GGNSC Louisville St. Matthews LLC et al v. Phillips
MEMORANDUM OPINION AND ORDER by Chief Judge Joseph H. McKinley, Jr.granting pla 4 Motion to Expedite; Case STAYED until conclusion of ordered arbitration; denying dft 7 Motion to Dismiss; parties shall comply as set forth in Order. cc: Counsel(MLG)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
CIVIL ACTION NO. 3:17-CV-00406-JHM
GGNSC LOUISVILLE ST. MATTHEWS,
LLC, d/b/a/ GOLDEN LIVING CENTER –
ST. MATTHEWS, et al
MEMORANDUM OPINION AND ORDER
This matter is before the Court on the motion by plaintiffs GGNSC Louisville St.
Matthews LLC, d/b/a Golden Living Center – St. Matthews; GGNSC Administrative Services,
LLC; GGNSC Holdings, LLC; GGNSC Equity Holdings, LLC; GGNSC Equity Holdings II,
LLC; Golden Gate National Senior Care, LLC; Golden Gate Ancillary, LLC; GGNSC Clinical
Services, LLC; and GPH Louisville St. Matthews, LLC (“plaintiffs”) to expedite consideration
of their petition to compel arbitration (DN 4), as well as the motion by defendant Ilene Phillips to
dismiss. (DN 7.) These matters are ripe for decision.
Ilene Phillips was a resident of Golden Living Center – St. Matthews from October 1,
2016, until March 1, 2017.
Prior to her admittance, she signed an “Alternative Dispute
Resolution Agreement” (“ADR agreement”). (DN 1-3.) This agreement stated that Phillips
agreed to resolve “any disputes covered by this Agreement . . . exclusively by an ADR process . .
.” (Id. at 2.) Covered disputes included “violation[s] of a right claimed to exist under federal,
state, or local law . . . tort . . . consumer protection . . . negligence; gross negligence; malpractice;
and any alleged departure from any applicable . . . medical, health care, consumer, or safety
standards.” (Id. at 4.)
The ADR agreement states on its first page in bold capital letters that
“[t]his agreement is not a condition of admission to or continued residence in the facility.” (Id.
Underneath Phillips’ signature, the ADR agreement reads, “By 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.” (Id. at 8.)
During her residency, Phillips alleges that she suffered physical and emotional injuries
due to inadequate care, and her health and physical condition deteriorated beyond that caused by
the normal aging process. She filed a civil action in Jefferson Circuit Court against all of the
named plaintiffs in this case, as well as two other corporate entities, Redwood Holdings, LLC
and Providence Healthcare Management, Inc.; a named administrator of the facility, Joshua Lee
Schindler; and three unnamed defendants who provided care for Phillips while she was a
(DN 1-2.) The plaintiffs in this case then filed the present action, seeking to compel
arbitration of Phillips’ claims.
The plaintiffs have filed a motion for expedited
consideration of their petition. (DN 4.) Phillips did not respond to this motion, but she has filed
a separate motion to dismiss that the Court will consider. (DN 7.)
A. PHILLIPS’ MOTION TO DISMISS
As our sister court recently stated when faced with a similar case seeking to compel
arbitration of claims arising from a nursing home stay, “[w]e have been here before.” Richmond
Health Facilities-Madison, L.P. v. Shearer, 2017 WL 3273381, at *1 (E.D. Ky. Aug. 1, 2017).
The motion to dismiss makes numerous arguments in favor of dismissal, but all of the asserted
grounds for dismissal have been raised by defense counsel in other cases before this Court and
others, and they have been denied by the courts in those cases.
E.g., Owensboro Health
Facilities, L.P. v. Henderson, 2016 WL 2853569 (W.D. Ky. May 13, 2016); GGNSC Louisville
Hillcreek, LLC v. Watkins, 2016 WL 815295 (W.D. Ky. Feb 29, 2016). Thus, the Court will
only briefly address each.
1. FAILURE TO JOIN A NECESSARY PARTY
Phillips argues that the action should be dismissed for the failure to join the named
administrator who is a defendant in the state court action, as this individual is a necessary and
indispensable party under Fed. R. Civ. P. 19.
However, “[t]he Court can and will decide the
entire controversy without the administrators being named in the suit,” as the administrators
“have the same interest as [the corporate defendants] in this case: to compel arbitration.”
Watkins, 2016 WL 815295, at *2–3.
Nor will the existing parties “incur inconsistent
obligations” if the administrator is not joined. Id. at *3. Therefore, Rule 19 does not apply, and
the Court will not dismiss for the failure to join the administrator. Accord Owensboro Health
Facilities, L.P. v. Canary, 2017 WL 1015859, at *2 (W.D. Ky. Mar. 15, 2017); Henderson, 2016
WL 2853569, at *2; Preferred Care of Del, Inc. v. Blankenship, 2016 WL 7192127, at *2 (W.D.
