Opposition Brief — SSC Odin Operating Operating Co., LLC v Carter (No. 08-805)

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WW | APR 3.0 2009

No. 08-805

OFFICE OF THE CLERK

In The

Supreme Court of the United States

2

SSC ODIN OPERATING COMPANY LLC,

D/B/A ODIN HEALTH CARE CENTER,

Petitioner,

V.

SUE CARTER, SPECIAL ADMINISTRATOR

OF THE ESTATE OF JOYCE GOTT,

Respondent.

— +

On Petition For A Writ Of Certiorari

To The Appellate Court Of Illinois,

Fifth District

>

RESPONDENT'S BRIEF IN OPPOSITION

*

STACI M. YANDLE K. GLENDA CAMERON

7012 West Main St Counsel of Record

Belleville, [IL 62223 2006 Eastern Suburb.

(618) 394-9600 Suite 101

Christiansted, VI 00820

(340) 773-3444

Attorneys jor Respondent

April 30, 2009

QUESTION PRESENTED

The Appellate Court of Illinois, Fifth District,

affirmed the denial of petitioner’s motion to compel

arbitration. Should respondent be compelled to

arbitrate one of her claims, even though no valid

arbitration agreement exists between the parties?

ll

TABLE OF CONTENTS

Page

Bee PSN EIEN os cnescuuhvesauevercensneeuvanevacenits ate i

STATEMENT OF THE CABE......1cscccscccescncssessccontens 2

REASONS FOR DENYING THE WRIT ............... 4

I. There Is No Valid Agreement to Arbitrate

Respondent’s Wrongful Death Claim ........ 5

A. The FAA Does Not Require Courts to

Force Arbitration on Parties Who

Have Not Agreed to Arbitrate. ............ 5

B. The Illinois Court of Appeals, Fifth

District, Applied Established and

Routine Principles of State Contract

ee NEN ee ene ok kc ths 7

Il. There Is No Split in Authority on the

Questions Presented in the Petition......... 10

CONCLUSION..........-.. sonsivinied deaaddgaknlqoe nee 12

i]

TABLE OF AUTHORITIES

Page

CASES

14 Penn Plaza v. Pyett,__— S. Ct. __, 2009 WL

Se ahiciiatiie slot esi chit vas oxen tek cues) ambband sauna cane 7

Allied-Bruce Terminix Co’s, Inc. v. Dobson, 513

Se I aid Seisidnv avd teaniiuguninsieinnexaannec Maen auimaniens 7

AT & T Technologies, Inc. v. Communications

Workers, 475 U.S. 6438, 106 S. Ct. 1415 (1986)......... 5

Chapman v. Anchor Lumber, 823 N.E.2d 594

Caer ti BI, DET aos salen aninnecnantcedaccsundactcececeeuns 12

Doctor’s Associates, Inc. v. Casarotto, 517 U.S.

RN coi spate vnegealnecsevianedneeentiondnenessusneds 2,7,8

First Options of Chicago, Inc. v. Kaplan, 514

U.S. 938, 115 S. Ct. 1920 (1995).....................- eres

Granfinanctera, S.A. v. Nordberg, 492 U.S. 33,

109 S. Ct. 2782, 106 L.Ed.2d 26 (1989)...........0..0.0... 7

Green Tree Fin. Corp. v. Bazzle, 5389 U.S. 444

Es saint miacdcchamd corel ananaiateaaeaienrtedeiees eae

Green Tree Fin. Corp.-Alabama v. Randolph,

es Se Fe orice ash aces a loncaccasgnes tapas naaateancnied 8

Kinkel v. Cingular Wireless LLC, 223 Ill. 2d 1

PR cn ee aa are eae tig eet eee stare oa aael dares Cone cave canes 8

Kleinwort Benson North America, Ine. v.

Quantum Financial Services, Inc., 181 Ill. 2d

Be OR siesta csatokscsacasolshesineiseavaanitgescarerescdnaiersy: ee

Mastrobuono v. Shearson Lehman Hutton. Inc..

