[J-43-2016]
IN THE SUPREME COURT OF PENNSYLVANIA
WESTERN DISTRICT
SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, JJ.
DANIEL E. TAYLOR AND WILLIAM : No. 19 WAP 2015
TAYLOR, AS CO-EXECUTORS OF THE :
ESTATE OF ANNA MARIE TAYLOR, : Appeal from the Order of the Superior
DECEASED : Court entered April 2, 2015 at No. 2028
: WDA 2013, affirming the Order of the
: Court of Common Pleas of Washington
v. : County entered November 20, 2013 at
: No. 2012-6878.
:
EXTENDICARE HEALTH FACILITIES, : ARGUED: April 5, 2016
INC. D/B/A HAVENCREST NURSING :
CENTER; EXTENDICARE HOLDINGS, :
INC.; EXTENDICARE HEALTH FACILITY :
HOLDINGS, INC.; EXTENDICARE :
HEALTH SERVICES, INC.; :
EXTENDICARE REIT; EXTENDICARE, :
L.P.; EXTENDICARE, INC.; MON VALE :
NON ACUTE CARE SERVICE, INC. :
D/B/A THE RESIDENCE AT HILLTOP; :
MON-VALE HEALTH RESOURCES, INC; :
JEFFERSON HEALTH SERVICES, D/B/A :
JEFFERSON REGIONAL MEDICAL :
CENTER :
:
:
APPEAL OF: EXTENDICARE HEALTH :
FACILITIES, INC., D/B/A HAVENCREST :
NURSING CENTER, EXTENDICARE :
HOLDINGS, INC., EXTENDICARE :
HEALTH FACILITY HOLDINGS, INC., :
EXTENDICARE HEALTH SERVICES, :
INC., EXTENDICARE REIT, :
EXTENDICARE, L.P. AND :
EXTENDICARE, INC. :
OPINION
JUSTICE WECHT DECIDED: SEPTEMBER 28, 2016
The Federal Arbitration Act (“FAA”) provides that arbitration agreements “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. Pennsylvania Rule of Civil Procedure
213(e) requires the consolidation of survival and wrongful death actions for trial. A
representative of Extendicare Health Facilities, Inc., d/b/a Havencrest Nursing Center
(“Extendicare”), executed an arbitration agreement with Anna Marie Taylor (“Decedent”)
requiring the arbitration of claims arising from Decedent’s stay at the Extendicare
facility. Following Decedent’s death, Daniel and William Taylor (“the Taylors”) brought
wrongful death claims on behalf of themselves as wrongful death beneficiaries and
survival claims on behalf of Decedent’s estate against Extendicare and two other
defendants. Extendicare moved to bifurcate the wrongful death and survival actions,
and to compel arbitration of Decedent’s survival claim pursuant to the arbitration
agreement and the FAA.
The trial court relied upon Rule 213(e) to deny Extendicare’s motion to bifurcate,
and the Superior Court affirmed. We granted review to determine whether the FAA
preempts the lower courts’ application of Rule 213(e) under the facts presented. Upon
review, we conclude that the FAA preempts the application of Rule 213(e), and requires
arbitration of the survival claim against Extendicare. We therefore reverse the Superior
Court, and we remand to the trial court for further proceedings.
In 2010, Decedent was admitted to Mon-Vale Non-Acute Care Service, Inc.,
d/b/a The Residence at Hilltop (“The Residence”), a nursing home facility where, on
February 1, 2012, she fell and fractured her right hip. Decedent underwent surgery at
Jefferson Health Services, d/b/a Jefferson Regional Medical Center (“Jefferson Medical
[J-43-2016] - 2
Center”). Following surgery, Decedent was admitted to one of Extendicare’s skilled
nursing facilities. On February 9, 2012, as part of the admissions paperwork and
pursuant to a power of attorney authorizing him to act on Decedent’s behalf, William
Taylor executed the Alternative Dispute Resolution Agreement (“ADR Agreement”) that
is central to this appeal. The ADR Agreement, to which only Decedent (by William
Taylor) and Extendicare are parties, provides that any covered disputes arising between
the parties are to be submitted to binding arbitration:
Voluntary Agreement to Participate in ADR. The Parties agree that the
speed, efficiency and cost-effectiveness of the ADR process, together with
their mutual undertaking to engage in that process, constitutes good and
sufficient consideration for the acceptance and enforcement of this
Agreement. The Parties voluntarily agree that any disputes covered by
this Agreement ([hereinafter] referred to as “Covered Disputes”) that may
arise between the Parties shall be resolved exclusively by an ADR
process that shall include mediation and, where mediation does not
successfully resolve the dispute, binding arbitration. . . . The Parties’
recourse to a court of law shall be limited to an action to enforce a binding
arbitration decision or mediation settlement agreement entered in
accordance with this Agreement or to vacate such a decision based on the
limited grounds set forth in [the Uniform Arbitration Act, 42 Pa.C.S. §§
7301, et seq.]
Reproduced Record (“R.R.”) at 83a-84a. The ADR Agreement purported to require the
resolution of all disputes in a single arbitral forum as follows:
Covered Disputes. This Agreement applies to any and all disputes arising
out of or in any way relating to this Agreement or to [Decedent’s] stay at
[Extendicare’s facility] that would constitute a legally cognizable cause of
action in a court of law sitting in the Commonwealth of Pennsylvania and
shall include, but not be limited to, all claims in law or equity arising from
one Party’s failure to satisfy a financial obligation to the other Party; a
violation of a right claimed to exist under federal, state, or local law or
contractual agreement between the Parties; tort; breach of contract; fraud;
misrepresentation; negligence; gross negligence; malpractice; death or
wrongful death and any alleged departure from any applicable federal,
state, or local medical, health care, consumer or safety standards. . . . All
claims based in whole or in part on the same incident, transaction or
related course of care or services provided by [Extendicare] to [Decedent]
shall be addressed in a single ADR process.
[J-43-2016] - 3
R.R. at 84a.
Following her admission into the Extendicare facility, Decedent quickly developed
numerous medical complications. She died on April 3, 2012. On October 15, 2012, the
Taylors, as co-executors of Decedent’s estate, commenced this litigation, ultimately
filing a complaint asserting wrongful death and survival claims against Extendicare, The
Residence, and Jefferson Medical Center.1 The Taylors alleged that the combined
negligence of the three defendants caused or contributed to Decedent’s injuries and
death.
In response, Extendicare filed preliminary objections in the nature of a motion to
compel arbitration of the Taylors’ wrongful death and survival claims, arguing that both
claims should be submitted to binding arbitration pursuant to the ADR Agreement. In
support of its motion, Extendicare asserted that the Taylors’ wrongful death claim was
1
The Superior Court has explained the distinction between survival and wrongful
death causes of action as follows:
The survival action has its genesis in the decedent's injury, not his death.
The recovery of damages stems from the rights of action possessed by
the decedent at the time of death. . . . In contrast, wrongful death is not
the deceased's cause of action. An action for wrongful death may be
brought only by specified relatives of the decedent to recover damages on
their own behalf, and not as beneficiaries of the estate. . . . This action is
designed only to deal with the economic effect of the decedent’s death
upon the specified family members.
Pisano v. Extendicare Homes, Inc., 77 A.3d 651, 658-59 (Pa. Super. 2013) (quoting
Frey v. Pa. Elec. Co., 607 A.2d 796, 798 (Pa. Super. 1992)).
In this case, the survival action against Extendicare was brought on Decedent’s
behalf by the Taylors as her co-executors, while the wrongful death action against
Extendicare was brought on behalf of the Taylors as the statutory wrongful death
beneficiaries. See 42 Pa.C.S. § 8301 (providing that a wrongful death action exists only
for the benefit of “the spouse, children or parents of the deceased”).
[J-43-2016] - 4
derivative of the survival claim and, because the survival claim was within the scope of
the ADR Agreement, both claims must be submitted to arbitration.
On November 20, 2013, the trial court heard oral argument on Extendicare’s
motion. Although Extendicare maintained that the ADR Agreement required the court to
compel arbitration of both of the Taylors’ claims against it, Extendicare conceded that
the Superior Court recently had held that an arbitration agreement signed only by a
decedent did not bind the decedent’s wrongful death beneficiaries. See Pisano v.
Extendicare Homes, Inc., 77 A.3d 651, 660-61 (Pa. Super. 2013). Shifting its litigation
strategy to account for Pisano, Extendicare requested for the first time the bifurcation of
the Taylors’ two causes of action against it, and an order compelling arbitration just of
the survival claim, while the wrongful death claim remained pending for judicial
resolution.
