Preview
Electronically Filed
JOHN L. SUPPLE (SBN 94582) 9/1/2023 5:33 PM
jsupple@ jsupplelaw.com Superior Court of California
ROBERT R. DEERING (SBN 258043) County of Stanislaus
rdeering@jsupplelaw.com Clerk of the Court
MATTHEW SCHROEDER (SBN 273361) By: Raquel Enriquez, Deputy
mschroeder@ jsupplelaw.com
J SUPPLE LAW
A Professional Corporation
990 Fifth Avenue
San Rafael, CA 94901
Telephone: (415) 366-5533
Facsimile: (415) 480-6301
Attomeys for Defendants
COVENANT CARE CALIFORNIA, LLC dba TURLOCK NURSING
AND REHABILITATION CENTER; COVENANT CARE, LLC
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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IN AND FOR THE COUNTY OF STANISLAUS
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LARRY B. DIGNES (Decedent) by and through Case No. CV-20-004057
= 13 his Successors-In-Interest SHEILA M. LOWE,
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14 an individual; LORI M. KIRCHERT, an SUPPLEMENTAL DECLARATION OF
individual MATTHEW SCHROEDER IN SUPPORT|
15 OF DEFENDANTS’ SUPPLEMENTAL
Plaintiff, BRIEF IN OPPOSITION TO
16 PLAINTIFFS’ RENEWED MOTIONTO
vs. LIFT STAY AND ORDER
17 ALLOCATION OF ARBITRATION
18 COVENANT CARE CALIFORNIA, LLC dba COSTS TO DEFENDANTS OR
TURLOCK NURSING AND REMAND THE CASE TO SUPERIOR
19 REHABILITATION CENTER; COVENANT COURT
CARE, LLC, a Delaware Corporation; and
20 DOES 1 through 50, inclusive, Accompanying Documents:
1) Supplemental Brief
21 Defendants. 2) Declaration of John L. Supple
22 3) Proof of Service
23 Date: September 14, 2023
Time: 8:30 am.
24 Dept.: 24
Judge: Hon. Sonny S. Sandhu
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26 Complaint Filed: September 18, 2020
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SUPPLEMENTAL DECLARATION OF MATTHEW SCHROEDER IN SUPPORT OF DEFENDANTS
SUPPLEMENTAL BRIEF IN OPPOSITION TO PLAINTIFFS’ RENEWED MOTION TO LIFT STAY
I, Matthew Schroeder, hereby declare:
1 Iam an attomey at law licensed to practice in all the courts of the State of California
and an associate at the law firm of J Supple Law, PC, attorneys of record for Defendants
COVENANT CARE CALIFORNIA, LLC dba TURLOCK NURSING AND
REHABILITATION CENTER and COVENANT CARE, LLC (hereinafter “Defendants”). If
called as a witness, I could and would competently testify to the following facts based on my own
personal knowledge.
2 Plaintiffs’ Renewed Motion came on regularly for hearing on June 7, 2023 in
Department 24 of the above-captioned Court. Prior to said hearing, the Court issued a tentative
10 ruling denying Plaintiffs’ Renewed Motion without prejudice as follows: “In light of Plaintiff's
11 continued assertion that his estate cannot afford the costs of arbitration, the Court hereby grants
12 Defendant leave to conduct limited discovery into Plaintiff’s/his estate’s finances, to determine if
= 13 Plaintiff is unable to pay arbitration costs, before offering Defendant the option to elect to either
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14 pay Plaintiff's costs or waive their right to arbitrate. (Cal. Civ. Proc 1281, 1281.2, 1281.4, Aronow
15 v. Superior Ct., 76 Cal. App. 5th 865, (2022), as modified on denial of reh'g (Apr. 22, 2022).”
16 3 On June 7, 2023, at the hearing of Plaintiffs’ Motion, the Court amended its
17 tentative ruling to continue (rather than deny, without prejudice) the hearing of Plaintiffs’ Motion
18 to September 14, 2023, which became the Court’s final order. As part of said order, the Court
19 authorized the parties to submit supplemental briefing regarding the Estate’s ability to pay for the
20 cost arbitration based on the outcome of Defendants’ completed discovery into the Estate’s
21 finances.
22 BACKGROUND FACTS
23 4 Attached hereto as Exhibit 1 is a true and correct copy of Plaintniffs’ Opposition
24 to Defendants’ Motion to Compel Arbitration. Therein, Plaintiffs presented zero evidence of any
25 inability to pay for the cost of arbitration in their Opposition and further failed to do so in any of
26 the supplemental briefing afforded by the Court.
27 5. On July 25, 2022, Thomas S. Bradley of Judicate West was appointed as the
28 arbitrator via the strike and rank process.
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SUPPLEMENTAL DECLARATION OF MATTHEW SCHROEDER IN SUPPORT OF DEFENDANTS’
SUPPLEMENTAL BRIEF IN OPPOSITION TO PLAINTIFFS’ RENEWED MOTION TO LIFT STAY
6 Mediation was completed without resolution on March 22, 2023.
7 At no time thereafter did Plaintiffs engage the arbitrator to allow for discovery to
begin in the arbitration forum.
COURT AUTHORIZED FINANCIAL DISCOVERY
8 On June 15, 2023, Defendants propounded Form and Special Interrogatories,
Requests for Admission, and Requests for Production of Documents to Plaintiff's Estate, to which
Plaintiffs responded with verified responses on and around July 21, 2023.
9 Attached hereto as Exhibit 2 is a true and correct copy of Defendants’ Form
Interrogatories, Set One, to Plaintiff Larry Dignes, by and through his successor-in-interest, Sheila
10 M. Lowe and Plaintiffs’ verified Response to same.
11 10. Attached hereto as Exhibit 3 is a true and correct copy of Defendants’ Special
12 Interrogatories, Set One, to Plaintiff Larry Dignes, by and through his successor-in-interest, Sheila
= 13 M. Lowe and Plaintiffs’ verified Response to same.
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14 11. Attached hereto as Exhibit 4s a true and correct copy of Defendants’ Request for
15 Admissions, Set One, to Plaintiff Larry Dignes, by and through his successor-in-interest, Sheila
16 M. Lowe and Plaintiffs’ verified Response to same.
17 12. Attached hereto as Exhibit Sis a true and correct copy of Defendants’ Request for
18 Production of Documents, Set One, to Plaintiff Larry Dignes, by and through his successor-in-
19 interest, Sheila M. Lowe and Plaintiffs’ verified Response to same.
20 ADDITIONAL RELEVANT FACTS
21 13. As of September 1, 2023, Plaintiffs’ counsel's website specifically promised “[W]e
22 do not charge you for our services. Our attomey fees are a built-in part of your settlement... We
23 only get a payment if you get a settlement.” (See York Law Firm website, available at
24 https://www.yorklawfirm.com/). This representation on counsel’s website indicates it is highly
25 likely counsel agreed to advance all fees and costs to the Estate.
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SUPPLEMENTAL DECLARATION OF MATTHEW SCHROEDER IN SUPPORT OF DEFENDANTS’
SUPPLEMENTAL BRIEF IN OPPOSITION TO PLAINTIFFS’ RENEWED MOTION TO LIFT STAY
14, Attached hereto as Exhibit 6 is a true and correct copy of the Judicate West
arbitration fee schedule, which expressly notes that “Per Cal. Code Civ. Proc. § 1284.3(a)(3), an
arbitration fee waiver form for indigent consumer parties is available upon request.”
15. In my experience, and per the Judicate West “Frequently Asked Questions”
webpage, available at https://www judicatewest.com/Resource/Fags#: ~:text=A s% 20required
% 20by% 20Califomia% 20C ode,charged% 20to% 20an% 20indigent%20consumer, Judicate West
waives fees and costs, exclusive of arbitrator fees, charged to indigent consumers in accordance
with Califomia Code of Civil Procedure § 1284.3(a)(3). Additionally, there is no charge for filing
a motion with Judicate West. The moving party will be charged a retainer for reserved hearing
10 time and review of the motion and the neutral may adjust the fees as part of the ruling as it relates
11 to a specific motion.
12 16. In 2019, the monthly federal poverty level for a household size of one in the
= 13 contiguous United States was $1,040.83. Three hundred percent of the monthly $1,040.83 federal
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14 poverty level equals $3,122.50. (See https://aspe.hhs.gov/topics/poverty-economic-
15 mobility/poverty-quidelines/prior-hhs-poverty-quidelines-federal-register-references/2019-
16 poverty-quidelines).
17 17. Based on the above numbers, Mr. Dignes would qualify for a fee waiver with
18 Judicate West for his claims and would therefore not be required to pay an administrative filing
19 fee of $500, a case management fee of $375-plus, nor would he be required to pay any costs
20 associated with filing potential Motions. He would also not pay for the first three days of the
21 arbitration hearing, as said fees will be borne by Defendants per agreement.
22 18. To date, Plaintiffs have not engaged the arbitrator to allow for discovery to begin
23 in the arbitration forum despite the Court’s Ruling that as a prerequisite to any renewed motion to
24 lift the stay, Plaintiffs “demonstrate good faith participation in the arbitration ordered by the Court
”
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SUPPLEMENTAL DECLARATION OF MATTHEW SCHROEDER IN SUPPORT OF DEFENDANTS’
SUPPLEMENTAL BRIEF IN OPPOSITION TO PLAINTIFFS’ RENEWED MOTION TO LIFT STAY
I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
Executed this 15‘ day of September, 2023 at San Rafael, California.