514 U.S. 52 (1995)............ 5

1V

TABLE OF AUTHORITIES — Continued

Page

Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614 (1985)...............0.-2.0008 4

O’Hara v. Ahlgren, Blumfeld and Kempster,

ee Ses Te ee Dawn ictienesessonicdioncessevexes ee iteaes 7

Perry v. Thomas, 482 U.S. 483, 107 S. Ct. 2520

2 ARRAS SP OPO DAE MN I NPC OTTERS 2, 8, 9

Scherk v. Alberto-Culver Co., 417 U.S. 506

SE sites tel cecke dns Jeewewincisaets ee Ecia enaearnienri deinen 9

Volt Info. Sciences, Inc. v. Bd. of Trustees of

Leland Stanford Junior Univ., 489 U.S. 468

FRE APS AHN. Ae Ree TES mane aT Pea eee D

Washington v. Confederated Bands and Tribes

of Yakima Nation, 489 U.S. 463, 99 S. Ct.

740, 58 L.Ed.2d 740 (1979).............. a Rae A ne 7

STATUTES

Federal Arbitration Act (“FAA”), 9 U.S.C. §1

MRIS accent te ena eee ea Cue aes Pas ak un mintien dale passim

Illinois Nursing Home Care Act (“INHCA”),

210 Ill. Comp. Stat. 45/1-101 et seq. ..................... 2, 4

linois Wrongful Death Act (““IWDA”), 740 III.

Comp. Stat. 180/101 ef Aah EMOTE, et

RULES

I SUN NI TIF ercvcdiicnciscnsvecesivanmsneqerctnmvsecdeened 9

INTRODUCTION

Petitioner seeks review of a decision of an

intermediate state appellate court on whether unu-

sual state statutory provisions applicable only to

nursing home residents are preempted by the Federal

Arbitration Act (FAA). Petitioner concedes that only

two other states have comparable statutes and that

no federal appellate court or state court of last resort

has ruled on whether such statutes are preempted. In

the absence of a conflict or of any indication that such

statutes are common or that the issue presented is a

frequently recurring one, Petitioner has failed to

demonstrate that this case presents an issue of suffi-

cient importance to merit this Court’s review.

Moreover, Petitioner overlooks that regardless of

how this Court might resolve the preemption

question it seeks to present, it will still have to

litigate with Respondent in court, because Respon-

dent never entered into an arbitration agreement

with Petitioner, and her lawsuit raises a claim under

the Illinois Wrongful Death Act that belongs

exclusively to her rather than to the Decedent who

signed the arbitration agreements at issue. The lower

court did not have to reach this issue because it held

the arbitration agreements invalid, but if the case

were remanded, it would have to address this issue

and could not direct Respondent’s wrongful death

claim to arbitration. Thus, Petitioner’s preemption

argument will not keep it out of court no matter how

it is resolved, and this Court should not devote its

attention to an issue that, ultimately, will have so

little impact on the course of the proceedings below.

Finally, in resolving the preemption issue posed

by Petitioner, the lower court conscientiously applied

the relevant decisions of this Court, including

Doctor’s Assoctates, Inc. v. Casarotto, 517 U.S. 681

(1996) and Perry v. Thomas, 482 U.S. 483, 107 S. Ct.

2520 (1987) and correctly recognized that those

decisions hold that the FAA permits application to

arbitration of generally applicable state-law contract

principles but preempts application of state-law prin-

ciples that apply distinctively to arbitration agree-

ments. Petitioner does not take issue with the lower

court’s statement of the principles derived from this

Court’s decisions, but only with their application to

an unusual set of state statutes. Even if Petitioner’s

complaints about the lower court’s application of FAA

preemption principles were correct, error correction —

especially with respect to a decision that does not

necessarily reflect the final word of the I]}linois courts

with respect to the issue presented — is not a suffi-

cient basis for invocation of this Court’s discretionary

jurisdiction.

STATEMENT OF THE CASE

This case involves claims that Respondent Sue

Carter brought pursuant to the Tllinois Nursing

Home Care Act ({NHCA) and the Illinois Wrongful

Death Act (IWDA) to recover damages resulting from

3

injuries sustained by and the death of Joyce Gott.

