Opinion ID: 3135613
Heading Depth: 1
Heading Rank: 3

Heading: analysis

Text: 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 -7- 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. -8- 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 -9- 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