MATTHEW SCHROEDER
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SUPPLEMENTAL DECLARATION OF MATTHEW SCHROEDER IN SUPPORT OF DEFENDANTS’
SUPPLEMENTAL BRIEF IN OPPOSITION TO PLAINTIFFS’ RENEWED MOTION TO LIFT STAY
EXHIBIT 1
WENDY C. YORK, SBN 166864
VIRGINIA L. MARTUCCI, SBN 316296
YORK LAW CORPORATION
1111 Exposition Boulevard, Building 500
Sacramento, California 95815
Ph: (916) 643-2200
Fax: (916) 643-4680
Attorneys for Plaintiff LARRY DIGNES (Decedent) by and through his Successors-In-Interest
SHEILA M. LOWE, an individual; LORI M. KIRCHERT, an individual
IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA
IN AND FOR THE COUNTY OF STANISLAUS
10 LARRY B. DIGNES (Decedent) by and Case No.: CV-20-004057
through his Successors-In-Interest SHEILA
11 M. LOWE, an individual; LORI M PLAINTIFFS’ OPPOSITION TO
KIRCHERT, an individual DEFENDANTS’ MOTION TO COMPEL
12 ARBITRATION
Plaintiff,
13 vs. DATE: July 8, 2021
TIME: 8:30 a.m.
14 COVENANT CARE CALIFORNIA, LLC DEPT: 24
dba TURLOCK NURSING AND JUDGE: Hon. Sonny S. Sandhu
15 REHABILITATION CENTER; COVENANT
CARE, LLC, a Delaware Corporation; and
16 DOES 1 through 50, inclusive Complaint Filed: 9/18/20
Trial Date: Not Yet Set
17 Defendants.
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{00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION
TABLE OF CONTENTS
Page(s)
SUMMARY OF ARGUMENT ............
IL FACTUAL BACKGROUND
A. The Dispute Resolution Agreement...........
B. The Arbitration Agreement Covers the Conduct, Costs, and Rules of Arbitration.......
C. The Deposition of Deanna Brummel...........
Il. STANDARD OF LAW.
10 A. State Law, Rather than the Federal Arbitration Act, Applies .. . .
11 B. This Court Has Authority to Determine Arbitrarily
12 IV THE ARBITRATION AGREEMENT IS UNCONSCIONABLE
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A. The Agreement is Procedurally Unconscionable
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1. The Agreement is Highly Procedurally Unconscionable Because It Is
15 Oppressive
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2. The Agreement is Procedurally Unconscionable Because It Results in
17 Surprise .......0..
18 The Agreement Is Substantively Unconscionable..........
19 1. Fees are Hidden and Prohibitively Expensive
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2. Plaintiffs’ Discovery Rights Under the Agreement are Severely Limited 10
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3. The Agreement Lacks Mutuality of Obligation. 11
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4. The Agreement Deprives Plaintiffs of Constitutional and Statutory Rights 11
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Due to the Extent of the Unconscionability, the Court Should Strike the Entire
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Agreement 12
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THE AGREEMENT DOES NOT BIND PLAINTIFFS SHEILA LOWE AND
26 LORI KIRCHERT, WHO ARE NON-SIGNATORIES : : 12
27 VI PLAINTIFFS’ WRONGFUL DEATH CLAIMS AND THE PATIENT RIGHTS’
28 CLAIMS ARE NOT ARBITRABLE, AND THE COURT SHOULD DENY
{00070106.1}
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ARBITRATION TO AVOID CONFLICTING RULES |... 14
VIL. DEFENDANTS FAILED TO AUTHENTICATE THE SIGNATURE 15
VII. CONCLUSION 15
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{00070106.1}
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TABLE OF AUTHORITIES
State Cases
Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, 114. 6,9, 12
Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.5" 835, 841-843 4, 14,15
Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243-1244...c.ccc. 6
Benaroya v. Willis (2018) 23 Cal.App.5" 462, 464-465...
Benasra v. Marciano (2001) 92 Cal.App.4th 987, 990... 12
Birl v. Heritage Care, LLC (2009) 172 Cal.App.4th 1313... 14
10
Buckner v, Tamarin (2002) 98 Cal.App.4th 140, 142 13, 14
11
12 Bush v. Horizon West (2012) 205 Cal.App.4th 924, 929 14
13 County of Contra Costa v. Kaiser Foundation Health Plan, Inc. (1996)
47 Cal.App.4th 237, 245 vee 12
14
Fitzhugh v. Granada Healthcare & Rehabilitation Center, LLC (2007)
1S
150 Cal.App.4th 469, 471 13
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Goldman v. Sunbridge Healthcare, LLC (2013) 220 Cal.App.4th 1160, 1169
17
Grafton Partners, L.P. v. Superior Court (2005) 36 Cal. 4th 944, 951 uses 11
18
Graham vy. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 817 veces
19
20 Gross v. Recabaren (1988) 206 Cal.App.3d 771 wc 14
21 Gutierrez v. Autowest, Inc. (2003) 114 Cal. App. 4th 77, 87 8,9
22 Ishkanian v. CLS Transp. LLC (2014) 59 Cal.4th 348, 388-389 ........ 14
23
Laswell v. AG Seal Beach, LLC (2010) 189 Cal.App.4th 1399 14
24
Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1076, 1081-1085
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Lopez v. Bartlett Care Center, LLC (2019) 39 Cal.App.5th 311........ 11
26
Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1469.......... 11
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28 Ruiz v. Moss Brothers Auto Group, Inc. (2014) 232 Cal.App.4th 836 15
{00070106.1}
iii
Ruiz v. Podolsky (2010) 50 Cal.4th 838, 841, 114 Cal.Rptr.3d 263 .. 14
Sababin v. Superior Court (2006) 144 Cal.App.4th 81, 89 14
Sanchez v. Western Pizza Ent., Inc. (2009) 172 Cal.App.4th 154, 165
Smith v. Ben Bennett, Inc. (2005) 133 Cal.App.4th 1507, 1523 .......... lL
Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1133...
Ting v. AT&T (2003) 319 F.3d 1126, 1151-1152 veces 12
Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 245...
Valencia v. Smith (2010) 185 Cal.App.4th 153, 177
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11 Valentine v. Plum Healthcare Grp., LLC (2019) 37 Cal. App. 5th 1076, 1084... 14
12 Victoria v. Sup. Ct. (1985) 40 Cal.3d 734, 739 cscs 5,6
13 Zullo v. Superior Court, supra, 197 Cal.App.4th at p. 484, 127 Cal.Rptr.3d 461 ...
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{00070106.1}
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STATE STATUTES
Code of Civil Procedure § 1430 11
Civil Code §1633.9 15
Civil Code § 1654
Civil Code § 3294 10
Code of Civil Procedure § 1281.2........ 5, 14, 15
Code of Civil Procedure § 2017.310.... ll
Health and Safety Code § 1430(b) 14
10 Welfare and Institutions Code § 15657 10
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{00070106.1}
1. SUMMARY OF ARGUMENT
On September 18, 2020, Plaintiff Larry Dignes, by and through his successors in interest.
Sheila Lowe and Lori Kirchert, filed suit against Defendants alleging cases of action for Elder
Abuse and Wrongful Death, among others, arising from Ms. Dignes’ residency at Defendants’
skilled nursing facility, Turlock Nursing and Rehabilitation (TNR). Mr. Dignes was admitted to
TNR on August 7, 2019 following treatment for a stroke. As a result of Defendants’ reckless
neglect, Mr. Dignes was discharged to the hospital less than a month after admission, and was
diagnosed with an untreated C. Difficile infection, sepsis, and renal failure. Mr. Dignes died onl
August 30, 2019. In response to Plaintiffs’ Complaint, Defendants seek to force Plaintiffs’ claims to}
10 arbitration based on a “Dispute Resolution Agreement” purportedly signed by Mr. Dignes that.
11 among other defects, is so unconscionable that it is unenforceable and violates the law because if
12 forces non-signatories to arbitrate claims which are not subject to arbitration. Therefore, the Court
13 should deny the Motion to Compel Arbitration.
14 Il. FACTUAL BACKGROUND
15 A. The Dispute Resolution Agreement.
16 The Dispute Resolution Agreement (“Agreement” or “Arbitration Agreement”) is an|
17 arbitration agreement in disguise. This six-page Dispute Resolution Agreement requires residents
18 who have a dispute with TNR to first participate in mediation and then binding arbitration. (Decl|
19 Brummel, Ex A.) The only parties to the Agreement are Mr. Dignes and TNR. Ms. Brummel.
20 Defendants’ admissions’ department employee who presented the Agreement to Mr. Dignes.
21 claimed in her declaration to give the Agreement to Mr. Dignes to sign on the day of admission.
22 (Decl. Brummel, { 5.) She stated that generally residents sat next to her at a computer so they could
23 review admissions documents together. (Decl. Brummel, 43.) In reality, Mr. Dignes signed the
24 admissions packet (including the Agreement) eight days after admission. Mr. Dignes did not sit
25 down at Ms. Brummel’s computer; rather, Ms. Brummel brought an iPad to Mr. Dignes’ room and
26 stood at his bedside while she scrolled through nearly 100 pages of electronic documents on an iPad.
27 As she reviewed the documents, Ms. Brummel placed Mr. Dignes’ electronic signature (captured
28 only once at the beginning of the process) on the documents, including on the Arbitration
{00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 1
Agreement. Plaintiffs Sheila Lowe, Mr. Dignes’ daughter and Power of Attorney, and Lori Kirchert
first learned of the purported Arbitration Agreement after the filing of the Complaint. At no time did)
they sign the Agreement. (Decl. Martucci, 114, 22, Ex. D.)
