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

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No. 16-32

In the Supreme Court of the Anited States

KINDRED NURSING CENTERS LIMITED PARTNERSHIP,

DBA WINCHESTER CENTRE FOR HEALTH AND

REHABILITATION, NKA FOUNTAIN CIRCLE HEALTH AND

REHABILITATION, ET AL..,

Petitioners,

Vv.

JANIS E. CLARK AND BEVERLY WELLNER, ET AL.,

Respondents.

On Writ of Certiorari to the

Supreme Court of Kentucky

JOINT APPENDIX

ANDREW J. PINCUS ROBERT E. SALYER

Counsel of Record Counsel of Record

Mayer Brown LLP Wilkes & McHugh, PA.

1999 K Street, N.W. 429 North Broadway

Washington, DC 20006 P.O. Box 1747

(202) 263-3000 Lexington, KY 40588

apincus@mayerbrown.com (859) 455-3356

rsalyer@wilkesmchugh.com

Counsel for Petitioners Counsel for Respondents

PETITION FOR CERTIORARI FILED JULY 1, 2016

CERTIORARI GRANTED OCTOBER 28, 2016

TABLE OF CONTENTS

Relevant Docket Entries in the Kentucky

Court of Appeals (Clarh)..................cessssseeeeeeees

Relevant Docket Entries in the Kentucky

Court of Appeals (Wellner)..............c..cc0ce0ee00ee0

Relevant Docket Entries in the Kentucky

Supreme Court (Clar hh) .........cccccccssccecccccccesccecee

Relevant Docket Entries in the Kentucky

Supreme Court (Wellner) ...................cccccceeeeeees

Power of Attorney (Clas it) ..........0...ccccccccccsescesscce ses

Power of Attorney (Wellner)..................cccesecseeeeeees

Arbitration Agreement (Clark)................02.00.000000

Arbitration Agreement (Wellner)...................0...00.

Petition for Rehearing (Clark) (Appendices

Omitted) (October 12, 2015) .................ccseseeeees

Petition for Rehearing (Wellner) (Appendices

Omitted) (October 12, 2015) ..................cccccceee.

Response to Petition for Rehearing (Clark)

ey Cis SE occncdnsutimiidennietdineddiivercecmonsivens

Response to Petition for Rehearing (Wellner)

I a

Appellants’ Motion for Leave to Cite Supple-

mental Authority (Clark) (December 16,

PIE cinincdadansimitciniintdankubihieiaimibianininiatntess

The Kentucky Supreme Court’s Receipt of No-

tice of Movants’ Motion for Leave to Cite

Supplemental Authority (Clark)

UY TN Se dee cicnicettctsndessiunistinncinonends

Appellees’ Response to Motion to Supplement

Authorities in Support of Petitioners’ Pend-

ing Petition for Rehearing (Clark) ...................... 92

Appellees’ Response to Motion to Supplement

Authorities in Support of Petitioners’ Pend-

ing Petition for Rehearing (Wellner) ................. 101

The following items are not reproduced in the

joint appendix because they have already been re-

produced in the petition for a writ of certiorari, at the

pages indicated:

The Kentucky Supreme Court’s Order

Denying Rehearing (February 18, 2016).................. la

The Kentucky Supreme Court’s Opinion

A ee 3a

The Kentucky Court of Appeals’ Order in

I i lear icemannetie 119a

The Clark County Circuit Court’s November

ISAS LE Ie oe 126a

The Clark County Circuit Court’s January 9,

NN I sities cc incsndertpssniendiddctanbisncevenanness 128a

The Kentucky Court of Appeals’ Order in

I I I io cccdcrncckecdectntinncensenswnce 13la

The Clark County Circuit Court’s November

ek I Oe BD i oiccccicinccntssvccsenbineaddeseess 138a

The Clark County Circuit Court’s January 9,

ee I ci ciccinitdicenntcesactomesaniideddsineionintn 140a

The following items are not reproduced in the

joint appendix because they have already been re-

produced in the response to petition for a writ of cer-

tiorari, at the pages indicated:

Appellants’ Motion for Leave to Cite

Supplemental Authority in Wellner (December

TINIE dibs oi sa a csineddannetsundaltiegeiiiebadalinsneasuphesens sve la

The Kentucky Supreme Court’s Receipt Of

Notice of Movants’ Motion for Leave to Cite

Supplemental Authority in Wellner (December

ERT a Be: ARAN ASRS SO 8a

The Kentucky Supreme Court’s Order

Granting Movants’ Motion to Cite

Supplemental Authority (December 30, 2015)....... 10a

KENTUCKY COURT OF APPEALS

KINDRED NURSING CENTERS LIMITED

PARTNERSHIP,

Appellant,

JANIS E. CLARK, Executrix of the Estate of Olive G.

Clark, deceased,

Appellee.

No. 2012-CA-2113

RELEVANT DOCKET ENTRIES

NO. DATE DESCRIPTION

1 11/19/2012 Circuit Court Judgment

2 12/7/2012 Relief Pursuant to CR 65.07

12/7/2012 Motion for Interlocutory

Relief

4 12/18/2012 Response to Motion

11 6/25/2013 Order Denying Relief under

CR 65

13 9/24/2015 Supreme Court Opinion

15 2/23/2016 —_‘ Finality

KENTUCKY COURT OF APPEALS

KINDRED NURSING CENTERS LIMITED

PARTNERSHIP,

Appellant,

BEVERLY M. WELLNER (individually, and on be-

half of the Estate of Joe P. Wellner),

Appellee.

No. 2012-CA-2112

RELEVANT DOCKET ENTRIES

NO. DATE DESCRIPTION

1 11/19/2012 Circuit Court Judgment

12/7/2012 Relief Pursuant to CR

65.07

3 12/7/2012 Motion for Interlocutory

Relief

4 12/18/2012 Response to Motion

11 6/25/2013 Order Denying Relief

under CR 65

13 9/24/2015 Supreme Court Opinion

15 2/23/2016 = Finality

SUPREME COURT

OF KENTUCKY

KINDRED NURSING CENTERS LIMITED PART-

NERSHIP D/B/A WINCHESTER CENTRE FOR

HEALTH AND REHABILITATION N/K/A FOUN-

TAIN CIRCLE HEALTH AND REHABILITATION,

et al.,

Appellants,

JANIS E. CLARK, Executrix of the Estate of Olive G.

Clark, deceased, and on behalf of the wrongful death

beneficiaries of Olive G. Clark,

Appellee.

No. 2013-SC-430

RELEVANT DOCKET ENTRIES

NO. $DATE #£DESCRIPTION

1 6/25/2013. Judgment/Original Action

Date

2 7/2/2013 Relief Pursuant to CR

65.09

3 7/10/2013 Partial Record Filed

7/15/2013 Respondent’s Response

6 7/15/2013 Sent Out for Assignment

10 11/7/2013 Courts Own Motion:

Setting Oral Argument

NO,

DATE

11/19/2013

6/22/2015

6/26/2015

8/4/2015

9/24/2015

10/9/2015

10/13/2015

10/26/2015

11/10/2015

2/18/2016

11/4/2016

DESCRIPTION

Courts Own Motion:

Setting Oral Argument

Motion as to Record

Response to Motion as to

Record

Order — As to Record

Opinion — Denying

Order on Courts Own

Motion

Petition for Rehearing

Response to Petition for

Rehearing

Sent Out for Assignment

Order Denying Petition for

Rehearing

Finality — Publication

Letter

Finality

Note That Certiorari

Granted

THE SUPREME COURT

OF KENTUCKY

KINDRED NURSING CENTERS LIMITED PART-

NERSHIP D/B/A WINCHESTER CENTRE FOR

HEALTH AND REHABILITATION N/K/A FOUN-

TAIN CIRCLE HEALTH AND REHABILITATION,

et al.,

Appellants,

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,

Appellee.

No. 2013-SC-431

RELEVANT DOCKET ENTRIES

NO. DATE £DESCRIPTION

1 6/25/2013. Judgment/Original Action

Date

2 7/2/2013 Relief Pursuant to CR

65.09

3 7/10/2013 + Partial Record Filed

7/15/2013 Respondent’s Response

6 7/15/2013 Sent Out for Assignment

10 11/7/2013 Courts Own Motion:

Setting Oral Argument

DATE

11/19/2013

6/22/2015

6/26/2015

8/4/2015

9/24/2015

10/9/2015

10/13/2015

10/26/2015

11/10/2015

2/18/2016

11/4/2016

DESCRIPTION

Courts Own Motion:

Setting Oral Argument

Motion as to Record

Response to Motion as to

Record

Order — As to Record

Opinion — Denying

Order on Courts Own

Motion

Petition for Rehearing

Response to Petition for

Rehearing

Sent Out for Assignment

Order Denying Petition for

Rehearing

Finality — Publication

Letter

Finality

Note That Certiorari

Granted

GENERAL DURABLE POWER OF ATTORNEY

TO CONDUCT ALL BUSINESS AND

PERSONAL AFFAIRS OF PRINCIPAL

I, OLIVE G. CLARK, (SSAN # XXX-XX2445), of

536 Garden Springs Drive, Mt. Sterling, KY 40353,

hereby constitute and appoint my daughter, JANIS

ELAINE CLARK of 825 Sunset Drive, Lexington,

Fayette County, Kentucky 40502, 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, and dispose of all matters affecting

me and/or my estate in any possible way.

Without limiting or derogating from this general

power, I specifically authorize my attorney in fact for

me and in my name, place, and stead, in her sole dis-

cretion:

To prepare and complete administrative docu-

ments necessary to secure or preserve any and all

governmental benefits available to me;

To lease, sell, or convey any real or personal

property that I may now or ever own;

To mortgage my property as she sees fit;

To receive and receipt for any money which may

now or hereafter be due to me;

To retain and release all liens on real or personal

property;

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

checks, promissory notes, contracts, deeds or agree-

ments;

To invest or reinvest my money for me;

To institute or defend suits concerning my prop-

erty or rights;

To file all tax returns (including, without limita-

tion, state and federal income tax returns;

To enter all safe deposit boxes;

To transfer assets of mine to any trust created by

me for addition to trust principal; and

Generally to do and perform for me and in my

name all that I might do if present.

Also, without limiting or derogating from this

general power, I authorize my attorney in fact to

make all decisions regarding my health care and

medical treatment.

THIS POWER OF ATTORNEY IS A DURA-

BLE POWER OF ATTORNEY AND SHALL NOT

BE AFFECTED BY MY DISABILITY AS PRIN-

CIPAL OR OTHERWISE.

The rights, powers, and authority of my attorney

in fact shall commence upon execution of this in-

strument and shall remain in full force and effect un-

til this instrument is terminated by me in writing.

I hereby adopt and ratify all of the acts of my

said attorney in fact done pursuant to the power

hereby granted, as fully as if I were acting in my own

proper person.

IN TESTIMONY WHEREOFPF, WITNESS my signa-

ture this 31%t of August, 2006.

_/s/

OLIVE G.CLARK

(STATE OF KENTUCKY )

)

(COUNTY OF )

Before me, the undersigned authority,

came OLIVE G. CLARK, who is of sound mind and

eighteen (18) years of age or older, and acknowledged

that she voluntarily dated and signed this writing or

directed it to be signed and dated as above.

Done this 31° day of August, 2006.

/s/

(Signature of Notary Public)

Date commission expires:

10/9/2007

Prepared by:

_/s/

Glenn E. Acree

Acree Law Office

P O Box 25787

Lexington, KY 40583-5787

(859) 253-4664

POWER OF ATTORNEY

JOE PAUL WELLNER

KNOW ALL MEN BY THESE PRESENTS:

That I, JOE PAUL WELLNER, of Winchester,

Clark County, Kentucky hereby make, constitute

and appoint my wife, BEVERLY M. WELLNER, as

my true and lawful Attorney-in-Fact for me and in

my name, place and stead:

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

session, 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 investment, including bonds, notes and oth-

er obligations of the United States deemed prudent

by my said wife in her discretion, with full power to

retain the same without liability for loss or deprecia-

tion thereof.

2. To demand, sue for, collect, recover and re-

ceive all debts, monies, interest and demands what-

soever now due or that may hereafter be or become

due to me (including the right to institute legal pro-

ceedings therefor).

3. To make, execute, deliver and endorse notes,

drafts, checks and order for the payment of money or

other property from or to me or order in my name.

4. To, make, execute and deliver deeds, releases,

conveyances and contracts of every nature in relation

to both real and personal property, including stocks,

bonds, and insurance.

5. To have access to my safe deposit boxes, act as

my proxy with power of substitution to vote all stocks

or securities in my name in relation to any individual

or corporate action, to deposit any stocks or securi-

ties in connection with any plans of prospective or

reorganization committees, to accept and exercise all

rights, to subscribe for securities and to sell same.

6. To receive and receipt for all rents and income

to which I am or may become entitled, pay therefrom

all necessary expenses for the maintenance, upkeep,

care and protection of my property, deduct therefrom

her own reasonable compensation, and pay the net

income from time to time to me or in such manner as

I shall direct, or in the absence of such payment to

me or at my discretion, to invest the same for me in

her judgment in the manner above described.

7. To prepare, execute and file federal or state

income tax returns and other real and personal

property tax lists and to pay all such taxes.

8. In the event of my illness, incapacity or other

emergency to have full power to make all health care

decisions for me and in my stead; this power shall

encompass the power to make any decision which I

might myself make in authorizing or refusing treat-

ment, surgery or other health care. My Attorney-in-

Fact shall have the right to refuse the administration

of nutrition and hydration.

9. If I should ever need a guardian or curator or

similar person or entity to assist me if I am unable to

fully handle all of my affairs, and if this Power of At-

torney should not be sufficient therefor, I nominate

my wife, BEVERLY M. WELLNER, as my guardi-

an, curator, etc., and I specifically provide that sure-

ty not be required on her bond as such.

10. I hereby further grant unto my Attorney-in-

Fact full power in and concerning the above premises

and to do any and all acts as set forth above as fully

as I could do if I were personally present, and at my

decease to pay, transfer and deliver over to my per-

sonal representative, all principal and income then

in his possession and control, and I do ratify and con-

firm whatever my said Attorney-in-Fact shall lawful-

ly do under these presents, provided however, that

my attorney shall not bind me as surety, guarantor

for accommodation nor give away any of my estate,

whatsoever, nor shall my attorney be authorized to

accept service of process for or on my behalf.

This Power of Attorney shall become effective

immediately and shall not be affected by my disabil-

ity, this provision being pursuant to KRS 386.093.

A photo copy or other mechanical duplication of

this instrument shall have the same effect as an orig-

inal.

I revoke all prior General Powers of Attorney

that I may have executed and I retain the right to

revoke or amend this Durable Power of Attorney and

to execute a new Durable Power of Attorney, assum-

ing that I have the capacity to do so. Any amend-

ments to this Power of Attorney shall be made by me

in writing.

IN WITNESS WHEREOF, I have hereunto set

my hand and signature on this the 15 day of May,

2008.

WITNESS TO SIGNATURE BY MARK

His

[sf _ | JOE PAUL /s WELLNER

Mark

/s/

STATE OF KENTUCKY )

) s.s.

COUNTY OF CLARK )

I, a notary public in and for the State and County

aforesaid, do hereby certify that the foregoing Power

of Attorney was produced and executed before me by

JOE PAUL WELLNER who is personally known to

me, and was acknowledged by him in my presence on

this the 15** day of May, 2008 to be his voluntary act

and deed.

My commission expires March 31, 2012.

/3/ Ashley B. Holley

NOTARY PUBLIC

STATE OF KENTUCKY AT

LARGE

Prepared by:

/s/ Michael A. Rowady

MICHAEL A. ROWADY, ESQ.

Blair & Rowady, P.S.C.

212 South Maple Street

Winchester, Kentucky 40391

(859) 744-3251

ALTERNATIVE DISPUTE RESOLUTION

AGREEMENT BETWEEN

RESIDENT AND FACILITY (OPTIONAL)

I. ALTERNATIVE DISPUTE RESOLUTION

{ADR) AGREEMENT PROVISIONS

A. Any and all claims or controversies arising

out of or in any way relating to this ADR Agreement

(“Agreement”) or the Resident’s stay at the Facility

including disputes regarding interpretation of this

Agreement, whether arising out of State or Federal

law, whether existing or arising in the future,

whether for statutory, compensatory or punitive

damages and whether sounding in breach of con-

tract, tort or breach of statutory duties (including,

without limitation, any claim based on violation of

rights, negligence, medical malpractice, any other

departure from the accepted standards of health care

or safety or the Code of Federal Regulations or un-

paid nursing home charges), irrespective of the basis

for the duty or of the legal theories upon which the

claim is asserted, shall be subdued to alternative

dispute resolution as described in this Agreement.

Only disputes that would constitute a legally cog-

nizable cause of action in a court of law may be sub-

mitted to alternative dispute resolution. The parties

to this Agreement understand that the Dispute Reso-

lution Process contains provisions for both mediation

and binding arbitration. If the parties are unable to

reach settlement informally, or through mediation,

the dispute shall proceed to binding arbitration.

