Darren Obtains 8th Circuit Court of Appeals' Reversal of Important Arbitration Decision

Representing the estate of a deceased nursing home resident, Clyde Posey, Darren recently appealed a federal district court decision forcing the parties to arbitrate in private, rather than have a public jury trial, in a wrongful death case against Northport Health Services of Arkansas, LLC (Northport). Fortunately, the United States Eighth Circuit Court of Appeals agreed with Darren’s analysis of the case and reversed the federal district court.

On September 2, 2004, Clyde and his son, Matt, arrived at a nursing home owned by Northport and sought Clyde's admission to the facility. Clyde was experiencing disorientation, delusions, and hallucinations. As part of the admission process, Matt and Clyde received an admission agreement (the Agreement) that included an arbitration agreement and waiver of jury trial. Both Clyde and Matt signed the Agreement; Clyde signed as the "Resident," Matt as the "Responsible Party." The Agreement defined Responsible Party as a legal guardian, attorney-in-fact, "or some other individual or family member who agrees to assist the Facility in providing for [the resident's] health, care, and maintenance." It also noted that "[t]he Responsible Party represents to the Facility that he or she manages, uses, directs or controls funds or assets which may be used to pay for Resident's Facility charges and/or that he or she tends to make decisions for or otherwise act on behalf of Resident." It is undisputed that Matt was not his father's legal guardian or attorney-in-fact.

Northport admitted Clyde as a resident to its nursing home, where he stayed until his death in January 2016. A few months later, Mark Posey, as special administrator of his father's estate, sued Northport in Arkansas state court for wrongful death. Northport filed a separate action in federal court, seeking to stay the state court action and compel arbitration of the wrongful death claim pursuant to the Agreement. The parties then filed competing motions for summary judgment. The district court denied Mark's motion and granted Northport's motion to the extent that it sought to compel arbitration. Basing its reasoning solely on the Agreement, assuming without finding that Clyde was incompetent at the time of his admission, and recognizing that Matt was not his father's legal representative, the district court used the third-party beneficiary theory to find as a matter of law that Matt, in his individual capacity, entered into a binding arbitration agreement with Northport, for which Clyde was the intended beneficiary. Therefore, the district court directed Clyde's estate to arbitrate the dispute. This appeal follows, with Mark asserting that the district court misused the third-party beneficiary theory when no underlying agreement was present between the Poseys and Northport.

The United States Eighth Circuit Court of Appeals agreed.

Why is This Decision Important?

A new recently released report today titled The Truth About Forced Arbitration shines a light on forced arbitration, the pernicious practice that strips Americans of fundamental rights, destroys lives, and allows corporations full immunity for their transgressions. 

This report not only informs the public—but educates policymakers and aids in advocacy efforts around the country. Here is what the report shows: 

• AAJ’s analysis of arbitration claims data—provided by the arbitration providers themselves—proves that consumers are more likely to be struck by lightning than they are to win a monetary award in forced arbitration!
• Forced arbitration is not an alternative judicial process, but instead eliminates claims, immunizes corporations, and allows abuse, discrimination, fraud, and essentially all other corporate wrongdoing to go unchecked.
• Though there are thought to be nearly 800 million consumer arbitration provisions in effect, only an average of 6,000 claims are brought each year. Similarly, 60 million workers are subject to forced arbitration under the terms of their employment contracts, yet only 11,114 tried to pursue a claim against their employer in arbitration, and just a tiny percentage of these cases resulted in a monetary award for the individual who brought the claim.

Forced arbitration is a rigged, anti-consumer practice that eliminates our Seventh Amendment right to trial by jury. However, Congress can now end forced arbitration by voting for the upcoming FAIR Act to restore the rights of American consumers, workers, patients, and nursing home residents.

Please share this report with your friends as a reminder of why Darren has made it his mission to protect civil justice and to inform them about how this rigged practice devastates Americans. 

We need to end forced arbitration in all its forms.