Opinion ID: 1833239
Heading Depth: 1
Heading Rank: 2

Heading: The FAA states:

Text: 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... 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. `The [FAA] preempts contrary state law (specifically, contrary law based on Ala.Code 1975, § 8-1-41(3), and public policy) and renders enforceable a written predispute arbitration agreement but only if that agreement appears in a contract evidencing a transaction that involves interstate commerce.' Tefco Fin. Co. v. Green, 793 So.2d 755, 758 (Ala.2001) (quoting Southern United Fire Ins. Co. v. Knight, 736 So.2d 582, 585-86 (Ala.1999)). [9] The Physicians, relying on Sisters of the Visitation v. Cochran Plastering Co., 775 So.2d 759 (Ala.2000), argue that the Agreements are purely intrastate in nature and that the arbitration provision contained in the Agreements is therefore unenforceable under § 8-1-43(3), Ala.Code 1975. The Physicians assert that the only facts relevant to this case are the following: (1) that the Agreement was by and between Selma Medical Center, Inc., and the Physicians; (2) that by the time the Agreements were legally binding, the two doctors were Alabama residents; [10] (3) that the Agreements were negotiated and executed in Alabama; (4) that the Agreements were personal-service contracts for the Physicians to provide anesthesiology services in Alabama; and (5) that the Hospital provided no substantive evidence to establish that the contracts in question substantially impact interstate commerce. Accordingly, they argue that under Sisters the Agreements present no substantial impact upon interstate commerce and, thus, that the FAA is inapplicable. We disagree. It is well settled that Congress can regulate three broad categories of activity pursuant to its commerce power: (1) the use of the channels of interstate commerce; (2) the instrumentalities of interstate commerce or persons or things in interstate commerce; and (3) those activities having a substantial effect on interstate commerce. Southern United Fire Ins. Co. v. Knight, 736 So.2d 582, 587 n. 3 (Ala.1999) (See, J., concurring specially) (citing United States v. Lopez, 514 U.S. 549, 558-59, 115 S.Ct. 1624, 131 L.Ed.2d 626 (1995)) (emphasis added). When a case involves allegations of the use of the instrumentalities of interstate commerce, or persons or things in interstate commerce, a court need not reach the question whether the underlying transaction substantially affects interstate commerce, because `[s]uch persons and things, by definition, substantially affectbecause they are components ofinterstate commerce.' Ex parte Stewart, 786 So.2d 464, 474 (Ala.2000) (on application for rehearing) (Houston, J., concurring specially and quoting the brief of the respondent Birmingham News Company, which cited Lawrence H. Tribe, American Constitutional Law, § 5-5, at 827 (3d ed.2000)); see Reno v. Condon, 528 U.S. 141, 148-49, 120 S.Ct. 666, 145 L.Ed.2d 587 (2000), and Knight, 736 So.2d at 587 n. 3 (stating that because the party seeking arbitration did not allege that the transaction used the channels of interstate commerce or the instrumentalities of interstate commerce, the underlying transaction must substantially affect interstate commerce if it is to come within the commerce power). Accordingly, we do not agree with the Physicians that Sisters governs the disposition of this case; the Sisters analysis `does not apply to cases like this one, where the actual persons and things involved are themselves within the flow of commerce. ' Stewart, 786 So.2d at 474 (on application for rehearing) (Houston, J., concurring specially and quoting the brief of the Birmingham News Company) (emphasis added). In describing Congress's power to regulate people and things moving in interstate commerce, the United States Supreme Court has referred to the flow or current of activity. See Stewart, 786 So.2d at 474-75 (on application for rehearing) (Houston, J., concurring specially); Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 195, 95 S.Ct. 392, 42 L.Ed.2d 378 (1974); Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 87 L.Ed. 460 (1943); Swift & Co. v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518 (1905). The Court has defined this flow to include the practical, economic continuity in the generation of goods and services for interstate markets and their transport and distribution to the consumer. Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 195, 95 S.Ct. 392, 42 L.Ed.2d 378 (1974); see Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995) (similarly defining flow and stating that the phrase involving commerce, as used in § 2 of the FAA, covers activities within the flow of interstate commerce as well as activities having an effect on interstate commerce). The Physicians entered the flow of interstate commerce when they moved from South Carolina to Alabama. In fact, the sole purpose of the Agreements was to place the Physicians within the current of commerce and to move them to Alabama, where they were to become the sole providers of all anesthesia services performed at the Hospital. Accordingly, when the Physicians moved across state lines, they became persons ... in interstate commerce. Lopez, 514 U.S. at 558, 115 S.Ct. 1624, 131 L.Ed.2d 626; see Reno v. Condon, 528 U.S. 141, 148, 120 S.Ct. 666, 145 L.Ed.2d 587 (2000) (Because drivers' information [information contained in the records of a state motor-vehicle department] is, in this context, an article of commerce, its sale or release into the interstate stream of business is sufficient to support congressional regulation.). As part of the flow of commerce, then, the Physicians were properly subject to congressional regulation. The flow of commerce begins before, and ends after, the actual movement across State lines, in order to fulfill the purpose of the overall transaction. See Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 87 L.Ed. 460 (1943); Stewart, 786 So.2d 464 (on application for rehearing) (Houston, J., concurring specially). In Swift & Co. v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518 (1905), Justice Holmes, discussing the interstate shipment of livestock, described the continuing flow of commercial activity: [C]ommerce among the States is not a technical legal conception, but a practical one, drawn from the course of business. When cattle are sent for sale from a place in one State, with the expectation that they will end their transit, after purchase, in another, and when in effect they do so, with only the interruption necessary to find a purchaser at the stock yards, and when this is a typical, constantly recurring course, the current thus existing is a current of commerce among the States, and the purchase of the cattle is a part and incident of such commerce. 196 U.S. at 398-99, 25 S.Ct. 276 (emphasis added); see Stewart, 786 So.2d at 469 (Houston, J., concurring specially). In Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 87 L.Ed. 460 (1943), the United States Supreme Court determined that the flow of commerce did not end when a wholesale distributor of paper products stored the goods in his warehouse before delivering them to in-state customers. Rather, the Court reasoned, the current of commerce continued until the products reached the customers for whom they were intended. Id. at 567-68, 63 S.Ct. 332. The Court stated: If there is a practical continuity of movement from the manufacturers or suppliers without the state, through respondent's warehouse and on to customers whose prior orders or contracts are being filled, the interstate journey is not ended by reason of a temporary holding of the goods at the warehouse.... The contract or understanding pursuant to which goods are ordered, like a special order, indicates where it was intended that the interstate movement should terminate.  317 U.S. 564, 569, 63 S.Ct. 332, 87 L.Ed. 460 (emphasis added). The Agreements required the Physicians to move themselves and their medical practices from South Carolina to Selma, Alabama, to provide anesthesia services to patients in the Selma community. Thus, the agreements were themselves an integral part of the Physicians' movement in the flow of commerce, subjecting their personal-service contracts to the jurisdiction of the FAA. See Gulf Oil Corp. v. Copp Paving Co., supra; Allied-Bruce Terminix Cos. v. Dobson, supra (stating that the phrase involving commerce, as used in § 2 of the FAA, covers activities within the flow of interstate commerce). Therefore, we reverse the trial court's order enjoining the arbitration proceedings and remand the case. [11] REVERSED AND REMANDED. HOUSTON, BROWN, and STUART, JJ., concur. JOHNSTONE, J., concurs in the result. MOORE, C.J., and LYONS, HARWOOD, and WOODALL, JJ., dissent.