Binding arbitration means that the parties are waiv-

ing their right to a trial, including their right to a ju-

ry trial, their right to trial by a Judge and their right

to appeal the decision of the arkitrator(s). Except as

expressly set forth herein, the provisions of the Uni-

form Arbitration Act, KRS 417.045 et seq., shall gov-

ern the Arbitration. This Agreement includes claims

against the Facility, its employees and/or its medical

director in his capacity as medical director.

B. It is the intention of the parties to this

Agreement that it shall inure to the benefit of and

bind the parties, their successors and assigns, includ-

ing the agents, employees, servants, officers, direc-

tors and any parent or subsidiary of the Facility, and

all persons whose claim is derived through or on be-

half of the Resident, including any parent, spouse,

child, guardian, executor, administrator, legal repre-

sentative, or heir of the Resident. The term “Resi-

dent” includes the resident, his or her Guardian or

Attorney In Fact, his or her agent(s) or any person

whose claim is derived though or on behalf of the res-

ident.

C. The “Claimant” may be either the Facility or

the Resident, depending on who files the Request for

ADR (the “Request”). The other party or parties

against whom the Request is filed will be the “Re-

spondent(s)”.

D. Any mediation or arbitration conducted pur-

suant to this Agreement shall be administered by an

independent impartial entity that is regularly en-

gaged in providing mediation and arbitration. ser-

vices. The Request for ADR shall be made in writing

and may be submitted to the National Arbitration

Forum (“NAF”), 6465 Wayzata Blvd., Suite 500, P.O.

Box 50191, Minneapolis, MN 55405, (800) 474-2371,

facsimile (952) 345-1160 www.adrforum.com (the

“Administrator”), by regular mail, certified mail, or

overnight delivery. If the parties choose not to select

NAF or, if NAF is unwilling or unable to serve as the

Administrator, the parties shall select another inde-

pendent and impartial entity that is regularly en-

gaged in providing mediation and arbitration ser-

vices to serve as Administrator. Requests for ADR,

regardless of the entity chosen to be Administrator,

shall be conducted in accordance with the NAF Me-

diation Rules and NAF Code of Procedure (hereinaf-

ter, collectively “NAF Rules of Procedure”). A copy of

the Rules of the Dispute Resolution Process may be

obtained from the Facility’s Executive Director, or

from NAF at the address or website listed above.

E. All claims based in whole or in part on the

same incident(s), transaction(s), or related course of

care or services provided by the Facility to the Resi-

dent, shall be mediated or arbitrated in one proceed-

ing. A claim shall be waived and forever barred if it

arose prior to the Request for ADR and is not pre-

sented in the arbitration hearing.

F. The parties shall attempt to resolve any dis-

pute arising out of or relating to the Agreement or

the Resident’s stay at the Facility by mediation. Un-

less the parties agree otherwise, the mediator will be

selected as described in the NAF Mediation Rules.

The mediation shall convene not later than 120 days

after tne Request is received by the Administrator.

Any claim or controversy that remains unresolved af-

ter the conclusion or termination of the mediation

shall be settled by binding arbitration in accordance

with this Agreement. Unless the parties agree oth-

erwise, the Arbitrator(s) shall be selected as de-

scribed in the NAF Code of Procedure. The arbitra-

tion shall convene not later than sixty (60) days after

the conclusion or termination of mediation. Claims

where the demand is less than $75,000 shall not be

subject to mediation and shall proceed directly to ar-

bitration, unless one of the parties requests media-

tion, in which case all parties shall mediate in good

faith. The parties, at their own expense, may be rep-

resented by an attorney at the mediation or arbitra-

tion.

G. The parties agree to engage in limited discov-

ery of relevant information and documents before

and during mediation in accord with the Supple-

mental Disclosures for Kindred Mediations (“Sup-

plemental Disclosures”). Any disputes which the par-

ties cannot resolve regarding the scope and limits of

discovery shall be resolved by the mediator. A copy of

the Supplemental Disclosures may be obtained from

the Facility’s Executive Director or from NAF at the

address or website listed in Paragraph D of this

Agreement.

H. Cost of ADR. Facility shall pay the mediator’s

fees and other reasonable costs (excluding resident’s

attorney's fees) associated with the mediation. Facili-

ty shall pay the Arbitrator(s) fees and other reason-

able costs associated with the arbitration (excluding

resident’s attorney's fees) up to a maximum of five

(5) days of hearing. If the arbitration hearing exceeds

five (5) days, the additional fees and costs shall be

borne equally by the parties.

I. The losing party must pay the award to the

prevailing party within thirty (30) days of the award

date. If the award is not timely paid, the prevailing

party may bring legal action pursuant to KRS

417.150 to enforce the award as if ft were a judgment

entered by a court.

J. If for any reason there is a finding that the

Uniform Arbitration Act KRS 417.045 et seq., cannot

be applied to this Agreement, then the parties here-

by make clear their intent that their disputes/claims

be resolved pursuant to the Federal Arbitration Act

and that the parties do not want their dis-

putes/claims resolved in a judicial forum.

K. The Parties agree and stipulate that the orig-

inal of this Agreement, including the signature page,

may be scanned and stored in a computer database

or similar device, and that any printout or other out-

put readable by sight, the reproduction of which is

shown accurately to reproduce the original of this

document, may be used for any purpose just as if it

were the original, including proof of the content of

the original writing.

L. The Resident, or his or her legal guardian, his

or her agent or designated legal representative un-

derstand that other local nursing home’s agreements

may not contain an alternative dispute resolution

provision. The parties agree that the _ cost-

effectiveness, time-efficiency and public policy rea-

sons stated above are proper consideration for the

acceptance of the Agreement.

ll. ATTORNEY FEES AND COSTS

The parties to this Agreement expressly agree to

bear their own attorney fees and costs incurred in re-

lation to this Agreement, or in relation to any other

claim, including a claim to collect on unpaid nursing

home charges.

lil. SEVERABILITY PROVISION

If any provision of this Agreement is determined

by a court of competent jurisdiction to be invalid or

unenforceable, in whole or in part, the remaining

provisions, and partially invalid or unenforceable

provisions, to the extent valid and enforceable, shall

nevertheless be binding and valid and enforceable.

IV. RESIDENT'S _ UNDERSTANDING OF

AGREEMENT

The Resident understands that (A) he/she has

the right to seek legal counsel concerning this

Agreement, (B) the execution of this Agreement is

not a precondition to the furnishing of services to the

Resident by the Facility, and (C) this Arbitration

Agreement may be revoked by providing notice to the

Facility from the Resident within thirty (30) days of

signature. If not revoked within thirty (30) days, this

Agreement shall remain in effect for all care and ser-

vices rendered at the Facility, even if such care and

services are rendered following the Resident’s dis-

charge and readmission to the Facility. (D) Nothing

in this Agreement shall prevent Resident or any oth-

er person from reporting alleged violations of law to

the appropriate administrative, regulatory or law en-

forcement agency. The Resident, his or her agent or

designated legal representative, also had the oppor-

tunity to consult with a Facility representative re-

garding such explanations or clarification.

Olive Clark 0280 Winchester Centre

for Health &

Rehabilitati

Print Name of Resident Print Name and Number

of Facility

_/s/ Jan Clark POA —s—_/s/

Signature of Resident or Signature of Title of Fa-

Legal Representative cility’s Authorized Agent

Jan Clark, Daughter _/s/

(Financial Agent) _ Printed Name of Facili-

Legal Representative ty’s Authorized Agent

Printed Name and Ca-

pacity (i.e., guardian, du-

rable power of attorney,

spouse, son, daughter,

etc.)

Date: 8/15/08 Date: 8/15/08

If signed by a Legal Representative, the representa-

tive certifies that the Facility may reasonably rely

upon the validity and authority of the representa-

tive’s signature based upon actual, implied or appar-

ent authority to execute this Agreement as granted

by the resident.

ALTERNATIVE DISPUTE RESOLUTION

AGREEMENT BETWEEN

RESIDENT AND FACILITY (OPTIONAL)

I. ALTERNATIVE DISPUTE RESOLUTION

(ADR) AGREEMENT PROVISIONS

A. Any and all claims or controversies arising

out of or in any way relating to this ADR Agreement

(“Agreement”) or the Resident’s stay at the Facility

including disputes regarding interpretation of this

Agreement, whether arising out of State or Federal

law, whether existing or arising in the future,

whether for statutory, compensatory or punitive

damages and whether sounding in breach of con-

tract, tort or breach of statutory duties (including,

without limitation, any claim based on violation of

rights, negligence, medical malpractice, any other

departure from the accepted standards of health care

or safety or the Code of Federal Regulations or un-

paid nursing home charges), irrespective of the basis

for the duty or of the legal theories upon which the

claim is asserted, shall be subdued to alternative

dispute resolution as described in this Agreement.

Only disputes that would constitute a legally cog-

nizable cause of action in a court of law may be sub-

mitted to alternative dispute resolution. The parties

to this Agreement understand that the Dispute Reso-

lution Process contains provisions for both mediation

and binding arbitration. If the parties are unable to

reach settlement Informally, or through mediation,

the dispute shall proceed to binding arbitration.

Binding arbitration means that the parties are waiv-

ing their right to a trial, including their right to a ju-

ry trial, their right to trial by a Judge and their right

to appeal the decision of the arbitrator(s). Except as

expressly set forth herein, the provisions of the Uni-

form Arbitration Act, KRS 417.045 et seq., shall gov-

ern the Arbitration. This Agreement includes claims

against the Facility, its employees and/or its medical

director in his capacity as medical director.

B. It is the intention of the parties to this

Agreement that it shall inure to the benefit of and

bind the parties, their successors and assigns, includ-

ing the agents, employees, servants, officers, direc-

tors and any parent or subsidiary of the Facility, and

all persons whose claim is derived through or on be-

half of the Resident, including any parent, spouse,

child, guardian, executor, administrator, legal repre-

sentative, or heir of the Resident. The term “Resi-

dent” includes the resident, his or her Guardian or

Attorney in Fact, his or her agent(s) or any person

whose claim is derived through or on behalf of the

resident.

C. The “Claimant” may be either the Facility or

the Resident, depending on who files the Request for

ADR (the “Request”). The other party or parties

against whom the Request is filed will be the “Re-

spondent(s)”.

D. Any mediation or arbitration conducted pur-

suant to this Agreement shall be administered by an

independent impartial entity that is regularly en-

gaged in providing mediation and arbitration ser-

vices. The Request for ADR shall be made in writing

and may be submitted to the National Arbitration

Forum (“NAF”), 6465 Wayzata Blvd., Suite 500, ”.O.

Box 50191, Minneapolis, MN 55405, (800) 474-2371,

facsimile (952) 345-1160 www.adrforum.com (the

“Administrator’), by regular mail, certified mail, or

overnight delivery. If the parties choose not to select

NAF or, if NAF is unwilling or unable to serve as the

Administrator, the parties shall select another inde-

pendent and impartial entity that is regularly en-

gaged in providing mediation and arbitration ser-

vices to serve as Administrator. Requests for ADR,

regardless of the entity chosen to be Administrator,

shall be conducted in accordance with the NAF Me-

diation Rules and NAF Code of Procedure (hereinaf-

ter, collectively “NAF Rules of Procedure”). A copy of

the Rules of the Dispute Resolution Process may be

obtained from the Facility’s Executive Director, or

from NAF at the address or website listed above.

E. All claims based in whole or in part on the

same incident(s), transaction(s), or related course of

care or services provided by the Facility to the Resi-

dent, shall be mediated or arbitrated in one proceed-

ing. A claim shall be waived and forever barred if it

arose prior to the Request for ADR and is not pre-

sented in the arbitration hearing.

F. The parties shall attempt to resolve any dis-

pute arising out of or relating to the Agreement or

the Resident’s stay at the Facility by mediation. Un-

less the parties agree otherwise, the mediator will be

selected as described in the NAF Mediation Rules.

The mediation shall convene not later than 120 days

after the Request is received by the Administrator.

Any claim or controversy that remains unresolved af-

ter the conclusion or termination of the mediation

shall be settled by binding arbitration in accordance

with this Agreement. Unless the parties agree oth-

erwise, the Arbitrator(s) shall be selected as de-

scribed in the NAF Code of Procedure. The arbitra-

tion shall convene not later than sixty (60) days after

the conclusion or termination of mediation. Claims

where the demand is less than $75,000 shall not be

subject to mediation and shall proceed directly to ar-

bitration, unless one of the parties requests media-

tion, in which case all parties shall mediate in good

faith. The parties, at their own expense, may be rep-

resented by an attorney at the mediation or arbitra-

tion.

G. The parties agree to engage in limited discov-

ery of relevant information and documents before

and during mediation in accord with the Supple-

mental Disclosures for Kindred Mediations (“Sup-

plemental Disclosures”). Any disputes which the par-

ties cannot resolve regarding the scope and limits of

discovery shall be resolved by the mediator. A copy of

the Supplemental Disclosures may be obtained from

the Facility’s Executive Director or from NAF at the

address or website listed in Paragraph D of this

Agreement.

H. Cost of ADR. Facility shall pay the mediator’s

fees and other reasonable costs (excluding resident’s

attorney’s fees) associated with the mediation. Facili-

ty shall pay the Arbitrator(s)’ fees and other reason-

able costs associated with the arbitration (excluding

resident's attorney's fees) up to a maximum of five

(5) days of hearing. If the arbitration hearing exceeds

five (5) days, the additional fees and costs shall be

borne equally by the parties.

I. The losing party must pay the award to the

prevailing party within thirty (30) days of the award

date. If the award is not timely paid, the prevailing

party may bring legal action pursuant to KRS

417.150 to enforce the award as if it were a judgment

entered by a court.

J. If for any reason there is a finding that the

Uniform Arbitration Act KRS 417.045 et seq., cannot

be applied to this Agreement, then the parties here-

by make clear their intent that their disputes/claims

be resolved pursuant to the Federal Arbitration Act

and that the parties do not want their dis-

putes/claims resolved in a judicial forum.

K. The Parties agree and stipulate that the orig-

inal of this Agreement, including the signature page,

may be scanned and stored in a computer database

or similar device, and that any printout or other out-

put readable by sight, the reproduction of which is

shown accurately to reproduce the original of this

document, may be used for any purpose just as if it

were the original, including proof of the content of

the original writing.

L. The Resident, or his or her legal guardian, his

or her agent or designated legal representative un-

derstand that other local nursing home’s agreements

may not contain an alternative dispute resolution

provision. The parties agree that the _ cost-

effectiveness, time- efficiency and public policy rea-

sons stated above are proper consideration for the

acceptance of the Agreement.

= & Y FEE

The parties to this Agreement expressly agree to

bear their own attorney fees and costs incurred in re-

lation to this Agreement, or in relation to any other

claim, including a claim to collect on unpaid nursing

home charges.

Ill, SEVERABILITY PROVISION

If any provision of this Agreement is determined

by a court of competent jurisdiction to be invalid or

unenforceable, in whole or in part, the remaining

provisions, and partially invalid or unenforceable

provisions, to the extent valid and enforceable, shall

nevertheless be binding and valid and enforceable.

IV. RESIDENTS UNDERSTANDING OF

AGREEMENT

The Resident understands that (A) he/she has

the right to seek legal counsel concerning this

Agreement, (B) the execution of this Agreement is

not a precondition to the furnishing of services to the

Resident by the Facility, and (C) this Arbitration

Agreement may be revoked by providing notice to the

Facility from the Resident within thirty (30) days of

signature. If not revoked within thirty (30) days, this

Agreement shall remain in effect for all care and ser-

vices rendered at the Facility, even if such care and

services are rendered following the Resident’s dis-

charge and readmission to the Facility. (D) Nothing

in this Agreement shall prevent Resident or any oth-

er person from reporting alleged violations of law to

the appropriate administrative, regulatory or law en-

forcement agency. The Resident, his or her agent or

designated legal representative, also had the oppor-

tunity to consult with a Facility representative re-

garding such explanations or clarification.

Joe Wellner 0280 Winchester Centre

for Health &

lal Rehabilitati

Print Name of Resident Print Name and N umber

of Facility

/s/

Signature of Resident or Signature of Title of Fa-

Legal Representative cility’s Authorized Agent

Beverly Wellner, Spouse /s/

(Financial Agent) _ Printed Name of Facili-

Legal Representative ty’s Authorized Agent

Printed Name and Ca-

pacity (i.e., guardian, du-

rable power of attorney,

spouse, son, daughter,

etc.)

Date: 8/16/08 Date: 8/16/08

lf signed by a Legal Representative, the representa-

tive certifies that the Facility may reasonably rely

upon the validity and authority of the representa-

tive’s signature based upon actual, implied or ap-

parent authority to execute this Agreement as grant-

ed by the resident.

COMMONWEALTH OF KENTUCKY

SUPREME COURT OF KENTUCKY

2013-SC-000430-I

KINDRED NURSING CENTERS LIMITED PART-

NERSHIP d/b/a WINCHESTER CENTRE FOR

HEALTH AND REHABILITATION n/k/a FOUN-

TAIN CIRCLE HEALTH AND REHABILITATION;

KINDRED NURSING CENTERS EAST, LLC; KIN-

DRED HOSPITALS LIMITED PARTNERSHIP;

KINDRED HEALTHCARE, INC.; KINDRED

HEALTHCARE OPERATING, INC.; KINDRED

REHAB SERVICES, INC. d/b/a PEOPLEFIRST

REHABILITATION

MOVANTS/PETITIONERS

Vv.

