Golden Gate National Senior Care, LLC et al v. Brown et al

Filing 16

MEMORANDUM OPINION & ORDER: IT IS ORDERED that: 1. Defendant's Motion to Dismiss 8 is GRANTED IN PART and DENIED IN PART; 2. Plaintiff's Motion for Expedited consideration of Complaint to Enforce the the Alternative Resolution Agreement and to Compel Defendants to Submit Their Claims to Arbitration 4 is GRANTED IN PART and DENIED IN PART; 3. Plaintiff's Motion for Leave to Cite Additional Authority 12 is GRANTED; 4. Defendants are ENJOINED from pursuing their pending state court claims for violations of the rights of long term care residents under KRS § 216.515 and personal injury by means of negligence, medical negligence, and corporate negligence before the Lincoln Circuit Court. Defendant Gary Brown's claim for loss of spousal consortium before the LincolnCircuit Court is not enjoined. Signed by Judge Joseph M. Hood on 4/5/2018.(KM)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION AT LEXINGTON

SENIOR )
)
)
Plaintiffs,
)
)
v.
)
)
PAT BROWN and GARY BROWN,
)
)
)
Defendants.
GOLDEN GATE NATIONAL
CARE, LLC, et al.

**

**

Civil Action No.
5:17-CV-153-JMH
MEMORANDUM OPINION & ORDER

**

**

**

This matter is before the Court on Plaintiff’s Motion for
Expedited Consideration of Complaint to Enforce the Alternative
Resolution Agreement and to Compel Defendants to Submit Their
Claims to Arbitration [DE 4] and Defendants Motion to Dismiss
[DE 8], both of which have been fully briefed by the parties.1
Defendants

ask

this

Court

to

determine

that

it

lacks

jurisdiction in this matter or, in the alternative, abstain from
exercising jurisdiction and to dismiss the Plaintiffs’ Complaint
under

the

parallel
Court.

Colorado
state

They

injunctive
1

River

court

further
relief

abstention

action

pending

assert

that,

would

be

doctrine
in
in

the
any

inappropriate

in

favor

Lincoln
event,
under

a

Circuit

that
the

of

any
Anti-

The Court also considers Plaintiff’s Motion for Leave to Cite Additional
Authority [DE 12] in support of their Motion to Compel Arbitration. This
motion is also fully briefed by the parties and will, after careful
consideration by the Court, be granted.

Injunction Act. As explained below, the Court disagrees. Rather,
Plaintiffs’

Motion

to

Enforce

the

Alternative

Resolution

Agreement and to Compel Defendants to Submit Their Claims to
Arbitration [DE 4] is well-received, at least in part. For the
reasons which follow, relief will be afforded both parties, but
Defendants will be enjoined from pursuing a subset of all but
Gary Brown’s loss of spousal consortium claim before the Lincoln
Circuit Court.
I.
On September 27, 2016, Defendant Pat Brown was admitted to
Golden

LivingCenter

–

Stanford

(“GLC

–

Stanford”

or

the

“facility) in Stanford, Kentucky. During the admission process,
Pat

Brown

signed

a

document

titled

“ALTERNATIVE

RESOLUTION AGREEMENT,” which provided for,
[a]ny and all disputes arising out of or in
any way relating to this Agreement or the
Resident’s stay at the Facility or the
Admissions Agreement between the Parties
that would constitute a legally cognizable
cause of action in a court of law sitting in
the state where the Facility is located.
Covered Disputes include but are not limited
to all claims in law or equity arising from
one Party’s failure to satisfy a financial
obligation to the other Party; a violation
of a right claimed to exist under federal,
state, or local law or contractual agreement
between
the
Parties;
tort;
breach
of
contract;
consumer
protection;
fraud;
misrepresentation;
negligence;
gross
negligence; malpractice; and any alleged
2

DISPUTE

departure
from
any
applicable
federal,
state,
or
local
medical
health
care,
consumer, or safety standards.
It

further

provides

that

it

“shall

be

governed

by

and

interpreted under the Federal Arbitration Act, 9 U.S.C. §§ 1 et
seq.” and that “[a]ll claims based in whole or in part on the
same

incident,

services

transaction,

provided

by

the

or

related

Facility

to

course

the

of

care

or

Resident

shall

be

addressed in a single ADR process, which shall adjudicate solely
the

claims

of

the

Parties

named

in

this

Agreement....”

