GGNSC Chestnut Hill LLC et al v. Schrader
Filing
49
Judge Douglas P. Woodlock: MEMORANDUM AND ORDER entered granting 2 Motion to Compel; finding as moot 48 Motion status conference (Woodlock, Douglas)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
GGNSC CHESTNUT HILL LLC
d/b/a GOLDEN LIVING CENTER HEATHWOOD; GGNSC
ADMINISTRATIVE SERVICES LLC;
GOLDEN GATE NATIONAL SENIOR
CARE, LLC; GGNSC HOLDINGS
LLC,
Plaintiffs,
v.
JACKALYN M. SCHRADER, AS THE
PERSONAL REPRESENTATIVE OF
THE ESTATE OF EMMA J.
SCHRADER,
Defendant.
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CIVIL ACTION
NO.16-10525-DPW
FINDINGS OF FACT
AND
CONCLUSIONS OF LAW
March 31, 2018
Jackalyn Schrader, is the personal representative of her
mother’s estate.
She brought a wrongful death action in state
court as a result of the death of her mother at a nursing home.
In response, the nursing home entities (collectively “GGNSC”)1
1
The GGNSC entities, the four Plaintiffs in this action,
are: GGNSC Chestnut Hill LLC d/b/a Golden Living Center
Heathwood, a limited liability company organized under the laws
of the State of Delaware with its principal place of business
located at 188 Florence Street, Chestnut Hill, Massachusetts,
doing business as Golden Living Center Heathwood, a long-term
care facility, within the meaning of 940 C.M.R. § 4.01, located
at 188 Florence Street in Chestnut Hill; GGNSC Administrative
Services, LLC, a management company for GGNSC Chestnut Hill LLC,
organized under the laws of the state of Delaware with its
Q:\PENDING ORDERS\Schrader.docx
3/31/2018 11:48 AM
brought this federal court action to compel Jackalyn Schrader to
arbitrate the dispute pursuant to the Federal Arbitration Act.
I. THE BROAD AND CONTESTED LEGAL LANDSCAPE
This case is an example of the many skirmishes that
continue along the recently intensifying - but wavering - battle
line between those who support resolution of disputes by
arbitration and those who support resolution of disputes by
conventional litigation.
There has historically been a strong public policy
preference toward arbitration both federally and in the state of
Massachusetts.
See Mastrobuono v. Shearson Lehman Hutton, Inc.,
514 U.S. 52, 62 (1995) (federal policy favoring arbitration)
[Stevens, J]; Miller v. Cotter, 863 N.E.2d 544, 547 (2007)
(Massachusetts policy favoring arbitration).
So long as
arbitration agreements are not invalidated through contract
defenses, such as fraud, duress, or unconscionability, they have
generally been viewed as valid in the nursing home context.
See
Miller, 863 N.E.2d at 544.
principal place of business in Texas; Golden Gate National
Senior Care, LLC, a management company for GGNSC Chestnut Hill
LLC, organized under the laws of the state of Delaware with its
principal place of business in Texas; and GGNSC Holdings LLC,
also a Delaware company with its principal place of business in
Texas. GGNSC Chestnut Hill LLC is a subsidiary of and directly
owned by GGNSC Holdings LLC.
2
Nevertheless, a contrary public policy view has asserted
itself in some state courts and then has been rejected by the
Supreme Court of the United States.
See, e.g., Extendicare
Homes, Inc. v. Whisman, 478 S.W.3d 306 (Ky. 2015) rev’d sub nom.
Kindred Nursing Center, Ltd. v. Clark, 137 S. Ct. 1421 (2017);
Brown v. Genesis Healthcare Corp., 724 S.E.2d 250 (W.Va. 2011)
rev’d sub nom. Marmet Health Care Center, Inc. v. Brown, 565
U.S. 530, 132 S.Ct 1201 (2012) (per curiam).
In 2016, during the last year of the Obama administration,
the most concerned federal administrative agency rejected
arbitration agreements in the nursing home context when the
Department of Health and Human Services Center for Medicare and
Medicaid Services (“CMS”) issued a new rule (the “2016 Rule”)
effective November 28, 2016, prohibiting Medicare and Medicaidparticipating long-term care facilities from entering “into predispute binding arbitration agreements with their residents or
their representatives.”
81 Fed. Reg., 68800 (October 4, 2016)
(to be codified at 42 C.F.R. § 483.70(n)).
By terms, that new
rule, however, did not apply retroactively, and CMS made clear
that it would “not have any effect on existing arbitration
agreements or render them unenforceable.” Id.
Ultimately, I
need not weigh in on the validity of the CMS rule because I am
examining an agreement that was signed in 2013, well before this
rule was enacted.
It is sufficient for purposes of the matter
3
before me to observe that the CMS rule is not to be applied
retroactively.
Moreover, enforcement of the 2016 Rule has been enjoined
and the new Trump administration has proposed a newer rule to
replace it.
Shortly before the effective date of the 2016 Rule,
Judge Mills in the Northern District of Mississippi entered a
preliminary injunction barring its enforcement.
