Docket No. 106511.

IN THE

SUPREME COURT

OF

THE STATE OF ILLINOIS

__________________

SUE CARTER, Special Adm’r of the Estate of Joyce Gott, Deceased,

Appellee (Lisa Madigan, Attorney General of the State of Illinois,

Intervenor-Appellee), v. SSC ODIN OPERATING COMPANY,

LLC, d/b/a Odin Healthcare Center, Appellant.

Opinion filed April 15, 2010.

JUSTICE THOMAS delivered the judgment of the court, with

opinion.

Chief Justice Fitzgerald and Justices Kilbride, Garman, and Burke

concurred in the judgment and opinion.

Justices Freeman and Karmeier took no part in the decision.

OPINION

The narrow question presented in this case is whether the

antiwaiver provisions of the Nursing Home Care Act (210 ILCS

45/3–606, 3–607 (West 2006)) are “grounds as exist at law or in

equity for the revocation of any contract” within the meaning of

section 2 of the Federal Arbitration Act (FAA) (9 U.S.C. §2 (2000)).

The appellate court answered this question in the affirmative, finding

that the antiwaiver provisions avoid the preemptive effect of the FAA

on that basis. For the reasons that follow, we reverse the judgment of
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the appellate court and remand the cause so that the appellate court

may consider issues raised by the parties but not previously addressed.

BACKGROUND

Plaintiff, Sue Carter, is the special administrator of the estate of

Joyce Gott. Defendant, SSC Odin Operating Company, LLC, is a

nursing home located in Odin, Illinois, that does business as Odin

Healthcare Center. Gott was a resident of defendant’s nursing home

from May 20, 2005, until July 29, 2005, and again from January 12,

2006, until her death on January 31, 2006. Plaintiff, acting as the legal

representative of Gott, entered into a written “Health Care Arbitration

Agreement” with defendant on May 20, 2005, upon Gott’s initial

admission. Gott herself signed a “Health Care Arbitration Agreement”

six days after her second admission. Plaintiff’s signature does not

appear on this second agreement, and both agreements are comprised

of the same, identical terms. 

In both agreements, the parties agreed to submit to binding

arbitration “all disputes with each other and their representatives

arising out of or in any way related or connected to the Arbitration

Agreement and all matters related thereto including matters involving

the Resident’s stay and care provided at the Facility.” Specifically

included within the scope of the agreements were “any disputes

concerning whether any statutory provisions relating to the Resident’s

rights under Illinois law were violated.” The agreements also stated

that each party waived its right to a trial by jury, stating in all capital

letters:

“YOU CANNOT BE REQUIRED TO SIGN THIS

AGREEMENT IN ORDER TO RECEIVE TREATMENT,

BY SIGNING THIS AGREEMENT, YOUR RIGHT TO

TRIAL BY JURY OR A JUDGE IN COURT WILL BE

BARRED AS TO ANY DISPUTE RELATING TO

INJURIES THAT MAY RESULT FROM NEGLIGENCE

DURING YOUR TREATMENT OR CARE, AND WILL BE

REPLACED BY AN ARBITRATION PROCEDURE.

THIS AGREEMENT PROVIDES THAT ANY CLAIM

WHICH MAY ARISE OUT OF YOUR HEALTH CARE

WILL BE SUBMITTED TO A PANEL OF
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ARBITRATORS, RATHER THAN TO A COURT FOR

DETERMINATION.THISAGREEMENT REQUIRES ALL

PARTIES SIGNING IT TO ABIDE BY THE DECISION OF

THE ARBITRATION PANEL.”

The agreements further stated, however, that they do not apply to

“any dispute where the amount in controversy is less than ***

$200,000.” The parties also agreed that the resident or legal

representative would have a right to rescind the agreement within 30

days of signing and that the execution of the agreement was not a

precondition for admission to the facility. The agreements additionally

provided that defendant would pay all arbitrator fees and up to $5,000

in reasonable “attorney fees and costs for the Resident in any claims

against the Facility.” Finally, the agreements noted that they were

governed by the FAA and that if any portion was determined invalid

or unenforceable, the remainder of the terms would continue to be

binding.

Following Gott’s death, plaintiff filed a two-count complaint in the

circuit court of Marion County against defendant. Count I was a

statutory survival claim that alleged violations of the Nursing Home

Care Act (210 ILCS 45/2–107, 1–117 (West 2006)) and regulations

promulgated by the Illinois Department of Public Health pursuant to

that Act. Count II was a statutory action under the Wrongful Death

Act (740 ILCS 180/0.01 et seq. (West 2006)). In both counts, plaintiff

alleged that defendant had failed to provide adequate and properly

supervised care as needed by Gott. In count I, plaintiff alleged that

defendant’s acts and omissions resulted in Gott suffering injuries

between January 12, 2006, and January 31, 2006, during Gott’s

second stay at the facility. In the wrongful-death count, plaintiff

alleged that defendant’s acts and omissions resulted in Gott’s death

and therefore the loss of companionship and society for her heirs.

Defendant filed an answer to the complaint, denying the

allegations therein and asserting various affirmative defenses,

including that both counts of the lawsuit were precluded by the

arbitration agreements that were signed by Gott and plaintiff. Later,

defendant filed a motion to compel arbitration, relying on section 2 of

the FAA, which provides in relevant part as follows:

“A written provision in *** a contract evidencing a

transaction involving commerce to settle by arbitration a
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controversy thereafter arising out of such contract or

transaction, or the refusal to perform the whole or any part

thereof, or an agreement in writing to submit to arbitration an

existing controversy arising out of such a contract,

transaction, or refusal, 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

(2000).

Defendant attached to his motion a memorandum of law, a copy of

each of the agreements, and the affidavit of Mary Ann Smith,

defendant’s chief administrator, setting forth facts that allegedly

established that the arbitration agreements involved interstate

commerce within the meaning of section 2 of the FAA.

Plaintiff filed a memorandum of law (and supplement) in

opposition to the motion to compel arbitration, arguing, among other

things, that the agreements were in violation of the public policy of

this state, as expressed in sections 3–606 and 3–607 of the Nursing

Home Care Act, and were therefore void. Section 3–606 of the Act

provides that “[a]ny waiver by a resident or his legal representative of

the right to commence an action under Sections 3–601 through

3–607, whether oral or in writing, shall be null and void, and without

legal force or effect.” 210 ILCS 45/3–606 (West 2006). Section

3–607 of the Act provides that “[a]ny party to an action brought

under Sections 3–601 through 3–607 shall be entitled to a trial by jury

and any waiver of the right to a trial by a jury, whether oral or in

writing, prior to commencement of an action, shall be null and void,

and without legal force or effect.” 210 ILCS 45/3–607 (West 2006).

Plaintiff contended that the public policy behind the antiwaiver

provisions of sections 3–606 and 3–607 is a generally applicable

defense to all contracts in Illinois and therefore that policy is a

“grounds as exist at law *** for the revocation of any contract”

sufficient to negate FAA preemption. See 9 U.S.C. §2 (2000). Plaintiff

also raised three additional contentions in her effort to avoid

arbitration: (1) the FAA did not apply because the arbitration

agreements did not involve interstate commerce; (2) the agreements

were void for a lack of a mutual obligation to arbitrate; and (3)

because she did not sign the second arbitration agreement, she could

not be compelled to arbitrate.
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The circuit court denied the motion to compel arbitration without

an evidentiary hearing. First, the court found that with respect to the

wrongful-death claim, the right to proceed to recovery through

arbitration is considered a “right of action.” Thus, even if Gott would

have had to proceed to arbitration had she lived and wanted to

recover for her injuries, she nonetheless still had a “cause of action.”

According to the circuit court, although Gott was bound by the

agreements for her own claims, a plaintiff bringing claims on behalf of

the estate is not bound by the agreements. Second, with respect to the

survival count, the court found that the claim was valid because the

arbitration agreement was “unenforceable both because it is in direct

violation of emphatically stated public policy and for lack of

mutuality.” Finally, the circuit court seemed to be addressing whether

the transaction involved “interstate commerce” within the meaning of

the FAA when it made the following finding:

“Further, the underlying contractual relationship was between

an elderly Marion County resident and a Marion County care

facility. The contract was for personal care within this county.

The action relates to the care provided. The statute involved

here is a public safety statute that affects the relationships

between the contracting parties. This trial court believes that

in the aggregate the economic activity does not represent

general practice subject to federal control.”

The appellate court affirmed the circuit court’s decision, but did

so on the basis of a single question of law–whether the “public policy”

expressed in the Nursing Home Care Act was an ordinary state-law

contract defense applicable to all contracts, and thus beyond the

preemptive effect of the FAA. 381 Ill. App. 3d 717, 721. The

appellate court found that sections 3–606 and 3–607 embodied a

public policy that applied to all contracts generally and did not

“specifically target arbitration.” 381 Ill. App. 3d at 722-23. The court

concluded that this public policy was a legitimate contract defense

within the language of section 2 of the FAA (i.e., “save upon such

grounds as exist at law or equity for the revocation of any contract”)

that can void an arbitration agreement. In reaching this conclusion, the

court found defendant’s reliance upon Perry v. Thomas, 482 U.S.