The

Agreement provides that it is binding upon Pat Brown and “all
persons whose claim is or may be derived through or on behalf of
[her],

including

any

next

of

kin,

guardian,

executor,

administrator, legal representative or heir” and the facility
and “its employees, agents, officers, directors, affiliates and
any

parent

or

subsidiary

of

the

Facility

and

its

medical

director acting in his or her capacity as medical director.” The
Agreement is to “inure to the benefit of, bind, and survive” the
parties, “their successors, and assigns.”
The

Agreement

also

provides

that

it

“GOVERNS

IMPORTANT

LEGAL RIGHTS” and that one should “PLEASE READ IT CAREFULLY AND
IN ITS ENTIRETY BEFORE SIGNING.” It further advises that one has
a

right

“to

seek

advice

of

legal

counsel

concerning

this

Agreement” and that signing it was “not a condition to admission
3

to or residence in the [f]acility.” The Agreement was also, by
its terms, revocable “by sending written notice to the Facility
within 30 days of signing it.”
There is no dispute that Pat Brown signed the agreement or
that she never revoked the Agreement. Just under her signature,
the Agreement reads, “[b ]y my signature, I acknowledge that I
have read this Agreement or had it read to me, that I understand
what I am signing, and that I accept its terms.” Gary Brown did
not sign the Agreement.
On March 9, 2017, Pat and Gary Brown filed an action in
Lincoln Circuit Court, Civil Action No. 17-CI-00104, asserting
negligence, medical negligence, corporate negligence, violations
of long term care resident’s rights under KRS 216.510, et seq.,
and loss of spousal consortium against Plaintiffs as a result of
the care that Pat Brown received at the facility. The Browns
also brought a claim of negligence against Barbara Woods and
Lisa Davis, both of whom are citizens of Kentucky and served as
administrators of the facility during Pat Brown’s residence, in
the state court action. No substantive rulings related to the
enforceability of the Agreement have been made in the Lincoln
Circuit Court. Neither Woods nor Davis are named as plaintiffs
in the matter at bar before this Court.

4

By virtue of their Complaint in this action, Plaintiffs ask
this Court to enforce an arbitration agreement entered into by
Pat Brown, and GLC - Stanford, and to stay the pursuit of the
action in Lincoln Circuit Court in order that any arbitration
ordered may proceed.
II.
As an initial matter and in the face of Defendant's Motion
to

Dismiss

Plaintiffs'

claims

pursuant

to

Fed.

R.

Civ.

P.

12(b)(1) and (7), the Court concludes that it has jurisdiction
to

consider

this

matter.

Defendants

argue

that

there

is

no

jurisdiction because Plaintiffs have failed to join a necessary
party under Rule 19 and, once the citizenship of that necessary
party is taken into account, there is a lack of subject-matter
jurisdiction under 28 U.S.C. § 1332 because (1) the parties will
not be of diverse citizenship and (2) the Federal Arbitration
Act

will

not,

alone,

create

a

federal

question

which

would

confer jurisdiction under 28 U.S.C. § 1331 in this matter upon
this Court.2 For the same reasons announced in Preferred Care,

2

Under the FAA, a district court has jurisdiction over a petition to compel
arbitration only if the court would have jurisdiction over “a suit arising
out of the controversy between the parties” without the arbitration
agreement. 9 U.S.C. § 4. That is, the FAA “‘bestow[s] no federal jurisdiction
but rather require[s] an independent jurisdictional basis' [for access to a
federal forum] over the parties' dispute.” Vaden v. Discover Bank, 556 U.S.
49, 59, 129 S.Ct. 1262, 173 L.Ed.2d 206 (2009) (quoting Hall Street Assoc.,
LLC v. Mattel, Inc., 552 U.S. 576, 581–82, 128 S.Ct. 1396, 170 L.Ed.2d 254
(2008) (internal quotation marks omitted)); see also Moses. H. Cone Mem.
Hosp. v. Mercury Const. Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765

5

Inc. v. Belcher, No. 14-CV-107-JMH, 2015 WL 1481537, at *1-3
(E.D. Ky. Mar. 31, 2015), the Court disagrees.
A

Rule

12(b)(1)

motion

can

either

attack

the

claim

of

jurisdiction on its face, in which case all allegations of the
plaintiff

must

be

considered

as

true,

or

it

can

attack

the

factual basis for jurisdiction, in which case the trial court
must weigh the evidence and the plaintiff bears the burden of
proving

that

jurisdiction

exists.

