Amicus Curiae Brief — Country Oaks Partners, LLC, dba Country Oaks Care Center, et al., Petitioners v. Mark Harrod

No. 23-1357

In the

Supreme Court of the United States

COUNTRY OAKS PARTNERS, LLC, DBA

COUNTRY OAKS CARE CENTER, et al.,

Petitioners,

v.

MARK HARROD,

Respondent.

On Petition for a Writ of Certiorari

to the Supreme Court of California

BRIEF OF THE CIVIL JUSTICE ASSOCIATION OF

CALIFORNIA, THE AMERICAN HEALTH CARE

ASSOCIATION AND THE NATIONAL CENTER

FOR ASSISTED LIVING, AND THE CALIFORNIA

ASSOCIATION OF HEALTH FACILITIES AS

AMICI CURIAE SUPPORTING PETITIONERS

Mark E. Reagan

Hooper, Lundy & Bookman, P.C.

44 Montgomery St.,

Ste. 3500

San Francisco, CA 94104

Counsel for The American

Healthcare Association

and the National Center for

Assisted Living, and The

California Association of

Health Facilities

Calvin House

Counsel of Record

Gutierrez, Preciado &

House, LLP

3020 E. Colorado Blvd.

Pasadena, CA 91107

(626) 449-2300

calvin.house@gphlawyers.com

Counsel for Amici Curiae

July 29, 2024

130196

A

(800) 274-3321 • (800) 359-6859

i

TABLE OF CONTENTS

Page

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . i

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . . ii

INTEREST OF AMICI CURIAE . . . . . . . . . . . . . . . . . . 1

SUMMARY OF THE ARGUMENT . . . . . . . . . . . . . . . 2

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

I.

The Court should grant certiorari to make

clear that California’s continuing hostility

to arbitration violates the FAA’s federal

policy favoring arbitration . . . . . . . . . . . . . . . . . . . 5

II. The Court should grant certiorari to make

clear that state courts may not evade

the federal policy favoring arbitration by

relying on contract interpretation rules

that disfavor arbitration . . . . . . . . . . . . . . . . . . . . 7

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ii

TABLE OF CITED AUTHORITIES

Page

CASES

AT&T Mobility LLC v. Concepcion,

563 U.S. 333 (2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Buckeye Check Cashing, Inc. v. Cardegna,

546 U.S. 440 (2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Chamber of Commerce of the United States v. Bonta,

62 F.4th 473 (9th Cir. 2023) . . . . . . . . . . . . . . . . . . . . . 6

DIRECTV, Inc. v. Imburgia,

577 U.S. 47 (2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Harrod v. Country Oaks Partners, LLC,

15 Cal. 5th 939 (2024) . . . . . . . . . . . . . . . . . . . . . . 4, 7, 8

Kindred Nursing Ctrs. Ltd. P’ship v. Clark,

581 U.S. 246 (2017) . . . . . . . . . . . . . . . . . . . . . . . . 3, 8, 9

Lamps Plus, Inc. v. Varela,

587 U.S. 176 (2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,

460 U.S. 1 (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Perry v. Thomas,

482 U.S. 483 (1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Preston v. Ferrer,

552 U.S. 346 (2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

iii

Cited Authorities

Page

Southland Corp. v. Keating,

465 U.S. 1 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Valley View Health Care, Inc. v. Chapman,

992 F. Supp. 2d 1016 (E.D. Cal. 2014) . . . . . . . . . . . . . 7

STATUTES AND OTHER AUTHORITIES

42 C.F.R. § 483.70(m) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Cal. Health & Safety Code § 1430 . . . . . . . . . . . . . . . . 3, 6

Cal. Health & Safety Code § 1599.61 . . . . . . . . . . . . . . . . 3

Cal. Health & Safety Code § 1599.81(b) . . . . . . . . . . 4, 6, 8

Cal. Labor Code § 432.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Cal. Prob. Code § 4600 et seq. . . . . . . . . . . . . . . . . . . . . . 4

Cal. Prob. Code § 4700 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Federal Arbitration Act . . . . . . . . . . . . . . . . . 1, 2, 3, 5, 6, 7

Patient’s Bill of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 7

1

INTEREST OF AMICI CURIAE1

The Civil Justice Association of California (“CJAC”)

is a nonprofit organization whose members are businesses

from a broad cross section of industries. CJAC’s principal

purpose is to educate the public and its governing bodies

about how to make laws determining who gets paid, how

much, and by whom when the conduct of some causes harm

to others—more fair, certain, and economical. Toward

this end, CJAC regularly appears as amicus curiae in

numerous cases of interest to its members, including

those that concern the scope and application of the Federal

Arbitration Act (“FAA”).