JANIS E. CLARK, Executrix of the Estate

of OLIVE G. CLARK, deceased, and on behalf of the

wrongful death beneficiaries of OLIVE G. CLARK

RESPONDENT/RESPONDENT

ON REVIEW FROM

COURT OF APPEALS

CASE NO: 2012-CA-002213-I

PETITION FOR REHEARING

Submitted by:

Quintairos, Prito, Wood & Boyer, P.A.

/s/

Donald L. Miller, I

Peter Cassidy, III

Kristin M. Lomond

9300 Shelbyville Road, Suite 400

Louisville, KY 40222

COUNSEL FOR PETITIONERS

ERTIFICATE OF CE

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, Ken-

tucky Court of Appeals, 360 Democrat Drive, Frank-

fort, 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. Broad-

way, P.O. Box 1747, Lexington, KY 40588-1747, and

J.T. Gilbert, Esq., Coy, Gilbert & Gilbert, 212 N. Se-

cond St., Richmond, KY 4..; on this 12th day of Oc-

tober, 2015.

/s/

Counsel for Petitioners

PETITION FOR REHEARIN

The majority Opinion sidestepped the Federal

Arbitration Act, the Supremacy Clause and misin-

terpreted controlling decisions of the U.S. Supreme

Court. A power of attorney cannot constitutionally

permit formation of one type of contract but not an

arbitration contract. The Court should correct the

majority's error. Civil Rule 76.32 governs petitions

for rehearing and states in part, “[A] petition for re-

hearing shall be limited to a consideration of the is-

sues argued on the appeal and will be granted only

when it appears that the court has overlooked a ma-

terial fact in the record, or a controlling statute or

decision, or has misconceived the issues presented on

the appeal or the law applicable thereto.”!

The Supremacy Clause of the United States Con-

stitution provides that “the Laws of the United

States...shall be the supreme Law of the Land, and

the Judges in every State shall be bound thereby.”

U.S. CONST., Art. VI, c1.2. Therefore, a “state law

that stands as an obstacle to the accomplishment

and execution of the full purposes and objectives of

Congress’ is preempted by the Supremacy Clause.”

Hines v. Davidowitz, 312 U.S. 52, 67 (1941). As fed-

eral substantive law, the Federal Arbitration Act

(“FAA”) preempts all contrary or inconsistent state

law. See ATT Mobility, LLC v. Concepcion, 563 U.S.

333, 131 S.Ct. 1740 (2011). The majority here agreed

the FAA applied to govern the arbitration agree-

ments at issue:

A written provision in... a contract evidenc-

ing a transaction involving commerce to set-

tle by arbitration a controversy thereafter

arising out of such contract or transaction, ...

1 This closely decided (4-3) decision sets new Kentucky prece-

dent, and Petitioners agree with the dissent that it overtly con-

flicts with federal and state court decisions interpreting and

applying the FAA to Kentucky arbitration law. Since oral ar-

guments were held in this case on December 12, 2013, almost

two years ago now, even this Court's membership has changed.

Petitioners respect the Court's considered debate, and given

such a close decision with such huge implications for Kentucky

law, encourage the Court strongly to consider rehearing in this

case.

or an agreement in writing to submit to arbi-

tration an existing controversy arising out of

such a contract,...shall be valid, irrevocable,

and enforceable, save upon such grounds as

exist at law or in equity for the revocation of

any contract.

9 U.S.C. § 2 (emphasis added). See also, Extendicare

Homes, Inc. v. Whisman, No. 2013-SC-000426-I,

2015 WL 5634309 at *8 (Ky. Sept. 24, 2015). Never-

theless, it failed to apply the FAA. The Court’s Opin-

ion is attached as Appendix 1.

The majority Opinion’s newly-created rule of law

disfavoring enforcement of agent-executed arbitra-

tion agreements cannot stand in light of the FAA. To

require more to enforce an arbitration contract

signed by an agent than for any other contract

signed by an agent disproportionately impacts arbi-

tration and is preempted by the FAA.

Ms. Clark expressly granted to her attorney-in-

fact the power to make and sign “any and all con-

tracts or agreements,” without qualification. She also

granted her the authority, “in her sole discretion, to

transact, handle and dispose of all matters affecting

me and/or my estate in any possible way.” See Gen-

eral Durable Power of Attorney, attached as Appen-

dix 2 (emphasis added). The majority requires for

enforcement a redundancy that would require correc-

tion in a grammar class. By fiat, the majority viti-

ates Ms. Clark’s express grant of power and deems it

to be a “vague and general delegation of authority.”

See Whisman, 2015 WL 563430 at *16. The majority

also characterized an arbitration contract — a con-

tract to agree upon the forum for resolution of her

claims — as one waiving the “inviolate,” “sacred,” and

“God-given right” to a jury trial. Id.

The majority opinion radically misses the mark

because it derives from an incorrect assumption con-

cerning the United States’ form of government.

Whether characterized as a “Constitutional Democ-

racy’ where the majority rules, see Smith ov.

Allwright, 321 U.S. 649, 664 (U.S. 1944), or a “Con-

stitutional Republic” where the people are sovereign,

see Chisholm v. Georgia, 2 U.S. (2 Dall.) 419

(1793)(superseded by statute in holding), its founders

built the United States as a nation of laws. Indeed,

when the majority's members took their places on

this Court each took an oath to “support the Consti-

tution of the United States and the Constitution of

this Commonwealth.” Kentucky Constitution § 228

(emphasis added). The majority did not comply with

this oath. As Justice Thurgood Marshall stated:

Thus state law, whether of legislative or judi-

cial origin, is applicable if that law arose to

govern issues concerning the validity, revo-

cability, and enforceability of contracts gen-

erally. A state-law principle that takes its

meaning precisely from the fact that a con-

tract to arbitrate is at issue does not comport

with this requirement of §2 .... A court may

not, then, in assessing the rights of litigants

to enforce an arbitration agreement, construe

that agreement in a manner different from

that in which it otherwise construes

nonarbitration agreements under state law.

Nor may a court rely on the uniqueness of an

agreement to arbitrate as a basis for a state-

law holding that enforcement would be un-

conscionable, for this would enable the court

to effect what we hold today the state legisla-

ture cannot.

Perry v. Thomas, 482 U.S. 483, 492 fn 9 (1987) (citing

Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388

U.S. 395 (1967) and Southland Corp. v. Keating, 465

U.S. 1 (1984)(emphasis original)).

The majority's Opinion does not support the U.S.

or Kentucky Constitutions. A jury trial is absolutely

not a “God-given” right, but rather a right provided

under the terms and conditions of a constitution

written and adopted by its people. In fact, one can

easily waive one’s right to jury trial simply by not

asking for it. See CR 38.04. See also, Brown uv.

Hoblitzell, 307 S.W.2d 739 (Ky. 1956). Regardless,

the majority probably invalidated countless arbitra-

tion contracts signed by agents under powers of at-

torney for mobile phone service, cable television,

credit cards, loans, etc., without even considering

those ramifications, because it so detests the agree-

ments in the nursing home context.2 A result-

oriented law is not faithful to any constitution.

Highlighting the majority Opinion’s error is its

failure to recognize — or to distinguish — that courts

2 As the Court is well aware, arbitration clauses appear in a

myriad of contracts involving a host of goods and services. See,

e.g., Green Tree Fin. Corp. v. Baizle, 539 U.S. 444 (2003)(home

improvement loan); Citizens Bank v. Alafabco, Inc., 539 U.S. 52

(2003) (commercial debt restructuring contract); Circuit City

Stores, Inc. v. Adams, 532 U.S.105 (2001)(employment con-

tract); Wright v. Universal Mar. Serv. Corp., 525 U.S. 70 (1998)

(longshoreman collective bargaining contract); Mastrobuono v.

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

brokerage contract); Allied-Bruce Terminix v. Dobson, 513 U.S.

265 (1995)(termite control contract); Prima Paint Corp. v. Flood

& Conklin Mfg. Co., 388 U.S. 395 (1967)(paint manufacturing

and sales agreement). Mitsubishi Motors Corp. v. Soler Chrys-

ler-Plymouth, inc. 473 U.S. 614 (1985)(automobile manufactur-

ing and sales distribution contract).

and legislatures can indeed set higher standards for

parental rights, slavery and marriage to name a few

(see, e.g., KRS 625.090; KY Const. § 25; and KRS

402.050) because no federal law prohibits those ele-

vated standards. The majority — ignores that

tion pre eo as amend to others. The majority's

dislike for the federal mandate, “redefining” or “ele-

vating” the standard for enforcing agent-executed

arbitration contracts is simply preempted.

I. THe MAJORITY OVERLOOKED AND IGNORED THE FAA

AS THE CONTROLLING STATUTE AND MISCONSTRUED

CONTROLLING DECISIONS INTERPRETING IT

The Federal Arbitration Act (“FAA”) expressly

protects both pre-and post-dispute arbitration con-

tracts, including those used in long-term care facili-

ties like the one at issue here. See 9 U.S.C. § 2. See

also, Marmet Health Care Center, Inc. v. Brown, __

U.S. __, 182 S. Ct. 1201 (2012) (applying the FAA in

nursing home context).

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

333, 131 S. Ct. 1740 (2011), the U.S. Supreme Court

held that the FAA means exactly what it says:

agreements to arbitrate “shall be valid, irrevocable,

and enforceable save upon such grounds as exist at

law or in equity for the revocation of any contract.”

Id., 131 S.Ct. at 1745 (quoting 9 U.S.C. § 2). Arbitra-

tion is a matter of contract and courts must treat ar-

bitration contracts “on an equal footing with other

contracts” and enforce them to their terms. Id. at

1745. The FAA not only preempts state laws that

expressly disfavor arbitration agreements but it also

preempts state-law rules that purport to apply to all

contracts equally but actually “have a dispropor-

tionate impact on arbitration agreements.” See Jd.

at 1747 (emphasis added). The majority's Opinion

does both, and the FAA preempts its rule of law.

Regardless of the majority’s intent, its Opinion

discriminates against arbitration contracts, isolating

them as forgoing a “God-given” right. That violates

the FAA. The FAA preempts all generally applicable

contract defenses — as this Court crafted its rule here

— that “derive their meaning from the fact that an

agreement to arbitrate is at issue.” Id. at 1746:

When state law prohibits outright the arbi-

tration of a particular type of claim, the

analysis is straightforward: The conflicting

rule is displaced by the FAA. Preston uv.

Ferrer, 552 U.S. 346, 353, 128 S.Ct. 978, 169

L.Ed.2d 917 (2008). But the inquiry be-

comes more complex when a doctrine

normally thought to be generally appli-

cable, such as duress or, as relevant here,

unconscionability, is alleged to have been

applied in a fashion that disfavors arbi-

tration. In Perry v. Thomas, 482 U.S. 483,

107 S.Ct. 2520, 96 L.Ed.2d 426 (1987), for

example, we noted that the FAA’s preemptive

effect might extend even to grounds tradi-

tionally thought to exist “at law or in equity

for the revocation of any contract.” Id., at

492, n. 9, 107 S.Ct. 2520 (emphasis deleted).

Concepcion, 131 S.Ct. at 1747 (bold emphasis added).

The majority Opinion found Ms. Clark’s POA

granted to her agent the authority to enter into the

arbitration agreement. That should have ended the

discussion. But the majority then took its analysis

one step further and held that the arbitration con-

tract itself required a higher standard for enforce-

ment than other contracts:

One might entertain considerable doubt

about whether Olive consciously intended to

forfeit her right of access to the courts and to

a jury trial, but the language of her POA en-

compasses that result regardless of Olive’s

actual intent. Given this extremely broad,

universal delegation of authority, it would

be impossible to say that entering into a

pre-dispute arbitration agreement was

not covered.

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

agreement, which on its face, forfeits

those fundamental constitutional rights.

Whisman, 2015 WL 5634309 at *14-*15 (emphasis

added). The majority's Opinion simply violates the

FAA and the Supremacy Clause.

The FAA does not prohibit a person from denying

‘her attorney-in-fact the power to sign arbitration

contracts. The principal retains the prerogative to

limit an agent’s authority under the POA as she sees

fit. See, eg., Ping v. Beverly Enterprises, Inc., 376

S.W. 3d 581, 591-92 (Ky. 2012)(“Although the statute

allows durable powers of attorney to be created, it

does not address what authority may be granted

therein. The scope of that authority is thus left to

the principal to declare”). However, the FAA abso-

lutely prohibits a court or state legislature from do-

ing what Ms. Clark herself did not do: making rules

to inhibit enforcement of arbitration contracts signed

by her agent, as distinguished from all other con-

tracts signed by her agent. Stated otherwise, the

FAA prohibits courts from interpreting a POA

providing the “right to contract,” or a similar proxy,

to authorize the formation of one type of contract but

not a contract for arbitration. See, eg., GGNSC

Vanceburg, LLC v. Taulbee, 2013 WL 4041174

(E.D.Ky., Aug. 7, 2013) (copy attached as Appendix

3).

Here, the majority refused to enforce a valid ar-

bitration contract by inferring that Ms. Clark might

have limited her attorney-in-fact’s express power “to

sign any and all contracts” because this particular

contract contained an arbitration clause, which by

definition waives her right to jury trial. Whisman,

2015 WL 5634309 at *14-*15. Kentucky’s legislature

could not pass a law requiring more specificity in the

POA’s grant of authority to enforce an arbitration

contract than is required for all other contracts and

this Court cannot craft one. That law flagrantly of-

fends the FAA. Yet, the majority held agent-

executed arbitration contracts in Kentucky shall re-

quire more for enforcement than all other agent-

executed contracts. Jd. at *17. Compare, Taulbee,

supra.®

3“An arbitration agreement is a contract. The power of attorney

must be read in accordance with its express terms and in light

of the strong federal policy favoring arbitration.... Taulbee’s ar-

guments that arbitration agreements are different and require

more than the general power to contract for authorization to

execute one are of no help to her. That line of reasoning would

Il. THE MAJORITY OPINION MISAPPLIED THE APPLICABLE

LAW

Congress enacted the FAA “in response to wide-

spread judicial hostility to arbitration agreements”

that had “manifested itself in a ‘great variety’ of ‘de-

vices and formulas’ declaring arbitration against

public policy.” AT&T Mobility LLC v. Concepcion,

131 S.Ct. 1740, 1745, 1747 (2011)(quoting Robert

Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d

402, 406 (2d Cir. 1959)). Here, the majority attempt-

ed to avoid U.S. Supreme Court precedent by charac-

terizing its rule as one of general agency law and

denying any specific arbitration discrimination:

We reject the notion that this holding con-

flicts with the decisions of the United States

Supreme Court in Marmet Health Care Cen-

ter, Inc. v. Brown, - U.S. - , 182 S.Ct. 1201,

182 L.Ed.2d 42 (2012), and AT & T Mobility

LLC v. Concepcion, 563 U.S. 333, 131 S.Ct.

1740, 179 L.Ed.2d 742 (2011).... To the con-

trary, our holding does not prohibit arbitra-

tion of any “particular type of claim.” .... A

straight-forward application of our rule that

an attorney-in-fact cannot act beyond the

powers granted in the power-of-attorney doc-

ument stands in stark contrast to the blanket

prohibitions against arbitration agreements

condemned in Marmet and Concepcion.

Whatever hostility our rule evinces is not

against the federal policy favoring arbitra-

tion; indeed, Kentucky shares that same poli-

cy, as we have proclaimed on several occa-

simply result in preemption of such a requirement under the

FAA.” 2013 WL 4041174 at *9 (emphasis added).

sions. Our rule merely reflects a long-

standing and well-established policy disfa-

voring the unknowing and involuntary relin-

quishment of fundamental constitutional

rights regardless of the context in which they

arise.

Whisman, 2015 WL 5634309 at *17-*18 (footnote

omitted).

The majority apparently misreads or miscon-

ceives Concepcion’s and Marmet Health’s holdings.

While Concepcion held that prohibiting a particular

claim violated the FAA, it also held that “a doctrine

normally thought to be generally applicable” can vio-

late the FAA if applied in a fashion to disfavor arbi-

tration. See Concepcion, 131 S. Ct. at 1747. This

Court previously rejected a similar attempted dis-

tinction in a commercial context, in Schnuerle v. In-

sight Commce’ns Co., L.P., 376 S.W.3d 561, 577 (Ky.

2012):

[Ojur state Constitution and statutes favor

the enforceability of arbitration agreements.

Moreover, the purpose of the FAA “was to re-

verse the longstanding judicial hostility to

arbitration agreements that had existed at

English common law and had been adopted

by American courts, and to place arbitration

agreements upon the same footing as other

contracts.” Gilmer uv. Interstate/Johnson

Lane Corp., 500 U.S. 20, 24, [citation omit-

ted] (1991). The FAA’s provisions “manifest

a liberal federal policy favoring arbitration

agreements. “ Jd. at 25, 111 S.Ct. 1647

(quoting Moses H. Cone Mem’ Hosp. v. Mer-

cury Constr. Corp., 460 U.S. 1, 24, [citation

omitted] (1983)). The Supreme Court has

“rej nerali ttacks on i-

tr h ‘ ion of arbi-

tration as a method of weakening the

protections afforded in the substantive

law _to would-be complainants.” Green

Tree Fin. Corp. v. Randolph, 531 U.S. 79, 89-

90, [citation omitted] (2000) (quoting Rodri-

guez de Quijas v. Shearson/AM. Express,

Inc., 490 U.S. 477, 481 [citation omitted]

(1989)); Jenkins, 400 F.3d at 874. In light of

such long-standing public policy, we see no

basis to disturb this contractual term. (Em-

phasis added.)

