GGNSC Louisville Mt. Holly, LLC et al v. White

Filing 20

MEMORANDUM OPINION AND ORDER by Senior Judge Thomas B. Russell granting 5 Motion to Compel Arbitration and to Enjoin Defendant. Defendant is enjoined from proceeding against Plaintiffs in Jefferson Circuit Court until conclusion of arbitration. Parties compelled to arbitrate all claims that are subject of Defendant's claims in Jefferson Circuit Court. Proceeding is stayed until conclusion of arbitration. Telephonic conference previously scheduled for 2/20/2017 is cancelled. cc: Counsel(JAC)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
CIVIL ACTION NO. 3:16-CV-00149-TBR
GGNSC LOUISVILLE MT. HOLLY, LLC,
d/b/a GOLDEN LIVINGCENTER – MT. HOLLY, et al.

PLAINTIFFS

v.
MERECCO TURNER, as Administrator of the Estate of
EARLENE WHITE, deceased

DEFENDANT

Memorandum Opinion and Order
This matter is before the Court upon Plaintiffs’ motion to compel arbitration
and to enjoin defendant from further pursuing related state court litigation.
5.]

Defendant has responded, [DN 18], and Plaintiffs have replied, [DN 19].

briefed, Plaintiffs’ motion is ripe for adjudication.

[DN
Fully

For the following reasons, that

motion [DN 5] is GRANTED.
I. Facts and Procedural History
For about two months in 2015, Earlene White was a resident of the Golden
Living Center – Mt. Holly nursing home in Louisville, Kentucky.

[DN 18 at 1.]

During her stay at that facility, Ms. White alleged that she “suffered physical and
emotional injuries due to inadequate care.”

[Id. at 1-2.]

Accordingly, she filed

suit in Jefferson County, Kentucky Circuit Court against various persons and
entities associated with Golden Living Center.

That case is styled White v. Golden

Gate National Senior Care, LLC d/b/a Golden Living, et al., Civil Action No. 16-CI00408. [DN 1-2.]

In turn, Plaintiffs filed the instant suit in federal court. See [DN 1.]1

They

claim that a document executed by Ms. White upon her admittance to Golden
Living Center requires that all her claims in the Jefferson Circuit Court case be
submitted to arbitration.

That document, entitled the “Alternative Dispute

Resolution Agreement,” states that Ms. White and the nursing home “agree that
any disputes covered by this Agreement . . . that may arise between them shall be
resolved exclusively by an ADR process that shall include mediation, and where
mediation is not successful, binding arbitration.” [DN 1-1 at 1.] Although
Defendant contends that the arbitration agreement is unenforceable, Defendant
does not dispute the agreement’s authenticity.
In pertinent part, the agreement between Ms. White and Golden Living
Center provides that “any and all disputes arising out of or in any way relating to
this Agreement or to the Resident’s stay at the Facility or the Admissions
Agreement between the Parties that would constitute a legally cognizable cause of
action” shall be subject to arbitration.

[Id. at 2.]

The agreement requires that the

arbitration be administered by JAMS, pursuant to its rules of procedure.

[Id.]

Further, the first page contains conspicuous language regarding the waiver of a
right to a jury trial:
THE PARTIES UNDERSTAND, ACKNOWLEDGE, AND AGREE
THAT THEY ARE SELECTING A METHOD OF RESOLVING
DISPUTES WITHOUT RESORTING TO LAWSUITS OR THE
COURTS, AND THAT BY ENTERING INTO THIS AGREEMENT,
Plaintiffs in this case are GGNSC Louisville Mt. Holly, LLC, d/b/a Golden Living Center – Mt.
Holly; Golden Gate National Senior Care, LLC, d/b/a Golden Living; GGNSC Administrative
Services, LLC; GGNSC Equity Holdings, LLC; Golden Gate Ancillary, LLC; GGNSC Clinical
Services, LLC; and GPH Louisville Mt. Holly, LLC.
1

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THEY ARE GIVING UP THEIR CONSTITUTIONAL RIGHT TO
HAVE THEIR DISPUTES DECIDED IN A COURT OF LAW BY A
JUDGE OR JURY, THE OPPORTUNITY TO PRESENT THEIR
CLAIMS AS A CLASS ACTION AND/OR TO APPEAL ANY
DECISION OR AWARD OF DAMAGES RESULTING FROM THE
ADR PROCESS EXCEPT AS PROVIDED HEREIN.
[Id. at 1 (emphasis in original).]

Ms. White was not required to sign the

arbitration agreement to be admitted to Golden Living Center.

[Id.]

Sadly, Ms. White passed away during the pendency of this action. See [DN
6.]

Merecco Turner was appointed administrator of Ms. White’s estate by the

Jefferson District Court, and is now the defendant in this case. See [DN 16.]

