklahoma

and

David W. Little

LAW OFFICES OF DAVID LITTLE

Oklahoma City, Oklahoma

For Plaintiff/Appellee

OPINION

EDMONDSON, J.:

¶1 We granted certiorari to address the first

impression questions of: (1) whether a home warranty

plan meets the definition of an insurance contract,

(2) and if it is insurance, whether a forced arbitration

clause in such a contract is unenforceable under

the Oklahoma Uniform Arbitration Act, (3) whether

12 O.S. 2011 § 1855 of the Oklahoma Uniform Arbitration Act is a state law enacted for the purpose of

regulating insurance under the McCarran-Ferguson

Act, 15 U.S.C. § 1012 (b), and (4) whether pursuant to

the McCarran-Ferguson Act, does § 1855 preempt the

application of the Federal Arbitration Act, 9 U.S.C.

§§ 1 - 307? We answer all questions in the affirmative.

FACTS AND PROCEDURAL HISTORY

¶2 Donna Sparks purchased a policy from Old

Republic Home Protection (ORHP) which included

coverage for the repair or replacement cost of the home

air conditioning system during the stated policy term.

ORHP drafted this contract which included a provision that disputes between the parties would be

resolved by arbitration under the Federal Arbitration

Act. There is no evidence that this arbitration policy

provision was independently discussed or negotiated

between the parties. Almost six months after purchasing the coverage, the Plaintiffs alleged they

suffered a covered loss. Specifically, Plaintiffs claimed

that their home was extensively damaged as a result

of problems that arose from faulty repair work to the

air conditioning system. Plaintiffs notified ORHP

when covered repairs were needed who then selected

the repair company to be dispatched to their home.

Plaintiffs alleged that ORHP engaged in a pattern and

practice of using unqualified contractors to perform

work and deliberately sought contractors who would

opine little or no work was needed. ORHP did not

directly perform the home repair services. Homeowners asserted that ORHP was negligent in the selection

and hiring of the repair company, and thus ORHP is

liable to the Plaintiffs for damage to their home. On

July 7, 2016, homeowners filed a lawsuit against

ORHP for breach of contract and bad faith breach of

contract.

¶3 The contract is titled as an “Oklahoma Home

Warranty.” The contract identifies the following

advantages of an Old Republic Home Warranty Plan:1

Home Buyers

In an ideal world, buying a home should be

one of the most memorable and rewarding

experiences of your life. However, the headaches caused by a heating system failure or a

broken refrigerator could taint those memories forever.

Safeguard your budget against expensive

system and appliance failures with an Old

Republic Home Warranty Plan. . . .

What would you pay without a home warranty? Potential out-of-pocket repair or replacement costs for major systems and

appliances:

Record, Exhibit 2, Defendant Old Republic Home Protection

Co., Inc.’s Motion to Stay and Compel Arbitration, and Brief in

Support, William B. Sparks and Donna Sparks, Plaintiffs v. Old

Republic Home Protection Company, Inc., Defendant, CJ-16-795,

District Court of Cleveland County.

Item

Repair/Replacement

Cost without a Home

Warranty

Heating System

$318 - $3,911

Air Conditioning

$360 - $5,100

Water Heater

$384 - $2,331

Oven/Range

$325 - $2,487

Refrigerator

$294 - $1,904

Washer/Dryer

$230 - $1,112

The rate sheet reflects the respective premium for

each of the three different levels of coverage offered,

Standard, Ultimate and Platinum. On the bottom

corner of this page also appears an insignia with “Old

Republic Insurance Group.”2 Plaintiffs purchased the

Platinum coverage and the “Declaration of Coverage”

identifies the contract as a “home warranty.”3

¶4 Initially, ORHP pled that it was an insurance

company and that the agreement between ORHP and

the Plaintiffs was an “insurance” contract but later

pled that it was not an insurance company and that

this was simply a home service contract but not

insurance. This change in position was reflected in an

Amended Answer filed after the trial court’s February

7, 2017 Order denying ORHP’s motion to compel

arbitration. There is no transcript of this hearing and

Record, Exhibit 3, Defendant Old Republic Home Protection

Co., Inc.’s Motion to Stay and Compel Arbitration, and Brief in

Support, William B. Sparks and Donna Sparks, Plaintiffs v. Old

Republic Home Protection Company, Inc., Defendant, CJ-16-795,

District Court of Cleveland County.

no evidence in the record reflecting that ORHP

obtained leave of court to file the Amended Answer.

Homeowners did not file an objection to the amended

pleading.

¶5 On February 8, 2017 the trial court filed a

summary order stating ORHP’s “motion to compel

arbitration denied- motion to stay denied.”4 The trial

court made no other findings and the order is silent on

the reason for the denial. An appeal may be taken from

an order denying a motion to compel arbitration. 12

O.S. 2011 § 1879 (A) (1).

¶6 ORHP filed a Petition in Error on February 23,

2017 urging that it was error for the district court to

deny the Motion for Arbitration and Motion to Stay

“given the contract between the parties pursuant to

the Federal Arbitration Act (9 U.S.C. § 1, et seq.), the

Oklahoma Uniform Arbitration Act (12 O.S. § 1851

et seq.), and applicable case law interpreting those

statutes.”5 On appeal, ORHP argued as follows: (1) the

FAA controlled this dispute, (2) the Oklahoma Uniform Arbitration Act is preempted by the FAA,

(3) McCarran-Ferguson Act does not apply because

“Old Republic and the Plaintiffs chose the law that

governs all disputes (the FAA).” ORHP did not dispute

that the McCarran-Ferguson Act gives individual

states the right to regulate insurance or that “12

O.S. § 1855 (D) purports to regulate insurance in

William B. Sparks and Donna Sparks, Plaintiffs’ v. Old

Republic Home Protection Company, Inc., Defendant, CJ-16-795,

District Court of Cleveland County, Summary Order, 2-8-17.

William B. Sparks and Donna Sparks, Plaintiffs/Appellees,

v. Old Republic Home Protection Company, Inc., Defendant/

Appellant, 115,789, Petition in Error.

Oklahoma.” However, ORHP argued that the

“McCarran-Ferguson Act can only apply when interpreting a contract that does not contain a choice of law

agreement,”7 and therefore, it was not relevant to any

issue before this Court. ORHP cited no legal authority

to support this last argument. The sole support offered

by ORHP was simply that “the FAA is not reverse

preempted by the McCarran-Ferguson Act because

this Contract chooses the FAA to the exclusion of

any contradictory laws.”8 We are not persuaded by

statements without legal authority.

¶7 ORHP drafted the preprinted policy issued to the

Plaintiffs. ORHP inserted all language regarding the

FAA choice of law. Contrary to ORHP’s argument,

Dean Witter Reynolds, Inc. v. Shear, 1990 OK 67, ¶ 1,

796 P.2d 296 does not support the argument that the

FAA must control as the “choice of law” chosen by the

parties in the contract; it offers no useful guidance in

this regard. Dean Witter obtained an arbitration

award against its customer and then brought an action

pursuant to the Oklahoma Uniform Arbitration Act to

obtain an executable judgment. On appeal, Shear

sought relief on the single contention that the arbitration and the choice-of-law clauses were void under a

provision of the Oklahoma constitution. We refused to

consider this argument because Shear failed to timely

preserve this issue by proper response to the summary

judgment filed by Dean Witter. For that reason we

held that Shear “cannot now invoke Oklahoma law to

William B. Sparks and Donna Sparks, Plaintiffs/Appellees,

v. Old Republic Home Protection Company, Inc., Defendant/

Appellant, 115,789, Appellant’s Brief in Chief

Id.

test the validity of the arbitration clause of the State’s

fundamental law.” Dean Witter Reynolds, 1990 OK 67,

¶ 7, 796 P.2d at 298. We did not hold, as urged by

ORHP, that New York law and the arbitration clause

applied because of the parties “choice of law” provision

in the contract. Unlike the appellant in Dean Witter

Reynolds, the Plaintiffs challenged the choice of law

provision before the trial court, and this issue is fully

preserved. We do not find Dean Witter Reynolds

instructive on the issues before us.

¶8 ORHP further asserted that the application of 12

O.S. 2011 § 1855 conflicts with federal law, i.e. the

FAA, which should preempt any conflicting state law

under the pronouncements of Manna Health Care Ct.,

Inc. v. Brown, 565 U.S. 530, 132 S.Ct. 1201, 182

L.Ed.2d 42. In Marmet, the West Virginia court held

that as a matter of public policy under West Virginia

law, an arbitration clause in a nursing home agreement adopted prior to a negligent act shall not be

enforced to compel arbitration. The state court went

on to conclude that the FAA did not preempt the

state public policy against predispute arbitration

agreements as applied to claims for personal injury

against a nursing home. The Supreme Court found

that the FAA displaces a state law that prohibits

outright the arbitration of a particular type of claim.

Id., 565 U.S. at 533, 132 S.Ct. at 1203. The Marmet

court did not consider the reverse preemption granted

to states under the McCarran-Ferguson Act for state

law provisions relating to the business of insurance.

For this reason, we do not find Marmet controlling.

¶9 Next ORHP argued that “home warranties” are

really a ‘home service contract’ and therefore this type

of contract by statutory definition is not insurance

pursuant to the Oklahoma Home Service Contract Act,

36 O.S. §§ 6750 - 6755. ORHP further argued, if this

contract is not “insurance” then Section 1855 of the

Oklahoma Uniform Arbitration Act would not apply,

which exempts any contract that “references insurance” from the provisions of that Act. If the contract at

issue was not one that referenced insurance, then the

McCarran-Ferguson Act would not apply to reverse

preempt the Federal Arbitration Act. Stated differently, the FAA would preempt any state law that

would be in conflict and this matter should be ordered

to arbitration. As more fully discussed below, we find

the home warranty is insurance and we reject these

contentions from ORHP.

¶10 On November 19, 2018 the Court of Civil

Appeals affirmed the lower court’s order, with one

judge dissenting. The majority concluded that Oklahoma state law, the Uniform Arbitration Act, 12 0.5.

2011 §1855 (D) prevented the trial court from compelling arbitration because the contract “referenced

insurance” within the meaning of this Act and further

that the Oklahoma legislature did not intend to

exempt contracts made pursuant to the Oklahoma

Home Service Contract Act9 (HSCA) and the Service

Warranty Act10 (SWA)from this provision in the

Uniform Arbitration Act. We agree.

¶11 On Petition for Certiorari, ORHP argued that

COCA erred and this matter presented a case of first

impression on whether an arbitration clause in a

“home protection plan” could be disregarded under the

Federal Arbitration Act (FAA). In addition, ORHP

urged that the decision by the COCA determining that

Title 36 O.S. 2011 & Supp. 2012 §§ 6750-6755.

Originally in Title 36, but revised and renumbered in 2012

as 15 O.S. §§ 141.1-141.35.

