Pickering v. Urbantus, LLC

• Decision Date: 23 November 2011
• Docket Number: No. 4:11–cv–00411–JEG–RAW.,4:11–cv–00411–JEG–RAW.
• Citation: 827 F.Supp.2d 1010
• Parties: Debrah PICKERING and Wesley Stevens, Attorneys–in–Fact for Paulyne Stevens, Plaintiffs, v. URBANTUS, LLC d/b/a Emeritus at Urbandale; and Emeritus Corporation d/b/a Emeritus at Urbandale, Defendants.
• Court: U.S. District Court — Southern District of Iowa

827 F.Supp.2d 1010

Debrah PICKERING and Wesley Stevens, Attorneys–in–Fact for Paulyne Stevens, Plaintiffs,

v.URBANTUS, LLC d/b/a Emeritus at Urbandale; and Emeritus Corporation d/b/a Emeritus at Urbandale, Defendants.

No. 4:11–cv–00411–JEG–RAW.

United States District Court,S.D. Iowa,Central Division.

Nov. 23, 2011.

Steven P. DeVolder, DeVolder Law Firm, Norwalk, IA, Mark S. Pennington, Kutmus, Pennington & Hook, West Des Moines, IA, for Wesley Stevens, Debrah Pickering.

Christopher P. Jannes, Kendall R. Watkins, Davis Brown Koehn Shors & Roberts PC, Des Moines, IA, for Urbantus LLC, Emeritus Corporation.

ORDER

JAMES E. GRITZNER, Chief Judge.

Now before the Court is a Combined Motion to Dismiss or Stay the Proceedings and to Compel Arbitration brought by Defendants Urbantus, LLC (Urbantus), and Emeritus Corporation (Emeritus) (collectively, Defendants). ¹ Plaintiffs Debrah Pickering (Pickering) and Wesley Stevens (collectively, Plaintiffs), as Attorneys–in–Fact for Paulyne “Polly” Stevens (Ms. Stevens), resist. Neither party has requested a hearing and the Court finds that none is needed; therefore, the matter is fully submitted and ready for disposition.

I. FACTUAL AND PROCEDURAL BACKGROUND

On July 16, 2009, Pickering entered into a Memory Care Occupancy Agreement (Occupancy Agreement) with Emeritus on behalf of Ms. Stevens, effective July 18, 2009. The Occupancy Agreement, which makes no mention of Urbantus, states that it is made “between Emeritus Corporation, a Washington corporation (‘we,’ ‘us' or ‘our’) and Polly Stevens (‘You’ or ‘Resident’).” Occupancy Agreement, Defs.' Ex. B 3, ECF No. 2–3. Pickering, acting in her shared capacity as Attorney–in–Fact for Ms. Stevens, also signed an Agreement to Resolve Disputes by Binding Arbitration (Arbitration Agreement). Per its terms, the Arbitration Agreement was entered into by “Emeritus at Urbandale (the ‘Community’) and Polly Stevens.” Arbitration Agreement, Defs.' Ex. C 1, ECF No. 2–4. This Arbitration Agreement, which is not attached to nor incorporated by the Occupancy Agreement, provides:

any action, dispute, claim or controversy of any kind, whether in contract or in tort, statutory or common law, personal injury, property damage, legal or equitable or otherwise, arising out of the provision of assisted living services, healthcare services, or any other goods or services provided under the terms of any agreement between the Parties, including disputes involving the scope of this Arbitration Agreement, or any other dispute involving acts or omissions that cause damage or injury to either Party, except for matters involving eviction, shall be resolved exclusively by binding arbitration and not by lawsuit or resort to the judicial process, except to the extent that applicable law provides for judicial review of arbitration proceedings. To the fullest extent permitted by law, this Arbitration Agreement shall apply to third parties not signatories to this Agreement, including any spouse, heirs, or persons claiming through the Resident. Any claims or grievances against the Community's corporate parent, subsidiaries, affiliates, employees, officers or directors shall also be subject to and resolved in accordance with this Arbitration Agreement.

Id. The Arbitration Agreement, which took effect July 16, 2009, has a governing law provision which specifies that it “shall be governed by and interpreted under the Federal Arbitration Act.” Id. at 2. Pursuant to the above agreements, Ms. Stevens became a tenant at Emeritus at Urbandale in Polk County, Iowa.

Emeritus at Urbandale, though not itself a legal entity, is owned and operated by Emeritus, a Washington corporation with its principal place of business in Seattle. Emeritus is also the sole member of Urbantus, a Washington limited liability company with its principal place of business in Seattle Washington. Urbantus owns the real estate upon which Emeritus at Urbandale is operated. Emeritus at Urbandale is a nursing home facility which is certified to provide dementia-specific assisted living programs to residents. In operating its programs, Emeritus at Urbandale orders a variety of medical equipment and supplies from a number of vendors and suppliers through national vendor contracts. Many of these third parties maintain their principal offices in states other than Iowa, including Florida, Minnesota, Michigan, and Kentucky.