He

responded to Plaintiffs’ motion to compel arbitration, [DN 18], and they replied, [DN
19].
II. Standard of Review
Congress enacted the United States Arbitration Act of 1925, more commonly
referred to as the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1 et seq., in response to
the common law hostility toward arbitration and the refusal of many courts to
enforce arbitration agreements.

The Supreme Court has since interpreted the FAA

as codifying “a national policy favoring arbitration when the parties contract for
that mode of dispute resolution.” Preston v. Ferrer, 552 U.S. 346, 349 (2008).

The

Court has further stated that the FAA’s underlying purpose is to put arbitration
agreements “upon the same footing as other contracts.” EEOC v. Waffle House,
Inc., 534 U.S. 279, 289 (2002) (quoting Gilmer v. Interstate/Johnson Lane Corp.,
500 U.S. 20, 24 (1991)). The FAA establishes a procedural framework applicable in
both federal and state courts, and also mandates that substantive federal
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arbitration law be applied in both. See Allied-Bruce Terminix Cos. v. Dobson, 513
U.S. 265 (1995); Southland Corp. v. Keating, 465 U.S. 1, 16 (1984).
Section 3 of the FAA permits a party seeking to enforce an arbitration
agreement to request that litigation be stayed until the terms of the arbitration
agreement have been fulfilled.

9 U.S.C. § 3.

Before compelling arbitration, the

Court “must engage in a limited review to determine whether the dispute is
arbitrable.” Masco Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 627 (6th Cir. 2004)
(quoting Javitch v. First Union Sec., Inc., 315 F.3d 619, 624 (6th Cir. 2003)).

This

review requires the Court to determine first whether “a valid agreement to
arbitrate exists between the parties,” and second whether “the specific dispute falls
within the substantive scope of the agreement.” Id. (quoting Javitch, 315 F.3d at
624).

“Because arbitration agreements are fundamentally contracts,” the Court

must “review the enforceability of an arbitration agreement according to the
applicable state law of contract formation.”

Seawright v. Am. Gen. Fin. Servs.,

Inc., 507 F.3d 967, 972 (6th Cir. 2007) (citing First Options of Chi., Inc. v. Kaplan,
514 U.S. 938, 943-44 (1995)).
III. Discussion
Defendant puts forth three principal arguments in an effort to stave off
arbitration. First, he argues that the arbitration agreement is not enforceable
under the Federal Arbitration Act because it does not involve interstate commerce.
Next, Defendant contends that the agreement is procedurally and substantively
unconscionable under Kentucky law. Finally, Defendant claims that even if the

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arbitration agreement is valid, the Anti-Injunction Act prevents this Court from
enjoining him from further pursuing the related litigation in Jefferson Circuit
Court.
These arguments are not novel.

Rather, in some form or fashion, each one

has been raised before, and rejected by, eleven of the thirteen federal district judges
currently sitting in this Commonwealth.2

See GGNSC Louisville Mt. Holly LLC v.

Stevenson, No. 3:16-CV-00423-JHM, 2016 WL 5867427 (W.D. Ky. Oct. 6, 2016)
(McKinley, C.J.); GGNSC Louisville Hillcreek, LLC v. Watkins, No. 3:15-CV-902DJH, 2016 WL 815295 (W.D. Ky. Feb. 29, 2016) (Hale, J.); Sun Healthcare Group,
Inc. v. Dowdy, No. 5:13-CV-00169-TBR, 2014 WL 790916 (W.D. Ky. Feb. 26, 2014)
(Russell, J.); Pine Tree Villa, LLC v. Coulter, No. 3:15-CV-00815-CRS-CHL (W.D.
Ky. Oct. 4, 2016) (Simpson, J.); Golden Gate National Senior Care, LLC v.
Fleshman, No. 3:15-CV-00891-GNS, 2016 WL 3406159 (W.D. Ky. June 17, 2016)
(Stivers, J.); Brookdale Senior Living Inc. v. Stacy, 27 F. Supp. 3d 776 (E.D. Ky.
2014) (Caldwell, C.J.); Diversicare of Nicholasville, LLC v. Lowry, __ F. Supp. 3d
___, 2016 WL 5852857 (E.D. Ky. 2016) (Hood, J.); GGNSC Stanford, LLC v. Gilliam,
__ F. Supp. 3d ___, 2016 WL 4700135 (E.D. Ky. 2016) (Reeves, J.); Preferred Care,
Inc. v. Howell, No. 16-13-ART, 2016 WL 4470746 (E.D. Ky. Aug. 19, 2016) (Thapar,
J.); GGNSC Frankfort, LLC v. Tracy, No. 14-30-GFVT, 2015 WL 1481149 (E.D. Ky.
Mar. 31, 2015) (Van Tatenhove, J.); Diversicare Leasing Corp. v. Allen, No. 15-60GRW, 2016 WL 4443169 (E.D. Ky. Aug. 18, 2016) (Wilhoit, J.).