Am.Health Care
Ass’n v. Burwell, 217 F. Supp. 3d 921 (N.D. Miss. 2016).
While
the government had appealed this decision to the United States
Court of Appeals for the Fifth Circuit in the waning days of the
Obama administration, see Am.Health Care Ass’n v. Price, appeal
docketed sub nom. Am.Health Care Ass’n v. Burwell, No. 17-60005
(5th Cir. Jan. 6, 2017), the new administration published a
proposed revised rule reversing the 2016 Rule banning nursing
home arbitration, 82 Fed. Reg. 26649 (June 8, 2017), 2017 WL
2462165, and coincidentally moved to dismiss its appeal of Judge
Mills’s injunction.
Am. Health Ass’n v. Price, No. 17-60005
(5th Cir. Jun. 2, 2017).
Prescinding from discussion of the resolution of the
arbitration question as a categorical matter at the highest
judicial and executive levels, I must also note that even within
regimes where the general applicability of a policy favoring
arbitration is acknowledged, or at least finally acquiesced in,
hand to hand combat over the conditions precedent can be a proxy
4
for the broader controversy regarding the public policy of
dispute resolution by arbitration.2
2
Thus, here, Jackalyn
I note that the state courts to which remands were directed by
the Supreme Court of the United States seem prepared to rely on
alternative contractual defense grounds to bar arbitration when
a categorical bar to arbitration is found violative of the
Federal Arbitration Act. In the Kindred Nursing Center
litigation, involving consolidation of two cases, the Supreme
Court of the United States remanded only one of the two cases.
Kindred Nursing Center, Ltd. v. Clark, 137 S.Ct. 1421, 1429
(2017). As to the Clark estate, the Supreme Court reversed the
Kentucky Supreme Court’s judgment, ruling that “the court must
now enforce the Clark-Kindred arbitration agreement,” because
the decision of the Kentucky Supreme Court “was based
exclusively on the clear-statement rule that . . . violates the
FAA.” Id. As to the Wellner estate, the Supreme Court was
“uncertain as to whether . . . an impermissible taint” in the
form of the clear-statement rule influencing the way in which
the Kentucky Supreme Court interpreted the Wellner power of
attorney (as insufficiently broad to give Beverly the authority
to execute an arbitration agreement for Joe). Id. The Supreme
Court made clear that “[i]f that interpretation of the document
is wholly independent of the . . . clear-statement rule, then
nothing we have said disturbs it.” Id. Therefore, the court
was instructed on remand to “determine whether it adheres, in
the absence of the clear-statement rule, to its prior reading of
the Wellner power of attorney.” Id.
On remand, in Wellner, the Kentucky Supreme Court held that
their prior decision should remain undisturbed because it had
not been “tainted” by the clear-statement rule. See Kindred
Nursing Center, Ltd. v. Wellner, 533 S.W.3d 189, petition for
certiorari filed, No. 17-1318 (U.S. Mar. 20, 2018).
In the Brown litigation, the Supreme Court of the United
States, remanded three consolidated cases, Marmet Health Care
Center, Inc. v. Brown, 565 U.S. 530, 534, 132 S.Ct. 1201, 1204
(2012) (per curiam). Family members of patients in those cases
signed arbitration agreements with the nursing home on behalf of
the patients. Each contract included a clause requiring the
parties to arbitrate all disputes. West Virginia’s Supreme
Court of Appeals held that “as a matter of public policy under
West Virginia law, an arbitration clause in a nursing home
admission agreement adopted prior to an occurrence of negligence
that results in a personal injury or wrongful death, shall not
be enforced to compel arbitration of a dispute concerning the
5
Schrader declined to concede that a valid agreement to arbitrate
was formed as a matter of general contract law.
Given the
factual dispute about contract formation, I have found it
necessary to act as factfinder on the question.
The following
Findings of Fact and Conclusions of Law set forth my
determination that a valid agreement was formed and that
Jackalyn Schrader must be compelled to arbitrate her claims
against GGNSC.
II. FINDINGS OF FACT
On February 4, 2013, Jackalyn Schrader’s mother, Emma
Schrader (“Ms. Schrader”) was transferred by ambulance and
admitted to Golden Living Center Heathwood (hereinafter
negligence.” 565 U.S. at 532. The West Virginia court
“concluded that the FAA does not pre-empt the state public
policy.” Id. Because the West Virginia court proposed an
“alternative holding that the particular arbitration clauses . .
. were unconscionable,” the Supreme Court of the United States
remanded the case. Id. at 533-34. In particular, it was
“unclear . . . to what degree the state court’s alternative
holding was influenced by the invalid, categorical rule . . .
against predispute arbitration agreements.” Id. at 534. Thus,
the Supreme Court directed the West Virginia court to consider
on remand whether “absent that general public policy, the
arbitration clauses . . . are unenforceable under state common
law principles that are not specific to arbitration and preempted by the FAA.” Id.
