Stiner v. Brookdale Senior Living, Inc.

• Decision Date: 25 January 2019
• Docket Number: Case No. 17-cv-03962-HSG
• Citation: 354 F.Supp.3d 1046
• Court: U.S. District Court — Northern District of California
• Parties: Stacia STINER, et al., Plaintiffs, v. BROOKDALE SENIOR LIVING, INC., et al., Defendants.

354 F.Supp.3d 1046

Stacia STINER, et al., Plaintiffs,

v.BROOKDALE SENIOR LIVING, INC., et al., Defendants.

Case No. 17-cv-03962-HSG

United States District Court, N.D. California.

Signed January 25, 2019

Benjamin Joseph Bien-Kahn, Christopher David Hu, Devin Whetstone Mauney, Gay Crosthwait Grunfeld, Jenny Snay Yelin, Rosen Bien Galvan and Grunfeld LLP, Kathryn Ann Stebner, Kelly Jean Knapp, Stebner & Associates, San Francisco, CA, Guy Burton Wallace, Sarah S. Colby, Schneider Wallace Cottrell Konecky Wotkyns LLP, Emeryville, CA, for Plaintiffs.

Adam P. KohSweeney, Matthew David Powers, Mallory Ann Jensen, O'Melveny & Myers LLP, San Francisco, CA, Jeffrey A. Barker, O'Melveny and Myers, Los Angeles, CA, for Defendants.

ORDER DENYING DEFENDANTS' MOTION TO COMPEL ARBITRATION, GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS, AND DENYING DEFENDANTS' MOTION TO STRIKE

Re: Dkt. Nos. 59, 60, 61

HAYWOOD S. GILLIAM, JR., United States District Judge

Before the Court are the Motion to Compel Arbitration, Dkt. No. 59, Motion to Dismiss and/or Strike Portions of Plaintiffs' Second Amended Complaint, Dkt. No. 60, and Motion to Strike Portions of the Second Amended Complaint, Dkt. No. 61, brought by Defendants Brookdale Senior Living Inc. and Brookdale Senior Living Communities, Inc. ("Brookdale").

I. BACKGROUND

On July 13, 2017, Plaintiffs Patricia and Christopher Eidler, Stacia Stiner, Mary-Catherine Jones, and Helen Carlson filed this action against Defendants for violations of the Americans with Disabilities Act of 1990 ("ADA"), the Unruh Civil Rights Act ("Unruh Act"), the Consumer Legal Remedies Act ("CLRA"), California Business and Professions Code §§ 7200 et seq. ("UCL"), and California Welfare and Institutions Code § 15610.3. Dkt. No. 1. Plaintiffs allege that Defendants' assisted living facilities are not accessible by persons with disabilities, and that Defendants' policies prevent persons with disabilities from fully accessing and enjoying Defendants' facilities. Dkt. No. 52 ("SAC") ¶¶ 3–4. Plaintiffs additionally allege that Defendants misrepresent the quality of care at their facilities, in violation of California law. SAC ¶¶ 5–6.

Plaintiffs filed a first amended complaint on August 25, 2017, adding Bonita Hager and Lawrence Quinlan as plaintiffs. Dkt. No. 20. On September 28, 2017, Defendants filed a motion to compel Plaintiffs Eidler, Hager, Jones, Carlson, and Quinlan to arbitration. Dkt. No. 23. On February 22, 2018, Plaintiffs voluntarily dismissed the claims of Plaintiffs Eidler, Hager, and Jones. Dkt. Nos. 40, 41, 42. The Court terminated Defendants' first motion to compel arbitration on March 15, 2018, when it granted leave for Plaintiffs to file the Second Amended Complaint. Dkt. No. 47. Plaintiffs filed the currently-operative Second Amended Complaint on March 29, 2018, which added Plaintiffs Edward Boris, Bernie Jestrabek-Hart, Arthur and Patricia Lindstrom, and Ralph Schmidt. See SAC.

II. MOTION TO COMPEL ARBITRATION

A. Legal Standard

The Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. , sets forth a policy favoring arbitration agreements and establishes that a written arbitration agreement is "valid, irrevocable, and enforceable." 9 U.S.C. § 2 ; see also 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) (noting federal policy favoring arbitration). The FAA allows that a party "aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court ... for an order directing that ... arbitration proceed in the manner provided for in such agreement." 9 U.S.C. § 4. Federal policy is "simply to ensure the enforceability, according to their terms, of private agreements to arbitrate." Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Jr. Univ. , 489 U.S. 468, 476, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989). Courts must resolve any "ambiguities as to the scope of the arbitration clause itself ... in favor of arbitration." Id.

Arbitration agreements "shall be 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. In analyzing whether an arbitration agreement is valid and enforceable, "generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening § 2." Doctor's Assoc., Inc. v. Casarotto , 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996). In interpreting the validity and scope of an arbitration agreement, the courts apply state law principles of contract formation and interpretation. See Wolsey, Ltd. v. Foodmaker, Inc. , 144 F.3d 1205, 1210 (9th Cir. 1998) (citation omitted).

