Hooker v. The Citadel Salisbury LLC

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SONYA HOOKER, SYBIL RUMMAGE, DONNA DEAL, KENNETH MICHAEL DEAL, and BETTY DEAL, individually and on behalf of a class of those similarly situated, Plaintiffs, v. THE CITADEL SALISBURY LLC, SALISBURY TWO NC PROPCO LLC, ACCORDIUS HEALTH LLC, THE PORTOPICCOLO GROUP, LLC, SIMCHA HYMAN, and NAFTALI ZANZIPER, Defendants.

No. 1:21-cv-00384

United States District Court, M.D. North Carolina

April 20, 2023

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, Chief District Judge.

This class action lawsuit, in which Plaintiffs seek damages arising out of alleged nursing home understaffing prior to and through the COVID-19 pandemic, returns to the court on Plaintiffs' motion for class certification pursuant to Federal Rule of Civil Procedure 23(b)(3) and, alternatively Rule 23(c)(4). (Doc. 70.) Plaintiffs are former residents of The Citadel Salisbury nursing home: Sybil Rummage, along with her sponsor, Sonya Hooker; and Betty Deal, along with her sponsors Donna Deal and Kenneth Michael Deal. Defendants, The Citadel Salisbury, LLC (“The Citadel”); Salisbury Two NC Propco, LLC; Accordius Health, LLC (“Accordius”) The Portopiccolo Group, LLC (“Portopiccolo”) Simcha Hyman; and Naftali Zanziper, have responded, opposing the motion for class certification. (Doc. 72.) The court held argument on the present motion on November 10, 2022. (Doc 85.) For the reasons set forth below, the motion for class certification will be denied.

I. BACKGROUND

According to the amended complaint, Plaintiffs Rummage and Deal (“Resident Plaintiffs”) were residents of a nursing home facility located at 710 Julian Road. (Doc. 62 ¶¶ 2, 5, 8-9.)^[1] Prior to 2020, when each Plaintiff entered the facility, it was known as “Salisbury Center” and was owned and operated by Genesis Healthcare (“Genesis”). (Id. ¶ 29.) When they arrived at Salisbury Center, Resident Plaintiffs executed admission agreements outlining the care and basic services they should expect to receive. (Id. ¶ 58-59, 130.) Plaintiffs Sonya Hooker, Donna Deal, and Kenneth Michael Deal (“Sponsor Plaintiffs”) are family members who sponsor and assist the Resident Plaintiffs. (Id. ¶¶ 4, 6-7.)

On February 1, 2020, Salisbury Center was sold, and operational control was transferred to The Citadel.^[2] (Id. ¶ 24.)

The services and care at Salisbury Center had deteriorated as Genesis fought financial trouble (id. ¶ 30), and conditions grew worse once The Citadel took over (id. ¶ 35). Residents experienced various problems from alleged chronic understaffing as part of the Defendants' business model, such as failures to provide necessary medication and care to the residents and to adequately communicate with sponsors. (See, e.g., id. ¶¶ 72-74, 118, 120, 141-145.) According to the Centers for Medicare and Medicaid Services (“CMS”), during the time of The Citadel's ownership, the quality rating of the facility declined from one to zero out of five stars. (Id. ¶ 41.) The Citadel was eventually “subject to more frequent inspections, escalating penalties, and potential termination from Medicare and Medicaid” as part of the state's “Special Focus Facility” program for nursing home facilities with a “history of serious quality issues.” (Id. ¶ 39.) On May 14, 2022, CMS issued a notice terminating the facility from the Medicare program, requiring it to shut down. (Doc. 85 at 12.) Residents thereafter had to be relocated. (Id.) This led to the closing of the facility in June 2022. (Id. at 4.)

The Citadel was at times relevant a limited liability company organized under North Carolina law with a license with the State of North Carolina, Department of Health and Human Services, Division of Health Services Regulation, to operate as a for-profit combination skilled nursing facility and adult care home. (Doc. 62 ¶ 9-10.) Defendant Salisbury Two NC Propco, LLC was a limited liability company organized under North Carolina law owning the property where the facility was operated. (Id. ¶ 11.) Defendant Accordius was a limited liability company organized under the laws of the State of New York providing “management” services to The Citadel. (Id. ¶¶ 12-13.) Portopiccolo was a limited liability company organized under New Jersey law providing “back office services” to The Citadel. (Id. ¶¶ 14-15.) The sole members and owners of all limited liability companies involved were Simcha Hyman and Naftali Zanziper. (Id. ¶¶ 16-18.)