Following argument, the trial court overruled Extendicare’s preliminary
objections. It agreed with Extendicare and the Taylors that, in accord with Pisano, the
Taylors could not be compelled to arbitrate their wrongful death claim against
Extendicare because they, as wrongful death beneficiaries, were not parties to the ADR
Agreement. Trial Ct. Op., 1/29/2014, at 3; see Pisano, 77 A.3d at 660-61 (holding that
because wrongful death actions are not derivative of the decedent’s rights, the wrongful
death beneficiaries were not bound by an arbitration agreement executed by the
decedent); see also E.E.O.C. v. Waffle House, 534 U.S. 279, 293 (2002) (holding that,
notwithstanding the federal policy favoring arbitration agreements, the FAA does not
require parties to arbitrate when they have not agreed to do so).
The trial court also refused Extendicare’s request to sever the survival action
from the wrongful death action in order to send the former to arbitration. The trial court
explained that it found no authority within the FAA to support severance. To the
[J-43-2016] - 5
contrary, the trial court opined that severance would not advance the purpose of the
FAA, which, it explained, was “to ease the burden of litigation on the parties and this
Court’s docket.” Trial Ct. Op., 1/29/2014, at 3-4 (citing Joseph Muller Corp. Zurich v.
Commonwealth Petrochem., Inc., 334 F.Supp. 1013, 1019 (S.D.N.Y. 1971)). Examining
Rule 213(e) of the Pennsylvania Rules of Civil Procedure, the trial court held that it was
required to consolidate for trial the wrongful death and survival actions. Pa.R.C.P.
213(e).2
Extendicare appealed to the Superior Court, which affirmed.3 Taylor v.
Extendicare Health Facilities, Inc., 113 A.3d 317 (Pa. Super. 2015).4 The Superior
2
Rule 213(e) provides as follows:
(e) A cause of action for the wrongful death of a decedent and a cause of
action for the injuries of the decedent which survives his or her death may
be enforced in one action, but if independent actions are commenced they
shall be consolidated for trial.
(1) If independent actions are commenced or are pending in the
same court, the court, on its own motion or the motion of any party,
shall order the actions consolidated for trial.
(2) If independent actions are commenced in different courts, the
court in which the second action was commenced, on its own
motion or the motion of any party, shall order the action transferred
to the court in which the first action was commenced.
(3) If an action is commenced to enforce one cause of action, the
court, on its own motion or the motion of any party, may stay the
action until an action is commenced to enforce the other cause of
action and is consolidated therewith or until the commencement of
such second action is barred by the applicable statute of limitation.
Pa.R.C.P. 213(e).
3
See 42 Pa.C.S. § 7320(a)(1) (providing that an appeal may be taken from “[a]
court order denying an application to compel arbitration”).
4
Neither Jefferson Medical Center nor The Residence participated in the appeal,
because they were not parties to the ADR Agreement.
[J-43-2016] - 6
Court rejected Extendicare’s argument that the Taylors’ wrongful death action is
dependent upon the rights that Decedent possessed before she died, and that the
wrongful death and survival claims together must be submitted to arbitration. The court
relied upon Pisano to hold that “an arbitration agreement signed by the decedent or his
or her authorized representative is not binding upon non-signatory wrongful death
beneficiaries, and they cannot be compelled to litigate their claims in arbitration.”
Taylor, 113 A.3d at 320-21.
Turning to Extendicare’s alternative argument that the trial court should have
bifurcated the two claims and compelled arbitration of the survival action pursuant to the
ADR Agreement, the Superior Court recognized that this was an issue of first
impression in Pennsylvania. The court relied upon Rule 213(e) to hold that the wrongful
death and survival actions could not be bifurcated, but must be consolidated for trial.
The Superior Court explained that the General Assembly had considered the overlap
between wrongful death and survival actions, as well as the potential for duplicative
awards, and made the legislative policy decision to require consolidation. Taylor, 113
A.3d at 322 (citing the Wrongful Death Statute, 42 Pa.C.S. § 8301(a)5). The Superior
Court recognized that Rule 213(e) implemented this policy decision by detailing how
and where such claims must be consolidated. Taylor, 113 A.3d at 325.
5
Section 8301(a) provides as follows:
(a) General rule.--An action may be brought, under procedures prescribed
by general rules, to recover damages for the death of an individual caused
by the wrongful act or neglect or unlawful violence or negligence of
another if no recovery for the same damages claimed in the wrongful
death action was obtained by the injured individual during his lifetime and
any prior actions for the same injuries are consolidated with the wrongful
death claim so as to avoid a duplicate recovery.
42 Pa.C.S. § 8301(a).
[J-43-2016] - 7
Attempting to avoid consolidation, Extendicare relied upon the FAA, which was
“intended to foreclose state legislative attempts to undercut the enforceability of
arbitration agreements.” Southland Corp. v. Keating, 465 U.S. 1, 3 (1984). Extendicare
argued that the FAA preempted Rule 213(e), and relied upon Marmet Health Care Ctr.,
Inc. v. Brown, 132 S.Ct. 1201 (2012) for support. In Marmet, the Supreme Court of the
United States held that the FAA preempted a state law which precluded the
enforcement of pre-dispute arbitration agreements in nursing home disputes involving
personal injury or death. See id. at 1204 (observing that West Virginia’s prohibition was
“a categorical rule prohibiting arbitration of a particular type of claim,” and therefore was
contrary to the requirements of the FAA). According to Extendicare, the FAA likewise
preempted Rule 213(e) to the extent that the rule purported or operated to bar the
arbitration of a claim otherwise subject to an arbitration agreement.
Engaging in a conflict preemption analysis,6 the only form of preemption
implicated in this case, the Superior Court disagreed with Extendicare. According to the
court, Rule 213(e) did not prohibit the arbitration of wrongful death and survival claims,
rendering this case distinct from the categorical prohibition struck down in Marmet.
6
As the Superior Court recognized, there are several types of preemption.
Express preemption is implicated when the federal law contains a provision expressly
preempting state law. Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev.
Comm., 461 U.S. 190, 204 (1983). The second form of preemption is field preemption,
where the federal statute “reflects a Congressional intent to occupy the entire field” of
law. Taylor, 113 A.3d at 323 (quoting Volt Info. Sci., Inc. v. Bd. of Tr. of Leland Stanford
Junior Univ., 489 U.S. 468, 477 (1989)). “Finally, ‘a state enactment will be preempted
where a state law conflicts with a federal law.’” Stone Crushed P’ship v. Kassab
Archbold Jackson & O'Brien, 908 A.2d 875, 881 (Pa. 2006) (quoting Office of
Disciplinary Counsel v. Marcone, 855 A.2d 654, 664 (Pa. 2004)). Conflict preemption
may be found when it is impossible to comply with both federal and state law, Fla. Lime
& Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43 (1963), or where the state law
“stands as an obstacle to the accomplishment and execution of the full purposes and
objectives of Congress.” Hines v. Davidowitz, 312 U.S. 52, 67 (1941).
[J-43-2016] - 8
Rather, the Superior Court viewed the procedural rule as “neutral regarding arbitration
generally, and the arbitration of wrongful death and survival actions specifically.”
Taylor, 113 A.3d at 325. The Superior Court further observed that wrongful death and
survival actions may proceed together in arbitration when all of the parties, including the
wrongful death beneficiaries, have agreed to arbitration. Id.
In this case, however, the Superior Court found no agreement to arbitrate the
wrongful death claim, or to arbitrate the survival actions against The Residence or
Jefferson Medical Center. Id. at 326. Rather, the court observed, the only claim subject
to an agreement to arbitrate is the Taylors’ survival claim against Extendicare. Id. The
court observed that the piecemeal disposition Extendicare sought involved “wholly
redundant proceedings with a potential for inconsistent verdicts and duplicative
damages.” Id. The Superior Court held that the wrongful death beneficiaries’
constitutional right to a jury trial and the state’s interest in litigating wrongful death and
survival actions in one proceeding required that all claims proceed in court. Id. at 328.
The court viewed its holding as consistent with one of the primary objectives of
arbitration, i.e., “to achieve streamlined proceedings and expeditious results,” id. (citing
AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 346 (2011)), and affirmed the trial
court order overruling Extendicare’s preliminary objection seeking to compel arbitration.7
Extendicare sought discretionary review in this Court. We granted review as to
the following issues:
7
Neither the trial court nor the Superior Court addressed the Taylors’ alternative
arguments against the ADR Agreement’s enforcement, including mistake, lack of
consideration, frustration of purpose, impracticability, and unconscionability. These
arguments were raised before the trial court in response to Extendicare’s request for
bifurcation. Because the trial court denied Extendicare’s motion to bifurcate, it was
unnecessary for it to resolve these alternative arguments.
