December 28, 2010
Hunter v. Royal Caribbean Cruises, Ltd.
Response in Opposition to Motion to Compel Arbitration
Here a Plaintiff seafarer is opposing Royal Caribbean’s attempt to block her access to the Court by compelling her to arbitrate her disputes with the company.
IN THE UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 1:10-CV-24146-KMM
Ruel Andrew Hunter,
Plaintiff,
v.
Royal Caribbean Cruises, Ltd.,
Defendant.
______________________________________/
PLAINTIFF’S PRELIMINARY RESPONSE WITHOUT THE BENEFIT OF DISCOVERY[1] IN OPPOSITION TO DEFENDANT’S MOTION TO COMPEL ARBITRATION
COMES NOW, the Plaintiff, Ruel Andrew Hunter, by and through undersigned counsel, and hereby files his preliminary response without the benefit of discovery in opposition to Defendant’s Royal Caribbean Cruises, Ltd. (hereinafter “RCCL”) Motion to Compel Arbitration and for good cause relies on the following memorandum of law.
MEMORANDUM OF LAW
I. DEFENDANT’S MOTION TO COMPEL ARBITRATION SHOULD BE DENIED IN ITS ENTIRETY FOR SEVERAL COMPELLING REASONS. FIRST, PURSUANT TO BINDING ELEVENTH CIRCUIT PRECEDENT IN THOMAS V. CARNIVAL, ARBITRAL PROVISIONS IN SEAFARER’S CONTRACTS DESIGNATING FOREIGN LAW AS THE LAW OF THE ARBITRATION ARE NULL AND VOID AS AGAINST PUBLIC POLICY. AS A RESULT, THE ARBITRATION CLAUSE HERE IS UNENFORCEABLE UNDER THE CONVENTION, GIVEN THAT NORWEGIAN LAW, AND NOT U.S. LAW, WILL BE APPLIED. SECOND, ARBITRATION IS ALSO UNENFORCEABLE UNDER THOMAS V. CARNIVAL BECAUSE IT WOULD DEPRIVE PLAINTIFF OF HIS STATUTORY RIGHT TO A JURY TRIAL
A. Overview.
This case arises out of injuries sustained to Plaintiff while working as a seafarer aboard Defendant’s vessel. Plaintiff, a citizen and resident of Nicaragua, filed the instant lawsuit on or about November 18, 2010 for Negligence under the Jones Act (Count I),[2] unseaworthiness of the ship (Count II), failure to provide maintenance and cure (Count III),[3] failure to treat (Count IV), and failure to pay wages under the Seaman’s Wage Act (Count V)[4] [D.E. 1]. Plaintiff filed his Amended Complaint on November 22, 2010 and Second Amended Complaint on November 30, 2010.[5]
On December 6, 2010, RCCL filed its Motion to Compel Arbitration [D.E. 12]. For the reasons outlined below, however, this Honorable Court should deny Defendant’s Motion to Compel on grounds that the arbitral provision is void as against public policy.
B. Seafarers from the start have been wards of admiralty.
The issue of arbitrability of a Jones Act seafarers’ claim should begin with the fact that seafarers are a protected class. “The policy of Congress, as evidenced by [the Jones Act], has been to deal with [seafarers] as a favored class.” Bainbridge v. Merchants’ & Miners’ Transp. Co., 287 U.S. 278, 282 (1932). Similarly, “Seafarers from the start were wards of admiralty.” U.S. Bulk Carriers, Inc. v. Arguelles, 400 U.S. 351, 355 (1971)(citing Robertson v. Baldwin, 165 U.S. 275, 287 (1897)). “From the earliest times, maritime nations have recognized that unique hazards, emphasized by unusual tenure and control, attend the work of seafarers.” See Aguilar v. Standard Oil Co. of New Jersey, 318 U.S. 724, 728 (1943). More recently, in Chandris, Inc. v. Latsis, 515 U.S. 347, 355 (1995)(Internal Citations omitted), the Court reaffirmed the longstanding principle that seafarers are wards of the Admiralty Courts as a “feature of the maritime law compensating or offset ting the special hazards and disadvantages to which they who go down to sea in ships are subjected.”[6]
C. Thomas v. Carnival holds that the subject arbitration provision is null and void as against public policy and therefore unenforceable. This is so because the contract’s choice of law clause, designating Norwegian law, and not U.S. law, as the substantive law in any arbitration proceeding – constitutes a prospective waiver of U.S. Statutory rights.
The subject arbitration provision contains a choice of law clause which provides, in part that “[t]he procedural and substantive law of the arbitration shall be the law of Norway without regard to conflict of law principles.” [D.E. 12 – 1, pg. 2]. The arbitral clause further provides that “[a]ny grievance or other dispute shall be governed in accordance with the laws of Norway, without regard to any conflicts of laws principles.” [D.E. 12-1, pg. 3].