10a

the home warranty in this case is a contract that

“references insurance,” and calling home warranty

agreements “insurance”: (1) departed from the accepted and usual course of judicial proceedings calling

for this Court’s power of supervision, (2) invaded the

legislative prerogative and interpreted statutes contrary to the express language provided by the legislature, (3) deviated from federal and state case law by

invalidating the choice of law clause in the contract,

and the parties’ agreement to utilize the Federal

Arbitration Act, and (4) ignored the plain language of

the home service contract statute declaring that “home

service contracts are not insurance in this state.”

¶12 Homeowners argued that the federal McCarranFerguson Act authorized the “reverse preemption” of

the FAA in this instance. Because the FAA did not

preempt relevant Oklahoma state law involving the

regulation of insurance, Homeowners replied that the

Court of Civil Appeals did not err in holding that

§ 1855 of the Oklahoma Uniform Arbitration Act

barred the enforcement of arbitration in this matter.

We agree.

¶13 We granted certiorari on May 28, 2019.

STANDARD OF REVIEW

¶14 ORHP urged that arbitration is the appropriate

forum to resolve this matter. Homeowners disputed

that ORHP was entitled to an order for arbitration

under both Oklahoma law and federal precedent. As

the party opposing the motion for arbitration, the

Plaintiffs had the burden “to show that Congress

intended to preclude a waiver of judicial remedies for

the statutory rights at issue; an intention discernible

from the statute’s text or legislative history or an

inherent conflict between arbitration and the statute’s

11a

underlying purposes.” Thompson v. Bar-S Foods Co.,

2007 OK 75 8, 174 P.3d 567, 572. 11The trial court’s

denial of a motion to compel arbitration is to be

reviewed de novo. Thompson, 2007 OK 75, ¶ 9, 174 P.

3d at 572.12

FEDERAL LAW: REVERSE PREEMPTION UNDER

McCARRAN-FERGUSON ACT WITH STATE LAWS

INVOLVE]) IN REGULATION OF INSURANCE

¶15 Generally speaking, the Federal Arbitration Act

(FAA) preempts any state law limiting the enforcement of arbitration. See, eg., Preston v. Ferrer, 552

U.S. 346, 35253, 128 S. Ct. 978, 169 L.Ed.2d 917

(2008). Preemption stems from the Supremacy Clause

of the United States Constitution that insures federal

law will prevail or “preempt” a conflicting state law.

Smith Cogeneration Mgmt., Inc. v. Corp, Comm’n,

1993 OK 147, ¶ 21, 863 P.2d 1227, 1239. The foundation of ORHP’s argument is grounded in the concept of

preemption, namely that the FAA should have

preempted § 1855 of the Uniform Arbitration Act to

the extent it conflicted with the federal law, and the

parties should have been ordered to arbitrate the

claims. ORHP further urged that the COCA decision

violated the Supremacy clause of the United States

Constitution. However, ORHP’ s argument ignores the

clear mandates of another federal law, the McCarranFerguson Act, 15 U.S.C. §§ 1011 - 1015, which bestows

upon states absolute authority over matters relating to

Citing, Bruner v. Timberlane Manor Ltd. Partnership, 2006

OK 90, ¶ 22, 155 P.3d 16, 25, quoting Shearson/American Express,

Inc. v, McMahon, 482 U.S. 220, 227,107 S.Ct. 2332, 2337, 96

L.Ed.2d 185.

See also, Fleming Companies, Inc. v. Tru Discount Foods, 1999

OK CIV APP 18, 977 P.2d 367, certiorari denied (Feb. 10, 1999).

12a

the regulation of insurance. Minnieland Private Day

School, Inc. v. Applied Underwriters Captive Risk

Assur Co., Inc., 867 F. 3d 449 (4th Cir. 2017). This Act

and its implications must be understood in the context

of the issues material to this matter.

¶16 The McCarran-Ferguson Act was enacted in

1945 following a decision by the Supreme Court

holding insurance was subject to federal regulations

under the interstate commerce clause shifting control

away from the states. See United States v. SouthEastern Underwriters Ass’n, 322 U.S. 533, 64 S.Ct.

1162, 88 L.Ed. 1440 (1944). Prior to this decision, “it

had been assumed . . . that the issuance of an

insurance policy was not a transaction in interstate

commerce and that the States enjoyed a virtually

exclusive domain over the insurance industry.”

St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531,

538-39, 98 S. Ct. 2923, 57 L.Ed2d 932 (1978). In

response to South-Eastern. Underwriters, Congress

legislatively restored the States preeminent position

with respect to the regulation of insurance through the

adoption of McCarran-Ferguson. See, U.S. Dep’t of

Treasury v. Fabe, 508 U.S. 491, 500, 113 S.Ct. 2202,

124 L.Ed.2d 449 (1993).

¶17 This Act specifically states that “no Act of

Congress shall be construed to invalidate, impair, or

supersede any law enacted by any State for the

purpose of regulating the business of insurance.”

15 U.S.C. § 1012. The landmark McCarran-Ferguson

Act completely “transformed the legal landscape by

overturning the normal rules of pre-emption.” U.S.

Dep’t of Treasury v. Fabe, 508 U.S. 491, 500, 113 S.Ct.

2202, 124 L.Ed.2d 449 (1993). McCarran-Ferguson

“authorizes ‘reverse preemption’ of generally applicable federal statutes by state laws enacted for the

13a

purpose of regulating the business of insurance.”

ESAB Grp. Inc. v. Zurich Ins. PLC, 685 F.3d 376, 380

(4th Cir. 2012), See also, Safety Nat’l Cas. Corp. v.

Certain Underwriters at Lloyd’s, London, 587 F.3d

714, 720 (5th Cir. 2009) (en bane), cert. denied, 562

U.S. 827, 131 S.Ct. 65, 178 L.Ed.2d 22 (2010).

¶18 Almost simultaneously with congressional efforts

to insure the states’ dominance with respect to insurance regulation, Congress was also moving to federalize arbitration policy. In 1925, Congress enacted the

Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16,

establishing a liberal federal policy in favor of

arbitration in maritime and commercial contracts.

ESAB, 685 F.3d at 380.13 The interplay between these

two acts is considered with regard to the resolution of

the issues before this Court.

McCARRAN FERGUSON ACT: CONTRACTS

REGULATING THE ‘BUSINESS OF

INSURANCE’ ARE PROTECTED

FROM PREEMPTION BY THE FAA

¶19 The Supreme Court of the United States has not

yet spoken on the specific interplay between the

McCarran-Ferguson Act and the FAA. However, the

high court has made clear that the FAA policy in favor

of arbitration may not be asserted to resolve a foundational challenge to the validity of an arbitration agreement. Granite Rock Co. v. Int’l Bhd. of Teamsters, 561

U.S. 287, 130 S.Ct. 2847, 177 L. Ed2d 567 (2010). The

Court explained that the presumption of favoring

arbitration is applied “only where it reflects, and

derives its legitimacy from a judicial conclusion that

See also, CompuCredit Corp. v. Greenwood, 565 U.S. 95, 132

S.Ct. 665, 181 L.Ed 2d 586.

14a

arbitration of a particular dispute is what the parties

intended because their express agreement to arbitrate

was validly formed and (absent a provision clearly and

validly committing such issues to an arbitrator) is

legally enforceable and best construed to encompass

that dispute. Id. 561 U.S. at 303, 130 S. Ct. 2847.

¶20 We acknowledge that by virtue of the

Supremacy Clause, “we are governed by the decisions

of the United States Supreme Court with respect

to the federal constitution and federal law, and we

must pronounce rules of law that conform to extant

Supreme Court jurisprudence.” Rollaway v. UNUM

Life Ins. Co. of America, 2003 OK 90, ¶ 15, 89 P.3d

1022, 1027. Where the United States Supreme Court

has not spoken on the direct issue, “we are free to

promulgate judicial decisions grounded in our own

interpretation of federal law.” Id.

¶21 A number of federal courts who have considered

the interplay between the FAA and the McCarranFerguson Act have held that state laws involving the

business of insurance take precedence over the competing federal law, FAA favoring arbitration. Minnieland Private Day Sch., Inc. v. Applied Underwriters

Captive Risk Assurance, 867 F.3d 449, 454 (4th Cir.

2017).14 The Fourth Circuit acknowledged that the

FAA generally preempts a state law limiting the

enforcement of arbitration agreements. The Minnieland

court discussed that it agreed with the district court’s

See also, Am. Bankers Ins. Co. Of Fla. v. Inman, 436 F.3d

490, 494 (5th Cir. 2006), Mississippi statute prohibiting arbitration of disputes related to coverage provisions in personal automobile insurance policies reverse preempts the FAA; Am. Health

& Life Ins. Co. v. Heyward, 272 F. Supp.2d 578, (D.S.C. 2003).

South Carolina law prohibiting mandatory arbitration provisions

in insurance contracts reverse preempts the FAA.

15a

conclusion that mandatory arbitration provisions in

insurance contracts were void pursuant to Va. Code

Ann. § 38.2-312. On appeal, there was no disagreement that this state law provision, which we note is

similar to the Oklahoma provision, reverse preempted

the FAA.

¶22 Many other courts have concluded that state

laws invalidating arbitration provisions in insurance

contracts reverse preempt the FAA. Am. Bankers ins.

Co. of Fla. v. Inman, 436 F.3d 490, 494 (5th Cir. 2006);

See also, Love v. Money Tree, Inc., 279 Ga. 476, 614

S.E.2d 47, automobile club memberships constituted

insurance and the state law prohibiting arbitration in

contracts of insurance was held to be a state law

enacted for the purpose of regulating insurance, and

thus, the McCarran-Ferguson Act precluded the FAA

from preempting the conflicting state law; State, Dept.

of Transp. v. James River Ins. Co., 176 Wash.2d 390,

292 P.3d 118 (2013), state statute prohibiting any

agreement in insurance contract which deprived court

of jurisdiction against the insurer and void mandatory

arbitration provisions constituted the business of regulating insurance, thereby shielding the state statute

from preemption by the FAA under the McCarranFerguson Act.

¶23 In this matter, the judicial conclusion by the

lower court was to deny ORHP’ s request for arbitration. The COCA then held that the state law, § 1855

which plainly exempts “contracts which reference

insurance” from arbitration is a state law regulating

the business of insurance. Accordingly, under the the

McCarran-Ferguson Act, the state law must prevail

over the federal law, the FAA; i.e., this state law enjoys

the benefit of reverse preemption.

16a

OKLAHOMA UNIFORM ARBITRATION ACT

“SHALL NOT APPLY TO CONTRACTS WHICH

REFERENCE INSURANCE”

¶24 Furthermore, for more than half a century, this

Court has held that an insurance company’s insertion

of forced arbitration in an insurance contract deprived

the insured of a judicial examination and determination of the issues and such policy provision was

contrary to public policy and unenforceable. Boughton

v. Farmers Ins. Exch., 1960 OK 159, ¶ 13, 354 P.2d

1085, 1089. Boughton relied solely on the common law

as Oklahoma had not yet enacted an arbitration

statute.