[J-43-2016] - 9
Does the Superior Court’s decision, which refused to compel arbitration of
the arbitrable survival claim, violate the [FAA] requirement that arbitration
agreements “shall be valid, irrevocable[,] and enforceable[,] save upon
[such] grounds as exist at law or in equity for the revocation of any
contract”?
Does the Superior Court’s conclusion that [Pa.R.C.P. 213(e)] require[s]
the consolidation of the otherwise arbitrable survival action with the non-
arbitrable wrongful death action on grounds of efficiency violate the [FAA]
as it has been interpreted by the United States Supreme Court which has
consistently ruled that arbitration is required when there is an agreement
to arbitrate even when compelling arbitration results in duplication and
piecemeal litigation?
Taylor v. Extendicare Health Facilities, Inc., 122 A.3d 1036-37 (Pa. 2015) (per curiam).
Because these are questions of law, our standard of review is de novo, and our scope
of review is plenary. See Wert v. Manorcare of Carlisle Pa., 124 A.3d 1248 (Pa. 2015).
Extendicare concedes that, pursuant to Pisano, the Taylors’ wrongful death claim
must be litigated in the trial court. Extendicare contests only the trial court’s refusal to
sever the arbitrable survival claim from the non-arbitrable wrongful death claim. Relying
upon the FAA’s directive that arbitration agreements “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, Extendicare argues that the United States Supreme Court
has interpreted this language as expressing a national policy favoring arbitration that
preempts any state law that stands in the way of an agreement to arbitrate.8
8
See, e.g., Marmet, 132 S.Ct. at 1204 (holding that “a categorical rule” prohibiting
the arbitration of personal injury or wrongful death claims was contrary to the FAA);
Concepcion, 563 U.S. at 341 (“When state law prohibits outright the arbitration of a
particular type of claim, the analysis is straightforward: the conflicting rule is displaced
by the FAA.”); Southland, 465 U.S. at 10 (“In enacting § 2 of the [FAA], Congress
declared a national policy favoring arbitration and 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.”); Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460
(continuedQ)
[J-43-2016] - 10
Extendicare criticizes the Superior Court for premising its decision upon notions
of expediency and efficiency. In this respect, Extendicare relies upon a line of cases
establishing that the FAA’s pro-arbitration mandate trumps litigation efficiency. See
KPMG LLP v. Cocchi, 132 S.Ct. 23, 26 (2011) (“[W]hen a complaint contains both
arbitrable and nonarbitrable claims, the [FAA] requires courts to ‘compel arbitration of
pendent arbitrable claims when one of the parties files a motion to compel, even where
the result would be the possibly inefficient maintenance of separate proceedings in
different forums.’” (internal citation omitted)); Dean Witter Reynolds, Inc. v. Byrd, 470
U.S. 213, 218 (1985) (“[T]he [FAA] requires district courts to compel arbitration of
pendent arbitrable claims when one of the parties files a motion to compel, even where
the result would be the possibly inefficient maintenance of separate proceedings in
different forums.”); Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
20 (1983) (“[The FAA] requires piecemeal resolution when necessary to give effect to
an arbitration agreement.”).
Extendicare observes that state and federal court decisions in Pennsylvania
currently differ regarding the issue presented herein. While the Superior Court in this
case relied upon Rule 213(e) to refuse to compel arbitration of an arbitrable claim, the
federal courts sitting in Pennsylvania uniformly have rejected Taylor or its rationale.9
(Qcontinued)
U.S. 1, 24 (1983) (“Section 2 is a congressional declaration of a liberal federal policy
favoring arbitration agreements, notwithstanding any state substantive or procedural
policies to the contrary.”).
9
See, e.g., Golden Gate Nat’l Senior Care LLC v. Sulpizio, 2016 WL 1271333
(M.D. Pa. March 31, 2016); Clouser v. Golden Gate Nat’l Senior Care, LLC, 2016 WL
1179214 (W.D. Pa. March 23, 2016); Erie Operating, L.L.C. v. Foster, 2015 WL
5883658 (W.D. Pa. Oct. 8, 2015); Hartman v. Sabor Healthcare Group, 2015 WL
(continuedQ)
[J-43-2016] - 11
According to these federal courts, whenever Rule 213(e) would prevent the operation of
a valid arbitration agreement by prohibiting the bifurcation of an arbitrable survival claim
from a non-arbitrable wrongful death claim, it is preempted by the FAA.
In response, the Taylors argue that the trial court’s and Superior Court’s rulings
are not contrary to the FAA or any controlling authority. According to the Taylors, the
FAA preempts only state laws or rules that expressly prohibit certain arbitration
proceedings. See, e.g., Marmet, 132 S.Ct. 1201; Perry v. Thomas, 482 U.S. 483, 491
(1987). The Taylors argue that Rule 213(e), conversely, is arbitration-neutral. Because
the rule does not target arbitration, the Taylors perceive no conflict between the rule and
the FAA for purposes of preemption. Indeed, the Taylors echo the Superior Court by
asserting that Rule 213(e) is only implicated in this case because Extendicare failed to
procure signatures from the wrongful death beneficiaries. According to the Taylors, had
Extendicare obtained the appropriate signatures on the ADR Agreement, both the
survival and wrongful death claims would be subject to arbitration.
The Taylors also advance alternative arguments that the ADR agreement is
unenforceable under state law for reasons that include mistake, lack of consideration,
impracticability, frustration of purpose, and unconscionability. Recognizing that the
lower courts did not consider these arguments, the Taylors urge this Court either to
address them or to remand them to the trial court for resolution.
(Qcontinued)
5569148 (M.D. Pa. Sept. 21, 2015); Golden Gate Nat’l Senior Care, LLS v. Beavens,
2015 WL 5000886 (E.D. Pa. Aug. 20, 2015); THI of Pa. at Mountainview, LLC v.
McLaughlin ex rel McLaughlin, 2015 WL 2106105 (W.D. Pa. May 6, 2015); N. Health
Facilities v. Batz, 993 F.Supp. 2d 485 (M.D. Pa. 2014).
[J-43-2016] - 12
With these arguments in mind, we begin our analysis by reviewing federal
preemption doctrine, which springs from the Supremacy Clause.10 Federal law is
paramount, and state laws that conflict with federal law are “without effect.” Dooner v.
DiDonato, 971 A.2d 1187, 1193 (Pa. 2009) (quoting Altria Group, Inc. v. Stephanie
Good, 555 U.S. 70, 76 (2008)). Although federal preemption of state laws may be
found in any of three ways, see supra, n.6; Stone Crushed P’ship v. Kassab Archbold
Jackson & O’Brien, 908 A.2d 875, 881 (Pa. 2006), Extendicare advocates solely for a
finding of conflict preemption. See Volt Info. Sci., Inc. v. Bd. of Tr. of Leland Stanford
Junior Univ., 489 U.S. 468, 477 (1989) (“The FAA contains no express pre-emptive
provision, nor does it reflect a congressional intent to occupy the entire field of
arbitration.”). Conflict preemption typically arises where compliance with both federal
and state law is impossible, or when the state law stands as an obstacle to the
accomplishment of the full purposes and objectives of the United States Congress.
Holtz Cigar Co. v. City of Philadelphia, 10 A.3d 902, 918 n.4 (Pa. 2011); see Volt, 489
U.S. at 477.
Turning first to the relevant state law, Rule 213(e) is a rule of compulsory joinder,
providing that wrongful death and survival actions “may be enforced in one action, but if
independent actions are commenced they shall be consolidated for trial.” Pa.R.C.P.
10
The Supremacy Clause of the United States Constitution provides as follows:
This Constitution, and the Laws of the United States which shall be made
in Pursuance thereof; and all Treaties made, or which shall be made,
under the Authority of the United States, shall be the supreme Law of the
Land; and the Judges in every State shall be bound thereby, any Thing in
the Constitution or Laws of any State to the Contrary notwithstanding.
U.S. Const. art. VI, cl. 2.
[J-43-2016] - 13
213(e).11 If independent actions are filed or pending in the same court, or are
commenced in different courts, the trial courts “shall” order them to be consolidated. Id.
This procedural rule facially addresses scenarios where the litigants seek to resolve
survival and wrongful death claims in court, mandates a single judicial action, and
expresses the Commonwealth’s interest in the efficient judicial resolution of survival and
wrongful death claims and the avoidance of duplicative recoveries. See Pezzulli v.
D’Ambrosia, 26 A.2d 659, 662 (Pa. 1942) (“[T]here is an important limitation on the right
to bring actions under both the death acts and the survival statute, namely, that it must
not work a duplication of damages.”). Rule 213(e) is silent regarding arbitration,
because it does not contemplate the scenario where one claim that is subject to
compulsory joinder is also subject to arbitration due to the contractual agreement of the
parties.