B. The Arbitration Agreement Covers the Conduct, Costs, and Rules of Arbitration.
The Agreement signed by TNR on August 15, 2019 covers the conduct, costs, and rules off
arbitration. (Decl. Brummel, Ex. A.) For example, the agreement requires the parties to give up their
constitutional right to a jury trial, on the premise that arbitration is “often less expensive” than court]
(Decl. Brummel, Ex. A, §4.) The Agreement requires arbitration through Judicate West, oy
alternatively ADR (which presumably means ADR Services, Inc.) (/d. at 7.) Paragraph 7 refers the
10 parties to the Judicate West website for arbitration rules.
11 The Agreement states that TNR will pay for the mediator’s fees and costs, as well as
12 arbitrator’s fees and costs for up to three days of hearing. (/d. at 14.) If the hearing exceeds three
13 days, the parties must equally bear the costs and fees. (/d. at §14.) As of 2021, Judicate West
14 charges a $500 filing fee, a $250.00 case management fee, and a $750.00 fee for all hearings that are
15 two days or less. This does not include the individual fees for each arbitrator, which are set by the
16 arbitrators and range from $450.00 to $1,500.00 per hour. (Decl. Martucci, §5.) Similarly, ADR|
17 Services, Inc. charges a $450.00 per party fee, and arbitrators set their own fees. Based on these
18 fees, a three-day arbitration could cost anywhere from $10,800 to $36,000. Most elder abused
19 arbitrations and trials last longer than two weeks. A two-week arbitration would cost anywhere from]
20 $36,000 to $120,000 for the arbitrator’s fees alone, not including pre-hearing discovery, hearing
21 preparation, and other administrative costs. (Decl. Martucci, 5.)
22 In addition to these exorbitant fees, the rules of arbitration sharply curtail a Plaintiff's right
23 to discovery. Judicate West allows for one deposition as a matter of right, only 20 Special
24 Interrogatories and 20 Requests for Production. (Decl. Martucci, §/4 Ex. A.) Under ADR Services.
25 Inc. rules, discovery is not permitted unless ordered by the arbitrator. (Decl. Martucci, 46 Ex. B.
26 The Agreement requires confidentiality of the proceedings and any award and requires Mr. Dignes
27 to waive his right to “representative, consolidated, or class treatment of any claim.” (/d. at 915.) Ms
28 Brummel misrepresented to residents they had a right to rescind within 30 days. However, a closer
{00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 2
read of Paragraph 16 reveals that even if a resident rescinds the Agreement, Arbitration applies t
disputes “arising before the rescission.” (Jd. at §16.) Thus, the right to rescind is limited.
Cc The Deposition of Deanna Brummel.
Plaintiffs’ counsel deposed Ms. Brummel on May 27, 2021. Ms. Brummel has no formal
medical training or certificates. Ms. Brummel stated that it was her job to test residents’ capacity to
sign agreements, and she would do that by looking at the resident’s orders in the file, looking fox
Powers of Attorney on file, and asking the residents simple questions to determine whether they had|
capacity. If a resident had a Power of Attorney but inadvertently signed an Agreement, Ms,
Brummel would not go back and correct that or have the person with Power of Attorney re-sign thd
10 documents. (Decl. Martucci, §13, Ex. D.)
1 The Arbitration Agreement is the last document in a 75 to 100-page electronic admissions
12 packet presented to residents after they are assigned a room. Despite being titled a “Dispute
13 Resolution Agreement,” Ms. Brummel refers to it as an “Arbitration Agreement.” Ms. Brummel
14 stated that in 2019 when Mr. Dignes was a resident, she went to residents’ rooms at their bedside to
15 go over admissions paperwork. Holding an iPad, she would scroll through the 100-page electronid
16 packet, explaining relevant parts. The resident signed their name once at the beginning of thd
17 process. There is no place where residents acknowledge or place their signature anywhere on thd
18 documents other than on the first signature. Rather, Ms. Brummel clicks the signature lines to place
19 the residents’ electronic signature throughout the packet. In total, it takes 15 to 20 minutes to g
20 over the Admissions packet, including the Agreement. (Decl. Martucci, §15, Ex. D.)
21 Throughout the deposition, Ms. Brummel confused mediation and arbitration, likely due t
22 the convoluted Agreement. When asked to describe arbitration, Ms. Brummel had difficult
23 articulating what arbitration is: “I would let them know that it’s -- they are signing this due to if
24 negligence was happening at the facility, and they wanted to go forth and sue the company.
25 arbitration is where a third party mediator comes in and they go from there, whatever the issues are.
26 and they would try to resolve it.” (/d.)
27 Ms. Brummel does not go over the Agreement paragraph by paragraph with residents. She
28 completed approximately 2 to 10 intakes per day, five days a week at TNR for three and a half
{00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 3
years. Thus, throughout her employment, she likely performed anywhere from 1,500 to 9,00!
admission signings. Less than 20 times during her employment with TNR did a resident decline thd
Agreement. Although Ms. Brummel told residents that arbitration is less expensive than traditional
Court, she does not know how much Arbitration costs. Ms. Brummel does not know the arbitratiot
rules and did not give residents a copy of those rules with the Agreement. Ms. Brummel did no
inform residents they could consult with an attorney prior to signing. She does now know whether
the Agreement is negotiable, does not tell residents they can negotiate, and did not volunteer to
residents that they had a right to rescind the Agreement. Importantly, Ms. Brummel does not kno’
whether the Agreement binds resident’s families, and she does not inform residents that the
10 Agreement would bind their families. (Decl. Martucci, 16-18, Ex. D.)
11 Ms. Brummel claims to have an independent recollection of Mr. Dignes. This is unlikel
12 given the thousands of admissions she completed during her employment. She said in her
13 declaration that Mr. Dignes signed the Agreement on the day he was admitted, but later
14 acknowledged at deposition that she does not know when he signed. Ms. Brummel described that
15 she stood at Mr. Dignes’ bedside as she reviewed the iPad with him. She did not tell Mr. Dignes
16 about the cost of arbitration, but explained to Mr. Dignes that “if they decided to sue the compan
17 due to negligence, and they wanted to arbitrate, a third party would come in.” Ms. Brummel did no
18 tell Mr. Dignes that any other claims other than those for negligence would be covered by the
19 Agreement. She did not tell Mr. Dignes that the Agreement was negotiable, that it could bd
20 rescinded, or that it bound his heirs/successors. (Decl. Martucci, 419-21, Ex. D.)
21 Ill. STANDARD OF LAW
22 A State Law, Rather than the Federal Arbitration Act, Applies.
23 The Federal Arbitration Act (“FAA”) does not apply; only California procedural law applies]
24 “The procedural aspects of the FAA do not apply in state court absent an express provision in the
25 arbitration agreement.” (Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.St
26 835.) Defendants admit the existence of a valid contract is governed by California law. (Motion t
27 Compel Arbitration [“MTC”], p. 4:9-16.) Regardless of whether the FAA or California applies, both]
28 the FAA and the California Arbitration Act, Code of Civil Procedure § 1280, et seq. “CAA”
{00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 4
employ the same rules of contract interpretation (state law). (See, Valencia v. Smith (2010) 185
Cal.App.4th 153, 177 (Generally, the FAA obligates federal courts to apply state law when|
interpreting an arbitration clause”...“even when the [FAA] applies, interpretation of the arbitration]
agreement is governed by state law principles....”]) In interpreting arbitration agreements, basid
principles of contract law apply. (Sanchez v. Western Pizza Ent., Inc, (2009) 172 Cal.App.4th 154.
165.) As with other contracts, ambiguities in standard form arbitration agreements are to be
construed against the drafter. (Victoria v. Sup. Ct. (1985) 40 Cal.3d 734, 739; see also, Civil Code §|
1654.) Accordingly, California law applies to the analysis of the enforceability of the agreement.
B. This Court Has Authority to Determine Arbitrability,
10 Defendants may argue that the arbitrator, rather than this Court, has the authority to
11 determine arbitrability of the Agreement. (Decl. Brummel, Ex A, 11.) However, the Agreemen'
12 does not clearly and unmistakably delegate authority to the arbitrator. It is also well-settled that thd
13 Court, rather than the arbitrator, has the sole authority to “determine whether a non-signatory to thd
14 arbitration agreement can be compelled to arbitrate. The authority to decide that question resides, b’
15 law, solely with the trial court.” (Benaroya yv. Willis (2018) 23 Cal.App.Sth 462, 467; see also
16 Goldman v. Sunbridge Healthcare, LLC (2013) 220 Cal.App.4th 1160, 1169 [“there is no polic
17 compelling persons to accept arbitration of controversies which they have not agreed to arbitrate.”’]
18 Here, Plaintiffs Sheila Lowe and Lori Kirchert are non-signatories to the purported Arbitration]
19 Agreement, so the Court has the sole authority to determine whether the Agreement is enforceable.
20 IV. THE ARBITRATION AGREEMENT IS UNCONSCIONABLE
21 The Court has the authority to deny arbitration where it finds grounds exist for the rescission]
22 of an arbitration agreement. (Code of Civil Procedure § 1281.2.) Here, the Agreement is
23 unconscionable, and the Court should decline to enforce it. Unconscionability refers to “an absencd
24 of meaningful choice of the part of one of the parties together with contract terms which ard
25 unreasonably favorable to the other party.” (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4thl
26 1109, 1133.) Unconscionability has procedural and substantive elements. Both “‘must be present in|
27 order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrind
28 of unconscionability.’ But they need not be present in the same degree.... [T]he more substantivel
{00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 5
oppressive the contract term, the less evidence of procedural unconscionability is required to coma
to the conclusion that the term is unenforceable, and vice versa.” (Armendariz v. Foundation Healti
Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 [citations omitted].) “The issue in every case is
whether the terms of the contract are sufficiently unfair, in view of all relevant circumstances, that a
court should withhold enforcement.” (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 12434
1244.) Here, both procedural and substantive unconscionability permeate the Arbitration Agreement
such that it should be rescinded.