When considering a motion to compel arbitration, the court is limited to determining (1) whether a valid arbitration agreement exists, and, if so (2) whether the arbitration agreement encompasses the dispute at issue. Cox v. Ocean View Hotel Corp. , 533 F.3d 1114, 1119 (9th Cir. 2008). If these conditions are satisfied, the court must compel arbitration. 9 U.S.C. § 4 ; Dean Witter Reynolds, Inc. v. Byrd , 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985) ("By its terms, the [FAA] leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration.").

B. Helen Carlson

i. Factual Background

Helen Carlson ("Ms. Carlson") is a 94-year-old resident of Brookdale Fountaingrove¹ since approximately October of 2011. SAC ¶ 17. Joan Carlson is Ms. Carlson's daughter-in-law and guardian ad litem for the purposes of this lawsuit, and has held Ms. Carlson's power of attorney since December 2006. Id. Before Ms. Carlson moved into Brookdale Fountaingrove, Joan Carlson, "acting as Ms. Carlson's legal representative and power of attorney," read and signed a standardized residency agreement and arbitration addendum with Emeritus. SAC ¶ 115; Dkt. No. 31-1, Ex. B; Dkt. No. 69 at 2. The arbitration agreement specified that it "shall be governed by and interpreted under the Federal Arbitration Act." Dkt. No. 31-1, Ex. B. Joan Carlson signed a subsequent residency agreement with Emeritus in January of 2013. Dkt. No. 31-1 ¶ 5, Ex. C. The 2013 residency agreement does not address arbitration. Dkt. No. 31-1, Ex. C. On November 17, 2015, Joan Carlson, in her capacity as Ms. Carlson's legal representative and holder of her power of attorney, reviewed and signed an agreement with Brookdale entitled "Amendment to Continuing Care Residence and Services Agreement." SAC ¶ 119.

In December of 2017, Joan Carlson was informed that Ms. Carlson would need to move to the memory care section of Brookdale Fountaingrove. SAC ¶ 122. On or around December 18, 2017, five months after this lawsuit was filed, Joan Carlson read and signed a new residency agreement with Brookdale reflecting Ms. Carlson's move to the memory care section. Id. ; Dkt. No. 38-1, Ex. D. In that December 2017 agreement, Joan Carlson opted out of the arbitration provision. Dkt. No. 38-1, Ex. D at 9–12. That 2017 agreement also included a provision stating that "[t]his agreement and any written amendments constitute the entire agreement between the parties and supersede all prior and contemporaneous discussions, representations, correspondence, and agreements whether oral or written." Id. at 15.

ii. Discussion

There is no dispute that the 2011 residency agreement with Emeritus contained a valid arbitration clause. Dkt. No. 69 at 4; Dkt. No. 59 at 4–5. However, Plaintiffs contend that both the 2013 residency agreement with Emeritus, which contained no arbitration clause, and the December 2017 residency agreement superseded the 2011 arbitration addendum. Dkt. No. 69 at 4. Defendants contend that the 2013 residency contract cannot terminate the 2011 arbitration addendum because it does not address arbitration at all, and that the 2017 residency agreement governs arbitration only with respect to Ms. Carlson's relocation and stay in the memory care section beginning in December of 2017. Dkt. No. 59 at 5–9. Defendants further contend that the 2017 residency agreement did not retroactively apply to the claims already at issue in this case when it was signed. Id.

a. 2013 Residency Agreement

With respect to the 2013 Residency agreement, Defendants cite to Huffman v. Hilltop Companies, LLC , which addressed the issue of an arbitration clause that was not mentioned in the survival clause of the same contract. 747 F.3d 391, 397–98 (6th Cir. 2014). The Sixth Circuit concluded that the nature of the survival clause, along with the "strong presumption in favor of arbitration," led to the conclusion that there was no clear implication that the arbitration clause would expire with the contract. Id. at 397–399.

Defendants also cite to Cione v. Foresters Equity Servs, Inc. , a California Court of Appeal case in which the plaintiff signed an arbitration agreement as part of a contract with the National Association of Securities Dealers ("NASD"), and subsequently signed an employment contract with a third party. 58 Cal. App. 4th 625, 630–31, 68 Cal.Rptr.2d 167 (1997). The third-party contract included an integration clause stating that the agreement contained "the entire understanding of the parties hereto with respect to the subject matter contained herein," and that there were "no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to in this Agreement." Id. at 631, 68 Cal.Rptr.2d 167. The court of appeals held that because the integration clause of the third-party contract explicitly applied only to the subject matter it described, and the contract made no mention of arbitration, that contract did not supersede the arbitration agreement in plaintiff's original contract with NASD. Id. at 637–638, 68...