Pursuant to the terms of RCCL’s arbitral provision, therefore, if Plaintiff were compelled to arbitrate this matter, Plaintiff would be forced to arbitrate his claims exclusively under Norwegian law. Because all of Plaintiff’s causes of action are U.S. based law remedies (which Norwegian law does not recognize) – compelling the case to arbitration would completely deprive Plaintiff his U.S. statutory rights. As shown below, for this very reason, under binding Eleventh Circuit precedent in Thomas v. Carnival, 573 F. 3d 1113 (11th Cir. 2009), RCCL’s arbitration is unenforceable, null and void as against public policy.
In Thomas v. Carnival, 573 F. 3d 1113 (11th Cir. 2009) the Court succinctly held that arbitration provisions in seafarers contracts – such as the one herein – with foreign choice of law clauses are against public policy and thus render the entire arbitration clause null and void. Thomas concerned a seaman who was injured aboard two Carnival cruise ships. Like in this matter, the claims asserted were negligence under the Jones Act, unseaworthiness, and a failure to pay wages under the Seaman’s Wage Act. Carnival sought to compel arbitration based upon an arbitration provision in the seaman’s employment agreement. The district court compelled arbitration, but a panel of the Eleventh Circuit reversed. Although it concluded that the seaman’s employment agreement was governed by the Convention, see id. at 1117, it ruled that the application of the arbitration clause – under which disputes would be arbitrated in the Philippines and resolved under Panamanian law – would be void as against the public policy of the United States (an affirmative defense under Article V(2)(B) under the Convention[7] because it forced the seaman to essentially waive his American statutory rights (i.e. Seaman’s Wage Act/Jones Act) in a forum that must apply non-U.S. law (i.e. Panamanian law). See Thomas v. Carnival, 573 F, 3d 1113 (11th Cir. 2009), citing Vimar Seguros Y Reaseguros v. M/V Sky Reefer, 515 U.S. 528 (1995):
….[U]nder the terms of the Arbitration clause, Thomas must arbitrate in the Philippines (choice-of-forum) under the law of Panama (choice-of-law). As the arbitrator is bound to effectuate the intent of the parties irrespective of any public policy considerations, these arbitration requirements “operate in tandem” to completely bar Thomas from relying on any U.S. statutorily-created causes of action…
Moreover, there is no assurance of “opportunity for review…..in this case Thomas would only be arbitrating a single issue claim, one derived solely from a U.S. statutory scheme. If applying Panamanian law, Thomas receives no award in the arbitral forum – a distinct possibility given the U.S. based nature of his claim – he will have nothing to enforce in U.S. Courts, which will deprive him of any later opportunity to review.
Despite our general deference to arbitration agreements in an area of international trade expansion, the possibility of such a result would counsel against being deferential in this circumstance, as it is exactly the sort that the Supreme Court has described as a “prospective waiver of parties’ rights to pursue statutory remedies” without the assurance of a “subsequent opportunity to review.” Vimar, 515 at 540. The Court explicitly stated that in such situations it “would have little hesitation in condemning the agreement as against public policy.” Id. For the reasons expressed, we find the Arbitration Clause requiring Arbitration in the Philippines under Panamanian Law null and void as it relates to Thomas’s Seaman’s Wage Act Claim.
(Id. Emphasis Added).
Herein, RCCL – like Carnival in Thomas – seeks to compel arbitration under a contract that calls for arbitration pursuant to the laws of Norway. This contract would undoubtedly deprive Plaintiff of his U.S. statutory rights, as none of the claims presented by Plaintiff would be cognizable under Norwegian law. Further, the language of the arbitration and choice of law clauses in Thomas is similar, if not identical to the language of the arbitration and choice of law clauses in the employment agreement here. As a result, the rationale in Thomas controls, and the arbitration and choice of law clauses cannot be enforced to deprive him of his federal statutory rights.
D. Following Thomas, the Southern District of Florida had declared identical arbitral provisions (containing foreign choice of law clauses) in Seafarer employment contracts –– unenforceable and therefore null and void as against public policy. Further, these opinions have unequivocally held 1) that Thomas is not limited to claims under the Seaman’s Wage Act (i.e. applies also Jones Act negligence claims) and 2) that Thomas applies to both statutory and non-statutory claims (i.e. applies also to unseaworthiness, maintenance and cure, failure to treat claims).