The majority ignored its own precedent because

of the context of this arbitration agreement. Com-

mercial contract cases often invoke the right to jury

trial just like a medical negligence case.

Holding the express power to “make and sign any

and all contracts,” Ms. Clark’s attorney-in-fact could

have (most likely, did) enter into enforceable con-

tracts for a variety of reasons, such as for banking

rights, property purchases, or even to admit her

mother to a hospital. Nevertheless, the majority

held that the contract she signed to arbitrate her

mother’s claims — a choice of forum contract with ab-

solutely no substantive implications to her right to

seek redress for claims — cannot be enforced because

the POA document did not include redundant lan-

guage to sign an “arbitration contract,” or even,

“to waive her constitutional right to jury trial.”4

‘ The dissent explained the error in this comparison logic: “The

difference between arbitration and the majority's parade of

horribles is obvious. Unlike the majority's examples, all of

which suppose the waiver or compromise of a basic, personal

“The ‘principal purpose’ of the FAA is to ensure

that private arbitration agreements are enforced ac-

cording to their terms.” Id. at 1748 (citing Volt In-

formation Sciences, Inc. v. Board of Trustees of Le-

land Stanford Junior Univ., 489 U.S. 468, 478

(1989)). While the §2 savings clause preserves appli-

cable common law contract defenses, the Concepcion

Court warned that the grounds available under §2

must not be construed to include a state’s policy

preference for procedures incompatible with arbitra-

tion. “[N]lothing in it suggests an intent to preserve

state-law rules that stand as an obstacle to the ac-

complishment of the FAA’s objectives.” Concepcion,

1318S. Ct. 1740, 1748 (citations omitted).

Federal law requires the Court to “stretch” to

find ways to enforce arbitration contracts. The ma-

jority reclassified “arbitration contracts” not as mere

contracts but as a principal's “waiver of his constitu-

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

See Whisman, 2015 WL 5634309, at *17. The result

mandates discriminatory enforcement for agent-

entered arbitration contracts as compared with all

other agent-entered contracts: an agent’s power “to

substantive right (rights that an ordinary attorney-in-fact is

rarely, if ever, asked to address on the principal’s behalf), arbi-

tration agreements, which are commonplace these days, involve

no substantive waiver. The principal’s substantive rights re-

main intact, only the forum for addressing those rights is af-

fected. The majority’s apparent presumption that the arbitra-

tion agreement has substantive implications adverse to the

principal (and thus belongs on the list of hard-to-waive sub-

stantive rights) is the very presumption Congress sought to

counteract with the FAA. Southland Corp. v. Keating, 465 U.S.

at 14, 104 S. Ct. 852 (discussing Congress’s intent to counteract

“common law hostility toward arbitration”).” Extendicare

Homes, Inc. v. Whisman, No. 2013-SC-000426-I, 2015 WL

5634309, at *35 (Ky. Sept. 24, 2015).

sign contracts” is now insufficient to enter into arbi-

tration contracts, rendering arbitration contracts -

alone — unenforceable absent additional language not

required for enforcement of all other agent-entered

contracts. That result is preempted by the FAA. 5

5 The FAA also preempts Kentucky’s interpretation of an arbi-

tration agreement's enforceability as against wrongful death

claim beneficiaries. In Marmet Health Care Center, 565 U.S.

_., 132 S.Ct. 1201, 1202-03 (2012), the U.S. Supreme Court

-held that the FAA preempted categorical exemptions of cases

from arbitration. No legitimate distinction exists between West

Virginia’s “policy-based” law prohibiting enforcement of

predispute agreements to arbitrate wrongful death claims and

Kentucky's judicially made “contract-based” law prohibiting en-

forcement of predispute agreements to arbitrate wrongful death

claims. Several cases await decisions on petitions for discre-

tionary review, conclusively demonstrating the constitutional

impermissibility of allowing many (perhaps all) contracts affect-

ing beneficiaries or other non-parties to the contract — but iso-

lating arbitration agreements as an outcast.

Ill, CONCLUSION

Here the Court has no choice but to grant rehear-

ing and correct its plain error.

Respectfully submitted,

QUINTAIROS, PRIETO, WOOD & BOYER,

P.A.

/s/

Donald L. Miller, II, 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

Counsel for Petitioners

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 FOUN-

TAIN CIRCLE HEALTH AND REHABILITATION;

KINDRED NURSING CENTERS EAST, LLC; KIN-

DRED HOSPITALS LIMITED PARTNERSHIP;

KINDRED HEALTHCARE, INC.; KINDRED

HEALTHCARE OPERATING, INC.; KINDRED

REHAB SERVICES, INC. d/b/a

PEOPLEFIRST REHABILITATION

MOVANTS/PETITIONERS

Vv.

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

ON REVIEW FROM

COURT OF APPEALS

CASE NO: 2012-CA-002212-I

PETITION FOR REHEARING

Submitted by:

Quintairos, Prieto, Wood & Boyer,P.A.

/s/

J. Peter Cassidy, III

Kristin M. Lomond

9300 Shelbyville Road, Suite 400

Louisville, KY 40222

COUNSEL FOR PETITIONERS

CE E

The undersigned hereby certifies that ten (10) copies

of this brief were served upon Susan Stoldey 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, Ken-

tucky Court of Appeals, 360 Democrat Drive, Frank-

fort, KY 40601; Hon. Jean Chenault Logue, Circuit

Judge, Clark County Courthouse, P.O. Box 313, Win-

chester, KY 40391; Robert Salyer and Richard E.

Circeo, Esq., Wilkes & McHugh, P.A., 429 N. Broad-

way, P.O. Box 1747, Lexington, KY 40588-1747, and

J.T. Gilbert, Esq., Coy, Gilbert & Gilbert, 212 N. Se-

cond St., Richmond, KY 40475 on this 12th day of

October, 2015.

/s/

Counsel For Petitioners

PETITION FOR REHEARING

The majority Opinion sidestepped the Federal

Arbitration Act, the Supremacy Clause and misin-

terpreted controlling decisions of the U.S. Supreme

Court. A power of attorney cannot constitutionally

permit formation of one type of contract but not an

arbitration contract. The Court should correct the

majority's error. Civil Rule 76.32 governs petitions

for rehearing and states in part, “[A] petition for re-

hearing shall be limited to a consideration of the is-

sues argued on the appeal and will be granted only

when it appears that the court has overlooked a ma-

terial fact in the record, or a controlling statute or

decision, or has misconceived the issues presented on

the appeal or the law applicable thereto.”'

The Supremacy Clause of the United States Con-

stitution provides that “the Laws of the United

States...shall be the supreme Law of the Land, and

the Judges in every State shall be bound thereby.”

U.S. ConstT., Art. VI, cl.2. Therefore, a “state law

that ‘stands as an obstacle to the accomplishment

and execution of the full purposes and objectives of

Congress’ is preempted by the Supremacy Clause.”

Hines v. Davidowitz, 312 U.S. 52, 67 (1941). As fed-

eral substantive law, the Federal Arbitration Act

(“FAA”) preempts all contrary or inconsistent state

law. See ATT Mobility, LLC v. Concepcion, 563 U.S.

333, 131 S.Ct. 1740 (2011). The majority here agreed

the FAA applied to govern the arbitration agree-

ments at issue:

‘ This closely decided (4-3) decision sets new Kentucky prece-

dent, and Petitioners agree with the dissent that it overtly con-

flicts with federal and state court decisions interpreting and

applying the FAA to Kentucky arbitration law. Since oral ar-

guments were held in this case on December 12, 2013, almost

two years ago now, even this Court’s membership has changed.

Petitioners respect the Court's considered debate, and given

such a close decision with such huge implications for Kentucky

law, encourage the Court strongly to consider rehearing in this

case.

A written provision in ... a contract evidenc-

ing a transaction involving commerce to set-

tle by arbitration a controversy thereafter

arising out of such contract or transaction, ...

or an agreement in writing to submit to arbi-

tration an existing controversy arising out of

such a contract,... shall be valid, irrevocable,

and enforceable, save upon such grounds as

exist at law or in equity for the revocation of

any contract.

9 U.S.C. § 2 (emphasis added). See also, Extendicare

Homes, Inc. v. Whisman, No. 2013-SC-000426-I, 2015

WL 5634309 at *8 (Ky. Sept. 24, 2015). Nevertheless,

it failed to apply the FAA. The Court’s Opinion is at-

tached as Appendix 1.

The majority Opinion’s newly-created rule of law

disfavoring enforcement of agent-executed arbitra-

tion agreements cannot stand in light of the FAA. To

require more to enforce an arbitration contract

signed by an agent than for any other contract

signed by an agent disproportionately impacts arbi-

tration and is preempted by the FAA.

Mr. Wellner expressly granted to his attorney-in-

fact the power to make, execute and deliver “con-

tracts of every nature in relation to both real and

personal property,” without qualification. See Power

of Attorney of Joe Paul Wellner, attached as Appx. 2.

The Court agreed that personal injury claims consti-

tute “personal property” under Kentucky law. See

Whisman, 2015 WL 563430 at *13. The majority

then characterized the arbitration contract — a con-

tract to agree on a forum for resolving his personal

injury claims — as a contract not relating to personal

property (e.g., where to resolve the claims) but, in-

stead, “to relinquish his constitutional rights,” which

are “decisively not ‘personal property.“ Jd. (emphasis

original). By fiat, the majority vitiates Mr. Wellner’s

express grant of power and removes “arbitration con-

tracts” from the genre of all other contracts relating

to Mr. Wellner’s personal property. Jd. Moreover, fol-

lowing the majority’s logic, his attorney-in-fact could

unilaterally release Mr. Wellner’s personal injury

claim but could not choose to litigate that claim in an

arbitral forum.

The majority opinion radically misses the mark

because it derives from an incorrect assumption con-

cerning the United States’ form of government.

Whether characterized as a “Constitutional Democ-

racy” where the majority rules, see Smith v. Alfright,

321 U.S. 649, 664 (U.S. 1944), or a “Constitutional

Republic” where the people are sovereign, see

Chisholm v. Georgia, 2 U.S. (2 Dall.) 419

(1793)(superseded by statute in holding), its founders

built the United States as a nation of laws. Indeed,

when the majoritys members took their places on

this Court each took an oath to “support the Consti-

tution of the United States and the Constitution of

this Commonwealth.” Kentucky Constitution § 228

(emphasis added). The majority did not comply with

this oath. As Justice Thurgood Marshall stated:

Thus state law, whether of legislative or judi-

cial origin, is applicable if that law arose to

govern issues concerning the validity, revo-

cability, and enforceability of contracts gen-

erally. A state-law principle that takes its

meaning precisely from the fact that a con-

tract to arbitrate is at issue does not comport

with this requirement of §2 .... A court may

not, then, in assessing the rights of litigants

to enforce an arbitration agreement, construe

that agreement in a mariner different from

that in which it otherwise construes

nonarbitration agreements under state law.

Nor may a court rely on the uniqueness of an

agreement to arbitrate as a basis for a state-

law holding that enforcement would be iin-

conscionable, for this would enable the court

to effect what we hold today the state legisla-

ture cannot.

Perry v. Thomas, 482 U.S. 483, 492 fn 9 (1987) (citing

Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388

U.S. 395 (1967) and Southland Corp. v. Keating, 465

U.S. 1 (1984)(emphasis original)).

The majority's Opinion does not support the U.S.

or Kentucky Constitutions. A jury trial is absolutely

not a “God-given” right, but rather a right provided

under the terms and conditions of a constitution

written and adopted by its people. In fact, one can

easily waive one’s right to jury trial simply by not

asking for it. See CR 38.04. See also, Brown uv.

Hobitzell, 307 SW2d 739 (Ky. 1956). Regardless, the

majority probably invalidated countless arbitration

contracts signed by agents under powers of attorney

for mobile phone service, cable television, credit

cards, loans, etc., without even considering those

ramifications, because it so detests the agreements

in the nursing home context.” A result-oriented law

is not faithful to any constitution.

2 As the Court is well aware, arbitration clauses appear in a

myriad of contracts involving a host of goods and services. See,

e.g., Green Tree Fin. Corp. v. Bazzle, 639 U.S. 444 (2003)(home

improvement loan); Citizens Bank v. Alafabco, Inc., 639 U.S. 52

(2003) (commercial debt restructuring contract); Circuit City

Stores, Inc. v. Adams, 532 U.S.105 (2001)(employment con-

Highlighting the majority Opinion’s error is its

failure to recognize — or to distinguish — that courts

and legislatures can indeed set higher standards for

parental rights, slavery and marriage to name a few

(see, e.g., KRS 635.000; KY Const. § 25; _ ERS

pers Lo dere 2 ele

. The majority simply ignores that

pep as pm ne to ahaos. The majority's

dislike for the federal mandate, “redefining” or “ele-

vating” the standard for enforcing agent-executed

arbitration contracts is simply preempted.

|. THE MAJORITY OVERLOOKED AND IGNORED THE

FAA AS THE CONTROLLING STATUTE AND MIs-

CONSTRUED CONTROLLING DECISIONS _INTER-

PRETING IT

The Federal Arbitration Act (“FAA”) expressly

protects both pre-and post-dispute arbitration con-

tracts, including those used in long-term care facili-

ties like the one at issue here. See 9 U.S.C. § 2. See

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

U.S. __, 182 S.Ct. 1201 (2012) (applying the FAA in

nursing home context).

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

333, 131 S.Ct. 1740 (2011), the U.S. Supreme Court

held that the FAA means exactly what it says:

tract); Wright v. Universal Mar. Serv. Corp., 525 U.S. 70 (1998)

(longshoreman collective bargaining contract); Mastrobuono v.

Shearson Lehman Hutton, Inc., 614 U.S. 52 (1995)(securities

brokerage contract); Allied-Bruce Terminix v. Dobson, 513 U.S.

265 (1995)(termite control contract); Prima Paint Corp. v. Flood

& Conklin Mfg. Co., 388 U.S. 395 (1967)(paint manufacturing

and sales agreement). Mitsubishi Motors Corp. v. Soler Chrys-

ler-Plymouth, inc. 473 U.S. 614 (1985)(automobile manufactur-

ing and sales distribution contract).

agreements to arbitrate “shall be valid, irrevocable,

and enforceable save upon such grounds as exist at

law or in equity for the revocation of any contract.”

Id., 131 S.Ct. at 1745 (quoting 9 U.S.C. § 2). Arbitra-

tion is a matter of contract and courts must treat ar-

bitration contracts “on an equal footing with other

contracts” and enforce them to their terms. Id. at

1745. The FAA not only preempts state laws that ex-

pressly disfavor arbitration agreements but it also

preempts state-law rules that purport to apply to all

contracts equally but actually “have a dispropor-

tionate impact on arbitration agreements.” See id.

at 1747 (emphasis added). The majority's Opinion

does both, and the FAA preempts its rule of law.

Regardless of the majority's intent, its Opinion

discriminates against arbitration contracts, isolating

them as forgoing a “God-given” right. That violates

the FAA. The FAA preempts all generally applicable

contract defenses — as this Court crafted its rule here

-- that “derive their meaning from the fact that an

agreement to arbitrate is at issue.” Jd. at 1746:

When state law prohibits outright the arbi-

tration of a particular type of claim, the

analysis is straightforward: The conflicting

rule is displaced by the FAA. Preston uv.

Ferrer, 552 U.S. 346, 353, 128 S.Ct. 978, 169

L.Ed.2d 917 (2008). But the inquiry be-

comes more complex when a doctrine

normally thought to be generally appli-

cable, such as duress or, as relevant here,

unconscionability, is alleged to have been

applied in a fashion that disfavors arbi-

tration. [n Perry v. Thomas, 482 U.S. 483,

107 S.Ct. 2520, 96 L.Ed.2d 426 (1987), for

example, we noted that the FAA’s preemptive

effect might extend even to grounds tradi-

tionally thought to exist “ ‘at law or in equity

for the revocation of any contract.’ “ Jd., at

492, n. 9, 107 S.Ct. 2520 (emphasis deleted).

Concepcion, 131 S.Ct. at 1747 (bold emphasis added).

The majority found Mr. Wellner’s personal injury

claim constituted personal property, and his attor-

ney-in-fact had the authority to make contracts relat-

ing to his personal property. See Whisman, 2015 WL

5634309 at *13. In other words, Ms. Wellner could

make contracts to release his personal injury claims.

The arbitration contract concerns the forum to re-

solve Mr. Wellner’s claims, nothing more substan-

tive. But the majority then took its analysis one step

further and held that the arbitration contract itself

required a higher standard for enforcement than

other contracts:

Beverly’s authority to deal with Joe’s real

and personal property does not translate into

the power to relinquish his constitutional

rights. Consequently, we conclude that Bev-

erly was not authorized to provide Joe’s as-

sent to an agreement waiving his constitu-

tional rights by committing his future per-

sonal injury claims to arbitration.

