Campbell v. Anesthesia Mgmt. Sols.

• Decision Date: 14 September 2021
• Docket Number: 5:20-cv-3538-SAL
• Parties: Paula Campbell, Plaintiff, v. Anesthesia Management Solutions, LLC, Defendant.
• Court: U.S. District Court — District of South Carolina

Paula Campbell, Plaintiff, v. Anesthesia Management Solutions, LLC, Defendant.

No. 5:20-cv-3538-SAL

United States District Court, D. South Carolina, Orangeburg Division

September 14, 2021

OPINION AND ORDER

Sherri A. Lydon, United States District Judge.

This matter is before the Court for review of the July 14, 2021 Report and Recommendation of United States Magistrate Thomas E. Rogers, III (the “Report”), made in accordance with 28 U.S.C. § 636(b) and Local Civil Rule 73.02 (D.S.C.). [ECF No. 16]. Defendant filed a motion to dismiss asserting it is entitled to dismissal on two alternative grounds. [ECF No. 9]. First, Defendant argues the first amended complaint must be dismissed pursuant to Fed.R.Civ.P 17(a)(3) because Plaintiff failed to name or substitute the real party in interest. Alternatively, Defendant moves the Court to require Plaintiff to name the real party in interest, to compel arbitration, and to dismiss the first amended complaint. In the Report, the Magistrate Judge rejected Defendant's arguments that Paula Campbell is not the real party in interest. [ECF No. 16]. Accordingly, the Magistrate Judge did not recommend dismissal under Rule 17(a)(3) nor did he recommend requiring Plaintiff to substitute another party. Id. However, the Magistrate Judge recommended that Defendant's motion be granted as to Defendant's request that the case be compelled to arbitration and dismissed. Id. Plaintiff filed timely objections to the Report, ECF No. 17 and Defendant replied, ECF No. 18. The matter is ripe for ruling. For the reasons outlined herein, the Court adopts the Report as modified by this Order.

BACKGROUND

On July 14, 2021, the Magistrate Judge issued a thorough Report and Recommendation. The Report sets forth in detail the relevant facts and standards of law on this matter. See [ECF No. 16]. This Court incorporates those facts and standards without a recitation, except to clarify one point of law. Defendants, inter alia, moved to dismiss this action and compel arbitration pursuant to Federal Rule of Civil Procedure 12(b)(3) and the Federal Arbitration Act. [ECF No 9 p.1]; Fed.R.Civ.P. 12(b)(3); 9 U.S.C. § 1 et seq. The Magistrate Judge found the motion to dismiss and compel arbitration was most properly considered a motion to dismiss for improper venue under Rule 12(b)(3). [ECF No. 16 p.4]. The Magistrate Judge reasoned, citing pre-2013 Fourth Circuit authority, that (b)(3) was the proper subsection of Rule 12 because an arbitration clause is “a specialized kind of forum-selection clause.” Id. While the Magistrate Judge's choice to consider the motion under Rule 12(b)(3) had no substantive effect on the Report, it was technically erroneous.

“Prior to 2013, Rule 12(b)(3) was considered the proper vehicle by which a party may move to dismiss an action for improper venue based on a forum-selection clause.” Hyundai Merch. Marine Co. v. ConGlobal Indus., LLC, No. 2:15-CV-01562-DCN, 2015 WL 13841411, at *3 (D.S.C. Nov. 4, 2015) (citing Atlantic Floor Servs., Inc. v. Wal-Mart Stores, Inc., 334 F.Supp.2d 875, 877 (D.S.C. 2004)). However, in Atlantic Marine Construction Co. v. U.S. District Court for the Western District of Texas, the law changed when the Supreme Court of the United States addressed the procedure that is available for a defendant in a civil case who seeks to enforce a forum-selection clause. 571 U.S. 49 (2013). In Atlantic Marine, the Court held that Rule 12(b)(3) allows dismissal only when venue is wrong or improper, a determination that “depends exclusively on whether the court in which the case was brought satisfies the requirements of federal venue laws.” Id. at 577. The Court held that a forum-selection clause does not itself make venue improper. Id. Accordingly, dismissal under Rule 12(b)(3) is not available in this case.