The American Health Care Association and the

National Center for Assisted Living (“AHCA/NCAL”) is

the largest association in the United States representing

long term and post-acute care providers, with more

than 14,000 member facilities. AHCA/NCAL’s diverse

membership includes nonprofit and proprietary skilled

nursing centers, assisted living communities, sub-acute

centers, and homes for individuals with intellectual and

development disabilities. By delivering solutions for

quality care, AHCA/NCAL aims to improve the lives of

the millions of frail elderly and individuals with disabilities

who receive long term or post-acute care in our member

facilities each day. AHCA/NCAL files amicus curiae briefs

in cases, like this one, that have important implications

for long term and post-acute care.

1. Counsel of record for the parties received notice of the

intent to file this brief. No counsel for any party in this case

authored this brief in whole or in part. No person or entity aside

from the amici made a monetary contribution to the preparation

or submission of this brief.

2

The California Association of Health Facilities

(“CAHF”) is a nonprofit trade association representing

more than 1,300 licensed skilled nursing, intermediate

care, ICF-DD, ICF-MR, and subacute facilities in

the State of California. The long-term care facilities

represented by CAHF have been and continue to be

subject to a multitude of lawsuits like the present action

and will be directly impacted by this decision and its

impact of the enforceability of pre-dispute binding

arbitration agreements. CAHF provides a statewide,

policy perspective to this case and issues regarding

arbitration on behalf of the long-term care facilities in

California.

CJAC, AHCA /NCAL and CAHF members have

an interest in making sure that they can enforce their

arbitration agreements despite the hostility toward such

agreements that the decision that is the subject of the

certiorari petition embodies.

SUMMARY OF THE ARGUMENT

The ongoing hostility toward arbitration exhibited by

the California legislature and the California courts has

led to yet another intrusion on the principles underlying

the Federal Arbitration Act (FAA). Here, the California

Supreme Court has applied a statute that discriminates

against arbitration agreements on its face to frustrate

the clear intent of the parties to settle their disputes

by way of arbitration. The California Health and Safety

Code requires (1) that any contract of admission to

intermediate care and nursing facilities “clearly indicate”

that agreement to arbitration is not a precondition to

admission, (2) that any arbitration clause must be stated

3

on a separate form, and (3) that the arbitration clause

notify the patient that he may not waive his ability to sue

for violation of the Patient’s Bill of Rights. 2 This Court

should grant certiorari to make two points clear:

1. The hostility to arbitration expressed in the

Health and Safety Code violates the superseding policy

of the FAA to favor arbitration.

2. Reliance on the Health and Safety Code’s

mandated separation of an arbitration clause from the rest

of the contract of admission to invalidate the arbitration

clause on the grounds that a patient’s power of attorney

did not clearly state that his family member had authority

to agree to an arbitration clause violates this Court’s

ruling that decisions that “specially impede[ ] the ability of

attorneys-in-fact to enter into arbitration agreements. . . .

flout[ ] the FAA’s command to place those agreements

on an equal footing with all other contracts.” Kindred

Nursing Ctrs. Ltd. P’ship v. Clark, 581 U.S. 246, 255-56

(2017).

ARGUMENT

California Health and Safety Code section 1599.61

requires intermediate care and nursing facilities to use

a standard admission agreement. If a facility asks the

patient to agree to arbitration, the arbitration provision

2. The Patient’s Bill of Rights provides that “An agreement

by a resident or patient of a skilled nursing facility or intermediate

care facility to waive that resident’s or patient’s rights to sue

pursuant to this subdivision is void as contrary to public policy.”

Cal. Health & Safety Code § 1430.