On remand, the West Virginia Supreme Court of Appeals reversed
the two trial court orders compelling arbitration and permitted
the parties to raise and develop their arguments regarding
unconscionability anew before the trial court. Brown v. Genesis
Healthcare Corp., 729 S.E.2d 217, 223 (W.Va. 2012). There have
been no reported decisions in that litigation since then.
6
“Heathwood”) in Chestnut Hill.
care that day at Heathwood.
Ms. Schrader began receiving
Aside from the Consent to Treat
document, which authorized the nursing staff to commence
treatment, no paperwork or agreements were completed in order
for Ms. Schrader to be admitted and begin receiving care at
Heathwood.
Katelyn LaTouf was the Administration Coordinator at the
time of Ms. Schrader’s admittance to Heathwood.
She was
responsible for completing admissions paperwork with new
patients.
As a matter of custom and practice, Ms. LaTouf would
present new residents with a package or booklet of information
and agreements (apart from the Consent to Treat, which was
executed with the nursing staff).
Ms. LaTouf has no specific
memory of meeting Emma or Jackalyn Schrader or providing them
with the paperwork now in dispute.
While Ms. LaTouf usually
discussed the paperwork with patients and their representatives,
if a patient had a representative who was unable to sign
paperwork at the time of admittance at Heathwood, it was Ms.
LaTouf’s practice either to mail the paperwork to the
representative or to leave it for the representative to complete
at a later time.
It was Ms. LaTouf’s general practice to allow
the families of newly admitted patients to take the package of
agreements, including the arbitration agreement, home to
consider and have legal counsel review if they wished.
7
However,
on February 4, 2013, after Ms. Schrader was admitted to
Heathwood, Jackalyn Schrader signed a document describing Ms.
Schrader’s “Inventory of Personal Possessions.”
As part of her duties as a member of the nursing staff,
Vanessa Desesa, RN, made a progress note in Emma Schrader’s file
on February 11, 2013 at 15:30, which stated, in part: “daughter
will be in to sign paperwork and be present for Ativan trial.”
Jackalyn Schrader signed three documents on February 11, 2013,
including: a DNR Order, a No CPR Order, and a Consent to
Withhold CPR.
Jackalyn Schrader completed additional documents
on February 14, 2013.
February 19, 2013.
She signed the Admissions Agreement on
In addition to the Admissions Agreement,
Jackalyn Schrader signed four other documents on February 19,
2013.
On February 27, 2013, Jackalyn Schrader signed six
documents.
Three signed documents, including the Arbitration
Agreement, were left undated.
Ms. LaTouf testified that she
signed the Arbitration Agreement on February 11, 2013 and does
not recall personally seeing Jackalyn Schrader sign the
agreement.
Jackalyn Schrader testified that the signature on the
Durable Power of Attorney document appeared to be hers; the
signature on the Admissions Agreement appeared to be hers; the
signature on the Arbitration Agreement appeared to be hers; the
8
signature on the Acknowledgement of Receipt of the Department of
Public Health Brochure appeared to be hers; the signature on the
Authorization for Assignment of Insurance Benefits appeared to
be hers; the signature on the Acknowledgment Page Regarding
Valuables appeared to be hers; and the signature on the Mass
Health Application appeared to be hers.
Jackalyn Schrader
testified that it was her common practice to sign paperwork in
blue ink.
The documents presented to Jackalyn Schrader as
initially offered during her testimony were black and white
copies, and she stated that she could not verify her signatures
unless she saw them in blue ink.
In viewing the original and/or
color copied versions submitted thereafter that Jackalyn
Schrader signed, I find that she signed the following documents
in blue ink: the Arbitration Agreement; Acknowledgement of
Receipt of the Department of Public Health Brochure); Admission
Agreement (dated 2/19/13); Authorization for Assignment of
Insurance Benefits (dated 2/19/13); and Document Opening an RFMS
Banking Account (dated 2/19/13).
Ms. LaTouf testified that there was no requirement to sign
the Arbitration Agreement for continued care at Heathwood.
The
Arbitration Agreement contained a signature line to accept the
agreement and a separate signature line to decline the
agreement.
Nevertheless, although there was an option to either
accept or decline the Arbitration Agreement, Ms. LaTouf only
9
highlighted below the signature line that indicated acceptance
of the agreement.
Near the top of the first page of the Arbitration
Agreement, in bold capital letters, the Arbitration Agreement,
states: “This agreement is not a condition of admission or
continued residency in the facility” (emphasis in original).
On
the top of the signature page of the Arbitration Agreement, the
Agreement states in bold capital letters: “His [sic] agreement
governs important legal rights. Please read it carefully and in
its entirety before signing.”
III. CONCLUSIONS OF LAW
The Federal Arbitration Act provides that:
A written provision in any maritime transaction or a
contract evidencing a transaction involving commerce to
settle by arbitration a controversy thereafter arising
out of such contract or transaction, or the refusal to
perform the whole or any part thereof, or an agreement
in writing to submit to arbitration an existing
controversy arising out of such a contract, transaction,
or
refusal,
shall
be
valid,
irrevocable,
and
enforceable, save upon such grounds as exist at law or
in equity for the revocation of any contract.
