Opinion
Civil Action 5:20-cv-3538-SAL-TER
07-14-2021
PAULA CAMPBELL, Plaintiff, v. ANESTHESIA MANAGEMENT SOLUTIONS, LLC, Defendant.
REPORT AND RECOMMENDATION
Thomas E. Rogers, III United States Magistrate Judge.
I. INTRODUCTION
Plaintiff brings this action pursuant to the Family Medical Leave Act (FMLA), 29 U.S.C. § 2601, et seq., alleging causes of action for interference, discrimination, and retaliation. Presently before the court is Defendant's Motion to Dismiss or in the Alternative, to Require Plaintiff to Substitute the Real Party in Interest and to Compel Arbitration and Dismiss (ECF No. 9). Plaintiff filed a Response (ECF No. 10) and Defendant filed a Reply (ECF No. 11). All pretrial proceedings in this case were referred to the undersigned pursuant to the provisions of 28 U.S.C. 636(b)(1)(A) and (B) and Local Rule 73.02 (B)(2)(g), DSC. This report and recommendation is entered for review by the district judge.
II. RELEVANT FACTUAL ALLEGATIONS
Defendant Anesthesia Management Solutions, LLC (AMS) provides anesthesia staffing management services for medical facilities. Am. Compl. ¶ 4. On April 20, 2019, AMS took over the management of anesthesia staff at The Regional Medical Center (RMC) in Orangeburg, South Carolina, pursuant to a contract between AMS and RMC. Am. Compl. ¶ 5. At the time AMS took over management of anesthesia staffing at RMC, Plaintiff, a Certified Registered Nurse Anesthetist (CRNA), was the Director of Anesthesiology at RMC and had been employed there since 2008. Am. Compl. ¶¶ 8-9. On April 15, 2019, AMS required Plaintiff to sign a contract labeled “Independent Contractor Agreement for CRNA Professional Services (the Contract), ” which provided that Plaintiff was an independent contractor and not an employee of AMS. Am. Compl. ¶¶ 14-15.
When AMS took over, Plaintiff was on six weeks of FMLA maternity leave. Am. Compl. ¶ 10. On June 11, 2019, AMS received an inquiry from Plaintiff about taking FMLA leave. Am. Compl. ¶ 27. The same day, AMS Director of Business Management and VP of Recruitment, Jesse Breedlove, told Plainiff via email that she was not eligible for FMLA leave. Am. Compl. ¶ 28. On August 7, 2019, Mr. Breedlove emailed Plaintiff a thirty-day termination notice. Am. Compl. ¶ 29. Plaintiff reached out to other RMC staff members to try and learn why she was being terminated. Am. Compl. ¶ 31. On August 16, 2019, Mr. Breedlove threatened Plaintiff that if she did not cease this activity, her thirty-day termination would instead be an immediate termination. Am. Compl. ¶ 32. On August 19, 2019, AMS placed Plaintiff on FMLA leave for five days to keep her from returning to work after issuing her termination notice, despite its earlier claim that she was ineligible. Am. Compl. ¶ 33. Plaintiff's termination became effective on August 31, 2019. Am. Compl. ¶ 34. III. CONTRACTUAL AGREEMENT
Relevant to this action is the “Independent Contractor Agreement for CRNA Professional Services (the Contract)” between AMS and Sleep Away, LLC (Sleep Away). Contract (ECF No. 61). The Contract provides that the Contractor, i.e., Sleep Away, LLC, employs a CRNA and will provide CRNA services for use by AMS. Contract p. 1. It further provides that
Contractor shall retain the exclusive right to employ and terminate CRNAs. AMS may refuse to permit any particular CRNA provided by Contractor from performing any services hereunder, provided AMS has a reasonable basis for so doing. The CRNAs providing the Services hereunder are set forth on Schedule 1.1 hereto, as
amended from time to time by the mutual agreement of the parties hereto (the CRNAs).
