GGNSC Louisville St. Matthews LLC v. Phillips
3:17-cv-00406
W.D. Ky.Aug 10, 2017Background
- Resident Ilene Phillips lived at Golden Living Center–St. Matthews from October 2016 to March 2017 and signed an Alternative Dispute Resolution (ADR) agreement before admission that stated arbitration would resolve covered disputes and that signing was not a condition of admission.
- Phillips sued the facility and related corporate defendants in Jefferson Circuit Court alleging negligent and substandard care causing physical and emotional injuries.
- The corporate plaintiffs filed a federal petition to compel arbitration and moved for expedited consideration; Phillips moved to dismiss the federal action.
- Phillips argued multiple grounds to dismiss: failure to join a necessary party, lack of FAA applicability (no interstate commerce), unconscionability, lack of subject-matter jurisdiction, failure to authenticate the ADR agreement, Colorado River abstention, and Anti-Injunction Act concerns.
- The district court evaluated these defenses, concluded the ADR agreement is valid and covers Phillips’s claims, found FAA jurisdiction, denied the motion to dismiss, granted the petition to compel arbitration, enjoined the state-court action pending arbitration, and stayed the federal proceeding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether arbitration agreement is enforceable under FAA | Agreement is valid, covers Phillips’s claims, and FAA governs | FAA doesn't apply because no interstate commerce; agreement unconscionable | Court: FAA applies; agreement not unconscionable; arbitration compelled |
| Whether necessary-party joinder requires dismissal under Rule 19 | Joinder unnecessary; corporate defendants represent same interest | Administrator in state suit is necessary/indispensable party | Court: Administrator not necessary; Rule 19 dismissal denied |
| Whether federal court has subject-matter jurisdiction | Federal question via FAA and diversity exists among present parties | No federal question; lack of complete diversity if administrator joined | Court: FAA creates federal issue; administrator not required; jurisdiction proper |
| Whether court should abstain or be enjoined from stopping state suit | Federal court should protect arbitration right and enjoin state action to effectuate judgment | Colorado River abstention or Anti-Injunction Act bars relief | Court: Declined to abstain; injunction fits exception to Anti-Injunction Act; state action enjoined |
Key Cases Cited
- Stout v. J.D. Byrider, 228 F.3d 709 (6th Cir. 2000) (framework for court tasks when deciding a motion to compel arbitration)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (arbitrability standard and federal policy favoring arbitration)
- Great Earth Companies, Inc. v. Simons, 288 F.3d 878 (6th Cir. 2002) (Colorado River abstention factors and Anti-Injunction Act exception discussion)
- Kindred Nursing Centers Ltd. P’Ship v. Clark, 137 S. Ct. 1421 (U.S. 2017) (Supreme Court guidance on enforceability of arbitration agreements in nursing-home context)