9 U.S.C. § 2.
Healthcare, and specifically a transaction in
which an individual is admitted to a nursing home, is a
commercial activity to which the federal law applies.
Miller,
863 N.E.2d at 544.
In determining whether a motion to compel arbitration
should be granted, a court must determine whether “(i) there
10
exists a written agreement to arbitrate, (ii) the dispute falls
within the scope of that arbitration agreement, and (iii) the
party seeking an arbitral forum has not waived its right to
arbitration.”
Gove v. Career Sys. Dev. Corp., 689 F.3d 1, 4
(1st Cir. 2012) (quoting Combined Energies v. CCI, Inc., 514
F.3d 168, 171 (1st Cir. 2008)).
“[A]rbitration is a matter of
contract” and “principles of state contract law control the
determination of whether a valid agreement to arbitrate exists.”
Id. at 3 (citations and internal quotation marks omitted).
Thus, arbitration agreements can be “invalidated by ‘generally
applicable contract defenses, such as fraud, duress, or
unconscionability.’”
Bekele v. Lyft, Inc., 199 F. Supp. 3d 284,
292 (D. Mass. 2016) [Saylor, J.] (quoting AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 339 131 S. Ct. 1740 (2011)).
A.
Validity
I first consider whether there is a written agreement to
arbitrate.
See id. at 294.
Under Massachusetts law, in order
to have a valid contract there must be an offer, acceptance, and
consideration.
Id.
“Formation of a contract is judged by the
objective conduct of the parties, rather than their subjective
intent.”
Id.
(citing Brewster Wallcovering Co. v. Blue
Mountain Wallcovering, Inc., 864 N.E.2d 518, 532 n.35 (Mass.
App. Ct. 2007)).
Jackalyn Schrader argues that there is no
valid contractual agreement because there was no “meeting of the
11
minds,” meaning that significant, material terms were still
being negotiated, Situation Mgmt. Sys., Inc. v. Malouf, Inc.,
724 N.E.2d 699, 703 (Mass. 2000) [Ireland, J], because she did
not fully execute the agreement.
I disagree.
Jackalyn Schrader was provided a packet of paperwork, which
included an Arbitration Agreement that she was free to reject or
accept.
I find that the Arbitration Agreement’s signature page
was provided to Jackalyn Schrader along with the entire
agreement in a package of paperwork.
I find further that the
signature that appears on the original Arbitration Agreement, in
blue ink, is that of Jackalyn Schrader.
Under the
circumstances, absent fraud which I do not find, Jackalyn
Schrader’s suggestion of failure to read or understand the
agreement given to her, “does not free [her] from its
obligations.”
Miller, 863 N.E.2d at 545.
In sum, there is no
evidence that Jackalyn Schrader did not assent to the terms of
the Arbitration Agreement that she signed.
Thus, a valid
contractual agreement to arbitrate exists.
B.
Unconscionability
Jackalyn Schrader contends that even if a valid agreement
exists, the contract is invalid because it is unconscionable.
Unconscionability is determined on a case by case basis, and
courts must pay particular attention to “whether, at the time of
the execution of the agreement, the contract provision could
12
result in unfair surprise and was oppressive to the allegedly
disadvantaged party.”
Miller, 863 N.E.2d at 545.
Unconscionability is a question of law, which must be determined
based on the setting, purpose, and effect of the contract.
Id.
at 537.
At the outset, I consider whether the contract was
procedurally unconscionable.
Procedural unconscionability is
present when the “circumstances surrounding the formation of the
contract show that the aggrieved party had no meaningful choice
and was subject to unfair surprise.”
Barrasso v. Macy’s Retail
Holdings, Inc., 2016 WL 1449567, at *5 (D. Mass.
Apr. 12, 2016).
In Licata v. GGNSC Malden Dexter LLC, the
plaintiff argued that the arbitration agreement at issue was
unconscionable “because it was executed at a late hour, by an
unsophisticated individual, under circumstances where the
parties had unequal bargaining power, and he was compelled to
sign based on his mother’s need for treatment.”
No. SUCV2011-
02815-A, 2012 WL 1414881, at *4 (Mass. Super. Mar. 14, 2012),
aff'd, 2 N.E.3d 840 (Mass. 2014).
Despite those circumstances,
the Licata court found that the agreement was not unconscionable
because there was no evidence of undue influence to sign the
agreement, the agreement clearly indicated that it was not
mandatory and should be read carefully, and there was a 30-day
revocation period.
Id.
13
The arbitration agreement given to Jackalyn Schrader
clearly indicated in bold-face capital letters that the
agreement was not mandatory for continued care; the agreement
also prominently stated at the top of the signature page that
the entire agreement should be read carefully.
Furthermore, the
agreement provided a 30-day revocation period in which Jackalyn
Schrader could have sent written notice of her wish to revoke
acceptance of the agreement.
Ms. LaTouf’s action of
highlighting only one of the signature lines did not amount to
undue influence, especially in light of the fact that the
agreement was not mandatory and was revocable.