483, 96 L. Ed. 2d 426, 107 S. Ct. 2520 (1987), and Doctor’s

Associates, Inc. v. Casarotto, 517 U.S. 681, 134 L. Ed. 2d 902, 116
 

1We note that subsequent to the release of this published opinion in

Fosler, the Second District, on March 1, 2010, filed a modified opinion upon

denial of rehearing. It did not, however, revise its previous holding.

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S. Ct. 1652 (1996), to be misplaced because the antiwaiver provisions

in the Nursing Home Care Act do not specifically mention arbitration,

and also because, under the Illinois statute, a contract that does not

mention arbitration but requires a bench trial would be voided to the

same extent as a contract requiring arbitration. 381 Ill. App. 3d at

722.

This court initially denied defendant’s petition for leave to appeal

on September 24, 2008. Defendant then filed a petition for a writ of

certiorari in the United States Supreme Court. There, defendant

argued that the appellate court misread the holdings of Perry and

Casarotto, and that its decision conflicted with Preston v. Ferrer, 522

U.S. 346, 169 L. Ed. 2d 917, 128 S. Ct. 978 (2008), and Southland

Corp. v. Keating, 465 U.S. 1, 79 L. Ed. 2d 1, 104 S. Ct. 852 (1984),

as well as with the holdings in four federal circuits. In its brief in

opposition to the motion for a writ of certiorari, plaintiff argued that

the intermediate nature of the appellate court’s decision was a factor

that weighed against allowing the petition. Plaintiff noted the

possibility that a conflict could arise among panels of the Illinois

appellate court on the issue, thereby requiring resolution by the Illinois

Supreme Court. Therefore, plaintiff asserted, the United States

Supreme Court, as a court of last resort, should not grant certiorari

because the issue has not been finally settled by Illinois in the absence

of a decision by the Illinois Supreme Court. On May 8, 2009, shortly

after plaintiff filed her brief in opposition to the writ, the Illinois

Appellate Court, Second District, filed Fosler v. Midwest Care Center

II, Inc., 391 Ill. App. 3d 397 (2009), which held that the FAA

preempted the antiwaiver provisions of the Nursing Home Care Act.1

Fosler expressly rejected the contrary holding of the Fifth District in

the present case. Fosler, 391 Ill. App. 3d at 399 (found that Carter

was wrongly decided and could not be reconciled with Perry).

Defendant’s petition for a writ of certiorari was denied on June 1,

2009.

Citing a conflict between the Second District’s decision in Fosler
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and the Fifth District’s decision in this case, defendant filed a motion

in this court for reconsideration of the denial of its petition for leave

to appeal. On August 7, 2009, this court granted defendant’s motion

and allowed the petition for leave to appeal. 210 Ill. 2d R. 315. We

exercise jurisdiction in this case pursuant to our supervisory authority

over the Illinois court system. See Ill. Const. 1970, art. VI, §16; In re

Estate of Funk, 221 Ill. 2d 30, 97-98 (2006); People v. Lyles, 217 Ill.

2d 210, 216 (2005) (our supervisory authority is a broad and

unlimited power that grants jurisdiction without need to articulate its

instruments or agencies). We also allowed the Attorney General of the

State of Illinois leave to intervene as an additional appellee. 735 ILCS

5/2–408(c) (West 2008). For the reasons that follow, we reverse the

judgment of the appellate court on the issue that it addressed, and we

remand the cause to the appellate court so that it may consider and

decide issues not reached by it previously. See Schwartz v. Cortelloni,

177 Ill. 2d 166, 172 (1997).

ANALYSIS

At the outset, we note that the appellate court did not consider the

question of whether the parties’ agreement evidenced “a transaction

involving commerce” within the meaning of the FAA (9 U.S.C. §2

(2000)), and it is not entirely clear that the circuit court reached this

issue either. We assume arguendo that the transaction satisfied the

interstate commerce requirement of the FAA, but this is an issue that

should be addressed by the appellate court on remand.

We now turn to the sole issue addressed by the appellate

court–whether the antiwaiver policy expressed in the Nursing Home

Care Act is a generally applicable contract defense that negates FAA

preemption. Questions of federal preemption and statutory

interpretation present questions of law that are subject to de novo

review. Board of Education, Joliet Township High School District

No. 204 v. Board of Education, Lincoln Way Community High School

District No. 210, 231 Ill. 2d 184, 194 (2008). 

