In re No Place Like Home, Inc.

Decision Date27 October 2016
Docket NumberCase No. 15–31133–K
Citation559 B.R. 863
Parties In re No Place Like Home, Inc., Debtor. Tax ID/EIN: 62–1095865
CourtU.S. Bankruptcy Court — Western District of Tennessee

David J. Cocke, Esq., Evans | Petree PC, 1000 Ridgeway Loop Road, Suite 2000, Memphis, Tennessee 38120, dcocke@evanspetree.com , Attorney for Claimants

William B. Ryan, Esq., Donati Law, PLLC, 1545 Union Avenue, Memphis, Tennessee 38104, billy@donatilawfirm.com , Attorney for Claimants

E. Franklin Childress, Jr., Esq., M. Ruthie Hagan, Esq., Angie C. Davis, Baker Donelson Bearman Caldwell & Berkowitz, PC, 165 Madison Avenue, Suite 2000, Memphis, Tennessee 38103, fchildress@bakerdonelson.com , rhagan @bakerdonelson.com , angiedavis@bakerdonelson.com , Attorneys for Debtor—NPLH

Laurie D. Pulliam, Esq., LDP Law, LLC, 16901 Melford Blvd., Suite 123, Bowie, Maryland 20715, lpulliam@ldpulliamlaw.com , Co–Counsel for the Official Committee of Unsecured Creditors

Leland Murphree, Caynard Cooper & Gale, PC, 1901 6th Avenue North, Suite 2400, Birmingham, Alabama 35203, lmurphree@maynardcooper.com , Co–Counsel for the Official Committee of Unsecured Creditors

Joan Dickerson Williams, Esq., Kevin C. Gray, Esq. Maynard, Cooper & Gale, PC, 655 Galatin Street SW, Huntsville, Alabama 35801, jdwilliams @maynardcooper.com , kgray@maynardcooper.com , Co–Counsel for the Official Committee of Unsecured Creditors

Karen P. Dennis, Esq., Office of the United States Trustee, 200 Jefferson Avenue, Suite 400, Memphis, Tennessee, 38103 Karen.P.Dennis@usdoj.gov , Trial Attorney for U.S. Trustee for Region 8

MEMORANDUM AND ORDER RE GRANTING MOTION TO LIFT AUTOMATIC STAY TO PERMIT ARBITRATION OF CLAIMS” COMBINED WITH RELATED ORDERS AND NOTICE OF THE ENTRY THEREOF
David S. Kennedy

, UNITED STATES CHIEF BANKRUPTCY JUDGE

INTRODUCTION

This core proceeding under 28 U.S.C. § 157(b)(2)(B) and (G)

arises out of a Motion To Lift Automatic Stay To Permit Arbitration of Claims” (hereinafter “Motion”) filed by David J. Cocke, Esquire (“Mr. Cocke”), under 11 U.S.C. § 362(d)(1)

for and on behalf of twenty-two (22) nurse claimants, Akisha Bailey, Brandy Butler, Tacaweta Burton, Cynthia Davis, Latoya Freeman, Darrick Glasper, Latonya Gober, Cherica Hill, Kecia Huddleston, Lashunda Ilbourg, Estelle Ingraham, Rhonda Johnson, Candace Marshall, Linda McGee–Labarre, Eva Mitchell, Karen Mitchell, Kesia Nevels, Idell Rice, Tara Thomas, Ericka Walker–Cole, Bernice Warren, and Shemika Willis (Claimants).1 Mr. Cocke is the Chapter 11 attorney for the above-named Claimants along with William B. Ryan, Esquire. E. Franklin Childress, Jr., Esquire (“Mr. Childress”); Ruthie M. Hagan, Esquire (“Ms. Hagan”); and Angie C. Davis, Esquire (“Ms. Davis”), attorneys for the above-named Chapter 11 debtor, No Place Like Home (“NPLH”), filed a written objection or response thereto and participated at the hearing on the Motion that was held on October 21, 2016. These attorneys all appeared at the hearing on the Motion and provided thoughtful oral statements on behalf of the position of each of their respective clients.