The FAA is in tension with Rule 213(e). It is neither exaggeration nor hyperbole
to characterize the rise of arbitration over the last century as revolutionizing the rule of
law and access to justice.12 Prior to the 1925 enactment of the FAA, courts across the
11
Both of the parties have, at this juncture, confined their arguments solely to the
application of Rule 213(e).
12
See, e.g., Thomas E. Carbonneau, The Revolution in Law Through Arbitration,
56 Clev. St. L. Rev. 233, 233 (2008) (opining that “[t]he development of a ‘strong federal
policy favoring arbitration’ cast aside traditional acceptations about law and
adjudication,” and arguing that the rule of law which the human civilization has
associated with law and the legal process "has been profoundly, perhaps irretrievably,
altered by the rise of arbitration”) (citing E.E.O.C. v. Waffle House, Inc., 534 U.S. 279,
290 (2002)); Charles L. Knapp, Taking Contracts Private: The Quiet Revolution in
Contract Law, 71 Fordham L. Rev. 761, 782-83 (2002) (“[D]enial of access to a court of
law in most cases means exactly that—denial of access not merely to a court, or even
to a jury, but to the law itself.”); Stephen L. Hayford, Commercial Arbitration in the
Supreme Court 1983-1995: A Sea Change, 31 Wake Forest L. Rev. 1, 1 (1996) (“One
(continuedQ)
[J-43-2016] - 14
country disparaged arbitration as a renegade form of adjudication, and refused to
enforce private arbitration agreements. See Thomas E. Carbonneau, The Revolution in
Law Through Arbitration, 56 Clev. St. L. Rev. 233, 244 (2008); see also Allied-Bruce
Terminix Cos. v. Dobson, 513 U.S. 265, 270-71 (1995) (discussing the historical
background of the FAA); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24
(1991) (same). During this time, when arbitration occurred primarily in the commercial
context between businesses of equal bargaining power, see Margaret M. Harding, The
Clash Between Federal and State Arbitration Law and the Appropriateness of
Arbitration As A Dispute Resolution Process, 77 Neb. L. Rev. 397, 400 (1998), the
business interests that favored the enforcement of private arbitration agreements began
(Qcontinued)
of the most striking recent developments in the civil justice arena is the emergence of
commercial arbitration as a viable alternative to traditional litigation.”).
Indeed, Professor Myriam Gilles recently opined that, as a result of the anti-
lawsuit movement that nurtured the shift to arbitration over the last thirty years:
[W]e are now at a unique point in our legal history: one that portends,
quite literally, the end of doctrinal development in entire areas of the law.
Companies, anxious to avoid . . . exposure . . . are highly motivated to
insert confidential, one-on-one arbitration mandates into the standard form
agreements that, over these same thirty years, have come to govern their
relationships with employees, consumers, direct purchasers, and all
manner of counterparties. As a result, all disputes under these
agreements—whether they would have otherwise been brought as class
or individual claims—will now be shunted into the hermetically-sealed
vault of private arbitration, where there is no public, transparent decision-
making process, much less stare decisis, or common law development.
For entire categories of cases that are ushered into this vault—from
consumer law, to employment law, to much of antitrust law—common law
doctrinal development will cease. This, quite literally, represents the end
of law.
Myriam Gilles, The Day Doctrine Died: Private Arbitration and the End of Law, 2016 U.
Ill. L. Rev. 371, 372 (2016).
[J-43-2016] - 15
to lobby state governments and Congress for legislation compelling the courts to
enforce their bargains. Michael G. McGuinness & Adam J. Karr, California’s "Unique"
Approach to Arbitration: Why This Road Less Traveled Will Make All the Difference on
the Issue of Preemption Under the Federal Arbitration Act, 2005 J. Disp. Resol. 61, 63
(2005). Congress answered the call by enacting the FAA, 9 U.S.C. §§ 1-14, in 1925 as
modest legislation to rehabilitate arbitration, Carbonneau, The Revolution, 56 Clev. St.
L. Rev. at 245, and to “reverse centuries of judicial hostility to arbitration agreements by
placing them on equal footing with other contracts.” Shearson/Am. Express v.
McMahon, 482 U.S. 220, 225-26 (1987).13
The FAA was intended by Congress “first and foremost” to ensure judicial
enforcement of arbitration agreements into which parties had entered. Dean Witter, 470
U.S. at 220. Although Congress was not “blind to the potential benefit of [the FAA] for
expedited resolution of disputes,” id. at 219, the Supreme Court has rejected “the
suggestion that the overriding goal of the [FAA] was to promote the expeditious
resolution of claims.” Id. To address its preeminent concern, Section 2 of the FAA
makes arbitration agreements “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. § 2.14
13
See also Concepcion, 563 U.S. at 339 (explaining that “[t]he FAA was enacted in
1925 in response to widespread judicial hostility to arbitration agreements”); Allied-
Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 270 (1995); Volt Info. Sci., 489 U.S. at
474; Dean Witter, 470 U.S. at 220 (explaining that when Congress passed the FAA, it
was motivated by a desire to change the existing anti-arbitration climate); Prima Paint
Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 195, 415 (1967).
14
Section 2 provides, in its entirety, as follows:
A written provision in any maritime transaction or a contract evidencing a
transaction involving commerce to settle by arbitration a controversy
(continuedQ)
[J-43-2016] - 16
The text of this section not only embodies Congress’ intent to ensure that private
arbitration agreements are enforced like any other contract, but also includes the FAA’s
so-called “savings clause,” by which courts may refuse to enforce agreements to
arbitrate under state laws that “arose to govern issues concerning the validity,
revocability, and enforceability of contracts generally.” Perry, 482 U.S. at 492 n.9.
Originally, the FAA was perceived to be a procedural statute applicable only in
federal courts. See Lyra Haas, The Endless Battleground: California’s Continued
Opposition to the Supreme Court’s Federal Arbitration Act Jurisprudence, 94 B. U. L.
Rev. 1419, 1424 (2014). From these humble origins, however, the FAA has evolved
through the Supreme Court’s application of conflict preemption into what one
commentator has characterized as “a redefinition of civil justice, a modification of the Bill
of Rights, and the implicit emendation of the U.S. Constitution.” Carbonneau, The
Revolution, 56 Clev. St. L. Rev. at 246. According to some, the Supreme Court has
interpreted the FAA as a “preemption juggernaut,” Lisa Tripp & Evan R. Hanson, AT&T
v. Concepcion: The Problem of A False Majority, 23 Kan. J. L. & Pub. Pol’y 1, Fall 2013,
defining the contours of the FAA to eradicate any state law that “stands as an obstacle
to the accomplishment and execution of the full purposes and objectives” of the FAA.
Concepcion, 563 U.S. at 352 (citing Hines v. Davidowitz, 312 U.S. 52, 67 (1941));
(Qcontinued)
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.
[J-43-2016] - 17
McGuinness & Karr, California’s “Unique” Approach, 2005 J. Disp. Resol. at 65 (“The
Court has broadly interpreted the FAA provisions that direct courts to enforce arbitration
agreements, while narrowly construing those provisions that limit the reach of the
FAA”.).
Beginning with Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395
(1967), the Supreme Court established the doctrinal underpinnings for transforming the
FAA into a “preemption juggernaut” by holding that federal courts sitting in diversity
jurisdiction were obligated to apply the FAA. Tripp & Hanson, AT&T v. Concepcion: The
Problem of A False Majority, 23 Kan. J. L. & Pub. Pol’y, at 1. Twenty years later, in
Moses H. Cone, the Court relied upon the Supremacy Clause to hold that the FAA
established “a body of federal substantive law of arbitrability.” 460 U.S. at 24. Shortly
thereafter, the Court held that state and federal courts are bound by the FAA, and that
Congress intended to preclude state attempts to undermine the enforceability of
arbitration agreements. Southland, 465 U.S. at 10 (“[i]n enacting § 2 of the [FAA],
Congress declared a national policy favoring arbitration and 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. . . .”); see Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985) (stating that the question of whether
claims are arbitrable must be decided with a “healthy regard for the federal policy
favoring arbitration”).15
15
In Southland, the Court elevated the preemptive effect of the FAA above any
countervailing concerns for federalism. Southland, 465 U.S. at 19 (Stevens, J.,
concurring in part and dissenting in part) (“The existence of a federal statute enunciating
a substantive federal policy does not necessarily require the inexorable application of a
(continuedQ)
[J-43-2016] - 18
Since federalizing arbitration in Southland, the Supreme Court has continued to
reaffirm its commitment to arbitration by striking down conflicting state laws.16 In much
of its FAA preemption jurisprudence pre-dating Concepcion, the Supreme Court
appeared to hold that it was only when a state law expressed an anti-arbitration policy
that it was preempted by the FAA. For example, in Doctor’s Assoc., Inc. v. Casarotto,
the Court held that the FAA preempted a state statute that conditioned the enforceability
of an arbitration clause upon a specific notice requirement. 517 U.S. 681, 688 (1996)
(explaining that the national policies embodied in the FAA are “antithetical to threshold
limitations placed specifically and solely on arbitration provisions”). Casarotto clarified
that, although states generally may regulate contracts, they may not decline to enforce
arbitration agreements solely because they are arbitration agreements.17
(Qcontinued)
uniform federal rule of decision notwithstanding the differing conditions which may exist
in the several States and regardless of the decisions of the States to exert police
powers as they deem best for the welfare of their citizens.”); id. at 36 (O’Connor, J.,
dissenting) (“Today’s decision is unfaithful to congressional intent, unnecessary, and, in
light of the FAA’s antecedents and the intervening contraction of federal power,
inexplicable.”).
