Diversicare Leasing Corp. et al v. Strother
Filing
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MEMORANDUM OPINION & ORDER, 1) denying 5 MOTION to Dismiss by Larry Strother as Executor of the Estate of Miles Strother 2) granting plaintiff's motion to compel arbitration and to enjoin dfts 3) dft shall prosecute all of its claims arising out of Miles Strother's residency at Boyd Nursing & Rehabilitation center in accord with the terms of the arbitration agreement signed by his guardian and 4) matter is STAYING CASE pending any further proceedings to enforce any award of the arbitrator.. Signed by Judge Henry R. Wilhoit, Jr on 4/17/15.(SMT)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION
ASHLAND
Civil Action No. 14-128-HRW
DIVERS! CARE LEASING CORP. d/b/a
BOYD NURSING & REHABILITATION CENTER;
OMEGA HEALTHCARE INVESTORS, INC.;
DIVERSICARE HEALTHCARE SERVICES, INC;
and DIVERSICARE MANAGEMENT SERVICES CO.
v.
PLAINTIFFS
MEMORANDUM OPINION AND ORDER
LARRY STROTHER,
Executor of the
ESTATE OF MILES STROTHER,
DEFENDANT
This matter is before the Court upon Defendant's Motion to Dismiss [Docket No. 5] and
Plaintiffs' Motion to Compel Arbitration and Enjoin Defendant [Docket No. 7]. The motions
have been fully briefed [Docket Nos. Sci, 6, 7 and 8]. For the reasons set fotth herein, this Court
will overrule Defendant's motion and sustain that of the Plaintiffs.
I.
Plaintiffs allege that "[o]n or about August 2, 2012, Miles Strother was admitted to Boyd
Nursing & Rehabilitation Center, a nursing home located in Ashland, Kentucky and operated by
Plaintiffs." [Complaint, Docket No. 1, ~ 12]. As part of the admission process, his son, Larry
Strother, in his capacity as Guardian of Miles Strother, signed an Arbitration Agreement on
behalf of Miles Strother. !d.,~ 13. The Arbitration Agreement is attached as Exhibit A to the
Complaint and provides, in pertinent part:
[A]ny legal dispute, controversy, demand, or claim that arises out
of or relates to the Resident Admission Agreement or is in any way
connected to the Resident's stay at the Facility shall be resolved
exclusively by binding Arbitration and not by a lawsuit or
resort to other legal process .... This agreement to arbitrate shall
include, but is not limited to, any claim for payments, nonpayment, or refund for services rendered to the Resident by the
Facility, claims arising out of State or Federal law, claims based
upon breach of contract, breach of fiducimy duty, violation of
rights, fraud or misrepresentation, common law or statut01y
negligence, gross negligence, malpractice or any other claim based
on any departure from accepted standards of medical or nursing
care, whether such claims be for statutory, compensatory, or
punitive damages, and whether arising in the future or presently
existing.
[Docket No. 1-1, p. !](emphasis added).
The Arbitration Agreement further states:
This agreement shall inure to the benefit of and be binding upon
the Patties and their successors and assigns, including the Facility's
parents, agents, employees, servants, officers, directors,
shareholders, medical directors, attorneys, insurers, or affiliated
business entities, and any and all persons whose claim is derived
from or on behalf of the Resident, including his or her agents,
guardian, power of attorney, parent, spouse, child, executor,
administrator, legal representative, heirs, trustees, or insurers."
ld., p.2 (emphasis added).
Miles Strother remained a resident at Boyd Nursing & Rehabilitation Center until
December 3, 2013.
On July 22,2014, Larry Strother, in his capacity as the Executor of the Estate of Miles
Strother, filed in the Circuit Court of Boyd County, Kentucky, Case No. 14-CI-00599, a
negligence, medical negligence, corporate negligence, violation of long term care resident's
rights, and wrongful death action against Diversicare Leasing Corp. d/b/a Boyd Nursing &
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Rehabilitation Center; Omega Healthcare Investors, Inc.; Diversicare Healthcare Services, Inc.
f/kla Advocat, Inc.; Diversicare Management Services Company; Cindy Salyers, in her capacity
as Administrator of Boyd Nursing & Rehabilitation Center;; and John Does 1 through 5. [Docket
No. 1-2].
