GGNSC Chestnut Hill LLC v. Schrader

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

GGNSC CHESTNUT HILL LLC )

d/b/a GOLDEN LIVING CENTER - )

HEATHWOOD; GGNSC )

ADMINISTRATIVE SERVICES LLC; )2

GOLDEN GATE NATIONAL SENIOR )

CARE, LLC; GGNSC HOLDINGS )

LLC, )

)

Plaintiffs, )

) CIVIL ACTION

v. ) NO.16-10525-DPW

)

JACKALYN M. SCHRADER, AS THE )

PERSONAL REPRESENTATIVE OF )

THE ESTATE OF EMMA J. )

SCHRADER, )

)

Defendant. )

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

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.

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 Medicaid-

participating long-term care facilities from entering “into pre-

dispute 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

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

for the broader controversy regarding the public policy of

dispute resolution by arbitration.2 Thus, here, Jackalyn

2 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

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 pre-

empted 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.

“Heathwood”) in Chestnut Hill. Ms. Schrader began receiving

care that day at Heathwood. 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. 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. She signed the Admissions Agreement on

February 19, 2013. 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

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

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

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

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

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.

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

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

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 non-

signatory 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

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.

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

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’

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.

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

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.” Bales, 2008 WL 2660366,

at *8. 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. Neb. Rev. Stat. § 30-809; Bales,

2008 WL 2660366, at *8. 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

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.” Golden Gate Nat'l Senior

Care, LLC, 123 F. Supp. at 634. 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

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 A reading of

4 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

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.

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).

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

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. The

motion [Dkt. No. 2] to compel is therefore granted. The Clerk

is directed to enter final judgment in this matter to that

effect.

Douglas P. Woodlock

DOUGLAS P. WOODLOCK

UNITED STATES DISTRICT JUDGE