Managing Legal
One of this blog’s goals is to help business owners and executives to make better management decisions through a practical understanding of how the law works.
This post is the second in a four-part series in which I explain how the legal system can prevent lawyers from giving a “yes” or “no” answer to questions about whether or not a particular management decision will create legal problems.
Because the legal system is based on human decision-making — while scientific “laws” are not.
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Consider the following circumstance:
A higher court overrules a lower court, and the lower court then throws a judicial tantrum and refuses to follow the higher court’s holding offers an argument for why it need not abide by the higher court’s ruling.
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In Kindred Nursing Centers, L.P. v. Clark, decided May 15, 2017, the U.S. Supreme Court — reversed and vacated the judgment of the Kentucky Supreme Court — in which the Kentucky Supreme Court had refused to enforce the parties’ agreement to send any disputes to arbitration — rather than have them handled by a court.
In overturning the Kentucky Supreme Court’s judgment — 7-to-1 — the U.S. Supreme Court had ruled:
“The Federal Arbitration Act … preempts [makes invalid] any state rule discriminating on its face against arbitration … And … also displaces any rule that covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements.”
Plain English: We’re telling all lower courts to enforce arbitration provisions according to their terms — just as they would any other term in a contract — because the Federal Arbitration Act says they have to do so.
Then the U.S. Supreme Court sent the case back to the Kentucky Supreme Court to do just that.
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Last month the Kentucky Supreme Court returned last year’s volley from the U.S. Supreme Court.
And the Kentucky Supreme Court appears to have stiff-armed the U.S. Supreme Court.
In Northern Kentucky Area Development District v. Snyder.
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It’s not just me who recognizes a dismissive pushback by one panel of judges (the Kentucky Supreme Court) against another (the U.S. Supreme Court) — despite the fact that the latter are higher in the judicial pecking order.
Consider this from Liz Kramer, partner at Stinson Leonard Street:
“I would understand if not every state supreme court got the memo from last year’s [U.S. Supreme Court] decision on [Federal Arbitration Act] preemption, [Kindred Nursing Centers, L.P. v. Clark], which reminded state courts that the [Federal Arbitration Act] prevents state courts from imposing additional requirements on arbitration agreements that are not required for other types of contracts.
“But Kentucky definitely got the memo. The memo was addressed to Kentucky.
“Yet, last week [September 27, 2018] the Supreme Court of Kentucky released a new decision that continues to convey hostility to arbitration and [the U.S. Supreme Court’s] decisions interpreting the [Federal Arbitration Act].”
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And here’s one U.S. Supreme Court Justice’s response to earlier apparent stiff-arming by the Kentucky Supreme Court:
During argument of Kindred Nursing Centers, L.P. v. Clark at the U.S. Supreme Court last year, Justice Stephen Breyer interrupted the lawyer arguing to uphold the Kentucky Supreme Court’s decision and, “cut him off caustically“:
“I’m testing out whether it’s really true [that you’re not discriminating against arbitration]. Of course I’m highly suspicious as you can tell from my tone of voice. What I really think has happened is that Kentucky just doesn’t like the Federal law. That’s what I suspect. So they’re not going to follow it ….”
Justice Breyer’s suspicions about the Kentucky Supreme Court seem to have been vindicated when it issued its ruling in Northern Kentucky Area Development District v. Snyder three weeks ago.
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As I stated in Part 1 of this series: What lawyers tell you lacks the objectivity we associate with physics or chemistry because — in the law — human decisions determine outcomes.
In the Kentucky example above the human factor appeared in the form of stubborn self-assertion against authority (Again: My opinion and the view of other lawyers).
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In Part 3 I describe the circumstance where a judge’s personal idiosyncrasies distinctive, well-informed judgments of the law or evidence is likely to drive the outcome of a case.