See

RMI

Titanium

Co.

v.

Westinghouse Elec. Corp., 78 F.3d 1125, 1133–35 (6th Cir.1996);
United States v. Ritchie, 15 F.3d 592, 598 (6th Cir.1994); Ohio
Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th
Cir.1990).
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,” and Plaintiffs contend that this Court has jurisdiction
based on the diversity of the parties. In the instant action,
there is no dispute that the amount in controversy exceeds the
sum

or

value

of

$75,000,

exclusive

of

interest

and

costs.

(1983). Section 4 of the FAA “neither expand[s] nor contract[s] federal
subject matter jurisdiction.” Stroh Container Co. v. Delphi Indus., Inc., 783
F.2d 743, 747 n .7 (8th Cir.1986). Thus, a petitioner proceeding under § 4
must assert an independent source of subject matter jurisdiction. Here, the
plaintiffs assert only that the Court has diversity jurisdiction pursuant to
18 U.S.C. § 1332.

6

Further, there is no dispute that Defendants are residents of
Kentucky and that each of the named Plaintiffs in this action is
a citizen of another state. However, Woods and Davis, nursing
home administrators named as defendants in the state complaint
but

not

as

Kentucky.

a

party

Defendants

in

the

present

claim

that

matter,

are

complete

citizens

diversity

of
of

citizenship among the parties in this case cannot be maintained
because, while Woods and Davis are not named as plaintiffs in
this action, they are indispensable parties under Fed. R. Civ.
P. 19 and their joinder would destroy the complete diversity
among parties required by 28 U.S.C. 1332(a)(1).
If

lack

of

subject-matter

jurisdiction

is

raised

in

a

motion to dismiss, the plaintiff “bears the burden of proving
jurisdiction ... to survive the motion.” Mich. S. R.R. Co. v.
Branch & St. Joseph Counties Rail Users Ass'n, 287 F.3d 568, 573
(6th Cir .2002). However, the plaintiff will “survive [a] motion
to dismiss by showing ‘any arguable basis in law’ for the claims
set forth in the complaint.” Id. (quoting Musson Theatrical,
Inc. v. Fed. Express Corp., 89 F.3d 1244, 1248 (6th Cir.1996)).
III.
Defendants argue that Woods and Davis are necessary and
indispensable

parties

to

this

action

7

and

that,

since

their

joinder would destroy diversity in this action, subject matter
jurisdiction is lacking and the matter must be dismissed.
The existence of a non-diverse party in the related state
court action does not, on its own, destroy diversity:
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 party whose participation is so
important 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 cannot be joined without
divesting
the
court
of
subject-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 party's absence, the court
must dismiss the case.
GGNSC Vanceburg, LLC, v. Hanley, Civil Action No. 13–106–HRW,
2014 WL 1333204, *3 (E.D.Ky. Mar.28, 2014).
Accordingly, the Court first considers whether Woods and
Davis are even necessary parties, which they are if, “in [their]
absence, complete relief cannot be accorded among those already
parties” or “[their] claims an interest relating to the subject
of the action and is so situated that the disposition of the
8

action in [their] absence may ..., as a practical matter, impair
or impede [their] ability to protect the interest” or their
absence would “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.
The
action,

claims
which

against
group

of

the

defendants

defendants

in

the

includes

state
the

court

various

Plaintiffs to this action and Woods and Davis, are based on the
same occurrence—the alleged negligence at the nursing home that
resulted in injury to Pat Brown and, through loss of spousal
consortium, to Gary Brown. The arbitration agreement, by its
terms, governs claims against the corporate parties as well as
the

administrators.