16
See Lyra Haas, The Endless Battleground: California’s Continued Opposition to
the Supreme Court’s Federal Arbitration Act Jurisprudence, 94 B. U. L. Rev. 1419,
1425-26 (2014) (“Over time the Court has expanded the reach of these substantive
provisions, placing the FAA in a position to preempt a vast swath of state law on
arbitration.”); Hayford, A Sea Change, 31 Wake Forest L. Rev. at 36 (“All of the major
anti-arbitration arguments have been swept aside by the Supreme Court, leaving
without succor parties that contract to arbitrate future disputes and subsequently decide
they would prefer to adjudicate in court.”).
17
See Allied-Bruce, 513 U.S. at 272-73 (confronting an Alabama law that made
predispute arbitration agreements invalid and unenforceable, and rejecting the
argument that the FAA carved out “an important statutory niche in which a State
remains free to apply its antiarbitration law or policy”); Mastrobuono v. Shearson
Lehman Hutton, Inc., 514 U.S. 52, 58 (1995) (holding that when the parties in court
proceedings include claims that are subject to an arbitration agreement, the FAA
(continuedQ)
[J-43-2016] - 19
By striking down state laws targeting arbitration agreements, the Supreme Court
has limited the role of state courts to regulating contracts to arbitrate under general
contract law principles in accord with the savings clause, under which it has held that
only “generally applicable contract defenses, such as fraud, duress, or
unconscionability, may be applied to invalidate arbitration agreements without
contravening § 2.” Casarotto, 517 U.S. at 687; see Allied-Bruce, 513 U.S. at 281;
Rodriguez de Quijas v. Shearson/Am. Express, Inc., 490 U.S. 477, 483-84 (1989);
Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 226 (1987); Perry, 482 U.S. at
492 n.9 (explaining that “[s]tate 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”).18 These cases instruct that courts are obligated to enforce
arbitration agreements as they would enforce any other contract, in accordance with
their terms, and may not single out arbitration agreements for disparate treatment.19
(Qcontinued)
requires that agreement to be enforced even if a state statute or common-law rule
would otherwise exclude that claim from arbitration); Volt Info Sci., 489 U.S. at 477
(providing that a state law that “stands as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress” should be preempted);
Mitsubishi Motors Corp. v. Soler-Chrysler-Plymouth, Inc., 473 U.S. 614, 627 (1985)
(finding no basis in the FAA “for disfavoring agreements to arbitrate statutory claims”).
18
See also Borough of Ambridge Water Auth. v. Columbia, 328 A.2d 498, 500 (Pa.
1974) (“Contracts that provide for arbitration are valid, enforceable and irrevocable,
save upon such grounds as exists in law or in equity for the revocation of any other type
of contract.”).
19
Consequently, in the realm of arbitration, state law exists solely to determine
whether a valid contract exists. Myriam Gilles, Opting Out of Liability: The Forthcoming,
Near-Total Demise of the Modern Class Action, 104 Mich. L. Rev. 373, 394-95 (2005)
(“While it remains . . . for courts to determine whether a valid contract requiring
arbitration exists, all other issues concerning the scope of arbitration agreements are
now for arbitrators to decide.”); see Kristopher Kleiner, AT&T Mobility L.L.C. v.
(continuedQ)
[J-43-2016] - 20
But the prerogatives of state courts to regulate arbitration agreements even in
accord with generally applicable contract defenses such as unconscionability have been
called into question. Indeed, in recent years the Supreme Court’s preemption
juggernaut has gathered momentum.20 In Concepcion, 563 U.S. 333, the Court held
that the FAA preempted California’s common-law rule of unconscionability (the
“Discover Bank Rule”), which it viewed as an obstacle to the accomplishment and
execution of the purposes and objectives of the FAA. In Discover Bank v. Superior
Court, 113 P.3d 1100 (Cal. 2005), the California Supreme Court had applied the
California Code, which allowed courts to refuse to enforce any contract found to be
unconscionable at the time it was made, to conclude that class action waivers are
unconscionable and void under certain circumstances.21 The Discover Bank rule was
facially neutral, and applied to class action waivers in arbitration as well as litigation.
(Qcontinued)
Concepcion: The Disappearance of the Presumption Against Preemption in the Context
of the FAA, 89 Denv. U. L. Rev. 747, 751 (2012).
20
See, e.g., Myriam Gilles, Individualized Injunctions and No-Modification Terms:
Challenging "Anti-Reform" Provisions in Arbitration Clauses, 69 U. Miami L. Rev. 469
(2015) (providing that “the United States Supreme Court has been on a bit of a pro-
arbitration tear recently, upholding ever-more draconian dispute resolution clauses
inserted in standard-form contracts against all sorts of legal and policy-based
challenges”).
21
The Discover Bank court explained the rule as follows:
[W]hen the [class action] waiver is found in a consumer contract of
adhesion in a setting in which disputes between the contracting parties
predictably involve small amounts of damages, and when it is alleged that
the party with the superior bargaining power has carried out a scheme to
deliberately cheat large numbers of consumers out of individually small
sums of money, then, at least to the extent the obligation at issue is
governed by California law, the waiver becomes in practice the exemption
of the party “from responsibility for [its] own fraud, or willful injury to the
(continuedQ)
[J-43-2016] - 21
The Concepcions had responded to an advertisement by AT&T for a free phone,
and had entered into an agreement for the sale and servicing of the phone. When they
were billed $30.22 in sales tax based upon the phone’s retail value, they attempted to
sue AT&T in federal court. Concepcion, 563 U.S. at 336-37. Their action later was
consolidated with a putative class action alleging that AT&T had engaged in false
advertising and fraud. Id. at 337. However, the Concepcions and other members of the
class were met with AT&T’s attempt to compel arbitration under the contract. Id. The
Concepcions opposed the motion, arguing that the arbitration agreement was
unconscionable and unlawful under the Discover Bank Rule because it disallowed class
actions. Id. at 338. The district court denied AT&T’s motion, and the Ninth Circuit Court
of Appeals affirmed pursuant to the Discover Bank Rule, which it held was not
preempted by the FAA. Id.
In a 5-4 decision authored by the late Justice Antonin Scalia, the United States
Supreme Court reversed. The Court held that the FAA’s savings clause did not protect
the Discover Bank Rule from preemption. According to the Court, “[w]hen state law
prohibits outright the arbitration of a particular type of claim, the analysis is
straightforward: The conflicting rule is displaced by the FAA.” Concepcion, 563 U.S. at
341 (citing Preston v. Ferrer, 552 U.S. 346, 353 (2008)). The inquiry is more complex,
however, when a generally applicable doctrine, such as unconscionability, is alleged to
(Qcontinued)
person or property of another.” (Civ.Code, § 1668.) Under these
circumstances, such waivers are unconscionable under California law and
should not be enforced.
113 P.3d at 1110.
[J-43-2016] - 22
have been applied in a manner hostile to arbitration. Id. The Supreme Court reiterated
that a court may not “rely on the uniqueness of an agreement to arbitrate as a basis for
a state-law holding that enforcement would be unconscionable, for this would enable
the court to effect what . . . the state legislature cannot.” Id. at 341 (citing Perry, 482
U.S. at 493 n.9). Although the FAA, through Section 2’s savings clause, preserves
generally applicable contract defenses, the Court held that it did not suggest “an intent
to preserve state-law rules that stand as an obstacle to the accomplishment of the
FAA’s objectives.” Id. at 343. In this respect, the Court held that the Discover Bank
Rule, by requiring the availability of class-wide arbitration, interfered with the
“fundamental attributes of arbitration” and therefore was “an obstacle to the
accomplishment and execution of the full purposes and objectives of Congress” in
enacting the FAA. Id. at 344, 352.