¶25 After the adoption of our state Uniform Arbitration Act, we examined the predecessor to § 1855, 15

O.S. 1991 § 802 (A) (repealed 2006) which stated that

the Act “shall not apply to . . . contracts with reference

to insurance except for those contracts between insurance companies.” Cannon v. Lane, 1993 OK 40, 867

P.2d 1235. In Cannon, we considered a binding arbitration provision in a health insurance contract and

refused to enforce an order for arbitration because the

contract between the parties “related to insurance”

falling within this exception to the Act. We also noted

that “under the authority of Wilson, Boughton, and 15

O.S. 1991 § 216, such a contract is void.” 1993 OK 40,

¶ 11, 867 P.2d at 1239.

¶26 In 2006, the Act was recodified and 15 O.S. 1991

§ 216 was replaced with the current law, 12 O.S. 2011

§ 1855 (D) which provides:

D. The Uniform Arbitration Act shall not

apply to collective bargaining agreements

and contracts which reference insurance,

17a

except for those contracts between insurance

companies. (Emphasis added).

Next, we examine whether the contract “references

insurance” and therefore is exempt from the Oklahoma

Uniform Arbitration Act. ORHP urged that the contract could not be treated as insurance because by

statute, “home service contracts are not insurance in

this state.” 36 O.S. 2011 § 6752 (9). We disagree with

this conclusion on the basis of several factors. The

contract drafted by ORHP is titled a “home warranty”

and not a home service contract, and it is unclear

whether § 6752 (9) has any application to the instant

matter. This will be discussed in more detail. In

addition, § 1855 (D) is broader than advocated by

ORHP. Section 1855 does not state that the Uniform

Arbitration Act shall not apply to insurance contracts,

rather it exempts contracts which simply reference

insurance as defined by this Court’s extensive jurisprudence. Finally, we look more closely at the nature

of the home warranty before us and examine its nature

in light of guidelines from the Supreme Court of the

United States, Oklahoma statutes defining “insurance,” and the wisdom of other Courts.

HOME WARRANTY CONTRACTS ARE

CONTRACTS THAT “REFERENCE INSURANCE”

¶27 We have previously noted the initial admission

by ORHP that the contract at issue was “insurance”

and it was an “insurance company.” Following the trial

court’s denial of the motion for arbitration, ORHP filed

an Amended Answer stating the policy at issue is not

insurance and it is not an insurance company. There

was no objection filed to this amended response, and

there is nothing in the record to reflect that ORHP

obtained leave of court to file this amendment. It is

evident from these contradictory pleadings that even

18a

ORHP was confused about whether the home warranty was insurance and if it was an insurance

company.

¶28 The record before us reflects that the Old

Republic International Corporation (ORI) Annual

Review, 2015, listed ORHP as a subsidiary and a

member of the company’s “General Insurance Group”

with “premiums written” in 2015 that exceeded two

hundred million dollars ($200,000,000.00).15 ORI also

listed ORHP as one of its 27 “insurance companies”16

and referred to ORHP as part of the “General Insurance Group” selling policies accounting for 5% of

all premium volume for the entire parent company.17

Although this information is not determinative of

whether the plan before us is “insurance” it does

reflect how the parent company considered and

treated ORHP. Furthermore, the actual contract with

the Plaintiffs has an insignia clearly printed on it “Old

Republic Insurance Group.”

¶29 ORHP solely drafted the contract and ORHP

determined the use of all terms including the following

references within the contract: “Oklahoma Home Warranty,” and “Old Republic Home Warranty Plan.”18

ORHP did not include the term “home service con15

Record, Exhibit 3 to Plaintiffs’ Objection to Defendant Old

Republic Home Protection Company’s Motion to Stay Order

Pending Appeal.

Id.

Record, Exhibit 4 to Plaintiffs’ Plaintiffs’ Objection to Defendant Old Republic Home Protection Company’s Motion to Stay

Order Pending Appeal, Record.

Record, Exhibit B to Defendant Old Republic Home Protection Co., Inc.’s Motion to Stay and Compel Arbitration, and Brief

in Support.

19a

tract” in the contract before this Court; in fact those

words are noticeably absent. Under the Old Republic

Home Warranty Plan, the Plaintiffs agreed to pay

a predetermined premium and, in exchange, ORHP

agreed to assume the risk of paying for the repair

and/or replacement of specifically identified appliances as well as heating and cooling systems.

Although ORHP designated the contract as a “home

warranty,” it argued that the contract should instead

be treated or deemed to be a “home service contract”

governed by the Oklahoma Home Service Contract Act

(HSCA), 36 O.S. 2011 §§ 6751 et seq.

¶30 Before we discuss what application, if any, the

HSCA has in this matter, we examine more closely the

terms and effect of the “home warranty plan” drafted

by ORHP and whether this contract is one that

“references” insurance. We note that even ORHP

has convincingly argued that the company’s “home

warranty plans are analogous to insurance.” See,

Campion v. Old Republic Home Protection Co., Inc.,

561 F.Supp.2d 1139, 1144, (S.D. Cal. 2012). In this

California case, ORHP was facing an action filed

under the Consumer Legal Remedies Act. In Campion,

identical to the instant contract before us, the ORHP

home warranty plan provided that covered systems

and appliances that become inoperable during the

contract term due to normal wear and tear will be

repaired or replaced at the expense of ORHP or the

plan holder would be provided with payment in lieu of

repair or replacement. Under the home warranty plan,

ORHP did not perform the services but rather maintained a network of independent contractors that

it dispatched to a planholder’s home to perform the

service. The plaintiff in Campion unsuccessfully

argued that the home warranty contracts fell under

the consumer act because they were “service” con-

20a

tracts. ORHP advocated in the California case that the

home warranty was not a service contract, but rather

was insurance. The Campion court was swayed by

ORHP’s position and offered the following notable

distinction:

Defendant’s home warranty plans are not

contracts for repair or replacement services

and Defendant does not itself provide these

services. Instead the plans are designed to

offer protection to home owners from potential future losses. The plans obligate Defendant to pay for the cost of the repair or replacement of covered systems and appliances that

become inoperable due to normal wear and

tear during the term of the contract. It is

possible a claim may never be submitted and,

thus, a homeowner may not receive any

‘goods or services’ under his or her plan. The

home warranty plans provide for a transfer of

risk that is not merely incidental, but rather

is a central and relatively important element

of the plans, and the relationship between

Defendant and its plan holders and their

respective obligations are consistent with the

concept of ‘insurance’, as it is defined in the

Insurance Code.

Campion, Id. at 1145-1146. The Campion court agreed

with ORHP that the home warranty plan was consistent with the concept of insurance.

¶31 Likewise, ORHP’s home warranty plan provides

for the transfer of risk that is a central and important

element of the plan. The plan reassured the Plaintiffs

that this plan would “safeguard your budget against

excessive system and appliance failures with an Old

Republic Home Warranty Plan.”

21a

¶32 In McMullan v. Enterprise Financial Group,

Inc., 2011 OK 7, 247 P.3d 1173, we were asked to

determine whether a ‘vehicle service contract’ met the

definition of an insurance contract. In concluding that

it was “insurance,” we relied on the guidance from the

United States Supreme Court, Group Life & Health

ins. Co. v. Royal Drug Co., 440 U.S. 205, 210, 228, 99

S.Ct. 1067, 59 L.Ed 2d 261 (1979) outlining the

following necessary elements:

. . . The primary elements of an insurance

contract are the spreading and underwriting

of a policy holder’s risk. It is characteristic of

insurance that a number of risks are

accepted, some of which involve losses, and

that such losses are spread over all the risks

so as to enable the insurer to accept each risk

at a slight fraction of the possible liability

upon it.” (Citations omitted)

McMullan, 2011 OK 7, ¶ 11, 247 P.3d at 1178.

We also recognized that the Royal Drug court,

quoting Jordan v. Group Health Assn, 71 App. D.C. 38,

107 F.2d 239 (1939) stated:

Whether the contract is one of insurance or of

indemnity there must be a risk of loss to

which one party may be subjected by contingent or future events and an assumption of it

by legally binding arrangement by another.

McMullan, 2011 OK 7, ¶ 12, 247 P.3d at 1178.

¶33 In McMullan we discussed that vehicle service

contracts were written like insurance policies and that

the “obvious purpose of a vehicle service contract is to

protect the purchaser from the expenses associated

with an unexpected mechanical breakdown or an

22a

expensive but necessary repair.” McMullan, 2011 OK

7, ¶ 13, 247 P.3d at 1178. In concluding that the contract was “insurance” we reflected that the “purchaser

pays a premium and buys an agreement to shift any

potential hazard they may face to the vehicle service

provider.” Id. Likewise, the primary feature of the

ORHP home warranty plan was to “safeguard [the

Plaintiffs’] budget against expensive system and

appliance failures with an Old Republic Home

Warranty Plan.”19 The Plaintiffs paid a premium to be

insured that they would not have to pay the full repair

costs in the event a covered system, like the air

conditioning needed repair or replacing. In fact, the

contract specifically notes the range of potential costs

in the event of a covered system failure. By purchasing

this policy, the Plaintiffs were relieved of this potential

liability and instead this potential cost shifted to

ORHP. Following our analysis in McMullan, the

ORHP contract before us meets all the hallmarks of an

insurance policy. Furthermore, this is the very conclusion reached by the Campion court when reviewing

the ORHP home warranty policy, and as argued by

ORHP in that matter.

¶34 We do not agree with the conclusion of ORHP

that the contract is governed by the Oklahoma Home

Service Contract Act. The legislature stated the

purpose of the Oklahoma Home Service Contract Act

“is to create an independent legal framework within

which home service contracts are defined, may be sold

and are regulated in this state.” 36 O.S. 2011 § 6751

Record, Exhibit 2, Defendant Old Republic Home Protection

Co., Inc.’s Motion to Stay and Compel Arbitration, and Brief in

Support, William B. Sparks and Donna Sparks, Plaintiffs v. Old

Republic Home Protection Company, Inc., Defendant, CJ-16-795,

District Court of Cleveland County.

23a

(A). The very next section, §6752 subpart (9), has three

sentences that need to be separately examined. The

first sentence in this subpart states as follows:

“Home service contract” or “home warranty”

means a contract or agreement for a separately stated consideration for a specific duration to perform the service, repair, replacement or maintenance of property or indemnification for service, repair, replacement or

maintenance, for the operational or structural failure of any residential property due

to a defect in materials, workmanship, inherent defect or normal wear and tear, with or

without additional provisions for incidental

payment or indemnity under limited circumstances. 36 O.S. 2011 §6752 (9)

The next sentence is directed only to “home service

contracts” and does not include a reference to “home

warranty” and states:

Home service contracts may provide for the

service, repair, replacement or maintenance

of property for damage resulting from power

surges or interruption and accidental damage

from handling and may provide for leak or

repair coverage to house roofing systems.