Respondent alleged that the Petitioner failed to

provide adequate care to Joyce Gott while Ms. Gott

was a resident at Petitiorer’s nursing home. Joyce

Gott was admitted into Udin Health Care Nursing

Home on January 12, 2006 to convalesce from a sur-

gical procedure that fixed a hip fracture. At the time

of admission, Ms. Gott was on Coumadin, a blood

thinner. As a result, Dr. Aziz Rahman, Ms. Gott’s

family doctor, provided a “Doctor’s Protocol” sheet

with her admission, that required the staff at Odin to

test her PTINR levels daily for the first three days,

then once a week for the three weeks after that, and

then once every two weeks for three weeks following

that. The purpose of the testing was to check the

coagulation of the blood. Contrary to the specific

instructions on the “Doctor’s Protocol,” Ms. Gott’s

PTINR was taken on January 13, 2006, and not taken

again. Because Odin failed to test Ms. Gott’s blood

according to the protocol, they failed to detect that

Ms. Gott’s blood had become too thin. As a result, Ms.

Gott, 75 years-old at the time, developed gastro-

intestinal bieeding and died on January 31, 2006.

Odin moved the trial court to compel arbitration

based on two written arbitration agreements signed

by or on behalf of Ms. Gott. In response to the motion,

Carter raised several state-law defenses, including

lack of mutuality, voidness for illegality, and that

Carter is a non-party not bound by the agreements.

The trial court denied the motion to compel arbitra-

tion and the Illinois Appellate Court, Fifth District,

4

affirmed. The Illinois Supreme Court denied Odin’s

petition for leave to appeal.

¢

REASONS FOR DENYING THE WRIT

Contrary to petitioner Odin’s assertion, review by

this Court is not necessary to ensure proper and

uniform application of the Federal Arbitration Act

(“FAA”), 9 U.S.C. § 1 et seqg., to determine if a claim is

subject to arbitration, nor does the decision below

present an irreconcilable conflict with this Court’s

precedents. Rather, this matter involves traditional

principles of contract interpretation and, under the

FAA, arbitration agreements are subject to generally

applicable state law contract defenses. Moreover,

regardless of any decision this Court might render

with respect to the question presented by Odin, the

outcome with respect to Carter’s wrongful death

claim would remain the same, because Carter was

not a party to any arbitration agreement. That is,

regardless of how this Court might resolve the pre-

emption question petitioner seeks to present, it will

still have to litigate with Respondent in court. This is

so because the FAA “does not require parties to

arbitrate when they have not agreed to do so.”

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614, 625 (1985).

I. There Is No Valid Agreement to Arbitrate

Respondent’s Wrongful Death Claim.

A. The FAA Does Not Require Courts to

Force Arbitration on Parties Who

Have Not Agreed to Arbitrate.

The FAA places arbitration agreements on equal

footing with other contracts. Contracts do not become

super contracts simply because of the presence of an

arbitration clause.

Nothing in the FAA overrides normal rules of

contract formation; the Act’s goal was to put

arbitration on a par with other contracts and

eliminate any vestige of old rules disfavoring arbitra-

tion. Arbitration depends on agreement, see First

Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943,

115 S. Ct. 1920 (1995); AT & T Technologies, Inc. v.

Communications Workers, 475 U.S. 643, 648-49, 106

S.Ct. 1415 (1986), and this Court has repeatedly

stated that “when deciding whether the parties

agreed to arbitrate a certain matter ... courts

generally should apply ordinary state-law principles

that govern the formation of contracts.” First Options,

514 U.S. at 944; see also Mastrobuono v. Shearson

Lehman Hutton, Inc., 514 U.S. 52, 60-63 (1995): Volt

Info. Sciences, Inc. v. Bd. of Trustees of Leland

Stanford Junior Univ., 489 U.S. 468, 474 (1989) (“the

interpretation of private contracts is ordinarily a

question of state law, which this Court does not sit to

review”); Green Tree Fin. Corp. v. Bazzle, 539 US.

444, 447 (2003) (the contractual interpretation

question of whether an arbitration clause permitted

6

class actions in arbitration was “a matter of state

law....”)

It is axiomatic that a party to a contract cannot

bargain away a right he or she does not have. Indeed,

petitioner Odin does not dispute the fact that the

right to bring a wrongful death claim does not belong

to the decedent. Nor is there any contention that

respondent Carter ever entered into any agreement to

arbitrate any claim. Thus, there is no denying in this

case that Carter’s wrongful death claim is not subject

to the arbitration agreement, and Odin does not

contend otherwise. Regardless of the resolution of the

preemption issues raised by the petition, therefore,

Carter’s wrongful death claim cannot be referred to

arbitration, and the case against the nursing home

will inevitably proceed in the trial court on the

wrongful-death claim.