The preemption doctrine is derived from the supremacy clause of

article VI of the United States Constitution, which provides that the

laws of the United States “shall be the supreme Law of the Land ***

any Thing in the Constitution or Laws of any State to the Contrary
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notwithstanding.” U.S. Const., art. VI, cl. 2. Thus, state law is null

and void if it conflicts with federal law. Sprietsma v. Mercury Marine,

197 Ill. 2d 112, 117 (2001). 

Federal law preempts state law under the supremacy clause in any

one of the following three circumstances: (1) express

preemption–where Congress has expressly preempted state action; (2)

implied field preemption–where Congress has implemented a

comprehensive regulatory scheme in an area, thus removing the entire

field from the state realm; or (3) implied conflict preemption–where

state action actually conflicts with federal law. Sprietsma, 197 Ill. 2d

at 117. The key inquiry in any preemption analysis is to determine the

intent of Congress. City of Chicago v. Comcast Cable Holdings,

L.L.C., 231 Ill. 2d 399, 405 (2008). 

In the present case, only conflict preemption is at issue. This is

because the FAA contains no express preemption provision, and it

does not indicate a congressional intent to occupy the entire field of

arbitration. Volt Information Sciences, Inc. v. Board of Trustees of the

Leland Stanford Junior University, 489 U.S. 468, 477, 103 L. Ed. 2d

488, 499, 109 S. Ct. 1248, 1255 (1989). Thus, state law is preempted

by the FAA to the extent that it actually conflicts with state law, that

is, to the extent that it “ ‘stands as an obstacle to the accomplishment

and execution of the full purposes and objectives of Congress.’ ” Volt

Information Sciences, 489 U.S. at 477, 103 L. Ed. 2d at 499, 109 S.

Ct. at 1255, quoting Hines v. Davidowitz, 312 U.S. 52, 67, 85 L. Ed.

581, 587, 61 S. Ct. 399, 404 (1941). This inquiry requires us to

consider the relationship between state and federal laws as they are

interpreted and applied and not simply as they are written. Jones v.

Rath Packing Co., 430 U.S. 519, 526, 51 L. Ed. 2d 604, 614, 97 S.

Ct. 1305, 1310 (1977). Moreover, it is well settled that uniformity of

decision is an important consideration when state courts interpret

federal statutes, and we will give “considerable weight” to the

decisions of federal courts that have addressed preemption under

section 2 of the FAA. See Sprietsma, 197 Ill. 2d at 120 (citing

Weiland v. Telectronics Pacing Systems, Inc., 188 Ill. 2d 415, 422

(1999), Wilson v. Norfolk & Western Ry. Co., 187 Ill. 2d 369, 383

(1999), and Busch v. Graphic Color Corp., 169 Ill. 2d 325, 335

(1996)). We also recognize that decisions of the United States

Supreme Court addressing FAA preemption are binding on this court.
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See Bowman v. American River Transportation Co., 217 Ill. 2d 75,

91 (2005).

The basic purpose of the FAA is to overcome the historical

reluctance of courts to enforce agreements to arbitrate. Allied-Bruce

Terminix Cos. v. Dobson, 513 U.S. 265, 270, 130 L. Ed. 2d 753, 762,

115 S. Ct. 834, 838 (1995). When Congress passed the FAA in 1925,

it intended courts to enforce agreements by parties to arbitrate and to

place such agreements on the same footing as other contracts. AlliedBruce, 513 U.S. at 270-71, 130 L. Ed. 2d at 762, 115 S. Ct. at 838.

A state statute stands as an obstacle to the purposes of the FAA if it

targets arbitration provisions for disfavored treatment not applied to

other contractual terms generally. Allied-Bruce, 513 U.S. at 281, 130

L. Ed. 2d at 769, 115 S. Ct. at 843. Similarly, state provisions form

an obstacle if they “take their meaning from the fact that a contract to

arbitrate is at issue, or frustrate arbitration, or provide a defense to it.”

Securities Industry Ass’n v. Connolly, 883 F.2d 1114, 1123 (1st Cir.

1989).

Here, defendant argues that the appellate court misconstrued the

United States Supreme Court’s decisions in Perry and Casarotto, and

failed to consider the more factually and analytically pertinent

decisions of Southland Corp. v. Keating, 465 U.S. 1, 79 L. Ed. 2d 1,

104 S. Ct. 852 (1984), and Preston v. Ferrer, 552 U.S. 346, 169 L.

Ed. 2d 917, 128 S. Ct. 978 (2008). We agree.