This specific proceeding presents the question whether under particular facts and circumstances and applicable law the bankruptcy court or an arbitrator should ultimately resolve a certain federal wage and hour matter involving, for example, overtime and wage claims for an additional third year under the Fair Labor Standards Act (“FLSA”). That is, whether the subject arbitration agreements should be heard and enforced by an arbitrator or a bankruptcy judge. There are various threshold questions for judicial determination here that the court should address: (1) whether the Federal Arbitration Act (“FAA”) applies to the subject arbitration agreement; (2) whether the relevant statutory provisions and policies of the FAA conflict with the relevant statutory provisions and policies of the Bankruptcy Code; (3) whether the parties expressly agreed to arbitrate; (4) whether the issues would be better suited before an arbitrator or a bankruptcy judge; and (5) whether the bankruptcy court should exercise discretion, if any, under the existing facts and circumstances of this case to allow for arbitration or judicial proceedings.

The overarching issue, and ultimately what this proceeding comes down to, is what forum (arbitration or the bankruptcy court) should hear, determine, and liquidate the Claimants' asserted claims against NPLH? Assuming discretion exists, the bankruptcy court should utilize its discretion with great care in such matters to ensure that the arbitration dispute is appropriately and properly resolved in the most just, speedy, and inexpensive manner as possible before an arbitrator or a bankruptcy judge while recognizing the inherent statutory tension between the FAA and the Bankruptcy Code.2 This may mean compelling arbitration at times when the court feels under the existing facts and circumstances that it is appropriate, while at other times deciding that arbitration would likely frustrate the judicial process and should be avoided. This determination regarding when to compel arbitration arising out of a bankruptcy case should be made on a case-by-case basis/analysis until such time as Congress or the Supreme Court provides a clear and predictable litmus test to avoid the existing statutory tension, conflicts, and collision between the federal policies and goals of the Arbitration Act and the Bankruptcy Code.

BACKGROUND FACTS, CIRCUMSTANCES, AND PROCEDURAL HISTORY

After considering statements of counsel made at the hearing and the entire case record as a whole, the following shall constitute this court's findings of fact and conclusions of law in accordance with Rule 7052 of the Federal Rules of Bankruptcy Procedure

. Although the parties have a strong difference of opinion regarding the outcome of the instant Motion, nonetheless, the pre- and post-petition background facts and circumstances, and procedural history are not in substantial dispute and may be summarized, in relevant part, as follows.

NPLH is a Tennessee corporation that provides home health care to pediatric patients. NPLH was founded and is owned by Mrs. Mary Lynn Flood (“Mrs. Flood”). NPLH is operated by Mr. Craig Flood, acting as President, (“Mr. Flood”), and Mrs. Flood, acting as the sole owner, director, and Secretary (collectively “the Floods”). The Floods are husband and wife. NPLH currently employs approximately two-hundred (200) individuals, including licensed practical nurses (“LPNs”) and registered nurses (“RNs”), in the Tennessee counties of Shelby, Fayette, and Tipton.

Prior to November 16, 2015, the Claimants had entered into Independent Contractor Agreements with NPLH, which contained, among other things, an arbitration clause. (Claimants' Mot. Ex. C). All of the LPNs and RNs were required to sign this contract before they continued their work with NPLH. On April 16, 2015, Darrick Glasper, one of the Claimants, filed a civil complaint in the United States District Court for the Western District of Tennessee (District Court) seeking primarily to recover unpaid overtime premiums, liquidated damages, attorneys' fees, and litigation costs3 against NPLH while attempting also to initiate a class action lawsuit.4 NPLH responded and insisted that the arbitration clause in the contract be enforced. The District Court agreed, leading to numerous arbitration actions against NPLH regarding NPLH's compensation practices of its independent contractors and the FLSA.5 By classifying the Claimants as “independent contractors,” they were denied several employee protections, including overtime pay, benefits, and proper tax withholdings in accordance with the FLSA.6

On November 16, 2015, NPLH, without admitting liability, changed the classification of its nurses from independent contractors to non-exempt hourly “employees” under the FLSA. After this decision, NPLH chose to no longer schedule or use any nurse that was previously classified as an independent contractor. This decision also included the obligation to pay the existing “employees” overtime for the past two (2) years for all hours worked over the forty (40) hours in a workweek, as well as liquidated damages.