The final sentence provides:

Home service contracts are not insurance in

this state or otherwise regulated under the

Insurance Code. 36 O.S. 2011 § 6752 (9)

We take note that this final sentence does not state

that home service contracts or home warranties are

not insurance in this state or otherwise regulated

under the Insurance Code. The exclusionary language,

i.e. “not insurance,” is limited solely to “home service

24a

contracts.” Within this definition section, the legislature provided a separate definition for “warranty”

which states at § 6752 (11) as follows:

“Warranty” means a warranty made solely by

the manufacturer, importer or seller of property or services, including builders on new

home construction, without consideration, that

is not negotiated or separated from the sale of

the product and is incidental to the sale of the

product, that guarantees indemnity for defective parts, mechanical or electrical breakdown, labor or other remedial measures, such

as repair or replacement of the property or

repetition of services.

It is clear from this statutory scheme, that “home service contracts” are defined differently than a “home

warranty.” ORHP drafted this contract and identified

this policy as a “home warranty” and never refers to

this agreement as a “home service contract.” We find

that the Old Republic Home Warranty is not a home

service contract as defined by this Act.

CONCLUSION

¶35 We hold that the Plaintiffs’ home warranty plan

meets the definition of insurance and as such is

exempt from the Oklahoma Uniform Arbitration Act.

We further hold that § 1855 of this Act is a state law

enacted for the purpose of regulating insurance, and

thus, the McCarran-Ferguson Act applies precluding

the Federal Arbitration Act from preempting conflicting state law.

CONCUR: Gurich, C.J., Darby, V.C.J., Kauger,

Edmondson, Colbert, and Combs, JJ., Reif, S.J. and

Bass, S.J.

CONCURS IN RESULT: Winchester, J.

25a

APPENDIX B

THIS OPINION HAS BEEN RELEASED

FOR PUBLICATION BY ORDER OF

THE COURT OF CIVIL APPEALS

IN THE COURT OF CIVIL APPEALS OF THE

STATE OF OKLAHOMA

DIVISION II

[Filed November 19, 2018]

————

Case No. 115,789

————

WILLIAM B. SPARKS and DONNA SPARKS,

Plaintiffs/Appellees,

vs.

OLD REPUBLIC HOME

PROTECTION COMPANY, INC.,

Defendant/Appellant,

and

OLD REPUBLIC INTERNATIONAL and

ALL SEASON’S HEATING AND AIR, LLC,

Defendants.

————

APPEAL FROM THE DISTRICT COURT OF

CLEVELAND COUNTY, OKLAHOMA

HONORABLE TRACY SCHUMACHER,

TRIAL JUDGE

AFFIRMED

26a

Amy N. Bennett

John David Lackey

PAUL & LACKEY, P.C.

Tulsa, Oklahoma

Mark E. Bialick

R. Ryan Deligans

DURBIN LARIMORE & BIALICK

Oklahoma City, Oklahoma

For Defendants/Appellants

and

David W. Little

LAW OFFICES OF DAVID LITTLE

Oklahoma City, Oklahoma

For Plaintiff/Appellee

————

OPINION BY P. THOMAS THORNBRUGH,

CHIEF JUDGE:

¶1 Old Republic Home Protection Company, Inc.

(Old Republic), appeals a decision of the district court

finding that 12 O.S.2011 § 1855(D) prevented the court

from compelling arbitration of the dispute arising

from a home warranty/service contract between Old

Republic and William B. Sparks and Donna Sparks

(the Sparks). Section 1855(D) provides that “the Uniform Arbitration Act shall not apply to . . . contracts

which reference insurance . . . .”

¶2 We conclude that when the Legislature enacted

the “Oklahoma Home Service Contract Act”1 (HSCA)

Title 36 O.S.2011 & Supp. 2012 §§ 6750-6755.

27a

and the “Service Warranty Act”2 (SWA), it did not

intend to exempt contracts made pursuant to these

Acts from the provisions of 12 O.S.2011 § 1855(D), and

that such contracts “reference insurance” for the

purposes

§ 1855(D).

BACKGROUND

¶3 This appeal arises from a dispute between the

Sparks and Old Republic involving a “home warranty”

contract, and a series of problems with the Sparks’ air

conditioning. The Sparks sued Old Republic, alleging

a pattern and practice of using unqualified contractors

to perform work pursuant to the contract, and of

deliberately selecting contractors who would opine

that little or no work was needed to repair any covered

appliance or fitting while ignoring the opinion of contractors who believed that more substantive repair or

replacement was necessary. Old Republic sought to

compel arbitration of the dispute pursuant to a contractual arbitration clause. The Sparks argued that

arbitration of the dispute is prohibited by 12 O.S.2011

§ 1855(D) because the contract is one that “references

insurance.” The district court agreed, and refused to

compel arbitration. Old Republic appealed. In April

2017, the Supreme Court stayed the district court case

pending appeal.

STANDARD OF REVIEW

¶4 This appeal may be resolved by an interpretation

of the phrase “references insurance” in 12 O.S.2011

§ 1855(D). Statutory construction and interpretation

is a question of law. Mariani v. State ex rel. Oklahoma

Originally in Title 36, but revised and renumbered in 2012

as 15 O.S. §§ 141.1-141.35.

28a

State Univ., 2015 OK 13, ¶ 7, 348 P.3d 194. Our

standard of review is de novo on a question of law,

which we review without deference to the trial court’s

reasoning or result.

ANALYSIS

¶5 This case presents a singular question of law:

was the contract sold to the Sparks by Old Republic a

contract “referencing insurance” that is subject to the

arbitration prohibition of 12 O.S.2011 § 1855(D),

which provides that “the Uniform Arbitration Act

shall not apply to . . . contracts which reference

insurance. . . .” Old Republic brings three arguments

contending that any dispute arising from the contract

sold to the Sparks is subject to the mandatory

arbitration provided for in the contract.3 The first is

that Oklahoma law is preempted by federal law in this

matter. The second is that arbitration pursuant to the

Federal Arbitration Act (FAA) is a contractual “choice

of law” by the parties that the courts must enforce. The

third is that the HSCA, 36 O.S.2011 & Supp. 2012

§§ 6750-6755, exempts the contract from the

provisions of § 1855(D).

I. PREEMPTION

¶6 Old Republic first argues that § 1855(D) is preempted by federal law. Regulation of the business of

insurance is traditionally reserved to the states, and

Old Republic’s argument has been persistently rejected by both Oklahoma and federal courts, based on

an interpretation of the McCarran-Ferguson Act. This

Act, at 15 U.S.C. § 1012(b), states that “no Act of

The record is clear that the contract in question explicitly

provides that disputes arising from the contract be arbitrated

pursuant to the Federal Arbitration Act (FAA).

29a

Congress shall be construed to invalidate, impair, or

supersede any law enacted by any State for the purpose of regulating the business of insurance.” “Thus,

McCarran-Ferguson authorizes `reverse preemption’

of generally applicable federal statutes by state laws

enacted for the purpose of regulating the business of

insurance.” ESAB Grp., Inc. v. Zurich Ins. PLC, 685

F.3d 376, 380 (4th Cir. 2012); see also Am. Bankers Ins.

Co. of Fla. v. Inman, 436 F.3d 490, 494 (5th Cir. 2006)

(holding that Mississippi statute prohibiting contractually required arbitration of disputes stemming from

uninsured and underinsured motorist coverage provisions of personal automobile insurance policies reverse

preempts FAA); Am. Health & Life Ins. Co. v.

Heyward, 272 F.Supp.2d 578, 582 (D.S.C. 2003) (holding that South Carolina law prohibiting mandatory

arbitration provisions in insurance contracts reverse

preempts the FAA); and Minnieland Private Day Sch.,

Inc. v. Applied Underwriters Captive Risk Assurance

Co., Inc., 867 F.3d 449, 453-54 (4th Cir. 2017). We find

this question well-settled in case law, and reject Old

Republic’s contention that § 1855(D) is preempted by

federal law.

¶7 In addition we are not willing to read a federal

preemption into the Oklahoma Legislature’s statement that these contracts are “not insurance” for the

purpose of certain state regulations. If the Legislature

were to declare that an otherwise ordinary contract

“was insurance” or “references insurance,” this declaration would have no effect whatsoever on whether

federal law would preempt the application of

§ 1855(D). The federal inquiry would simply ignore the

statement of the Legislature, and determine if the law

was “enacted by any State for the purpose of regulating the business of insurance” pursuant to federal

standards. The same facts apply in the reverse situa-

30a

tions. The application or preemption of § 1855(D) is

based on an analysis of the nature, operation, and

purpose of the law in question, not on how the

Oklahoma Legislature chooses to characterize it.

II. CHOICE OF LAW

¶8 Old Republic next argues that the Oklahoma

prohibition on arbitration of contracts with reference

to insurance may be circumvented if an insurer

“chooses” the FAA as the governing law of an (adhesive) insurance contract. The Oklahoma Supreme

Court rejected this argument in Cannon v. Lane, 1993

OK 40, 867 P.2d 1235, holding that, if the parties agree

in an insurance contract to submit controversies to

arbitration that are otherwise barred by the public

policy expressed in 15 O.S.1991 § 802(A) (now 12 O.S.

§ 1855(D)) such agreements are unenforceable. Id.,

¶¶ 3, 11.

III. THE OKLAHOMA HOME SERVICE

CONTRACT ACT

¶9 Old Republic’s third argument is that that the

contract in question is a “home service contract” or

“home warranty,” and hence it is exempt from the

insurance arbitration prohibition of 12 O.S.2011

§ 1855(D) because these contracts are statutorily “not

insurance.”4 Oklahoma has created several statutory

or common-law categories of contracts that provide

non-traditional insurance coverage, and are regulated

See SWA § 141.2(17)(f), stating that “service warranties are

not insurance in this state or otherwise regulated under the

Insurance Code,” and HSCA § 6752(9), stating, “Home service

contracts are not insurance in this state or otherwise regulated

under the Insurance Code.”

31a

by a regime different from that applied to traditional

insurance providers.

¶10 The Legislature created the SWA in 1993

(originally in Title 36, but revised and renumbered in

2012 as 15 O.S. §§ 141.1-141.35). In 2011, the Legislature created the HSCA, now codified at 36 O.S.2011 &

Supp. 2012 §§ 6750-6755. No published case law has

directly interpreted either of these Acts since they

became law. It is clear that the Legislature intended

that both “Home Service Contracts” and “Service

Warranties” be subject to regulatory regimes separate

from those governing general insurance, and also

separate from each other.5 The difference between the

two Acts, and what types of contracts fall under each

Act, is not immediately obvious, and some additional

analysis is necessary because it is not clear whether

the contract in question is legally a home service

contract or a service warranty.

A. Home Warranty or Service Warranty?

¶11 Each Act contains a statement of what activities

are covered by the respective Act, both of which are

reproduced below with the differences highlighted:

HSCA § 6752(9) provides as follows:

“Home service contract” or “home warranty”

means a contract or agreement for a separately stated consideration for a specific

duration to perform the service, repair,

replacement or maintenance of property or

indemnification for service, repair, replace5

HSCA § 6753 is clear that “home service contract providers

as defined in Section 6752 of this title and properly registered

under this law are exempt from any treatment pursuant to the

Service Warranty Act.”