Because the court below could have reached the

same outcome by denying arbitration on this ground

~ and would be required to address the issue and

reach the same result even if the Court were to decide

the preemption issue adversely and remand — this

Court should deny the petition for certiorari on this

independent basis. '

‘This Court recently reiterated that:

“Without cross-petitioning for certiorari, a prevailing

party may, of course, ‘defend its judgment on any

ground properly raised below whether or not that

ground was relied upon, rejected, or even considered

(Continued on following page)

B. The Illinois Court of Appeals, Fifth

District, Applied Established and Rou-

tine Principles of State Contract Law.

In Allied-Bruce Terminix Co’s, Inc. v. Dobson, 513

U.S. 265, 281 (1995), this Court reiterated that

“States may regulate contracts, including arbitration

clauses, under general contract law principles and

they may invalidate an arbitration clause ‘upon such

grounds as exist at law or in equity for the revocation

of any contract.’” (emphasis added). The court below

applied this principle in rejecting Odin’s preemption

claim. First, the court made the unremarkable obser-

vation that “a violation of public policy can be a

legitimate generally applicable defense to all con-

tracts in [llinois.” Pet. App. 6a (citing O’Hara v.

Ahlgren, Blumfeld and Kempster, 127 fll. 2d 333, 314-

42 (1989); Kleinwort Benson North America, Inc. v.

Quantum Financial Services, Inc., 181 Ill. 2d 214,

226-27 (1998).

Next, the Illinois Court of Appeals observed ‘hat,

unlike the statute at issue in Doctor’s Associates, Inc.

v. Casarotto, 517 U.S. 681], 687 (1996), the [linois

Nursing Home Care Act (INHCA) (210 Ill. Comp.

by the District Court or the Court of Appeals.”

Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 38-39,

109 S.Ct. 2782, 106 I.Ed.2d 26 (1989) (quoting

Washington v. Confederated Bands and Tribes of

Yakima Nation, 439 U.S. 463, 476, n. 20,99 S. Ct. 740,

58 L.Ed.2d 740 (1979))

14 Penn Plaza v. Pyett,__ S. Ct. ___, 2009 WL 838159 at *15

8

Stat. 45/3-606 and 3-607, “represent[s] ‘emphatically

stated public policy’ that has existed in this state for

nearly 30 years.” Pet. App. 7a. The Illinois Appellate

Court correctly stated that:

The rule stated in Casarotto and [Perry v.|

Thomas|, 482 U.S. 483 (1987),] fis] that state

law is applicable and is not preempted by the

Federal Arbitration Act if that law arose to

govern issues concerning the validity, rev-

ocability, and enforceability of contracts

generally.

Pet. App. 9a. The Illinois Appellate Court then

applied the rule as stated in Casarotto and Thomas to

the facts of this case and concluded that:

because the public policy expressed in

sections 3-606 and 3-607 concerns the

validity, revocability and enforceability of

contracts generally and does not specifically

target arbitration agreements, it presents a

legitimate state law contract defense of a

violation of public policy to the agreements

and so voids the agreements.

Pet. App. 10a (citing Kinkel v. Cingular Wireless LLC,

223 Ill. 2d 1, 15-19 ‘2009)). The reasoning of the

Illinois Appellate Court is consistent with this Court’s

express holding in Casarotto that “[cjourts may not

invalidate arbitration agreements under state

laws applicable only to arbitration provisions.” 517

U.S. at 686. Thus, despite the “lberal federal policy

favoring arbitration agreements,” Green Tree Fn.

Corp.-Alabama v. Randolph, 531 U.S. 79, 81 (2000),

9

state law is not entirely displaced from the FAA

preemption analysis. Under § 2, “state law, whether

of legislative or judicial origin, is applicable if that

law arose to govern issues concerning the validity,

revocability, and enforceability of contracts generally.”

Thomas, 482 U.S. at 492 n. 9 (1987). In other words,

in enacting the FAA “Congress [only] precluded

States from singling out arbitration provisions for

suspect status, requiring instead that such provisions

be placed ‘upon the same footing as other contracts.’”

Id. (queting Scherk v. Alberto-Culver Co., 417 US.

506, 511 (1974)). In short, the Illinois Appellate

Court’s ruling is consistent with this Court’s prece-

dents.