Contract ¶ 1.1. Plaintiff is the only person named as a Designated CRNA under Schedule 1.1.
Contract p. 9.
Article 2 is entitled “Independent Contractor Status” and provides as follows:
2.1 Independent Contractors. CRNAs provided by Contractor shall perform all Services as independent contractors and not as employees, as those terms are used and construed for federal tax purposes and as required by ethics and standards of the CRNA profession. Contractor understands that AMS is not required to withhold any federal income tax, social security tax, and state and local tax or to secure worker's compensation insurance, employee liability insurance or any kind or to take any other action with respect to the insurance or taxes of any CRNA or any third parties that may be engaged by Contractor.
...
2.3 No Benefits. No CRNA shall be entitled to any benefits provided by AMS to its employees, including but not limited to health insurance, vacation, sick pay, ERISA and non-ERISA plans or any other benefits that may now or in the future be provided to all or some of AMS's employees.
2.4 Reclassification. In the event any court or agency were to consider the CRNAs or Contractor as an employee by law, Contractor agrees, and shall require each CRNA providing the Services hereunder to agree, that Contractor and the CRNAs knowingly and voluntarily agree that in such case Contractor and the CRNAs would not be entitled to any rights or benefits provided to employees of AMS.
Contract ¶¶ 2.1-2.4. The Contract also contains an arbitration provision:
9.7 Arbitration. In the event of a breach of this Agreement, Contractor and AMS (the “Parties”) expressly acknowledge and agree that any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration administered by the American Health Lawyers Association (“AHLA”) Dispute Resolution Service in accordance with its then prevailing Arbitration Rules. Disputes under this clause shall be resolved by arbitration in accordance with Title 9 of the U.S. Code (United States Arbitration Act) and the AHLA Arbitration Rules. The arbitration shall be conducted in Pensacola, Florida, by a sole arbitrator. The party initiating the arbitration shall give the other party notice of the matter in dispute. The parties shall confer and attempt to mutually agree upon the selection of an arbitrator within ten (10) days of the date the AHLA provides the responding party with notice of the filing of the demand for arbitration.
In the event the parties cannot agree upon an arbitrator, the sole arbitrator will be appointed pursuant to the AHLA Rules. Either party may apply to the arbitrator seeking injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved. All determinations and the final decisions of the arbitrator shall be made in writing. The fees and expenses of the arbitrator shall be borne equally by the Parties. The arbitrator's decision shall be binding on the Parties hereto and may be entered in any court of competent jurisdiction. Notwithstanding this agreement to arbitrate, either party to this Agreement shall be entitled to seek a judicial temporary restraining order, preliminary injunction or other equitable relief to enforce the provisions of this Agreement pending the filing and resolution of an arbitration before the AHLA.
Contract ¶ 9.7. The Contract was signed by David Simpson, MD on behalf of AMS and by Plaintiff on behalf of Sleep Away, LLC. Contract p. 7.
IV. STANDARD OF REVIEW
Defendants move for dismissal pursuant to Rules 17(a)(3) and 12(b)(3) of the Federal Rules of Civil Procedure. Federal Rule of Civil Procedure 17(a)(1) requires that all civil actions “be prosecuted in the name of the real party in interest.” Rule 17(a)(3), states “[t]he court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to ratify, join, or be substituted into the action.” Though not frequently raised as a basis for dismissal, commentators agree that parties should be able to assert a defense under Rule 17 by motion. See 6A Charles Alan Wright, et al., Federal Practice and Procedure, Civil 3d § 1554 (“It also seems logical to allow the objection to be raised by a preliminary motion when it may result in a dismissal of the action if the real party in interest cannot be joined or substituted. This approach seems sound, especially since the federal courts consistently have allowed motions raising defenses that are not enumerated in Rule 12(b), or any other rule for that matter” (footnotes omitted).).