Its

enforceability

with

respect

to

all

parties, including Woods and Davis, is a matter pending before
the state court. If this Court and the state court were to reach
different

conclusions

concerning

the

enforceability

of

the

arbitration agreement, the Browns could be placed in a position
where they would be obliged to arbitrate the claims with some of
the

parties

covered

by

the

agreement

and

to

proceed

in

litigation before the state court with respect to other parties,
Woods and Davis, who are arguably covered by the agreement.
Thus, the Browns are subject to a substantial risk of incurring
inconsistent obligations because of Woods and Davis’s interests
9

in this matter. Accordingly, the Court concludes that Woods and
Davis are necessary parties to the action.
As the joinder of Woods and Davis, citizens of Kentucky,
would destroy diversity jurisdiction, the Court must determine
whether they are “indispensable.” Thus, the 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
his absence would be adequate; and (4) whether Plaintiff would
have an adequate remedy if the action were dismissed for nonjoinder. Fed. R. Civ. P. 19(b).
The Browns argue that they will not be afforded complete
relief in the absence of Woods and Davis as plaintiffs to this
action. They assert that there could then be a duplication of
proceedings

and

that

they

will

be

unduly

and

unnecessarily

prejudiced if they are subjected to arbitration with just the
named Plaintiffs. The Court is not persuaded of their position.
The duplication of proceedings alone in these circumstances
is not a disqualifying factor. “[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
10

of [the Browns’] decision to file a suit naming [Plaintiffs,
Woods,

and

arbitration

Davis]
under

in
the

state

court

[arbitration

rather

than

agreement].”

to

demand

PaineWebber,

Inc. v. Cohen, 276 F.3d 197, 202 (6th Cir. 2001). Moreover, “the
possibility

of

piecemeal

litigation

is

a

necessary

and

inevitable consequence of the FAA's policy that strongly favors
arbitration.” Id. The Court considers that, while there is a
risk that the state court will reach an inconsistent outcome
regarding the arbitration agreement as it relates to the Browns,
it is a low risk. This does not rise to the degree of prejudice
required to conclude an absent party is indispensable. Id. at
203. 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.” Id. at 205.
Finally, the Browns argue that an adequate remedy exists in
state court if this Court dismisses the case. This is true, but
the factors, when balanced, do not militate in favor of the
conclusion that Woods and Davis are indispensable parties. It
follows that the failure to join him does not warrant dismissal.
Ultimately, the requirements of diversity of jurisdiction have
been met, and this Court has subject matter jurisdiction over
this case.
11

IV.
Next, the Court considers whether it should abstain from
exercising jurisdiction and dismiss Plaintiffs’ complaint upon
application

of

the

Colorado

abstention

River

doctrine

which

permits this Court to dismiss a cause pending before it in favor
of a parallel state court action. The undersigned and several
other

courts

abstention

in

is

this

district

inappropriate

have

in

recently

concluded

circumstances

that

substantially

similar to those presented in this matter. See Diversicare of
Nicholasville, LLC, et al. v. Lowry, No. 5:16-cv-53-JMH, 2016 WL
5852857

(E.D.

Howell,

187

Ky.

Sept.

F.Supp.3d

30,

796,

2016);

805-06

Preferred

(E.D.

Ky.

Care,

Inc.

2016);

v.

Richmond

Health Facilities Kenwood, LP v. Nichols, Civil Action No. 5:14–
141–DCR,

2014

WL

4063823

(E.D.Ky.

Aug.

13,

2014);

Brookdale

Senior Living, Inc. v. Caudill, Civil Action No. 5:14–098–DCR;
2014 WL 3420783 (E.D. Ky. July 10, 2014); GGNSC Vanceburg, LLC,
v.

Hanley,

Civil

Action

No.

0:13–106–HRW,

2014

WL

1333204

(E.D.Ky. Mar.28, 2014); GGNSC Vanceburg, LLC, v. Taulbee, Civil
Action

No.

5:13–cv–71–KSF,

2013

WL

4041174

(E.D.Ky.

Dec.19,

2013); but see Preferred Care of Delaware, Inc. v. Vanarsdale,
152

F.Supp.3d

state

court

929,
had

930-32
issued

(E.D.
an

Ky.