Subsequently, Diveriscare Leasing Corp. d/b/a Boyd Nursing & Rehabilitation Center
filed a Complaint in this Court, as Plaintiffs, alleging federal subject matter jurisdiction by virtue
of diversity and seeking substantially the same relieffrom this Court regarding arbitration as they
had demanded in State court; to-wit, to find the ADR Clause to be valid and enforceable; to
compel Defendants to arbitrate the State Court claims; and to enter an order enjoining the
Defendants from pursuing their claims in the State Court Action.
Defendant seeks a dismissal of the instant lawsuit. He contends that this Court lacks
subject-matter jurisdiction; that it should abstain from hearing this action in light of the pending
state-couti matter; that the arbitration agreement at issue is invalid and unenforceable; and that
the Court should not exercise its power to enjoin him from continuing the prosecution of his
state-court action.
Plaintiffs seek entry of an Order compelling Defendant to proceed to arbitration and, in
addition, enjoining him from pursing his claims in state court.
II.
The purpose of a motion to dismiss pursuant to Fed. R. Civ. P 12(b)(6), is to allow a
defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief. See Mayer v.
Mylod, 988 F.2d 635, 638 (6'h Cir. 1993). This requires a consideration of and a ruling upon the
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merits of a claim. In determining whether dismissal is warranted under Rule 12(b)(6), the
complaint must be construed in the light most favorable to the nonmoving party and its
allegations taken as true. Miller v. Currie, 50 F.3d 373, 377 (6 1h Cir. 1995). If, in doing so, the
Court determines that the case is legally insufficient, it will be dismissed.
The procedure under a motion to dismiss for lack of subject matter jurisdiction pursuant
to Fed. R. Civ. P 12(b)(1) is quite different. At issue in a Rule 12(b)(1) motion is the trial court's
jurisdiction-its very power to hear the case. In this context, the trial comi may proceed as it
never could under 12(b)(6) - no presumptive truthfulness attaches to either party's allegations
and the existence of disputed material facts will not preclude the trial couti from evaluating for
itself the merits of jurisdictional claims. Moreover the party claiming jurisdiction will have the
burden of proof that jurisdiction does in fact exist. RMI Titanium Co. v. Westinghouse Electric
Corp., 78 F.3d 1125, 1134 (6'h Cor. 1996)(internal citations omitted).
III.
A.
Subject matter jurisdiction exists.
"The requirement that jurisdiction be established as a threshold matter 'spring[s] from the
nature and limits of the judicial power of the United States' and is inflexible and without
exception.'" Mansfield, C. & L.M.R. Co. v. Swan, 111 U.S. 379, 382,4 S.Ct. 510,28 L.Ed. 462
(1884). Federal coutis are courts of limited jurisdiction, and subject matter jurisdiction may be
obtained only with the existence of diverse parties or a federal question. Heartwood, Inc. v.
Agpaoa, 628 F.3d 261,266 (6th Cir.2010); 28 U.S.C. §§ 1331, 1332.
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Neither party assetts the existence of a federal question. Rather, the disputed question is
that of diversity. 28 U.S.C. § 1332 provides that "district courts shall have original jurisdiction of
all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive
of interest and costs, and is between ... citizens of different States,"
Defendant has not challenged the allegations in Plaintiffs' Complaint concerning the
citizenship of the named Plaintiffs in this action. Indeed, Defendant has already pled in the
appurtenant state court action that each of the named Plaintiffs in this action are citizens of
another state. Neither has Defendant challenged that the amount in controversy fails to meet the
jurisdictional requirements of 28 U.S.C. § 1332. Rather, he contends that complete diversity of
citizenship among the parties carmot be established because Cindy Salyers, the nursing home
administrator named in his state complaint, but not in the instant matter, is a Kentucky citizen
and an indispensable party under Fed.R.Civ.P. 19. He maintains that her joinder would destroy
the complete diversity among parties required by 28 U.S.C. 1332(a)(l).