The Fourth Circuit has found that a motion to dismiss and compel arbitration is most properly considered under Rule 12(b)(3) for improper venue, noting that the Supreme Court has characterized an arbitration clause as “a specialized kind of forum-selection clause.” Aggarao v. MOL Ship Mgmt. Co., 675 F.3d 355, 365 n.9 (4th Cir. 2012) (citing Scherk v. Alberto-Culver Co., 417 U.S. 506, 519, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974)); Sucampo Pharm., Inc. v. Astellas Pharma, Inc., 471 F.3d 544, 550 (4th Cir.2006) (“A motion to dismiss based on a forum-selection clause should be properly treated under Rule 12(b)(3) as a motion to dismiss on the basis of improper venue.”); see also Brown v. Five Star Quality Care, Inc., No. 2:15-CV-4105-RMG, 2016 WL 8710474, at *2 (D.S.C. Jan. 8, 2016) (applying Rule 12(b)(3)). “The party seeking to compel arbitration bears the burden of establishing the existence of an arbitration provision that purports to cover the dispute.” Scales v. SSC Winston-Salem Operating, Co., LLC, No. 1:17CV539, 2017 WL 4467278, at *2 (M.D. N.C. Oct. 5, 2017) (internal quotation marks and citation omitted). “If the party makes this evidentiary showing, the party opposing arbitration must come forward with sufficient facts to place the entitlement to arbitration in dispute.” Id. (citing Chorley Enters., Inc. v. Dickey's Barbecue Rests., Inc., 807 F.3d 553, 564 (4th Cir. 2015)). When considering a motion under Rule 12(b)(3), the Court may consider evidence outside the pleadings, but the facts are viewed in the light most favorable to the plaintiff because a plaintiff need only make a prima facie showing of proper venue to survive a motion to dismiss. Id. at 365-66.
V. DISCUSSION
A. Real Party in Interest
Defendant argues that Sleep Away, and not Paula Campbell, is the real party in interest in this action because an arbitration agreement exists between Sleep Away and Defendant and Paula Campbell is not a party to that agreement. Defendant argues that Plaintiff was put on notice via Defendant's first motion to dismiss that Paula Campbell is not the real party in interest in this action and she had a reasonable opportunity to substitute Sleep Away as the Plaintiff when she filed her amended complaint but failed to do so. Thus, Defendant argues, this action should be dismissed pursuant to Rule 17(a)(3).
Before determining whether dismissal is appropriate pursuant to Rule 17(a)(3) for failure to name the real party in interest, the court must first determine who, in fact, is the real party in interest in this action. “The meaning and object of the real party in interest principle embodied in Rule 17 is that the action must be brought by a person who possesses the right to enforce the claim and who has a significant interest in the litigation. Whether a plaintiff is entitled to enforce the asserted right is determined according to the substantive law.” Virginia Elec. & Power Co. v. Westinghouse Elec. Corp., 485 F.2d 78, 83 (4th Cir. 1973) (citations omitted).
The FMLA provides that “an eligible employee shall be entitled to a total of 12 workweeks of leave during any 12-month period ... [b]ecause of the birth of a son or daughter of the employee in order to care for such son or daughter.” 29 U.S.C. § 2612(a)(1)(A). The FMLA provides that “[a]n action to recover the damages or equitable relief prescribed in paragraph (1) may be maintained against any employer (including a public agency) in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of (A) the employees; or (B) the employees and other employees similarly situated.” 29 U.S.C. § 2617(a)(2). “Under the FMLA, the term “employee” as relevant to this action means “any individual employed by an employer.” 29 U.S.C. § 203(e)(1) (emphasis added). Thus, employee as used in the FMLA is an individual, not an LLC like Sleep Away. Further, the rights provided under the FMLA, entitlement to leave from employment under certain enumerated circumstances, makes sense only in the context of an individual employee, not an LLC.