2016)

interlocutory

(abstaining
ruling

on

where
the

enforceability of the arbitration agreement). In each instance,
12

there was an allegation of negligence in care provided at a
nursing home. The party claiming injury filed a civil action in
state court, and the nursing home then asserted that the state
court claims were subject to the binding arbitration agreement
between the parties and demanded the dispute be referred to
arbitration and the state court case dismissed with prejudice.
In each instance, the nursing home then filed a complaint in the
federal court, alleging federal jurisdiction by way of diversity
(and omitting the nursing home administrators, arguably subject
to the arbitration agreement but without diverse citizenship, as
a

party

in

the

federal

court

action),

arguing

that

the

arbitration agreement was valid and enforceable, and asking the
federal court to compel the party claiming injury to arbitrate
his or her state claims and to enjoin him or her from further
pursuing his or her claims in state court.
In Taulbee, the late Karl S. Forester of this Court summed
up abstention doctrine as follows:
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 F.3d 620, 625
(6th Cir. 2009). This exception is narrow
because a district court presented with a
case
that
arises
under
its
original
jurisdiction has a “virtually unflagging
obligation” to exercise the jurisdiction
13

conferred upon it by the coordinate branches
of government and duly invoked by litigants.
Colorado River Water Conservation Dist. v.
United States, 424 U.S. 800, 817, 96 S.Ct.
1236, 47 L.Ed.2d 483 (1976). Abstention is
an “extraordinary and narrow exception to
the duty of a district court to adjudicate a
controversy properly before it.” Id. at 813.
Taulbee, 2013 WL 4041174 at *2. Abstention is appropriate under
certain limited circumstances, as follows:
Under Colorado River, the threshold issue is
whether there are parallel proceedings in
state court. Crawley v. Hamilton Cnty.
Comm'rs, 744 F.2d 28, 31 (6th Cir. 1984).
Once a court has determined there are
parallel proceedings, the Supreme Court
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. PaineWebber, Inc. v. Cohen, 276 F.3d
197, 206 (6th Cir. 2001). 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.
Id.
The analysis is straightforward. No one disputes that the
present action is parallel to the state court proceedings; thus,
14

the Court applies the eight factor test. See id. at *3 (citing
PaineWebber, 276 F.3d at 206). As the Court sees the matter,
only two factors favor abstention. First, it is impossible that
the

federal

forum

is

less

convenient

to

the

parties,

since

Lexington is not so very far from Lincoln County (in which the
injuries allegedly occurred and near which the Court presumes
that most of the witnesses reside). See id. at *3. Second, the
state court action is no doubt adequate to protect the federal
plaintiffs' rights because, under the Supremacy Clause, a state
court is bound by the requirements of the FAA. Id.
The

other

factors

favor

federal

jurisdiction,

however,

keeping in mind that “the balance [is to be] heavily weighted in
favor of the exercise of jurisdiction.” Moses H. Cone, 460 U.S.
1, 16 (1983). The parties agree that the case does not involve
real property or the assumption of jurisdiction over any res or
property. Thus, the first factor weighs in favor of the exercise
of

federal

(citing

court

Romine

v.

jurisdiction
Compuserve

and

Corp.,

against
160

F.3d

abstention.
337,

341

Id.
(6th

Cir.1998)). The third factor offers little to no support for
Defendant's argument in favor of abstention, since the desire to
avoid piecemeal litigation is insufficient to overcome a strong
federal policy in favor of arbitration or, in this instance, the
exercise of jurisdiction. PaineWebber, 276 F.3d at 207.
15

With

respect

obtained

by

each

to

the

court,

order

in

which

“priority

should

jurisdiction
not

be

was

measured

exclusively by which complaint was filed first, but rather in
terms of how much progress has been made in the two actions.”
Moses H. Cone, 460 U.S. at 21. Neither of the cases – state or
federal – are far advanced in this instance. Since both parties
remain in the early pleading stages, the fourth factor weighs
against

abstention.

factor-the

For

relative

much

the

same

reason,

progress

of

the

state

the
and

seventh
federal

proceedings—weighs against abstention as there has been limited
progress in the state court to date.
As to the fifth factor, regarding the source of law, while
it is true that state law will govern the standard contract
defenses

Brown

Federal

Arbitration

arbitration
presents

a

raises

agreements
“liberal

against
Act

the

arbitration

governs

generally
federal

the

and
policy

agreement,

the

enforceability

of

applies

here.