Yet, this Court and other courts within this District have consistently held that the nursing
home administrators are not indispensable per Rule 19.
As the undersigned explained in
GGNCSv. Hanley, 2014 WL 1333204 (E.D. Ky. 20140, Rule 19 deals with what were
historically known as "necessary" and "indispensable" parties. The terms "necessary" and
"indispensable" are terms of art in jurisprudence concerning Rule 19, and "necessary" refers to a
party who should be joined if feasible, while "indispensable" refers to a patty whose participation
is so impottant to the resolution of the case that, if the joinder of the party is not feasible, the suit
must be dismissed. If a necessary party cmmot be joined without divesting the comt of subject-
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matter jurisdiction, the Rule Provides additional criteria for determining whether that party is
indispensable, but if the court finds that the party is anything less than indispensable, the case
proceeds without that party, and if, on the other hand, the court finds that the litigation cannot
proceed in the patty's absence, the comt must dismiss the case.
The first step in determining whether Ms. Salyers is indispensable is to determine whether
She is "necessary". A party is deemed necessary under the Rule if:
(A) in that person's absence, complete relief cannot be accorded
among those already parties; or
(B) the person claims an interest relating to the subject of the
action and is so situated that the disposition of the action in the
person's absence may:
(I) as a practical matter, impair or impede the person's ability to
protect the interest; or
(ii) leave an existing party subject to a substantial risk of incurring
double, multiple, or otherwise inconsistent obligations because of
the interest.
Fed.R.Civ.P. 19.
Defendant's claims against Ms. Salyers and the Plaintiffs in this case are based on the
same occurrence, to-wit, the alleged negligence that resulted in injury to his father. Fmther, the
arbitration agreement governs claims against the corporate parties as well as the administrators.
Moreover, if this Court and the state court were to reach different conclusions regarding whether
the m·bitration agreement is enforceable, Ms. Salyers would face inconsistent procedural
remedies. Accordingly, the Comt concludes that the administrators are necessary pmty to the
action.
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However, that is not the end of the inquiry as it pertains to the existence of subject matter
jurisdiction in this case. As the joinder of Ms. Salyers would destroy diversity jurisdiction, the
Court must also determine whether she is "indispensable." To do so, this Court must balance the
following factors: (1) the extent to which a judgment rendered in their absence might prejudice
them or the existing parties; (2) the extent to which any prejudice could be lessened or avoided
by protective provisions in the judgment, shaping the relief, or other measures; (3) whether a
judgment rendered in their absence would be adequate; and (4) whether Plaintiffs would have an
adequate remedy if the action were dismissed for non-joinder. Fed.R.Civ.P. 19(b).
Defendant argues that he will not be afforded complete relief in the absence of Ms. Salyers
in this action. He asserts that he will be unduly and unnecessarily prejudiced by either a grant of
jurisdiction by this Court or by being subjected to arbitration with just the named Plaintiffs, and
that such a result would result in duplication of proceedings. The Court will address each of these
arguments in turn.
First, the duplication of proceedings in these circumstances is not a disqualifying factor. The
Sixth Circuit has rejected of this line of argument in a factually similar case addressing joinder:
"[T] he possibility of having to proceed simultaneously in both state and federal court," or in two
separate arbitrations for that matter, "is a direct result of [Strother's] decision to file a suit
naming [Diversicare and Ms. Salyers] in state court rather than to demand arbitration under the
[arbitration agreement]." Paine Webber, Inc. v. Cohen, 276 F.3d 197,202 (2001). Moreover, "the
possibility of piecemeal litigation is a necessary and inevitable consequence of the FAA's policy
that strongly favors arbitration." ld. The Court considers that there is low risk that the state comt
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will reach an inconsistent outcome regarding the subject arbitration agreement as it relates to any
party. Even assuming such risk, however, this is not the degree of prejudice required to conclude
an absent party is indispensable. Jd at 203. Determining whether the dispute as it relates to
Diversicare is subject to arbitration is a simple matter of contract interpretation and does not
require Ms. Salyers"s presence or input. !d. The prejudice Defendant fears does not present the
degree of prejudice necessary to support a conclusion that the administrators are an indispensable
party. Furthermore, "[w]here the risk of prejudice is minimal, the Court need not consider how
protective provisions in the judgment, the shaping of relief, or other measures might reduce the
risk of prejudice." !d. at 205.