Over 25 years ago, in Southland, the Supreme Court first held that

the FAA applies in state as well as federal court and preempts

conflicting state laws. Southland, 465 U.S. at 16, 79 L. Ed. 2d at 15,

104 S. Ct. at 861. Southland involved a provision of the California

Franchise Investment Law that provided that “ ‘[a]ny condition,

stipulation or provision purporting to bind any person acquiring any

franchise to waive compliance with any provision of this law or any

rule or order hereunder is void.’ ” Southland, 465 U.S. at 10, 79 L.

Ed. 2d at 11, 104 S. Ct. at 858, quoting Cal. Corp. Code Ann. §31512

(West 1977). The California Supreme Court interpreted this statute to

require judicial consideration of claims brought under it and therefore

refused to enforce the parties’ contract to arbitrate such claims.

Southland, 465 U.S. at 10, 79 L. Ed. 2d at 11, 104 S. Ct. at 858. In

reversing the California Supreme Court, the United States Supreme

Court began its analysis by noting “a national policy favoring
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arbitration” that withdrew the power of the states to “require a judicial

forum for the resolution of claims which the contracting parties agreed

to resolve by arbitration.” Southland, 465 U.S. at 10, 79 L. Ed. 2d at

12, 104 S. Ct. at 858. In holding that the California law violated the

supremacy clause, the Court found that Congress “intended to

foreclose state legislative attempts to undercut the enforceability of

arbitration agreements.” Southland, 465 U.S. at 16, 79 L. Ed. 2d at

15, 104 S. Ct. at 861. Finally, the majority in Southland addressed the

partial dissent of Justice Stevens, which relied on the fact that section

2 of the FAA “permits a party to nullify an agreement to arbitrate on

‘such grounds as exist at law or in equity for the revocation of any

contract.’ ” Southland, 465 U.S. at 16 n.11, 79 L. Ed. 2d at 15 n.11,

104 S. Ct. at 861 n.11. In that regard, the majority stated as follows:

“We agree, of course, that a party may assert a general

contract defenses such as fraud to avoid enforcement of an

arbitration agreement. We conclude, however, that the defense

to arbitration found in the California Franchise Investment

Law is not a ground that exists at law or in equity ‘for the

revocation of any contract’ but merely a ground that exists for

the revocation of arbitration provisions in contracts subject to

the California Franchise Investment Law. Moreover, under

this dissenting view, ‘a state policy of providing special

protection for franchisees ... can be recognized without

impairing the basic purposes of the federal statute.’ Post, at

21. If we accepted this analysis, states could wholly eviscerate

congressional intent to place arbitration agreements ‘upon the

same footing as other contracts,’ H.R. Rep. No. 96, 68th

Cong., 1st Sess., 1 (1924), simply by passing statutes such as

the Franchise Investment Law. We have rejected this analysis

because it is in conflict with the [FAA] and would permit

states to override the declared policy requiring enforcement of

arbitration agreements.” (Emphasis in original.) Southland,

465 U.S. at 16 n.11, 79 L. Ed. 2d at 15 n.11, 104 S. Ct. at

861 n.11.

The Supreme Court next considered FAA preemption in Perry,

holding that section 2 of the FAA, “which mandates enforcement of

arbitration agreements, pre-empts §229 of the California Labor Code,

which provides that actions for the collection of wages may be
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maintained ‘without regard to the existence of any private agreement

to arbitrate.’ ” Perry, 482 U.S. at 484, 96 L. Ed. 2d at 432, 107 S. Ct.