favoring

The

FAA

arbitration

agreements” that must be taken into account even when state-law
issues are presented. Moses H. Cone, 460 U.S. at 24. It follows
that this factor weighs in favor of federal court jurisdiction
or, at the very least, not against it in this instance. The
final factor under Colorado River is the presence or absence of
concurrent jurisdiction. While there is concurrent jurisdiction,
16

this fact only marginally favors abstention, if at all. As noted
above,

the

governing

law

is

the

FAA,

which

“expresses

a

preference for federal litigation,” The existence of concurrent
jurisdiction “is insufficient to justify abstention” under the
circumstances. PaineWebber, 276 F.3d at 208–09.
On balance, the circumstances in this matter do not present
the “exceptional” circumstances necessary to compel this Court
to abandon the “virtually unflagging obligation of the federal
courts to exercise the jurisdiction given them.” Colorado River,
424 U.S. at 817–1″. Accordingly, this Court declines to abstain.
IV.
Finally, the Court considers whether Plaintiff’s complaint
should be dismissed pursuant to Fed. R. Civ. P. 12(b)(6) for
failure

to

because

state

the

a

claim

underlying

upon

which

relief

ADR

Agreement

is

can

be

granted

invalid

and

unenforceable. Specifically, Defendants argue (1) that the ADR
Agreement

does

not

evidence

a

contract

involving

interstate

commerce, (2) that the ADR Agreement is facially unenforceable
because it is unconscionable, and (3) that the ADR Agreement is
unenforceable because the attorney-in-fact did not possess the
authority to execute it.
(1)

17

Even assuming that the Browns correctly contend that the
care provided to Pat Brown occurred only within the borders of
the Commonwealth of Kentucky, this is a case which clearly falls
within the scope of the FAA. The FAA applies to “contract[s]
evidencing a transaction involving commerce,” 9 U.S.C. § 2, and
extends to transactions “in individual cases without showing any
specific effect upon interstate commerce if in the aggregate the
economic activity would represent a general practice ... subject
to federal control.” Citizens Bank v. Alafabco, Inc., 539 U.S.
52, 56–57, 123 S.Ct. 2037, 156 L.Ed.2d 46 (2003) (quoted in
Nichols, 2014 WL 4063823 at *8; Brookdale Sr. Living Inc. v.
Stacy, 27 F.Supp.3d 776, 791–92 (E.D.Ky. 2014)). “The Supreme
Court has “interpreted the term ‘involving commerce’ in the FAA
as

the

functional

‘affecting
broadest

equivalent

commerce’—words
permissible

of

exercise

of
art
of

the
that

more

familiar

ordinarily

Congress'

term

signal

Commerce

the

Clause

power.” Id. (citing Allied–Bruce Terminix Cos., 513 U.S. 265,
273–274, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995)).
Interstate commerce is interpreted broadly and healthcare
is

an

economic

activity

that

represents

a

general

practice

subject to federal control. See Ping v. Beverly Enterprises,
Inc., 376 S.W.3d 581, 589 (Ky. 2012) (citing Alafabco, 539 U.S.
at 56–57). Courts in the Eastern District of Kentucky, as well
18

as

others,

agreements

have
are

found

that

contracts

similar

“evidencing

nursing

residency

transaction

a

home

involving

commerce,” under the FAA. See Nichols, 2014 WL 4063823 at *8;
Caudill, 2014 WL 3420783, at *9; see also Stacy, 27 F.Supp.3d at
791–92; Hanley, 2014 WL 1333204 at *8–9; GGNSC Taulbee, 2013 WL
4041174 at *10–11 (remarking that courts have looked to the
acceptance of Medicare as evidence of interstate commerce); and
Warner, 2013 WL 6796421 at *7–8.
The arbitration agreement in this case is a component of a
larger

contract

that

evidences

a

transaction

involving

interstate commerce. See Stacy, 27 F.Supp.3d at 791–92. As other
courts

have

pointed

out,

“[t]he

food,

medicine,

and

durable

medical supplies that [the plaintiffs] provided must come from
somewhere.” Id. at *14 (quoting GGNSC Louisville Hillcreek, LLC
v. Warner, Civil Action No. 3:13–cv–752–H, 2013 WL 6796421, *8
(W.D.Ky. Dec. 19, 2013)). Accordingly, Defendants argument that
the arbitration agreement is unenforceable under the FAA because
it does not evidence a transaction involving interstate commerce
is without merit.
(2)
Defendants argue next that the procedural and substantive
nature

of

the

Unconscionability,

ADR
in

Agreement
the

renders

Commonwealth
19

it
of

unconscionable.
Kentucky,

is

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. Ct. App.
2001).