4

cannot be included in the standard admission agreement

but must be set forth in a separate document with a

separate signature line. Cal. Health & Safety Code

§ 1599.81(b).

The California Supreme Court’s decision acknowledged

the effect of that statutorily mandated separation on its

framing of the issue before it:

Under California’s Health Care Decisions Law

(Prob. Code, § 4600 et seq.), [footnote omitted]

a principal may appoint a health care agent to

make health care decisions should the principal

later lack capacity to make them. In this case,

a health care agent signed two contracts with a

skilled nursing facility. One, with state-dictated

terms, secured the principal’s admission to

the facility. The other made arbitration the

exclusive pathway for resolving disputes with

the facility. This second contract was optional

and had no bearing on whether the principal

could access the facility or receive care. The

issue before us is whether execution of the

second, separate, and optional contract for

arbitration was a health care decision within

the health care agent’s authority. It was not,

and the facility’s owners and operators may

not, therefore, rely on the agent’s execution of

that second agreement to compel arbitration

of claims arising from the principal’s alleged

maltreatment that have been filed in court.

Harrod v. Country Oaks Partners, LLC, 15 Cal. 5th 939,

946-47 (2024).

5

I.

The Court should grant certiorari to make

clear that California’s continuing hostility to

arbitration violates the FAA’s federal policy

favoring arbitration.

The FA A “is a congressional declaration of a

liberal federal policy favoring arbitration agreements,

notwithstanding any state substantive or procedural

policies to the contrary.” Moses H. Cone Mem’l Hosp. v.

Mercury Constr. Corp., 460 U.S. 1, 24 (1983). To further

that policy, “questions of arbitrability must be addressed

with a healthy regard for the federal policy favoring

arbitration.” Ibid. The FAA “embodies Congress’ intent

to provide for the enforcement of arbitration agreements

within the full reach of the Commerce Clause.” Perry v.

Thomas, 482 U.S. 483, 490 (1987).

As this Court is aware, California’s legislature and

its courts have tried to evade that policy repeatedly.

See Southland Corp. v. Keating, 465 U.S. 1, 3 (1984)

(statute that purported to invalidate certain arbitration

agreements violated the Supremacy Clause); Perry v.

Thomas, supra (FAA preempted a provision that actions

for collection of wages could be maintained without

regard to the existence of an arbitration agreement);

Preston v. Ferrer, 552 U.S. 346 (2008) (statute requiring

some wage and hour disputes to be determined by a

state administrative agency conflicted with the FAA);

AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011)

(California rule that a contractual arbitration provision

was unconscionable because it disallowed class wide

proceedings was preempted); DIRECTV, Inc. v. Imburgia,

577 U.S. 47, 54 (2015) (California courts could not use

a contractual choice of California law to overcome this

6

Court’s invalidation of a California rule that was hostile

to arbitration).

More recently, in 2019, California enacted California

Labor Code section 432.6, which makes it a crime for an

employer to require its employees to agree to arbitration.

Although the authors of the statute apparently thought

they could avoid the FAA by stating that an arbitration

agreement that violated the statute was still valid, the

Ninth Circuit ruled otherwise:

First, California argues that because AB 51

regulates the conduct of employers before an

arbitration agreement is formed, rather than

affecting the validity or enforceability of the

executed arbitration agreement itself, it does

not conflict with the FAA. As we have explained,

this argument fails. Rules that impede parties’

ability to form arbitration agreements hinder

the broad “national policy favoring arbitration,”

Buckeye Check Cashing[, Inc. v. Cardegna], 546

U.S. [440,] at 443 [2006], just as much as those

that undermine the enforceability of alreadyexisting arbitration agreements.

Chamber of Commerce of the United States v. Bonta, 62

F.4th 473, 487 (9th Cir. 2023).

The California Supreme Court decision for which

review is sought relies on statutory provisions that

illustrate that ongoing hostility. Health and Safety Code

section 1599.81 requires arbitration clauses, unlike other

clauses, to be set forth in a separately signed document.

Health and Safety Code section 1430 invalidates any

7

provision that would require arbitration of a claim under

the Patient’s Bill of Rights. Those statutes are facial

violations of the FAA, as one United States District Court

in California has recognized. See Valley View Health Care,

Inc. v. Chapman, 992 F. Supp. 2d 1016, 1041 (E.D. Cal.

