Opposition Brief — Kindred Nursing Ctrs. Ltd. P'ship v. Clark, 137 S. Ct. 1421 (2017) (No. 16-32)

SEP 6 - 20%

No. 16-32

—-

CLERK

Bu Whe

Supreme Court of the Gnited States

——___—-®

KINDRED NURSING CENTERS LIMITED

PARTNERSHIP. DBA WINCHESTER CENTRE FOR

HEALTH AND REHABILITATION, NKA POUNTAIN

CIRCLE HEALTH AND REHABILITATION CENTER, et al,

Petitioners.

%

JANIS E. CLARK, et al..

Respondents.

o-—

On Petition For A Writ Of Certiorari

To The Supreme Court Of Kentucky

°

RESPONDENTS’ BRIEF IN OPPOSITION

+ 2 —

JAMES T. GU.BERT ROBERT E. SALYEK

Coy, GILBERT, Counsel of Record

SHEPHERD & W1).SON WILKES & McHuci, PA.

212 North Second Street 429 North Broadway

Richmond. KY 40475 P.O. Box 1747

(859) 623-3877

Lexington, KY 40588

(859) 455-3356

rsalyer@wilkesmchugh.com

Counsel for Respondents

—

CPOCRKLE LEGAL WRIEFS (nie 225-60ts

WWW COCKLELEGALBRIETE COM

i

QUESTION PRESENTED

A power of attorney is an Agency appointment.

Under Kentucky law, the scope of an agent’s authority

depends upon the principal’s intent. Here the Ken-

tucky Supreme Court determined the intentions of two

principals in their respective powers of attorney by in-

terpreting the meaning of the language used in the in-

struments. Petitioners are in effect asserting that the

FAA preempts the intention of a principal as deter-

mined by the Kentucky Supreme Court, regarding the

scope of Agency authority conveyed upon the agent.

The question thus presented is:

Whether the Kentucky Supreme Court’s routine

application of interpretive principles to an instrument

of Agency, e.g., a power-of-attorney, is preempted by the

Federal Arbitration Act.

os

TABLE OF CONTENTS

Page

QUESTION PRESENTE D............ccccccsccssccsensssesseees i

ps ' F ho Foc. «sy ers iv

I ace aphiniiasininiiincdbaiouecbenenbidiiieds 1

STATEMENT OF THE CASE. ...........::00..cccseesseseees 3

Bi I i cinriccticaievesnstensccscnuicusces 3

<n id aerhiniciasinenioanionians 7

REASONS FOR DENYING THE PETITION ....... 12

I. There Is No Split Of Opinion Below ........... 12

Il. The Kentucky Supreme Court’s Decision

Does Not Implicate The FAA Or Trigger

I sciciciiastendemeeeniionsntanuncaes 14

Ill. The Kentucky Supreme Court Interpreted

The Powers Of Attorney In This Case Accord-

ing To Reasonable And Arbitration-Neutral

Canons of Agency Interpretation ................ 18

A. The Kentucky Supreme Court Inter-

preted The Wellner Power Of Attorney

Literally According To Its Language.... 19

B. The Kentucky Supreme Court Inter-

preted The Clark Power Of Attorney

According To The Revealed Intent Of

The Principal, As Understood From The

Standpoint Of The Reasonable Expecta-

tions Flowing From Language Used In

REESE IEE on CREE EEE eye ee 20

IV. The Decision Below Is Consistent With This

Se clanbbnaiirmennsoaieenns 26

ili

TABLE OF CONTENTS — Continued

Page

V. That This Case Comes Out Of The Kentucky

Supreme Court, Rather Than The US.

Court Of Appeals For The Sixth Circuit,

Makes This Case A Poor Vehicle For Review

Of The Requirements Of The FAA. .............. 32

VI. Interpreting State Agency Law In Defer-

ence To A Federal Statutory Scheme Would

Have Unforeseen Negative Ramifications.... 33

SINE iesiecieccionbicieiccosmneninrenin cieeeseiintriatansientoriseeets 36

APPENDIX

APPENDIX A — Petitioners’ Motion for Leave to

Cite Supplemental Authority (December 15,

Se cistesciscnddasacihsanaseniancicipiccicsanntisdaaiunbtebseacentrasmbdcudiiniaie App. 1

APPENDIX B — The Kentucky Supreme Court

Receipt Notice (December 16, 2015)................ App. 8

APPENDIX C — The Kentucky Supreme Court

Order granting leave to cite supplemental! au-

thority, and filing the tendered authority to

Petitioners’ Motion for Rehearing (December

30, 2015)........... iesssdhasiaddmaiaiiangeinnaemmmaaianiees App. 10

iv

TABLE OF AUTHORITIES

Page

CASES

Allied-Bruce Terminix Companies, Inc. v. Dob-

I ee Ee pakctictceptumnanictausisessienvesstoonis 32

American Express Co. v. Italian Colors Restau-

PE Te es Be CED sccecentiissectinccvennavnngncenvsrecas 33

AT&T Mobility LLC v. Concepcion, 563 U.S. 333

ENE cattudpedanicrisuseheacatsanenenienniamndeiapmgeemniinse passim

Brandenburg Health Facilities, LP v. Mattingly,

No. 3:15-cv-00833 (W.D.Ky. 2016) ..............cccceceeeee ee 12

Buckeye Check Cashing, Inc. v. Cardegna, 546

Se HN ccihdsiavenspnstnsnnnnpuasichednetiuasltinanesnié Sitios 15, 16

Chastain v. Robinson-Humphrey Co., 957 F.2d

Ni ictcnricrcnsnicisivlecnsstiincneneenimaicacopestdiich 16

Clinton v. Hibbs’ Executrix, 259 S.W. 356 (Ky.

Se wintsdatincnnsitatnnbeneisdcameiiodneniaucibaaahdsiianecen 1, 21, 22

DIRECTV, Inc. v. Imburgia, 136 8.Ct. 463

SITET cics\tnicisess'o oacilacidiainone inaiupsadesieecanmabauaimindatan 30, 31, 33

Discover Bank v. Superior Court, 113 P.3d 1100

TRACI SAE ae Bea a a i aaa en 27, 28, 31

Doctor’s Associates v. Casarotto, 517 U.S. 681

ec icaniocctnsila ceasieasiectcsnnencapunaiunauamssasnercdscndsaanpansas 26, 29

Donna Ping v. Beverly Enterprises, Inc., 376

S.W.3d 581 (Ky. 2012)...........c0c00e-00.-cesevcesees 7, 8,11, 22

Estate of Smith v. Southland Suites of Ormond

Beach, LLC, 28 So.3d 103 (Fla. Dist. Ct. App.

iinientctes ccc ceanacandessaiasadaaniaccannmacaupicccisancibateseaiialis 13

Vv

TABLE OF AUTHORITIES ~— Continued

Page

First Options of Chicago, Inc. v. Kaplan, 514 U.S.

ana ORE Be ait Re AE tage NERY rs A 15

Gateway Coal Co. v. United Mine Workers of

America, 414 U.S. 368 (1974) ......22.....ccccccccscccssscceees 15

GGNSC Louisville Mt. Holly, LLC, et al. v.

Leslie Guess Mohamed-Vall, No. 3:16-cev-

ONIN SHIN SII oo hecscesisnotiecencennsinonsedicsutascseed 12

Granite Rock Co. v. International Broth. of Team-

SR, TI as I CI ceskcceccdketcrsnsscisbsnsciaccnis 14, 15

Harding v. Kentucky River Hardwood Co., 265

8 gs RELIES ECR LER Ay Oe 21

Hathaway v. Eckerle, 336 S.W.3d 83 (Ky. 2011)......... 18

Kindred Healthcare, Inc. v. Henson, 481 S.W.3d

Be GE Ms MI, MT cc ccniccktninanisenenctnsvscansinsederesss 21

Marmet Health Care Center, Inc. v. Brown, 132

i a aaean stone 29

Michigan v. Long, 463 U.S. 1032 (1983)............0.0000... 17

Mills Street Church of Christ v. Hogan, 785

S.W.2d 263 (Ky. Ct. App. 1990)...............c0sseececcesseees 21

Myers v. GGNSC Holdings, LLC, 2013 WL

1913557 (N.D. Miss. May 8, 2013)................0-..605. 13

Preferred Care of Delaware, Inc. v. Hopkins, No.

5:15-cv-00191 (W.D.Ky. 2016) ...............cc cece ceeeee 12

Preston v. Henning, 69 Ky. (6 Bush) 556 (Ky.