It

is

“directed

against

one-sided,

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. Ct. App.
1978)).
Defendants argue that “[t]he ADR Agreement is part of a
mass-produced,
presented

to

boiler-plate,
the

pre-printed

Respondents

within

a

document,
lengthy

likely

stack

of

admissions paperwork” when “the Petitioners are aware that the
admissions process is often an overwhelming experience. Yet, the
Petitioners knowingly present to residents a stack of admissions
paperwork consisting of legal documents, which are lengthy and
cumbersome, to sign typically at one sitting.” See [DE 8-1.]
They point, as well to what they describe as “an obviously gross
disparity of bargaining power between the parties in situations
like the instant case. The Petitioners, as a healthcare services
conglomerate,

draft

and

select
20

the

desired

placement

and

presentation

of

the

ADR

Agreement

to

residents

and

their

families when they are facing the emotional and difficult task
of seeking necessary care for a loved-one from an unknown third
party.”

At

the

heart

of

their

argument

is

this:

“These

arbitration agreements are not entered into by two commercially
sophisticated
promote

parties

commercial

seeking

mutual

efficiency.

Instead,

benefits
these

in

order

agreements

to
are

utilized to protect the healthcare conglomerate and undermine
the justice system in a whole arena of personal injury law.”
They point out, as well, the relatively larger expense imposed
on plaintiffs in suits like theirs with cost-sharing imposed by
the process, as well as the tendency to truncate discovery.
The agreement in question contains the following features:
(1) it is on separate sheets of paper, separately titled in bold
print, and presented as a component of the admissions package
during the admissions process; (2) it is conspicuously titled;
(3) the title states that acceptance of the agreement is not
required

for

admission

to

the

facility;

(4)

the

agreement

provides no limitation on the right to recovery, including type
or amount of damage claims, causes of action, or truncation of
the otherwise applicable statute of limitations; and (5) the
terms are reciprocal and mutual by and between the parties.

21

In

other

words,

there

is

nothing

to

suggest

that

the

agreement is “one-sided, oppressive and unfairly surprising” or
that the dichotomy between the parties, a health care company
and an individual seeking nursing home care, accompanied by her
family in seeking that care, resulted in some sort of bargain
that should not be enforced. Conseco, 47 S.W.3d at 341. For this
reason,

other

courts

applying

Kentucky

law

have

found

that

arbitration agreements similar to the one at bar and presented
as

part

of

the

nursing

home

admission

process

were

not

procedurally unconscionable. See, e.g., Nichols, 2014 WL 4063823
at

*9;

Abell

v.

Bardstown

Medical

Investors,

Ltd.,

2011

WL

2471210, *1–3 (W.D.Ky. June 20, 2011).
Moreover,
something

more,

the

arbitration

void

against

agreement
public

is

policy.

not,
It

without
is

well

established that there exists “an emphatic federal policy in
favor of arbitral dispute resolution.” KPMG LLP v. Cocchi, 565
U.S. 18, 21 (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, 565 U.S. 530, 532-33 (2012). The Supreme Court held that,
“‘[w]hen

state

law

prohibits

outright

the

arbitration

of

a

particular type of claim, the analysis is straightforward: The

22

conflicting rule is displaced by the FAA.’” Id. (quoting AT & T
Mobility LLC v. Concepcion, 563 U.S. 333, 341 (2011)).
Accordingly,

the

Court

declines

to

provide

relief

to

Defendants on these grounds.
VI.
The

state

court

complaint

alleges

a

loss

of

spousal

consortium clam on behalf of Gary Brown, among other claims, and
Plaintiffs argue that it is governed by the Agreement and must
be

arbitrated.

governs

“all

The

claims

Court
based

disagrees.
in

whole

The
or

Agreement

in

part

expressly

on

the

same

incident, transaction, or related course of care or services
provided by the Facility to the Resident” and is binding upon
Pat Brown and “all persons whose claim is or may be derived
through or on behalf of [her]....” For this set of claims “shall
inure

to

the

benefit

of,

bind

and

survive

them,

their

successors, and assigns.”
Under Kentucky law, “[a] loss of consortium claim is also a
statutorily

created

independent

claim

that

accrues

to

the

spouse. Therefore, just as a decedent cannot bind his heirs to
arbitrate a wrongful death claim, the decedent also cannot bind
his heirs to arbitrate a loss of consortium claim.” Life Care
Centers

v.