Defendant has

District Judge David L. Bunning and Senior District Judge William O. Bertelsman, both sitting in
the Eastern District of Kentucky, appear never to have passed upon these issues.

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presented this Court with no compelling reason why it should depart from this
precedent.

Therefore, as more fully explained below, Plaintiffs’ motion must be

granted.
A. Interstate Commerce
Defendant first claims that the arbitration agreement between Ms. White
and Golden Living Center “plainly fails to meet the standards for enforcement
under the FAA” because the contract does not evidence a transaction involving
interstate commerce.

[DN 18 at 4.]

In order for the FAA to apply to this

arbitration agreement, such a nexus between the contract and interstate commerce
must exist. 9 U.S.C. § 2.
The Supreme Court has interpreted the phrase “involving commerce” in the
FAA as signaling the broadest permissible exercise of Congress’ Commerce Clause
power.

Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56 (2003).

Based upon that

interpretation, this Court has found on multiple prior occasions that nursing home
admission agreements implicate interstate commerce.

See Life Care Centers of

Am., Inc. v. Estate of Neblett, No. 5:14-CV-00124-TBR, 2014 WL 5439623, at *6-7
(W.D. Ky. Oct. 22, 2014); Sun Healthcare Group, Inc. v. Dowdy, No. 5:13-CV-00169TBR, 2014 WL 790916, at *11-12 (W.D. Ky. Feb. 26, 2014); GGNSC Louisville
Hillcreek, LLC v. Warner, No. 3:13-CV-752-H, 2013 WL 6796421, at *7-8 (W.D. Ky.
Dec. 19, 2013).

In Warner, this Court emphasized that while the nursing care may

occur wholly within the borders of Kentucky, the food, medicine, medical, and other
supplies all likely come from elsewhere and that it would be impracticable for the

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nursing home to procure all goods necessary for the daily operations purely through
intrastate channels. Warner, 2013 WL 6796421, at *8. The Warner Court also
noted that, like here, Defendant’s state court complaint alleged that foreign entities
owned, operated, managed, controlled, and provided services for the nursing home.
Id.; see [DN 1-2]. Ms. White’s admissions agreement with Golden Living Center,
containing the arbitration clause, reflects a transaction in interstate commerce.
B. Unconscionability
Next, Defendant argues that the arbitration agreement is unconscionable.
[DN 18 at 4.]

He states that the agreement is a contract of adhesion “likely

presented to [Ms. White] within a lengthy stack of admissions paperwork,” and that
“there is an obviously gross disparity of bargaining power between the parties.”
[Id. at 5.]

Defendant also alleges that the procedural rules followed by JAMS, the

designated arbitrator, are insufficient to allow Defendant to fully present his case.
The doctrine of unconscionability is a narrow exception to the fundamental
rule of contract law 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.

See, e.g., Conseco Fin. Serv. Corp. v. Wilder, 47 S.W.3d 335,

341 (Ky. Ct. App. 2001) (finding arbitration clause was not unconscionable).
contract may be either procedurally or substantively unconscionable.

A

Procedural

unconscionability “pertains to the process by which an agreement is reached.” Id.
at 341 n.22.

In contrast, substantive unconscionability “refers to contractual terms

that are unreasonably or grossly favorable to one side and to which the disfavored

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party does not assent.”

Id. (citing Harris v. Green Tree Fin. Corp., 183 F.3d 173,

181 (3d Cir. 1999)).
The arbitration agreement at issue in this case is neither procedurally nor
substantively unconscionable.

First, the Supreme Court of Kentucky has said that

“[a]dhesion contracts,” including ones containing arbitration clauses, “are not per se
improper.” Schnuerle v. Insicht Commc’ns, Co. L.P., 376 S.W.3d 561, 576 (Ky.
2012).

Rather, when “[t]he [arbitration] clause [is] not concealed or disguised

within the form,” when its terms “are clearly stated,” and when “its effect is not
such as to alter the principal bargain in an extreme or surprising way,” it will not
be procedurally unconscionable. Id. at 576-77.

Here, the Court notes that the

arbitration agreement at issue: (1) is a stand-alone agreement; (2) contains four
printed pages in normal font; (3) contains a bold-face capital letter provision noting
waiver of right to a jury trial on its first page; (4) contains no limitation on type or
amount of damages claimed; (5) contains no limitation on causes of action; and (6)
contains a signature page titled in bold-face capital letters stating that the
agreement governs important legal rights and should be read carefully.