Beginning when The Citadel assumed operations, Plaintiffs allege, it was purposefully and consistently staffed inadequately such that it was unable to provide the services required for the safety and well-being of its residents and as promised. (Id. ¶ 56.) Plaintiffs' amended complaint alleges breach of contract against The Citadel,^[3] with whom Resident Plaintiffs contracted, and relies on the “instrumentality rule” to allege claims of civil conspiracy and concert of action to pierce the corporate veil to reach the remaining Defendants. (Id. ¶¶ 202-226.) Plaintiffs seek damages for Defendants' failure to “provide the service or supplies and the level of staffing that they were obligated to supply to the resident populations.” (Id. ¶ 210.) Plaintiffs also seek to disgorge Medicare or Medicaid payments made on their behalf “reflecting the reasonable value of the staffing hours they were entitled to have received and did not receive.” (Id. ¶ 2.) Plaintiffs allege class action treatment, citing “over 100” potential class members and 14 common questions that include the following: the use of “uniform policies and systems” of management; “[w]hether the law requires the facility to maintain staffing at a reasonable across-the-board level,” which is alleged to be 4.1 hours per resident day of “total nurse staffing” and 0.75 hours per resident day of “Registered Nurse staffing”; “[w]hether an express or implied-in-fact contract was formed between residents”; and damages. (Id. ¶ 197.)

II. ANALYSIS

A. Legal Standard

Plaintiffs move to certify a class under Federal Rule of Civil Procedure 23(b)(3), or alternatively as “an issue class under Rule 23(c)(4).”^[4] (Doc. 70.) Defendants oppose certification, contending that several of the prerequisites to certification have not been met. (Doc. 72.)

The class action device is “an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.” Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013) (internal quotation marks omitted). Rule 23 “does not set forth a mere pleading standard.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). To be certified, a party seeking class certification must “establish by a preponderance of the evidence that the action complies with each part of Rule 23.” Brown v. Nucor Corp., 785 F.3d 895, 931 (4th Cir. 2015) (Agee, J., dissenting) (citing cases). First, a plaintiff must satisfy the four requirements set out in Rule 23(a): “(1) numerosity of parties; (2) commonality of factual and legal issues; (3) typicality of claims and defenses of class representatives; and (4) adequacy of representation.” Gunnells v. Healthplan Services, Inc., 348 F.3d 417, 423 (4th Cir. 2003); see Thorn v. Jefferson-Pilot Life Insurance Co., 445 F.3d 311, 317 (4th Cir. 2006) (“Plaintiffs bear the burden of demonstrating satisfaction of the Rule 23 requirements and the district court is required to make findings on whether the plaintiffs carried their burden.” (internal quotation marks, citation, and alterations omitted)).

Next, the proposed class must show that it is one of the three types of classes described in Rule 23(b). Thorn, 445 F.3d at 318. Here, Plaintiffs seek to certify the class pursuant to Rule 23(b)(3), which provides that a class action may be maintained if “questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3). Alternatively, Plaintiffs argue that certification is appropriate under Rule 23(c)(4), which allows courts to certify a class as to certain issues, even when plaintiffs' claims otherwise do not satisfy the predominance test. See Gunnells, 348 F.3d at 439-45. Although it is Plaintiffs' burden to demonstrate compliance with Rule 23, the court “has an independent obligation to perform a ‘rigorous analysis' to ensure that all of the prerequisites have been satisfied.” EQT Prod. Co. v. Adair, 764 F.3d 347, 358 (4th Cir. 2014) (quoting Wal-Mart, 564 U.S. at 350-51 (2011)).

At the class certification stage, “[m]erits questions may be considered to the extent - but only to the extent - that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied.” Amgen Inc v. Connecticut Retirement Plans & Trust Funds, 568 U.S. 455, 466 (2013); Brown, 785 F.3d at 903 (“[T]he merits of a claim may be considered only when relevant to determining whether the Rule 23 prerequisites for class certification are satisfied.” (internal quotation marks omitted)). Otherwise, “[a]n evaluation of the probable outcome on the merits is not properly part of the certification decision.” Amgen, 568 U.S. at 467 (quoting Fed.R.Civ.P. 23 advisory committee's note to 2003 amendments); Brown, 785 F.3d at 903 (“Rule 23 grants courts no license to engage in free-ranging merits inquiries at the certification stage.” (quoting Amgen, 568 U.S. at 466)). Persuasiveness of the class-wide evidence is, in general, a matter for a jury. Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 459 (2016). Of course, if no reasonable juror could believe the class-wide evidence, Plaintiffs would lack common proof. Id. (comparing class certification standards to standards for summary judgment and directed...