U.S. Supreme Court Affirms Broad Construct of FAA
February 28, 2012
Hot off the presses from our United States Supreme Court is a decision decided February 21, 2012 affirming a broad construction of the Federal Arbitration Act (“FAA”). While the decision, Marmet Healthcare Center, Inc. v. Clayton Brown, 565 U.S. – (2012) No. 11391, would appear to be a case of narrow import – it reverses a decision of the West Virginia Supreme Court of Appeals that held arbitration provisions in nursing home contracts to be invalid – the language is far reaching. The Supreme Court, in a sharply-worded, five-page opinion states there is a long and clear history that arbitration provisions are completely valid under the Federal Arbitration Act and should be enforced. On a court known for long opinions and complicated balancing tests, the opinion is refreshing in its clarity: “[w]hen state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA.” Slip Op. at 3-4 (quoting AT&T Mobility LLC v. Concepcion, 563 U.S. – (2011)(Slip Op. at 6-7).
The importance of this decision is clear: arbitration provisions are to be upheld. Period. So while the narrow holding of Brown applies to only a tiny subset of West Virginia cases, the Supreme Court’s rule is broad and permits employers wide latitude in requiring arbitration agreements from their employees and then stating that those agreements are to be enforced. The wisdom and value of an arbitration provision in an employee’s application or contract is something that will be discussed in subsequent editions of our labor and employment focused e-newsletter, SuperVision Today.