RR ai 8 EE TSB Se 1

vi

TABLE OF AUTHORITIES — Continued

Page

Sandvik AB v. Advent Int'l Corp., 220 F.3d 99 (3d

COA FID tinccoinisnstinsanonatscsccmadadameaieacannaeeeeee 17

Schnuerle v. Insight Communications Company,

LP, FIG B.W.Be GE CH BEES) ocivvccccvcccnsccvccsssccsssess 18

Southland Corp. v. Keating, 465 U.S. 1 (1984)........... 32

Spahr v. Secco, 330 F.3d 1266 (10th Cir. 2003).......... 17

Sphere Drake Ins. Ltd. v. All American Ins. Co.,

BO FN GET (Tihs Che, BE) ccc cseesnsncisniccsecncssinvesnis 17

Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559

CIA SIRI PEMD o ninssisdisncsndnsilebbauine soukiomnaccemantaanaeee 33, 34

Volt Information Sciences, Inc. v. Board of Trus-

tees of Leland Stanford Junior University, 489

Cis SPE GE stersdcsncciincs icasiacsenionseasieimiaaaeenal 15, 34

Wright v. Universal Maritime Service Corp., 525

CRA PO CREED waseuivnesindssinoainnssbiudicaiamanunagaa asain 21

STATUTES

DP RAMA OP OF sos snsinisncane nonannesenmenpuniceiannaaaenae tae 14, 15

DUA a 0 6 apcictsiveinnscenreeidclonniante eee 14

See LE Gae BONIS secenisnsneense sovindn sapeioaeicieienada asia a 12

Me Bee TOG, B SEE Bi isis. ccsiscnetsccersesmausnaeins jenceeiaels 9

Ee. COR COD OG BR i icotis scncocecersnmnnscacssaruneien ee 33

OTHER AUTHORITIES

RESTATEMENT (THIRD) OF AGENCY § 2.02............. 7,9, 22

1

INTRODUCTION

In the case below, the Kentucky Supreme Court

interpreted and construed the two powers of attorney

at issue as not encompassing the authority for the

agents to enter into pre-dispute arbitration agree-

ments on behalf of their respective principals. The

principals were nursing home residents of a single

nursing home, and the agents were family members of

the respective principal. The underlying disputes in

their cases involve personal injury and allegations of

nursing home abuse.

In one power of attorney, the Kentucky Supreme

Court held that the plain language of the instrument

did not encompass the authority. In the other power of

attorney, the court held that the principal’s intent to

grant this authority could not be reasonably inferred

from the language of the instrument.’

The lower court did not proscribe agent-made pre-

dispute arbitration agreements. Rather, the Kentucky

Supreme Court said this:

Without any doubt, one may expressly grant

to his attorney-in-fact the authority to bar-

gain away his rights to access the courts and

to trial by jury by entering into a pre-dispute

‘ The question of intent is structurally a factual question;

however, in Kentucky as with other jurisdictions, determination

of the intent encompassed in a power of attorney is as a matter of

law, and a matter for the courts. Preston v. Henning, 69 Ky. (6

Bush) 556 (Ky. 1869); see also Clinton v. Hibbs’ Executrix, 259 S.W.

356, 357-358 (Ky. 1924) (question of principal’s intent a matter for

the court and not a jury).

2

arbitration agreement. No one challenges

that.

Pet. App. 43.

The lower court determined that the agents lacked

sufficient authority to execute the arbitration con-

tracts on behalf of the principals. This case therefore

does not turn on any question of Contract law, except

insofar as every contract requires party authority for

its execution, and the Kentucky Supreme Court made

this point abundantly clear as well:

There is no dispute that if the arbitration

agreements were validly formed, they are en-

forceable as written under both the Kentucky

Uniform Arbitration Act (KUAA), KRS 417.050

et seq., and the Federal Arbitration Act (FAA),

9 U.S.C. §§ 1 et seq., at least with respect to

the decedents’ claims for personal injury and

statutory violations.

Pet. App. 24.

Any questions posed in this case subsist in Agency.

Under Kentucky law, all powers of attorney are inter-

preted in accordance with “the age-old principle that a

power of attorney must be strictly construed in con-

formity with the principal’s purpose.” Pet. App. 28.

Moreover, under Kentucky law, the authority in a

power of attorney derives from the intent of the princi-

pal. By default, in Kentucky a power of attorney con-

fers no authority, until a court is satisfied from the

principal’s communication that the authority has been

intentionally conferred. Whether a power of attorney

3

encompasses a particular transaction, a construing

Kentucky court of law must gauge whether the reason-

able reading of the grant of authority — as opposed to

the broadest plausible reading — signifies the intention

of the principal for such types of transaction to be con-

summated on the principal’s behalf.

The Kentucky Supreme Court engaged in a rou-

tine application of interpretative principles to an in-

strument of Kentucky Agency in this case. The petition

here seeks to involve this Court in power of attorney

interpretation and construction, a task normally con-

signed to State law and State courts, and an area of

law heretofore outside of the FAA’s ambit. There is no

split of opinion between the decision below and any

U.S. Court of Appeals. There is no split of opinion be-

tween the decision below and any State court of last

resort. As such, this Court should deny the petition for

writ of certiorari.

_ °

STATEMENT OF THE CASE

I. Factual Background

Both cases involved in this petition stem out of

allegations of nursing home abuse of a member of

the Respondent’s family (nursing home residents Joe

Wellner and Olive Clark), committed by Petitioners

and their nursing home facility, Winchester Centre

for Health and Rehabilitation (n/k/a Fountain Circle

Health and Rehabilitation Center). It was alleged, and

was taken as fact by the Kentucky Supreme Court

4

below, that at the time of Joe Wellner and Olive Clark’s

admissions to Fountain Circle Health and Reha-

bilitation Center, the nursing home residents’ respec-

tive attorneys-in-fact executed pre-dispute arbitration

agreements on behalf of the resident, ostensibly pur-

suant to written powers of attorney. Pet. App. 6-7.

Joe P. Wellner was a resident of Fountain Circle

Health and Rehabilitation Center from on or about Au-

gust 16, 2008 until on or about June 15, 2009, dying on

June 19, 2009. Respondent Beverly Wellner, on behalf

of the Estate of her husband and on behalf of his

wrongful death beneficiaries, alleged in a Complaint in

the Circwit Court for Clark County, Kentucky, that at

Petitioners’ facility Joe Wellner sustained numerous

injuries, including falls; dehydration and malnutrition;

pressure sores; infections; improper wound care; se-

vere pain; and death.

Olive Clark was a resident at this same Fountain

Circle Health and Rehabilitation Center from on or

about August 16, 2008 until on or about March 30,

2009, dying on April 4, 2009. While she was a resident

in the Defendants’ facility, it is alleged that Olive Clark

also sustained numerous injuries, including falls; de-

hydration; skin breakdown; infections; medication er-

rors; severe pain; and death. Respondent Janis Clark,

on behalf of the Estate of her mother and on behalf of

Olive’s wrongful death beneficiaries, filed a Complaint

against Petitioners in the Circuit Court for Clark

County, Kentucky.

5

The written powers of attorney in question were

short, one page affairs. The Wellner power of attorney

provided in pertinent part:

1. To receive, take receipt for, and hold in

possession, manage and control all property,

both real and personal, which I now or may

hereafter own, hold, possess or be or become

entitled to with full power to sell, mortgage or

pledge, assign, transfer, invest and reinvest

the same or any part thereof in forms of in-

vestment, including bonds, notes and other

obligations of the United States deemed pru-

dent by my said son in his discretion, with full

power to retain the same without liability for

loss or depreciation thereof.

2. Todemand, sue for, collect, recover and re-

ceive all debts, monies, interest and demands

whatsoever now due or that may hereafter be

or become due to me (including the right to in-

stitute legal proceedings therefor).

3. To make, execute, deliver and endorse

notes, drafts, checks and order for the pay-

ment of money or other property from or to me

or order in my name.

4. To make, execute and deliver deeds, re-

leases, conveyances and contracts of every na-

ture in relation to both real and personal

property, including stecks, bonds, and insur-

ance.

Pet. App. 21-23. The Clark power of attorney provided

in pertinent part:

6

I, OLIVE G. CLARK. . . hereby constitute and

appoint ... my true and lawful attorney in

fact, with full power for me and in my name,

place, and stead, in her sole discretion, to

transact, handle, dispose of all matters affect-

ing me and/or my estate in any possible way.

Without limiting or derogating from this gen-

eral power, I specifically authorize my attor-

ney in fact for me and in my name, place, and

stead, in her sole discretion:

* * +

To draw, make, and sign in my name any and

all checks, promissory notes, contracts, deeds

or agreements;

* * *

To institute or defend suits concerning my

property or rights;

* * *

Generally to do and perform for me and in my

name all that I might do if present.

Pet. App. 18-19.

