Biller v. S-H OPCO Greenwich Bay Manor
961 F.3d 502
| 1st Cir. | 2020Background
- Joan McKenna moved into Brookdale Greenwich Bay in March 2016 and signed a residency agreement (signed by her daughter/attorney-in-fact, Kara Biller) that included a broad arbitration clause covering disputes “arising out of, or in any way relating to” the Agreement or any of McKenna’s stays.
- Brookdale agreed in July 2016 to administer McKenna’s thyroid medication but allegedly failed to do so from July 2016 to August 2017, resulting in hospitalization and McKenna’s subsequent permanent move out of the facility.
- In July 2017 McKenna was transferred to a memory-care unit and Brookdale gave (and later executed) an updated residency agreement; plaintiffs contend the move terminated the March 2016 agreement and eliminated its arbitration clause.
- Plaintiffs sued in state court alleging negligence and breach of contract; Brookdale removed and moved to compel arbitration under the FAA; the district court denied the motion, concluding the March 2016 agreement had terminated.
- Brookdale appealed; the First Circuit reversed, holding the arbitration clause remains enforceable, that the arbitrator must decide contract-interpretation questions like the meaning of “relocate,” and directing the district court to compel arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability (court v. arbitrator)? | Court must decide because whether a written agreement to arbitrate exists is a threshold judicial question. | Arbitrator should decide—clause covers disputes over interpretation, scope, enforceability. | No clear-and-unmistakable delegation; court decides the threshold but sends interpretive disputes (like meaning of “relocate”) to arbitrator. |
| Whether the residency agreement terminated on relocation (thereby ending arbitration) | Move to memory-care in July 2017 triggered termination clause, extinguishing the arbitration clause. | The relocation dispute is one of contract interpretation covered by the arbitration clause and thus for the arbitrator to decide. | The arbitration clause delegates interpretation of the Agreement; the arbitrator should decide when/if the contract terminated. |
| Whether an arbitration clause survives expiration/termination of the underlying contract | If the underlying contract ended, the arbitration clause ended with it. | Arbitration clauses are severable and presumptively survive expiration; post-expiration disputes with a real source in the contract remain arbitrable. | Arbitration clause is separable and presumed to survive; plaintiffs needed an independent challenge to the arbitration clause itself to avoid arbitration. |
| Replacement contract / unconscionability defenses | A new implied-in-fact July 2017 agreement superseded the 2016 agreement and contained no arbitration; alternatively, the arbitration clause is unconscionable. | No evidence of a mutual intent to wholly replace the 2016 agreement or to revoke arbitration; unconscionability claims lack the necessary factual showing (e.g., prohibitive fees). | Plaintiffs failed to prove an entirely superseding agreement or to make the factual showing required to render the arbitration clause unconscionable; arbitration remains enforceable. |
Key Cases Cited
- Am. Express Co. v. Italian Colors Rest., 570 U.S. 228 (2013) (courts must enforce arbitration agreements according to their terms)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (arbitration remains a matter of contract; delegation requires clear and unmistakable evidence)
- Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63 (2010) (distinguishes challenges to arbitration clause itself from challenges to the contract as a whole)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (arbitration clauses are severable from the rest of the contract absent contrary intent)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (party must specifically challenge arbitration clause to avoid arbitration)
- AT&T Techs., Inc. v. Commc'ns Workers, 475 U.S. 643 (1986) (courts decide arbitrability in the absence of clear delegation)
- Litton Fin. Printing Div. v. N.L.R.B., 501 U.S. 190 (1991) (presumption that arbitration provisions survive contract expiration)
- Nolde Bros., Inc. v. Local No. 358, 430 U.S. 243 (1977) (post-expiration arbitration can be appropriate when dispute is rooted in the expired agreement)
- Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287 (2010) (court must decide threshold questions about existence/validity of arbitration agreement unless clearly delegated)
- Unite Here Local 217 v. Sage Hospitality Res., 642 F.3d 255 (1st Cir. 2011) (arbitrator decides disputes over the duration/meaning of underlying agreement when arbitration clause covers such interpretive disputes)
- Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367 (1st Cir. 2011) (elements for compelling arbitration under the FAA)
- Awuah v. Coverall N. Am., Inc., 554 F.3d 7 (1st Cir. 2009) (incorporation of arbitration rules can show clear delegation)
- Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79 (2000) (party alleging prohibitive arbitration costs must show likelihood of such costs to avoid arbitration)