Ky. Dec. 12, 2016).
2. FAILURE TO STATE A CLAIM
Phillips makes two arguments in favor of dismissal pursuant to Fed. R. Civ. P. 12(b)(6).
First, she argues that the agreement is unenforceable under the Federal Arbitration Act (“FAA”)
as it does not evidence a transaction involving interstate commerce. However, “[m]any cases
have found that the FAA applies to arbitration agreements involving nursing home residents,”
with these cases recognizing “that it would be impracticable for the nursing home to procure all
goods necessary for the daily operations purely through intrastate channels.” Preferred Care of
Del., Inc. v. Crocker, 173 F. Supp. 3d 505, 514 (W.D. Ky. 2016) (citations omitted). Thus, the
Court rejects this argument.
And second, Phillips argues that arbitration agreement is unconscionable. This argument
is “baseless,” as “[t]here was nothing either procedurally or substantively unconscionable about
this arbitration agreement.” Watkins, 2016 WL 815295, at *5–6. Voluminous paperwork and
disparate bargaining power alone do not make an arbitration agreement unconscionable,
especially one that clearly indicates it is not required for admission. Thus, the Court rejects this
argument. Accord Canary, 2017 WL 1015859, at *3; Henderson, 2016 WL 2853569, at *2;
Blankenship, 2016 WL 7192127, at *2.
3. LACK OF SUBJECT MATTER JURISDICTION
Phillips argues that this Court lacks subject matter jurisdiction over the present action, as
the case neither arises under federal law nor has diverse parties. These arguments are derivative
of those previously discussed. The Court found in regards to Phillips motion to dismiss for
failure to state a claim that the transaction at issue implicates interstate commerce, thereby
triggering the FAA. Thus, the case arises under federal law. And Phillips argument as to a lack
of diversity relies upon her prior argument as to the named administrator in the state court action
being a necessary party in the present case. According to Phillips, because the administrator
must be joined, complete diversity will not exist once he is brought into this action as a plaintiff.
But the Court has already determined that the administrator is not a necessary party. Therefore,
based upon the plaintiffs who are properly in the case at this time, complete diversity exists. As
such, the Court rejects Phillips argument that the Court lacks subject matter jurisdiction. Accord
Watkins, 2016 WL 815295, at *2.
4. FAILURE TO AUTHENTICATE
Phillips argues that the action should be dismissed since the plaintiffs have failed to
authenticate the ADR agreement. As our sister court has stated in a similar case,
Authentication is a threshold — but relatively simple —
requirement. To rely on a document, a party is required to show
enough evidence to “support a finding” that the document is what
the party says it is. Fed. R. Evid. 901(a). To determine whether that
burden is met, the Court can consider the agreement's appearance,
contents, substance, and characteristics. See Fed. R. Evid.
Preferred Care, Inc. v. Howell, 2016 WL 4470746, at *2 (E.D. Ky. Aug. 19, 2016). The Court
finds that the plaintiffs have met that burden. Phillips points to nothing in the document to which
the Court should give enhanced attention, instead simply noting that the FAA requires arbitration
agreements to be made in writing.
The document’s appearance, contents, substance, and
characteristics all appear ordinary for a case of this nature, and with Phillips giving the Court no
reason to question that the document is what the plaintiffs say it is, the Court rejects Phillips
argument in favor of dismissal. Accord Howell, 2016 WL 4470746, at *2; GGNSC Vanceburg,
LLC v. Hanley, 2014 WL 1333204, at *8 (E.D. Ky. Mar. 28, 2014).
5. COLORADO RIVER ABSTENTION
Phillips argues that the Court should abstain from exercising jurisdiction pursuant to
Colorado River Water Conservation District v. United States, 424 U.S. 800, 817 (1976). Under
Colorado River, if there are parallel state and federal actions, the Court is to weigh eight factors
in determining if abstention is proper. The factors include
(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 statecourt action to protect the federal plaintiff's rights; (7) the relative
progress of the state and federal proceedings; and (8) the presence
or absence of concurrent jurisdiction.
Great Earth Companies, Inc. v. Simons, 288 F.3d 878, 886 (6th Cir. 2002). The Court in
Watkins analyzed all eight considerations and found that, in a very similar case, “[n]early every
factor weighs against abstention,” Watkins, 2016 WL 815295, at *4.