When Joe Wellner and Olive Clark were admitted

to Fountain Circle Health and Rehabilitation Center,

their respective attorneys in fact executed on their be-

half, not only admission contracts, but also separate ar-

bitration agreements. Those arbitration agreements

themselves “provided that all claims and controversies

arising from the agreement or the resident’s stay at the

facility, including contract, tort, breach of statutory du-

ties and other causes of action would be resolved under

7

the agreement.” Pet. App. 57. These agreements were

optional, i.e., they were neither a condition of admis-

sion nor a condition for the provision of health care at

Petitioners’ facility. Pet. App. 17; 20.

ll. Proceedings Below

Upon motions filed in each case to compel arbitra-

tion, the Clark County Circuit Court initially ordered

enforcement. However, the Kentucky Supreme Court

subsequently entered a decision in the case of Donna

Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581 (Ky.

2012), cert. denied, 133 S.Ct. 1996 (U.S. April 22, 2013),

and Respondents moved for reconsideration.

In Ping, the Kentucky Supreme Court held that a

power of attorney, which does not contain an authori-

zation for dispute resolution, does not encompass the

power to execute an arbitration agreement. Ping, 376

S.W.3d at 593-594. Additionally, Ping specifically

quoted the RESTATEMENT (THIRD) OF AGENCY § 2.02

(comment h. (2006)), which teaches that there are

“(tlhree types of acts (that) should lead a reasonable

agent to believe that the principal does not intend to

authorize the agent to do the act.” Ping, 376 S.W.3d at

593. These acts by the agent “will impose on the prin-

cipal” unforeseen “consequences” such that the author-

ity to engage in those acts will not be inferred. Jd.; Pet.

App. 27-28; 122-124. One category of acts are those

that “create legal consequences” “significant and sepa-

rate” from the primary transactions, having “majer le-

gal implications for the principal, such as granting a

8

security interest in the principal’s property or execut-

ing an instrument confessing judgment.” Ping, 376

S.W.3d at 593; Pet. App. 28 n.10. “We would place in

this third category of acts with significant legal conse-

quences a collateral agreement to waive the principal’s

right to seek redress of grievances in a court of law.”

Ping, 376 S.W.3d at 593. “Nothing in Mrs. Duncan’s

power of attorney suggests her intent that Ms. Ping

make such waivers on her behalf.” Jd.

Upon the precedent of Ping, the Clark County Cir-

cuit Court vacated its earlier orders compelling arbi-

tration, substituting therefor orders denying the

motions to compel arbitration. Pet. App. 126-127; 138-

139. The case below is actually a consolidation by the

Kentucky Supreme Court of three separate cases from

the Kentucky Court of Appeals and the Clark and

Trigg County Circuit Courts. A third set of parties in

the lower courts, involving an unrelated nursing home

and unrelated corporate defendant-appellants, have

not joined in this petition.? See Pet. App. 29-38. In all

three instances, the Circuit Court reached its decision

premised upon absence of sufficient transactional au-

thority in the respective power of attorney.

Petitioners filed motions for interlocutory relief in

the Court of Appeals of Kentucky. Given the Kentucky

Supreme Court’s decision in Ping v. Beverly Enter-

prises, see supra, and the reliance of Ping upon the

* This anomaly in the proceeding in front of this Court is one

initial reason that this case does not represent the proper vehicle

to resolve any issues arising in this case.

9

RESTATEMENT OF AGENCY, the Kentucky Court of Ap-

peals denied relief. Pet. App. 121-125; 131-137.

Subsequent to the Kentucky Court of Appeals Or-

ders denying relief, Petitioners appealed to the Ken-

tucky Supreme Court. Not surprisingly, the Kentucky

Supreme Court interpreted the three powers of attor-

ney distinctively from one another, based upon their

respective verbiage. Contrary to the impression per-

haps left by Petitioners’ petition, the Supreme Court of

Kentucky did not interpret or construe any term in any

arbitration agreement. Rather, the Kentucky Supreme

Court’s opinion is directed to interpreting the meaning

and effect of words in powers of attorney.’

The Kentucky Supreme Court’s reading of the

Wellner power of attorney was straightforward. The

Wellner power of attorney included language granting

the attorney in fact some authority over Joe Wellner’s

legal affairs, and language granting the power to con-

tract regarding property. The Kentucky Supreme

Court concluded that this language did not plausibly

encompass the power to execute the pre-dispute arbi-

tration contract on behalf of the principal. The instru-

ment language that included “the right to institute

legal proceedings” to recover money was insufficient

* Additionally, the lower court held (as it had in the past)

that, pursuant to Kentucky's wrongful death statute, Ky. Rev.

Stat. § 411.130, decedents do not have the authority to bind their

wrongful death beneficiaries to arbitrate a wrongful death claim.

Pet. App. 8-12. Under Ky. Rev. Stat. § 411.130 the decedent has

neither a legal nor an equitable interest in the wrongful death

claim.

10

because, self-evidently, executing a pre-dispute arbi-

tration agreement is not itself the institution of a legal

proceeding. Pet. App. 35-36. And while a chose-in-

action is property under Kentucky law, the arbitration

agreement was at its most fundamental an exchange

involving the parties’ rights, rather than an exchange

with reference to their property. It would be objectively

implausible to characterize the execution of a pre-

dispute arbitration agreement as a property trans-

action. Pet. App. 36-38.

The Kentucky Supreme Court determined that

the Clark power of attorney did plausibly encompass

the power to execute the pre-dispute arbitration con-

tract on behalf of the principal, given the instrument’s

broad language. The instrument language grants the

attorney-in-fact power “to do and perform for me and

in my name all that I might do if present,” as well as

granting general authority to execute contracts. None-

theless, the Kentucky Supreme Court determined that

it was not objectively reasonable to interpret the Clark

instrument language as including the Agency power to

execute pre-dispute arbitration contracts on behalf of

the principal. Pet. App. 38-39. The Supreme Court took

the position that the meaning of a Kentucky power of

attorney is not determined by the broadest inferences

that can be drawn from its words; rather, a Kentucky

power of attorney's meaning derives from the readable

intentions of the principal. Pet. App. 39. A universal

but generally-worded grant of Agency was insufficient

to demonstrate that the principal had manifested the

11

intention for the attorney in fact to have the power in

question.

The Kentucky Supreme Court considered the Ken-

tucky Constitution’s characterization of the right to

trial to inform the principal’s reasonable expectations

of language in Kentucky instruments. Pet. App. 41-43.

The Kentucky citizen-principal, being master over his

or her own legal affairs, does not evince an intention

for an agent to have the ability to take that principal

out of the legal system vis-a-vis another party, in an

irrevocable and unbreakable perpetual agreement, un-

less the principal specifically grants the agent this

power. See Pet. App. 43.

There were two Dissenting Opinions. Justice

Abramson wrote one Dissent, joined by Chief Justice

Minton and Justice Noble. Justice Abramson had au-

thored the Ping Opinion, and she attempted to distin-

guish its circumstances from those of Wellner and

Clark. See Pet. App. 84.

Justice Noble additionally also wrote a Dissent,

joined by Chief Justice Minton. She wrote separately

to point out what she considered to be a general error

in the Kentucky Supreme Court’s power of attorney ju-

risprudence. She contended that the Kentucky Su-

preme Court was in effect erroneously converting

general powers of attorney into specific powers of at-

torney by limiting general powers of attorney to the il-

lustrative powers recited in the instrument. Pet. App.

109; 111-112.

12

REASONS FOR DENYING THE PETITION

I. There Is No Split Of Opinion Below.

Again, there is no split of opinion between the de-

cision below and any U.S. Court of Appeals or other

State supreme court regarding any issue addressed by

the lower court here. Only one U.S. District Court has

addressed this issue and the lower court’s decision.

Even as the U.S. District Court for the Western District

of Kentucky has chosen not to follow the State Su-

preme Court’s holding on the proper interpretation of

Kentucky powers of attorney, the U.S. Court of Appeals

for the Sixth Circuit has yet to address the issue.

Most of the U.S. District Court cases from the

Western District of Kentucky cited by Petitioners have

been appealed to the Sixth Circuit. See, e.g., Branden-

burg Health Facilities, LP v. Mattingly, No. 3:15-cv-

00833 (W.D. Ky. 2016), appeal docketed, No. 16-6168

(6th Cir. Jul. 19, 2016); Preferred Care of Delaware, Inc.

v. Hopkins, No. 5:15-cv-00191 (W.D. Ky. 2016), appeal

docketed, No. 16-6180 (6th Cir. Jul. 22, 2016); GGNSC

Louisville Mt. Holly, LLC, et al. v. Leslie Guess Mo-

hamed-Vall, No. 3:16-cv-00136 (W.D. Ky. 2016), appeal

docketed, No. 16-5606 (6th Cir. May. 5, 2016). The Sixth

Circuit will have appellate jurisdiction to hear these

interlocutory appeals, at the very least inasmuch as

the U.S. District Court orders also include injunctive

relief. Injunctive relief entitles those appellants to an

appeal as of right regarding the injunction, 28 U.S.C.