Tt is also well established that state law governs

the enforceability of contracts, so long as the state

law does not disfavor arbitration clauses as compared

to other contract terms. Here, Odin has not shown,

and cannot show, a conflict or a “state of confusion”

about either these broad principles or their applica-

tion to this case. Indeed, Odin’s claim is, at most, that

the court below misapplied correctly stated legal

principles to the particular [llinois statutes involved

in this case. Even if Odin was correct, such a claimed

error by an intermediate-level state appellate court

hardly warrants review by this Court. Indeed, this

Court’s Rule 10 specifically admonishes that “la!

petition for certiorar! is rarely granted when the

asserted error consists of ... the misapplication of a

properly stated rule of law.”

10

Il. There Is No Split in Authority on the

Questions Presented in the Petition.

In an effort to dress up its request for review of

the correctness of the lower court’s decision as an

issue meriting this Court’s attention, petitioner Odin

claims that the decision conflicts with a number of

decisions of federal appellate courts. An examination

of the decisions Odin cites, however, reveals that the

conflict is chimerical. The federal appellate cases

Odin cites involve the very different question whether

statutes that forbid the enforcement of forum selec-

tion clauses in franchise or construction contracts are

preempted by the FAA when applied to arbitration

agreements including such clauses. [Pet. 26-27] That

may be an interesting and even important question,

but cases resolving it hardly present a square conflict

with a decision about the enforceability of an

arbitration agreement involving a nursing home

resident.

Turning to the issue actually directly involved in

the case, Odin concedes that it has been able to locate

only two other states that have statutes that are

directly comparable to the Illinois laws at issue here

— a concession that significantly undermines any

suggestion that the issue presented here is of broad,

national importance. And as to whether such statutes

are preempted by the FAA, Odin cites only two

unreported and unappealed federal trial-court rulings

that touched on the preemption question [Pet. 26-27],

neither of which involved a direct attempt to enforce

an arbitration provision in a contract signed by a

11

nursing home resident. In other words, the issue pre-

sented has yet to reach either a state court of last

resort or a federal appellate court, in this or any other

case. If and when the issue is resolved at that level,

its resolution presents a conflict, there will be ample

time for the Court to address that issue.

In a final attempt to suggest the existence of a

conflict of state supreme court authority, Odin cites

rulings of the Oklahoma, Alabama, Mississippi, and

Texas Supreme Courts on a different issue — whether

contracts between nursing homes and their residents

involve interstate commerce sufficiently to trigger

application of the FAA. [Pet. 27-28] The decision

below, however, did not even suggest that the FAA

was inapplicable for that reason, and, indeed,

assumed its applicability. Odin’s claim that the Okla-

homa state court’s resolution of the interstate com-

merce issue indicates that they are “hostile” to the

FAA might conceivably offer some reason for review of

an Oklahoma decision based on the commerce

rationale, but it 1s hardly a reason for reviewing an

Illinois decision that did not even address that issue.

In other words, even if there is a split among the

state supreme courts as to whether contracts between

nursing homes and their residents involve interstate

commerce, this case simply does not present that

question and such a split cannot be a basis for review.

In the end, this case involves only the views of

one intermediate state appellate court on preemption

of an unusual state statute. Based on QOdin’s own

canvass of the judicial landscape, it is evidently the

12

first appellate court in the country to address pre-

emption of such a statute. And its holding is not even

definitive within its own state: the Illinois courts of

appeals for other districts may conceivably resolve

the issue differently, as may the Illinois Supreme

Court, should a conflict among the lower state courts

arise that requires resolution at a higher level.

Chapman v. Anchor Lumber, 823 N.E.2d 594, 596 (3d

Dist. Ill. App. 2005) (noting that Illinois has five

appellate districts, aad the decisions of one district

are not binding on the others). Only at that point will

the view of the Illinois courts be finally settled, and

only if that view comes into conflict with decisions of

other state courts of last resort or federal courts of

appeals might an issue requiring resolution by this

Court be presented.

CONCLUSION

For the foregoing reasons, the petition for a writ

of certiorari should be denied.

Respectfully submitted,

STacit M. YANDLE K. GLENDA CAMERON

7012 West Main St. Counsel of Record

Belleville, IL 62223 2006 Eastern Suburb,

(618) 394-9600 Suite 101

Christiansted. VI 00820

(340) 773-3444

Attorney = for Respondent

Date: April 30, 2009