Central to this action is the question of whether Paula Campbell was an employee of Defendant and, thus, eligible for benefits under the FMLA. However, that ultimate question is not presently before this court at this stage of the litigation. For the purposes of determining the real party in interest in this action, which is one of the issues raised in the present motion, the court must look to the statutory language of the FMLA regarding who generally is allowed to bring suit under the act. Any discussion herein regarding Paula Campbell as an “employee” of Defendant is solely for the purpose of determining the real party in interest and not for the later question of whether she was an employee or an independent contractor.
Title 29 U.S.C. § 2611(3) states that “[t]he terms ‘employ', ‘employee', and ‘State' have the same meanings given such terms in subsections (c), (e), and (g) of section 203 of this title.”
The fact that a contractual agreement that includes an arbitration provision exists between Sleep Away and Defendant does not change the real party in interest in this action. The right to FMLA leave belongs to the individual employee, 29 U.S.C. § 2612(a)(1)(A), and the right to recover damages and/or equitable relief for FMLA violations likewise belongs to the individual employee, 29 U.S.C. § 2617(a)(2). The arbitration agreement speaks only to the forum in which any claim that is covered by the agreement must be brought. It does not determine who may bring an action, only where it must be brought. There is no assignment of the right to recovery under the arbitration agreement or otherwise within the Contract. As noted by both parties, Paula Campbell is not a party to the Contract and, thus, could not have assigned her right to recovery under the FMLA to Sleep Away via that Contract. Accordingly, Defendant's argument that this case should be dismissed for Plaintiff's failure to name the real party in interest is without merit.
B. Arbitration
Defendant also argues that dismissal of this action is proper because all of the claims raised by Plaintiff are subject to mandatory arbitration pursuant to the arbitration agreement contained within the Contract between Sleep Away and Defendant. Plaintiff argues arbitration is not mandatory in this action because she is not a party to the Contract and the arbitration agreement does not cover the claims raised here. In deciding whether to compel arbitration, the trial court is tasked with determining two gateway issues. Howsam v. Dean Witter Reynolds, 537 U.S. 79, 83-84 (2002). Courts should “engage in a limited review to ensure that the dispute is arbitrable - i.e., that a valid agreement to arbitrate exists between the parties and that the specific dispute falls within the substantive scope of that agreement.” Hooters of America, Inc. v. Phillips, 173 F.3d 933, 938 (4thCir. 1999). In deciding whether the parties have an enforceable agreement to arbitrate, courts apply state law principles governing the formation of contracts. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995).
As set forth above, the arbitration agreement contained within the Contract provides that the Federal Arbitration Act (FAA), 9 U.S.C. § 3, et seq. is applicable here. The FAA “creates a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985). While Congress considered the advantage of expeditious resolution of disputes through arbitration in enacting the FAA, its primary purpose was to enforce agreements into which parties have entered. Volt Information Sciences, Inc. v. Board of Trustees of the Leland Stanford Junior University, 489 U.S. 468, 478 (1989).
Referred to as the “United States Arbitration Act” in the Contract.
“[Q]uestions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration.” Gilmer, 500 U.S. at 26. The “liberal federal policy favoring arbitration agreements manifested by this provision and the Act as a whole, is at bottom a policy guaranteeing the enforcement of private contractual arrangements; the Act simply ‘creates a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate.'” Mitsubishi, 473 U.S. at 625 (citing Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983). However, the presumption in favor of arbitration “applies only when ‘a validly formed and enforceable arbitration agreement is ambiguous about whether it covers the dispute at hand,' not when there remains a question as to whether an agreement even exists between the parties in the first place.” Raymond James Fin. Servs. v. Cary, 709 F.3d 382, 385-386 (4th Cir. 2013).
The Supreme Court has directed that we “apply ordinary state law principles that govern the formation of contracts, ” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995), and the “federal substantive law of arbitrability.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). Thus state law determines questions “concerning the validity, revocability, or enforceability of contracts generally, ” Perry v. Thomas, 482 U.S. 483, 493 n. 9, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987), but the Federal Arbitration Act, 9 U.S.C. § 2 (1994), “create[s] a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act.” Moses H. Cone Mem'l Hosp., 460 U.S. at 24, 103 S.Ct. 927.
