Northern Kentucky Area Development District v. Danielle Snyder

The question presented is: Whether the Federal Arbitration Act (FAA) preempts Ky. Rev. Stat. § 336.700(2), which invalidates arbitration agreements between an employer and an employee, or whether the statute instead presents a “generally applicable contract defense” that can withstand preemption under the FAA. Ky. Rev. Stat. § 336.700(2) provides: “[N]o employer shall require as a condition or precondition of employment that any employee or person seeking employment waive, arbitrate, or otherwise diminish any existing or future claim, right, or benefit to which the employee or person seeking employment would otherwise be entitled under any provision of the Kentucky Revised Statutes or any federal law.” The Supreme Court of Kentucky refused to enforce the parties’ arbitration agreement because it held that the statute – when applied to an arbitration agreement between an employer and its employee – provided a generally applicable contract defense. The 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 (emphasis added). It establishes a rule of equal-treatment: A court may invalidate an arbitration agreement based on “generally applicable contract defenses” like fraud