32a

ment or maintenance, for the operational or

structural failure of any residential property

due to a defect in materials, workmanship,

inherent defect or normal wear and tear,

with or without additional provisions for incidental payment or indemnity under limited

circumstances. Home service contracts may

provide for the service, repair, replacement,

or maintenance of property for damage resulting from power surges or interruption and

accidental damage from handling and may

provide for leak or repair coverage to house

roofing systems. Home service contracts are

not insurance in this state or otherwise regulated under the Insurance Code. (Emphasis

added.)

SWA §141.2(17) provides as follows:

“Service warranty” means a contract or agreement for a separately stated consideration for

a specific duration to perform the repair or

replacement of property or indemnification

for repair or replacement for the operational

or structural failure due to a defect or failure

in materials or workmanship, with or without additional provision for incidental payment of indemnity under limited circumstances, including, but not limited to, failure

due to normal wear and tear, towing, rental

and emergency road service, road hazard,

power surge, and accidental damage from

handling or as otherwise provided for in the

contract or agreement. The term “service

warranty” includes a contract or agreement to

provide one or more motor vehicle ancillary

33a

service(s) as defined by this section. (Emphasis added.)

¶12 Hence, a “home service contract” or “home warranty” covers “service, repair, replacement or maintenance” while a “service warranty” covers only “repair

or replacement.” HSCA § 6752(4) and § 6751(B)(2)

state that a contract “that provides for scheduled

maintenance only and does not include repair or

replacement” is a “maintenance agreement” and that

maintenance agreements are excluded from the

HSCA. Therefore, a home warranty must offer “repair

and replacement” in addition to “maintenance.”

¶13 Another statutory difference is that a home warranty covers inherent defects or normal wear and tear,

while a service warranty may exist without provisions

for payment of damage due to normal wear and tear.

Further, a home warranty covers “residential property” while a “service warranty” covers “property.”

The two Acts clearly have a substantial overlap in

definition.6

¶14 The singular clarity that is manifest is provided

by HSCA § 6751(Purpose-Exemptions), which provides in part:

A. The purpose of the Oklahoma Home Service Contract Act is to create an independent

legal framework within which home service

contracts are defined, may be sold and are

regulated in this state.

...

By example, the “service or maintenance” of equipment or

fittings may, in the plain meaning of the words, involve “repair

or replacement,” and “property” may include “residential

property.”

34a

Proper registration under the Oklahoma

Home Service Contract Act exempts applicability under the Service Warranty Act,

which may regulate extended warranty,

retail, automobile and agreements not

defined in the Oklahoma Home Service

Contract Act. Nothing in the Service

Warranty Act is changed or amended by the

Oklahoma Home Service Contract Act.

¶15 The latter section of HSCA § 6751 shows that,

in 2011, the Legislature intended to remove the

potential regulation of home warranties from the SWA

and place them under a new legislative scheme.

Hence, irrespective of the broad and potentially overlapping definitions contained in each, the legislative

intent was evidently for the HSCA to regulate the sale

of warranties or service agreements on real property

and the associated attachments fittings, and appliances, while the SWA was intended to regulate the

sale of retail extended warranties (such as warranties

on consumer electronics), automobile service agreements and similar consumer agreements not involving

real property. The contract in question bears all the

hallmarks of a home warranty rather than a service

warranty, and we find that it was both intended as,

and statutorily is, a home warranty.

¶16 In short, we are faced with a contract that is

fundamentally a “home warranty,” written by a

traditional insurer who is an “exempt” provider of

service warranties. But what is the status of such

a contract vis-à-vis the arbitration bar of 12 O.S.

§ 1855(D)? Does it “reference insurance” so as to invalidate the contractual arbitration provisions?

35a

IV. DO CONTRACTS ISSUED PURSUANT TO THE

HSCA OR SWA REFERENCE INSURANCE FOR

THE PURPOSES OF 12 O.S. § 1855(D)?

¶17 Old Republic largely bases its argument on the

definition found in 15 O.S. Supp. 2014 § 141.2(17)(0,

which states that “service warranties are not insurance in this state or otherwise regulated under the

Insurance Code” and interprets this as a legislative

decision to remove such contracts from the requirement of 12 O.S.2011 § 1855(D) that “the Uniform

Arbitration Act shall not apply to . . . contracts which

reference insurance.” We are not inclined to so readily

interpret a tacit intention of the Legislature to remove

what are so clearly contracts of insurance from the

Oklahoma public policy regulating insurance

expressed by § 1855.

V. DOES 15 O.S. SUPP. 2014 § 141.2(17)(f)

PLACE HOME WARRANTIES OUTSIDE OF

2 O.S.2011 § 1855(D)?

¶18 The cardinal rule of statutory construction is to

ascertain legislative intent. Both the SWA and the

HSCA contain statements to the effect that home

service contracts and/or service warranties are not

insurance in this state. However, the same contracts

are clearly designed to function and perform as

“insurance,” and are subject to a regulatory regime

that is substantially identical to that applied to

insurance under the authority of the State Insurance

Commissioner. The requirements placed on vendors

who sell such “warranty” or “service” contracts are

unique to the regulation of “insurance” and are clearly

rooted in the same public policy that overcomes the

general freedom of contract and allows the state to

strictly regulate the form and practice of insurance

36a

agreements. And yet, the Legislature has stated that

these contracts are “not insurance.”

¶19 Did the Legislature simply declare that these

agreements are regulated by special regimes similar

to but apart from those applied to traditional insurance products, or did it intend to declare that such

agreements do not “reference insurance” for purposes

of 12 O.S.2011 § 1855(D) and thus are not encompassed by the public policy embodied in § 1855(D)?7 An

examination of the statutory text alone does not

provide the answer to this question, which appears

to be one of first impression. No published or

unpublished decision found by this Court addresses

either of the current Acts in any context.

¶20 For the reasons outlined below, we find the

legislative intent expressed in the HSCA and SWA can

be reconciled by recognizing that such contracts bear

all the fundamental features of insurance and are

regulated as insurance is regulated. We conclude

that the Legislature intended to create a separate regulatory regime for these contracts but

did not intend to exempt them from the public

policy embodied in the arbitration prohibition

of § 1855(D).

¶21 “‘Insurance’ is a contract whereby one undertakes to indemnify another or to pay a specified

amount upon determinate contingencies.” 36 O.S.2011

§ 102. Both HSCA and SWA contracts display all the

fundamental features of insurance. Both operate

by risk pooling, which fundamentally distinguishes

insurance contracts from ordinary contracts and is “an

Another option, of course, is that the Legislature did not

consider § 1855(D) at all when constructing the SWA and HSCA,

and had no intent to change its scope.

37a

essential characteristic of the insurance industry.”

Hollaway v. UNUM Life Ins. Co. of Am., 2003 OK 90,

¶ 22, 89 P.3d 1022.

¶22 The primary attributes of an insurance contract

are the spreading and underwriting of a policyholder’s

risk. “It is characteristic of insurance that a number of

risks are accepted, some of which involve losses, and

that such losses are spread over all the risks so as to

enable the insurer to accept each risk at a slight

fraction of the possible liability upon it.” Grp. Life &

Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 211,

99 S. Ct. 1067, 1073 (1979)(quoting 1 G. Couch,

Cyclopedia of Insurance Law § 1;3 (2d ed. 1959)).

Examining the HSCA and SWA in detail, we note that

“service warranties” and “home service contracts” not

only are “insurance” by the classic definition, but they

also are regulated by the Legislature in the same

manner as insurance contracts. Providers must register, obtain a revocable license, and comply with numerous financial responsibility requirements regulating reserves. (See SWA §§ 144.4-144.7 and HSCA

§ 6753(C)). Enforcement is carried out by an insurance

commissioner. All of these provisions are fundamental

to insurance regulation and its unique position in state

law.

¶23 Although HSCA and SWA vendors evidently are

subjected to less stringent regulatory requirements

than traditional insurance companies, “the extent of

regulation is not what makes a service provider an

‘insurance company’ nor is it what makes a service

agreement an ‘insurance’ contract.” McMullan v.

Enter. Fin. Grp., Inc., 2011 OK 7, ¶ 10, 247 P.3d 1173.

Such warranties clearly are not ordinary contracts

under Oklahoma law, and, in the absence of the

Legislature stating that they are “not insurance,” they

38a

would certainly be classed as contracts “which reference insurance.” The question therefore becomes

whether the Legislature, by stating that these contracts are not insurance for purposes of general insurance regulation, also intended to reverse the otherwise

evident conclusion that they “reference insurance” for

purposes of 12 O.S. § 1855(D)? We hold that it did not.

B. McMullan - Bad Faith and Insurance Guarantees

¶24 A possible historical context can be found by

examining the 2011 McMullan case. The SWA was

enacted in 1993.8 The 1993 version of the Act differs

from the 2012 version in two important ways. The

1993 version did not contain the “shall not be deemed

to create a special relationship between the parties

which would give rise to an action in tort to recover for

breach of the duty of good faith and fair dealing.” Nor

did the 1993 version require the policy disclosure

statement warning required by current SWA § 141.21,

that “This is not an insurance contract. Coverage

afforded under this contract is not guaranteed by the

Oklahoma Insurance Guaranty Association.”

¶25 McMullan found that vehicle service contracts

which fell under the SWA met the definition of and

were designed to function and perform as “insurance,”

and, therefore, could support a cause of action for

bad faith. The “no bad-faith” language subsequently

added to the SWA was clearly intended to override

McMullan. More importantly, because McMullan declared service warranties to be “insurance,” the Legislature evidently also wished to clarify that, unlike

traditional insurance policies, service warranties are

The Act was originally part of Title 36 – Insurance. In 2012,

it was recodifed as part of Title 15 – Contracts.

39a

not subject to or guaranteed by the Oklahoma Property and Casualty Insurance Guaranty Association

Act.9 It is in this context that the Legislature stated that

such contracts are “not insurance,” and required a

warning to that effect.

C. We find No Explicit Exclusion of Service

Warranties or Home Warranties from § 1855(D)

¶26 We conclude that, had the Legislature intended

to exclude home and service warranties from § 1855(D),

it would have clearly and explicitly stated so. Instead,

it appears that the Legislature was primarily concerned with distinguishing the specific regulatory and

guarantee regimes applied to home and service warranties from general insurance regulation when it

stated that these contracts, which bear all the fundamental hallmarks of insurance, are “not insurance.”

¶27 We further find no difference or rationale in

public policy that would require § 1855(D) to apply to

all contracts that reference insurance and function

as insurance except home and service warranties.10

The Oklahoma Property and Casualty Insurance Guaranty

Association Act, 36 O.S.2011 & Supp. 2014 §§ 2001-2020.2,

created a nonprofit, unincorporated legal entity known as the

Oklahoma Property and Casualty Insurance Guaranty Association. The Association collects assessments from any insurer

writing the “kind of insurance to which the [Act] applies,” and

uses the funds to pay covered claims of insurers that have become

insolvent. Although their activities have all the features of

property/casualty insurance, we find no indication that service

warranty providers traditionally paid assessments to the Association. Hence the Legislature’s desire to specifically exclude

these contracts from the definition of an “insurer” under the Act.