On March 1, 2011, Ms. Stevens, while a resident of Emeritus at Urbandale in the dementia-specific assisted living program, was found on the floor of her room at approximately 1:50 a.m. She was discovered by an Emeritus at Urbandale employee who placed Ms. Stevens back into her bed. That afternoon, family members of Ms. Stevens requested that an ambulance be called, and Ms. Stevens was subsequently taken to Iowa Methodist Medical Center West and admitted into the intensive care unit. Following an examination, Ms. Stevens was diagnosed with six broken ribs and a partially collapsed lung.

Plaintiffs filed their petition in the Iowa District Court for Polk County on August 17, 2011, alleging that Defendants' employees and agents were negligent in failing to document Ms. Stevens' fall, in failing to follow protocol following the fall, in moving Ms. Stevens prior to an appropriate medical assessment, in failing to notify the appropriate health personnel or call 911, and in failing to notify family members. Plaintiffs allege further negligence in the training of Defendants' employees, in the failure to document their requisite training, and in the insufficient staffing of Emeritus at Urbandale. Plaintiffs seek compensatory and punitive damages. Urbantus timely removed the action to this Court based upon diversity jurisdiction. Following removal, Urbantus filed the present motion pursuant to 9 U.S.C. §§ 3–4, which Plaintiffs responded to concurrent with the filing of their motion to remand, amended complaint, and motion to join Emeritus as a defendant. Based upon subsequent filings by the parties, and the approval of the requested joinder, the Court denied Plaintiffs' motion to remand as moot, leaving only Defendants' motion for consideration.

II. DISCUSSION

The Federal Arbitration Act (FAA) was passed “to overcome courts' refusals to enforce agreements to arbitrate” by “plac[ing] such agreements upon the same footing as other contracts.” Allied–Bruce Terminix Cos., Inc., v. Dobson, 513 U.S. 265, 270–71, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995) (internal quotation marks and citations omitted). Arbitration agreements that fall under the FAA are considered “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. “Section 2 is a congressional declaration of a liberal federal policy favoring arbitration agreements....” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). In accordance with the intent of Congress, the FAA's provisions, though substantive in nature, are applied in diversity cases. Allied–Bruce Terminix Cos., Inc., 513 U.S. at 271, 115 S.Ct. 834. Furthermore, when in conflict with state law, the FAA preempts state statutes. Id.; see also Faber v. Menard, Inc., 367 F.3d 1048, 1052 (8th Cir.2004) (explaining that the FAA “preempts all state laws that reflect a policy disfavoring arbitration and which are designed specifically to limit arbitration”).

The FAA governs written maritime transactions and contracts “evidencing a transaction involving commerce.” 9 U.S.C. § 2. The Supreme Court has interpreted “involving commerce” broadly to constitute “the functional equivalent of ‘affecting [commerce].’ ” Allied–Bruce Terminix Cos., Inc., 513 U.S. at 274, 115 S.Ct. 834. The phrase “evidencing a transaction” was interpreted to mean that the transaction must, “ in fact, [ ] have involved interstate commerce.” Id. at 277, 115 S.Ct. 834.

As a preliminary matter, the Court must determine whether the Arbitration Agreement falls under the purview of the FAA. That the agreement is in written form is not at issue here; therefore, the Court need only consider if the contract involves commerce. The arbitration clause provides that it “shall be governed by and interpreted under the Federal Arbitration Act, 9 U.S.C. Sections 1–16.” Arbitration Agreement, Defs.' Ex. C 2, ECF No. 2–4. While Defendants provide extensive argument in their briefing to establish that Emeritus at Urbandale's conduct qualifies as interstate commerce, Plaintiffs do not contest this general statement of the law nor the applicability of the FAA when nursing facilities are operated by entities from other states.² Plaintiffs rather challenge the sufficiency of the record to demonstrate a commerce nexus as to Urbantus.

While the relationship of the parties is further discussed below, viewed in either context the record reflects that the Arbitration Agreement involves interstate commerce. As mentioned above, Congress clearly intended to invoke through the FAA the “broadest permissible exercise of [its] Commerce Clause power.” Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56, 123 S.Ct. 2037, 156 L.Ed.2d 46 (2003). As raised by Defendants, the affect on interstate commerce can be viewed in the aggregate. Id. Through the course of complying with the Occupancy Agreement, which stipulates the care to which Ms. Stevens is entitled, Emeritus at Urbandale continually acted, in fact, in interstate commerce. Defendants provided an affidavit from Lisa Eastman, the Administrator of Emeritus at Urbandale attesting to the variety of medical equipment and other supplies that Emeritus at Urbandale purchases through a number of out-of-state vendors and suppliers. The products purchased, shipped from at least four alternate states, range from laundry supplies, to food and culinary products, to pharmaceutical and medical goods. Interstate transactions such as these certainly fall within the broad scope Congress...