§ 1292, and the Sixth Circuit will necessarily have

pendent jurisdiction over the arbitration agreement

13

decisions upon which the injunctions are based. Given

that the Sixth Circuit has not yet addressed the as-

serted issues raised by Petitioners here, but is poised

to do so, a writ of certiorari would be premature at this

juncture.

In a footnote, Petitioners cite to two out-of-state

cases where courts have purportedly interpreted pow-

ers of attorney differently from the interpretation

given Kentucky powers of attorney by the lower court.

These cases do not signify a split however. In Myers uv.

GGNSC Holdings, LLC, 2013 WL 1913557 (N.D. Miss.

May 8, 2013), the U.S. District Court assumed, without

the benefit of opposition from the party who might be

expected to oppose arbitration, that a broadly-worded

general power of attorney permitted the attorney in

fact to execute an arbitration agreement on behalf of a

principal. Notably, the federal court decided this issue

only in the alternative, after concluding that a third

party beneficiary theory would apply to bind the prin-

cipal to a mandatory-for-services arbitration agree-

ment. Furthermore, the federal court decided the issue

by apparent application of Mississippi law on powers

of attorney — not pursuant to any requirement of the

FAA. Likewise, in Estate of Smith v. Southland Suites

of Ormond Beach, LLC, 28 So.3d 103 (Fla. Dist. Ct.

App. 2010) (per curiam), the Florida intermediate

court decided the scope of the power of attorney at is-

sue by application of Florida law, not pursuant to an

application of a requirement from the FAA. Neither

case represents a disagreement, much less a conflict,

with the lower court here.

14

Il. The Kentucky Supreme Court’s Decision

Does Not Implicate The FAA Or Trigger Fed-

eral Preemption.

Title 9 U.S.C. §2 preserves intact contract de-

fenses that pertain to the formation of an arbitration

agreement. See AT&T Mobility LLC v. Concepcion, 563

U.S. 333, 354-355 (2011) (Thomas, J., concurring)

(reading 9 U.S.C. § 4 to explain the subset of contract

defenses available under 9 U.S.C. § 2, and contrasting

formation defenses, from those defenses that pertain

to the revocation or enforceability of an agreement).

Where a party’s agent lacks authority to execute the

arbitration agreement, no contract is ever formed. The

FAA does not preempt the defense that no one with

proper authority executed the arbitration agreement.

Similarly, the FAA does not preempt a State judicial

determination regarding the scope of an agent’s au-

thority.

There is a difference between a defense to the for-

mation of a contract, the success at which triggers rev-

ocation of the contract, and no formation of a contract

at all. The FAA does not trigger any substantive right

pursuant to an agreement to arbitrate, independently

of the existence of such an agreement. Therefore, the

lower court’s decision here does not trigger FAA anal-

ysis. There was no contract for arbitration.

The federal policy flowing from the agreement to

arbitrate exists to place such agreements on the same

footing as other contracts, Granite Rock Co. v. Interna-

tional Broth. of Teamsters, 561 U.S. 287, 302 (2010),

15

and any limitations upon contract defenses found in

9 U.S.C. § 2 are one aspect of this federal policy favor-

ing arbitration. Granite Rock Co. , 561 U.S. at 302. How-

ever, whether an agreement to arbitrate ever existed

(i.e., whether there ever existed a meeting of the minds

of the parties for an exchange of value) is a condition

precedent before the rubrics of the FAA are triggered.

See id. (policy considerations favoring arbitration flow

from and are dependent upon an agreement to arbi-

trate); see also Gateway Coal Co. v. United Mine Work-

ers of America, 414 U.S. 368, 374 (1974) (obligations

arising under the FAA exist by virtue of a party’s con-

tract for arbitration, and not by operation of law). The

due regard for the federal policy favoring arbitration

and the threat of federal preemption only arises upon

presentation of a prima facie contract. See Volt Infor-

mation Sciences, Inc. v. Board of Trustees of Leland

Stanford Junior University, 489 U.S. 468, 475-476

(1989) (the due regard for the federal policy favoring

arbitration applies to contract interpretation, and to

questions of scope).

Ordinary State Contract law principles govern the

formation of agreements to arbitrate. See First Options

of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)

(whether an agreement on arbitration was reached is

a question answered by application of “ordinary state-

law principles that govern the formation of contracts”).

Whether a putative agreement to arbitrate exists is a

question distinguishable from any dispute regarding

the validity of formation, or enforceability of the con-

tract. See Buckeye Check Cashing, Inc. v. Cardegna, 546

16

U.S. 440, 444 n.1 (2006) (distinguishing the question of

whether an arbitration agreement was “ever con-

cluded,” from the question of whether the agreement

was void ab initio due to illegality).

As such, there is a two tier process in approach-

ing an alleged arbitration agreement. Questions of

whether a contract is fatally flawed, rendering it either

void or unenforceable, are second tier queries. They are

answered subject to application of the FAA.

However, the question of whether a prima facie

agreement ever existed at all, i.e., whether there oc-

curred a meeting of the minds for an exchange of value,

is a first tier question. It is answered prior to trigger-

ing the FAA. In Buckeye Check Cashing, this Court

stated that a challenge “‘upon such grounds as exist at

law or in equity for the revocation of any contract’” re-

fers to a challenge to the validity of the arbitration

agreement, or to the validity of a larger contract in

which an arbitration clause is ensconced. Buckeye

Check Cashing, Inc., 546 U.S. at 444. The Court went

on to make a colorable distinction between a dispute

regarding an arbitration agreement’s validity, and one

where there is a dispute as to whether an agreement

was “ever concluded.” See Buckeye Check Cashing, Inc.,

546 US. at 444 n.1.

Buckeye Check Cashing, Inc. recites a number

of examples of such threshold disputes: Did the al-

leged obligor sign the contract? Jd. (citing Chastain v.

Robinson-Humphrey Co., 957 F.2d 851 (11th Cir.

1992)). Did the signing obligor lack mental capacity to

17

assent? Id. (citing Spahr v. Secco, 330 F.3d 1266 (10th

Cir. 2003)). Did the signor lack authority to bind the

obligor? Id. (citing Sandvik AB v. Advent Intl Corp.,

220 F.3d 99 (3d Cir. 2000) and Sphere Drake Ins. Ltd.

v. All American Ins. Co., 256 F.3d 587 (7th Cir. 2001)).

Logically, before there is any calculus as to whether

there exists “such grounds as exist at law or in equity

for the revocation of any contract,” i.e., a challenge to

the contract’s validity and one subject to the FAA;

there must be a prima facie case that the contract was

in fact “ever concluded.” Here, the lower court’s deci-

sion operates to find that a contract was never con-

cluded, and the FAA is thus not triggered.

Consequently, the disputes before us are not

about the enforcement of validly formed ar-

bitration agreements covered by the KUAC

[sic] and the FAA. Rather, the disputes are

about the formation of the arbitration agree-

ments; and specifically, whether the agent

purporting to sign the arbitration agreement

on behalf of his principal had the authority to

do so.

Pet. App. 24 (emphasis in the original).

The decision below does not implicate the FAA. It

involves solely a question of the State law on the scope

of Agency authority, and this Court should therefore

deny the petition for certiorari. See Michigan v. Long,

463 U.S. 1032, 1037-1044 (1983) (where the judgment

of a State court rests on adequate and independent

State grounds, the U.S. Supreme Court lacks jurisdic-

tion to review the case, inasmuch as such a review

18

would only constitute an advisory opinion on federal

law).

Ill. The Kentucky Supreme Court Interpreted

The Powers Of Attorney In This Case Ac-

cording To Reasonable And Arbitration-

Neutral Canons of Agency Interpretation.

The essential nature of the decision below subsists

as an exercise in applying State Agency law and de-

termining an Agency relationship. The Kentucky

Supreme Court did not examine or interpret the arbi-

tration agreements, neither as a whole nor in their

terms, to arrive at that court’s decision. If the Ken-

tucky Supreme Court had found sufficient Agency,

there is no reason to believe that that court would not

have enforced the arbitration agreements. See Pet.

App. 24; see also Schnuerle v. Insight Communications

Company, L.P., 376 S.W.3d 561 (Ky. 2012) (enforcing

arbitration agreement in context of consumer internet

service agreement); Hathaway v. Eckerle, 336 S.W.3d

83 (Ky. 2011) (enforcing arbitration agreement in con-

text of automobile purchaser’s dispute with auto deal-

ership). Justice Noble’s Dissent strongly suggests that

at root the split in the lower court was not actually di-

rected toward the reach of the FAA at all, but to the

proper interpretation and construction of Kentucky

powers of attorney. See Pet. App. 105-107.

19

A. The Kentucky Supreme Court Inter-

preted The Wellner Power Of Attorney

Literally According To Its Language.