The SWA covers contracts insuring against “accidental

damage from handling or as otherwise provided for in the contract

or agreement.” This could open the door to all property insurance

40a

Regulation under the SWA and HSCA clearly arises

from the public policy regarding insurance. These

contracts are regulated in the manner of insurance for

the same policy purposes. Indeed, if the public policy

that requires intrusive regulation of the insurance

business is inapplicable because these contracts are

truly “not insurance,” or contracts that “reference

insurance,” it is difficult to discern how the Legislature could force such strict and intrusive regulation of

ordinary contracts without interfering with the state

policy of freedom of contract.”

¶28 In the absence of clearly demonstrated legislative intent to exempt such contracts from § 1855(D),

and because these contracts clearly function as insurance and are subject to the public policy expressed in

§ 1855(D), we hold that such contracts “reference

insurance” for purposes of that statute, and that any

mandatory arbitration clause in such a contract is

void.

VI. REGISTRATION ARGUMENTS

¶29 The record also indicates that Old Republic is

not registered as a vendor of home warranties under

the HSCA, although it is registered under the SCA.

The Sparks argue that registration is a requirement to

regulation under the Act, and therefore, even if we

were to find that registered providers of home warranties are exempt from the arbitration bar of 12 O.S.

§ 1855(D), Old Republic would still not be not entitled

to such an exemption, As we have previously found

that contracts pursuant to the HSCA or SWA do

“reference insurance” for the purposes of § 1855(D)

being characterized as a “service warranty” by the vendor

specifically to evade the public policy embodied in § 1855(D).

41a

(irrespective of registration), we need not address this

argument.

CONCLUSION

¶30 We find that contracts issued pursuant to

the SWA and HSCA “reference insurance” for the

purposes of 12 O.S. § 1855(D). Hence, disputes arising

from those contracts are not subject to mandatory

arbitration.

AFFIRMED.

WISEMAN, P.J., concurs, and FISCHER. J., dissents.

FISCHER, J., dissenting:

¶1 In my view, the Legislature has decided that the

contract at issue in this case is not insurance. Therefore, arbitration of this dispute is not prohibited by

section 1855(D) of the Oklahoma Uniform Arbitration

Act, 12 O.S.2011 §§ 1851 through 1881, excluding from

compelled arbitration contracts that reference insurance. I would reverse the order appealed and remand

with instructions to grant Old Republic’s motion to

compel arbitration. Therefore, I respectfully dissent.

BACKGROUND

¶2 The parties entered into a contract to be effective

from September 15, 2015, to September 15, 2016. The

document describes the contract as an “Oklahoma

Home Warranty.” The contract provides for repair

and/or replacement of certain home appliances located

at the Sparks’ residence in Moore, Oklahoma. Old

Republic asserts that this was the sixth renewal of the

Sparks’ Home Warranty contract for appliances

located at that residence, an assertion not disputed by

the Sparks. The contract Declaration of Coverage page

contains a “DISPUTE RESOLUTION” section, which

42a

states that the contract is subject to an “Arbitration

Provision outlined on Page 9;” but, if the Sparks did

not want to be subject to the arbitration provision,

they could cancel the contract within thirty days.

“Otherwise, this arbitration provision will be

applicable.”

¶3 The arbitration provision referred to is on page

nine of the contract and states that the parties agree

to arbitrate all disputes or claims arising out of the

contract or the parties’ relationship. The arbitration

provision invokes the rules for consumer disputes of

the American Arbitration Association and provides

that the arbitration of any dispute will be “governed

by the Federal Arbitration Act (9 U.S.C. § 1, et seq.) to

the exclusion of any different or inconsistent state or

local law, ordinance or judicial rule.”

¶4 The Sparks allege that on March 11, 2016, they

had a loss to their air conditioning system covered by

the Home Warranty, and that Old Republic was

unable to repair the air conditioning system to their

satisfaction. Old Republic does not dispute this allegation. Nor is there any disagreement regarding whether

this dispute is covered by the parties’ arbitration

clause. This dispute concerns the enforceability of

the parties’ agreement to arbitrate this dispute. The

Sparks sued Old Republic for breach of contract and

the tort of breach of duty to deal fairly and in good

faith. Old Republic filed a motion to compel arbitration

pursuant to the arbitration clause in the parties’ Home

Warranty contract. Old Republic appeals the district

court’s order denying its motion to compel arbitration.

I. The Parties’ Contract Is Not Insurance

¶5 Section 1855(D) provides: “The Uniform Arbitration Act shall not apply to . . . contracts which

43a

reference insurance, except for those contracts between insurance companies.” The Sparks contend that

their Home Warranty is a contract of insurance and,

therefore, arbitration of this dispute is prohibited by

section 1855(D). As authority for this proposition, the

Sparks cite McMullan v. Enterprise Financial Group,

Inc., 2011 OK 7, 247 P.3d 1173, which held that a

vehicle service warranty contract was an insurance

contract for purposes of the Oklahoma Service

Warranty Insurance Act, 36 O.S.2001 §§ 6601 through

6639. The Sparks contend that we should follow

McMullan and hold that this Home Warranty is an

insurance contract. To do so would ignore what is, in

my view, the Legislature’s clear intent to the contrary.

¶6 The Oklahoma Service Warranty Insurance Act

at issue in McMullan was repealed in 2012 and

replaced by the Service Warranty Act, 15 O.S. Supp.

2012 §§ 141.1 through 141.35, the applicable legislation in this case. The definition of a “service warranty”

is identical in both statutes, with one critical exception. The new Service Warranty Act added a

provision to the definition of “service warranty”

making it clear that a service warranty contract is not

an insurance contract.1 That provision states that

“service warranties are not insurance in this state

or otherwise regulated under the Insurance Code.”

15 O.S. Supp. 2012 § 141.2(14)(f) (renumbered as

§ 142(17)(f)). In my view, it is clear that the Service

Warranty Act was adopted in response to the

McMullan decision and for the purpose of changing

the “existing law,” as interpreted by the McMullan

The Sparks’ counsel’s failure to note this fact or comment on

the effect of the repeal of the Oklahoma Service Warranty

Insurance Act on the continued viability of the McMullan holding

is a disservice to this Court and the district court.

44a

Court, to exclude service warranties from the kinds of

contracts that do constitute insurance. See Blitz

U.S.A., Inc. v. Okla. Tax Comm’n, 2003 OK 50, ¶ 19,

75 P.3d 883 (by amending a statute the Legislature

may intend to change existing law).

¶7 There are two statutory regimes potentially

applicable to the parties’ contract, the Service Warranty Act (15 O.S. Supp. 2012 §§ 141.1 through 141.35)

and the Home Service Contract Act (36 O.S.2011

§§ 6750 through 6755). As the Majority correctly

points out, there is some overlap but also there

are some differences between the kinds of contracts

covered by the two acts. The parties’ Home Warranty

contract contains provisions that are covered by both

acts.

¶8 However, I find it unnecessary to determine

whether the parties’ Home Warranty contract is governed by one Act to the exclusion of the other because

the Legislature has excluded both types of contracts

from the definition of “insurance.” Both statutes

declare that home service contracts and service warranty contracts O.S.2011 § 6752(9). “The law-making

body is presumed to have expressed its intent in a

statute’s language and to have intended what the text

expresses.” Yocum v. Greenbriar Nursing Home, 2005

OK 27, ¶ 9, 130 P.3d 213. “When statutory language is

unambiguous, no further construction is needed . . . .”

St. John Med. Ctr. v. Bilby, 2007 OK 37,¶ 6, 160 P.3d

978. Because the Legislature has declared that the

parties’ contract is not “insurance,” arbitration of this

dispute is not prohibited by section 1855(D) of the

Uniform Arbitration Act.

45a

II. McCarran-Ferguson Preemption

¶9 The Sparks also argue, in essence, that even if

their Home Warranty is not an insurance contract

(1) it is, nonetheless, a contract which references

insurance; (2) contracts which reference insurance

are excluded from the application of the Uniform

Arbitration Act pursuant to section 1855(D); (3) section 1855(D) is a state law regulating insurance and,

therefore, (4) the McCarran-Ferguson Act, 15 U.S.C.

§§ 1010 through 1015, preempts the Federal Arbitration Act, 9 U.S.C. §§ 1 through 16, and any effort to

compel arbitration of this dispute. That interpretation

of section 1855(D) directly conflicts with the Federal

Arbitration Act’s well-established national policy applicable in state and federal courts, “foreclose[ing]

state legislative attempts to undercut the enforceability of arbitration agreements.” Preston v. Ferrer, 552

U.S. 346, 353, 128 S. Ct. 978, 983 (2008).

¶10 The Majority finds this issue “well settled” in

case law from four federal courts. I do not. Neither this

Court, the Oklahoma Supreme Court, nor the United

States Supreme Court has directly addressed the

potential conflict between the McCarran-Ferguson Act

and the Federal Arbitration Act.

¶11 Section 2 of the Federal Arbitration Act states:

A written provision in any . . . contract

evidencing a transaction involving commerce

to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and

enforceable, save upon such grounds as exist

at law or in equity for the revocation of any

contract.

46a

15 U.S.C. § 2. Section 1012 of the McCarran-Ferguson

Act preempts any “Act of Congress” which invalidates,

impairs, or supersedes a State law enacted for the

purpose of regulating “the business of insurance.” 15

U.S.C. § 1012(b).2 The United States Supreme Court

has invoked the McCarran-Ferguson Act to hold that

a state creditor priority law applicable to insolvent

insurance companies was not preempted by a federal

creditor priority statute because the state law’s

protection of the claims of insurance policyholders

involved “the actual performance of an insurance

contract . . . an essential part of the ‘business of

insurance.’ United States Dep ‘t of Treasury v. Fabe,

508 U.S. 491, 505, 113 S. Ct. 2202, 2210 (1993). But

Fabe did not involve an agreement to arbitrate or the

applicability of the Federal Arbitration Act, Nonetheless, Congress did not intend to “cede the field of insur2

(a) State regulation

The business of insurance, and every person engaged

therein, shall be subject to the laws of the several

States which relate to the regulation or taxation of

such business.

(b) Federal regulation

No Act of Congress shall be construed to invalidate,

impair, or supersede any law enacted by any State for

the purpose of regulating the business of insurance, or

which imposes a fee or tax upon such business, unless

such Act specifically relates to the business of insurance: Provided, That after June 30, 1948, the Act of

July 2, 1890, as amended, known as the Sherman Act,

and the Act of October 15, 1914, as amended, known as

the Clayton Act, and the Act of September 26, 1914,

known as the Federal Trade Commission Act, as

amended [15 U.S.C.A. 41 et seq.], shall be applicable to

the business of insurance to the extent that such

business is not regulated by State law.

47a

ance regulation to the States” by enacting the

McCarran-Ferguson Act. Humana Inc. v. Forsyth, 525

U.S. 299, 308, 119 S. Ct. 710, 717 (1999).