The Supreme Court defined the “fundamental attributes of arbitration” as “lower
costs, greater efficiency and speed, and the ability to choose expert adjudicators to
resolve specialized disputes.” Concepcion, 563 U.S. at 348. The Court further defined
the “overarching purpose” of the FAA as twofold: to ensure “the enforcement of
arbitration agreements according to their terms,” and “to facilitate streamlined
proceedings.” Id. at 344. In Concepcion, the majority found that these two goals did not
conflict. Id. at 345. Acknowledging that the state rule was arbitration-neutral, the Court
focused upon the rule’s practical effect rather than its text. The rule’s application,
according to the Court, interfered with the fundamental attributes of arbitration, and thus
was preempted. Id. at 344. In reaching this conclusion, the majority rejected the
argument that class-arbitration waivers shield corporations from numerous, low-value
[J-43-2016] - 23
claims, which can either be brought as a class action or not at all, explaining that
“[s]tates cannot require a procedure that is inconsistent with the FAA, even if it is
desirable for unrelated reasons.” Id. at 351.
Justice Clarence Thomas concurred, providing the fifth vote for the Supreme
Court’s preemption holding, based not upon the purposes and objectives of the FAA,
but upon a textual analysis of the statute.22 In Justice Thomas’s opinion, the savings
clause, by referring to “revocation,” suggested that it applied only to defenses that relate
to the formation of the contract, rather than to general contract defenses. Concepcion,
563 U.S. at 354 (Thomas, J., concurring). For Justice Thomas, the only question
presented in Concepcion was whether the Discover Bank Rule pertained to the making
of a contract. Id. at 356. Because the Discover Bank Rule was premised upon public
policy, rather than a defense related to contract formation, Justice Thomas did not
believe it was a ground for revocation under Section 2’s savings clause. Id. at 356-57.
Concepcion is relevant to our analysis not only because it limited application of
state law under the savings clause, but also because it defined the “overarching
purpose” of the FAA as twofold: to ensure the enforcement of arbitration agreements
according to their terms, and to facilitate streamlined proceedings. Although the Court
22
Justice Thomas explained that although he preferred to engage in a textual
analysis of the savings clause, the parties did not develop arguments along those lines.
He therefore joined the Majority opinion, but took the opportunity to explain his preferred
approach. Moreover, any suggestion that Concepcion resulted in a plurality decision
was put to rest in DIRECTV, Inc. v. Imburgia, 136 S. Ct. 463, 468 (2015), in which the
Supreme Court, in a clear majority, applied Concepcion to set aside a California court’s
refusal to enforce an arbitration agreement. Although the Court acknowledged that
Concepcion was “a closely divided case,” it held that the states were obligated to apply
it. DIRECTV, 136 S. Ct. at 468 (“The Federal Arbitration Act is a law of the United
States, and Concepcion is an authoritative interpretation of that Act. Consequently, the
judges of every State must follow it.”).
[J-43-2016] - 24
held that the arbitration agreements at issue in Concepcion could be enforced according
to their terms, and that doing so would facilitate streamlined proceedings, when these
two purposes conflict, the Court has mandated that enforcement trumps efficiency.
In Moses H. Cone, for example, the hospital plaintiff in a state court proceeding,
who resisted arbitration, filed claims against two defendants. 460 U.S. at 5. The claims
against one defendant, Mercury, were subject to an arbitration agreement. Id. Before
the Supreme Court, the plaintiff argued that if it was forced to arbitrate its claims against
Mercury, it would be forced to resolve its related disputes in separate forums. Id. at 19-
20. The Court did not share the plaintiff’s concern for avoiding piecemeal resolution of
its claims:
That misfortune . . . occurs because the relevant federal law requires
piecemeal resolution when necessary to give effect to an arbitration
agreement. Under the [FAA], an arbitration agreement must be enforced
notwithstanding the presence of other persons who are parties to the
underlying dispute but not to the arbitration agreement. If the dispute
between Mercury and the Hospital is arbitrable under the Act, then the
Hospital’s two disputes will be resolved separately—one in arbitration, and
the other (if at all) in state-court litigation.
Id. at 20.
Similarly, in Dean Witter, 470 U.S. 213, the Court examined how to proceed in a
lawsuit against a single defendant in which the plaintiff raised a non-arbitrable federal
claim (premised upon federal securities law) and a pendent, arbitrable state law claim.
The lower court had observed that the denial of arbitration is justified when the facts
supporting all of the claims are intertwined, because arbitration could produce results
that would bind the judicial forum through issue preclusion. Byrd v. Dean Witter
Reynolds, Inc., 726 F.2d 552, 554 (9th Cir. 1984). The Supreme Court reversed,
holding that, under such circumstances, upon the motion of one of the parties, the FAA
[J-43-2016] - 25
requires district courts to compel arbitration of the arbitrable claims, “even where the
result would be the possibly inefficient maintenance of separate proceedings in different
forums.” Dean Witter, 470 U.S. at 217. Examining the mandatory language of Section
2 of the FAA, the Court found that the district court had no discretion not to compel
arbitration of an arbitrable claim. Id. at 218 (quoting 9 U.S.C. § 2 (providing that
arbitration agreements “shall be valid, irrevocable, and enforceable”)). The Court
further rejected the efficiency argument that, by declining to compel arbitration, “the
court avoids bifurcated proceedings and perhaps redundant efforts to litigate the same
factual questions twice.” Id. at 217. Rather, the Court expressly elevated Congress’
intent to enforce arbitration agreements over any concern it bore for efficiency, and held
that any conflict between the FAA’s two goals must be resolved in favor of enforcement.
Id. at 221 (“The preeminent concern of Congress in passing the Act was to enforce
private agreements into which parties had entered, and that concern requires that we
rigorously enforce agreements to arbitrate, even if the result is ‘piecemeal’ litigation, at
least absent a countervailing policy manifested in another federal statute.”).
Subsequently, in KPMG, 132 S.Ct. 23, nineteen plaintiffs sued three defendants,
raising, inter alia, five claims against KPMG, two of which were subject to an arbitration
agreement. The state trial court refused to compel arbitration of any of the claims, and
the state appellate court affirmed. Id. at 24. In a brief per curiam opinion, the Supreme
Court summarily reversed. Relying upon Dean Witter, the Court held that state courts
must “examine with care” complaints seeking to invoke their jurisdiction to sever
arbitrable from non-abirtrable claims, and “may not issue a blanket refusal to compel
[J-43-2016] - 26
arbitration merely on the grounds that some of the claims could be resolved by the court
without arbitration.” Id.23
Collectively, Moses H. Cone, Dean Witter and KPMG instruct that the prospect of
inefficient, piecemeal litigation proceeding in separate forums is no impediment to the
arbitration of arbitrable claims. Indeed, where a plaintiff has multiple disputes with
separate defendants arising from the same incident, and only one of those claims is
subject to an arbitration agreement, the Court requires, as a matter of law, adjudication
in separate forums.
Moreover, while state courts have attempted to reconcile their state law contract
defenses and public policy protections with the preemptive effect of the FAA, see, e.g.,
Concepcion 563 U.S. at 342 (recognizing that “the judicial hostility toward[] arbitration
that prompted the FAA had manifested itself in ‘a great variety’ of ‘devices and formulas’
declaring arbitration against public policy”), the United States Supreme Court has
endeavored to compel judicial acceptance of private agreements to arbitrate.24 The
FAA is now perceived as applying to almost every arbitration agreement, although the
savings clause envisions a limited role for state law. In this respect, arbitration has
come a long way from its origin as a mutually agreed-upon method of dispute resolution
23
See also Nationwide Mut. Ins. Co. v. George V. Hamilton, Inc., 571 F.3d 299,
308 (3d Cir. 2009) (recognizing that arbitration agreements must be enforced
notwithstanding the presence of persons who are parties to the underlying dispute, but
not to the arbitration agreement, and explaining that “the FAA has a policy in favor of
[piecemeal litigation], at least to the extent necessary to preserve arbitration rights”).
24
See Hayford, A Sea Change, 31 Wake Forest L. Rev. at 36 (“The contemporary
Supreme Court is intolerant of legal maneuvers and other machinations, whatever their
origin, intended to avoid the arbitration bargain or delay the commercial arbitration
process.”).
[J-43-2016] - 27
by two business entities of equal bargaining power, and now is employed in a variety of
contracts, many of which are contracts of adhesion.25 As arbitration clauses proliferate,
individuals will ever more broadly exchange their right to a jury trial for basic consumer
products or nursing home care.
One of the striking consequences of the shift away from the civil justice system
and toward private adjudication is that corporations are routinely stripping individuals of
their constitutional right to a jury trial. See U.S. Const. amend. VII (preserving the right
to a trial by jury); Pa. Const. art. 1, § 6 (same). While one’s right to a jury trial may be
waived, it is not at all apparent that signatories to arbitration agreements are aware that
they waive their right to a jury trial upon the execution of an arbitration agreement.26
The West Virginia Supreme Court of Appeals highlighted this constitutional
concern in Brown et al v. Marmet Health Care Ctr. et al, 724 S.E.2d 250 (W.Va. 2011).