Jackalyn
Schrader also argues that the agreement was unconscionable
because it was not explained to her.
This argument fails
because there is no duty to explain the terms of a written
contract to the other party in an arms-length transaction.
Sec.
Indus. Ass'n v. Connolly, 703 F. Supp. 146, n. 10 (D. Mass.
1988), aff'd, 883 F.2d 1114 (1st Cir. 1989).
Overall, the
admissions process here does not indicate unfairness or lack of
meaningful choice.
See Miller, 863 N.E.2d at 546 (“[N]othing in
the circumstances of an ordinary admission to a nursing home . .
. would suggest unfairness or oppression necessary to support a
claim of procedural unconscionability.”).
While Jackalyn Schrader makes no compelling substantive
unconscionability argument, in the interests of completeness, I
14
briefly consider whether the arbitration agreement is
substantively unconscionable.
A contract with terms that are
“oppressive to one party” is substantively unconscionable.
Barrasso, 2016 WL 1449567, at *5.
The Supreme Judicial Court in Miller considered whether an
arbitration agreement signed by the plaintiff there on behalf of
his father, who had been admitted to a nursing home, was
unconscionable.
863 N.E.2d at 545.
In determining that the
agreement was not substantively unconscionable, the SJC focused
on the fact that the agreement was “bilateral in that either
party could invoke its provisions” and that the plaintiff “had a
unilateral right of recision for thirty days after execution of
the agreement.”
Id.
Based on these touchstones, the agreement
at issue is not substantively unconscionable.
The agreement
here is bilateral because both parties are bound to arbitration.
Jackalyn Schrader had the right to rescind the arbitration
agreement within 30 days of signing.
There is no evidence of
substantive unconscionability with regard to the arbitration
agreement in question.
C.
Arbitrability of Wrongful Death Claims
Finally, I consider whether Jackalyn Schrader’s claims, as
the executor of the estate, fall within the scope of the
agreement.
The text of the Arbitration Agreement at issue
states that the term “Resident” applies to “the Resident, all
15
persons whose claim is or may be derived through or on behalf of
the Resident, including any next of kin, guardian, executor,
administrator, legal representative, or heir of the Resident,
and any person who has executed this Agreement on the Resident’s
behalf.”
Jackalyn Schrader contends that even if the
arbitration agreement is valid, and despite the language in the
agreement that binds executors and those who derive their claims
on behalf of the resident, this wrongful death claim cannot be
arbitrated because wrongful death beneficiaries are not parties
to the Arbitration Agreement.
GGNSC contends by contrast that
the Defendant’s Massachusetts wrongful death claim is derivative
of a claim that Ms. Schrader could have brought herself if she
had survived, making the wrongful death beneficiary claims
subject to arbitration.
In determining the scope of the agreement, I must apply
ordinary state law principles governing the formation of
contracts.
Grand Wireless, Inc. v. Verizon Wireless, Inc., 748
F.3d 1, 7 (1st Cir. 2014).
While a contract cannot generally
bind a non-party, there are exceptions under which a nonsignatory may be bound.
Id. at 9-10.
As relevant here, the law
with regard to whether beneficiaries in a wrongful death suit
are bound by arbitration agreements that they did not sign is
unsettled, with no uniformity among courts throughout the
country.
Compare Bales v. Arbor Manor, No. 4:08CV3072, 2008 WL
16
2660366, at *8 (D. Neb. July 3, 2008) (“Because of the
derivative nature of a wrongful death action in Nebraska, I
conclude that the arbitration must be enforced against the
plaintiff to the same extent it would have been enforced against
the plaintiff’s decedent had he survived.”) with Golden Gate
Nat'l Senior Care, LLC v. Beavens, 123 F. Supp. 3d 619, 633-34
(E.D. Pa. 2015) (determining that “survival action” claims
brought by the estate of the deceased “belong” to the decedent
and pass to the estate by “the terms of the will or intestacy”
and therefore fall within the scope of an arbitration agreement
entered into by the deceased, but that wrongful death claims are
“separate and distinct cause[s] of action from a survival
action” and are not the deceased’s causes of action such that
“an arbitration agreement signed by the decedent or his or her
authorized representative is not binding upon non-signatory
wrongful death beneficiaries”) [Stengel, J].
Accordingly,
whether non-signatory beneficiaries of an estate are bound by an
arbitration agreement entered into by the deceased turns on
whether wrongful death claims in Massachusetts are considered
derivative or independent.
As a starting point, I look to the only opinion discussing
Massachusetts law I have found or been directed to that is
directly on-point.
In Oahn Nguyen Chung v. StudentCity.com,
Inc., No. CIV.A. 10-10943-RWZ, 2011 WL 4074297 (D. Mass. Sept.
17
9, 2011), the parents of a student who died in a boating
accident while attending a trip organized by StudentCity, sued
for wrongful death as executors of their child’s estate.
My
colleague, Judge Zobel, then considered whether the decedent’s
consent to arbitration foreclosed the executors of the estate
from bringing a wrongful death claim on behalf of the
statutorily designated beneficiaries.