¶12 Although no United States Supreme Court

decision has addressed the potential conflict between

the McCarran-Ferguson Act and the Federal Arbitration Act, with respect to any conflict between the

Federal Arbitration Act and state law, that Court’s

position is clear: “[W]hen state law prohibits outright

the arbitration of a particular type of claim, the

analysis is straightforward: The conflicting rule is

displaced by the FAA.” Marmet Health Care Ctr. Inc.

v. Brown, 565 U.S. 530, 533, 132 S. Ct. 1201, 1204

(2012) (invalidating a state law prohibition on arbitration of nursing home disputes) (citing AT&T Mobility

LLC v. Concepcion, 563 U.S. 333, 341, 131 S. Ct. 1740,

1747 (2011) (state law doctrine prohibiting waiver of

the right to file class actions and invalidating a

contract containing an arbitration agreement was

displaced by the Federal Arbitration Act)). See also

Preston v. Ferrer, 552 U.S. 346, 128 S. Ct. 978 (2008)

(state law granting labor commissioner exclusive

jurisdiction of labor disputes is superseded by the

Federal Arbitration Act when the parties agree to

arbitrate those disputes). The cases cited by the

Majority holding that the McCarran-Ferguson Act

preempts application of the Federal Arbitration Act if

the contract containing the arbitration clause involves

insurance either predate or do not discuss Marmet

Health Care Ctr. Inc. v. Brown.

¶13 Clearly, section 1855(D) of the Oklahoma

Arbitration Act is a state law that “prohibits outright

the arbitration of a particular type of claim,” that is,

claims which arise from contracts which reference

insurance. Marmet, 565 U.S. at 533, 132 S. Ct. at 1204.

48a

Although there is no controlling authority resolving

any conflict between the McCarran-Ferguson Act and

the Federal Arbitration Act, resolution of that issue

in this case is not required unless the McCarranFerguson Act applies.

¶14 For purposes of the McCarran analysis, the

initial question is not whether the contract between

the Sparks and Old Republic is a contract referencing

insurance according to Oklahoma law. Contracts

which “reference insurance,” as that term is used in

section 1855(D), but which do not involve the business

of insurance, are not contracts which invoke McCarran

preemption. See, e.g., Union Labor Life Ins. Co. v.

Pireno, 458 U.S. 119, 102 S. Ct. 3002 (1982) (agreement between insurer and professional organization to

determine the reasonable costs of chiropractic services

for health insurance policy reimbursement purposes

did not involve the business of insurance); Group Life

& Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 99

S. Ct. 1067 (1979) (holding that agreements between

insurer and pharmacies, which reduced the costs of

health insurance to policyholders, did not involve the

business of insurance).

¶15 The initial McCarran question is whether Old

Republic’s practice of issuing home warranty contracts, like the one issued to the Sparks, constitutes

the “business of insurance.” 15 U.S.C. § 1012(b). The

analysis for determining what constitutes the “business of insurance” is summarized in Pireno:

[T]hree criteria [are] relevant in determining

whether a particular practice is part of the

“business of insurance” . . . first, whether

the practice has the effect of transferring

or spreading a policyholder’s risk; second,

whether the practice is an integral part of the

49a

policy relationship between the insurer and

the insured; and third, whether the practice

is limited to entities within the insurance

industry.

Pireno, 458 U.S. at 129, 102 S. Ct. at 3009 (citing

Group Life & Health Ins. Co. v. Royal Drug Co., 440

U.S. 205, 99 S. Ct. 1067 (1979)). The Home Warranty

contract between the Sparks and Old Republic

satisfies this analysis. Subject to agreed limits, the

Home Warranty contract transfers the risk of repairing or replacing certain home appliances from the

Sparks to Old Republic. That risk transfer is central

to the relationship between the Sparks and Old

Republic. And, only entities licensed by or registered

with the Oklahoma Insurance Commissioner may

lawfully issue home warranty policies in Oklahoma.

See 36 O.S. Supp. 2014 § 6753(B), and 15 O.S. Supp.

2012 § 141.4(A). Consequently, for McCarran purposes, it does not matter whether this is a “Home

Service Contract,” 36 O.S.2011 § 6752(9), or a “Service

Warranty” contract, 15 O.S. Supp. 2014 § 141.2(17).

The parties’ Home Warranty contract was issued as

part of the business of insurance.

¶16 A federal statute that would otherwise supplant

a state statute is preempted by the McCarranFerguson Act if the federal statute (1) does not

“specifically relate[ ] to the business of insurance”; (2)

the state statute was enacted “for the purpose of

regulating the business of insurance”; and (3) the

federal statute would “invalidate, impair or supersede” the state statute. US. Dep’t of Treasury v. Fabe,

508 U.S. 491, 501, 113 S. Ct. 2202, 2208 (1993). The

first Fabe factor is satisfied. There is nothing in the

Federal Arbitration Act that specifically mentions or

relates to the business of insurance.

50a

¶17 The second Fabe factor is more difficult. Unlike

the “actual performance of an insurance contract”

found to be an essential part of the business of

insurance in Fabe, section 1855(D) does not affect the

allocation of risk between the Sparks and Old

Republic, and is not “an integral part of the policy

relationship.” Union Labor Life Ins. Co. v. Pireno, 458

U.S. 119, 129, 102 S. Ct. 3002, 3009 (1982). Section

1855(D) merely determines where the Sparks and

Old Republic will settle their to entities within the

insurance industry.” Id. Consequently, section 1855(D)

cannot have been enacted for the purpose of regulating

the business of insurance, and, therefore, does not

satisfy the second Pireno requirement.

¶18 The third Fabe factor is lacking as well.

Application of the Federal Arbitration Act would not

“invalidate, impair or supersede” section 1855(D). 15

U.S.C. § 1012(b). There is nothing in the express

language of the Federal Arbitration Act that would

“invalidate” or “supersede” section 1855(D). Nonetheless, if compelling arbitration in this case would

“impair” the effect of section 1855(D), the McCarran

Act may apply.

¶19 A federal statute can “impair” a state statute if

it frustrates a declared state policy or if it interferes

with a state regulatory regime. Humana Inc. v.

Forsyth, 525 U.S. 299, 310, 119 S. Ct. 710, 717 (1999).

The Federal Arbitration Act does not frustrate

Oklahoma’s public policy, nor is it inconsistent with

that declared State policy. In this area, the policies are

the same. Compare 12 O.S.2011 § 1857(A): “An agreement contained in a record to submit to arbitration

any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable, and irrevocable except upon a ground that exists

51a

at law or in equity for the revocation of a contract,”

with 9 U.S.C. § 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 . . . shall be valid, irrevocable, and enforceable, save upon such grounds as

exist at law or in equity for the revocation of any

contract.” The Federal Arbitration Act “‘reflects an

emphatic federal policy in favor of arbitral dispute

resolution.’“ KPMG LLP v. Cocchi, 565 U.S. 18, 21, 132

S. Ct. 23, 25 (2011) (per curiam) (quoting Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473

U.S. 614, 631, 105 S. Ct. 3346, 3356 (1985)). Likewise,

“[n]o longer does Oklahoma disfavor arbitration. In

fact, we have a strong public policy which favors it.”

Rollings v. Thermodyne Indus., Inc., 1996 OK 6, ¶ 32,

910 P.2d 1030.

¶20 As to whether the Federal Arbitration Act

would interfere with Oklahoma’s regulatory regime,

the Oklahoma Legislature has answered that question. “The marketing, sale, offering for sale, issuance,

making, proposing to make and administration of

service warranties . . . shall be exempt from all

provisions of the Insurance Code.” 15 O.S. Supp. 2012

§ 141.4(E). And, “service warranties are not insurance

in this state or otherwise regulated under the Insurance Code.” 15 O.S. Supp. 2014 § 141.2(17)(f). Similarly, the “Oklahoma Home Service Contract Act

declares that home service contracts, as defined in

Section 6752 of this title, are not insurance and not

otherwise subject to the Insurance Code.” 36 O.S.

Supp. 2012 § 6751(A). See 36 O.S.2011 § 6752(9)

(“Home service contracts are not insurance in this

state or otherwise regulated under the Insurance

Code.”) Further, the “marketing, sale, offering for sale,

issuance, making, proposing to make and administra-

52a

tion of home service contracts. shall be exempt from

all other provisions of the Insurance Code.” 36 O.S.

Supp. 2012 § 6753(F).3

¶21 “When federal law does not directly conflict with

state regulation, and when application of the federal

law would not frustrate any declared state policy or

interfere with a State’s administrative regime, the

McCarran-Ferguson Act does not preclude its application.” Humana, Inc. v. Forsyth, 525 U.S. 299, 310, 119

S. Ct., 710, 717 (1999) (holding that federal RICO

statute did not impair Nevada criminal statutes and

was not preempted by McCarran-Ferguson). Because

the Oklahoma Legislature has specifically chosen to

exclude home warranty contracts from the State’s

laws regulating insurance, enforcement of the arbitration provision in the Sparks’ contract will not “frustrate” State public policy or “interfere with” Oklahoma’s

statutory insurance regulatory regime. Id. As a result,

enforcement of the Federal Arbitration Act and the

parties’ agreement to arbitrate this dispute will not

“impair” any Oklahoma statute “enacted . . . for the

purpose of regulating the business of insurance . . . .”

15 U.S.C. § 1012(b). Therefore, the McCarran-Ferguson Act does not apply to section 1855(D), and does not

The Oklahoma Supreme Court has also implied, without

directly deciding the issue, that Oklahoma law does not prohibit

the arbitration of disputes arising from insurance contracts. “In

the present matter, it must be shown that the arbitration clause

applies to the issue of underpayment of insurance coverage in the

[GAP insurance] policy. If this cannot be shown, the Court will

not impose arbitration upon the parties.” Harris v. David Stanley

Chevrolet, Inc., 2012 OK 9, ¶ 7, 273 P.3d 877. See also Embry v.

Innovative Aftermarket Sys., 2008 OK CIV APP 92, 198 P.3d 388,

(holding that a GAP policy is a contract of insurance).

53a

preempt enforcement of the Federal Arbitration Act in

this case.

¶22 For these reasons, I would reverse the order

appealed and remand with instructions to grant Old

Republic’s motion to compel arbitration.

November 19, 2018

54a

APPENDIX C

IN THE DISTRICT OF CLEVLAND COUNTY,

STATE OF OKLAHOMA

[Filed] February 8, 2017]

————

Sparks

Plaintiff(s)

Old Republic

Defendant(s)

Little

Attorney(s) for Plaintiffs

Smith/Waddell

Attorney(s) for Defendants

SUMMARY ORDER

Date: 2/7/17

Court Reporter:

Judge:

counsel appear mtn to compel arbitration denied mtn

to stay denied

/s/ [Illegible]

Judge

55a

APPENDIX D

IN THE DISTRICT COURT OF

CLEVELAND COUNTY

STATE OF OKLAHOMA

[Filed January 19, 2017]

————

Case No. CJ-16-795-TS

————

WILLIAM B. SPARKS and DONNA SPARKS,

Plaintiffs,

vs.

OLD REPUBLIC HOME PROTECTION COMPANY, INC.

(A Foreign Insurance Company), OLD REPUBLIC

INTERNATIONAL (A Foreign Insurance Company)

and ALL SEASON’S HEATING AND AIR, LLC.,

Defendants.

