United States District Court, N.D. California, San Jose Division
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS THE
FIRST AMENDED COMPLAINT WITHOUT LEAVE TO AMEND RE: DKT. NO.
R. LLOYD United States Magistrate Judge.
Daniel Hernandez sues for himself and on behalf of two
putative subclasses for rescission of an arbitration
agreement due to alleged fraud, as well as for alleged
violation of California Health and Safety Code §
1430(b). Hernandez invokes this court's diversity
jurisdiction, 28 U.S.C. § 1332. Pursuant to Fed.R.Civ.P.
12(b)(6), defendant TLC of the Bay Area, Inc. (TLC) moves to
dismiss the First Amended Complaint (FAC) for failure to
state a claim. TLC also moves to strike the class allegations
pursuant to Fed.R.Civ.P. 12(f). Plaintiff opposes the motion.
Upon consideration of the moving and responding papers, as
well as the oral arguments presented, the court grants
TLC's motion to dismiss and deems moot the motion to
following facts are drawn from the FAC. Additionally, as will
be discussed, the parties have separately stipulated to the
dates of plaintiff's admission to and discharge from the
facility in question.
is a former resident of one of the skilled nursing facilities
(Facility) owned and operated by TLC. The parties stipulate
that he was admitted to the Facility on June 23, 2015. On or
about that date, plaintiff entered into an Arbitration
Agreement with the Facility. (FAC, Ex. 1). That agreement
provides that any disputes between plaintiff and the Facility
“shall be resolved exclusively by binding
arbitration” to be conducted “in accordance with
the National Arbitration Forum Code of Procedure, which is
hereby incorporated into this Agreement, and not by a lawsuit
or resort to court process.” (Id. at 1). In a
footnote, the agreement provides a phone number, fax number,
and a website address where information about the National
Arbitration Forum (NAF) and a copy of the Code of Procedure
can be obtained. (Id. at 1 n.1).
Arbitration Agreement expressly states that it is not part of
the Admissions Agreement and that residents are not required
to sign the Arbitration Agreement as a condition of
admission. (FAC, Ex. 1).
parties stipulate that plaintiff was discharged from the
Facility a few months later on September 15, 2015.
22, 2016, Hernandez sued TLC in state court for alleged elder
abuse. On August 9, 2016, TLC requested a 45-day extension to
respond to Hernandez's state court complaint. Then, on
August 24, 2016, TLC sent a letter stating that TLC
“has found that Daniel Hernandez agreed to arbitrate
any claims involving his care” and requesting that
plaintiff “voluntarily dismiss the above action and
proceed to arbitrate his claims.” (FAC ¶ 26, Ex.
7). On September 13, 2016, TLC wrote a letter advising that
TLC would be filing a motion to compel arbitration. That
motion was filed that same day. (Id. ¶ 27, Exs.
then filed this federal putative class action here on
September 28, 2016, asserting a sole claim for relief under
California Health & Safety Code § 1430(b). He
alleged that TLC fraudulently duped residents into signing
the Arbitration Agreement, thereby depriving them of their
right to a jury trial. The claim was based on allegations
that, since 2009, NAF had ceased administering arbitrations
involving consumers and that the NAF's Code of Procedure
was not accessible online. TLC moved to dismiss the original
complaint, arguing (among other things) that the allegations
did not give rise to a plausible or actionable claim for
relief. That motion was mooted when Hernandez timely filed
his FAC as a matter of right under Fed.R.Civ.P. 15(a).
adds a claim seeking rescission of the Arbitration Agreement
due to fraud. It continues to assert a claim for violation of
California Health & Safety Code § 1430(b) for
alleged deprivation of the right to a jury trial. And,
Hernandez continues to bring his claims for himself and on
behalf of two putative subclasses. Both subclasses are
comprised of current and former residents of skilled nursing
facilities owned, operated, or managed by TLC. The only
difference is that Subclass 2 consists of individuals against
whom TLC tried to enforce the Arbitration Agreement. (FAC
¶ 1). The gravamen of the FAC continues to be that TLC
fraudulently duped plaintiff and putative class members into
signing the Arbitration Agreement, even though the NAF no
longer administers consumer disputes and the NAF's Code
of Procedure was not accessible online.
back in state court---on November 11, 2016, TLC answered
Hernandez's complaint and ceased efforts to enforce the
federal suit, TLC once again moves to dismiss pursuant to
Fed.R.Civ.P. 12(b)(6). TLC contends that plaintiff's
right to a jury trial is not one that is protected by Cal.
Health & Safety Code § 1430(b). And, TLC says that
the § 1430(b) claim is time-barred anyway. Additionally,
TLC argues that the FAC does not sufficiently allege facts
supporting a claim for rescission based on fraud. As to both
claims, defendant maintains that the FAC does not allege
facts establishing any plausible claim for relief. Pursuant
to Fed.R.Civ.P. 12(f), TLC also moves to strike the class
allegations, arguing that individual issues of causation and
reliance will necessarily predominate over any common issues
of law or fact.
reasons to be discussed, this court grants the motion to
dismiss both claims for relief and deems moot the ...