at 2522-23, quoting Cal. Lab. Code Ann. §229 (West 1971). The

Court began its analysis by strongly emphasizing that section 2 of the

FAA embodied a “liberal federal policy favoring arbitration

agreements, notwithstanding any state substantive or procedural

policies to the contrary.” Perry, 482 U.S. at 489, 96 L. Ed. 2d at 435,

107 S. Ct. at 2525 (court also stated that section 2 “declared a

national policy favoring arbitration” and is a “clear federal policy of

requiring arbitration”). The Court addressed the viability of general,

state-contract-law defenses, like unconscionabilty, to attack

agreements to arbitrate. The Court noted that “state law, whether of

legislative or judicial origin, is applicable if that law arose to govern

issues concerning the validity, revocability, and enforceability of

contracts generally. A state-law principle that takes its meaning

precisely from the fact that a contract to arbitrate is at issue does not

comport with this requirement ***.” (Emphasis in original.) Perry,

482 U.S. at 492 n.9, 96 L. Ed. 2d at 437 n.9, 107 S. Ct. at 2527 n.9.

The Court continued that courts may not construe arbitration

agreements differently from what it would otherwise construe

nonarbitration agreements, nor may they “rely on the uniqueness of an

agreement to arbitrate as a basis for a state-law holding that

enforcement would be unconscionable.” Perry, 482 U.S. at 492 n.9,

96 L. Ed. 2d at 437 n.9, 107 S. Ct. at 2527 n.9. 

In Casarotto, the Court was faced with a Montana statute that

declared an arbitration clause unenforceable unless “ ‘[n]otice that

[the] contract is subject to arbitration’ is ‘typed in underlined capital

letters on the first page of the contract.’ ” Casarotto, 517 U.S. at 683,

134 L. Ed. 2d at 906, 116 S. Ct. at 1654, quoting Mont. Code Ann.

§27–5–114(4) (1995). The Court had no trouble holding that the state

enactment conflicted with the FAA and was therefore displaced by the

federal law. Casarotto, 517 U.S. at 683, 134 L. Ed. 2d at 906, 116 S.

Ct. at 1654. Casarotto reiterated the principles set forth in Southland

and Perry. It then concluded that the Montana statute was preempted

because it “places arbitration agreements in a class apart from ‘any

contract,’ and singularly limits their validity.” Casarotto, 517 U.S. at

688, 134 L. Ed. 2d at 910, 116 S. Ct. at 1657. 

The Supreme Court most recently addressed FAA preemption in
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Preston. There, the Court held that the FAA allows parties to choose

an arbitral forum to decide their disputes and that the FAA supersedes

any state law that lodges primary jurisdiction in another forum,

whether judicial or administrative. Preston, 552 U.S. at 349-50, 169

L. Ed. 2d at 923, 128 S. Ct. at 981. The parties in Preston had agreed

to arbitrate disputes that might arise under a management contract.

Preston claimed that he was owed fees as a personal manager under

the contract, but Ferrer claimed the contract was void because Preston

was acting as an unlicensed talent agent in violation of a state statute.

Following the procedures prescribed by state law, Ferrer petitioned

the state labor commissioner to decide whether the contract was

enforceable because it violated a law requiring the licensing of talent

agents. Like the Illinois Nursing Home Care Act, the statute at issue

in Preston did not mention arbitration, stating: “In cases of

controversy arising under this chapter, the parties involved shall refer

the matters in dispute to the Labor Commissioner, who shall hear and

determine the same, subject to an appeal within 10 days after

determination, to the superior court where the same shall be heard de

novo.” Preston, 552 U.S. at 355, 169 L. Ed. 2d at 926, 128 S. Ct. at

985, quoting Cal. Lab. Code Ann. §1700.44 (West 2003). The dispute

eventually found its way to state superior court, where Preston moved

to compel arbitration, but the court refused his request because it

believed the FAA did not preempt actions before an administrative

agency with exclusive jurisdiction over the dispute. The California

Court of Appeal affirmed. The Supreme Court of the United States

reversed, stating that the issue was simply “who decides whether

Preston acted as personal manager or as talent agent.” Preston, 552

U.S. at 352, 169 L. Ed. 2d at 925, 128 S. Ct. at 983. The Court found

that the motion to compel arbitration raised solely the question of

which forum would hear the parties’ dispute and that the parties had

not lost any substantive rights under the statute. Preston, 552 U.S. at

359, 169 L. Ed. 2d at 929, 128 S. Ct. at 987. In other words, the

parties had not waived causes of action under the statute; instead, they

had agreed who would decide such issues, and that “who” was an

arbitrator.

We believe that the antiwaiver provisions of the Nursing Home

Care Act relied upon by the plaintiff are legally indistinguishable from

the provisions struck down by the Supreme Court in Southland, Perry
 2The State, as intervenor, contends that Preston’s holding was dependent

on the conclusion that another provision within the California statutory

scheme “singled out arbitration for unique restrictions.” The State’s

argument, however, seeks to impose a limitation on Preston that is not

supported by the clear language of that decision. Preston found that both

statutory provisions were preempted by the FAA, giving no indication that

its holding with respect to the first statutory section was dependent on the

Court’s holding with respect to the second statutory section. Preston, 552

U.S. at 356, 169 L. Ed. 2d at 927, 128 S. Ct. at 985.

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and Preston. Here, just like the statutes in Southland and Preston, the

Illinois statute required resolution of the dispute in a non-arbitral

forum. Moreover, neither of the actual statutory provisions invalidated

in Southland and Preston even mention arbitration. The appellate

court erroneously believed that the Nursing Home Care Act had to

specifically “target” or single out arbitration agreements for FAA

preemption to apply. This is a misreading of Perry and Casarotto.