First, property is not at issue. Second, this Court is just as
convenient for the parties as the state court; the two courts sit in
the same city. Third, the Court will compel arbitration here, which
will completely avoid any piecemeal litigation. Fourth, this Court
obtained jurisdiction over the arbitration issue first. Fifth, the
governing law here, the FAA, is federal. Sixth, it is unlikely that
the state court will adequately protect [the Plaintiffs’] contractual
right to arbitrate in light of the Kentucky Supreme Court's recent
holding in Extendicare Homes, Inc. v. Whisman, [478 S.W.3d 306
(Ky. 2015)]. Seventh, the proceedings are at the same point. And
eighth, there is concurrent jurisdiction.
The analysis in this case is nearly identical, with the only exception being that the facts of this
case do not implicate the recently reversed Whisman decision. See Kindred Nursing Centers Ltd.
P’Ship v. Clark, 137 S. Ct. 1421 (2017). However, this one factor does not tip the scales in favor
of abstention. Thus, the Court will not abstain from exercising jurisdiction. Accord Canary,
2017 WL 1015859, at *2; Henderson, 2016 WL 2853569, at *2; Blankenship, 2016 WL
7192127, at *2.
6. ANTI-INJUNCTION ACT
Finally, Phillips argues that enjoining the state court action would violate the AntiInjunction Act, and the case should thus be dismissed.
However, “[a]n injunction when
compelling arbitration falls into the ‘necessary . . . to protect or effectuate [the district court’s
own] judgments’ exception to the Anti-Injunction Act.” Watkins, 2016 WL 815295, at *6
(quoting Great Earth, 288 F.3d at 893). Therefore, the Court will not dismiss the action.
B. PETITION TO COMPEL ARBITRATION
The Court now turns to the plaintiffs’ petition to compel arbitration.
agreement provides that the FAA, 9 U.S.C. §§ 1–16, shall govern the agreement. (DN 1-3, at 6.)
“When asked by a party to compel arbitration under a contract, a federal court must determine
whether the parties agreed to arbitrate the dispute at issue.” Stout v. J.D. Byrider, 228 F.3d 709,
714 (6th Cir. 2000) (citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.
614, 626 (1985)). Specifically,
[w]hen considering a motion to stay proceedings and compel
arbitration under the Act, a court has four tasks: first, it must
determine whether the parties agreed to arbitrate; second, it must
determine the scope of that agreement; third, if federal statutory
claims are asserted, it must consider whether Congress intended
those claims to be nonarbitrable; and fourth, if the court concludes
that some, but not all, of the claims in the action are subject to
arbitration, it must determine whether to stay the remainder of the
proceedings pending arbitration.
Stout, 228 F.3d at 714 (citing Compuserve, Inc. v. Vigny Int'l Fin., Ltd., 760 F. Supp. 1273, 1278
(S.D. Ohio 1990)); see also N. Fork Collieries LLC v. Hall, 322 S.W.3d 98, 102 (Ky. 2010)
(“The task of the trial court confronted with” a motion to compel arbitration “is simply to decide
under ordinary contract law whether the asserted arbitration agreement actually exists between
the parties and, if so, whether it applies to the claim raised in the complaint. If an arbitration
agreement is applicable, the motion to compel arbitration should be granted”) (citations omitted).
In this case, Phillips and the plaintiffs entered into an agreement to arbitrate (DN 1-3) that
covers the exact type of claims Phillips has asserted in the state court action. All of Phillips
claims allege some form of negligent care or supervision or a failure to adhere to statutory
standards of care, and the agreement explicitly requires arbitration of “any disputes covered by
this Agreement . . . [including] violation[s] of a right claimed to exist under federal, state, or
local law . . . tort . . . consumer protection . . . negligence; gross negligence; malpractice; and any
alleged departure from any applicable . . . medical, health care, consumer, or safety standards.”
(DN 1-3, at 2–4.) Further, there are no federal claims asserted that are precluded from arbitration.
Finally, the Court must determine whether to stay the remainder of the proceedings.
Under the Anti-Injunction Act, a district court may enjoin state court proceedings in order “to
protect or effectuate its judgments,” among other reasons. 28 U.S.C. § 2283. Thus, in order to
effectuate its decision compelling arbitration, the Court will enjoin the state court action pending
For the reasons set forth above, IT IS HEREBY ORDERED as follows:
(1) The plaintiffs’ motion for expedited consideration of its petition to compel arbitration (DN 4)
is GRANTED. The petition to compel arbitration (DN 1) is GRANTED. The defendants are
ENJOINED from proceeding against the plaintiffs in the Jefferson Circuit Court action until the
conclusion of the ordered arbitration. The parties are COMPELLED to arbitrate all claims
which are the subject of the defendant’s claims in Jefferson Circuit Court. Counsel shall
promptly inform the Jefferson Circuit Court of this Memorandum Opinion and Order.
(2) This proceeding is STAYED until the conclusion of the ordered arbitration.
(3) The defendant’s motion to dismiss (DN 7) is DENIED.
August 9, 2017
cc: counsel of record
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