Notably, Petitioners’ Question Presented does not

properly pertain to the Wellner power of attorney or

the lower court’s interpretation thereof. That the Well-

ner instrument failed to include an express provision

regarding arbitration is not the basis of the lower

court’s holding regarding the Wellner power of attor-

ney. Rather, the lower court concluded that the black

letter of the language in the Wellner power of attorney

did not plausibly encompass the power to execute a

pre-dispute arbitration agreement.

While the power granted to the Wellner agent to

“institute legal proceedings” necessarily encompasses

some discretion in exercising this power, it in no way

implies that the agent had the authority to promise a

third party to never exercise one of the powers actually

granted, e.g., the power to sue in a court of law. Fun-

damentally, the arbitration agreement was the pre-

dispute waiver of one route of dispute resolution; it did

not represent the institution of anything.

Kindred acknowledges that this provision

of the Wellner POA granting the power to

“demand, sue for, collect, recover and receive

all ... demands whatsoever” and “to insti-

tute legal proceedings” did not expressly au-

thorize Beverly to sign the pre-dispute arbi-

tration agreement. Instead, Kindred argues

that such authorization must be implied be-

cause arbitration is “reasonably necessary or

20

incidental,” as Kindred puts it, to “the ability

to settle suits that have been brought pur-

suant to Joe’s intended grant of authority.”

Kindred argues, “it would be an absurd result

to recognize an agent’s power to bring suit...

and then deny that she has the power to settle

those very claims.” We do not disagree; but

“arbitrating” is not “settling.”

Pet. App. 35.

The Wellner power of attorney language regarding

property contracts was likewise facially insufficient. A

chose-in-action under Kentucky law is indeed personal

property, but it would be at best unvested property in

this circumstance. Moreover, a pre-dispute arbitration

agreement is a contract fundamentally pertaining to a

right. It is not the buying, selling, or leasing of any kind

of property. No lay principal would understand it as a

property transaction. Pet. App. 36-38. In sum, the in-

terpretation of the Wellner power of attorney fell under

its black letter, and Petitioners’ Question Presented

does not apply to it.

B. The Kentucky Supreme Court Inter-

preted The Clark Power Of Attorney

According To The Revealed Intent Of

The Principal, As Understood From The

Standpoint Of The Reasonable Expecta-

tions Flowing From Language Used In

Kentucky.

Here, the Kentucky Supreme Court held that the

Clark power of attorney did not include the power to

21

execute the pre-dispute arbitration contract. It came to

this conclusion by determining the intent manifested

by the principal, given what that principal should rea-

sonably see as flowing from the language used. Cf

Wright v. Universal Maritime Service Corp., 525 U.S.

70, 79-80 (1998) (arbitration requirement in collective

bargaining agreement must be particularly clear).

Under Kentucky law, powers of attorney are

strictly construed, Harding v. Kentucky River Hard-

wood Co., 265 S.W. 429 (Ky. 1924), giving effect only to

the purposes of the principal. See Clinton v. Hibbs’ Ex-

ecutrix, 259 S.W. 356, 357-358 (Ky. 1924) (agent’s au-

thority to conduct all business and execute all notes, at

the gent’s discretion, held not to encompass the power

to bind the principal as surety). Under Kentucky law

“lalctual authority arises from a direct, intentional

granting of specific authority from a principal to an

agent.” Kindred Healthcare, Inc. v. Henson, 481 S.W.3d

825, 830 (Ky. Ct. App. 2014) (citing Mills Street Church

of Christ v. Hogan, 785 S.W.2d 263, 267 (Ky. Ct. App.

1990)) (emphasis added). The principal’s discrimina-

tion against all powers of Agency is to be inferred by

Kentucky courts, until those courts are satisfied that

the inference has been overcome by the principal’s

communication. See Mill Street Church of Christ v. Ho-

gan, 785 SW2d at 267 (burden to establish Agency is

upon the proponent thereof). Given these arbitration-

neutral principles, in determining whether a power of

attorney authorizes a particular transaction, a con-

struing Kentucky court of law must gauge whether

the reasonable reading of the instrument signifies the

22

intent of the principal that such types of transaction

be consummated on the principal’s behalf.

The Kentucky Supreme Court’s decision in this

case, as in that of Ping v. Beverly Enterprise before it,

took into account the reasoning from the RESTATEMENT

(THIRD) OF AGENCY § 2.02 (comment h. (2006)). Notably,

while the Restatement speaks to the significance of un-

foreseen consequences stemming from literally read-

ing a broad power of attorney, it does not speak of these

consequences as necessarily negative. For example,

granting a security interest in a principal’s property,

e.g., to secure a loan benefiting the principal, may be a

common and desirable action taken by an attorney in

fact. Nonetheless, it is a significant transaction poten-

tially unforeseen by the principal, and must be set out

explicitly in the power of attorney, according to the

Common Law. Cf Clinton v. Hibbs’ Executrix, supra

(agent empowered to conduct all business and execute

all notes, at the agent’s discretion, does not encompass

the power to bind the principal as surety without lan-

guage to this effect). Such a requirement of expression

does not evince judicial hostility to securing transac-

tions. Similarly, requiring explicit mention of the

power to execute pre-dispute arbitration agreements

does not signify judicial hostility toward arbitration.

Nonetheless, Petitioners contend that the lower

court discriminated against arbitration, pointing to

the following language:

It would be strange, indeed, if we were to infer,

for example, that an attorney-in-fact with the

23

authority “to do and perform for me in my

name all that I might if present to make any

contracts or agreements that I might make if

present” could enter into an agreement to

waive the principal’s civil rights; or the prin-

cipal’s right to worship freely; or enter into an

agreement to terminate the principal’s paren-

tal rights; put her child up for adoption; con-

sent to abort a pregnancy; consent to an

arranged marriage; or bind the principal to

personal servitude. It would, of course, be ab-

surd to infer such audacious powers from a

non-specific, general, even universal, grant of

authority.

Pet. App. 42.

Petitioners claim, as does the Dissent below, that

this list constitutes a “parade of horribles” into which

the lower court lumped arbitration, inasmuch as each

of these exemplars indicates an extreme, and arguably

distasteful, transaction taken on behalf of a principal.

Petitioners and the Dissent misconstrue the purpose of

the listing however.

The lower court used this hyperbolic list to prove

a point, not to make a comparison. The point is that,

even though all of these transactions are literally cov-

ered by language giving the agent the right to step in

the shoes of the principal, no court is going to noncha-

lantly assume that the agent was granted the author-

ity to put the principal’s child up for adoption, without

specifically-tailored language in the power of attorney

to that effect.

24

That is, a principal certainly could put a child up

for adoption in person. This may be viewed as an un-

fortunate transaction, but the fact that such a transac-

tion is consummated by an agent does not make the

transaction itself any better or worse in character. It

does make the transaction fatally suspect however, if

the agent held only a general, albeit broad catch-all,

power of attorney. That the Kentucky Supreme Court

reads limitations into even the most general and uni-

versal of powers of attorney is a practice that preceded

that court’s line of arbitration cases. See Pet. App. 43-

44 (lower court citing Rice v. Floyd, 768 S.W.2d 57, 59

(Ky. 1989) for this proposition).* Despite a grant of com-

pete proxy power, the Kentucky Supreme Court is still

going to recognize a back-stop of what can be reasona-

bly inferred from a universal but non-specific grant of

authority.

Petitioners claim, as does the Dissent below, that

the lower court’s allusion to the Kentucky Constitution

signifies an elevation of the right to civil trial to a sac-

rosanct status.

[Tihe right of trial by jury, . . . incidentally is

the only thing that our Constitution com-

mands us to “hold sacred.” See Ky. Const. § 7

(“The ancient mode of trial by jury shall be

‘ In Rice v. Floyd, the Kentucky Supreme Court announced

that even the broadest power of attorney would not have all the

authority that a guardian might have. Rice v. Floyd, 768 S.W.2d

at 59 (“The scope of authority, duties and accountability of a

guardian is much broader than that of a traditional power of at-

torney, even one intended to survive disability.”).

25

held sacred, and the right thereof remain in-

violate, subject to such modifications as may

be authorized by this Constitution.”).

Pet. App. 41.

Petitioners and the Dissent claim that, by virtue

of this purported elevation in status, the Kentucky Su-

preme Court required specific Agency power to waive

a principal’s trial rights via the pre-dispute arbitration

agreement. Not so. The lower court made clear that it

was not purposing to craft an Agency rule to protect

trial rights per se; rather, the lower court held that it

deemed the Kentucky Constitution to inform princi-

pals as to what is reasonably foreseeable in Kentucky

instruments, thereby providing a key to determining

the meaning expressed in a power of attorney.

[I]t would be absurd to infer from a non-

specific, universal grant, the principal’s as-

sent to surrender of other fundamental, even

sacred, liberties.

Pet. App. 42 (emphasis altered).