Neblett,

No.

5:14–CV–00124–TBR,

2014

WL

7179652

(W.D.Ky. December 17, 2014) (internal citations omitted). Gary
23

Brown did not sign the agreement and, in the absence of any
indication that Pat Brown was acting as his power of attorney
when

she

signed

the

admissions

agreements,

including

the

arbitration, the Court declines to extend the limitations of the
arbitration agreement to Gary Brown’s loss of consortium claim,
which

belongs

to

him

Facilities

v.
to

require

811

Nichols,

(declining

alone.

See,

F.3d

decedents

e.g.,

192,
to

197

Richmond
(6th

Health
2016)

wrongful

arbitrate

Cir.

death

claim); Preferred Care, Inc. v. Howell, No. CV 16-13-ART, 2016
WL 2858523, at *5 (E.D. Ky. May 13, 2016) (citing Extendicare
Homes,

Inc.

v.

Whisman,

478

S.W.3d

306,

313–14

(Ky.

2016)

(same); Ping v. Beverly Enters., Inc., 376 S.W.3d 581, 597–99
(Ky. 2012) (same) (holding that because a wrongful death claim
“is

not

derived

through

or

on

behalf

of

the

resident,

but

accrues separately to the wrongful death beneficiaries and is
meant to compensate them for their own pecuniary loss,” wrongful
death

beneficiaries

were

not

parties

to

the

arbitration

agreement). Further, “arbitration is a matter of contract and a
party cannot be required to submit to arbitration any dispute
which he has not agreed so to submit.” Howsam v. Dean Witter
Reynolds, Inc., 537 U.S. 79, 83 (2002) (internal quotation marks
omitted). Accordingly, Plaintiffs’ effort to force Gary Brown to
arbitrate his loss of consortium claim is misplaced and the
24

Court will not compel Defendant Gary Brown to arbitrate it or
stay the prosecution of that claim in the Lincoln Circuit Court.
VII.
Finally, the Court considers whether an injunction would
violate

the

Anti-Injunction

federal

court

specifically

to

stay

authorize

Act.

their

While

own

federal

the

FAA

proceedings,

requires

courts

to

it

stay

does

pending

a
not

state

court cases. Great Earth Co., Inc. v. Simons, 288 F.3d 878, 893
(6th Cir. 2002). Rather, the federal court's authority to enjoin
state-court proceedings is subject to the legal and equitable
standards
Injunction
concluded

for

injunctions

Act,
that

28
a

generally,

U.S.C.

district

§

2283.

court's

including
The

Sixth

injunction

the

Anti–

Circuit

of

has

state-court

proceedings after compelling arbitration does not violate the
Anti–Injunction

Act

exception

injunctions

for

because

the

injunction

‘necessary

fell

“within

the

to

protect

or

...

effectuate [district court] judgments.’” Great Earth, 288 F.3d
at

894.

It

concluded

that

“[a]n

injunction

of

the

state

proceedings [was] necessary to protect the final judgment of the
district court on this issue.” Id. Since enjoining the state
proceeding is not generally barred by the Anti–Injunction Act
and such injunction would serve to protect or effectuate this
Court's judgments, the Browns will be enjoined from pursuing the
25

pending

state

court

claims

(except

for

Brown’s

loss

of

consortium claim, as explained above) before the Lincoln Circuit
Court.
Accordingly, IT IS ORDERED that:
(1)

That Defendant’s Motion to Dismiss [DE 8] is GRANTED

IN PART and DENIED IN PART;
(2)

That Plaintiffs’ Motion for Expedited Consideration of

Complaint to Enforce the Alternative Resolution Agreement and to
Compel Defendants to Submit Their Claims to Arbitration [DE 4]
is GRANTED IN PART and DENIED IN PART;
(3)

That Plaintiffs’ Motion for Leave to Cite Additional

Authority [DE 12] is GRANTED;
(4)

That

Defendants

are

ENJOINED

from

pursuing

their

pending state court claims for violations of the rights of long
term care residents under KRS § 216.515 and personal injury by
means

of

negligence

negligence,
before

the

medical
Lincoln

negligence,

Circuit

Court.

and

corporate

Defendant

Gary

Brown’s claim for loss of spousal consortium before the Lincoln
Circuit Court is not enjoined.
This the 5th day of April, 2018.

26

27