Instead, the motion is best analyzed under sections three and four of the Federal Arbitration Act. 9 U.S.C. § 3-4. See Chorley Enterprises, Inc. v. Dickey's Barbecue Restaurants, Inc., 807 F.3d 553, 563 (4th Cir. 2015) (applying sections three and four of the Federal Arbitration Act instead of Rule 12(b)(3)). Section three requires a court to stay the trial of an action on issues that are subject to arbitration. 9 U.S.C. § 3. However, when every claim in a case must be submitted to arbitration, the court may dismiss the case instead of staying it. Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992); Sea-Land Service, Inc. v. Sea-Land of P.R., Inc., 636 F.Supp. 750, 757 (D. Puerto Rico 1986); Sparling v. Hoffman Const. Co., Inc., 864 F.2d 635, 638 (9th Cir. 1988); Hoffman v. Fidelity and Deposit Co. of Maryland, 734 F.Supp. 192, 195 (D.N.J. 1990); Dancu v. Coopers & Lybrand, 778 F.Supp. 832, 835 (E.D. Pa. 1991). Section four allows a district court of competent jurisdiction to compel arbitration where appropriate. 9 U.S.C. § 4. Section three empowers the court to stay or dismiss the action while section four empowers the court to compel arbitration. See Chorley, 807 F.3d at 563 (“Sections 3 and 4 in turn ‘provide[ ] two parallel devices for enforcing an arbitration agreement: a stay of litigation in any case raising a dispute referable to arbitration, 9 U.S.C. § 3, and an affirmative order to engage in arbitration, § 4.'” (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). Therefore, Defendant's motion to dismiss and compel arbitration is best analyzed under sections three and four of the Federal Arbitration Act. Despite the Magistrate's consideration of the motion under Federal Rule of Civil Procedure 12(b)(3), the legal standard is the same: if every claim in this action must be submitted to arbitration, the Court will dismiss the case without prejudice and compel arbitration.

REVIEW OF A MAGISTRATE JUDGE'S REPORT

The Court is charged with making a de novo determination of those portions of the Report to which specific objections are made, and the Court may accept, reject, or modify, in whole or in part, the recommendation of the Magistrate Judge, or recommit the matter to the Magistrate Judge with instructions. See 28 U.S.C. § 636(b)(1). A district court, however, is only required to conduct a de novo review of the specific portions of the Magistrate Judge's Report to which an objection is made. See id.; Fed.R.Civ.P. 72(b); Carniewski v. W. Virginia Bd. of Prob. & Parole, 974 F.2d 1330 (4th Cir. 1992). In the absence of specific objections to portions of the Report, this Court is not required to give an explanation for adopting the recommendation. See Camby v. Davis, 718 F.2d 198, 199 (4th Cir. 1983). Thus, the Court must only review those portions of the Report to which the party has made a specific written objection. Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310, 316 (4th Cir. 2005).

“An objection is specific if it ‘enables the district judge to focus attention on those issues- factual and legal-that are at the heart of the parties' dispute.'” Dunlap v. TM Trucking of the Carolinas, LLC, No. 0:15-cv-04009-JMC, 2017 WL 6345402, at *5 n.6 (D.S.C. Dec. 12, 2017) (citing One Parcel of Real Prop. Known as 2121 E. 30th St., 73 F.3d 1057, 1059 (10th Cir. 1996)). A specific objection to the Magistrate's Report thus requires more than a reassertion of arguments from the pleading or a mere citation to legal authorities. See Workman v. Perry, No. 6:17-cv-00765-RBH, 2017 WL 4791150, at *1 (D.S.C. Oct. 23, 2017). A specific objection must “direct the court to a specific error in the magistrate's proposed findings and recommendations.” Orpiano v. Johnson, 687 F.2d 44, 47 (4th Cir. 1982).

“Generally stated, nonspecific objections have the same effect as would a failure to object.” Staley v. Norton, No. 9:07-0288-PMD, 2007 WL 821181, at *1 (D.S.C. Mar. 2, 2007) (citing Howard v. Sec'y of Health and Human Servs., 932 F.2d 505, 509 (6th Cir. 1991)). The Court reviews portions “not objected to-including those portions to which only ‘general and conclusory' objections have been made-for clear error.” Id. (emphasis added) (citing Diamond, 416 F.3d at 315; Camby, 718 F.2d at 200; Orpiano, 687 F.2d at 47).

DISCUSSION

Plaintiff's specific objections to the Report are as follows:

(I) The Plaintiff cannot be held to the arbitration clause in the Contract between [Anesthesia Management Solutions, LLC (“AMS”)] and Sleep Away LLC because the Plaintiff is not a party to that Contract or an intended third-party beneficiary;

(II) That the scope of the Arbitration Agreement in the Contract does not include [Family Medical Leave Act (“FMLA”)] claims against AMS by [Certified Nurse Anesthetists (“CRNAs”)].

[ECF No. 17, p.1].

I. Plaintiff is not bound by the agreement to arbitrate under a third-party beneficiary theory, but she is bound under the doctrine of equitable estoppel.

Plaintiff argues that the Magistrate Judge applied the wrong law to the question of whether Plaintiff, a non-signatory to the Independent Contractor Agreement for CRNA Processional Services (“Contract”), could be bound by the Contract's arbitration clause. [ECF No. 17, p.3].

Plaintiff's position is as follows:

Judge Rogers correctly found that Florida law should apply to his analysis concerning arbitrability. He then inexplicably applies South Carolina law in the middle of his analysis. Had he applied Florida law-which is more stringent that [sic] South Carolina law-he would have concluded that the Plaintiff does not meet the Florida definition of “intended third party beneficiary” and cannot be held to the subject Contract.

Id. This Court will review the Magistrate Judge's determination that Plaintiff is bound by the arbitration clause de novo.

It is undisputed that the parties to this action are Paula Campbell and AMS, but the parties to the Contract are Sleep...