To be sure Perry and Casarotto do stand for the proposition that

section 2 of the FAA preempts those state laws that “single out”

arbitration agreements for special treatment. Southland and Preston,

however, demonstrate that Perry and Casarotto cannot be read to

stand for the converse proposition that state laws avoid FAA

preemption so long as they do not “single out” arbitration agreements

for special treatment. Instead, Southland and Preston make clear that

state statutes are preempted by the FAA if the statutes as applied

preclude the enforcement of federally protected arbitration rights,

regardless of whether the state statutes specifically target arbitration

agreements. The statutes involved in Southland and Preston did not

single out or target arbitration agreements explicity, as the statute in

Southland required “judicial consideration” of claims brought under

it (Southland, 465 U.S. at 10, 79 L. Ed. 2d at 11, 104 S. Ct. at 858),

and the statute in Preston simply placed jurisdiction of labor disputes

with an administrative agency (Preston, 552 U.S. at 351, 169 L. Ed.

2d at 924, 128 S. Ct. at 982; Cal. Lab. Code Ann. §1700.44 (West

2003)).2

Similarly, any distinction between the antiwaiver provisions of the

Nursing Home Care Act and the statute at issue in Perry is

inconsequential. Perry, 482 U.S. at 484, 96 L. Ed. 2d at 432, 107 S.
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Ct. at 2522-23 (providing a judicial forum for labor disputes

“ ‘without regard to the existence of any private agreement to

arbitrate’ ”), quoting Cal. Lab. Code Ann. §229 (West 1971). As the

appellate court in Fosler noted, the California statute in Perry

operated no differently than sections 3–606 and 3–607 of the Nursing

Home Care Act. See Fosler, 391 Ill. App. 3d at 407. With or without

the mention of arbitration, the California statute still guaranteed that

a judicial action for a wage dispute could be maintained. Inclusion of

the “phrase ‘without regard to the existence of any private agreement

to arbitrate’ does not mean that the statute applies only when there is

an agreement to arbitrate.” See Fosler, 391 Ill. App. 3d at 407. Thus,

just like the Illinois provisions, the California statute provided a

plaintiff with a judicial forum regardless of whether the contract

mandated arbitration. See Fosler, 391 Ill. App. 3d at 407.

The appellate court’s interpretation in the present case also

conflicts with the plain language of section 2 of the FAA, which

permits voiding of an arbitration agreement only on “such grounds as

exist at law or in equity for the revocation of any contract.” 9 U.S.C.

§2 (2000). State laws that are applicable to arbitration contracts and

some other types of contracts, but not all contracts, are not “grounds

*** for the revocation of any contract.” See, e.g., Bradley v. Harris

Research, Inc., 275 F.3d 884, 890 (9th Cir. 2001) (California statute

preempted because it applies only to forum-selection clauses and only

to franchise agreements, and therefore it does not apply to “any

contract”);OPE International LP v. Chet Morrison Contractors, Inc.,

258 F.3d 443, 447 (5th Cir. 2001) (Louisiana statute invalidated

because it conditioned arbitration agreement’s enforceability on a

Louisiana forum, a requirement not applicable to contracts generally);

Doctor’s Associates, Inc. v. Hamilton, 150 F.3d 157, 163 (2d Cir.

1998) (New Jersey case law invalidated because it applied to “one sort

of contract provision (forum selection) in only one type of contract (a

franchise agreement),” and so was preempted by the FAA); KKW

Enterprises, Inc. v. Gloria Jean’s Gourmet Coffees Franchising

Corp., 184 F.3d 42, 50-51 (1st Cir. 1999) (Rhode Island statute was

not a generally applicable contract defense because it applied to only

one type of provision, venue clauses, in one type of agreement,

franchise agreements); see also C. Drahozal, Federal Arbitration Act

Preemption, 79 Ind. L.J. 393, 409 (2004), citing Allied-Bruce, 513
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U.S. at 281, 130 L. Ed. 2d at 769, 115 S. Ct. at 843, citing 9 U.S.C.

§2 (1994). Here, the antiwaiver provisions of the Nursing Home Care

Act purport to invalidate arbitration agreements in a specific type of

contract–those involving nursing care–and for that reason alone they

are not a defense generally applicable to “any contract.”

The appellate court found it important that “a contract that never

mentions arbitration but instead requires a bench trial *** rather than

a trial by a jury, would be voided by *** sections [3–606 and 3–607]

to the same extent as a contract containing an arbitration agreement.”