Id.
Judge Zobel decided
that while the student had signed an arbitration agreement prior
to attending the trip, the student’s parents were not bound by
the arbitration agreement because “wrongful death is not
derivative of the decedent’s claim,” so “it would be
inconsistent with fundamental tenets of contract law to
nonetheless hold that those beneficiaries, who did not sign an
arbitration agreement, are bound by the decision of the
decedent, whose estate holds no interest in this claim.”
Id.
On reconsideration, while declining to reverse that holding, she
made clear that Massachusetts courts have not “squarely decided
whether a Massachusetts wrongful death claim is covered by a
decedent’s arbitration agreement,” and that “other jurisdictions
are divided on the question.”
Oahn Nguyen Chung v.
StudentCity.com, Inc., No. CIV.A. 10-10943-RWZ, 2013 WL 504757,
at *1 (D. Mass. Feb. 12, 2013); see also Angelo v. USA
Triathlon, No. CIV.A. 13-12177-LTS, 2014 WL 4716195, at *3 (D.
Mass. Sept. 19, 2014) (Sorokin, J) (agreeing with Chung, and
18
applying it in the context of an indemnity agreement).
I
respectfully disagree with the holding in Chung because the law
in Massachusetts has moved toward interpreting wrongful death
claims as derivative of the decedent’s cause of action.
The Massachusetts Wrongful Death Statute provides that “a
person who (1) by his negligence causes the death of a person,
or (2) by willful, wanton or reckless act causes the death of a
person under such circumstances that the deceased could have
recovered damages for personal injuries if his death had not
resulted . . . shall be liable in damages.” Mass. Gen. Laws
ch. 229, § 2.
At one time it was “undisputed that wrongful
death actions in Massachusetts were independent” of claims that
a decedent would have been able to bring had the decedent
survived.
Ellis v. Ford Motor Co., 628 F. Supp. 849, 858 (D.
Mass. 1986) (emphasis added) (internal quotation marks omitted).
By the late 1980s, however, courts began acknowledging that
“various amendments made to the wrongful death statute beginning
in 1958 evidence the legislature’s intention to overrule this
earlier view and to establish that a claim for wrongful death in
Massachusetts is derivative from and not independent of the
decedent’s personal injury claim.”
Id.
More recently, in
interpreting the Massachusetts wrongful death statute, several
courts, including judges of my own, have agreed with the
proposition that “Massachusetts law specifies that claimants’
19
rights are necessarily derivative of the decedent because they
can only recover if the decedent died ‘under such circumstances
that the deceased could have recovered damages for personal
injuries if his death had not resulted.’”
N. Assur. Co. of Am.
v. Wells, No. CIV.A. 12-10238-DPW, 2013 WL 2250985, at *6 (D.
Mass. May 21, 2013); Johnson v. Brown & Williamson Tobacco
Corp., 122 F. Supp. 2d 194, 209 (D. Mass. 2000) (one must assert
wrongful death claims on behalf of the decedent based upon
claims the decedent could have brought had the decedent
survived).
3
Furthermore, Massachusetts law only allows one to bring a
wrongful death claim as the executor or administrator of the
decedent’s estate, and there is no separate cause of action for
3
While the phrase “under such circumstances that the deceased
could have recovered damages for personal injuries if his death
had not resulted” does not unambiguously modify wrongful death
actions brought under negligence, the First Circuit has held
that to prevail on a negligence claim in a wrongful death
context, a plaintiff must prove that the defendant owed the
decedent a duty of reasonable care, that the defendant breached
this duty, that damage resulted, and that there was a causal
relation between the breach of the duty and the damage.
Cracchiolo v. E. Fisheries, Inc., 740 F.3d 64, 69 (1st Cir.
2014). The elements in a wrongful death claim mirror the
elements necessary to prove negligence had the decedent
survived. This effectively means that there would be no cause
of action unless the decedent could have sued had the decedent
survived. Therefore, wrongful death actions in Massachusetts,
even under negligence, must be understood to have been “brought
under circumstances that the deceased could have recovered for
damages for personal injuries if his death had not resulted,”
and are thereby derivative.
20
surviving family members.
Mass. Gen. Laws ch. 229, § 2.
(“Damages under this section shall be recovered in an action of
tort by the executor or administrator of the deceased.”); see N.
Assur. Co. of Am., 2013 WL 2250985, at *6.
In other words,
unlike some states in which individuals may bring their own
wrongful death claims, Massachusetts does not “segregate the
right to recover for wrongful death by claimant.”
N. Assur. Co.
of Am., 2013 WL 2250985, at *6.
Looking more broadly, in Miller v. Cotter, the SJC was
tasked with deciding whether to compel arbitration in a case
concerning a wrongful death suit brought by the son of a man who
died in a nursing home.
863 N.E.2d at 540-41.
While not
directly discussing the question of whether the son’s wrongful
death claim was subject to the arbitration agreement, the court
granted the motion to compel arbitration.