A The Agreement is Procedurally Unconscionable.
Procedural unconscionability focuses on two factors: oppression and surprise. (Zullo v,
10 Superior Court, supra, 197 Cal.App.4th at p. 484, 127 Cal.Rptr.3d 461.) “‘Oppression’ arises from]
11 an inequality of bargaining power which results in no real negotiation and ‘an absence off
12 meaningful choice.’ ‘Surprise’ involves the extent to which the supposedly agreed-upon terms of tha
13 bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed)
14 terms.” (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 245 [internal citations omitted].)
15 1 The Agreement is Highly Procedurally Unconscionable Because it is Oppressive.
16 Courts defined adhesion contracts as a “standardized contract, which, imposed and drafted
17 by the party of superior bargaining strength, relegates to the subscribing party only the opportunit
18 to adhere to the contract or reject it.” (Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 817.) Tha
19 hallmarks of adhesion include when one party drafts a contract, the parties fail to engage i
20 meaningful negotiation, and the contract is found as one part of a much larger group of documents
21 (Victoria v. Superior Court (1985) 40 Cal.3d 734, 743.) Here, the Arbitration Agreement is an|
22 oppressive adhesion contract because it was the last document buried in a 100-page electronid
23 admission packet presented to Defendant at his bedside. Ms. Brummel did not tell Mr. Dignes he
24 could negotiate the contract, nor did she tell him he could rescind the Agreement. The Agreement
25 was described in an inaccurate and cursory manner to Mr. Dignes, and Ms. Brummel placed hi:
26 electronic signature on the Agreement. Mr. Dignes himself did not even sign the Agreement, either
27 literally or symbolically, which arguably renders the entire agreement invalid.
28
{00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 6
Defendants argue “Decedent did not have to agree to arbitration as a precondition to bd
admitted to the Facility; his agreement to arbitration was completely voluntary.” (MTC, p. 4:25-27.
What Defendants fail to mention is that Mr. Dignes had already been in the facility for eight days
when TNR presented the “Dispute Resolution Agreement” to him at his bedside. (Decl. Martucci
14.) Later that night, he would fall while using the restroom, and two days later he began to sho
symptoms of a facility-acquired C. Difficile infection. Mr. Dignes was in poor health and already in|
the facility for over a week. What choice would a resident meaningfully have other than to sign
documents presented to him at his bedside after living in a facility for eight days.
Defendants argue “Decedent had the opportunity to rescind the Arbitration Agreement
10 within thirty days of execution.” (MTC, p. 43:28-4:3.) Mr. Dignes was not informed he could!
11 rescind the contract, and the rescission paragraph itself is oppressive because it only applies t
12 claims that arise after rescission. Mr. Dignes died as a result of TNR’s neglect within 15 days off
13 signing, so he unfortunately lacked time to rescind.
14 As an aside, any argument by Defendants that Mr. Dignes had capacity must be ignored foy
15 lack of foundation and speculation. Defendants cite to Paragraph 2 of Ms. Brummel’s declaration]
16 for the allegation that “Decedent did not lack capacity to execute the Arbitration Agreement.”! Thig
17 citation is entirely misleading and unsubstantiated. Nowhere in Ms. Brummel’s declaration does shd
18 claim to have knowledge that Mr. Dignes had capacity to sign the Dispute Resolution Agreement onl
19 August 15. Nor could she—she has no medical training and no medical licensing. Ms. Brummel did)
20 not confirm with Mr. Dignes’ doctor that he had capacity on August 15, and she did not know that
21 he had a POA on file, meaning he arguably should not have signed on behalf of himself. Thus, an:
22 argument about capacity must be disregarded. (Decl. Martucci, 923, Ex. E.)
23 In sum, the disparity in bargaining power and oppression is clear: TNR is a sophisticated)
24 party operated by corporate entities that own at least 20 facilities in California alone.? Mr. Dignes
25 was an 81-year-old stroke victim rehabbing in Defendants’ facility following a hospital stay. Rathey|
26 than present the admissions paperwork and Arbitration Agreement to Mr. Dignes on the day he wag
27
28
' See Defendants’ Motion to Compel Arbitration, p. 5:3-4, citing Brummel Decl.
See Covenant Care’s website: https://www.covenantcare.com/locations-by-name/.
{00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 7
admitted (when his family was present), or another time when his Power of Attorney, Sheila Lowe.
was present (she visited every other day), Defendants presented these documents to Mr. Dignes aftey
he had been living at TNR for eight days. The Arbitration Agreement is oppressive given thd
disparity in bargaining power, combined with the non-negotiable contract of adhesion presented|
bedside to a resident who had been in the facility for eight days.
2. The Agreement is Procedurally Unconscionable Because It Results in Surprise.
“Surprise” is defined as “the extent to which the supposedly agreed-upon terms of the
bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed]
terms.” (Gutierrez v. Autowest, Inc. (2003) 114 Cal. App. 4th 77, 87.) The Agreement would result
10 in surprise if enforced for several reasons. First, the Agreement was buried at the end of anl
11 electronic packet of 100 pages of admissions paperwork. The Agreement is contained within a six4
12 page contract masquerading as a “Dispute Resolution Agreement.” This is not a dispute resolution
13 agreement; hidden after three benign paragraphs about non-binding mediation is the binding
14 arbitration agreement and waiver of the constitutional right to a jury trial. The convoluted structure
15 of the agreement itself results in surprise.
16 Second, failing to include the costs and expenses in the Agreement causes Plaintiffs to be
17 subject to surprise and oppression. Even the closest reading of the agreement would not reveal the
18 costs of arbitration, which can be prohibitively high. The Agreement states that the Facility will pay
19 for the arbitrator’s fees for up to three days of hearing, at which point the parties will equally share
20 costs. (Decl. Brummel, Ex A., p. 3.) Ms. Brummel does not know the costs of arbitration, nor did
21 she tell Mr. Dignes the costs. (Decl. Martucci, 417, Ex D.) These costs may only be ascertained b:
22 reviewing Judicate West or ADR Services Inc.’s websites and making telephone and email inquiries
23 to request the hourly rates. Lulled by the claim in Paragraph 4 that arbitration “is often lesg
24 expensive and a faster way to resolve disputes compared to going to court,” a signatory to this
25 Agreement would be surprised to find out that it costs $1,500 in total fees simply to file a claim wit
26 Judicate West. The arbitrator’s fees range anywhere from $450 to $1,500 per_hour. Plaintiffs’
27 Counsel has an arbitration currently scheduled in a similar elder abuse case, and the hearing ig
28 scheduled for two weeks, or eighty hours. Based on Judicate West’s fee range, a two-week hearing}
{00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 8
could cost anywhere from $36,000 on the low end to $120,000 on the high end for the arbitrator’s
hearing fees alone.
Thus, a resident trying to determine what an arbitration will cost (assuming the resident
knows to look for this information), has to review the Agreement, check websites for rules and
administrative fees, and call Judicate West to even be able to reasonably estimate what thd
arbitrator's fees might be. If Mr. Dignes believed he would save costs by agreeing to arbitrate, thd
Judicate West administrative fees and arbitrator's fees (amounting potentially to over a hundred
thousand dollars) would be an unfair surprise.
Finally, a signatory may also be surprised to learn that Paragraph 5, 6, and 14 (pages 2-3
10 waive the signor’s and their heirs’ rights to a jury trial, as well as requires confidentiality. This
11 would also result in surprise to Mr. Dignes given that Ms. Brummel did not tell him that by signing
12 the Agreement, he waived his heirs rights. Thus, the totality of the circumstances demonstrates the
13 Arbitration Agreement is significantly procedurally unconscionable.
14 B. The Agreement Is Substantively Unconscionable.
15 Substantive unconscionability may be shown if the disputed contract provision falls outsidd
16 the non-drafting party's reasonable expectations. (Gutierrez v. Autowest, Inc. (2003) 114
17 Cal.App.4th 77, 89 [holding it is unconscionable to force arbitration where that process requires a
18 consumer to pay fees he or she cannot afford because such provisions are “unduly harsh and one4
19 sided, defeats the expectations of the nondrafting party, and shocks the conscience.”]) Here, tha
20 terms of the Agreement render it substantively unconscionable.
21 1 Fees are Hidden and Prohibitively Expensive.
22 As discussed supra, the Agreement is silent on the fees and costs. “Where a consumer enters
23 into an adhesive contract that mandates arbitration, it is unconscionable to condition that process o:
24 the consumer posting fees he or she cannot pay...while arbitration may be within the reasonabld
25 expectations of consumers, a process that builds prohibitively expensive fees into the arbitration
26 process is not.” (Gutierrez v. Autowest, Inc. (2003) 114 Cal. App. 4th 77, 89-90.) The court i
27 Gutierrez further declared, “To state it simply: it is substantively unconscionable to require a
28 onsumer to give up the right to utilize the judicial system, while imposing arbitral forum fees that
{00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 9
are prohibitively high.” (/d. at 90; see also Armendariz v. Foundation Health Psychare Services, Inc]
(2000) 24 Cal.4th 83, 118; Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1076, 1081-1085.
Here, the Agreement is substantively unconscionable given the arbitration hearing will cost between
$36,000 and over $100,000.
