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Oberhansly v. Association of Better Living and Education International

United States District Court, W.D. Michigan, Southern Division

May 16, 2017



          Paul L. Maloney United States District Judge

         Plaintiff brings an action in diversity under 28 U.S.C. § 1332, alleging breach of contract, negligence, fraud, and premises liability. (ECF No. 1.) Defendant Narconon Freedom Center (“NFC”) brings a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). (ECF No. 16.) Defendant Narconon Eastern United States (“Eastern”) joins NFC's motion to dismiss, and also raises an argument for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(1).[1](ECF No. 18.) Upon careful review of the record, the Court has decided that the motion can be resolved without oral argument. See W.D. Mich. LCivR 7.3(d). For the reasons that follow, Defendants' motions are granted.


         Plaintiff Dana Oberhansly, an Arizona resident, sought treatment for her drug addiction from NFC in Albion, Michigan. In April 2013, Plaintiff contacted NFC through their website. She spoke with an intake counselor who described NFC's facility and drug-addiction program. During the conversation, the intake counselor explained that NFC's facilities were very nice, and that she would be able to receive massages, exercise, and use a hot tub to help with her withdrawals. The intake counselor also informed her that her first week in the withdrawal unit would be comfortable and monitored by health care professionals. The intake counselor explained that the sauna portion would help her body detox by sweating out toxins to rid her body of residual drugs in her fat cells. The intake counselor also told her that the program would address her addiction and the problems associated with it, and that she would be monitored by health care professionals and work with trained counselors during the course of the program.

         The intake counselor offered to pay for half of Plaintiff's flight to Michigan because she could not afford the travel cost and entrance fees up front. He also told Plaintiff that she should come immediately to the facility to begin treatment as soon as possible because her addiction was a matter of life or death. Three days later, Plaintiff traveled to Michigan to enroll in NFC's drug-treatment program. The week before she left for Michigan, Plaintiff abused drugs heavily and continued to do so until she landed in Michigan. In fact, she was still high when she first arrived at NFC. During the flight to Michigan, Plaintiff admits to using cocaine, ecstasy, and ketamine.

         Upon arrival at NFC, Plaintiff signed and initialed each page of NFC's admission agreement, which describes the nature of the treatment program and its cost:

NARCONON FREEDOM CENTER, INC. (FREEDOM CENTER) drug and alcohol rehabilitation program has an excellent success rate for students who actively and honestly participate in and complete the entire program. Our program is designed to achieve this positive result with specific program steps and procedures, in a gradient found to be most workable and successful based on 40 years of experience in treating chemical dependency.
Freedom Center delivers a comprehensive drug and alcohol treatment program using the Narconon program methodology. This methodology was written and developed by founder William Benitez. This is based on the client's (called students) completion of established, results-oriented treatment goals, as opposed to a set number of days or weeks in treatment. The amount of time it takes each individual to complete the program varies, but should average between three and six months.

(Def.'s Mot. to Dismiss Ex. A, ECF No. 16-2, PageID.254.) The signed agreement also contains an arbitration provision:

The parties agree that any controversy, dispute or claim arising out of or relating to or involving this Admission Agreement shall be resolved by binding arbitration. Those claims subject to arbitration include but are not limited to any and all disputes or controversy regarding services provided, conditions at the Freedom Center facility, the staff, the results of the program, other student's actions, claims of discrimination, consumer complaints or any other cause of action.

(Id. at PageID.266.)

         NFC's website indicated a high success rate, ranging from 70-82% for those who completed Narconon's program. But the website and the information provided by the intake counselor did not indicate that NFC had any affiliation with Scientology, and never explained that the treatment program was based on Scientology. The website simply indicated that the program was developed by L. Ron Hubbard. The signed admission agreement also does not reference Scientology.

         When Plaintiff arrived at the facility, she was strip-searched by the staff and drug tested. She alleges that she entered the withdrawal portion of the program for seven days, and suffered withdrawals without the comfort measures that she was promised and without the supervision of trained health care professionals. She also alleges that the counselors were not trained professionals. Rather, they were individuals who had completed NFC's program themselves, some only a few weeks before beginning to work as a counselor. The website also advertised around-the-clock medical staffing, but Plaintiff only saw a doctor once a week and the remainder of the time, a single registered nurse was present. During Plaintiff's time in the withdrawal unit, the counselors periodically checked her heart rate and blood pressure, and provided her with vitamin bombs.

         After a week in the withdrawal unit, Plaintiff moved across the hall. NFC's facility was dilapidated; it did not look like the website's pictures or as the intake counselor had described. During Plaintiff's stay at NFC, the water in the women's wing was shut off for over two weeks. There was also a lack of hot water in the kitchen, and the Calhoun County Health Department cited NFC for several health code violations while Plaintiff was a patient. At one point, the Health Department shut down the kitchen for over a week. There was also a rampant bed-bug infestation in the facility.

