42 F. Supp. 3d 821
S.D. Miss.2014Background
- Minerva Garrett resided in Oasis Health & Rehab Yazoo City facility from Jan 2010 until her death in Sep 2012.
- Counsel for Garrett’s grandson sent Oasis a notice of claim on Aug 27, 2013 alleging nursing staff negligence caused her fall, ulcers, malnutrition, infection, and death.
- Oasis brought an action under 9 U.S.C. § 4 to compel arbitration per a disputed arbitration agreement between Oasis, Smith, and Garrett—wrongful death beneficiary.
- Smith filed a motion to dismiss or for summary judgment arguing the arbitration agreement was unenforceable due to lack of a forum and substantive unconscionability.
- Oasis moved for summary judgment enforcing the agreement; Smith did not respond to Oasis’s motion.
- The court applied FAA two-step analysis, found a valid arbitration agreement covering the claims, and granted Oasis’s enforcement request while denying Smith’s challenges.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration agreement is enforceable despite forum issues. | Smith argues no forum exists due to ADR Associates’ dissolution. | Smith contends the lack of a valid forum invalidates arbitration. | Agreement enforceable; forum/selection clause sufficient; forum can be substituted. |
| Whether the agreement is substantively unconscionable. | Garrett’s side argues terms favor Oasis and limit patient remedies. | Smith contends terms are oppressive and one-sided. | No substantive unconscionability; provisions severable if problematic. |
| Whether the cost-shifting provision renders the contract unconscionable. | Costs could preclude meaningful arbitration; argues unequal burden. | No proof that costs render arbitration prohibitive. | Not proven; cannot invalidate arbitration contract on this basis. |
| Whether the opt-out/Not Subject to ADR provisions create ambiguity or mutuality concerns. | Provisions allow court access for collection disputes, not for residents. | Provision intended to permit litigation of certain disputes by either party. | Not unconscionable; provision contemplated reciprocal opt-out not unlawful. |
| Whether the agreement’s method for selecting arbitrators satisfies FAA §5 and avoids state-law issues. | FEMA §5 allows court appointment if method fails. | State law not inconsistent with federal law; method provided. | FAA §5 satisfied; no need to rewrite contract. |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S. 2011) (FAA preempts state law conflicting with arbitration)
- Green Tree Fin. Corp. v. Randolph, 531 U.S. 79 (U.S. 2000) (costs cannot automatically render arbitration unenforceable)
- Moulds v. Covenant Health & Rehab of Picayune, 14 So.3d 695 (Miss. 2009) (one-sided/unconscionable provisions may be severed; not automatically voided)
- Covenant Health & Rehab, of Picayune, L.P. v. Brown, 949 So.2d 732 (Miss. 2007) (multiple provisions found unconscionable in admission agreements)
- Vicksburg Partners, L.P. v. Stephens, 911 So.2d 507 (Miss. 2005) (unconscionability and contract formation considerations)
- Sherrer v. Covenant Health & Rehab of Picayune, 2012 WL 1067910 (S.D. Miss. 2012) (forum-selection clause allowing alternate forum upheld)