Id. at 549.
This
evidences the SJC’s effective, albeit less than fully
articulated acceptance of the proposition that, under
Massachusetts law, arbitration with respect to wrongful death
actions is not disallowed as a matter of law.
Looking to other jurisdictions, I recognize there is a
split among the courts on this question.
But I am of the view
that the weight of persuasive authority treats wrongful death
claims as derivative.
In Nebraska, for example, Judge Kopf
determined that “[b]ecause of the derivative nature of a
21
wrongful death action in Nebraska, I conclude that the
arbitration agreement must be enforced against the plaintiff to
the same extent that it would have been enforced against the
plaintiff's decedent had he survived.”
at *8.
Bales, 2008 WL 2660366,
Notably, the Nebraska wrongful death statute contains
language similar to the Massachusetts statute, prescribing that
claims brought under their wrongful death statutes must be
claims that would have entitled the deceased to maintain an
action and recover damages.
2008 WL 2660366, at *8.
Neb. Rev. Stat. § 30-809; Bales,
Other state and federal courts have
drawn the same conclusion regarding other state wrongful death
provisions.
See e.g. In re Labatt Food Serv., L.P., 279 S.W.3d
640, 646 (Tex. 2009) (distinguishing wrongful death claim, which
is a derivative cause of action, from loss of consortium claim,
which is a separate and independent claim distinct from the
underlying action); Graves v. BP Am., Inc., 568 F.3d 221, 223
(5th Cir. 2009) (per curiam) (finding that a wrongful death
cause of action was derivative of the decedent’s rights under
Texas law and therefore any suit brought by the decedent’s
beneficiaries was subject to the arbitration agreement between
the decedent and his employer); Briarcliff Nursing Home, Inc. v.
Turcotte, 894 So. 2d 661, 665 (Ala. 2004) (per curiam)
(administrator of a decedent’s estate stands in the shoes of the
decedent and is bound by the powers and restrictions that the
22
decedent would have been held to, so the administrator is bound
to arbitration provisions); Wilkerson ex rel. Estate of
Wilkerson v. Nelson, 395 F. Supp. 2d 281, 288 (M.D.N.C. 2005)
(“[W]rongful death actions exist if and only if the decedent
could have maintained an action for negligence or some other
misconduct if she had survived.”); Herbert v. Superior Court,
215 Cal. Rptr. 477, 481 (Cal. Ct. App. 1985) [Hastings, J]
(determining that it is illogical not to subject wrongful death
beneficiaries to the arbitration agreement, in part, because it
is “unrealistic to require the signatures of all the heirs since
they are not even identified until the time of death.”).
To be sure, other courts have denied motions to compel
wrongful death claimants to arbitrate by holding that wrongful
death claims “exist only for the benefit of the spouse, children
and parents of the deceased,” and the wrongful death action is
not the “deceased’s right of action.”
Care, LLC, 123 F. Supp. at 634.
Golden Gate Nat'l Senior
Similarly, in Peters v.
Columbus Steel Castings Co., the court decided that Ohio law
requires the treatment of a wrongful death claim as an
independent cause of action, separate from any claim that the
decedent could have pursued if he had lived.
873 N.E.2d 1258 ¶
18 (Ohio Ct. App. 2006).
I am persuaded that the Supreme Judicial Court of
Massachusetts, if presented directly with the question, would
23
conclude that a wrongful death claim is a derivative claim as to
which the decedent’s representatives and beneficiaries would be
bound by an agreement to arbitrate.
Moreover, I must honor the
consistent treatment by the Supreme Court of the United States
of arguably special objections to arbitration contracts, in the
nursing home context, where it repeatedly held in recent
decisions that state laws that “impede[] the ability . . . to
enter into arbitration agreements . . . flout[] the FAA’s
command to place those agreements on an equal footing with all
other contracts.”
Kindred, 137 S. Ct. at 1429 (2017); see also
Marmet, 565 U.S. at 533 (“[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”)
(quoting AT&T Mobility LLC, 563 U.S. at 341) (internal quotation
marks omitted).
A compelling argument can be made that treating arbitration
agreements as without force in the wrongful death context has
the indirect but practical effect of singling arbitration
agreements out for special treatment.4
4
A reading of
Cases in the wake of Marmet declining to compel arbitration of
nursing home arbitration agreements strike me as alternatively
distinguishable, unpersuasive, or both. The parties in Marmet
signed arbitration agreements on behalf of the decedents — as I
have found Jackalyn Schrader did here on behalf of Ms. Schrader.
Thus, a holding that Marmet is inapplicable because the nursing
home patients signed the arbitration agreements themselves, see
Richmond Health Facilities v. Nichols, 811 F.3d 192, 198 (6th
24
Massachusetts law that fails to accommodate this firm and
current jurisprudence developed by the Supreme Court of the
United States runs the risk of being in contravention of the
Federal Arbitration Act.
My reading of the Massachusetts
wrongful death statute as derivative not only reflects my
considered understanding of what the Supreme Judicial Court
would rule if the issue came to it for resolution, it also
avoids inconsistency with the Federal Arbitration Act.
