Duenas v. Life Care Centers of America (CA1 10/21/14)

This is about how an arbitration agreement affected a wrongful-death claim and a claim under the Adult Protective Service Act. The court spends some time establishing that the agreement was lawful and proper but then decides that it didn’t apply here.

Plaintiff’s decedent was in and out of a nursing home, dying allegedly because of its acts. She sued under APSA and for wrongful death. But she had herself signed arbitration agreements on two occasions when decedent was in the home. The home therefore moved for summary judgment, which the trial court granted. She appealed.

The first question was whether the agreements were enforceable. The arbitration clause was apparently typical of those found in hospital admission papers. Plaintiff signed such papers twice, once during each of two admissions, though after her decedent had actually been admitted. On this issue she made several arguments and lost them:

She argued that the clause was procedurally unconscionable because she didn’t know about, wouldn’t have agreed to it, etc. But she had the opportunity to read it, it was not inconspicuous, and – the court says this is “highly relevant to a procedural unconscionability argument”  – did not have to be signed as a pre-condition to care.

She argued that it was misleading because it said that arbitration is quicker and cheaper than litigation but her lawyer had been involved in expensive arbitrations. But nothing in the clause was objectively false. (The court mentions that “It would be exceedingly difficult, if not impossible, to prove the general economic superiority of arbitration or traditional litigation . . .” It isn’t entirely clear why the court makes this incautiously truthful remark, “arbitration saves time and money” having become a mantra of both the bench and the bar because it works to the benefit of both the bench and the bar.)

She argued that arbitration was substantively unconscionable, apparently because it would allegedly cost too much and citing Clark. But she did not present evidence to carry her burden of proof.

She argued that the clause violated her reasonable expectations, citing a case of an ignorant young girl who signed such an agreement in order to get abortion counseling. But this plaintiff was not inexperienced, vulnerable, or under duress. “These agreements were not contracts of adhesion.” Again the court emphasizes that Plaintiff didn’t have to sign them to obtain care.

(In connection with this argument the court says that “an agreement to arbitrate . . . is not an affirmative defense.” A footnote explains that Rule 8(c) says “arbitration and award,” so arbitration is only an affirmative defense if you’ve been through it already and have an award. That’s the thinking of the Southern District of Texas case that this court cited once upon a time, but doesn’t mention here, for the same proposition. But what about Cortez v. Avalon Care Center (CA2 2010), “An assertion that arbitration is mandatory is an affirmative defense to a complaint”? Rule 8(c) also says “and any other matter constituting an avoidance or affirmative defense.” Isn’t arbitration an “avoidance”? You don’t have to avoid the whole claim, after all, or even the whole lawsuit – assumption of risk and comparative negligence are affirmative defenses. Arbitration is not a confession-and-avoidance defense in the strict common-law sense but, though that’s where affirmative defenses came from, that’s not what they are now —  the rule merely says “avoidance” and modern pleading allows a defendant, as the common law did not, to avoid without confessing.)

The next question was whether the arbitration agreements applied to the wrongful-death claims. The court answers that they did not because those claims are not derivative and belong to the statutory beneficiaries. The beneficiaries did not sign the agreements.

The last question was whether the arbitration agreements blocked the APSA claim, which, unlike wrongful-death, is derivative. The court says they do not, on factual grounds: Plaintiff signed them when decedent was in the home the first and second times but not when she was in the home the third and fourth times, when the allegedly culpable conduct presumably occurred.

First, though, the court had decided whether it was for it or the arbitrator to make that call. The agreement contained the usual sort of provision to the effect that the arbitrator resolve any dispute as to its scope. The court appears to conclude, though one hopes that its line of thought was clearer to the writer than it will be to the readers, that under the particular language of this contract “scope” was itself limited to the particular admissions during which Plaintiff signed arbitration agreements. To extend “scope” beyond that would allow an arbitrator to rule on the existence, not merely the scope, of the arbitration agreements.

The brief concurrence apparently agrees with the home that “scope” could include whether the agreements apply to the last two admissions. But it concludes that the court can make the decision because the parties waived having the arbitrator do so. “Neither party  . . . has questioned the authority of the superior court or this court to decide arbitrability.” We don’t really know what that means; maybe you had to be there.

So the court reverses except for claims arising out of the first two admissions. As to those, though, it says that their dismissal should have been without prejudice rather than with. “A dismissal of claims subject to arbitration should be entered without prejudice, to allow for further judicial determinations that may prove necessary.”

(link to opinion)