Whisman, 2015 WL 5634309 at *13 (emphasis add-

ed). The majority's Opinion simply violates the FAA

and the Supremacy Clause.

The FAA does not prohibit a person from denying

his attorney-in-fact the power to sign arbitration con-

tracts. The principal retains the prerogative to limit

an agent’s authority under the POA as he sees fit.

See, e.g., Ping v. Beverly Enterprises, Inc., 376 S.W.

3d 581, 591-92 (Ky. 2012)(“Although the statute al-

lows durable powers of attorney to be created, it does

not address what authority may be granted therein.

The scope of that authority is thus left to the princi-

pal to declare”). However, the FAA absolutely prohib-

its a court or state legislature from doing what

Mr. Wellner himself did not do: making rules to in-

hibit enforcement of arbitration contracts signed by

his agent, as distinguished from all other ‘contracts

of every nature relating to personal property” signed

by his agent. Stated otherwise, the FAA prohibits

courts from interpreting a POA providing the “right

to contract,” or a similar proxy, to authorize the for-

mation of one type of contract but not a contract for

arbitration. See, e.g., GGNSC Vanceburg, LLC v.

Taulbee, 2013 WL 4041174 (E.D.Ky., Aug. 7, 2013)

(copy attached as Appendix 3).

Here, the majority refused to enforce a valid ar-

bitration contract. Even though Mr. Wellner express-

ly granted his attorney-in-fact the power “to sign

contracts of every nature in relation to personal

property,” this particular contract contained an arbi-

tration clause — which by the majority’s new defini-

tion transformed a choice of forum contract (for re-

solving his personal injury claims) into a contract

waiving constitutional rights. Whisman, 2015 WL

5634309 at *13. Kentucky's legislature could not

pass a law requiring more specificity in the POA’s

grant of authority to enforce an arbitration contract

than is required for all other contracts and this

Court cannot craft one. That law flagrantly offends

the FAA. Yet, the majority held agent-executed arbi-

tration contracts in Kentucky shall require more for

enforcement than all other agent-executed contracts.

Id. at *17. Compare, Taulbee, supra.®

Il. THE MAJORITY OPINION MISAPPLIED THE

APPLICABLE LAW

Congress enacted the FAA “in response to wide-

spread judicial hostility to arbitration agreements”

that had “manifested itself in a ‘great variety’ of ‘de-

vices and formulas’ declaring arbitration against

public policy.” AT&T Mobility LLC v. Concepcion,

131 S.Ct. 1740, 1745, 1747 (2011)(quoting Robert

Lawrence Co. v. Devonshire Fabrics, Inc., 217 F.2d

402, 406 (2d Cir. 1959)). Here, the majority attempt-

ed to avoid U.S. Supreme Court precedent by charac-

terizing its rule as one of general agency law and

denying any specific arbitration discrimination:

We reject the notion that this holding con-

flicts with the decisions of the United States

Supreme Court in Marmet Health Care Cen-

ter, Inc. v. Brown, - U.S. - , 132 S.Ct. 1201,

182 L.Ed.2d 42 (2012), and AT & T Mobility

LLC v. Concepcion, 563 U.S. 333, 131 S.Ct.

1740, 179 L.Ed.2d 742 (2011).... To the con-

trary, our holding does not prohibit arbitra-

tion of any “particular type of claim.” ....

A straight-forward application of our rule

that an attorney-in-fact cannot act beyond

3“An arbitration agreement is a contract. The power of attorney

must be read in accordance with its express terms and in light

of the strong federal policy favoring arbitration.... Taulbee’s ar-

guments that arbitration agreements are different anc require

more than the general power to contract for authorization to

execute one are of no help to her. That line of reasoning would

simply result in preemption of such a requirement under the

FAA.” 2013 WL 4041174 at *9 (emphasis added).

the powers granted in the power-of-attorney

document stands in stark contrast to the

blanket prohibitions against arbitration

agreements condemned in Marmet and Con-

cepcion. Whatever hostility our rule evinces

is not against the federal policy favoring ar-

bitration; indeed, Kentucky shares that same

policy, as we have proclaimed on several oc-

casions. Our rule merely reflects a long-

standing and well-established policy disfa-

voring the unknowing and involuntary relin-

quishment of fundamental constitutional

rights regardless of the context in which they

arise.

Whisman, 2015 WL 5634309 at *17-*18 (footnote

omitted).

The majority apparently misreads or miscon-

ceives Concepcion’s and Marmet Health’s holdings.

While Concepcion held that prohibiting a particular

claim violated the FAA, it also held that “a doctrine

normally thought to be generally applicable” can vio-

late the FAA if applied in a fashion to disfavor arbi-

tration. See Concepcion, 131 S. Ct. at 1747. This

Court previously rejected a similar attempted dis-

tinction in a commercial context, in Schnuerle v. In-

sight Commce’ns Co., LP., 376 S.W.3d 561, 577 (Ky.

2012):

[O]jur state Constitution and statutes favor

the enforceability of arbitration agreements.

Moreover, the purpose of the FAA “was to re-

verse the longstanding judicial hostility to

arbitration agreements that had existed at

English common law and had been adopted

by American courts, and to place arbitration

agreements upon the same footing as other

contracts.” Gilmer v. Interstate/Johnson

Lane Corp., 500 U.S. 20, 24, [citation omit-

ted] (1991). The FAA’s provisions “manifest a

liberal federal policy favoring arbitration

agreements.’ “ Jd. at 25, 111 S.Ct. 1647 (quot-

ing Moses H Cone Mem’ Hosp. v. Mercury

Constr. Corp., 460 U.S. 1, 24, [citation omit-

ted] (1983)). The Supreme Court has “re-

erali on arbitra-

i r n_‘s ° itra-

tion w n

tections bstantive law

to would-be complainants.’ “ Green Tree

Fin. Corp. v. Randolph, 531 U.S. 79, 89-90,

[citation omitted] (2000) (quoting Rodriguez

de Quijas v. Shearson/Am. Express, Inc., 490

U.S. 477, 481 [citation omitted] (1989)); Jen-

kins, 400 F.3d at 874. In light of such long-

standing public policy, we see no basis to dis-

turb this contractual term. (Emphasis add-

ed.)

The majority ignored its own precedent because of

the context of this arbitration agreement. Commer-

cial contract cases often invoke the right to jury trial

just like a medical negligence case.

Holding the express power to “make contracts of

every nature in relation to personal property,” Mr.

Wellner’s attorney-in-fact could have (most likely,

did) enter into enforceable contracts for a variety of

reasons, such as for banking, purchases, or even to

admit her husband to a hospital. Nevertheless, the

majority held that the contract she signed to arbi-

trate her husband’s claims — a choice of forum con-

tract with absolutely no substantive implications to

his right to seek redress for claims — cannot be en-

forced because the POA document did not include

redundant language to sign an “arbitration con-

tract,” or even, “to waive his constitutional right to

jury trial.”4

“The ‘principal purpose’ of the FAA is to ensure

that private arbitration agreements are enforced ac-

cording to their terms.” Jd. at 1748 (citing Volt Jn-

formation Sciences, Inc. v. Board of Trustees of Le-

land Stanford Junior Univ., 489 U.S. 468, 478

(1989)). While the §2 savings clause preserves appli-

cable common law contract defenses, the Concepcion

Court warned that the grounds available under §2

must not be construed to include a state’s policy

preference for procedures incompatible with arbitra-

tion. “Nothing in it suggests an intent to preserve

state-law rules that stand as an obstacle to the ac-

complishment of the FAA’s objectives.” Concepcion,

131 S. Ct. 1740, 1748 (citations omitted).

* The dissent explained the error in this comparison logic: “The

difference between arbitration and the majority's parade of

horribles is obvious. Unlike the majority’s examples, all of

which suppose the waiver or compromise of a basic, personal

substantive right (rights that an ordinary attorney-in-fact is

rarely, if ever, asked to address on the principal’s behalf), arbi-

tration agreements, which are commonplace these days, involve

no substantive waiver. The principal’s substantive rights re-

main intact, only the forum for addressing those rights is af-

fected. The majority's apparent presumption that the arbitra-

tion agreement has substantive implications adverse to the

principal (and thus belongs on the list of hard-to-waive sub-

stantive rights) is the very presumption Congress sought to

counteract with the FAA. Southland Corp. v. Keating, 466 U.S.

at 14, 104 S.Ct. 852 (discussing Congress's intent to counteract

“common law hostility toward arbitration”).” Extendicare

Homes, Inc. v. Whisman, No. 2013-SC-000426-I, 2015 WL

5634309, at *35 (Ky. Sept. 24, 2015).

Federal law requires the Court to “stretch” to

find ways to enforce arbitration contracts. The ma-

jority reclassified “arbitration contracts” not as mere

contracts but as a principal’s “waiver of his constitu-

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

See Whisman, 2015 WL 5634309, at *17. The result

mandates discriminatory enforcement for agent-

entered arbitration contracts as compared with all

other agent-entered contracts: an agent’s power “to

sign contracts” is now insufficient to enter into arbi-

tration contracts, rendering arbitration contracts —

alone -- unenforceable absent additional language

not required for enforcement of all other agent-

entered contracts. That result is preempted by the

FAA.5

Ul CLUSION

Here the Court has no choice but to grant rehear-

ing and correct its plain error.

Respectfully submitted,

5 The FAA also preempts Kentucky’s interpretation of an arbi-

tration agreement's enforceability as against wrongful death

claim beneficiaries. In Marmet Health Care Center, 565 U.S. _,

132 S.Ct. 1201, 1202-03 (2012), the U.S. Supreme Court held

that the FAA preempted categorical exemptions of cases from

arbitration. No legitimate distinction exists between West Vir-

ginia’s “policy-based” law prohibiting enforcement of predispute

agreements to arbitrate wrongful death claims and Kentucky's

judicially made “contract-based” law prohibiting enforcement of

predispute agreements to arbitrate wrongful death claims. Sev-

eral cases await decisions on petitions for discretionary review,

conclusively demonstrating the constitutional imperimissibility

of allowing many (perhaps all) contracts affecting beneficiaries

or other non-parties to the contract — but isolating arbitration

agreements as an outcast.

QUINTAIROS ETO, WOOD & BOYER, P.A.

/s/

Donald L. Miller, II, 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

Counsel for Petitioners

COMMONWEALTH OF KENTUCKY

SUPREME COURT OF KENTUCKY

2013-SC-000430-1

KINDRED NURSING CENTERS LIMITED PART-

NERSHIP d/b/a WINCHESTER CENTRE FOR

HEALTH & REHABILITATION

PETITIONERS

Vv.

JANIS E. CLARK, Executrix Of The Estate Of OL-

IVE G. CLARK, deceased, and on behalf of the

wrongful death beneficiaries of

OLIVE G. CLARK, deceased

RESPONDENT

RESPONSE TO PETITION FOR REHEARING

Submitted By:

/s/

Richard E. Circeo (KY Bar # 91996)

Robert E. Salyer (KY Bar # 91869)

WILKES & MCHUGH, P.A.

P.O, Box 1747

Lexington, KY 40588-1747

Telephone Number: (859) 455-3356

Facsimile Number: (859) 455-3362

Counsel for Petitioner

CERTIFICATE OF SERVICE

I certify that this petition was served upon Don-

ald L. Miller, Il, Esq.; J. Peter Cassidy, III, Esq.;

Kristin M. Lomond, Esq.; Quintairos, Prieto, Wood &

Boyer, P.A.; 9300 Shelbyville Road, Suite 400; Louis-

ville, KY 40222; Hon. Jean Chenault Logue, Circuit

Judge, Clark County Courthouse, P.O. Box 313, Win-

chester, KY 40391; J.T. Gilbert, Esq., Coy, Gilbert &

Gilbert, 212 N. Second St., Richmond, KY 40475; and

upon the Hon. Sam Givens, Clerk of the Court of Ap-

peals, 360 Democrat Drive, Frankfort, Kentucky

40601, on this the 23rd day of October, 2015.

Counsel for Respondent

RESPONSE

The material and procedural facts, controlling

law, and jurisdictional basis have not changed. This

response to petition is filed pursuant to CR 76.32,

which provides in part:

(1) When authorized.

ree

(b) Except in extraordinary cases when jus-

tice demands it, a petition for rehearing shall

be limited to a consideration of the issues ar-

gued on the appee* and will be granted only

when it appears that the court has over-

looked a material fact in the record, or a

controlling statute or decision, or has

misconceived the issues presented on the

_\ appeal or the law applicable thereto.

I. Petitioners Do Not Offer A Sufficient Justi-

fication For Rehearing.

Petitioners provide this Court with no basis upon

which to justify a rehearing. The facts were not in

dispute in this case. There have been no facts aris-

ing since the Opinion issued to affect its conclusions.

Neither the parties nor the Court overlooked either a

controlling decision or statute. The Supreme Court’s

analyses of the issues, including the analyses of the

Dissents, were lengthy. Petitioners go on to argue in

effect however, that this Court “has misconceived the

issues presented on appeal or the law applicable

thereto.” Not so. Whether or not the Court’s Opinion

is correct (and it is), the Court certainly perceived all

the issues squarely. A rehearing is not authorized in

this instance under the Rule.

Petitioners obviously wish to re-argue to this

Court, that the Court “got it wrong.” Again, even if

this represented a correct characterization—and it

does not—such a proposition is not a legitimate ba-

sis upon which to hold a rehearing. Notwithstanding

Petitioners’ apparent dissatisfaction with the Opin-

ion of this Court, this Court issued an exhaustive

Opinion, in terms of both the Majority and Dissent-

ing optnions, and, as such, it can be fairly said that

the Court left no stone unturned in reaching its final

result. And the decision was in fact correct.

Il. The Supreme Court’s Decision Correctly

Interpreted Kentucky Agency And Power-

Of-Attorney Law.

Whisman clarifies the law regarding Kentucky

powers-of-attorney as they relate to pre dispute arbi-

tration agreements entered into between parties. It

extends interpretation of Kentucky’s law from Donna

Ping v. Beverly Enterprises, Inc., 376 SW3d 581 (Ky.

2012), and sets out three teachings:

First, general power-of-attorney language pur-

porting to grant agency authority to transact any

and all business that a principal could do if in per-

gon, i.é., a generic proxy power, is, by itself, ineffec-

tive to alter a fundamental right of the principal un-

der Kentucky law, e.g., promising forever to forego

all litigation in civil courts, of future disputes, be-

tween a principal and an outside party. See Pine

Tree Villa, LLC v. Brooker, 612 FedAppx 340, 344

(6th Cir. 2015) (“Kentucky law does not appear to

provide for unlimited POAs.”). That is, the latter

transactions alter the principal's status in society, at

least with respect to the other party to the agree-

ment. These transactions would thus not normative-

ly be foreseeable by the principal, and would not be

seen to be encompassed by a general grant of author-

ity without the appropriate specific language going

thereto.

Second, the act of signing a pre-dispute arbitra-

tion agreement is qualitatively different from the act

of instituting or participating in an arbitration, or of

ordinary actions tending to property. A reviewing

court must seek out the language for signing the

agreement.

Third, the power to enter into the status-

altering pre-dispute agreement to arbitrate all dis-

putes between an outside party and a principal is not

immanent in specific power-of-attorney language

purporting to grant agency authority (1) over litiga-

tion; or (2) over contracts involving a principal's

nroperty. Tending to these matters does not cover

the alteration of the principal’s civil right to a jury

trial vis-a-vis disputes with a second party, potential-

ly in perpetuity.

Just as important decisions which could be ex-

pressed in a power-of-attorney, e.g., the ability to

marry by proxy, or to cede parental rights, must

have that authority set out; an agent waiving his

principal's trial rights generally with respect to an-

other party must be set out. Whisman could not be

more clear regarding vague, general, “big tent” lan-

guage in a power-of-attorney. It is insufficient to ex-

ecute the agreement at bar. This is so because the

power to modify the fundamental rights of a princi-

pal changes that principal’s standing in society, L.e.,

it affects the principal’s status. It permanently al-

ters the principal’s access to the “King’s justice,” with

respect to at least the other party to the arbitration

agreement,! and cannot be inferred from an instru-

ment without explicit address.

Given its enormity, mere creation of a power over

the principal’s legal affairs, to include litigation and

the authority to file a law suit on behalf of the prin-

cipal, is not sufficient. Many powers-of-attorney in-

clude language authorizing litigation. However, it

does not follow from this that granting power to

take a certain action intrinsically encompasses

the power to promise never to take that action.

Disavowal (on the principal’s behalf), potentially into

perpetuity, by an agent of a power given him by the

principal would constitute the agent stepping into

the shoes of the principal in the creation of the

agency, i.e., unilaterally rewriting the power-of-

attorney.

! Including successors, assigns, affiliates, officers, employees,

ete....

Creation of a power to execute contracts in rela-

tion to the principal’s property is likewise not suffi-

cient. This Court agreed that a law suit involving

a dispute is a species of property, a “chose-in-

action.” However, the gravamen of the arbitration

agreement acts not in relation to that property; the

agreement acts primarily in relation to a fundamen-

tal civil right, vis-a-vis a second party.

