In a 7-1 decision issued today, the Supreme Court of the United States continued its long line of cases holding that the FAA preempts state law.  Kindred Nursing Centers v. Clark, No. 16-32 (May 14, 2017) (click here for a copy of the decision).  The Kentucky Supreme Court had developed a rule that a power of attorney instrument cannot authorize an agent to waive fundamental rights, such as the right to a jury trial, unless the power of attorney expressly mentions those fundamental rights.  In other words, a principal should not reasonably expect that fundamental rights are covered by a general power of attorney.  As a result of this state rule governing Kentucky powers of attorney, a general power of attorney does not grant an agent the ability to waive the principal’s right to worship freely, or to terminate the principal’s parental rights, or to waive the principal’s right to a jury trial, or any other fundamental right.  Instead, the power of attorney must provide a clear statement that the agent can waive a fundamental right of the principal.

The Supreme Court found that the FAA preempts this clear-statement rule from Kentucky because the state rule singles out arbitration agreements for special treatment.  The majority reasoned that the Kentucky rule, although couched in broad terms applicable to all fundamental rights, has never really been applied to other fundamental rights, such as the right to freely communicate or to sell one’s property.

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