With regard to the adequacy of available relief, Defendant makes much of the
administrator's status as a joint tortfeasor. He implies that this is dispositive of the Rule 19(b)
inquity. The United States Supreme Court has explicitly rejected this theory as a non sequitur.
Temple v. Synthes Corp., LTD., 498 U.S. 5, 8, Ill S.Ct. 315, 112 L.Ed.2d 263 (1990) (holding
that a party's status as a joint tortfeasor does not make them a necessmy or indispensable party
but simply a permissive patiy to an action against one of them),
Finally, Defendant argues that mt adequate remedy exists in state court if this Comi were to
dismiss the case. While that may be true, on balance, the factors do not dictate that the Court find
Ms. Salyers indispensable parties. As such, the failure to join her does not warrant dismissal.
The undersigned is not alone in this finding. In Sun Healthcare G1p., Inc. v. Dowdy,
2014 WL 790916 (W.D.Ky., 2014), Judge Russell ruled on a substantially similar Motion to
Dismiss by the same Defendant's counsel and found that subject matter jurisdiction existed
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without the administrator defendants. Judge Russell was persuaded by the "well-reasoned
analysis" in an 8'h Circuit case and found: " ... the makeup of the parties in the underlying
controversy is irrelevant for the determination of whether or not diversity jurisdiction exists. The
determinative inquiry is the makeup of the parties before this Court. The parties presently before
the Court, which does not include the administrators, are diverse. Therefore, this Court has
subject-matter jurisdiction on the basis of diversity." !d. at *4- *5.
Similarly, in
GGNSC Louisville Hillcreek, LLC v. Warner, 2013 WL 6796421 (W.D.Ky., 2013), Judge
Heyburn found that subject matter jurisdiction existed even without the administrator defendant.
Judge Heyburn analyzed of Rule 19 factors, namely: "(1) the extent to which a judgment
rendered in [the administrator's] absence might prejudice [the administrator] or the existing
parties; (2) the extent to which any prejudice could be lessened or avoided by protective
provisions in the judgment, shaping the relief, or other measures; (3) whether a judgment
rendered in [the administrator's] absence would be adequate; and (4) whether Golden Gate would
have an adequate remedy if the action were dismissed for non-joinder." Id. at *3. He concluded
that the duplication of proceedings is not a disqualifYing factor, the risk of prejudice to Defendant
was minimal, and an administrator's status as ajoint-tortfeasor does not make them an
indispensable party. !d. at *3-*4.
In this District, in Brookdale Senior Living, Inc. v. Stacy, 2014 WL 2807524 (E.D.Ky.,
2014), Judge Caldwell analyzed Rule 19 and applied the Sixth Circuit's analysis in
Paine Webber, as well as other nursing home matters from the district to conclude that "a
nursing-home administrator is not an indispensable party when she is joined in the underlying
state court action." !d. at *6.
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Judge Reeves' opinion in Brookdale Senior Living, Inc. v. Caudill, 20 I 4 WL 3420783
(E.D.Ky., 2014) is consistent. "After balancing the factors of Rule 19(b) and considering the
Sixth Circuit's rejection of nearly-identical arguments, the Comi finds that the state comi
administrators are not indispensable parties." !d.
Case law is clear from the District Courts of Kentucky, the Sixth Circuit and the Supreme
Court that this court has proper subject matter jurisdiction and the patiies before the comi are
properly diverse.