Relying in part upon the state constitution’s provision of the right to a jury trial, W. Va.
Const. art. III, § 13, the West Virginia court criticized the Supreme Court’s decisions
granting the FAA sweeping preemptive effect. Brown, 724 S.E.2d at 278 (“With
25
“Frequently, one cannot purchase a car, apply for a credit card, open a checking
or savings account in a bank, purchase stock on a major stock exchange, or take a
cruise trip on a major cruise line without having to accept a non-negotiable contract that
contains an arbitration clause mandating the arbitration of any and all disputes arising
out of that contract.” Larry J. Pittman, The Federal Arbitration Act: The Supreme Court's
Erroneous Statutory Interpretation, Stare Decisis, and A Proposal for Change, 53 Ala. L.
Rev. 789, 791 (2002); see Myriam Gilles, Operation Arbitration: Privatizing Medical
Malpractice Claims, 15 Theoretical Inquiries L. 671, 678 (2014). Indeed, as Justice
Scalia observed in Concepcion, “the times in which consumer contracts were anything
other than adhesive are long past.” Concepcion, 563 U.S. at 346.
26
See, e.g., Christine M. Reilly, Achieving Knowing and Voluntary Consent in Pre-
Dispute Mandatory Arbitration Agreements at the Contracting Stage of Employment, 90
Cal. L. Rev. 1203, 1208 (2002).
[J-43-2016] - 28
tendentious reasoning, the United States Supreme Court has stretched the application
of the FAA from being a procedural statutory scheme effective only in the federal courts,
to being a substantive law that preempts state law in both the federal and state
courts.”). Based upon its belief that Congress did not intend for all arbitration
agreements to be governed by the FAA, the state court held that the FAA did not apply
to pre-dispute agreements to arbitrate negligence claims in nursing home contracts. Id.
at 291-92 (“[A]s a matter of public policy under West Virginia law, an arbitration clause
in a nursing home admission agreement adopted prior to an occurrence of negligence
that results in personal injury or death, shall not be enforced to compel arbitration of a
dispute concerning the negligence.”).
On appeal, the Supreme Court was unsympathetic to the state court’s concern
for the right to a jury trial. In a cursory per curiam opinion, the Supreme Court reversed,
and chastised the West Virginia court for “misreading and disregarding the precedents
of this Court interpreting the FAA.” Marmet, 132 S.Ct. at 1202. The Court held that the
state’s public policy rationale constituted “a categorical rule prohibiting arbitration of a
particular type of claim,” which the Court held was “contrary to the terms and coverage
of the FAA” and, therefore, preempted. Id. at 1204; see Nitro-Lift Tech., L.L.C. v.
Howard, 133 S.Ct. 500, 501 (2012) (per curiam) (invalidating a state law that required
the validity of non-compete provisions in employment contracts to be resolved
judicially).27
27
Interestingly, upon remand from the Supreme Court, the West Virginia Supreme
Court of Appeals again declared that the arbitration agreements at issue could be
invalid, this time based upon common-law grounds of unconscionability, and remanded
(continuedQ)
[J-43-2016] - 29
With this Supreme Court jurisprudence in mind, and solicitous of our obligation to
consider questions of arbitrability with a “healthy regard for the federal policy favoring
arbitration,” Moses H. Cone, 460 U.S. at 20, we observe that Section 2 of the FAA binds
state courts to compel arbitration of claims subject to an arbitration agreement. 9
U.S.C. § 2 (providing that arbitration agreements “shall be valid, irrevocable, and
enforceable”). This directive is mandatory, requiring parties to proceed to arbitration on
issues subject to a valid arbitration agreement, even if a state law would otherwise
exclude it from arbitration. Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52,
58 (1995).
The only exception to a state’s obligation to enforce an arbitration agreement is
provided by the savings clause, which permits the application of generally applicable
state contract law defenses such as fraud, duress, or unconscionability, to determine
whether a valid contract exists. Casarotto, 517 U.S. at 687; Volt, 489 U.S. at 476;
Perry, 482 U.S. at 492 n.9.28 Pursuant to the savings clause, the compulsory joinder
mandate of Rule 213(e) could bar the trial court from bifurcating the Taylors’ arbitrable
survival action from its pending litigation in state court only if it qualifies as a generally
applicable contract defense. Rule 213(e), however, is not a substantive defense, but a
procedural mechanism to effectuate the state’s interest in the efficient resolution of
(Qcontinued)
for the development of a record to assess these common-law arguments. Brown et al v.
Marmet Health Care Ctr. et al, 729 S.E.2d 217, 223 (W.Va. 2012).
28
The Supreme Court’s case law, though, provides little guidance as to what state
laws might survive a preemption challenge, because it consistently has held that the
FAA preempts state law. See Concepcion, 563 U.S. at 344; Doctor’s Assocs., 517 U.S.
at 688; Perry, 482 U.S. at 491-92; and Southland, 465 U.S. at 10.
[J-43-2016] - 30
wrongful death and survival actions in one judicial forum. Thus, it does not fall within
the savings clause.
Moreover, even if Rule 213(e) was a generally applicable contract defense, it
would fail the test established in Concepcion. There, the Supreme Court instructed that
although the savings clause may save a state law from FAA preemption, it will not do so
when a state law prohibits outright the arbitration of a particular type of claim, when a
generally applicable contract defense is applied in a manner hostile to arbitration, or
when the state rule stands as an obstacle to the accomplishment of the FAA’s
objectives. Concepcion, 563 U.S. at 341-43.
As noted, the FAA’s objectives are to ensure the enforcement of arbitration
agreements and facilitate streamlined proceedings. Arbitration of a single claim under
the facts presented herein, with multiple plaintiffs and defendants and several causes of
action remaining in state court, likely will not lower costs or enhance efficiency.
Therefore, the scenario that we are addressing arguably presents a conflict between the
two objectives of the FAA, where enforcing the ADR Agreement between Decedent and
Extendicare will satisfy the enforcement objective at the expense of efficiency. Under
such circumstances, we are bound by the Supreme Court’s directive to favor
enforcement over efficiency. See Moses H. Cone, 460 U.S. at 20; Dean Witter, 470
U.S. at 217; KPMG, 132 S.Ct. at 24. The Supreme Court has made clear that
bifurcation and piecemeal litigation is the tribute that must be paid to Congressional
intent. Dean Witter, 470 U.S. at 217.
In reaching this conclusion, we focus upon the application of Rule 213(e) in
practice rather than upon its text or its purpose. See Concepcion, 563 U.S. at 344.
[J-43-2016] - 31
Whether one characterizes Rule 213(e) as a contract defense or as an arbitration-
neutral procedural rule, it was applied in this case to defeat arbitration of the survival
claim that Extendicare and Decedent (through her legal representative) agreed to
submit to arbitration. Like the Discover Bank Rule that the Supreme Court held was
preempted in Concepcion, the application of Rule 213(e) herein “stands as an obstacle”
to achieving the objectives of Congress in enacting the FAA, as interpreted by the
Supreme Court. Concepcion, 563 U.S. at 352. Thus, as applied herein, Rule 213(e)
conflicts with the FAA, and is preempted.
We recognize that Rule 213(e) is a procedural mechanism to control case flow,
and does not substantively target arbitration. However, the Supreme Court directed in
Concepcion that state courts may not rely upon principles of general law when
reviewing an arbitration agreement if that law undermines the enforcement of arbitration
agreements. We cannot require a procedure that defeats an otherwise valid arbitration
agreement, contrary to the FAA, even if it is desirable for the arbitration-neutral goal of
judicial efficiency. See Concepcion, 563 U.S. at 351 (“States cannot require a
procedure that is inconsistent with the FAA, even if it is desirable for unrelated
reasons.”). Declining to bifurcate the wrongful death and survival actions against
Extendicare in the interest of efficiency would nullify the ADR Agreement, a result not
permitted by the Supreme Court’s FAA jurisprudence.29
29
The dissent speculates that we have interpreted the FAA to divest wrongful death
beneficiaries of their statutorily created right to bring a claim in this Commonwealth.