It is sometimes pointed out that trial mghts are

easily waived, by the mere failure not to invoke

them. But the dissimilarity here should be obvious.

For an agent to transact with respect to, or disavow,

a particular piece of property should obviously be

small potatoes in a well-equipped power-of-attorney.

For an agent to disavow the institution of property

altogether, however, is entirely another matter.

Il. The Court’s Opinion Does Not Impinge Upon

The FAA.

The U.S. Supreme Court, interpreting the FAA,

has rejected numerous attempts by States to refuse

to enforce arbitration contracts undoubtedly made,

by virtue of their essential nature or their terms.

That is not happening here.

The former point notwithstanding, the U.S. Su-

preme Court has never held that the FAA requires

State agency law to bend to find authority to make

such contracts where it otherwise would not be

found. As U.S. Supreme Court Justice Clarence

Thomas noted in his concurrence in Concepcion, see

infra, “the FAA requires that an agreement to arbi-

trate be enforced unless a party successfully chal-

lenges the formation of the arbitration agreement.”

AT&T Mobility, LLC v. Concepcion, 131 SCt 1740,

1753 (2011). This identifies where the FAA begins

to apply. It intervenes once an arbitration agree-

ment is formed pursuant to unbiased State law prin-

ciples of interpretation (including those pertaining to

authority), and not befor. Where the FAA does not

begin to apply, the States are unbounded except by

their own self-governance... a self-governance that

has a place for State judicial interpretation of State

law.2

“A power of attorney cannot constitutionally

permit formation of one type of contract but not an

2 Petitioners bring this Court’s attention to Chisholm v. Geor-

gia, 2 U.S. 419 (1793), but misread the case. In Chisholm, the

U.S. Supreme Court denied that States possessed sovereign

immunity (Justice Iredell dissenting), holding that all sover-

eignty was held by the people of the United States as an aggre-

gate of sovereign individuals. It is commonly understood that

the peoples of the United States clarified this error via the

Eleventh Amendment (1795). Today, Dual Sovereignty is the

accepted understanding of the American federal system. See

e.g., Burt v. Titlow, 134 S.Ct. 10, 15 (2013); see also The Ken-

tucky Resolution (1799); Ware v. Hylton, 3 US 199 (1796):

“In June 1776, the Convention of Virginia formally declared,

that Virginia was a free, sovereign, and independent state; and

on the 4th of July, 1776, following, the United States, in Con-

gress assembled, declared the Thirteen United Colonies free

and independent states; and that as such, they had full power

to levy war, conclude peace, etc. I consider this as a declara-

tion, not that the United Colonies jointly, in a collective capaci-

ty, were independent states, etc. but that each of them was a

sovereign and independent state, that is, that each of them had

a right to govern itself by its own authority, and its own laws,

without any control from any other power upon earth.”

Ware, 3 US at 224 (Opinion of Justice Chase). Finite authority

is granted to the federal government through the U.S. Constitu-

tion and the laws promulgated therefrom; all other residual

governing authority is retained by the States. U.S. Const.

amend. X.

arbitration contract.” (Petition at p. 1) The error in

this statement should be obvious. Of course it can.

To put it clearly and methodically: Courts have no

right to discriminate against arbitration. Princi-

pals however, have every right to discriminate

against arbitration.

Happily, Petitioners recognize their error later in

their briefing. (See id. at p.6) Evidence of discrimi-

nation by the principal, as with all discriminations,

may arise affirmatively, or by omission. This Court

has simply announced what language signifies an

omission as a matter of law. The power must be

affirmatively set out, or it is omitted. This is the

crux of the issue at bar.

It would be strange, indeed, if we were to in-

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

the 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 agree-

ment to waive the principal's civil rights; or

the principal’s right to worship freely; or en-

ter into an agreement to terminate the prin-

cipal’s parental rights; put her child up for

adoption; consent to abort a pregnancy; con-

sent to an arranged marriage; or bind the

principal to personal servitude. It would, of

course, be absurd to infer such audacious

powers from a non-specific, general, even

universal, grant of authority. So too, it

would be absurd to infer from a non-specific,

universal grant, the principal’s assent to sur-

render of other fundamental, even sacred,

liberties.

The Dissent calls the comparative list in the quota-

tion supra, a “parade of horribles.”

The majority's apparent presumption that the

arbitration agreement has substantive impli-

cations adverse to the principal (and thus be-

longs on the list of hard-to-waive substantive

rights) is the very presumption Congress

sought to counteract with the FAA.

By lumping in arbitration with the “parade of

horribles,” the Dissent believes the Majority shows

animus toward arbitration. Respectfully, this is not

necessarily so. The list is not really a “parade of

horribles.” In many instances the decisions listed in

the parade may actually be highly beneficial to the

principal under the circumstances, e.g., marrying by

proxy. See State v. Anderson, 396 P2d 558, 561 (Ore.

1964) (“There is nothing about a proxy marriage,

that appears to be contrary to public policy.”). The

decision to marry, by proxy or otherwise, is not a

“horrible” one. It is however, a monumental deci-

sion, in effect altering the principal’s status in socie-

ty.3 If the agent might make the decision to execute a

marriage is foreseen by the principal, surely the

principal would make this authority clear in any

power-of-attorney instrument. If not set out, the

courts will deem it to be omitted. This is not discrim-

ination or animus.*

8’ But unlike the arbitration contract at bar, it is possible to

break marital contract and obtain a civil divorce.

4 It goes without saying that the U.S. Supreme Court considers

“marriage” a right, a good, and something to be favoured. See

Obergefell v. Hodges, 135 S.Ct. 2584 (2015).

Petitioners deny the significance of the decision

to waive trial rights generally vis-a-vis a party, even

potentially in perpetuity. (See Petition at p.3)° By

implication, Petitioners suggest that courts should

treat all decisions by agents with complete indiffer-

ence; yet the document from whence this Court de-

rives its authority and jurisdiction—the Kentucky

Constitution—calls the subject matter here “sacred.”

Certainly the Commonwealth and its people, as well

as the United States, could alter the trial rights be-

longing to the people. However, the alteration ought

not to be effected lightly, as its pedigree reaches back

at least to the Magna Carta, wherein King John first

conceded that property rights’ disputes must remain

in the permanent county courts, rather than follow

the movable King’s Bench.

It is easy enough to distinguish between the will

of God and the will of the English barons, but it is

difficult not to see the hand of Providence shepherd-

ing the resolution of disputes in Anglo-American law

from the Medieval trial by combat, to the appeal to

the Kings’ Bench, finally to the right to a civil trial in

front of one’s peers. Whereas due process in the

criminal law is the modus wherein the citizens’ rela-

tionship with the state mainly subsists, the civil law

is the modus wherein the citizens’ legal relationships

with each other subsists. Petitioners’ protestations

notwithstanding, civil trial rights are important, and

fundamental. More to the point, how agency law

5 It is not appropriate for Respondent to comment on Petition-

ers’ charged language on page 3 of the Petition. Suffice to say

that Petitioners’ institutional commentary comes off as over-

heated and unfortunate.

treats such rights does not in any way impact upon

the FAA.

This Court in this case has not acted against ar-

bitration. Rather, the Court has acted to specify

rules in written agency. More precisely, it has en-

gaged in the interpretation of words on a piece of pa-

per, seeking to determine the intentions of a princi-

pal, from what is reasonably foreseeable.

Petitioners recite a litany of false analogies in

their petition, one of which demonstrates their mis-

construction of the issue at bar: “Kentucky's legisla-

ture could not pass a law requiring more specificity

in the POA’s grant of authority to enforce an arbitra-

tion contract than is required for all other contracts

and this Court cannot craft one.” (Petition at p.7)

This is a straw man. Again, the Court here in effect

issued a canon of interpretation of language in an

instrument, in the endeavor to divine the intentions

of the principal. If the Kentucky legislature were to

pass the aforesaid statute, presumably it would be

issuing a proscription. The Supreme Court here

has issued no proscription.®

Nursing home facilities may still enforce ar-

bitration agreements with their residents

6 Whether the aforesaid proscription—limiting the circum-

stances under which a power of attorney may execute an arbi-

tration agreement—-would be federally pre-empted is not a

question in front of this Court. If, to take a different perspec-

tive, the legislature attempted to “interpret” principal inten-

tions statutorily, i.e., not place a wicket in front of creating the

agency power, but rather, claim to legislatively determine a

principal's intent; such would probably constitute an invasion of

the judiciary’s sphere and a violation of the principle of the sep-

aration of powers. This has not occurred, and Petitioners’ point

is entirely irrelevant and, again, not in front of the bar.

when the resident has signed the agreement

or validly authorized his agent to sign in

his stead. (emphasis added)

CONCLUSION

Complaint was filed in this case years ago. Re-

spondent prays this Court deny rehearing.

Respectfully submitted,

/s/

Robert E. Salyer, Esq.

SUPREME COURT OF KENTUCKY

2013-SC-000431-I

KINDRED NURSING CENTERS LIMITED PART-

NERSHIP d/b/a WINCHESTER CENTRE FOR

HEALTH & REHABILITATION, et al.

PETITIONERS

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, deceased

RESPONDENT

RESPONSE TO PETITION FOR REHEARING

Submitted By:

/s/ Robert E. Salyer __

Richard E. Circeo (KY Bar# 91996)

Robert E. Salyer (KY Bar# 91859)

WILKES & MCHUGH, P.A.

P.O. Box 1747

Lexington, KY 40588-1747

Telephone Number: (859) 455-3356

Facsimile Number: (859) 455-3362

Counsel for Petitioner

CERTIFICATE OF SERVICE

I certify that this petition was served upon Donald L.

Miller, II, Esq.; J. Peter Cassidy, III, Esq.; Kristin M.

Lomond, Esq.; Quintairos, Prieto, Wood & Boyer,

P.A.; 9300 Shelbyville Road, Suite 400; Louisville,

KY 40222; Hon. Jean Chenault Logue, Circuit Judge,

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

KY 40391; J.T. Gilbert, Esq., Coy, Gilbert & Gilbert,

212 N. Second St., Richmond, KY 40475; and upon

the Hon. Sam Givens, Clerk of the Court of Appeals,

360 Democrat Drive, Frankfort, Kentucky 40601, on

this the 23rd day of October, 2015.

/s/ Robert E. Salyer

Counsel for Respondent

RESPONSE

The material and procedural facts, controlling

law, and jurisdictional basis have not changed. This

response to petition is filed pursuant to CR 76.32,

which provides in part:

(1) When authorized.

“**

(b) Except in extraordinary cases when jus-

tice demands it, a petition for rehearing shall

be limited to a consideration of the issues ar-

gued on the appeal and will be granted only

when it appears that the court has over-

looked a material fact in the record, or a

controlling statute or decision, or has

misconceived the issues presented on the

appeal or the law applicable thereto.

eee

I. Petitioners do not offer a sufficient jus-

tification for rehearing.

Petitioners provide this Court with no basis upon

which to justify a rehearing. The facts were not in

dispute in this case. There have been no facts arising

since the Opinion issued to affect its conclusions.

Neither the parties nor the Court overlooked either a

controlling decision or statute. The Supreme Court’s

analyses of the issues, including the analyses of the

Dissents, were lengthy. Petitioners go on to argue in

effect however, that this Court “has misconceived the

issues presented on appeal or the law applicable

thereto.” Not so. Whether or not the Court’s Opinion

is correct (and it is), the Court certainly perceived all

the issues squarely. A rehearing is not authorized in

this instance under the Rule.

Petitioners obviously wish to re-argue to this

Court, that the Court “got it wrong.” Again, even if

this represented a correct characterization — and it

does not — such a proposition is not a legitimate ba-

sis upon which to hold a rehearing. Notwithstanding

Petitioners’ apparent dissatisfaction with the Opin-

ion of this Court, this Court issued an exhaustive

Opinion, in terms of both the Majority and Dissent-

ing opinions, and, as such, it can be fairly said that

the Court left no stone unturned in reaching its final

result. And the decision was in fact correct.

Il. The Supreme Court’s decision correctly in-

terpreted Kentucky agency and power-of-

attorney law.

Whisman clarifies the law regarding Kentucky

powers-of-attorney as they relate to pre- dispute ar-

bitration agreements entered into between parties. It

extends interpretation of Kentucky’s iaw from Donna

Ping v. Beverly Enterprises, Inc., 376 SW3d 581 (Ky.

2012), and sets out three teachings:

First, general power-of-attorney language pur-

porting to grant agency authority to transact any

and all business that a principal could do if in per-

son, i.e., a generic proxy power, is, by itself, ineffec-

tive to alter a fundamental right of the principal un-

der Kentucky law, e.g., promising forever to forego

all litigation in civil courts, of future disputes, be-

tween a principal and an outside party. See Pine Tree

Villa, LLC v. Brooker, 612 FedAppx 340, 344 (6th

Cir. 2015) (“Kentucky law does not appear to provide

for unlimited POAs.”). That is, the latter transac-

tions alter the principal’s status in society, at least

with respect to the other party to the agreement.

These transactions would thus not normatively be

foreseeable by the principal, and would not be seen

to be emcompassed by a general grant of authority

without the appropriate specific language going

thereto.

Second, the act of signing a pre-dispute arbitra-

tion agreement is qualitatively different from the act

of instituting or participating in an arbitration, or of

ordinary actions tending to property. A reviewing

court must seek out the language for signing the

agreement.

Third, the power to enter into the status-

altering pre-dispute agreement to arbitrate all dis-

putes between an outside party and a principal is not

immanent in specific power-of-attorney language

purporting to grant agency authority (1) over litiga-

tion; or (2) over contracts involving a principal's

property. Tending to these matters does not cover

the alteration of the principal's civil right to a jury

trial vis-a-vis disputes with a second party, potential-

ly in perpetuity.

Just as important decisions which could be ex-

pressed in a power-of-attorney, e.g., the ability to

marry by proxy, or to cede parental rights, must

have that authority set out; an agent waiving his

principal's trial rights generally with respect to an-

other party must be set out. Whisman could not be

more clear regarding vague, general, “big tent” lan-

guage in a power-of- attorney. It is insufficient to ex-

ecute the agreement at bar. This is so because the

power to modify the fundamental rights of a princi-

pal changes that principal’s standing in society, 1.e.,

it affects the principal’s status. It permanently alters

the principal's access to the “King’s justice,” with re-

spect to at least the other party to the arbitration

agreement,' and cannot be inferred from an instru-

ment without explicit address.

Given its enormity, mere creation of a power over

the principal’s legal affairs, to include litigation and

the authority to file a law suit on behalf of the prin-

cipal, is not sufficient. Many powers-of-attorney in-

clude language authorizing litigation. However, it

does not follow from this that granting power to

take a certain action intrinsically encompasses

the power to promise never to take that « ction.

Disavowal (on the principal’s behalf), potentially into

perpetuity, by an agent of a power given him by the

principal would constitute the agent stepping into

the shoes of the principal in the creation of the

agency, i.e., unilaterally rewriting the power-of-

attorney.

Creation of a power to execute contracts in rela-

tion to the principal’s property is likewise not suffi-

cient. This Court agreed that a law suit imvelving

a dispute is a apecies of property, a “chose-in-

action.” However, the gravamen of the arbitration

agreement acts not in relation to that property: the

‘ Including successors, assigns, affiliates, officers, employees,

Ove...

agreement acts primarily in relation to a fundamen-

tal civil right, vis-a-vis a second party.

It is sometimes pointed out that trial rights are

easily waived, by the mere failure not to invoke

them. But the dissimilarity here should be obvious.

For an agent to transact with respect to, or disavow,

a particular piece of property should obviously be

small potatoes in a well- equipped power-of-attorney.

For an agent to disavow the institution of property

altogether, however, is entirely another matter.

Il. The Court’s Opinion does not impinge upon

the FAA.

The U.S. Supreme Court, interpreting the FAA,

has rejected numerous attempts by States to refuse

to enforce arbitration contracts undoubtedly made,

by virtue of their essential nature or their terms.

That is not happening here.

The former point notwithstanding, the U.S. Su-

preme Court has never held that the FAA requires

State agency law to bend to find authority to make

such contracts where it otherwise would not be

found. As U.S. Supreme Court Justice Clarence

Thomas noted in his concurrence in Concepcion, see

infra, “the FAA requires that an agreement to arbi-

trate be enforced unless a party successfully chal-

lenges the formation of the arbitration agreement.”

AT&T Mobility, LLC v. Concepcion, 131 SCt 1740,

1753 (2011). This identifies where the FAA begins to

apply. It intervenes once an arbitration agreement is

formed pursuant to unbiased State law principles of

interpretation (including those pertaining to authori-

ty), and not before. Where the FAA does not begin to

apply, the States are unbounded except by their own

self-governance... 4 self- governance that has a place

for State judicial interpretation of State law.”

“A power of attorney cannot constitutionally

permit formation of one type of contract but not an

arbitration contract.” (Petition at p. 1) The error in

this statement should be obvious. Of course it can. To

put it clearly and methodically: Courts have no right

to discriminate against arbitration. Principals how-

ever, have every right to discriminate against ar-

bitration.

