248 Cal. App. 4th 392
Cal. Ct. App.2016Background
- Decedent Kenisha Parker signed three identical physician-patient arbitration agreements with Dr. Robert Yoho/New Body Cosmetic Surgery in 2013; she underwent liposuction in Sept. 2014 and died the same day; her relatives sued for wrongful death and malpractice.
- Defendants moved to compel arbitration under the arbitration agreements and invoked the Federal Arbitration Act (FAA), asserting the agreements involved interstate commerce (out-of-state medical supplies, internet advertising, out-of-state patients and contracts).
- Plaintiffs opposed, arguing the agreements failed to comply with Cal. Code Civ. Proc. §1295(c) because the statute grants a 30-day rescission (cooling-off) right and Parker died before that period expired, making the agreement unenforceable under Rodriguez v. Superior Court.
- The trial court denied the motion to compel, finding §1295(c)’s 30-day rescission applied and that the transaction did not sufficiently involve interstate commerce to trigger FAA preemption.
- The Court of Appeal reversed: it held the FAA applies (sufficient interstate nexus), the §1295(c) 30-day rescission right is a rule applicable only to arbitration provisions and therefore preempted by the FAA, and the motions to compel arbitration should have been granted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FAA applies (transaction "involving commerce") | Parker’s procedure and contracts were intrastate; venue/jurisdiction clauses point to California law so FAA should not apply | Medical practice has sufficient interstate nexus (20% supplies from out-of-state, internet advertising, out-of-state patients/contracts) so FAA applies | FAA applies; undisputed facts show sufficient effect on interstate commerce |
| Whether §1295(c) 30-day rescission right is enforceable against arbitration agreements covered by FAA | §1295(c) gives a statutory 30-day rescission right for medical arbitration agreements; Parker’s death before 30 days makes the agreement unenforceable (Rodriguez) | §1295(c) rescission is a rule applicable only to arbitration clauses and thus conflicts with the FAA; it is preempted | §1295(c) rescission right is preempted by the FAA and cannot be used to invalidate the arbitration agreements |
| Whether venue/jurisdiction language displaces FAA coverage | Venue/jurisdiction clauses selecting Los Angeles/California show parties intended California law to govern and avoid FAA preemption | The clauses are venue/ forum-selection provisions, not broad choice-of-law clauses displacing FAA; they do not avoid FAA | Venue language does not displace FAA; generic choice-of-law language that would exclude FAA is absent |
| Whether Rodriguez controls (death before 30 days invalidates agreement) | Rodriguez requires invalidation when signer dies before 30-day period expires because intent to waive jury right cannot be proved | Rodriguez did not consider FAA preemption; where FAA applies, Rodriguez’s §1295(c)-based outcome is displaced | Rodriguez’s reasoning is inapplicable here because FAA preempts §1295(c); thus Parker’s death before 30 days does not render the agreements unenforceable |
Key Cases Cited
- Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681 (state laws singling out arbitration provisions are preempted)
- Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265 ("involving commerce" interpreted broadly for FAA reach)
- Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1 (federal policy favoring arbitration; body of federal arbitrability law)
- Perry v. Thomas, 482 U.S. 483 (state rules that take meaning from the fact arbitration is at issue are preempted)
- Basura v. U.S. Home Corp., 98 Cal.App.4th 1205 (California decision finding state arbitration-specific statute preempted)
- Rodriguez v. Superior Court, 176 Cal.App.4th 1461 (holding death before §1295 30-day period can render medical arbitration agreement unenforceable where FAA not shown to apply)