Preview
Electronically Filed JOHN L. SUPPLE (SBN 94582) 9/1/2023 5:33 PM jsupple@ jsupplelaw.com Superior Court of California ROBERT R. DEERING (SBN 258043) County of Stanislaus rdeering@jsupplelaw.com Clerk of the Court MATTHEW SCHROEDER (SBN 273361) By: Raquel Enriquez, Deputy mschroeder@ jsupplelaw.com J SUPPLE LAW A Professional Corporation 990 Fifth Avenue San Rafael, CA 94901 Telephone: (415) 366-5533 Facsimile: (415) 480-6301 Attomeys for Defendants COVENANT CARE CALIFORNIA, LLC dba TURLOCK NURSING AND REHABILITATION CENTER; COVENANT CARE, LLC 10 SUPERIOR COURT OF THE STATE OF CALIFORNIA 11 IN AND FOR THE COUNTY OF STANISLAUS 12 LARRY B. DIGNES (Decedent) by and through Case No. CV-20-004057 = 13 his Successors-In-Interest SHEILA M. LOWE, tO 14 an individual; LORI M. KIRCHERT, an SUPPLEMENTAL DECLARATION OF individual MATTHEW SCHROEDER IN SUPPORT| 15 OF DEFENDANTS’ SUPPLEMENTAL Plaintiff, BRIEF IN OPPOSITION TO 16 PLAINTIFFS’ RENEWED MOTIONTO vs. LIFT STAY AND ORDER 17 ALLOCATION OF ARBITRATION 18 COVENANT CARE CALIFORNIA, LLC dba COSTS TO DEFENDANTS OR TURLOCK NURSING AND REMAND THE CASE TO SUPERIOR 19 REHABILITATION CENTER; COVENANT COURT CARE, LLC, a Delaware Corporation; and 20 DOES 1 through 50, inclusive, Accompanying Documents: 1) Supplemental Brief 21 Defendants. 2) Declaration of John L. Supple 22 3) Proof of Service 23 Date: September 14, 2023 Time: 8:30 am. 24 Dept.: 24 Judge: Hon. Sonny S. Sandhu 25 26 Complaint Filed: September 18, 2020 27 28 SUPPLEMENTAL DECLARATION OF MATTHEW SCHROEDER IN SUPPORT OF DEFENDANTS SUPPLEMENTAL BRIEF IN OPPOSITION TO PLAINTIFFS’ RENEWED MOTION TO LIFT STAY I, Matthew Schroeder, hereby declare: 1 Iam an attomey at law licensed to practice in all the courts of the State of California and an associate at the law firm of J Supple Law, PC, attorneys of record for Defendants COVENANT CARE CALIFORNIA, LLC dba TURLOCK NURSING AND REHABILITATION CENTER and COVENANT CARE, LLC (hereinafter “Defendants”). If called as a witness, I could and would competently testify to the following facts based on my own personal knowledge. 2 Plaintiffs’ Renewed Motion came on regularly for hearing on June 7, 2023 in Department 24 of the above-captioned Court. Prior to said hearing, the Court issued a tentative 10 ruling denying Plaintiffs’ Renewed Motion without prejudice as follows: “In light of Plaintiff's 11 continued assertion that his estate cannot afford the costs of arbitration, the Court hereby grants 12 Defendant leave to conduct limited discovery into Plaintiff’s/his estate’s finances, to determine if = 13 Plaintiff is unable to pay arbitration costs, before offering Defendant the option to elect to either LO 14 pay Plaintiff's costs or waive their right to arbitrate. (Cal. Civ. Proc 1281, 1281.2, 1281.4, Aronow 15 v. Superior Ct., 76 Cal. App. 5th 865, (2022), as modified on denial of reh'g (Apr. 22, 2022).” 16 3 On June 7, 2023, at the hearing of Plaintiffs’ Motion, the Court amended its 17 tentative ruling to continue (rather than deny, without prejudice) the hearing of Plaintiffs’ Motion 18 to September 14, 2023, which became the Court’s final order. As part of said order, the Court 19 authorized the parties to submit supplemental briefing regarding the Estate’s ability to pay for the 20 cost arbitration based on the outcome of Defendants’ completed discovery into the Estate’s 21 finances. 22 BACKGROUND FACTS 23 4 Attached hereto as Exhibit 1 is a true and correct copy of Plaintniffs’ Opposition 24 to Defendants’ Motion to Compel Arbitration. Therein, Plaintiffs presented zero evidence of any 25 inability to pay for the cost of arbitration in their Opposition and further failed to do so in any of 26 the supplemental briefing afforded by the Court. 27 5. On July 25, 2022, Thomas S. Bradley of Judicate West was appointed as the 28 arbitrator via the strike and rank process. 1 SUPPLEMENTAL DECLARATION OF MATTHEW SCHROEDER IN SUPPORT OF DEFENDANTS’ SUPPLEMENTAL BRIEF IN OPPOSITION TO PLAINTIFFS’ RENEWED MOTION TO LIFT STAY 6 Mediation was completed without resolution on March 22, 2023. 7 At no time thereafter did Plaintiffs engage the arbitrator to allow for discovery to begin in the arbitration forum. COURT AUTHORIZED FINANCIAL DISCOVERY 8 On June 15, 2023, Defendants propounded Form and Special Interrogatories, Requests for Admission, and Requests for Production of Documents to Plaintiff's Estate, to which Plaintiffs responded with verified responses on and around July 21, 2023. 9 Attached hereto as Exhibit 2 is a true and correct copy of Defendants’ Form Interrogatories, Set One, to Plaintiff Larry Dignes, by and through his successor-in-interest, Sheila 10 M. Lowe and Plaintiffs’ verified Response to same. 11 10. Attached hereto as Exhibit 3 is a true and correct copy of Defendants’ Special 12 Interrogatories, Set One, to Plaintiff Larry Dignes, by and through his successor-in-interest, Sheila = 13 M. Lowe and Plaintiffs’ verified Response to same. LO 14 11. Attached hereto as Exhibit 4s a true and correct copy of Defendants’ Request for 15 Admissions, Set One, to Plaintiff Larry Dignes, by and through his successor-in-interest, Sheila 16 M. Lowe and Plaintiffs’ verified Response to same. 17 12. Attached hereto as Exhibit Sis a true and correct copy of Defendants’ Request for 18 Production of Documents, Set One, to Plaintiff Larry Dignes, by and through his successor-in- 19 interest, Sheila M. Lowe and Plaintiffs’ verified Response to same. 20 ADDITIONAL RELEVANT FACTS 21 13. As of September 1, 2023, Plaintiffs’ counsel's website specifically promised “[W]e 22 do not charge you for our services. Our attomey fees are a built-in part of your settlement... We 23 only get a payment if you get a settlement.” (See York Law Firm website, available at 24 https://www.yorklawfirm.com/). This representation on counsel’s website indicates it is highly 25 likely counsel agreed to advance all fees and costs to the Estate. 26 27 28 2 SUPPLEMENTAL DECLARATION OF MATTHEW SCHROEDER IN SUPPORT OF DEFENDANTS’ SUPPLEMENTAL BRIEF IN OPPOSITION TO PLAINTIFFS’ RENEWED MOTION TO LIFT STAY 14, Attached hereto as Exhibit 6 is a true and correct copy of the Judicate West arbitration fee schedule, which expressly notes that “Per Cal. Code Civ. Proc. § 1284.3(a)(3), an arbitration fee waiver form for indigent consumer parties is available upon request.” 15. In my experience, and per the Judicate West “Frequently Asked Questions” webpage, available at https://www judicatewest.com/Resource/Fags#: ~:text=A s% 20required % 20by% 20Califomia% 20C ode,charged% 20to% 20an% 20indigent%20consumer, Judicate West waives fees and costs, exclusive of arbitrator fees, charged to indigent consumers in accordance with Califomia Code of Civil Procedure § 1284.3(a)(3). Additionally, there is no charge for filing a motion with Judicate West. The moving party will be charged a retainer for reserved hearing 10 time and review of the motion and the neutral may adjust the fees as part of the ruling as it relates 11 to a specific motion. 12 16. In 2019, the monthly federal poverty level for a household size of one in the = 13 contiguous United States was $1,040.83. Three hundred percent of the monthly $1,040.83 federal LO 14 poverty level equals $3,122.50. (See https://aspe.hhs.gov/topics/poverty-economic- 15 mobility/poverty-quidelines/prior-hhs-poverty-quidelines-federal-register-references/2019- 16 poverty-quidelines). 17 17. Based on the above numbers, Mr. Dignes would qualify for a fee waiver with 18 Judicate West for his claims and would therefore not be required to pay an administrative filing 19 fee of $500, a case management fee of $375-plus, nor would he be required to pay any costs 20 associated with filing potential Motions. He would also not pay for the first three days of the 21 arbitration hearing, as said fees will be borne by Defendants per agreement. 22 18. To date, Plaintiffs have not engaged the arbitrator to allow for discovery to begin 23 in the arbitration forum despite the Court’s Ruling that as a prerequisite to any renewed motion to 24 lift the stay, Plaintiffs “demonstrate good faith participation in the arbitration ordered by the Court ” 25 26 Il 27 Il 28 Il 3 SUPPLEMENTAL DECLARATION OF MATTHEW SCHROEDER IN SUPPORT OF DEFENDANTS’ SUPPLEMENTAL BRIEF IN OPPOSITION TO PLAINTIFFS’ RENEWED MOTION TO LIFT STAY I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed this 15‘ day of September, 2023 at San Rafael, California. MATTHEW SCHROEDER 10 11 12 = 13 LO 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 SUPPLEMENTAL DECLARATION OF MATTHEW SCHROEDER IN SUPPORT OF DEFENDANTS’ SUPPLEMENTAL BRIEF IN OPPOSITION TO PLAINTIFFS’ RENEWED MOTION TO LIFT STAY EXHIBIT 1 WENDY C. YORK, SBN 166864 VIRGINIA L. MARTUCCI, SBN 316296 YORK LAW CORPORATION 1111 Exposition Boulevard, Building 500 Sacramento, California 95815 Ph: (916) 643-2200 Fax: (916) 643-4680 Attorneys for Plaintiff LARRY DIGNES (Decedent) by and through his Successors-In-Interest SHEILA M. LOWE, an individual; LORI M. KIRCHERT, an individual IN THE SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF STANISLAUS 10 LARRY B. DIGNES (Decedent) by and Case No.: CV-20-004057 through his Successors-In-Interest SHEILA 11 M. LOWE, an individual; LORI M PLAINTIFFS’ OPPOSITION TO KIRCHERT, an individual DEFENDANTS’ MOTION TO COMPEL 12 ARBITRATION Plaintiff, 13 vs. DATE: July 8, 2021 TIME: 8:30 a.m. 14 COVENANT CARE CALIFORNIA, LLC DEPT: 24 dba TURLOCK NURSING AND JUDGE: Hon. Sonny S. Sandhu 15 REHABILITATION CENTER; COVENANT CARE, LLC, a Delaware Corporation; and 16 DOES 1 through 50, inclusive Complaint Filed: 9/18/20 Trial Date: Not Yet Set 17 Defendants. 