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Consumer Arbitration Agreements: 5.6.4.2 Family Member’s Signature Not Necessarily Binding on Patient

Many courts have held that a family member’s signature on a nursing facility admission agreement is not binding on the patient under agency principles unless the family member was acting under a formal, durable power of attorney or other delegation of authority, consistent with state law.479 And even when there is a power of attorney, it is not a given that it will give the attorney-in-fact the authority to bind a resident to an arbitration agreement.480

Consumer Arbitration Agreements: 5.6.5 Wrongful Death Claims

Non-signatory issues arise with some regularity in the context of wrongful death claims. An arbitration clause may be implicated when the decedent’s death occurred as a result of some contractual relationship, such as a wrongful death claim arising out of abusive treatment at a nursing facility, or out of medical malpractice by a physician.

Consumer Arbitration Agreements: 5.6.8 Application of Arbitration Agreement to Enforcement Agencies and Contempt Proceedings

While a consumer’s claim against a creditor or merchant may be subject to an arbitration clause, an administrative agency’s enforcement action against that creditor or merchant is not subject to the arbitration agreement entered into by the consumer.534 The same result applies even if the agency seeks monetary relief for an individual who has signed an arbitration agreement.535 When an agency files a case in its own name both in the public interest and on behalf of an individual, that action nee

Consumer Arbitration Agreements: 5.1 Introduction

This chapter addresses the interpretation and scope of a valid and enforceable arbitration agreement. Even if the consumer or worker has entered into an arbitration agreement with one party, this doesn’t mean that their claims are necessarily covered by the arbitration agreement or that the defendant they are suing can enforce the arbitration agreement.

Consumer Arbitration Agreements: 5.3.2 Narrow Reading of Federal Policy Favoring Arbitration

The Supreme Court’s articulation of a federal policy favoring arbitration should not be read excessively broadly in regards to issues of consent.17 A close analysis of the federal policy favoring arbitration favors a narrow rather than a broad reading.18 Specifically, the federal policy favoring arbitration should be read against the FAA’s central purpose of treating arbitration clauses just like other contracts.

Consumer Arbitration Agreements: 5.3.4 The Federal Policy Applies Only When Intent Is Ambiguous

Even when the federal policy favoring arbitration does apply, it does not mandate sending every dispute between contracting parties to arbitration.35 Courts “do not override the clear intent of the parties, or reach a result inconsistent with the plain text of the contract, simply because the policy favoring arbitration is implicated.”36 As the Supreme Court put it in Granite Rock, “We have applied t

Consumer Arbitration Agreements: 5.3.5 The FAA Policy Favoring Arbitration Trumps Contra Proferentem

Most states apply the general contract law rule of contra proferentem: that ambiguous contract language is interpreted against the drafter, which in most consumer cases will be the party seeking to enforce the arbitration clause. Because the federal policy favoring arbitration should be read consistently with state contract law, these state law rules should apply with equal force to arbitration agreements.

Consumer Arbitration Agreements: 5.3.6 Characterizing Challenges As Relating to Formation and Not Scope

Because the federal policy favoring arbitration applies to a dispute about the scope of a valid arbitration agreement entered into by the parties, but does not apply to disputes relating to the formation of the agreement, plaintiffs may benefit from characterizing their dispute as one of formation rather than as one of scope. The line separating a formation dispute from a scope dispute may not always be clear.

Consumer Arbitration Agreements: 5.4.1.2 Supreme Court Rejects the “Wholly Groundless” Standard

Before 2019, according to many courts, if there was no plausible basis to conclude that the arbitration clause was applicable to the underlying dispute, then the court (as opposed to the arbitrator) could decline to order arbitration, notwithstanding the presence of a delegation provision.75 Some courts described this analysis as turning on whether the claim to arbitrability was “wholly groundless.”76

Consumer Arbitration Agreements: 5.4.2.2 Whether a Clause Is “Broad” or “Narrow”

In addressing this question, many courts will first ask whether the clause is either (a) a general, broadly written clause, or (b) a narrowly written clause that is tied to a specific dispute.89 Some courts have questioned the propriety of creating a conceptual distinction between broad arbitration clauses and narrow ones and instead have suggested that all arbitration clauses should be interpreted under ordinary contract principles.90 But many courts place great weight on the distinction, and it is

Consumer Arbitration Agreements: 5.4.2.3.1 General

Depending on the particular jurisdiction, a broad clause will be applied to claims that appear collateral to the contract containing the arbitration provision as long as the claims bear a “significant relationship” to the contract,97 “touch matters covered by the contract,”98 implicate the parties’ rights under the contract or matters of contract construction,99 or have their “origin or genesis” in the contract.100

Consumer Arbitration Agreements: 5.4.2.3.2 Claims must depend on the existence of the contract or require construction of the contract

At a minimum, the claim must flow from the existence of the relationship governed by the agreement109 or require construction of some portion of the contract in order to relate to the contract.110 The true test is whether the claim and the contract are legally distinct rather than factually distinct.111 Thus several courts have found particular claims to fall outside the scope of a contractual arbitration clause even when the unde

Consumer Arbitration Agreements: 5.4.2.3.3 Claims that arise from a duty created by law

One common test holds that a tort or statutory claim is independent of the underlying contract if it arises from a breach of a duty created by law that is generally owed to others beside the contracting parties.115 In other words, if the actions complained of would give rise to a tort whether or not a contractual relationship existed between the parties, then the dispute is not related to the agreement and not arbitrable.116 The fact that the tort would not have occurred but for the contractual

Consumer Arbitration Agreements: 5.4.4 Whether One Contract’s Arbitration Clause Applies to Claims Arising from Another Contract

Another issue is whether an arbitration agreement contained in one contract applies to claims arising out of a second contract between the same parties (whether entered into before, after, or contemporaneously with the first contract).201 Generally, unless the agreement with the arbitration clause specifically references the other contract, the arbitration agreement should not apply to disputes arising out of the other contract.202 This is true even if the two contracts are closely intertwined.

Consumer Arbitration Agreements: 5.5.1 Overview

This section addresses whether a non-signatory is subject to an arbitration clause: can a non-signatory invoke an arbitration clause and can a signatory invoke such a clause against a non-signatory? Because arbitration is a matter of contract, it should be compelled only when it is consistent with the intent of the contracting parties. Parties generally intend that the contracts they sign apply only to the parties enumerated in the agreement.

Student Loan Law: 3.5.3.9.1 Forgiveness period

Income-driven repayment (IDR) plans provide that the remaining loan balance will be forgiven after the borrower makes qualifying payments under the plan for a specified number of years. This period is twenty years for borrowers in PAYE or IBR with loans taken out on or after July 1, 2014.209 The period is twenty-five years for borrowers in IBR with loans taken out prior to July 1, 2014.210

Student Loan Law: 3.5.3.9.3 One-Time IDR account adjustment

In recognition of the historical failures in income-driven repayment (IDR) servicing that has led many borrowers to unfairly miss out on earning qualifying time toward forgiveness, the Department announced a one-time, retroactive adjustment to how it will count what past time in repayment qualifies toward the twenty- or twenty-five year period required for forgiveness under the IDR plans (i.e., IBR, PAYE, REPAYE/SAVE, and ICR).231 As of February 2024, two policy institutes—the Cato Institute and the Mackinac C

Consumer Arbitration Agreements: 7.1.1 This Chapter’s Scope

The Federal Arbitration Act (FAA) finds arbitration agreements valid except upon such grounds as exist at law or in equity for the revocation of any contract.1 The FAA itself excludes certain transactions from this provision: transactions not in interstate commerce and “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”2

In addition, federal law limits the FAA in four different ways: