Robert L. Meinders, D.C., LTD v. Unitedhealthcare, Inc. et al

Filing 35

ORDER granting 11 Motion to Dismiss for Improper Venue Due to a Mandatory Arbitration Clause. Signed by Judge David R. Herndon on 11/19/14. (klh, )

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
DR. ROBERT L. MEINDERS, D.C.,
LTD.,
Plaintiff,

No.

vs.

3:14-cv-00548-DRH-DGW

UNITEDHEALTHCARE, INC., UNITED
HEALTHCARE OF ILLINOIS, INC.,
AND JOHN DOES E-12,
Defendants.
MEMORANDUM AND ORDER
HERNDON, District Judge:
I.

Introduction and Background

Pending before the Court is defendant United Healthcare, Inc. and United
Healthcare of Illinois, Inc.’s (“United”) motion to dismiss Counts I, II, and III for
improper venue due to a mandatory arbitration clause (Doc. 11). Plaintiff Dr.
Robert L. Meinders, D.C., LTD., (“Meinders”) responded (Doc. 17) and Untied filed
a reply (Doc. 22). For the following reasons, the Court GRANTS the motion.
On April 3, 2014, plaintiff filed a putative class action against United in the
Circuit Court for St. Clair County, Illinois. Thereafter, defendants removed the case
to this Court on original federal question jurisdiction grounds pursuant to 28
U.S.C. § 1331. (Doc. 2.).

According to the complaint, defendant United sent a

“junk fax” to plaintiff Dr. Robert L. Meinders, D.C. in violation of the Telephone

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Consumer Protection Act. (Doc. 2-1). Plaintiff alleges United HealthCare sent an
unsolicited fax to him advertising United Healthcare’s services. Id. Plaintiff’s three
count complaint alleges a violation under the Telephone Consumer Protection Act,
47 U.S.C. § 227 (“TCPA”) (Count I), common law conversion (Count II), and a
violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815
ILCS § 505/2 (“ICFDBPA”) (Count III).
Plaintiff is a chiropractor. On January 20, 2006, plaintiff signed a Provider
Agreement with ACN Group in which he agreed, inter alia, to arbitrate in Minnesota
any and all claims arising out of or relating to the Provider Agreement (Doc. 12-1).
The Provider Agreement provides in part:
In the event of a dispute arising out of or relating to this
Agreement … [i]f Provider and ACN Group are unable to resolve [such]
dispute by mutual agreement, then matters in controversy may be
submitted, upon the motion of either party, to arbitration under the
Commercial Rules of the American Arbitration Association (AAA). All
such arbitration proceedings shall be administered by the AAA in
Minnesota … Any arbitration proceeding shall occur in the County of
Hennepin, State of Minnesota.
The fax sent, at some time in 2013, to Meinders provided information about
new technology designed to assist United providers in recouping payment from
patients.
United seeks dismissal of plaintiff’s complaint pursuant to Federal Rules of
Civil Procedure 12(b)(3) for improper venue. United contends that plaintiff entered
a “Provider Agreement” (Doc 12-1, Exhibit A) with ACN Group, a wholly owned
subsidiary of United, in which plaintiff agreed to mandatory arbitration of his
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claims in Hennepin County, Minnesota. (Doc. 11, P. 1). Although United is not a
signatory to the Provider Agreement, defendant claims that plaintiff is bound to
arbitrate his claim in Minnesota because “ACN Group, Inc. is a United-owned entity
that coordinates the provision of healthcare services by, among other specialists,
chiropractors.” (Doc. 12, p. 2). Therefore, since ACN Group is a wholly owned
subsidiary of United, defendant should be allowed to arbitrate this cause of action
in Minnesota. Additionally, defendant argues that plaintiff must arbitrate his claims
in Minnesota because United has “assumed” some of the obligations of the signatory
(ACN Group) to the arbitration agreement and, therefore, can enforce it against
plaintiff. Defendant asks this Court to dismiss plaintiff’s entire complaint pursuant
to FRCP 12(b)(3) for improper venue.
Plaintiff responds that United was never a party or signatory to the Provider
Agreement, and plaintiff “never agreed to arbitrate his junk fax claims against
United HealthCare.” (Doc. 17, p. 2). Plaintiff maintains that United’s name never
appears in the Provider Agreement, that ACN Group is the only named party to the
agreement, and that Paul Balthazor, COO of ACN Group, Inc., signed on behalf of
ACN Group. Id. Further, plaintiff contends that United is not a party to the Provider
Agreement, and that he “is not seeking to enforce the Provider Agreement and his
claim does not arise in an action where he is seeking to enforce it.” (Doc. 17, p. 4).
Therefore, plaintiff asks this Court to deny defendant’s 12(b)(3) motion on the
grounds that United has no legal right to enforce the provisions of the Provider

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Agreement or mandate arbitration in regards to his three causes of action.
II.

Analysis

Because the arbitration clause in this case calls for arbitration outside the
Southern District of Illinois, Rule 12(b)(3) is the appropriate vehicle seeking
dismissal of Meinders’ suit. Faulkenberg v. CB Tax Franchise Systems, LP, 637
F.3d 801, 808 (7th Cir. 2011) (“[W]e have held that a Rule 12(b)(3) motion to
dismiss for improper venue, rather than a motion to stay or compel arbitration, is
the proper procedure to use when the arbitration clause requires arbitration
outside the confines of the district court’s district.”). When ruling on a motion to
dismiss of improper venue under Rule 12(b)(3), the Court may look to evidence
outside the pleadings. Id. at 809-10.
The FAA embodies a federal policy favoring enforcement of arbitration
agreements. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
24–25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The relevant language of the FAA
provides that an arbitration clause in a contract “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. Courts are to uphold and enforce applicable arbitration
agreements according to their terms unless they are invalidated by “generally
applicable contract defenses, such as fraud, duress, or unconscionability.” AT & T

Mobility LLC v. Concepcion, ––– U.S. ––––, 131 S.Ct. 1740, 1746, 179 L.Ed.2d 742
(2011) (quoting 9 U.S.C. § 2) (internal quotation marks omitted). A court must

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determine whether the parties are bound by a given arbitration agreement and
whether

the

agreement

to

arbitrate

applies

to

a

particular

type

of

controversy. See Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84, 123
S.Ct. 588, 154 L.Ed.2d 491 (2002). In determining whether parties have agreed to
arbitrate, courts apply state contract law. James v. McDonald's Corp., 417 F.3d
672, 677 (7th Cir. 2005). If a valid agreement to arbitrate exists, the burden is on
the party opposing arbitration to show that the claims at issue are not covered the
agreement. See Shearson/Am. Exp., Inc. v. McMahon, 482 U.S. 220, 226–27
(1987). Any doubts concerning the scope of arbitrable issues must be resolved in
favor of arbitration, Moses H. Cone, 460 U.S. at 24–25, 103 S.Ct. 927; Gore v.

Alltel Commc'ns, LLC, 666 F.3d 1027, 1032 (7th Cir. 2012), and a request for
arbitration “should not be denied unless it may be said with positive assurance that
the arbitration clause is not susceptible of an interpretation that covers the asserted
dispute.” United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574,
582–83, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960).
Here, the existence and validity of the arbitration clause are not in dispute,
nor is the application of the arbitration clause to this type of claim. Thus, the only
determination this Court must make is whether United can enforce the arbitration
clause contained in the Provider Agreement.
“[T]he obligation to arbitrate a dispute is not always limited to those who
have

personally

signed

an

agreement

containing

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such

a

provision. See

e.g., Thomson–CSF v. American Arbitration Association, 64 F.3d 773, 776 (2d
Cir.1995) (‘This Court has made clear that a nonsignatory party may be bound to
an arbitration agreement if so dictated by the “ordinary principles of contract and
agency.”‘ (citing McAllister Bros., Inc. v. A & S Transp. Co., 621 F.2d 519, 524 (2d
Cir.1980))).” Everett v. Paul Davis Restoration, Inc., --- F.3d ---, 2014 WL 5573300
at *2 (7th Cir. November 3, 2014). “There are five doctrines through which a
non-signatory can be bound by arbitration agreements entered into by others: (1)
assumption; (2) agency; (3) estoppel; (4) veil piercing; and (5) incorporation by
reference.” Zurich American Ins. Co. v. Watts Industries, Inc., 417 F.3d 682, 687
(7th Cir. 2005) (citing Fyrnetics (H.K.) Ltd. v. Quantum Group, Inc., 293 F.3d
1023, 1029 (7th Cir. 2002); accord Am. Bureau of Shipping v. Tencara Shipyard

S.P.A., 170 F.3d 349, 352 (2d Cir. 1999)).
Based on the pleadings it is clear that United has assumed the material
obligations of ACN Group, a wholly owned subsidiary of United, under the Provider
Agreement, which authorizes United to enforce the arbitration clause. 1 Under
Section 2 of the Provider Agreement, ACN Group is obligated to coordinate payment
to Meinders. Colleen Van Ham, President and CEO of United attested that United
assumed important obligations under the Provider Agreeement such as Optum’s
obligation to coordinate and transmit payments to providers such as Meinders.

In 2003, ACN became a wholly owned subsidiary of United Healthcare Services, Inc. In August
2010, ACN changed its name to OptumHealth Care Solutions, Inc. (“Optum”). The Provider
Agreement with ACN was amended, effective September 21, 2010, to reflect the change from ACN to
Optum. Optum is a wholly own subsidiary of United Healthcare Services, Inc.

1

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Further, United has paid Meinders.

Thus, United is entitled to enforce the

arbitration clause of the Provider Agreement. The Court grants the motion to
dismiss for improper venue.
III.

Conclusion

Accordingly, the Court GRANTS defendant United Healthcare, Inc. and
United Healthcare of Illinois, Inc.’s motion to dismiss (Doc. 11). Pursuant to Rule
12(b)(3), the Court DISMISSES this case for improper venue and closes the file.
IT IS SO ORDERED.
Signed this 19th day of November, 2014

Digitally signed by
David R. Herndon
Date: 2014.11.19
12:23:15 -06'00'

United States District Court

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