2 Petitioners bring this Court’s attention to Chisholm v. Geor-

gia, 2 U.S. 419 (1793), but misread the case. In Chisholm, the

U.S. Supreme Court denied that States possessed sovereign

immunity (Justice Iredell dissenting), holding that all sover-

eignty was held by the people of the United States as an aggre:

gate of sovereign individuals. It is commonly understood that

the peoples of the United States clarified this error via the

Eleventh Amendment (1795). Today, Dual Sovereignty is the

accepted understanding of the American federal system. See

e.g., Burt v. Titlow, 134 S.Ct. 10, 15 (2013); see also The Ken-

tucky Resolution (1799); Ware v. Hylton, 3 US 199 (1796):

“In June 1776, the Convention of Virginia formally declared,

that Virginia was a free, sovereign, and independent state, and

on the 4th of July, 1776, following, the United States, in Con-

gress assembled, declared the Thirteen United Colonies free

and independent states, and that as such, they had full power

to levy war, conclude peace, etc. | consider this as a declaration,

not that the United Colonies jointly, in a collective capacity,

were independent states, etc. but that each of them was & 60v-

ereign and independent state, that is, that each of them had a

right to govern itself by its own authority, and its own laws,

without any control from any other power upon earth.”

Ware, 3 US at 224 (Opimion of Justice Chase). Finite authority

is granted to the federal government through the U.S. Constitu-

tion and the laws promulgated therefrom; all other residual

governing authority ig retained by the States. U.S. Const.

amend. X.

Happily, Petitioners recognize their error later in

their briefing. (See id. at p.6) Evidence of discrimina-

tion by the principal, as with all discriminations,

may arise affirmatively, or by omission. This Court

has simply announced what language signifies an

omission as a matter of law. The power must be af-

firmatively set out, or it is omitted. This is the

crux of the issue at bar.

It would be strange, indeed, if we were to in-

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

the 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 agree-

ment to waive the principal's civil rights; or

the principal’s right to worship freely; or en-

ter into an agreement to terminate the prin-

cipal’s parental rights; put her child up for

adoption; consent to abort a pregnancy; con-

sent to an arrauged marriage; or bind the

principal to personal servitude. It would, of

course, be absurd to infer such audacious

powers from a non-specific; general, even

universal, grant of authority. So too, it would

be absurd to infer from a non-specific, uni-

versal grant, the principal’s assent to sur-

render of other fundamental, even sacred,

liberties.

The Dissent calls the comparative list in the quo-

tation supra, a “parade of horribles.”

The majority's apparent presumption that

the arbitration agreement has substantive

implications adverse to the principal (and

thus belongs on the list of hard-to-waive sub-

stantive rights) is the very presumption Con-

gress sought to counteract with the FAA.

By lumping in arbitration with the “parade of

horribles,” the Dissent believes the Majority shows

animus toward arbitration. Respectfully, this is not

necessarily so. The list is not really a “parade of

horribles.” In many instances the decisions listed in

the parade may actually be highly beneficial to the

principal under the circumstances, e.g., marrying by

proxy. See State v. Anderson, 396 P2d 558, 561 (Ore.

1964) (“There is nothing about a proxy marriage that

appears to be contrary to public policy.”). The deci-

sion to marry, by proxy or otherwise, is not a “horri-

ble” one. It is however, a monumental decision, in

effect altering the principal’s status in society.’ If the

agent might make the decision to execute a marriage

is foreseen by the principal, surely the principal

would make this authority clear in any power-of-

attorney instrument. If not set out, the courts will

deem it to be omitted. This is not discrimination or

animus.‘

Petitioners deny the significance of the decision

to waive trial rights generally vis-a-vis a party, even

potentially in perpetuity. (See Petition at p.3)® By

implication, Petitioners suggest that courts should

3 But unlike the arbitration contract at bar, it is possible to

break marital contract and obtain a civil divorce.

4 It goes without saying that the U.S. Supreme Court considers

“marriage” a right, a good, and something to be favoured. See

Obergefell v. Hodges, 136 S.Ct. 2684 (2015).

5 It is not appropriate for Respondent to comment on Petition-

ers’ charged language on page 3 of the Petition. Suffice to say

that Petitioners ‘ inetitutional commentary comes off as over-

heated and unfortunate.

treat all decisions by agents with complete indiffer-

ence; yet the document from whence this Court de-

rives its authority and jurisdiction — the Kentucky

Constitution — calls the subject matter here “sacred.”

Certainly the Commonwealth and its people, as well

as the United States, could alter the trial rights be-

longing to the people. However, the alteration ought

not to be effected lightly, as its pedigree reaches back

at least to the Magna Carta, wherein King John first

conceded that property rights’ disputes must remain

in the permanent county courts, rather than follow

the movable King’s Bench.

It is easy enough to distinguish between the will

of God and the will of the English barons, but it is

difficult not to see the hand of Providence shepherd-

ing the resolution of disputes in Anglo-American law

from the Medieval trial by combat, to the appeal to

the Kings’ Bench, finally to the right to a civil trial in

front of one’s peers. Whereas due process in the crim-

inal law is the modus wherein the citizens’ relation-

ship with the state mainly subsists, the civil law is

the modus wherein the citizens’ legal relationships

with each other subsists. Petitioners’ protestations

notwithstanding, civil trial rights are important, and

fundamental. More to the point, how agency law

treats such rights does not in any way impact upon

the FAA.

This Court in this case has not acted against ar-

bitration. Rather, the Court has acted to specify

rules in written agency. More precisely, it has en-

gaged in the interpretation of words on a piece of pa-

per, seeking to determine the intentions of a princi-

pal, from what is reasonably foreseeable.

Petitioners recite a litany of false analogies in

their petition, one of which demonstrates their mis-

construction of the issue at bar: “Kentucky’s legisla-

ture could not pass a law requiring more specificity

in the POA’s grant of authority to enforce an arbitra-

tion contract than is required for all other contracts

and this Court cannot craft one.” (Petition at p.7)

This is a straw man. Again, the Court here in effect

issued a canon of interpretation of language in an

instrument, in the endeavor to divine the intentions

of the principal. If the Kentucky legislature were to

pass the aforesaid statute, presumably it would be

issuing a proscription. The Supreme Court here

has issued no proscription.®

Nursing home facilities may still enforce ar-

bitration agreements with their residents

when the resident has signed the agreement

or validly authorized his agent to sign in

his stead. (emphasis added)

CONCLUSION

Complaint was filed in this case years ago. Re-

spondent prays this Court deny rehearing.

Respectfully submitted,

/3/ E. er _

6 Whether the aforesaid proscription — limiting the circum-

stances under which a power of attorney may execute an arbi-

tration agreement — would be federally pre-empted is not a

question in front of this Court. If, to take a different perspec-

tive, the legislature attempted to “interpret” principal inten-

tions statutorily, t.e., not place a wicket in front of creating the

agency power, but rather, claim to legislatively determine a

principal's intent; such would probably constitute an invasion of

the judiciary’s sphere and a violation of the principle of the sep-

aration of powers. This has not occurred, and Petitioners’ point

is entirely irrelevant and, again, not in front of the bar.

Robert E. Salyer, Esq.

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, Ken-

tucky Court of Appeals, 360 Democrat Drive, Frank-

fort, KY 40601; Hon. Jean Chenault Logue, Circuit

Judge, Clark County Courthouse, P.O. Box 313, Win-

chester, KY 40391; Robert Salyer and Richard E.

Circeo, Esq., Wilkes & McHugh, P.A., 429 N. Broad-

way, P.O. Box 1747, Lexington, KY 40588-1747, and

J.T. Gilbert, Esq., Coy, Gilbert & Gilbert, 212 N. Se-

cond St., Richmond, KY 40475 on this 15th day of

December, 2015.

/s/

Counsel for Movants

COMMONWEALTH OF KENTUCKY

SUPREME COURT OF KENTUCKY

2013-SC-000430-I

KINDRED NURSING CENTERS LIMITED PART-

NERSHIP D/B/A WINCHESTER CENTRE FOR

HEALTH AND REHABILITATION N/K/A FOUN-

TAIN CIRCLE HEALTH AND REHABILITATION;

KINDRED NURSING CENTERS EAST, LLC; KIN-

DRED HOSPITALS LIMITED PARTNERSHIP;

KINDRED HEALTHCARE, INC.; KINDRED

HEALTHCARE OPERATING, INC.; KINDRED

REHAB SERVICES, INC. D/B/A PEOPLEFIRST

REHABILITATION

MOVANTS/PETITIONERS

Vv.

JANIS E. CLARK, Executrix of the Estate of OLIVE

G. CLARK, deceased, and on behalf of the wrongful

death beneficiaries of OLIVE G. CLARK

RESPONDENT/RESPONDENT

ON REVIEW FROM

COURT OF APPEALS

CASE NO: 2012-CA-002213-I

MOVANTS’ MOTION FOR LEAVE TO CITE

SUPPLEMENTAL AUTHORITY

Movants/Petitioners, 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 Oper-

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

Peoplefirst Rehabilitation, respectfully move for

leave to cite supplemental authority, specifically the

recent United States Supreme Court Opinion, ren-

dered December 14, 2015, for consideration by this

Court in the Petition for Rehearing:

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

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

tached).

DIRECTY involved the California Court of Ap-

peal’s refusal to enforce an arbitration agreement

pursuant to its interpretation of state law. The Cali-

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

California make the contract’s class-arbitration

waiver unenforceable?” DIRECTV, 2015 WL 8546242

at *3. California law previously held that class-

arbitration waivers in consumer contracts were un-

enforceable as unconscionable. Jd. at *3. However, in

2011, the U.S. Supreme Court held that same Cali-

fornia rule “stands as an obstacle to the accomplish-

ment and execution of the full purposes and objec-

tives of Congress” embodied in the Federal Arbitra-

tion 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 waivers are still un-

enforceable “under California law.” DIRECTV, 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

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 authori-

tative interpretation of that Act. Consequent-

ly, 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] deci-

sion is a correct statement of California law but

whether (assuming it is) that state law is con-

sistent 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 Cali-

fornia court places arbitration contracts ‘on equal

footing with all other contracts.” Id. at *6 (citing

Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S.

440, 443 (2006)):

And in doing so, we must examine wheth-

er 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 have offered but rather to those it did

in fact offer.

DIRECTV, 2015 WL 8546242 at *6 (emphasis add-

ed).

The California court's interpretation of the arbi-

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

tration] field.” Id. 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), ra-

ther than a general principle that would

apply 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

powers granted by the Clark, Whisman and Wellner

POAs, specifically evaluating whether those POAs

granted authority sufficient for an arbitration con-

tract — which this Court differentiated from all oth-

er contracts!, as containing an additional “waiver of

a fundamental constitutional right” to jury trial:

| “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 jurispru-

Our focus has been, and remains, upon the

scope of the powera 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

agreement, 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 naar engeen age sufficient au-

thority 34 2¢] 1CEz . —-

bitration contract. Even ane finding the Clark POA

granted sufficient authority to sign a contract, (see

id. at * 14), the Court narrowly focused on the under-

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

extent to which the authority of an agent to waive

his principal's fundamental constitutional rights to

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

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

grant of authority”). Jd. at *15. DIRECTV holds this

reasoning is preempted by the FAA. See DIRECTV,

2015 WL 8546242 at *8.

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

omitted), the Supreme Court held that the FAA

preempted the Court of Appeal’s decision and ruled

that the state court must enforce the arbitration

dence dictating that the principal’s explicit grant of authority

delineated 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.

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 precisely 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

instructive to this Court in ruling on the Petition for

Rehearing. 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/__

Donald L. Miller, II, Esq.

J. Peter Cassidy, III, Esq.

Kristin M. Lomond, Esq.

9300 Shelbyville Road, Suite 400

Louisville, Kentucky 40222

Telephone: (502) 423-6390

Facsimile: (602) 423-6391

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 Hospi-

tals Limited Partnership; Kindred Healthcare, Inc.;

and Kindred Healthcare Operating, Inc.

Office of the Clerk

SUPREME COURT OF KENTUCKY

ROOM 209, STATE CAPITOL

700 CAPITAL AVE.

FRANKFORT, KENTUCKY 40601-348

SUSAN STOKLEY CLARY

Clerk

Telephone: (502) 564-4720

Fax: (502) 564-5491

RECEIPT NOTICE

TO: DONALD LEE MILLER II

FROM: SUSAN STOKLEY CLARY, CLERK

DATE: 12/16/2015

FILE NUMBER: 2013—SC-000430—I

KINDRED NURSING CENTERS LIMITED PART-

NERSHIP, D/B/A WINCHESTER CENTRE FOR

HEALTH AND REHABILITATION N/K/A

APPELLANTS

JANIS E. CLARK, EXECUTRIX OF THE ESTATE

OF OLIVE G. CLARK, APPELLEES DECEASED,

AND ON BEHALF OF THE WRONGFUL DEATH

APPELLEES

THE DOCUMENT LISTED BELOW HAS BEEN

RECEIVED AND FILED IN THIS OFFICE TODAY

IN THE ABOVE CASE:

MOVANTS FILED MOTION FOR LEAVE TO CITE

SUPPEMENTAL AUTHORITY.

CC: JAMES T. GILBERT KRISTIN M. LOMOND

JAMES PETER CASSIDY IIIT RICHARD ERIC CIRCEO

ROBERT EARL SALYER

FILE COPY

COMMONWEALTH OF KENTUCKY

SUPREME COURT OF KENTUCKY

CASE NO. 2013 -SC-000430

Kindred Nursing Centers Limited Partnership d/b/a

Winchester Centre for Health and Rehabilitation

n/k/a Fountain Circle Health and Rehabilitation,

et al.

MOVANTS/DEFENDANTS

Janis E. Clark, as Executrix on behalf of the Estate

of Olive G. Clark, deceased, and on behalf of the

wrongful death beneficiaries of Olive G. Clark

R SSPONDENTS/PLAINTIFFS

On Appeal from the Kentucky Court of Appeals

2012-CA-002213

Clark County Circuit Court

Civil Action No. 10-CI-00469

RESPONSE TO MOTION TO SUPPLEMENT

AUTHORITIES IN SUPPORT OF PETITION-

ERS’ PENDING PETITION FOR REHEARING

Respondents oppose the motion to supplement. The

U.S. Supreme Court decision which Petitioners seek

to supplement as authority, DIRECTV, Inc. v.

Imburgia, ___. —-U.S. __sédS. «Ct. — ss 2015 WL

8546242 (2015), has no bearing upon the petition for

rehearing. The motion, like the underlying petition

for rehearing, should be denied.

RESPONSE

DIRECTYV, Inc. v. Imburgia, does not change or

add to the law pertinent to the case at bar. As that

Opinion itself maintains, DIRECTYV in effect simply

restates the law from AT&T Mobility, LLC v. Con-

cepcion, 131 S.Ct. 1740 (2011), regarding enforcing

arbitration agreements per their terms.

Moreover, Petitioners are profoundly misinter-

preting just what this Court was doing in the consol-

idated case of Extendicare Homes, Inc. v. Belinda

Whisman; Kindred Nursing Centers LP v. Janis

Clark; and Kindred Nursing Centers LP v. Beverly

Wellner, 2015 WL 5634309 ---SW3d---- (Ky. 2015)

(hereinafter “Whisman”). Petitioners continue to

maintain that the Federal Arbitration Act (FAA), 9

USC § 2, pre-empts Whisman’s result. Now they

wish to cite to DIRECTV in the matter to that effect.

In fact the FAA is not triggered by the Whisman

decision. Petitioners’ confusion lies in comprehending

exactly the nature of Whisman’s analysis. Self-

evidently, this Court did not announce a proscrip-

tion against executing any kind of arbitration con-

tract, i.e., that arbitration contracts, validly-made,

would not be enforced according to their terms or

under certain circumstances. As no one doubts, par-

ties have an unencumbered right to enter into arbi-

tration agreements in Kentucky. Rather, the

Whisman Court engaged in an interpretation of a

personal legal writing and grant of authority,

i.e., a power-of-attorney executed by a private party.

I. As the Kentucky Supreme Court is the final

interpreter of the General Assembly’s stat-

utes, so too is the Kentucky Supreme Court

the final interpreter of the power-of-

attorney.

To use an analogy, while the Kentucky General

Assembly may not prevent anyone from executing an

arbitration agreement, it certainly could discrimi-

nate against arbitration in effect by declining to

create authority to execute arbitration contracts in

a Kentucky statutory scheme setting up a statutory

agent (e.g., a guardian in a State guardianship

scheme). And the U.S. Supreme Court has time and

again made clear that State statutory interpretation

of what a State legislature has created, t.e., the prop-

er interpretation of that State’s own laws, is binding

upon all courts, as the definitive interpretation.

“There is no doubt that we are bound by a state

court’s construction of a state statute.” Wisconsin v.

Mitchell, 508 US 476, 483 (1993) (citing R.A.V. v. St.

Paul, 505 US 377, 381 (1992); New York v. Ferber,

458 U.S. 747, 769 n. 24 (1982); Terminiello v. Chica-

go, 337 U.S. 1, 4 (1949)). Whereas the question of

whether a State legislation is (U.S.) Constitutional or

not, may fall upon the U.S. Supreme Court, inter-

preting what the State legislation means, is en-

tirely a State judicial function.