2014). Yet, the California Supreme Court’s decision did not

even acknowledge that it was basing its decision in part

on statutes that clearly violate federal law.

II. The Court should grant certiorari to make clear

that state courts may not evade the federal

policy favoring arbitration by relying on contract

interpretation rules that disfavor arbitration.

Although the California Supreme Court purported

to base its decision solely on the language of the power of

attorney under which Mark Harrod acted on behalf of his

uncle, there is no doubt that California’s anti-arbitration

statutes informed its interpretation. Its decision hinged

on the interpretation of the term “health care decisions”

in the power of attorney. But California Probate Code

section 4700 “instructs” that the Probate Code definition

of that term governs the effect of the use of that term in

any health care directive; its provisions “govern the effect”

of writings created under its authority. 15 Cal. 5th at 950.

The California Supreme Court also relied on the

fact that the arbitration clause appeared in a separate

document.

A standalone arbitration agreement would be

“markedly dissimilar” [citation omitted] from

agreements about who provides medical care or

what care they provide. Thus, defining the term

8

“health care decision” to include a standalone

arbitration agreement would not be “in concert

with” [citation omitted] the items listed and,

therefore, with the apparent intent evidenced

by the definitional provisions of Logan’s power

of attorney or the Health Care Decisions Law

it invokes.

15 Cal. 5th at 952-53. In so doing, it seems to have

ignored the fact that there was a standalone arbitration

agreement only because the anti-arbitration provision in

Health and Safety Code section 1599.81 required it. If

Country Oaks could have included an arbitration clause

in its standard admission agreement, the clause would

have been enforceable as part of a health care decision to

admit Mr. Harrod’s uncle to the County Oaks facility. It

was only because California decoupled arbitration from

admission that the California Supreme Court could rule

that the authority to enter into an arbitration agreement

needed to be clearly stated in the power of attorney. 3

Hence, when properly understood, the California

Supreme Court’s decision in this case is like the Kentucky

Supreme Court’s decision that this Court reversed in

Kindred Nursing Ctrs., supra. The Kentucky Supreme

Court had ruled that “a general grant of power (even

if seemingly comprehensive) does not permit a legal

3. The federal regulation that the California Supreme

Court mentioned in passing as one of the bases for requiring

an arbitration agreement to be in a separate signed document

(15 Cal. 5th at 948) does not in fact contain that requirement. It

states only that a facility cannot require arbitration as a condition

of admission, and that the agreement to arbitrate must contain

certain provisions. See 42 C.F.R. § 483.70(m).

9

representative to enter into an arbitration agreement for

someone else; to form such a contract, the representative

must possess specific authority to ‘waive his principal’s

fundamental constitutional rights to access the courts

[and] to trial by jury.’” 581 U.S. at 248. This Court ruled

that the decision “single[d] out arbitration agreements for

disfavored treatment,” and therefore “violate[d] the FAA.”

581 U.S. at 248. Likewise, here, the statutory requirement

of a standalone arbitration agreement planted the seed

for the California Supreme Court to treat an agreement

to arbitrate with an intermediate care or nursing facility

differently.

10

CONCLUSION

This case is emblematic of the continuing hostility

that California’s legislature and its courts have shown

toward arbitration. The Court should grant certiorari to

make clear that California, like the other states of the

United States, must respect the strong federal policy in

favor of arbitration. Under that policy the parties to an

arbitration agreement may determine without coercion

“the issues subject to arbitration” and “the rules by which

they will arbitrate.” Lamps Plus, Inc. v. Varela, 587 U.S.

176, 184 (2019).

Respectfully submitted,

Mark E. Reagan

Calvin House

Hooper, Lundy & Bookman, P.C.

Counsel of Record

44 Montgomery St.,

Gutierrez, Preciado &

Ste. 3500

House, LLP

San Francisco, CA 94104

3020 E. Colorado Blvd.

Pasadena, CA 91107

Counsel for The American

(626) 449-2300

Healthcare Association

calvin.house@gphlawyers.com

and the National Center for

Assisted Living, and The

Counsel for Amici Curiae

California Association of

Health Facilities

July 29, 2024