         In addition, Plaintiff did not receive counseling as advertised; the counselors were former graduates of the program, without any specialized training, knowledge, or expertise. At one point, a counselor was removed for abusing drugs. Based on the website and her conversation with the intake counselor, Plaintiff believed that she would undergo therapy to help her deal with her addiction. Instead, she received exercises based on Scientology teachings. Rather than receiving medically-recognized substance abuse therapy, patients adhered to a program of studying eight books written by L. Ron Hubbard, known as “technology” or “study technology” to Scientologists. The program included drills or exercises routinely used in Scientology. Instead of meeting with a counselor or drug-therapy specialist, Plaintiff engaged in these drills. The activities had no apparent connection to the treatment of substance abuse, and often lasted for hours at a time.

         During her stay at NFC, Plaintiff also feared for her safety. Other patients threatened violence against her, and NFC's staff simply told the other patients not to approach Plaintiff or talk to her.

         The detoxification or sauna portion of the program was a Scientology ritual known as the “Purification Rundown.” Patients first exercise vigorously, then ingest increased doses of Niacin and a vitamin bomb before entering the sauna for six hours a day. NFC requires all patients to spend six hours a day for five weeks in the sauna, and Plaintiff spent approximately 27 days in the sauna program. During this time, Plaintiff had an adverse reaction to the sauna and Niacin treatments, but she continued with the program. Patients were given a small amount of water and vegetables during their time in the sauna, but the vegetables often had mold. Several times, sewage backed up through the drains in the floor of the sauna. During the sauna treatments, there were no medical personnel available to oversee the health and safety of the patients. There was one sauna supervisor, who sat outside of the sauna area while the patients were inside. The sauna supervisor did not have any medical or specialized training, but rather served as a policing force to ensure that patients complied with the program. The claims about the benefits of NFC's sauna program are not scientifically proven, and there is no scientific evidence for the claim that the residual drug toxins stored in fatty tissue leak into the bloodstream and cause drug cravings. The sauna program also exposes patients to serious health risks including severe dehydration.

         Plaintiff completed NFC's drug-treatment program, but had difficulty adjusting to normal life afterward and relapsed. She brings an action in diversity against Defendants, alleging (1) breach of contract; (2) negligence; (3) fraud; and (4) premises liability. Defendant NFC argues that the signed admission agreement's arbitration clause controls, so the Court should dismiss Plaintiff's complaint under Rule 12(b)(6). Defendant Eastern joins NFC's motion and also argues, in the alternative, that the Court lacks personal jurisdiction.


         A complaint may be dismissed for failure to state a claim if it fails “‘to give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 335 U.S. 41, 47 (1957)). Although a complaint need not contain detailed factual allegations, a plaintiff's allegations must include more than labels and conclusions. Twombly, 550 U.S. at 555; Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”). The Court must determine whether the complaint contains “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 679. Although the plausibility standard is not equivalent to a “‘probability requirement, ' . . . it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. at 678 (quoting Twombly, 550 U.S. at 556). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has now ‘show[n]'- that the pleader is entitled to relief.” Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).

         In ruling on a Rule 12(b)(6) motion to dismiss, the Court may only consider “the [c]omplaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant's motion to dismiss so long as they are referred to in the [c]omplaint and are central to the claims contained therein.” Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008).

         Plaintiff also raises a claim for fraud. Federal Rule of Civil Procedure 9(b) requires particularity when pleading fraud. Iqbal, 556 U.S. at 686 (discussing the elevated Rule 9(b) pleading standard). In other words, the complaint must “(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” Indiana State Dist. Council of Laborers & Hod Carriers Pension & Welfare Fund v. Omincare, Inc., 583 F.3d 935, 942-43 (6th Cir. 2009) (citation and quotations omitted).

         In addition, the party must identify the “alleged misrepresentation on which he or she relied; the fraudulent scheme; the fraudulent intent of [the other party]; and the injury resulting from the fraud.” Coffey v. Foamex L.P., 2 F.3d 157, 161-62 (6th Cir. 1993) (quotation marks and citations omitted). But “[w]hen faced with a motion to dismiss for failure to plead fraud ‘with particularity' as required by Rule 9(b) . . ., ‘a court must factor in the policy of simplicity in pleading which the drafters of the Federal Rules codified in Rule 9.'” Whalen v. Stryker Corp., 783 F.Supp.2d 977, 982 (E.D. Ky. 2011) (quoting Michaels Bldg. Co. v. Ameritrust Co., N.A., 848 F.2d 674, 679 (6th Cir. 1988)). “Rule 9(b) is not to be read in isolation, but is to be interpreted in conjunction with Federal Rule of Civil Procedure 8.” United States ex. rel Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493, 503 (6th Cir. 2007) (quoting Michaels, 848 F.2d at 679). ...

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