That the Kentucky Supreme Court chose to deem

the Kentucky principal to be informed by the State

Constitution’s characterizations — as opposed to being

informed by ubiquitous arbitration clauses in the fine

print of consumer contracts which consumers do not

have a hand in drafting and often never notice — does

not constitute an incident of discrimination against

arbitration.® The Kentucky Supreme Court’s holding

5 Interestingly, the Wellner and Clark arbitration agreements

are facially governed by the Kentucky Uniform Arbitration Act.

26

explicitly affirms that pre-dispute nursing home arbi-

tration agreements are enforceable, and can be exe-

cuted by properly empowered agents. In sum, this

Court should not review this case because it involves

solely a reasonable interpretation of a Kentucky power

of attorney, and does not burden the execution of arbi-

tration agreements.

IV. The Decision Below Is Consistent With This

Court’s Precedent.

Petitioners rely upon AT&T Mobility LLC v. Con-

cepcion, 563 U.S. 333 (2011), to argue that State law

contract defenses are preempted by the FAA in the

event that the defenses “derive their meaning from the

fact that an agreement to arbitrate is at issue.” Jd. at

333 (citing Doctor’s Associates, Inc. v. Casarotto, see

infra). Concepcion stands for the proposition that even

arbitration-neutral State Contract law is preempted if

it has the effect of undermining the efficacy of entering

into arbitration agreements. In Concepcion, an arbitra-

tion clause in a consumer contract in California in-

cluded a class action waiver. Yet, California law

prohibited just such waivers in the context of consumer

Pet. App. 24. However, because of a jurisdictional anomaly in the

agreements potentially interfering with the KUAA’s application,

the FAA was held to govern the agreements. See Pet. App. 63. Pe-

titioners’ position must implicitly be then that a Kentucky power

of attorney could mean one thing in a FAA context (applying fed-

eral preemption), and another in an intra-State KUAA context (no

federal preemption). Such a result is self-evidently problematic. A

grant of Agency should be interpreted uniformly and objectively,

faithful to the mandate of the principal.

27

contracts of adhesion, and, as such, the U.S. Court of

Appeals for the Ninth Circuit found the arbitration

clause unconscionable and unenforceable under Cali-

fornia law (following the California Supreme Court’s

holding enunciated in Discover Bank v. Superior Court,

113 P.3d 1100 (2005)). The Ninth Circuit reasoned that

the California rule against class action waivers did not

single out arbitration contracts as such for disparate

treatment, as the rule applied equally to contracts bar-

ring class action in the context of in-court litigation.

This Court reversed, holding that even such a

facially neutral State law rule, given that it would

have a disproportionate impact on arbitration, is

preempted by the FAA. The FAA encourages the use of

arbitration for dispute resolution, and the benefit of

arbitration for the parties in consumer transactions

is the relative speed, cost, and efficiency of arbitration.

Class actions negate much of the advantages in speed,

cost, and efficiency. Thus, because the benefits of arbi-

tration would be absent without a class action waiver,

California’s refusal to enforce class action waivers had

the effect of removing an entire class of dispute from

the ambit of arbitration. That rule was preempted.

Concepcion is distinguishable from the circum-

stance here. First and most obviously, Concepcion is

not a case involving the formation of an arbitration

contract. There was no question that an agreement had

been reached in Concepcion, and it was an agreement

that included a class action waiver. As the Concurring

Opinion in Concepcion pointed out:

28

Reading §§ 2 and 4 [from the FAA] harmoni-

ously, the “grounds. . . for the revocation” pre-

served in § 2 would mean grounds related to

the making of the agreement. This would re-

quire enforcement of an agreement to arbi-

trate unless a party successfully asserts a

defense concerning the formation of the agree-

ment to arbitrate, such as fraud, duress, or

mutual mistake.

AT&T Mobility LLC v. Concepcion, 563 U.S. at 355

(Thomas, J., concurring). “Under this reading, the

question here would be whether California’s Discover

Bank rule relates to the making of an agreement. I

think it does not.” Jd. at 356. Here, the issue is un-

equivocally related to “the making of an agreement.”

Concepcion thus is distinguishable.

Additionally, Concepcion’s concern for a dispro-

portionate impact was directed at a State rule that

negated the advantages of arbitration, making arbitra-

tion effectively worthless as an alternative to litiga-

tion. This is not the effect of the lower court’s decision

here. No advantage of the arbitral method is affected.

Finally, the practical effect of the Discover Bank

rule in California was to render many agreements to

arbitrate unenforceable, even though both parties had

agreed to arbitration. In contrast, in the case below,

the Kentucky Supreme Court made clear that a suffi-

cient grant of authority to enter into such an agree-

ment would yield a valid contract. The holding of

Concepcion simply has no application to the lower

court’s decision.

29

Petitioners also cite to Doctor’s Associates v. Casa-

rotto, 517 U.S. 681 (1996), for support. In that case, this

Court was faced with a Montana statute mandating

that arbitration clauses in contracts had to be conspic-

uous and in a different font than the rest of the con-

tract. This Court held that such a highlighting of the

arbitration clause impermissibly ostracizes this clause

from all the other clauses in the contract, and is

preempted by the FAA.

Petitioners’ citation to Casarotto overlooks key dif-

ferences between the cases: The Montana statute

placed an encumbrance upon arbitration agreements

themselves. Here there is no requirement placed on the

agreements; the lower court’s decision only affects en-

tirely separate, independent instruments of Agency.

The Montana statute required that the subject matter

be highlighted, thereby ostracizing it as different than

other types of provisions in a contract. Here, the only

requirement is that the subject matter simply appear

in the instrument of Agency authority, which in no way

implies that an agreement to arbitrate is a suspect

transaction. Casarotto is thus distinguishable.

The case of Marmet Health Care Center, Inc. v.

Brown, 132 S.Ct. 1201 (2012), is even more clearly in-

applicable to this case. In Marmet this Court reversed

a West Virginia Supreme Court decision which held

that the FAA did not apply, at all, to personal injury or

wrongful death claims and that arbitration agree-

ments pertaining to those claims would not be en-

forced. The West Virginia Supreme Court came to this

conclusion based upon its own esoteric reading of the

30

statutory history of the FAA. The Kentucky Supreme

Court did not, nor did it have any reason to, analyze

the statutory history of the FAA, nor did the Kentucky

Supreme Court exclude any class of dispute from being

subject to pre-dispute arbitration agreements. Marmet

has no application.

Petitioners ask that the lower court’s decision be

vacated and remanded for further consideration in

light of DIRECTV, Inc. v. Imburgia, 136 S.Ct. 463

(2016). However, the Kentucky Supreme Court has al-

ready considered the impact of DIRECTV in this case.

Subsequent to the lower court’s decision, Petitioner be-

low filed a motion for rehearing. Petitioners filed a mo-

tion to supplement the authority for rehearing, to add

and cite to DIRECTV. (App., infra, 1a-6a) Petitioners

included argument as to DIRECTV’s applicability to

this case in their motion to supplement. The Kentucky

Supreme Court granted the motion to supplement

prior to ruling on the motion for rehearing (App., infra,

7a), and therefore has already taken DIRECTV into

account.

Additionally, DIRECTV is facially distinguishable

from the circumstances presented in the lower court’s

decision. In DIRECTV v. Imburgia, the defendant me-

dia corporation provided a form contract to its Califor

nia consumers, one that included an arbitration clause

excluding class action arbitration. The clause was con-

ditioned on the availability, i.e., the continued viability,

of the class action waiver. If local law refused to enforce

the class action waiver, then the arbitration clause it-

self would be rendered unenforceable, per the terms of

31

the contract. Post-AT&T v. Concepcion, the condition

for revoking the arbitration clause could only be trig-

gered if the lower court imported obsolete law (Califor-

nia’s Discover Bank rule) into the contract. This the

California appellate court did, holding that the arbi-

tration clause was unenforceable because the law at

the time of the contract’s inception prohibited the class

action waiver.

Given that the evinced intent of the contracting

DIRECTV parties was to enter into an arbitration

agreement, and given that their evinced intent was

also to exclude class action arbitration; normal con-

tract construction would have been to opt for the im-

portation of valid law to effect the contract. This Court

thus recognized that the California appellate court had

deliberately misapplied California Contract law, out of

apparent animus against arbitration. This Court re-

versed and remanded to the lower California court.

Contract law favors the enforcement of contracts

made. There is no such analogous preference in the in-

terpretation of Agency. Agency determinations are an

unbiased endeavor to determine the intent of the prin-

cipal, without regard to the promotion of a particular,

publicly-favored transaction. DIRECTV, along with

the other cases cited in the petition, have no applica-

tion to the lower court’s decision, and the lower court's

decision is fully consistent with this Court’s binding

precedents.

32

Vv. That This Case Comes Out Of The Kentucky

Supreme Court, Rather Than The U.S. Court

Of Appeals For The Sixth Circuit, Makes

This Case A Poor Vehicle For Review Of The

Requirements Of The FAA.