18 19 20 21 22 23 24 25 26 27 28 {00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION TABLE OF CONTENTS Page(s) SUMMARY OF ARGUMENT ............ IL FACTUAL BACKGROUND A. The Dispute Resolution Agreement........... B. The Arbitration Agreement Covers the Conduct, Costs, and Rules of Arbitration....... C. The Deposition of Deanna Brummel........... Il. STANDARD OF LAW. 10 A. State Law, Rather than the Federal Arbitration Act, Applies .. . . 11 B. This Court Has Authority to Determine Arbitrarily 12 IV THE ARBITRATION AGREEMENT IS UNCONSCIONABLE 13 A. The Agreement is Procedurally Unconscionable 14 1. The Agreement is Highly Procedurally Unconscionable Because It Is 15 Oppressive 16 2. The Agreement is Procedurally Unconscionable Because It Results in 17 Surprise .......0.. 18 The Agreement Is Substantively Unconscionable.......... 19 1. Fees are Hidden and Prohibitively Expensive 20 2. Plaintiffs’ Discovery Rights Under the Agreement are Severely Limited 10 21 3. The Agreement Lacks Mutuality of Obligation. 11 22 4. The Agreement Deprives Plaintiffs of Constitutional and Statutory Rights 11 23 Due to the Extent of the Unconscionability, the Court Should Strike the Entire 24 Agreement 12 25 THE AGREEMENT DOES NOT BIND PLAINTIFFS SHEILA LOWE AND 26 LORI KIRCHERT, WHO ARE NON-SIGNATORIES : : 12 27 VI PLAINTIFFS’ WRONGFUL DEATH CLAIMS AND THE PATIENT RIGHTS’ 28 CLAIMS ARE NOT ARBITRABLE, AND THE COURT SHOULD DENY {00070106.1} -i- ARBITRATION TO AVOID CONFLICTING RULES |... 14 VIL. DEFENDANTS FAILED TO AUTHENTICATE THE SIGNATURE 15 VII. CONCLUSION 15 10 ll 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 {00070106.1} il TABLE OF AUTHORITIES State Cases Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, 114. 6,9, 12 Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.5" 835, 841-843 4, 14,15 Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243-1244...c.ccc. 6 Benaroya v. Willis (2018) 23 Cal.App.5" 462, 464-465... Benasra v. Marciano (2001) 92 Cal.App.4th 987, 990... 12 Birl v. Heritage Care, LLC (2009) 172 Cal.App.4th 1313... 14 10 Buckner v, Tamarin (2002) 98 Cal.App.4th 140, 142 13, 14 11 12 Bush v. Horizon West (2012) 205 Cal.App.4th 924, 929 14 13 County of Contra Costa v. Kaiser Foundation Health Plan, Inc. (1996) 47 Cal.App.4th 237, 245 vee 12 14 Fitzhugh v. Granada Healthcare & Rehabilitation Center, LLC (2007) 1S 150 Cal.App.4th 469, 471 13 16 Goldman v. Sunbridge Healthcare, LLC (2013) 220 Cal.App.4th 1160, 1169 17 Grafton Partners, L.P. v. Superior Court (2005) 36 Cal. 4th 944, 951 uses 11 18 Graham vy. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 817 veces 19 20 Gross v. Recabaren (1988) 206 Cal.App.3d 771 wc 14 21 Gutierrez v. Autowest, Inc. (2003) 114 Cal. App. 4th 77, 87 8,9 22 Ishkanian v. CLS Transp. LLC (2014) 59 Cal.4th 348, 388-389 ........ 14 23 Laswell v. AG Seal Beach, LLC (2010) 189 Cal.App.4th 1399 14 24 Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1076, 1081-1085 25 Lopez v. Bartlett Care Center, LLC (2019) 39 Cal.App.5th 311........ 11 26 Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1469.......... 11 27 28 Ruiz v. Moss Brothers Auto Group, Inc. (2014) 232 Cal.App.4th 836 15 {00070106.1} iii Ruiz v. Podolsky (2010) 50 Cal.4th 838, 841, 114 Cal.Rptr.3d 263 .. 14 Sababin v. Superior Court (2006) 144 Cal.App.4th 81, 89 14 Sanchez v. Western Pizza Ent., Inc. (2009) 172 Cal.App.4th 154, 165 Smith v. Ben Bennett, Inc. (2005) 133 Cal.App.4th 1507, 1523 .......... lL Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1133... Ting v. AT&T (2003) 319 F.3d 1126, 1151-1152 veces 12 Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 245... Valencia v. Smith (2010) 185 Cal.App.4th 153, 177 10 11 Valentine v. Plum Healthcare Grp., LLC (2019) 37 Cal. App. 5th 1076, 1084... 14 12 Victoria v. Sup. Ct. (1985) 40 Cal.3d 734, 739 cscs 5,6 13 Zullo v. Superior Court, supra, 197 Cal.App.4th at p. 484, 127 Cal.Rptr.3d 461 ... 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 {00070106.1} iv STATE STATUTES Code of Civil Procedure § 1430 11 Civil Code §1633.9 15 Civil Code § 1654 Civil Code § 3294 10 Code of Civil Procedure § 1281.2........ 5, 14, 15 Code of Civil Procedure § 2017.310.... ll Health and Safety Code § 1430(b) 14 10 Welfare and Institutions Code § 15657 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 {00070106.1} 1. SUMMARY OF ARGUMENT On September 18, 2020, Plaintiff Larry Dignes, by and through his successors in interest. Sheila Lowe and Lori Kirchert, filed suit against Defendants alleging cases of action for Elder Abuse and Wrongful Death, among others, arising from Ms. Dignes’ residency at Defendants’ skilled nursing facility, Turlock Nursing and Rehabilitation (TNR). Mr. Dignes was admitted to TNR on August 7, 2019 following treatment for a stroke. As a result of Defendants’ reckless neglect, Mr. Dignes was discharged to the hospital less than a month after admission, and was diagnosed with an untreated C. Difficile infection, sepsis, and renal failure. Mr. Dignes died onl August 30, 2019. In response to Plaintiffs’ Complaint, Defendants seek to force Plaintiffs’ claims to} 10 arbitration based on a “Dispute Resolution Agreement” purportedly signed by Mr. Dignes that. 11 among other defects, is so unconscionable that it is unenforceable and violates the law because if 12 forces non-signatories to arbitrate claims which are not subject to arbitration. Therefore, the Court 13 should deny the Motion to Compel Arbitration. 14 Il. FACTUAL BACKGROUND 15 A. The Dispute Resolution Agreement. 16 The Dispute Resolution Agreement (“Agreement” or “Arbitration Agreement”) is an| 17 arbitration agreement in disguise. This six-page Dispute Resolution Agreement requires residents 18 who have a dispute with TNR to first participate in mediation and then binding arbitration. (Decl| 19 Brummel, Ex A.) The only parties to the Agreement are Mr. Dignes and TNR. Ms. Brummel. 20 Defendants’ admissions’ department employee who presented the Agreement to Mr. Dignes. 21 claimed in her declaration to give the Agreement to Mr. Dignes to sign on the day of admission. 22 (Decl. Brummel, { 5.) She stated that generally residents sat next to her at a computer so they could 23 review admissions documents together. (Decl. Brummel, 43.) In reality, Mr. Dignes signed the 24 admissions packet (including the Agreement) eight days after admission. Mr. Dignes did not sit 25 down at Ms. Brummel’s computer; rather, Ms. Brummel brought an iPad to Mr. Dignes’ room and 26 stood at his bedside while she scrolled through nearly 100 pages of electronic documents on an iPad. 27 As she reviewed the documents, Ms. Brummel placed Mr. Dignes’ electronic signature (captured 28 only once at the beginning of the process) on the documents, including on the Arbitration {00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 1 Agreement. Plaintiffs Sheila Lowe, Mr. Dignes’ daughter and Power of Attorney, and Lori Kirchert first learned of the purported Arbitration Agreement after the filing of the Complaint. At no time did) they sign the Agreement. (Decl. Martucci, 114, 22, Ex. D.) B. The Arbitration Agreement Covers the Conduct, Costs, and Rules of Arbitration. The Agreement signed by TNR on August 15, 2019 covers the conduct, costs, and rules off arbitration. (Decl. Brummel, Ex. A.) For example, the agreement requires the parties to give up their constitutional right to a jury trial, on the premise that arbitration is “often less expensive” than court] (Decl. Brummel, Ex. A, §4.) The Agreement requires arbitration through Judicate West, oy alternatively ADR (which presumably means ADR Services, Inc.) (/d. at 7.) Paragraph 7 refers the 10 parties to the Judicate West website for arbitration rules. 11 The Agreement states that TNR will pay for the mediator’s fees and costs, as well as 12 arbitrator’s fees and costs for up to three days of hearing. (/d. at 14.) If the hearing exceeds three 13 days, the parties must equally bear the costs and fees. (/d. at §14.) As of 2021, Judicate West 14 charges a $500 filing fee, a $250.00 case management fee, and a $750.00 fee for all hearings that are 15 two days or less. This does not include the individual fees for each arbitrator, which are set by the 16 arbitrators and range from $450.00 to $1,500.00 per hour. (Decl. Martucci, §5.) Similarly, ADR| 17 Services, Inc. charges a $450.00 per party fee, and arbitrators set their own fees. Based on these 18 fees, a three-day arbitration could cost anywhere from $10,800 to $36,000. Most elder abused 19 arbitrations and trials last longer than two weeks. A two-week arbitration would cost anywhere from] 20 $36,000 to $120,000 for the arbitrator’s fees alone, not including pre-hearing discovery, hearing 21 preparation, and other administrative costs. (Decl. Martucci, 5.) 22 In addition to these exorbitant fees, the rules of arbitration sharply curtail a Plaintiff's right 23 to discovery. Judicate West allows for one deposition as a matter of right, only 20 Special 24 Interrogatories and 20 Requests for Production. (Decl. Martucci, §/4 Ex. A.) Under ADR Services. 