The dissent asserts that, under our analysis, a wrongful death action based upon facts
which also led to an arbitrable survival action cannot be maintained in court because the
wrongful death beneficiaries will not be able to establish that “any prior actions for the
same injuries are consolidated with the wrongful death claim so as to avoid a duplicate
(continuedQ)
[J-43-2016] - 32
In its decision that Rule 213(e) barred bifurcation, the Superior Court expressed
concern for the wrongful death beneficiaries’ constitutional right to a jury trial. We share
the Superior Court’s concern, which appears to derive from the potential preclusive
effect of arbitration upon the wrongful death beneficiaries in the judicial proceedings,
(Qcontinued)
recovery.” Dissenting Opinion at 3 (quoting 42 Pa.C.S. § 8301(a)). This novel
interpretation of Subsection 8301(a) has not been advanced by the parties in this case,
is beyond the scope of our grant of review, and is not before us.
Moreover, we differ with the dissent’s reading of Subsection 8301(a). First, once
there is a valid arbitration agreement, the claims that are encompassed within that
agreement are transferred to a private arbitration forum for deliberation, and no longer
are pending in court. There is, therefore, no legal action for the plaintiff to consolidate
with the wrongful death claim. Second, once an issue has been referred to arbitration,
any judicial proceeding involving that issue is stayed pending the outcome of arbitration.
42 Pa.C.S. § 7304(d). Therefore, the survival claim arbitration will be resolved before
the wrongful death action can proceed in the court of common pleas. Thus, the court
hearing the wrongful death action may account for any damages awarded in the survival
arbitration and “avoid duplicate recovery” as required by Subsection 8301(a). Nothing
in this opinion suggests a willingness to countenance duplicative damages. Finally,
although the dissent, unlike the parties, has focused upon the Wrongful Death Act
rather than Rule 213(e), our preemption analysis herein applies equally to the
consolidation requirement of the Wrongful Death Act.
The dissent’s interpretation of Subsection 8301(a) to bar the arbitration of a claim
subject to a valid arbitration agreement is precisely the sort of obstacle to the
accomplishment of the FAA’s objectives that the United States Supreme Court has
repeatedly rejected. In the face of this controlling authority, the dissent would
nonetheless permit a party to avoid a contractual agreement to arbitrate a survival
action by adding a wrongful death claim under Subsection 8301(a). The dissent’s novel
jurisprudence would allow state legislatures to invalidate or nullify federal law simply by
including a requirement that is inconsistent with arbitration as an element of a statutory
cause of action by, for example, requiring all related issues to be filed in the court of
common pleas. The Supreme Court of the United States repeatedly has struck down
attempts by state courts to relieve parties of their obligation to arbitrate by relying upon
state substantive and procedural laws. We need not like this result. It is what the
Supremacy Clause commands.
[J-43-2016] - 33
through application of the doctrine of collateral estoppel.30 However, the preclusive
effect of an arbitration award upon judicial proceedings is not presently before this
Court. Moreover, although the appellate courts of the Commonwealth have held that “a
judicially confirmed private arbitration award will have collateral estoppel effect, even in
favor of non-parties to the arbitration, if the arbitrator actually and necessarily decided
the issue sought to be foreclosed and the party against whom estoppel is invoked had
full incentive and opportunity to litigate the matter,” Frog, Switch & Mfg. Co. v. Pa.
Human Relations Comm’n, 885 A.2d 655, 661 (Pa. Cmwlth. 2005),31 we have not
addressed this question. Notably, when the United States Supreme Court considered
whether courts should resolve arbitrable pendent claims when a non-arbitrable claim is
before it, in order to avoid the possible collateral estoppel effect of the arbitration
proceeding in a subsequent court proceeding, the Court acknowledged that the
preclusive effect of arbitration proceedings in such circumstances was not well-settled.
30
As we have explained, collateral estoppel, or issue preclusion, “forecloses re-
litigation in a later action, of an issue of fact or law which was actually litigated and
which was necessary to the original judgment.” Hebden v. W.C.A.B. (Bethenergy
Mines, Inc.), 632 A.2d 1302, 1304 (Pa. 1993) (quoting City of Pittsburgh v. Zoning Bd.
of Adjustment of Pittsburgh, 559 A.2d 896, 901 (Pa. 1989)). Collateral estoppel will
preclude relitigation of an issue determined in a previous action if five criteria are met:
(1) the issue decided in the prior case is identical to the one presented in
the later action; (2) there was a final adjudication on the merits; (3) the
party against whom the plea is asserted was a party or in privity with a
party in the prior case; (4) the party or person privy to the party against
whom the doctrine is asserted had a full and fair opportunity to litigate the
issue in the prior proceeding; and (5) the determination in the prior
proceeding was essential to the judgment.
Office of Disciplinary Counsel v. Kiesewetter, 889 A.2d 47, 50-51 (Pa. 2005).
31
See also Dyer v. Travelers, 572 A.2d 762, 764 (Pa. Super. 1990); Ottaviano v.
Southeastern Pa. Trans. Auth., 361 A.2d 810, 814 (Pa. Super. 1976).
[J-43-2016] - 34
Dean Witter, 470 U.S. at 222 (observing that “[t]he full-faith-and-credit statute requires
that federal courts give the same preclusive effect to a State’s judicial proceedings as
would the courts of the State rendering the judgment, and since arbitration is not a
judicial proceeding, . . . the statute does not apply to arbitration awards”); see McDonald
v. W. Branch, 466 U.S. 284, 287-88 (1984) (refusing to accord an arbitration ruling
collateral estoppel effect because “arbitral factfinding is generally not equivalent to
judicial factfinding”); Barrentine v. Ark.-Best Freight Sys., 450 U.S. 728 (1981). Thus,
the preclusive effect of arbitration in judicial proceedings is uncertain. 32
We sympathize with the position of the AARP as amicus curiae in support of the
Taylors that “[t]he prevalence of abuse and neglect in nursing facilities . . . make[s] it
imperative that victims and their families have fair access to complementary remedial
measures available through the civil justice system-particularly when the bad conduct
results in the suffering and death of a vulnerable person.” Amicus Curiae Brief of AARP
at 4; id. at 7 (detailing the evidence of significant levels of abuse and neglect in nursing
home facilities). As AARP observes, the contract formation process that attends
nursing facility admission can be a crisis-driven, stress-laden event involving the
32
One academic has observed that special problems arise when arbitral collateral
estoppel is applied in cases involving non-arbitrable claims. G. Richard Shell, Res
Judicata and Collateral Estoppel Effects of Commercial Arbitration, 35 UCLA L. Rev.
623, 655 (1988) (“Even if all the requisites of collateral estoppel are met in such cases,
there still remains the question of whether the findings of arbitrators ought to have
preclusive, perhaps dispositive, effects on a nonarbitrable claim, i.e., a claim that the
arbitrators are not permitted to hear.”). Professor Shell opines that the differences
between arbitration and court litigation make the rationales for applying judicial
preclusion inapplicable to arbitral preclusion, particularly because of the differences in
the social and institutional interests implicated, the relative modes of fact-finding utilized
in each forum, and because arbitration awards are frequently unexplained and difficult
to interpret. Id. at 659-60.
[J-43-2016] - 35
superior bargaining power of one party over the other. Id. at 14-15. Indeed, nursing
home defendants have reaped significant benefits from channeling medical malpractice
claims into arbitration to the detriment of medical malpractice victims.33 We cannot,
however, disregard or defy controlling precedent from the United States Supreme Court
in order to redress these inequities and deficiencies. DIRECTV, Inc. v. Imburgia, 136 S.
Ct. 463, 468 (2015) (observing that the “Supremacy Clause forbids state courts to
dissociate themselves from federal law because of disagreement with its content or a
refusal to recognize the superior authority of its source”); Marmet, 132 U.S. at 1202
(chastising the state court for misreading and disregarding controlling federal authority).
To the extent the Taylors have presented generally applicable contract defenses
to this Court, we decline to address them at this juncture. Because of the trial court’s
decision not to bifurcate the Taylors’ claims, and Extendicare’s immediate appeal of that
issue, the Taylors have not had the opportunity to present these issues in the lower
courts. Nor has Extendicare had the opportunity to respond to them. Moreover, we did
not grant allowance of appeal to resolve them. Upon remand to the trial court, the
parties will have the opportunity to litigate whether there is a valid and enforceable
arbitration contract in accord with generally applicable contract defenses and the FAA’s
savings clause.
Accordingly, we reverse the Superior Court’s order affirming the trial court, and
remand to the trial court for the resolution of the Taylors’ outstanding issues.
Jurisdiction relinquished.
33
See, e.g., Myriam Gilles, Operation Arbitration: Privatizing Medical Malpractice
Claims, 15 Theoretical Inquiries L. 671, 673-74 (2014) (examining studies to conclude
that long-term-care facilities generally fare better in arbitration than in litigation).
[J-43-2016] - 36
Chief Justice Saylor and Justices Baer and Dougherty join the opinion.
Chief Justice Saylor files a concurring opinion in which Justice Baer joins.
Justice Donohue files a dissenting opinion in which Justice Todd joins.
[J-43-2016] - 37