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Lack of Exceptions in Federal Arbitration Act Upheld in Marmet v. Brown

Friday, February, 24, 2012

The recent decision by the U.S. Supreme Court in Marmet Health Care, Inc. vs. Brown is the fourth decision the Supreme Court has made to illustrate that the Federal Arbitration Act trumps state laws regarding the enforceability of mandatory arbitration clauses. In this case, the decision indicated that litigation could not be sought for death and personal injury against nursing homes if a class action waiver was in the contract.


West VA's Decision on Contract Arbitration Vacated


Before the U.S. Supreme Court determined that the FAA had the ultimate authority in this matter, the West Virginia Supreme Court had already decided somewhat to the contrary. That is, they ruled that arbitration waivers were not enforceable in cases of personal injury and wrongful death. Their reasoning was that “Congress did not intend for the FAA to be, in any way, applicable to personal injury or wrongful death suits that only collaterally derive from a written agreement that evidences a transaction affecting interstate commerce, particularly where the agreement involves a service that is a practical necessity for members of the public.”


The U.S. Supreme Court thought differently. Their decision to vacate the state's ruling was based on a lack of exceptions within the FAA itself for these claims. Personal injury and wrongful death do not justify a state supreme court to ignore its duty to enforce the FAA. Further, the U.S. Supreme Court says that West Virginia's interpretation of Congress' intent was “tendentious” and “created from whole cloth.”


The Implications for Legal Arbitration


The language of the Supreme Court's decision was clear. They stated that it was the duty of every state-level court to hold the Federal Arbitration Act above state regulations, and that interpreting the FAA with “surely Congress' intent was/was not...” is not valid. This case makes the fourth time just this last year, the Supreme Court has held that contract arbitration clauses are legally binding.