The first issue this court must decide is whether a valid agreement to arbitrate exists between the parties. The parties to this action are Paula Campbell and AMS, yet the parties to the Contract are Sleep Away, LLC and AMS. Accordingly, a threshold issue is whether Plaintiff is bound by the arbitration agreement contained within the Contract to which she is not a party. “Because ‘traditional principles' of state law allow a contract to be enforced by or against nonparties to the contract through ‘assumption, piercing the corporate veil, alter ego, incorporation by reference, third-party beneficiary theories, waiver and estoppel,' 21 R. Lord, Williston on Contracts § 57:19, p. 183 (4th ed.2001), ” state law applies to determine whether Plaintiff is bound by the arbitration agreement. Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631, 129 S.Ct. 1896, 1902, 173 L.Ed.2d 832 (2009). The Contract specifically states that “[t]his Agreement is made and delivered in and shall be governed by and construed in accordance with the applicable laws of the State of Florida.”
Contract, ¶ 9.5. “Florida courts have long held that ‘no party may be forced to submit a dispute to arbitration that the party did not intend and agree to arbitrate.'” Allscripts Healthcare Sols., Inc. v. Pain Clinic of Nw. Fla., Inc., 158 So.3d 644, 646 (Fla. Dist. Ct. App. 2014) (citing Seifert v. U.S. Home Corp., 750 So.2d 633, 636 (Fla.1999)). However, a non-signatory may be bound to arbitrate under certain circumstances: (1) incorporation by reference; (2) assumption; (3) agency; (4) veil piercing/alter ego; and (5) estoppel. Johnson v. Pires, 968 So.2d 700, 701 (Fla. 4th DCA 2007) (citing Smith/Enron Cogeneration Ltd. Partnership, Inc. v. Smith Cogeneration Intern., Inc., 198 F.3d 88, 93, 97 (2d Cir. 1999)). Further, “a nonsignatory to an arbitration agreement may be bound to arbitrate if the nonsignatory has received something more than an incidental or consequential benefit of the contract, or if the nonsignatory is specifically the intended third-party beneficiary of the contract.” Germann v. Age Inst. of Fla., Inc., 912 So.2d 590, 592 (Fla. 2d DCA 2005) (citations omitted). Here, AMS argues that even though Plaintiff did not sign the Contract in her individual capacity, she is bound to the arbitration agreement contained therein because she signed the agreement, was mentioned in the agreement as an individual, aside from any role as a member of Sleep Away, LLC, and received a direct benefit from the Contract.
Because Plaintiff signed the Contract, albeit on behalf of Sleep Away, LLC, she was aware of the terms of the Contract, including the arbitration provision. Further, she was specifically mentioned in the Contract. The Contract states, “[t]he CRNAs providing the Services hereunder are set forth on Schedule 1.1 hereto, ” Contract ¶ 1.1, and Plaintiff is the only person named as a Designated CRNA under Schedule 1.1, Contract p. 9. Plaintiff received a direct benefit from the Contract that was more than incidental or consequential. Defendant entered into the Contract with Sleep Away, LLC for the purposes of retaining the professional services of Plaintiff, the only CRNA named in the Contract, in exchange for payment. Pursuant to the Contract, Plaintiff received payment for her services rendered to Defendant.
The facts presently before the court are consistent with those in Pearson v. Hilton Head Hosp., 400 S.C. 281, 295, 733 S.E.2d 597, 604 (Ct. App. 2012). In Pearson, the Plaintiff was a physician who had a contract with LocumTenens.com, a medical professional placement corporation. Id. at 285. LocumTenens.com had a contract with Defendant hospital for temporary placement of physicians, and Plaintiff was one of the physicians placed with the hospital pursuant to the contract. Id. Both contracts contained arbitration provisions. Id. Defendant hospital subsequently terminated Plaintiff's employment and Plaintiff filed suit. Id. The court held that Plaintiff was estopped from avoiding the arbitration agreement contained within the contract between LocumTenens.com and the hospital:
Even though Florida state law is applicable here, the holding in Pearson is instructive.