Petitioners claim that the FAA can preempt State

law regarding the interpretation of powers of attorney.

Even if this claim is true, this case constitutes a poor

vehicle to dispose of this issue.

The fact that this Court is not unanimous on

whether the FAA should apply in State court means

that a factor outside of Petitioners’ claim may be deci-

sive in the result. In Southland Corp. v. Keating, 465

U.S. 1 (1984), this Court concluded that section 2 of the

FAA applies equally in State court actions, and thus

preempts State courts from applying inconsistent

standards, over the dissent of Justice O’Connor, joined

by Justice Rehnquist. See id. at 21. Justice O’Connor

eventually accepted the stare decisis effect of Keating

in Allied-Bruce Terminix Companies, Inc. v. Dobson,

513 U.S. 265, 283-284 (1995) (O’Connor, J., concurring),

even while “continul[ing] to believe that Congress never

intended the Federal Arbitration Act to apply in state

courts, and that this Court has strayed far afield in

giving the Act so broad a compass.” /d. at 283. But in

Allied-Bruce, two more Justices took up the view “that

Southland clearly misconstrued the Federal Arbitra-

tion Act,” id. at 284 (Scalia, J., dissenting), and that the

FAA is “wholly inapplicable in [State] courts.” Jd. at

297 (Thomas, J., dissenting).

33

In DIRECTV, Inc. v. Imburgia, 136 S.Ct. 463

(2015), Justice Thomas made clear that he “remain|{s]

of the view that the Federal Arbitration Act ... does

not apply to proceedings in state courts” and “does not

require state courts to order arbitration.” Jd. at 471

(Thomas, J., dissenting). The continuing disagreement

on the Court over this question makes a case coming

from a State court a poor candidate for resolving any

issue involving the substance of the FAA. This is so

because such issues have often closely divided the

Court. See, e.g., American Express Co. v. Italian Colors

Restaurant, 133 S.Ct. 2304 (2013); Concepcion, 563

U.S. 333; Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp.,

559 U.S. 662 (2010). Concepcion was decided by a

five justice majority. The origin of this case in the

State court system makes it a very poor candidate for

review.

VI. Interpreting State Agency Law In Defer-

ence To A Federal Statutory Scheme Would

Have Unforeseen Negative Ramifications.

Determination of the intent of a principal in

Agency is necessarily a task committed to the judici-

ary.® At the end of the day, some court is going to have

the final say as to what Joe Wellner and Oliver Clark

® It is interesting to note however, the Louisiana Civil Code,

La. Civ. Code art. 2997, provides that an express power in a power

of attorney (called a “mandate” in Louisiana law) is required for

the agent to have the authority to refer a matter to arbitration on

behalf of the principal. Presumably Petitioners would take the po-

sition that this Louisiana statute would be preempted as well.

34

meant in their respective powers of attorney. That

court should be the court of last resort in Kentucky.

This Court should not wish to take on a role in inter-

preting Agency relationships in the United States. Is-

suing a writ of certiorari in this case would open up

this Court’s doors to parties seeking alternative inter-

pretations of powers of attorney whenever a federal

statutory scheme can be implicated and whenever

those parties are dissatisfied with a State court inter-

pretation.’ This petition threatens to federalize a huge

area of State law.

Finally, “the FAA imposes certain rules of funda-

mental importance, including the basic precept that

arbitration ‘is a matter of consent, not coercion.’”

Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S.

at 664 (quoting Volt v. Board of Trustees of Leland

Stanford Junior Univ., 489 U.S. at 479). This precept

is precisely what the lower court’s decision safe-

guards. Because the Kentucky Supreme Court could

not establish with certainty the principals’ intent to

grant their agents the power to execute these agree-

ments, that court narrowly construed the documents,

as that Court was required to do under Kentucky

law.

Normally a party presented a power of attorney to

establish an agent’s authority over another party’s

" Moreover, upon issuing a writ in this case, this Court may

henceforth be called upon to determine other questions related to

arbitration agreements, e.g., whether, in light of the public policy

favoring arbitration, a principal had sufficient capacity to enter

into the agreement.

35

business prefers more explicit language in the power

of attorney rather than less.... For instance, in

applying for a mortgage, banks typically require a very

specific and detailed power of attorney before the bank

will act on an application via attorney in fact. As such,

the preference of Petitioners and Amici for less explicit

language speaks to their eagerness for nursing home

residents to enter into these, practically unbreakable,

arbitration agreements at all costs ... perhaps inad-

vertently. Amici apparently justify this result as an

outcome expedient for the financial well being of the

nursing home industry. However, this would be a

wholly illegitimate means to that end. While the FAA

sets forth a national policy of favoring arbitration, pre-

sumably its aim is not to facilitate mistaken transac-

tions. Any other conclusion would have due process

implications, potentially converting the routine inter-

pretation of a power of attorney by a State court into a

Constitutional case.

36

CONCLUSION

The petition for a writ of certiorari to the Supreme

Court of Kentucky should be denied.

Respectfully submitted,

ROBERT E. SALYER

Counsel of Record

WILKES & McHuau, P.A.

429 North Broadway

P.O. Box 1747

Lexington, KY 40588

(859) 455-3356

rsalyer@wilkesmchugh.com

JAMES T,. GILBERT

Coy, GILBERT, SHEPHERD & WILSON

212 North Second Street

Richmond, KY 40475

(859) 623-3877

Counsel for Respondents

SEPTEMBER 2016

App. 1

COMMONWEALTH OF KENTUCKY

SUPREME COURT OF KENTUCKY

2013-SC-000431-I

KINDRED NURSING CENTERS LIMITED

PARTNERSHIP d/b/a WINCHESTER

CENTRE FOR HEALTH AND

REHABILITATION n/k/a FOUNTAIN

CIRCLE HEALTH AND REHABILITATION;

KINDRED NURSING CENTERS EAST, LLC;

KINDRED HOSPITALS LIMITED PARTNERSHIP;

KINDRED HEALTHCARE, INC.; KINDRED

HEALTHCARE OPERATING, INC.; KINDRED

REHAB SERVICES, INC. d/b/a PEOPLEFIRST

REHABILITATION MOVANTS/PETITIONERS

v. ON REVIEW FROM

COURT OF APPEALS

CASE NO: 2012-CA-002212-I

BEVERLY WELLNER, Individually and on

behalf of the Estate of JOE P. WELLNER, deceased,

and on behalf of the wrongful death beneficiaries of

JOE P.WELLNER RESPONDENT/RESPONDENT

MOVANTS’ MOTION FOR LEAVE

TO CITE SUPPLEMENTAL AUTHORITY

Movants/Petitioners, Kindred Nursing Centers Lim-

ited Partnership d/b/a Winchester Centre for Health

and Rehabilitation n/k/a Fountain Circle Health and

Rehabilitation; Kindred Nursing Centers East, LLC;

Kindred Hospitals Limited Partnership; Kindred

Healthcare, Inc.; and Kindred Healthcare Operating,

Inc. and Kindred Rehab Services, Inc. d/b/a Peoplefirst

App. 2

Rehabilitation, respectfully move for leave to cite sup-

plemental authority, specifically the recent United

States Supreme Court Opinion, rendered December

14, 2015, for consideration by this Court in the Petition

for Rehearing:

DIRECTV, Inc. v. Imburgia,__ U.S. _, __ 8. Ct.

____ (2015), 2015 WL 8546242 (Dec. 14, 2015) (copy at-

tached).

DIRECTV involved the California Court of Ap-

peal’s refusal to enforce an arbitration agreement pur-

suant to its interpretation of state law. The California

Court phrased the issue as, “Does the law of California

make the contract’s class-arbitration waiver unen-

forceable?” DIRECTV, 2015 WL 8546242 at *3. Califor-

nia law previously held that class-arbitration waivers

in consumer contracts were unenforceable as uncon-

scionable. Id. at *3. However, in 2011, the U.S. Supreme

Court held that same California rule “stands as an ob-

stacle to the accomplishment and execution of the full

purposes and objectives of Congress” embodied in the

Federal Arbitration Act. See AT&T Mobility LLC v.

Concepcion, 563 U.S. 333, 352 (2011). Regardless, the

California court in DIRECTV concluded Concepcion

did not change the result, that class-arbitration waiv-

ers are still unenforceable “under California law.” DI-

RECTV, 2015 WL 8546242 at *3. Thus, the Court of

Appeal refused to enforce the arbitration contract. Id.

The DIRECTV Court reversed, stating:

Lower court judges are certainly free to note

their disagreement with a decision of this

App. 3

Court. But the Supremacy Clause forbids

state courts to dissociate themselves from

federal law because of disagreement with its

content or a refusal to recognize the superior

authority of its source. [Citations omitted].