Once the above-decision was made, NPLH filed an original Chapter 11 case on November 20, 2015 (the “Petition Date”). NPLH also filed an “Application to Employ Baker Donelson as Attorneys” on November 22, 2015. Since the commencement of this Chapter 11 case, NPLH has continued to operate its business as a debtor-in-possession in accordance with the statutory provisions of §§ 1107

and 1108 of the Bankruptcy Code. On February 16, 2016, an official committee of unsecured creditors (hereinafter the Unsecured Creditors Committee) was formed by the United States Trustee for Region 8.

On March 22, 2016, NPLH filed an “Objection to Claim 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48”. (Docket No. 120). A “Response” was filed by the Claimants on September 6, 2016, asserting their right to recover damages accrued during the three (3) years immediately preceding the date they individually filed their actions. (Docket No. 265). A “Reply” was filed by NPLH on September 26, 2016, reserving its rights to contest the factual allegations until judicial adjudication of this Motion. (Docket No. 278). Prior to the above-mentioned reply, NPLH filed a “Second Amended Disclosure Statement” on August 16, 2016, and the “Tally Of Ballots” for the confirmation hearing regarding the Chapter 11 reorganization plan (hereinafter the “Plan”) on September 16, 2016.

After a hearing before this court on September 19, 2016, regarding the confirmation of NPLH's Plan which was combined with a pre-trial conference on the above-mentioned objections to the Claimants' claims, this court, with the parties' consent, opted to continue the FED. R. BANKR. P. 9014

contested matters regarding the objection to claims, but confirmed the amended Plan without...

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6 cases
  • Santangelo Law Offices, P.C. v. Touchstone Home Health LLC (In re Touchstone Home Health LLC), Bankruptcy Case No. 17–11134 TBM
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    • United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — District of Colorado
    • 21 d1 Agosto d1 2017
    ...across the country in relation to motions for relief from stay to liquidate claims by arbitration. See In re No Place Like Home, Inc. , 559 B.R. 863 (Bankr. W.D. Tenn. 2016) ("claims at issue arise strictly out of the FLSA and contract law. There is no underlying bankruptcy issue to be dete......
  • In re Patriot Solar Grp., LLC, Case No. 17–00984–jtg
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    ...... Chrysler LLC v. Plastech Engineered Prods., Inc. (In re Plastech Engineered Prods., Inc.) , 382 B.R. 90, ... or disallowance of claims arising under state law, like Vanguard's claims in this case, is a core proceeding under ... See Hill , 436 F.3d at 108 ; see also In re No Place Like Home, Inc. , 559 B.R. at 877 (citations omitted) ......
  • Kiskaden v. LVNV Funding, LLC (In re Kiskaden)
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    • United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — Eastern District of Kentucky
    • 7 d5 Abril d5 2017
    ...limitation or prohibition of the FAA, the arbitration agreement will not be strictly enforced." In re No Place Like Home, Inc. , 559 B.R. 863, 871 (Bankr. W.D. Tenn. 2016). "However, if no statutory text or legislative history exists on this topic, the court must then look to the third pron......
  • Sicherman v. World Auto Network Inc. (In re McZeal), Case No. 14-15947
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    • 31 d3 Maio d3 2017
    ...related to theBankruptcy Code." See id. (comparing In re Mintze, 434 F.3d 222, 231-32 (3d Cir. 2006) and In re No Place Like Home, Inc., 559 B.R. 863, 875 (Bankr. W.D. Tenn. 2016), with In re Gandy, 299 F.3d 489, 495-500 (5th Cir. 2002), In re Eber, 687 F.3d 1123, 1130-31 (9th Cir. 2012), a......
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1 books & journal articles
  • The Uneasy Relationship Between Arbitration and Bankruptcy.
    • United States
    • American Bankruptcy Law Journal Vol. 96 No. 4, December 2022
    • 22 d4 Dezembro d4 2022
    ...(Bankr. S.D. Fla. 2017) (enforcing arbitration with respect to nondischargeability of student loan debt); In re No Place Like Home, Inc., 559 B.R. 863 (Bankr. W.D. Tenn. 2016) (lifting stay to allow arbitration of federal wage and hour claims); Hix v. Flood (In re Hix), 2011 WL 1520013, at ......

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