————

DEFENDANT OLD REPUBLIC HOME

PROTECTION CO., INC.’S

MOTION TO STAY AND COMPEL

ARBITRATION, AND BRIEF IN SUPPORT

————

TO THE HONORABLE JUDGE:

COMES NOW Defendant Old Republic Home Protection Co., Inc. (“Defendant” or “ORHP”)1 and files

In their lawsuit, Plaintiffs also named a separate and independent Old Republic entity, Old Republic International (“ORI”),

as a Defendant. ORI does not join in the filing of this motion,

however. because it is not a proper party to this lawsuit. ORI is a

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this Motion to Stay and Compel Arbitration and Stay,

and Brief in Support, and would respectfully show

the Court as follows:

INTRODUCTION

Plaintiffs agreed, and are contractually bound, to

submit any dispute involving ORHP to binding arbitration. Plaintiffs and ORHP are parties to a home

warranty plan that includes, among other things, a

binding arbitration provision. And despite ORHP’s

request that Plaintiffs refer the matter to arbitration,

Plaintiffs have refused to honor their agreement;

instead, electing to proceed with their state court

action, causing ORHP to needlessly incur substantial

additional costs and expenses. The arbitration provision contained the parties’ home warranty plan is

binding and enforceable and this action should be

stayed and the matter referred to arbitration without

further delay.

II.

FACTUAL BACKGROUND

On July 7, 2016 Plaintiffs filed their Petition against

ORHP, among others, in which they allege that they

suffered a “covered loss.” based on some alleged damage caused to their home by their air conditioning

system. Plaintiffs’ Pet. at 1-2. Plaintiffs allege that,

non-operating entity that did not sponsor/issue the home warranty, did not provide any services or have any connection to the

home warranty and/or have any knowledge regarding the warranty and/or any of the facts or allegations that form the sole

basis of Plaintiffs’ claims against ORHP. Plaintiffs’ counsel has

been notified that ORI is an incorrect party but, as of the filing of

this motion, has not agreed to dismiss ORI from this lawsuit.

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pursuant to a Home Warranty Plan (the “Plan”) they

obtained from ORHP, they reported the loss to ORHP

but ORHP failed to act in a timely manner, wrongfully

refused to pay for Plaintiffs’ alleged losses, and was

negligent in retaining co-Defendant All Season’s

Heating and Air, LLC (“All Seasons”) to perform the

repairs. Id. at 2. True and correct copies of the Home

Warranty Plan and the Declaration of Coverage are

attached hereto as Exhibits A and B, respectively.

In connection with their alleged losses, Plaintiffs

asserted a bad faith cause of action against all defendants and seek recovery of punitive damages in

connection with those allegations. Id. at 2-3.2

Regardless of the merits of Plaintiffs’ allegations, all

of their claims against ORHP flow from and arise out

of rights and obligations allegedly contained in the

Plan. Accordingly, the terms and conditions of the

Plan govern all substantive and procedural aspects of

Plaintiffs’ claims against ORHP.

The contract that forms the basis of Plaintiff’s’

claims against ORHP contains a broad and enforceable arbitration provision. See Ex. A, at 9; E. B. To date,

no written discovery has been exchanged, no depositions have been scheduled, and the only pleading that

ORHP has submitted to this Court is its Answer. Thus,

ORHP has not taken advantage of any aspects of the

judicial process.

ORHP does not concede or otherwise admit or acknowledge

that it is, with respect to Plaintiffs’ bad faith cause of action, an

insurance company. That issue, however, is beyond the scope of

this Motion and has no bearing on the determination of whether

this proceeding should be stayed and the matter referred to

binding arbitration.

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II.

ARGUMENTS AND AUTHORITIES

A. Plaintiffs’ Claims Against ORHP Should Be

Referred To Arbitration.

The Plan that was expressly invoked by Plaintiff’s

and which forms the sole basis for the allegations

against ORCP contains the following binding arbitration provision:

Arbitration: By entering into this Agreement

the parties agree and acknowledge that all

dispute they have that involve us, or arise out

of action that we did or did not take, shall be

arbitrated as set forth herein as long as the

claim is in excess of the applicable claims

court jurisdictional limit. The parties further

agree that they are giving up the right to a jury

trial, and the right to participate in any class

action, private attorney general action, or

other representative or consolidated action

including any class arbitration or consolidated arbitration proceeding.

All disputes or claims between the parties

arising out of the agreement or the parties’

relationship shall be settled as follows:

1) Small claims court; for claims within the

applicable small claims court jurisdictional limit, or

2) Final and binding arbitration held in

the county of the covered property

address (or other location mutually

agreed upon by both parties) for claims

in excess of the Small Claims Court

jurisdictional limit.

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The arbitration shall be conducted by the

American Arbitration Association pursuant

to its rules for consumer disputes.

The parties expressly agree that this Agreement and this arbitration provision involve

and concern interstate commerce and are

governed by the provisions of the Federal

Arbitration Act . . . to the exclusion of any

different or inconsistent state or local law,

ordinance or judicial rule.

Ex. A at 9 (emphasis in original). Additionally, as

indicated by the Declaration of Coverage, Plaintiffs

were not only provided with additional notice of the

arbitration provision and given thirty (30) additional

days to cancel the Plan if they did not wish to agree to

arbitration. See Ex. B. Plaintiffs chose not to cancel the

Plan and agreed to be bound by the arbitration plan

provided therein.

Although the Plan explicitly requires the parties to

submit any disputes to arbitration, Plaintiffs elected

instead to file a Petition in State Court. Thus far,

Plaintiffs have refused—and continue to refuse—to

arbitrate. ORHP sent a written demand to arbitrate to

counsel for Plaintiffs on January 5, 2017 in an effort

to convince them to accept arbitration. A true and

correct copy of this letter is attached to this Motion as

Exhibit C and is incorporated fully by reference. Upon

receipt of ORHP’s arbitration demand. rather than

respond directly to ORHP’s demand, Plaintiffs immediately filed a motion seeking to have the case set for

trial on the Court’s jury docket. As of the date of this

filing, Plaintiffs’ actions demonstrate their outright

refusal to abide by the arbitration provision in the

Plan and have reaffirmed their intent to ignore the

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plain language of the Plan and continue to prosecute

their claims against ORI HP before this Court.

Plaintiffs’ claims against ORHP indisputably arise

out of or relate to the Plan. and, therefore, fall

squarely within the parameters of the arbitration

provision contained in that agreement. Plaintiffs’ allegations specifically invoke language of the claim and

are based on allegations as to ORHP’s “treatment of

Plaintiffs and the handling of their claims . . . .”

Plaintiff’s Pct. at 3. Plaintiffs and ORHP are equally

bound under the Plan to arbitrate. Thus, the agreement to arbitrate, as contained in the Plan, was

supported by consideration. Accordingly, all of the

claims asserted against ORHP arise out of or relate to

the binding and enforceable arbitration provision contained in the Plan and Plaintiffs’ should be compelled

to submit their claims to arbitration.

B. These Proceedings Should Be Stayed Pending

Arbitration.

The plain language of the Plan provides that it and

the included arbitration provision are governed by the

provisions of the Federal Arbitration Act (“FAA”). Ex.

A at 9. Section 3 of the FAA provides as follows:

If any suit or proceeding is brought in any of

the courts of the United States upon any issue

referable to arbitration under an agreement

in writing for such arbitration, the court in

which suit is pending, upon being satisfied

that the issue involved in such suit or proceeding is referable to arbitration under such

an agreement, shall on application of one of

the parties stay the trial of the action until

such arbitration has been had in accordance

with the terms of the agreement, providing

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the applicant for the stay is not in default in

proceeding with such arbitration.

9 U.S.C. § 3. Because Plaintiffs’ allege that ORHP

failed to comply with the terms of the Plan, their

claims and causes of action clearly present an issue

referable to arbitration under the Plan’s plain language. Accordingly, as provided by the FAA, a stay of

these proceedings is appropriate until the arbitration

has been conducted as the parties agreed.

III.

CONCLUSION

Based on the foregoing, ORHP respectfully requests

that the Court stay these proceedings and order

Plaintiffs to submit the entire controversy between the

parties to arbitration in accordance with arbitration

agreement contained in the Plan.

Respectfully submitted,

/s/ Jason Waddell

Jason Waddell, CBA# #30761

Jason Waddell, PLLC

222 NW 13th St.

Oklahoma City, OK 73103

(405) 232-5291

Fax (405) 708-7871

Jason@JasonWaddellLaw.com

ATTORNEYS FOR DEFENDANT

OLD REPUBLIC HOME

PROTECTION COMPANY, INC.

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CERTIFICATE OF CONFERENCE

The undersigned hereby certifies that a conference

was held with counsel for Plaintiffs regarding the

merits of this Motion and relief requested herein by

Defendant Old Republic Home Protection Co., Inc.

Agreement could not be reached, and therefore the

Motion is presented to the court for determination.

/s/ Jason Waddell

Jason Waddell

CERTIFICATE OF MAILING

This is to certify that on the 19 day of January, 2017,

a true and correct copy of the above and foregoing

instrument was mailed, postage prepaid, to:

David W. Little, Esq.

115 E. California Ave. — Bricktown

Miller-Jackson Building, Suite 350

Oklahoma City, OK 73104-2418

Mark E. Bialick

R. Ryan Deligans

DURBIN, LARIMORE & BIALICK

920 NORTH HARVEY

OKLAHOMA CITY, OK 73102

/s/ Jason Waddell

Jason Waddell

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APPENDIX E

OLD REPUBLIC HOME

PROTECTION COMPANY, INC.

Declaration of Coverage

DONNA SPARKS

1500 SW 38TH ST

MOORE OK 73160-2905

Covered Property:

Property Type*:

1500 SW 38TH ST

MOORE, OK 73160-2905

Single-Family Dwelling

under 5,000 Sq. Ft.

$750.00

Plan Fee Amount:

Plan Ordered By:

Plan Contact Number: 23245840 Renewal PP

Registration Code:

MAM7TU

Effective Date:

09/15/2016

Expiration Date:

11/04/2016

Trade Call Fee:

$75.00

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CONFIRMATION OF COVERAGE: To obtain the

most value from this Contract, it is important that you

understand the coverage that is offered, as well as the

limitations. Please read the enclosed Plan and then,

keep it handy throughout the term of coverage. The

Contract has been designed to provide coverage for

covered systems and appliances that become inoperable due to norm wear and use during the term of the

Contract. The Contract does not cover defects which

were known prior to the effective date of coverage.

IMPORTANT: Plan fees are based on property type/

square footage, and if the property type/square footage

listed is not accurate additional Plan fees (or a refund)

may be due. To make corrections, please call us at

800-445-6999. Please be advised that i during the

performance of service, we identify that additional

Plan fees are due, they must be paid at the time of

service.

DISPUTE RESOLUTION: While no one likes to

receive a complaint or to be involved in a dispute,

it can happen. If we are unable to resolve a dispute

through discussion, conciliation or mediation (each

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