The Federal Arbitration Act is the law of the

United States, and Concepcion is an author-

itative interpretation of that Act. Conse-

quently, the judges of every State must follow

it. U.S. Const., Art. VI, cl. 2 (“[T]he Judges in

every State shall be bound” by “the Laws of

the United States”).

DIRECTV, 2015 WL 8546242 at *5.

The DIRECTV Court summarized its focus, “we

must decide not whether . . . [the state court’s] decision

is a correct statement of California law but whether

(assuming it is) that state law is consistent with

the Federal Arbitration Act.” Jd. at *5 (emphasis

added). Recognizing that state courts are “the ultimate

authority on that [state] law,” (id. at *5), the DIRECTV

Court nevertheless explained its duty to “decide

whether the decision of the California court places ar-

bitration contracts ‘on equal footing with all other con-

tracts.’” Id. at *6 (citing Buckeye Check Cashing, Inc. v.

Cardegna, 546 U.S. 440, 443 (2006)):

And in doing so, we must examine whether

the Court of Appeal’s decision in fact

rests upon “grounds as exist at law or in

equity for the revocation of any con-

tract.” 9 U.S.C. § 2. That is to say, we look not

to grounds that the California court might

App. 4

have offered but rather to those it did in fact

offer.

DIRECTV, 2015 WL 8546242 at *6 (emphasis added).

The California court’s interpretation of the arbi-

tration contract was “unique, restricted to that [arbi-

tration] field.” Jd. at *6. DIRECTV cautioned state

courts against such holdings that apply or interpret

state law specific to arbitration contracts:

Third, nothing in the Court of Appeal’s rea-

soning suggests that a California court would

reach the same interpretation of “law of your

state” in any context other than arbitra-

tion. .. . Even given our assumption that the

Court of Appeal’s conclusion is correct, its

conclusion appears to reflect the subject

matter at issue here (arbitration), rather

than a general principle that would ap-

ply to contracts using similar language but

involving state statutes invalidated by other

federal law.

Fourth, the language used by the Court of

Appeal focused only on arbitration.

See DIRECTV, 2015 WL 8546242 at *6-*7 (emphasis

added).

DIRECTV’s reasoning may be instructive in this

Petition for Rehearing. This Court evaluated the pow-

ers granted by the Clark, Whisman and Wellner POAs,

specifically evaluating whether those POAs granted

authority sufficient for an arbitration contract — which

App. 5

this Court differentiated from all other contracts’, as

containing an additional “waiver of a fundamental con-

stitutional right” to jury trial:

Our focus has been, and remains, upon the

scope of the powers expressed in the power-of-

attorney document, and whether those ex-

pressed powers are sufficient to supply the

principal’s assent needed to form an agree-

ment, which on its face, forfeits those

fundamental constitutional rights.

Id. at * 15 (emphasis added).

This Court focused on whether powers expressly

granted by a POA document provided sufficient au-

thority specifically ix the context of enforcing an arbi-

tration contract. Even after finding the Clark POA

granted sufficient authority to sign a contract, (see id.

at * 14), the Court narrowly focused on the underlying

contract’s arbitral nature: “we also consider the extent

to which the authority of an agent to waive his princi-

pal’s fundamental constitutional rights to access the

courts, to trial by jury, and to appeal to a higher court,

can be inferred from a less-than-explicit grant of au-

thority”). Id. at * 15. DIRECTV holds this reasoning is

preempted by the FAA. See DIRECTV, 2015 WL

8546242 at *8.

+ “Infusing the authority to enter into ‘any contract or agree-

ment’ with the authority to waive fundamental constitutional

rights eviscerates our long line of carefully crafted jurisprudence

dictating that the principal’s explicit grant of authority deline-

ated in the power-of-attorney document is the controlling factor

in assessing the scope of the powers of the attorney-in-fact.” 2015

WL 5634309 at *16.

App. 6

Because the California court’s holding did not

place arbitration contracts “on equal footing with all

other contracts,” . . . and did not “give due regard .. . to

the federal policy favoring arbitration,” (citations omit-

ted), the Supreme Court held that the FAA preempted

the Court of Appeal’s decision and ruled that the state

court must enforce the arbitration agreement. See

DIRECTV, 2015 WL 8546242 at *8 (citing Perry v.

Thomas, 482 U.S. 483, 493, n. 9 (1987) (noting that the

FAA preempts decisions that take their “meaning pre-

cisely from the fact that a contract to arbitrate is at

issue”).

The analysis employed by the U.S. Supreme Court

in DIRECTV applies to this case and may be instruc-

tive to this Court in ruling on the Petition for Rehear-

ing. Movants cite DIRECTV for this reason.

A copy of the opinion is attached for the Court’s

ready reference.

Respectfully submitted,

QUINTAIROS, PRIETO,

WOOD & BOYER, P.A.

/s/ Kristin M. Lomond

Donald L. Miller, H, Esq.

J. Peter Cassidy, III, Esq.

Kristin M. Lomond, Esq.

9300 Shelbyville Road, Suite 400

Louisville, Kentucky 40222

Telephone: (502) 423-6390

Facsimile: (502) 423-6391

App. 7

Counsel for Movants,

Kindred Nursing Centers

Limited Partnership d/b/a

Winchester Centre for Health

and Rehabilitation n/k/a

Fountain Circle Health and

Rehabilitation; Kindred

Nursing Centers East, LLC;

Kindred Hospitals Limited

Partnership; Kindred

Healthcare, Inc.; and Kindred

Healthcare Operating, Inc.

CERTIFICATE OF SERVICE

The undersigned hereby certifies that ten (10) copies

of this brief were served upon Susan Stokley Clary,

Clerk, Supreme Court of Kentucky, Rm. 209, State

Capitol, 700 Capitol Ave., Frankfort, KY 40601-3488,

and one (1) copy served on Sam Givens, Clerk, Kentucky

Court of Appeals, 360 Democrat Drive, Frankfort, KY

40601; Hon. Jean Chenault Logue, Circuit Judge,

Clark County Courthouse, P.O. Box 313, Winchester,

KY 40391; Robert Salyer and Richard E. Circeo, Esq.,

Wilkes & McHugh, P.A., 429 N. Broadway, P.O. Box

1747, Lexington, KY 40588-1747, and J.T. Gilbert, Esq.,

Coy, Gilbert & Gilbert, 212 N. Second St., Richmond,

KY 40475 on this 15th day of December, 2015.

/s/ Kristin M. Lomond

Counsel for Movants

(Copy Of Opinion Omitted]

App. 8

[SEAL]

SUSAN STOKLEY OFFICE OF THE CLERK Telephone:

CLARY SUPREME COURT (502) 564-4720

Clerk OF KENTUCKY FAX:

ROOM 209, (502) 564-5491

STATE CAPITOL

700 CAPITAL AVE.

FRANKFORT,

KENTUCKY

40601-3488

RECEIPT NOTICE

TO: DONALD LEE MILLER II

FROM: SUSAN STOKLEY CLARY, CLERK

DATE: 12/16/2015

FILE NUMBER: 2013-SC-000431-I

KINDRED NURSING CENTERS APPELLANTS

LIMITED PARTNERHSHIP, D/B/A

WINCHESTER CENTRE FOR

HEALTH AND REHABILITATION N/K/A

V.

BEVERLY WELLNER, INDIVIDUALLY APPELLEES

AND ON BEHALF OF THE ESTATE

OF JOE P. WELLNER, DECEASED,

AND ON BEHALF OF THE WRONGFUL

THE DOCUMENT LISTED BELOW HAS BEEN RE-

CEIVED AND FILED IN THIS OFFICE TODAY IN

THE ABOVE CASE:

App. 9

MOVANTS FILED MOTION FOR LEAVE TO CITE

SUPPEMENTAL AUTHORITY.

CC:

JAMES T. GILBERT KRISTIN M. LOMOND

JAMES PETER CASSIDY III RICHARD ERIC CIRCEO

ROBERT EARL SALYER

FILE COPY

App. 10

Supreme Court of Kentucky

2013-SC-000430-I

KINDRED NURSING MOVANTS

CENTERS LIMITED

PARTNERSHIP, ETC., ET AL.

COURT OF APPEALS NO. 2012-CA-002113

CLARK CIRCUIT COURT NO. 10-CI-00469

JANIS E. CLARK, ETC. RESPONDENT

AND

2013-SC-00043 1-1

KINDRED NURSING CENTERS MOVANTS

LIMITED PARTNERSHIP, ETC., ET AL.

COURT OF APPEALS NO. 2012-CA-002112

CLARK CIRCUIT COURT NO. 10-CI-00472

BEVERLY WELLNER, ETC. RESPONDENT

ORDER

Movant’s motion for leave to cite supplemental au-

thority, in above-styled actions, is granted and the

heretofore tendered supplemental! authority is filed.

ENTERED: December 30, 2015.

/s/_ — John Minton

Chief Justice