Defendant suggests that the Supreme Comi's rationale in Vaden v. Discover Bank, 556 U.S.
49, 129 S.Ct. 1262, 173 L.Ed.2d 206 (2009), tips the scales in his favor with regard to
jurisdiction, or, more precisely, the lack thereof. In Vaden, Discover Bank sued a credit card
holder in state comt to recover past-due charges. The credit card holder filed a counterclaim, also
asse1ting state-law claims. Yet Discover Bank believed these claims were preempted by federal
law, and filed an action in federal district comi to compel arbitration of the counterclaims. The
Supreme Court held that the district court lacked jurisdiction because the federal issue arose
within the context of the state-court counterclaim, and federal comis cannot consider
counterclaims when assessing federal question jurisdiction. Accordingly, the Supreme Court
directed district courts to "look through" the arbitration action and determine whether federal
question jurisdiction exists based on the underlying state-court suit. !d. at 62.
Defendant urges that the logic of Vaden applies with equal force in cases resting on
diversity jurisdiction. He argues that the Court should "look through" the instant action and
determine whether it would have jurisdiction over the state suit, which includes the non-diverse
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nursing home administrators. However, this argument was explicitly rejected by Judge Caldwell
in Brookdale. She noted that the Supreme Court did not include diversity jurisdiction in its
holding, despite acknowledging that diversity jurisdiction exists as a separate method for bring a
claim pursuant to the Federal Arbitration Act. Brookdale, 27 F.Supp.3d at 782.
Accordingly, this Court will decline to "look through" the present action to determine
whether it would have diversity over the state-law suit.
Therefore, this Court finds the requirements of diversity jurisdiction have been met and
this Court has proper subject matter jurisdiction over this case.
B.
Abstention is not warranted.
Defendant, alternatively, argues that even if this Court has subject matter jurisdiction, it
should abstain from hearing the merits of the case on the basis that there is a parallel suit pending
in state court. This district has unequivocally dismissed this argument. GGNSC Vanceburg, LLC
v. Hanley, 2014 WL 1333204 (E.D.Ky. 2014). See also, Brookdale Senior Living Inc. v. Stacy,
27 F.Supp.3d 776 (E.D. Ky. 2014); Sun Healthcare Group, Inc. v. Dowdy, 2014 WL 790916
(W.D. Ky. 2014); and GGNSC Louisville Hillcreek, LLC v. Warner, 2013 WL 6796241
(W.D.Ky. 2013).
Even where federal courts properly have jurisdiction over the matter, a district court may
abstain from exercising its jurisdiction and refrain from hearing a case in limited circumstances,
Saginaw Hous. Comm'n v. Bannum, Inc., 576 FJd 620, 625 (6th Cir.2009). This exception is
narrow because a district comt presented with a case that arises under its original jurisdiction has
a "virtually unflagging obligation" to exercise the jurisdiction conferred upon it by the coordinate
branches of government and duly invoked by litigants. Colorado River Water Conservation Dist.
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v. United States, 424 U.S. 800, 817,96 S.Ct. 1236,47 L.Ed.2d 483 (1976). Abstention is an
"extraordinaty and narrow exception to the duty of a district court to adjudicate a controversy
properly before it." Jd. at 813.
Under Colorado River, the threshold issue is whether there are parallel proceedings in
state court. Crawley v. Hamilton County Comm'rs, 744 F.2d 28, 31 (6th Cir.1984). This is not in
dispute. Once a court has determined there are parallel proceedings, the Supreme Comt
identified eight factors that a district court must consider when deciding whether to abstain from
exercising its jurisdiction due to the concurrent jurisdiction of state court. Paine Webber, Inc. v.
Cohen, 276 F.3d at 206. Those factors are: (1) whether the state court has assumed jurisdiction
over any res or property; (2) whether the federal forum is less convenient to the parties; (3)
avoidance of piecemeal litigation; (4) the order in which jurisdiction was obtained; (5) whether
the source of governing law is state or federal; (6) the adequacy of the state court action to
protect the federal plaintiff's rights; (7) the relative progress of state and federal proceedings; and
(8) the presence or absence of concurrent jurisdiction. Id.