381 Ill. App. 3d at 722. But we do not find that this fact requires a

different result. The Illinois enactments at issue are merely pro-judicial

forum legislation that is the “functional equivalent” of antiarbitration

legislation, which is preempted by the FAA and the holding in

Southland. See Fosler, 391 Ill. App. 3d at 407. The California

Supreme Court in Southland held that the antiwaiver provision in that

case precluded the arbitration of disputes under the state statute

(Southland, 465 U.S. at 17, 79 L. Ed. 2d at 15-16, 104 S. Ct. at 861),

but it did not purport to limit the reach of the statute to arbitration

agreements. To the contrary, antiwaiver provisions in such statutes

have been applied in California and elsewhere to invalidate a wide

variety of contract provisions in addition to arbitration clauses. See 79

Ind. L.J. at 409 (collecting cases). Thus, Southland essentially held

that state laws that may apply to more than arbitration clauses are

nonetheless preempted. Application of the “singling out” theory in

such cases would be nothing more than a “backdoor attempt to have

the Supreme Court overrule Southland, which it already has refused

to do.” 79 Ind. L.J. at 410, citing Allied-Bruce, 513 U.S. at 272, 130

L. Ed. 2d at 763, 115 S. Ct. at 838-39.

Finally, we reject the State’s argument that the FAA should not be

read to preempt state provisions precluding the waiver of jury trials

because the right to a jury trial is a fundamental constitutional right

and jury trial guarantees do not “single out” arbitration clauses for

elimination. There are a number of problems with the State’s

argument. First, we note that it is axiomatic that a party may waive the

right to a trial by jury in a civil case by entering into a contract to

arbitrate. See, e.g., Sherwood v. Marquette Transportation Co., 587

F.3d 841, 842 (7th Cir. 2009), citing Carbajal v. H&R Block Tax

Services, Inc., 372 F.3d 903, 905-06 (7th Cir. 2004). Moreover,
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Illinois public policy favors arbitration as a means of dispute

resolution, generally (710 ILCS 5/2(a) (West 2006)), but sections

3–606 and 3–607 assert a contrary public policy affording nursing

home residents a judicial forum, including the right to a jury trial in a

dispute with a nursing home. As the appellate court in Fosler noted,

the incongruity illustrates why sections 3–606 and 3–607 did not

“ ‘ar[i]se to govern issues concerning the validity, revocability, and

enforceability of contracts generally.’ ” (Emphasis in original.) Fosler,

391 Ill. App. 3d at 409-10, quoting Perry, 482 U.S. at 492 n.9, 96 L.

Ed. 2d at 437 n.9, 107 S. Ct. at 2527 n.9. The State’s argument

ignores the fact that the jury-trial requirement does not apply to all

contracts generally, but only to nursing home contracts. Second, if the

State’s argument were accepted, it would mean that all arbitration

agreements sought to be enforced in Illinois would be invalid, given

that the requirement would have to apply to “all contracts” to avoid

FAA preemption. Such a construction would wholly eviscerate

arbitration agreements and would conflict with and override the

declared federal policy requiring enforcement of arbitration

agreements. By definition arbitration contracts call for an arbitrator,

rather than a jury, to resolve the parties’ dispute. In sum, we simply

do not believe that this is the kind of defense Congress had in mind

when it provided for a defense to preemption based on “grounds as

exist at law or in equity for the revocation of any contract.” 9 U.S.C.

§2 (2000). Rather, the purpose of this savings clause is to preserve

general contract defenses such as lack of mutuality, lack of

consideration, fraud, duress, unconscionability, and the like, that can

truly apply to any contract.

CONCLUSION

For the foregoing reasons, we hold that the public policy behind

the antiwaiver provisions of sections 3–606 and 3–607 of the Nursing

Home Care Act are not “grounds as exist at law or in equity for the

revocation of any contract” within the meaning of section 2 of the

FAA (9 U.S.C. §2 (2000)). The parties raise a number of other issues

before this court, including whether the parties arbitration agreement

evince a transaction “involving [interstate] commerce” within the

meaning of section 2 of the FAA. See 9 U.S.C. §2 (2000). Because

the appellate court erroneously determined that the public policy
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behind the Nursing Home Care Act’s antiwaiver provisions was a

valid, general contract defense to FAA preemption, it did not consider

any other issues in the case. As such, it is appropriate for this court to

remand the cause to the appellate court for consideration and

resolution of the remaining issues. County of Du Page v. Illinois

Labor Relations Board, 231 Ill. 2d 593, 619 (2008); Schwartz, 177

Ill. 2d at 184. Accordingly, we reverse the judgment of the appellate

court and remand the cause to the appellate court for further

proceedings consistent with this opinion.

Appellate court judgment reversed;

cause remanded.

JUSTICES FREEMAN and KARMEIER took no part in the

consideration or decision of this case.