IV. DECLINING TO ENJOIN THE STATE PROCEEDING
GGNSC requests that upon a finding that there is a valid
arbitration agreement covering all the Defendant’s claims
asserted in the state court proceeding, I enjoin the state court
proceeding. The Anti-Injunction Act gives federal courts the
authority to grant an injunction to stay proceedings in state
court in very limited circumstances, including “where necessary
in aid of [the federal court’s] jurisdiction or to protect or
effectuate [the federal court’s] judgments.”
28 U.S.C. § 2283.
Cir. 2016),is distinguishable. Moreover, a holding that
restricting arbitration with respect to wrongful death
beneficiaries does not amount to a categorical anti-arbitration
rule but instead is merely fact specific application of
principles of contract law. Carter v. SSC Odin Operating Co.,
LLC, 976 N.E.2d 344, 360 (Ill. 2012), is unpersuasive for the
reasons I have outlined in the text above because it amounts to
a practical, if indirect, singling out of arbitration agreements
under the mask of an invocation of general principles of
contract law.
25
The Fifth Circuit has considered whether a district court
has the discretion to issue an order staying a related state
court proceeding when it has determined that the claims must be
submitted to arbitration and found that the Anti-Injunction Act
did not bar an order compelling arbitration and enjoining
litigation in state court “because it falls within the exception
for injunctions necessary to protect or effectuate the district
court’s prior judgment.”
Am. Family Life Assur. Co. of Columbus
v. Biles, 714 F.3d 887, 893 (5th Cir. 2013) (per curiam).
In the Sixth Circuit courts have also concluded that “an
injunction issued concurrent with an order to compel arbitration
falls into the exception ‘to protect or effectuate [the Court’s]
judgments.’”
GGNSC Louisville St. Matthews v. Madison, 254 F.
Supp. 3d 901, 912 (W.D. Ky. 2017) (quoting Great Earth Cos. v.
Simons, 288 F.3d 878, 894 (6th Cir. 2002)) [Russell, J.].
Courts in the Third Circuit have come to similar
conclusions with regard to the Anti-Injunction Act and in
granting motions to compel arbitration have enjoined state court
proceedings as “necessary in aid of [their] jurisdiction” when
they issue orders to compel arbitration.
See, e.g., GGNSC Camp
Hill West Shore, LP v. Thompson ex rel. Mullen, No. 1:15-CV-445,
2015 WL 1932330, at *6 (M.D. Pa. Apr. 28, 2015); Golden Gate
Nat. Seniorcare LLC v. Lane, No. 3:CV-14-1957, 2015 WL 926432,
at *4 (M.D. Pa. Mar. 4, 2015).
26
While recognizing my power to do so, I do not find it
necessary here to enjoin the parallel state proceeding in order
to effectuate the judgment I will enter compelling arbitration.
The parties have cooperated by entering into a stipulation
deferring to this court’s resolution of the motion to compel
arbitration.
That resolution will be res judicata as between
the parties and so no further disparate treatment of the issue
can be anticipated in state court where presumably the parallel
case may now be dismissed as moot.
I share the view suggested by Professor Sternlight that
“the argument that federal courts should be allowed to enjoin
state courts in order to support arbitration is at its strongest
where it is clear that action taken, or perhaps about to be
taken, by the state court will flout the FAA.” Jean R.
Sternlight, Forum Shopping For Arbitration Decisions: Federal
Courts’ Use of Antisuit Injunctions Against State Courts, 147 U.
PA. L. REV. 91, 115 (1998).
Precisely the opposite is clear here
and there is no showing of any potential for interference by the
state court with this court’s determination of the arbitrability
issue. Consequently, an injunction against the state court
proceeding is unnecessary.
V. CONCLUSION
Judge Mills in a lengthy set of observations at the outset
of his analysis in Am. Health Care Ass’n, 217 F. Supp. 3d at
27
926-29, concluded that “this court is unaware of any form of
litigation which provides as effective a tool for pure delay,
while not advancing the underlying litigation, as nursing home
arbitration litigation.”
Id. at 928.
The litigation before me
illustrates the validity of those observations.
Far from being
an instrument for expeditious resolution of disputes, as
arbitration is generally presented by its proponents, it is as a
practical matter “a tool for delay” in the nursing home context
because of the many opportunities to contest its predicates.
But in this context, practical considerations have not
inflected the legal framework favoring arbitration agreements in
the absence of a conventional contractual defense.
Having
engaged in lengthy fact finding regarding such defenses here, I
conclude that no legal justification for avoiding arbitration is
available.
For the foregoing reasons, I conclude that the arbitration
agreement signed by Jackalyn Schrader, on behalf of Emma
Schrader, must be enforced with respect to all claims.
motion [Dkt. No. 2] to compel is therefore granted.
The
The Clerk
is directed to enter final judgment in this matter to that
effect.
Douglas P. Woodlock
DOUGLAS P. WOODLOCK
UNITED STATES DISTRICT JUDGE
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