In this case, as in Hanley and the other cases cited herein, only the second and sixth
factors favor abstention; the other factors favor federal jurisdiction. However, neither the fact
that the state forum would be slightly more convenient to the parties, nor the existence of
concurrent jurisdiction is an "exceptional" circumstance necessmy to compel this Comt to
abandon the "viltually unflagging obligation of the federal courts to exercise the jurisdiction
given them." Colorado River, 424 U.S. at 817-18.
Moreover, "the balance [is to be] heavily weighted in favor of the exercise of
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jurisdiction.' Moses H Cone, 460 U.S. 1, 16, 103 S.Ct. 927,74 L.Ed.2d 765 (1983) ."
Accordingly, abstention was not warranted.
C.
Dismissal is not appropriate under Rule 12(b )(6).
Contrary to Defendant's argument, the arbitration agreement executed by Defendant is
valid. His arguments have been squarely addressed and uniformly rejected by this District.
With regard to Defendant's argument to the contrmy, this Court has repeatedly held that it
is beyond dispute that the FAA applies to an arbitration agreement executed in connection with
admission to a nursing home. See, e.g., Richmond Health Facilities-Kenwood, LP v. Nichols,
CIV.A. 5:14-141-DCR, 2014 WL 4063823 (E.D. Ky. Aug. 13, 2014); Brookdale Senior Living,
Inc. v. Caudill, CIV.A. 5:14-098-DCR, 2014 WL 3420783 (E.D. Ky. July 10, 2014); Brookdale
Sr. Living Inc. v. Stacy, 88 Fed. R. Serv. 3d 1377 (E.D. Ky. June 20, 2014) ("[T)he "general
activity" of providing healthcare to Stacy-even if contained to an intrastate market in this
individual case-is without a doubt the kind of activity that in the aggregate is subject to federal
control under the Commerce Clause."); Brookdale Senior Living Inc. v. Hibbard, CIV.A. 5:13289-KKC, 2014 WL 2548117 (E.D. Ky. June 4, 2014); GGNSC Vanceburg, LLC v. Hanley,
CIV.A. 13-106-HRW, 2014 WL 1333204 (E.D. Ky. Mar. 28, 2014).
The Court now turns to the question of unconscionability, a doctrine that exists as a
narrow exception to the rule that, absent fraud in the inducement, a written agreement duly
executed by the party to be held, who had an opportunity to read it, will be enforced according to
its terms, Conseco Finance Servicing Corp. v. Wilder, 47 S.W.3d 335, 341 (Ky.App.2001),
Under Kentucky law, the doctrine of unconscionability is to be "directed against one-sided,
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oppressive, and unfairly surprising contracts, and not against the consequences per se of uneven
bargaining power or even a simple old-fashioned bad bargain." Id. (citing Louisville Bear Safety
Serv., Inc. v. South Central Bell Tel. Co., 571 S.W.2d 438,440 (Ky.App.1978)). Whether a
contract is substantively unconscionable (i.e., contains terms that are unreasonable or grossly
unfair to one side or another) or procedurally unconscionable (referring to the process by which
the contract is reached) is a fact-intensive inquiry. Here, the facts belie the existence of either
brand of unconscionability.
The agreement in question contains the following features that support its conscionability:
(1) it is a stand-alone agreement; (2) three pages printed in normal font; (3) bold face all capital
letter provision noting the agreement is not a condition of admission to the facility; (4) no
limitation on type or amount of damage claims; (5) no limitation on causes of action; (6) no
suspect forum selection; (7) no truncation of the otherwise applicable statute of limitations; (8)
the terms are such that a person of ordinary experience and education is likely to understand; and
(9) other courts applying Kentucky law have found that arbitration agreements presented as part
of the nursing home admission process were not procedurally unconscionable. See, e.g., Taulbee,
Abell v. Bardstown Medical Investors, Ltd., 20I 1 WL 2471210, *1-3 (W.D.Ky. June 20, 2011 ).