[the plaintiff] received a benefit due to the contract, in that he was able to work at the Hospital and receive payment for his work. If not for that contract, then [the plaintiff] would have had to make separate arrangements with the Hospital in order to work there. He knowingly accepted benefits of the contract between the Hospital and Locum. Accordingly, [the plaintiff] benefitted from that contract and should not be able to disclaim the arbitration agreement contained in it.Id. at 296-97.
Likewise, in the present case, Plaintiff would not have been able to work for Defendant absent the Contract between AMS and Sleep Away, LLC. Further, as stated above, Plaintiff was fully aware of all the terms of the Contract between AMS and Sleep Away, LLC, including the arbitration requirement, because she signed the Contract on behalf of Sleep Away, LLC. For these reasons, she is estopped from arguing that she is not bound by the arbitration agreement in the Contract. A valid agreement to arbitrate exists between Plaintiff and Defendant.
Plaintiff also argues the second gateway issue reserved for the trial court-whether the specific dispute falls within the substantive scope of the arbitration agreement. Phillips, 173 F.3d at 938. In determining the scope of an arbitration provision, the court must look to the factual allegations of the complaint in order to ascertain whether the claims alleged touch a concern or matter covered by the arbitration provision. See J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, S.A., 863 F.2d 315, 319 (4th Cir.1988) (noting that the arbitrability determination centers on “whether the factual allegations underlying the claim are within the scope of the arbitration clause, regardless of the legal label assigned to the claim”). Courts are to resolve any doubts concerning the scope of arbitrable issues in favor of arbitration with a healthy regard for the federal policy favoring arbitration. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 1241, 84 L.Ed.2d 158 (1985)).
Here, Plaintiff brings three causes of action under the FMLA-interference, discrimination, and retaliation. The arbitration agreement within the Contract provides that “any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration.” Contract ¶ 9.7. Plaintiff argues that her claims do not arise out of, relate to, or have a significant relationship to the Contract. Rather, she argues, her claims arise out of her request for maternity leave, Defendant's denial of that request, and her termination following her request. She argues that her claims arise out of federal law, not the Contract. However, this is a very narrowly drawn view of the scope of Plaintiff's claims. The language “arising out of or related to” constitutes a “broad arbitration clause[ ] capable of an expansive reach.” Am. Recovery Corp. v. Computerized Thermal Imagining, Inc., 96 F.3d 88, 93 (4th Cir. 1996). Plaintiff's claims relate to the Contract because she provided services for Defendant as a result of the Contract. In addition, the Contract purports to define Plaintiff's status as an independent contractor rather than an employee, which is directly related to whether she was entitled to the FMLA leave she requested. Finally, contrary to Plaintiff's argument that her claim arise out of federal law and, thus, are not subject to arbitration, claims of employment discrimination may properly be made the subject of mandatory arbitration. Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 116-17, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001). It is not necessary for the arbitration agreement to specifically mention the FMLA for claims thereunder to be subject arbitration. To hold otherwise would render meaningless the broad interpretation given to phrases such as “arising out of” and “relating to.” Even if there were any doubts as to whether claims arising out of Plaintiff's employment were subject to an arbitration agreement contained within a contract defining such employment, as stated above, all such doubts are resolved in favor of arbitration. Accordingly, Plaintiff's claims in this action are subject to arbitration.
VI. CONCLUSION
For the reasons discussed above, it is recommended that Defendant's Motion to Dismiss or in the Alternative, to Require Plaintiff to Substitute the Real Party in Interest and to Compel Arbitration and Dismiss (ECF No. 9) be granted only as to Defendant's request that the case be compelled to arbitration and dismissed.