25 Inc. rules, discovery is not permitted unless ordered by the arbitrator. (Decl. Martucci, 46 Ex. B. 26 The Agreement requires confidentiality of the proceedings and any award and requires Mr. Dignes 27 to waive his right to “representative, consolidated, or class treatment of any claim.” (/d. at 915.) Ms 28 Brummel misrepresented to residents they had a right to rescind within 30 days. However, a closer {00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 2 read of Paragraph 16 reveals that even if a resident rescinds the Agreement, Arbitration applies t disputes “arising before the rescission.” (Jd. at §16.) Thus, the right to rescind is limited. Cc The Deposition of Deanna Brummel. Plaintiffs’ counsel deposed Ms. Brummel on May 27, 2021. Ms. Brummel has no formal medical training or certificates. Ms. Brummel stated that it was her job to test residents’ capacity to sign agreements, and she would do that by looking at the resident’s orders in the file, looking fox Powers of Attorney on file, and asking the residents simple questions to determine whether they had| capacity. If a resident had a Power of Attorney but inadvertently signed an Agreement, Ms, Brummel would not go back and correct that or have the person with Power of Attorney re-sign thd 10 documents. (Decl. Martucci, §13, Ex. D.) 1 The Arbitration Agreement is the last document in a 75 to 100-page electronic admissions 12 packet presented to residents after they are assigned a room. Despite being titled a “Dispute 13 Resolution Agreement,” Ms. Brummel refers to it as an “Arbitration Agreement.” Ms. Brummel 14 stated that in 2019 when Mr. Dignes was a resident, she went to residents’ rooms at their bedside to 15 go over admissions paperwork. Holding an iPad, she would scroll through the 100-page electronid 16 packet, explaining relevant parts. The resident signed their name once at the beginning of thd 17 process. There is no place where residents acknowledge or place their signature anywhere on thd 18 documents other than on the first signature. Rather, Ms. Brummel clicks the signature lines to place 19 the residents’ electronic signature throughout the packet. In total, it takes 15 to 20 minutes to g 20 over the Admissions packet, including the Agreement. (Decl. Martucci, §15, Ex. D.) 21 Throughout the deposition, Ms. Brummel confused mediation and arbitration, likely due t 22 the convoluted Agreement. When asked to describe arbitration, Ms. Brummel had difficult 23 articulating what arbitration is: “I would let them know that it’s -- they are signing this due to if 24 negligence was happening at the facility, and they wanted to go forth and sue the company. 25 arbitration is where a third party mediator comes in and they go from there, whatever the issues are. 26 and they would try to resolve it.” (/d.) 27 Ms. Brummel does not go over the Agreement paragraph by paragraph with residents. She 28 completed approximately 2 to 10 intakes per day, five days a week at TNR for three and a half {00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 3 years. Thus, throughout her employment, she likely performed anywhere from 1,500 to 9,00! admission signings. Less than 20 times during her employment with TNR did a resident decline thd Agreement. Although Ms. Brummel told residents that arbitration is less expensive than traditional Court, she does not know how much Arbitration costs. Ms. Brummel does not know the arbitratiot rules and did not give residents a copy of those rules with the Agreement. Ms. Brummel did no inform residents they could consult with an attorney prior to signing. She does now know whether the Agreement is negotiable, does not tell residents they can negotiate, and did not volunteer to residents that they had a right to rescind the Agreement. Importantly, Ms. Brummel does not kno’ whether the Agreement binds resident’s families, and she does not inform residents that the 10 Agreement would bind their families. (Decl. Martucci, 16-18, Ex. D.) 11 Ms. Brummel claims to have an independent recollection of Mr. Dignes. This is unlikel 12 given the thousands of admissions she completed during her employment. She said in her 13 declaration that Mr. Dignes signed the Agreement on the day he was admitted, but later 14 acknowledged at deposition that she does not know when he signed. Ms. Brummel described that 15 she stood at Mr. Dignes’ bedside as she reviewed the iPad with him. She did not tell Mr. Dignes 16 about the cost of arbitration, but explained to Mr. Dignes that “if they decided to sue the compan 17 due to negligence, and they wanted to arbitrate, a third party would come in.” Ms. Brummel did no 18 tell Mr. Dignes that any other claims other than those for negligence would be covered by the 19 Agreement. She did not tell Mr. Dignes that the Agreement was negotiable, that it could bd 20 rescinded, or that it bound his heirs/successors. (Decl. Martucci, 419-21, Ex. D.) 21 Ill. STANDARD OF LAW 22 A State Law, Rather than the Federal Arbitration Act, Applies. 23 The Federal Arbitration Act (“FAA”) does not apply; only California procedural law applies] 24 “The procedural aspects of the FAA do not apply in state court absent an express provision in the 25 arbitration agreement.” (Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.St 26 835.) Defendants admit the existence of a valid contract is governed by California law. (Motion t 27 Compel Arbitration [“MTC”], p. 4:9-16.) Regardless of whether the FAA or California applies, both] 28 the FAA and the California Arbitration Act, Code of Civil Procedure § 1280, et seq. “CAA” {00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 4 employ the same rules of contract interpretation (state law). (See, Valencia v. Smith (2010) 185 Cal.App.4th 153, 177 (Generally, the FAA obligates federal courts to apply state law when| interpreting an arbitration clause”...“even when the [FAA] applies, interpretation of the arbitration] agreement is governed by state law principles....”]) In interpreting arbitration agreements, basid principles of contract law apply. (Sanchez v. Western Pizza Ent., Inc, (2009) 172 Cal.App.4th 154. 165.) As with other contracts, ambiguities in standard form arbitration agreements are to be construed against the drafter. (Victoria v. Sup. Ct. (1985) 40 Cal.3d 734, 739; see also, Civil Code §| 1654.) Accordingly, California law applies to the analysis of the enforceability of the agreement. B. This Court Has Authority to Determine Arbitrability, 10 Defendants may argue that the arbitrator, rather than this Court, has the authority to 11 determine arbitrability of the Agreement. (Decl. Brummel, Ex A, 11.) However, the Agreemen' 12 does not clearly and unmistakably delegate authority to the arbitrator. It is also well-settled that thd 13 Court, rather than the arbitrator, has the sole authority to “determine whether a non-signatory to thd 14 arbitration agreement can be compelled to arbitrate. The authority to decide that question resides, b’ 15 law, solely with the trial court.” (Benaroya yv. Willis (2018) 23 Cal.App.Sth 462, 467; see also 16 Goldman v. Sunbridge Healthcare, LLC (2013) 220 Cal.App.4th 1160, 1169 [“there is no polic 17 compelling persons to accept arbitration of controversies which they have not agreed to arbitrate.”’] 18 Here, Plaintiffs Sheila Lowe and Lori Kirchert are non-signatories to the purported Arbitration] 19 Agreement, so the Court has the sole authority to determine whether the Agreement is enforceable. 20 IV. THE ARBITRATION AGREEMENT IS UNCONSCIONABLE 21 The Court has the authority to deny arbitration where it finds grounds exist for the rescission] 22 of an arbitration agreement. (Code of Civil Procedure § 1281.2.) Here, the Agreement is 23 unconscionable, and the Court should decline to enforce it. Unconscionability refers to “an absencd 24 of meaningful choice of the part of one of the parties together with contract terms which ard 25 unreasonably favorable to the other party.” (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4thl 26 1109, 1133.) Unconscionability has procedural and substantive elements. Both “‘must be present in| 27 order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrind 28 of unconscionability.’ But they need not be present in the same degree.... [T]he more substantivel {00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 5 oppressive the contract term, the less evidence of procedural unconscionability is required to coma to the conclusion that the term is unenforceable, and vice versa.” (Armendariz v. Foundation Healti Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 [citations omitted].) “The issue in every case is whether the terms of the contract are sufficiently unfair, in view of all relevant circumstances, that a court should withhold enforcement.” (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 12434 1244.) Here, both procedural and substantive unconscionability permeate the Arbitration Agreement such that it should be rescinded. A The Agreement is Procedurally Unconscionable. Procedural unconscionability focuses on two factors: oppression and surprise. (Zullo v, 10 Superior Court, supra, 197 Cal.App.4th at p. 484, 127 Cal.Rptr.3d 461.) “‘Oppression’ arises from] 11 an inequality of bargaining power which results in no real negotiation and ‘an absence off 12 meaningful choice.’ ‘Surprise’ involves the extent to which the supposedly agreed-upon terms of tha 13 bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed) 14 terms.” (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 245 [internal citations omitted].) 15 1 The Agreement is Highly Procedurally Unconscionable Because it is Oppressive. 