Opinion ID: 1907167
Heading Depth: 2
Heading Rank: 1

Heading: whether the agreement to arbitrate is part of a contract evidencing interstate commerce.

Text: ¶ 13. A threshold determination which must be considered is whether the parties' admission agreement falls within the provisions of § 2 of the Federal Arbitration Act. The FAA requires that `we rigorously enforce agreements to arbitrate.' East Ford, 826 So.2d at 713 (citing Shearson/Am. Exp. Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 2337, 96 L.Ed.2d 185 (1987)). Specifically, § 2 of the Federal Arbitration Act, relates to the enforceability of arbitration provisions and provides that: A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a 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 (emphasis added). ¶ 14. In Allied-Bruce Terminix Companies v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995), a case where the Alabama Supreme Court affirmed the denial of a motion to compel arbitration, the United States Supreme Court examined the breadth of the Federal Arbitration Act and undertook to answer an interpretive question-how far beyond the flow of commerce does the word `involving' reach? Allied-Bruce Terminix, 513 U.S. at 273, 115 S.Ct. 834. In answering this question, the Supreme Court concluded that the phrase involving commerce is to be interpreted broadly and was the functional equivalent of the phrase affecting commerce, which signals Congress' intent to exercise its Commerce Clause powers to the fullest extent. Id. at 273-74, 115 S.Ct. 834. ¶ 15. In 2003, the U.S. Supreme Court once again sought to quantify the broad effect of the FAA as implemented through Congress' Commerce Clause power. In Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 123 S.Ct. 2037, 156 L.Ed.2d 46 (2003), the Supreme Court again reviewed an Alabama case where the Alabama Supreme Court refused to enforce arbitration. Specifically, the case dealt with debt-restructuring agreements which were executed in Alabama by Alabama residents. Id. at 54, 123 S.Ct. at 2039. The Alabama Supreme Court found, inter alia, that these agreements and transactions were not sufficiently a part of interstate commerce so as to trigger FAA applicability. The U.S. Supreme Court explained its interpretation of the Alabama Supreme Court's decision: Because there was no showing `that any portion of the restructured debt was actually attributable to interstate transactions; that the funds compromising the debt originated out-of-state; or that the restructured debt was inseparable from any out-of-state projects, the court found an insufficient nexus with interstate commerce to establish FAA coverage of the parties' dispute. 539 U.S. at 55, 123 S.Ct. at 2039. In reversing the Alabama Supreme Court, the U.S. Supreme Court held that Congress' Commerce Clause power `may be exercised in individual cases without showing any specific effect upon interstate commerce' if in the aggregate the economic activity in question would represent `a general practice ... subject to federal control.' 539 U.S. at 56-57, 123 S.Ct. at 2040 (citing Mandeville Island Farms, Inc. v. Am. Crystal Sugar Co., 334 U.S. 219, 236, 68 S.Ct. 996, 92 L.Ed. 1328 (1948)). See also Perez v. United States, 402 U.S. 146, 154, 91 S.Ct. 1357, 28 L.Ed.2d 686 (1971); Wickard v. Filburn, 317 U.S. 111, 127-128, 63 S.Ct. 82, 87 L.Ed. 122 (1942). ¶ 16. This case clearly falls within the broad purview of the Federal Arbitration Act. Accordingly, singular agreements between care facilities and care patients, when taken in the aggregate, affect interstate commerce. As stated in Alafabco, [o]nly the general practice need bear on interstate commerce in a substantial way. 539 U.S. at 57, 123 S.Ct. at 2040 (citing Maryland v. Wirtz, 392 U.S. 183, 196-97 n. 27, 88 S.Ct. 2017, 20 L.Ed.2d 1020 (1968); NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 37-38, 57 S.Ct. 615, 81 L.Ed. 893 (1937)). ¶ 17. Nursing homes through general practice, which includes basic daily activities like receiving supplies from out-of-state vendors and payments from out-of-state insurance companies or the federal Medicare program, affect interstate commerce. Moreover, the defendants in this case include a Georgia corporation, a Tennessee corporation and a Louisiana corporation, who collectively contribute to the operation of Vicksburg Partners nursing home, which receives services and goods from out-of-state vendors, takes in out-of-state residents, and receives payments from out-of-state insurance carriers, including federally-accredited Medicare/Medicaid programs. ¶ 18. Thus, since the arbitration clause is a part of a contract (the nursing home admissions agreement) evidencing in the aggregate economic activity affecting interstate commerce, the Federal Arbitration Act is applicable and we, therefore, proceed with our discussion concerning whether the relevant contract and arbitration clause were unconscionable. ¶ 19. In line with U.S. Supreme Court precedent, we will review the arbitration agreement in this case, paying close attention to the strong federal policy of favoring the enforcement of agreements to arbitrate. Absent a well-founded claim that an arbitration agreement resulted from the sort of fraud or excessive economic power that `would provide grounds for the revocation of any contract', the Arbitration Act `provides no basis for disfavoring agreements to arbitrate statutory claims by skewing the otherwise hospitable inquiry into arbitrability.' Shearson/Am. Exp., Inc., 482 U.S. at 226, 107 S.Ct. at 2337 (citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 627, 105 S.Ct. 3346, 3354, 87 L.Ed.2d 444 (1985)).