Taking

these factors into account, the arbitration agreement between Ms. White and
Golden Living center was not unconscionable from a procedural standpoint.
Defendant’s substantive unconscionability arguments are of similar import.
Under the FAA, Defendant’s allegations that arbitration will not afford him an
adequate opportunity to present his claims “[are] not a proper basis for refusing
enforcement of an arbitration clause under the doctrine of unconscionability.” Sun

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Healthcare Group, Inc. v. Dowdy, No. 5:13-CV-00169-TBR, 2014 WL 790916, at *13
(W.D. Ky. Feb. 26, 2014); see also GGNSC Louisville Hillcreek, LLC v. Warner, No.
3:13-CV-752-H, 2013 WL 6796421, at *9 (W.D. Ky. Dec. 19, 2013) (JAMS arbitration
rules, procedures, and costs are not substantively unconscionable).

Essentially,

Defendant’s arguments, at their core, “are nothing more than objections to
arbitration agreements in general, and therefore directly contradict the policy
embodied in the FAA.” Brookdale Sr. Living, Inc. v. Stacy, 27 F. Supp. 3d 776, 788
(E.D. Ky. 2014) (emphasis in original).

Once again, this Court need not entertain

the same arguments that it has rejected on numerous prior occasions. See
Preferred Care of Delaware, Inc. v. Hopkins, No. 5:15-CV-00191-GNS-LLK, 2016 WL
3546407, at *4-5 (W.D. Ky. 2016); Arnold v. Owensboro Health Facilities, L.P., No.
4:15-CV-00104-JHM, 2016 WL 502601, at *4-5 (W.D. Ky. Feb. 8, 2016) (collecting
cases).
C. Anti-Injunction Act
Lastly, Defendant contends that even if the arbitration agreement is
otherwise enforceable, this Court may not enjoin the parties from further pursing
the underlying Jefferson Circuit Court litigation.

[DN 18 at 6.]

“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 Cos., Inc. v.
Simons, 288 F.3d 878, 894 (6th Cir. 2002) (quoting Ultracashmere House, Ltd. v.
Meyer, 664 F.2d 1176, 1180 (11th Cir. 1981)) (internal citations omitted).

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Accordingly, “the district court’s authority to enjoin state-court proceedings is
subject to the legal and equitable standards for injunctions generally, including the
Anti-Injunction Act.”

Id.

In turn, the Anti-Injunction Act provides, “[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.
In Great Earth, after a trial court concluded that the parties’ dispute was
subject to arbitration, the Sixth Circuit held that “[a]n injunction of the state
proceedings [was] necessary to protect the final judgment of the district court.”
Great Earth, 288 F.3d at 894.

Such is the case here.

Having concluded that Ms.

White and Golden Living Center entered into a binding arbitration agreement
covering the claims at issue in the Jefferson Circuit Court case, the injunction
Plaintiffs request “properly falls within the exception for injunctions ‘necessary to
protect or effectuate [this Court’s] judgments.’” Id. (quoting 28 U.S.C. § 2283).
“Otherwise, [Defendant] would be permitted to circumvent [the] arbitration
agreement and in doing so, circumvent this Court’s judgment that [Defendant] be
compelled to arbitrate [Ms. White’s] claims.”
F. Supp. 3d 776, 792 (E.D. Ky. 2014).

Brookdale Sr. Living, Inc. v. Stacy, 27

This Court has often taken this same

approach in the past, and it does so again today. See, e.g., GGNSC Louisville Mt.
Holly LLC v. Stevenson, No. 3:16-CV-00423-JHM, 2016 WL 5867427, at *4 (W.D.
Ky. Oct. 6, 2016); GGNSC Louisville Hillcreek, LLC v. Watkins, No. 3:15-CV-902DJH, 2016 WL 815295, at *7 (W.D. Ky. Feb. 29, 2016); GGNSC Louisville Hillcreek,

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LLC v. Warner, No. 3:13-CV-752-H, 2013 WL 6796421, at *10 (W.D. Ky. Dec. 19,
2013).
IV. Conclusion
For the foregoing reasons, IT IS HEREBY ORDERED:
Plaintiff’s motion to compel arbitration and to enjoin Defendant [DN 5] is
GRANTED.

Defendant is ENJOINED from proceeding against Plaintiffs in the

Jefferson Circuit Court action until the conclusion of the arbitration. The parties
are COMPELLED to arbitrate all claims that are the subject of Defendant’s claims
in Jefferson Circuit Court.

Counsel shall promptly inform the Jefferson Circuit

Court of this Memorandum Opinion and Order.
This proceeding is STAYED until the conclusion of the ordered arbitration.
The parties shall inform the Court when arbitration is complete.
The telephonic status conference scheduled February 20, 2017 at 11:00
a.m. Eastern Time is CANCELLED.

February 8, 2017

CC: Counsel of Record

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