16 Courts defined adhesion contracts as a “standardized contract, which, imposed and drafted 17 by the party of superior bargaining strength, relegates to the subscribing party only the opportunit 18 to adhere to the contract or reject it.” (Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 817.) Tha 19 hallmarks of adhesion include when one party drafts a contract, the parties fail to engage i 20 meaningful negotiation, and the contract is found as one part of a much larger group of documents 21 (Victoria v. Superior Court (1985) 40 Cal.3d 734, 743.) Here, the Arbitration Agreement is an| 22 oppressive adhesion contract because it was the last document buried in a 100-page electronid 23 admission packet presented to Defendant at his bedside. Ms. Brummel did not tell Mr. Dignes he 24 could negotiate the contract, nor did she tell him he could rescind the Agreement. The Agreement 25 was described in an inaccurate and cursory manner to Mr. Dignes, and Ms. Brummel placed hi: 26 electronic signature on the Agreement. Mr. Dignes himself did not even sign the Agreement, either 27 literally or symbolically, which arguably renders the entire agreement invalid. 28 {00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 6 Defendants argue “Decedent did not have to agree to arbitration as a precondition to bd admitted to the Facility; his agreement to arbitration was completely voluntary.” (MTC, p. 4:25-27. What Defendants fail to mention is that Mr. Dignes had already been in the facility for eight days when TNR presented the “Dispute Resolution Agreement” to him at his bedside. (Decl. Martucci 14.) Later that night, he would fall while using the restroom, and two days later he began to sho symptoms of a facility-acquired C. Difficile infection. Mr. Dignes was in poor health and already in| the facility for over a week. What choice would a resident meaningfully have other than to sign documents presented to him at his bedside after living in a facility for eight days. Defendants argue “Decedent had the opportunity to rescind the Arbitration Agreement 10 within thirty days of execution.” (MTC, p. 43:28-4:3.) Mr. Dignes was not informed he could! 11 rescind the contract, and the rescission paragraph itself is oppressive because it only applies t 12 claims that arise after rescission. Mr. Dignes died as a result of TNR’s neglect within 15 days off 13 signing, so he unfortunately lacked time to rescind. 14 As an aside, any argument by Defendants that Mr. Dignes had capacity must be ignored foy 15 lack of foundation and speculation. Defendants cite to Paragraph 2 of Ms. Brummel’s declaration] 16 for the allegation that “Decedent did not lack capacity to execute the Arbitration Agreement.”! Thig 17 citation is entirely misleading and unsubstantiated. Nowhere in Ms. Brummel’s declaration does shd 18 claim to have knowledge that Mr. Dignes had capacity to sign the Dispute Resolution Agreement onl 19 August 15. Nor could she—she has no medical training and no medical licensing. Ms. Brummel did) 20 not confirm with Mr. Dignes’ doctor that he had capacity on August 15, and she did not know that 21 he had a POA on file, meaning he arguably should not have signed on behalf of himself. Thus, an: 22 argument about capacity must be disregarded. (Decl. Martucci, 923, Ex. E.) 23 In sum, the disparity in bargaining power and oppression is clear: TNR is a sophisticated) 24 party operated by corporate entities that own at least 20 facilities in California alone.? Mr. Dignes 25 was an 81-year-old stroke victim rehabbing in Defendants’ facility following a hospital stay. Rathey| 26 than present the admissions paperwork and Arbitration Agreement to Mr. Dignes on the day he wag 27 28 ' See Defendants’ Motion to Compel Arbitration, p. 5:3-4, citing Brummel Decl. See Covenant Care’s website: https://www.covenantcare.com/locations-by-name/. {00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 7 admitted (when his family was present), or another time when his Power of Attorney, Sheila Lowe. was present (she visited every other day), Defendants presented these documents to Mr. Dignes aftey he had been living at TNR for eight days. The Arbitration Agreement is oppressive given thd disparity in bargaining power, combined with the non-negotiable contract of adhesion presented| bedside to a resident who had been in the facility for eight days. 2. The Agreement is Procedurally Unconscionable Because It Results in Surprise. “Surprise” is defined as “the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed] terms.” (Gutierrez v. Autowest, Inc. (2003) 114 Cal. App. 4th 77, 87.) The Agreement would result 10 in surprise if enforced for several reasons. First, the Agreement was buried at the end of anl 11 electronic packet of 100 pages of admissions paperwork. The Agreement is contained within a six4 12 page contract masquerading as a “Dispute Resolution Agreement.” This is not a dispute resolution 13 agreement; hidden after three benign paragraphs about non-binding mediation is the binding 14 arbitration agreement and waiver of the constitutional right to a jury trial. The convoluted structure 15 of the agreement itself results in surprise. 16 Second, failing to include the costs and expenses in the Agreement causes Plaintiffs to be 17 subject to surprise and oppression. Even the closest reading of the agreement would not reveal the 18 costs of arbitration, which can be prohibitively high. The Agreement states that the Facility will pay 19 for the arbitrator’s fees for up to three days of hearing, at which point the parties will equally share 20 costs. (Decl. Brummel, Ex A., p. 3.) Ms. Brummel does not know the costs of arbitration, nor did 21 she tell Mr. Dignes the costs. (Decl. Martucci, 417, Ex D.) These costs may only be ascertained b: 22 reviewing Judicate West or ADR Services Inc.’s websites and making telephone and email inquiries 23 to request the hourly rates. Lulled by the claim in Paragraph 4 that arbitration “is often lesg 24 expensive and a faster way to resolve disputes compared to going to court,” a signatory to this 25 Agreement would be surprised to find out that it costs $1,500 in total fees simply to file a claim wit 26 Judicate West. The arbitrator’s fees range anywhere from $450 to $1,500 per_hour. Plaintiffs’ 27 Counsel has an arbitration currently scheduled in a similar elder abuse case, and the hearing ig 28 scheduled for two weeks, or eighty hours. Based on Judicate West’s fee range, a two-week hearing} {00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 8 could cost anywhere from $36,000 on the low end to $120,000 on the high end for the arbitrator’s hearing fees alone. Thus, a resident trying to determine what an arbitration will cost (assuming the resident knows to look for this information), has to review the Agreement, check websites for rules and administrative fees, and call Judicate West to even be able to reasonably estimate what thd arbitrator's fees might be. If Mr. Dignes believed he would save costs by agreeing to arbitrate, thd Judicate West administrative fees and arbitrator's fees (amounting potentially to over a hundred thousand dollars) would be an unfair surprise. Finally, a signatory may also be surprised to learn that Paragraph 5, 6, and 14 (pages 2-3 10 waive the signor’s and their heirs’ rights to a jury trial, as well as requires confidentiality. This 11 would also result in surprise to Mr. Dignes given that Ms. Brummel did not tell him that by signing 12 the Agreement, he waived his heirs rights. Thus, the totality of the circumstances demonstrates the 13 Arbitration Agreement is significantly procedurally unconscionable. 14 B. The Agreement Is Substantively Unconscionable. 15 Substantive unconscionability may be shown if the disputed contract provision falls outsidd 16 the non-drafting party's reasonable expectations. (Gutierrez v. Autowest, Inc. (2003) 114 17 Cal.App.4th 77, 89 [holding it is unconscionable to force arbitration where that process requires a 18 consumer to pay fees he or she cannot afford because such provisions are “unduly harsh and one4 19 sided, defeats the expectations of the nondrafting party, and shocks the conscience.”]) Here, tha 20 terms of the Agreement render it substantively unconscionable. 21 1 Fees are Hidden and Prohibitively Expensive. 22 As discussed supra, the Agreement is silent on the fees and costs. “Where a consumer enters 23 into an adhesive contract that mandates arbitration, it is unconscionable to condition that process o: 24 the consumer posting fees he or she cannot pay...while arbitration may be within the reasonabld 25 expectations of consumers, a process that builds prohibitively expensive fees into the arbitration 26 process is not.” (Gutierrez v. Autowest, Inc. (2003) 114 Cal. App. 4th 77, 89-90.) The court i 27 Gutierrez further declared, “To state it simply: it is substantively unconscionable to require a 28 onsumer to give up the right to utilize the judicial system, while imposing arbitral forum fees that {00067686.1} PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO COMPEL ARBITRATION - 9 are prohibitively high.” (/d. at 90; see also Armendariz v. Foundation Health Psychare Services, Inc] (2000) 24 Cal.4th 83, 118; Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1076, 1081-1085. Here, the Agreement is substantively unconscionable given the arbitration hearing will cost between $36,000 and over $100,000.