This same principle applies to interpreting the

principal’s meaning in a power-of-attorney. See U.S.

v. Bussey, 452 FSupp 891, 895 (D.C.La. 1978) (“[W]e

can find no authority which holds that federal law

1 Logically, if the State Supreme Court erred in interpreting a

State statute, it would be up to that’s State’s legislature to cor-

rect the high court’s error.

governs the interpretation or effect of a power of at-

torney.”); see also J.F. Toner & Son, Inc. v. Farm

Credit Bank of Baltimore, 1992 WL 404372

(W.D.Va.) (“[T]he interpretation, issuance and use of

a power of attorney is governed entirely by state

law.”). And even Petitioners have conceded that,

while the courts may not discriminate against arbi-

tration, principals surely can. And who is the final

decision-maker in what a principal has done, in a

controversy at bar?

This Court.

A power-of-attorney is in some sense the creation

of “personal law,” whereby a principal (analogous to

the legislature empowering a statutory agent) is le-

gally empowering the principal’s agent to act on the

principal's behalf. The Kentucky Supreme Court has

engaged in interpretation; it has not engaged in a

proscription of arbitration, and thus the FAA is not

implicated.

Il. DIRECTV v. Imburgia is a case pertaining

to interpreting and construing a contract,

and when to revoke that contract;? it is not

a case pertaining to interpreting an in-

strument of agency authority.

In DIRECTV v. Imburgia, the media corporation

defendant provided a form contract to its California

consumers which included a conditional arbitration

clause. This arbitration clause included language

prohibiting class action arbitration. However, the

(pre-Concepcion) clause also provided that “if the

2 To provide the context and lineage behind the DIRECTV deci-

sion, in 2011 AT&T v. Concepcion struck down California’s law

restricting class action waivers in arbitration agreements.

‘law of your state,’ makes the waiver of class arbitra-

tion unenforceable, then the entire [arbitration] pro-

vision ‘is unenforceable.” See DIRECTV at *3. Bi-

zarrely, the California courts held that this provision

incorporated pre-Concepcion (and invalid) California

consumer law prohibiting class waivers in consumer

arbitration into the DIRECTV contract, meaning

that the arbitration clause as a whole was nullified

by its own operation.

The U.S. Supreme Court reversed, keeping in

mind the words of 9 USC § 2 (emphasis added):

A written provision in ... a contract ... to set-

tle by arbitration a controversy thereafter

arising out of such contract ... or an agree-

ment in writing to submit to arbitration an

existing controversy arising out of such a

contract... shall be valid, irrevocable, and en-

forceable, save upon such grounds as exist at

law or in equity for the revocation of any

contract.

California does not routinely import defunct, in-

valid law into contracts, just in order to dismantle

those contracts. Given that the evinced intent of the

contracting DIRECTV parties was to enter into an

arbitration agreement, and given that this intention

would be satisfied by the importation of valid post-

Concepcion California law, and could only be upset

by the importation of obsolete, pre-empted, pre-

Concepcion law; normative contract construction

would opt for the former. A court would only opt for

8 That is, it appears that the company preferred bilateral arbi-

tration; but, if forced to face a class action, then it would opt for

in-court litigation.

the latter if it sought to revoke the agreement be-

cause of its subject matter.

Finding the existence of an agreement was never

the problem. An agreement had undoubtedly been

entered into in DIRECTV. The DIRECTV question

arose in the context of construing that agreement,

and what to enforce in that construction. And it in-

volved contract revocation.

Not the case here. The question here pertains to

the package of powers given by a principal to the

agent in a written instrument, and does not pertain

whatsoever, despite what Petitioners wish to believe,

to revoking a contract or construing its terms.

And so the ultimate question must be this: What

institution is the ultimate authority on the meaning

of a power-of-attorney, executed and used in a par-

ticular State, and involving that States’ citizens as

principal and agent? The obvious answer is, again:

That State’s Supreme Court. The FAA does not sig-

nal any intention of Congress that State courts (or

federal courts for that matter) interpret State agency

law in such a manner that they would not otherwise

do, were the FAA not to exist. Indeed, Respondent

has searched and found no instance where State

agency law has been commandeered to advance a

federal statutory right, however much such a right is

favoured.‘

4 Absurd and inconsistent results would arise if the American

judiciary routinely interpreted State agency law contingent up-

on the existence of a federal statute to which a litigant had cre-

atively tied a question of authority. Rather, a power-of-attorney

is an objective statement of authority.

CONCLUSION

Petitioners have made amply clear their dissatis-

faction with Whisman. It is time to move on.

Whisman, in its essence, is a case about inter-

preting a written grant of authority, the power-of-

attorney—not contract interpretation or construc-

tion—and thus DIRECTV has no application. Cer-

tainly DIRECTV announces nothing constituting

good cause for reconsideration pursuant to the black

letter of CR 76.32, which provides (emphasis added):

Except in extraordinary cases when justice

demands it, a petition for rehearing shall be

limited to a consideration of the issues ar-

gued on the appeal and will be granted only

when it appears that the court has over-

looked a material fact in the record, or a

controlling statute or decision, or has mis-

conceived the issues presented on the ap-

peal or the law applicable thereto.

Petitioners’ disappointment is not the standard

for CR 76.32 relief, and DIRECTV does nothing to

meet Petitioners’ burden. Respondent prays this

Court deny Petitioners’ motion to supplement.

Submitted By:

‘si

Robert E. Salyer (KY Bar # 91859)

Richard E. Circeo (KY Bar # 90243)

WILKES & MCHuGH, P.A.

P.O. Box 1747

Lexington, KY 40588-1747

Telephone Number: (859) 455-3356

Facsimile Number: (859) 455-3362

And

J.T. Gilbert, Esq.

Coy , Gilbert & Gilbert

212 N. Second St.

Richmond, KY 40475

Telephone Number: (859) 623-3877

Facsimile Number: (859) 624-5435

Counsel for Respondent

CERTIFICATE OF SERVICE

The undersigned hereby certifies that a true copy

of the foregoing document has been served via U.S.

Mail, with sufficient postage thereon to ensure deliv-

ery, this 6th day of July, 2015, upon the following:

Donald L. Miller, II, Esq.

J. Peter Cassidy, III, Esq.

Quintairos, Prieto, Wood & Boyer, P.A.

9300 Shelbyville Road, Suite 400

Louisville, KY 40222

Hon. Jean Chenault Logue

Clark County Circuit Judge

Clark County Courthouse

34 S. Main St.

P.O. Box 313

Winchester, KY 40391

The Kentucky Court of Appeals

360 Democrat Dr.

Frankfort, KY 40601

100

/s/

Wilkes & McHugh, P.A.

Attorneys for Respondent

101

COMMONWEALTH OF KENTUCKY

SUPREME COURT OF KENTUCKY

CASE NO. 2013-SC-000431

Kindred Nursing Centers Limited Partnership d/b/a

Winchester Centre for Health and Rehabilitation

n/k/a Fountain Circle Health and Rehabilitation, et

al.

PETITIONERS/DEFENDANTS

Beverly M. Wellner, Individually, an on behalf of the

Estate, of Joe P. Wellner, deceased, and on behalf of

the wrongful death beneficiaries of Joe P. Weliner

RESPONDENTS/PLAINTIFFS

On Appeal from the Kentucky Court of Appeals

2013-CA-002212

Clark County Circuit Court

Civil Action No. 10-CI-00472

RESPONSE TO MOTION TO SUPPLEMENT

AUTHORITIES IN SUPPORT OF PETITION-

ERS’ PENDING PETITION FOR REHEARING

Respondents oppose the motion to supplement. The

U.S. Supreme Court decision which Petitioners seek

to supplement as authority, DIRECTV, Inc. v.

Imburgia, _U.S. _, __ 8. Ct. _. 2015 WL 8546242

(2015), has no bearing upon the petition for rehear-

ing. The motion, like the underlying petition for re-

hearing, should be denied.

102

RESPONSE

DIRECTV, Inc. v. Imburgia, does not change or

add to the law pertinent to the case at bar. As that

Opinion itself maintains, DIRECTV in effect simply

restates the law from AT&T Mobility, LLC v. Con-

cepcion, 131 S.Ct. 1740 (2011), regarding enforcing

arbitration agreements per their terms.

Moreover, Petitioners are profoundly misinter-

preting just what this Court was doing in the consol-

idated case of Extendicare Homes, Inc. v. Belinda

Whisman; Kindred Nursing Centers LP v. Janis

Clark; and Kindred Nursing Centers LP v. Beverly

Wellner, 2015 WL 5634309 --- SW3d---- (Ky. 2015)

(hereinafter “Whisman”). Petitioners continue to

maintain that the Federal Arbitration Act (FAA), 9

USC § 2, pre-empts Whisman’s result. Now they

wish to cite to DIRECTV in the matter to that effect.

In fact the FAA is not triggered by the Whisman

decision. Petitioners’ confusion lies in comprehending

exactly the nature of Whisman’s analysis. Self-

evidently, this Court did not announce a proscription

against executing any kind of arbitration contract,

i.e., that arbitration contracts, validly-made, would

not be enforced according to their terms or under cer-

tain circumstances. As no one doubts, parties have

an unencumbered right to enter into arbitration

agreements in Kentucky. Rather, the Whisman

Court engaged in an interpretation of a personal le-

gal writing and grant of authority, i.e., a power-of-

attorney executed by a private party.

103

Itl. As the Kentucky Supreme Court is the final

interpreter of the General Assembly’s stat-

utes, so too is the Kentucky Supreme Court

the final interpreter of the power-of-

attorney.

To use an analogy, while the Kentucky General

Assembly may not prevent anyone from executing an

arbitration agreement, it certainly could discrimi-

nate against arbitration in effect by declining to

create authority to execute arbitration contracts in

a Kentucky statutory scheme setting up a statutory

agent (eg., a guardian in a State guardianship

scheme). And the U.S. Supreme Court has time and

again made clear that State statutory interpretation

of what a State legislature has created, i.e., the prop-

er interpretation of that State’s own laws, is binding

upon all courts, as the definitive interpretation.'

“There is no doubt that we are bound by a state

court’s construction of a state statute.” Wisconsin v.

Mitchell, 508 US 476, 483 (1993) (citing R.A.V v. Si.

Paul, 505 US 377, 381 (1992); New York v. Ferber,

458 U.S. 747, 769 n. 24 (1982); Terminiello v. Chica-

go, 337 U.S. 1, 4 (1949)). Whereas the question of

whether a State legislation is (U.S.) Constitutional or

not, may fall upon the U.S. Supreme Court, inter-

preting what the State legislation means, is en-

tirely a State judicial function.

This same principle applies to interpreting the

principal's meaning m a power-of- attorney. See US.

v. Bussey, 452 FSupp 891, 896 (D.C.La. 1978) (“[W]e

can find no authority which holds that federal law

1 Logically, if the State Supreme Court erred in interpreting a

State statute, it would be up to that’s State legislature to cor-

rect the high court's error.

104

governs the interpretation or effect of a power of at-

torney.”); see also J.F Toner & Son, Inc. v. Farm

Credit Bank of Baltimore, 1992 WL 404372

(W.D.Va.) (‘[T]he interpretation, issuance and use of

a power of attorney is governed entirely by state

law.”). And even Petitioners have conceded that,

while the courts may not discriminate against arbi-

tration, principals surely can. And who is the final

decision-maker in what a principal has done, in a

controversy at bar?

This Court.

A power-of-attorney is in some sense the creation

of “personal law,” whereby a principal (analogous to

the legislature empowering a statutory agent) is le-

gally empowering the principal's agent to act on the

principal’s behalf. The Kentucky Supreme Court has

engaged in interpretation; it has not engaged in a

proscription of arbitration, and thus the FAA is not

implicated.

IV. DIRECTV v. Imburgia is a case pertaining

to interpreting and construing a contract,

and when to revoke that contract’; it is not

a case pertaining to interpreting an in-

strument of agency authority.

In DIRECTV v. Imburgia, the media corporation

defendant provided a form contract to its California

consumers which included a conditional arbitration

clause. This arbitration clause included language

prohibiting class action arbitration. However, the

(pre-Concepcion) clause also provided that “if the

2 To provide the context and lineage behind the DIRECTV deci-

sion, in 2011 AT&T v. Concepcion struck down California’s law

restricting class action waivers in arbitration agreements.

105

‘law of your state,’ makes the waiver of class arbitra-

tion unenforceable, then the entire [arbitration] pro-

vision ‘is unenforceable.” See DIRECTV at *3. Bi-

zarrely, the California courts held that this provision

incorporated pre-Concepcion (and invalid) California

consumer law prohibiting class waivers in consumer

arbitration into the DIRECTV contract, meaning

that the arbitration clause as a whole was nullified

by its own operation.

The U.S. Supreme Court reversed, keeping in

mind the words of 9 USC § 2 (emphasis added):

A written provision in ... a contract ... to set-

tle by arbitration a controversy thereafter

arising out of such contract ... or an agree-

ment in writing to submit to arbitration an

existing controversy arising out of such a

contract... shall be valid, irrevocable, and en-

forceable, save upon such grounds as exist at

law or in equity for the revocation of any

contract.

California does not routinely import defunct, in-

valid law into contracts, just in order to dismantle

those contracts. Given that the evinced intent of the

contracting DIRECTV parties was to enter into an

arbitration agreement, and given that this intention

would be satisfied by the importation of valid post-

Concepcion California law, and could only be upset

by the importation of obsolete, pre-empted, pre-

Concepcion law; normative contract construction

would opt for the former. A court would only opt for

8 That is, it appears that the company preferred bilateral arbi-

tration; but, if forced to face a class action, then it would opt for

in-court litigation.

106

the latter if it sought to revoke the agreement be-

cause of its subject matter.

Finding the existence of an agreement was never

the problem. An agreement had undoubtedly been

entered into in DIRECTV. The DIRECTV question

arose in the context of construing that agreement,

and what to enforce in that construction. And it in-

volved contract revocation.

Not the case here. The question here pertains to

the package of powers given by a principal to the

agent in a written instrument, and does not pertain

whatsoever, despite what Petitioners wish to believe,

to revoking a contract or construing its terms.

And so the ultimate question must be this: What

institution is the ultimate authority on the meaning

of a power-of-attorney, executed and used in a par-

ticular State, and involving that States’ citizens as

principal and agent? The obvious answer is, again:

That State’s Supreme Court. The FAA does not sig-

nal any intention of Congress that State courts (or

federal courts for that matter) interpret State agency

law in such a manner that they would not otherwise

do, were the FAA not to exist. Indeed, Respondent

has searched and found no instance where State

agency law has been commandeered to advance a

federal statutory right, however much such a right is

favoured.*

4 Absurd and inconsistent results would arise if the American

judiciary routinely interpreted State agency law contingent up-

on the existence of a federal statute to which a litigant had cre-

atively tied a question of authority. Rather, a power-of-

attorney is an objective statement of authority.

107

CONCLUSION

Petitioners have made amply clear their dissatis-

faction with Whisman. It is time to move on.

Whisman, in its essence, is a case about inter-

preting a written grant of authority, the power-of-

attorney-not contract interpretation or construction-

and thus DIRECTV has no application. Certainly

DIRECTV announces nothing constituting good

cause for reconsideration pursuant to the black letter

of CR 76.32, which provides (emphasis added):

Except in extraordinary cases when justice

demands it, a petition for rehearing shall be

limited to a consideration of the issues ar-

gued on the appeal and will be granted only

when it appears that the court has over-

looked a material fact in the record, or a

controlling statute or decision, or has mis-

conceived the issues presented on the ap-

peal or the law applicable thereto.

Petitioners’ disappointment is not the standard

for CR 76.32 relief, and DIRECTV does nothing to

meet Petitioners’ burden. Respondent prays this

Court deny Petitioners’ motion to supplement.

Submitted By:

/3/ Robert E. Salyer

Robert E. Salyer (KY Bar # 91859)

Richard E. Circeo (KY Bar# 90243)

WILKES & MCHUGH, P.A.

P.O. Box 1747

Lexington, KY 40588-1747

Telephone Number: (859) 455-3356

Facsimile Number: (859) 455-3362

108

And

J.T. Gilbert, Esq.

Coy , Gilbert & Gilbert

212 N. Second St.

Richmond, KY 40475

Telephone Number: (859) 623-3877

Facsimile Number: (859) 624-5435

Counsel for Respondent

CERTIFICATE OF SERVICE

The undersigned hereby certifies that a true copy

of the foregoing document has been served via U.S.

Mail, with sufficient postage thereon to ensure deliv-

ery, this 6th day of July, 2015, upon the following:

Donald L. Miller, II, Esq.

J. Peter Cassidy, III, Esq.

Quintairos, Prieto, Wood & Boyer, P.A.

9300 Shelbyville Road, Suite 400

Louisville, KY 40222

Hon. Jean Chenault Logue

Clark County Circuit Judge

Clark County Courthouse

34 S. Main St. P.O. Box 313

Winchester, KY 40391

The Kentucky Court of Appeals

360 Democrat Dr.

Frankfort, KY 40601

/s/ Robert E. Salyer

Wilkes & McHugh, P.A.

Attorneys for Respondent

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.