Further, that the arbitration agreement is a "boiler-plate, pre-printed" document does not
render it unconscionable, per se. See Conseco, 47 S.W.3d at 342-43 (noting that an arbitration
clause appearing single-spaced on the back of a pre-printed form did not render it procedurally
unconscionable). Defendant has provided the Court no facts to suggest Plaintiffs' representatives
failed to provide him an opportunity to ask questions and understand the terms of the agreement.
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There is simply nothing to suggest that the arbitration agreement is one-sided, oppressive,
unfairly surprising or the result of unfair bargaining.
Moreover, the arbitration agreement is not void against public policy. It is well established
that there exists "an emphatic federal policy in favor of arbitral dispute resolution." KPMG LLP
v. Cocchi,- U.S.--, 132 S.Ct. 23,25 (2011). The United States Supreme Court
specifically rejected an argument that arbitration agreements can be voided for public policy
reasons. Marmet Health Care Center, Inc. v. Brown,- U.S.--, 132 S.Ct. 1201, 1203-4,
182 L.Ed.2d 42 (2012). The high Court held: "[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." Id.
Defendant's attempts to attack the validity of the arbitration agreement are contrmy to
established law and, as such, fall far short of establishing dismissal pursuant to Rule 12(b)( 6).
D.
This Court may enjoin Defendant from proceeding in state court.
Having found that Defendant must submit his claims to arbitration, the question turns to
whether this Court should enjoin the defendant from pursuing his parallel action in state court.
The Comt finds that such an injunction is necessary, and the defendant is enjoined from
proceeding with her state-court action. "Although the FAA requires courts to stay their own
proceedings where the issues to be litigated are subject to an agreement to arbitrate, it does not
specifically authorize federal courts to stay proceedings pending in state courts." Great Earth
Companies, Inv. v. Simmons, 288 F.3d 878, 893 (6'h Cir. 2002) (internal citations omitted). For
this reason, "the district court's authority to enjoin state-court proceedings is subject to the legal
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and equitable standards for injunctions generally, including the Anti Injunction Act." !d. Pursuant
to the Anti-Injunction Act, "[a] court of the United States may not grant an injunction to stay
proceedings in a State court except as expressly authorized by Act of Congress, or where
necessary in aid of its jurisdiction, or to protect or effectuate its judgments." 28 U.S. C. § 2283.
An injunction in this case "properly falls within the exception for injunctions 'necessmy to
protect or effectuate [this Court's] judgments.'" Great Earth, 288 F.3d at 894. The Comi has
determined that the pmiies entered into a binding arbitration agreement covering the scope of
Defendant's claims. Having made such a determination and compelling him to submit to
arbitration, it is necessmy to enjoin Defendant from pursing his claims in any alternative forum,
including state court. Otherwise, he would be permitted to circumvent her arbitration agreement
and in doing so, circumvent this Court's judgment that he be compelled to arbitrate his claims.
Accordingly, the Court will order that Defendant be enjoined from proceeding with his pending
state-court action.
IV.
A valid and binding arbitration agreement was executed by Lany Strother. This matter must
be referred to arbitration.
Accordingly, IT IS HEREBY ORDERED:
(1)
Defendant's Motion to Dismiss [Docket No.5] be OVERRULED;
(2)
Plaintiffs' Motion to Compel Arbitration and to Enjoin Defendant [Docket No. 7]
be SUSTAINED;
(3)
Defendant shall prosecute all of its claims arising out of Miles Strother's
residency at Boyd Nursing & Rehabilitation Center in accordance with the terms
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of the arbitration agreement signed by his guardian; and
(4)
This matter is hereby STAYED pending any further proceedings to enforce any
award of the arbitrator.
Signed By:
Henry R. Wlthqlt. Jr.
United States District .Judge
. .J
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