Govindarajan v. Carnival Corporation, 09-23386-CIV (Judge Jordan) (S.D. Fla. 2010) [D.E. 23]. The Plaintiff, a seamen, sued Carnival Cruise Line for injuries while working on its vessel, alleging Jones Act Negligence, unseaworthiness, failure to provide maintenance and cure, and failure to treat. Carnival sought to compel arbitration based upon an arbitration clause in the seaman’s employment agreement, requiring Panamanian law to apply in the arbitration. Citing Thomas, the Court held Carnival’s arbitral provision unenforceable and therefore void as against public policy, holding, in part:
For the reasons which follow, I do not believe that arbitration can be compelled. [D.E. 23, pg. 1] … The language of the arbitration and choice of law clauses in Thomas is similar, if not identical to the language of the arbitration and choice of law clauses in the employment agreement here. Bautista, moreover, did not address whether arbitration would be against U.S. public policy. See Bautista, 393 F. 3d at 1301-03…. I agree with the majority of my colleagues in this District and conclude (1) that Thomas is not limited to claims under the Seaman’s Wage Act, (2) that Thomas applies to both statutory and non-statutory claims, and (3) that the arbitration clause in this case is not enforceable under the Convention given that Panamanian law, and not U.S. law, will be applied in any arbitration proceeding under the choice of law clause (which is null and void under Thomas). [Id. D.E. 23, pg. 4]. (Emphasis added).
Watt v. NCL (Bahamas) Ltd., 2010 U.S. Dist. LEXIS 67745 10-20293 (S.D. Fla. 2010) (Chief Judge Moreno). The Plaintiff, a seamen, sued Norwegian Cruise Line for injuries, alleging Jones Act negligence, unseaworthiness, and failure to provide maintenance and cure. The agreement mandated Bahamian law as the substantive law of the arbitration. Citing Thomas, the Court held NCL’s arbitral provision unenforceable and therefore void as against public policy, holding, in part:
This Court agrees and finds that the instant arbitration agreement is void because, in requiring the application of only Bahamian law to an arbitration in Jamaica, it precludes the Plaintiff from relying on his U.S. statutorily created Jones Act claim. Because the arbitration agreement is unenforceable, removal pursuant to the Convention Act – the sole basis for removal was not proper. The Court accordingly finds that remand is warranted. It is therefore ADJUDGED that: (1) The Motion to Compel Arbitration and to dismiss is DENIED as the Court finds the arbitration agreement void as against public policy. (Emphasis added).
Sivkumar Sivanandi v. NCL (Bahamas) Ltd., Case No. 10-20296, 2010 U.S. Dist. LEXIS 54859 (S.D. Fla. 2010) (Judge Ungaro). Relying on Thomas, Judge Ungaro found that, because the arbitration agreement required the application of only Bahamian law, it precluded the plaintiff from recovering on his Jones Act claim and was thus void as against public policy.
Cardoso v. Carnival Corporation, 09-23442, 2010 U.S. Dist. LEXIS 24602 (S.D. Fla. 2010) (Judge Gold). Addressing the same argument, Judge Gold found that the arbitration agreement could not be enforced to require the Plaintiff to submit his claims to a tribunal that precluded them from maintaining their Jones Act claims:
While Defendant is correct insofar as the Eleventh Circuit’s narrow holding in Thomas applied only to claims asserted pursuant to the Seaman’s Wage Act, a holistic reading of Thomas indicates that the Eleventh Circuit’s reasoning applies with equal force to claims brought pursuant to the Jones Act. Specifically, I note that the Eleventh Circuit did not focus on the unique nature of the Seaman’s Wage Act in reaching its conclusion that foreign choice of law and arbitration clauses can if enforced in tandem-constitute a prospective waiver of statutory rights in violation of public policy. Rather, the Eleventh Circuit focused on the fact that the clauses would have ‘operated in tandem’ to bar Thomas from relying on any U.S. Statutory rights.
See also Kovacs v. Carnival Corporation, 09-22630, 2009 U.S. Dist. LEXIS 122255 (S.D. Fla. 2009) (Judge Huck) (“it would be against public policy to compel arbitration of Plaintiffs Jones Act claim according to Panamanian law because to do so would deprive her of important statutory rights provided by Congress to effectuate public policy”); See also Rozanska v. Princess Cruise Lines, Ltd., 2008 U.S. Dist. LEXIS 95773 (S.D. Fla. August 5, 2008), where the Court made clear the singular purpose of clause contained in the relevant seafarer’s agreement was “to deprive Plaintiff of her Jones Act and maintenance and cure causes of action, regardless if she sued in Bermuda or Poland, and despite the Defendant’s acknowledged base of operations in the United States.” While in Rozanska, the contractual language differed slightly, it should be abundantly clear that RCCL’s purpose or intent remains the same; that is, to deprive seafarer’s of their powerful, longstanding rights under U.S. law.
E. The core agreement to arbitrate (independent of its foreign choice of law clause) is also unenforceable. An additional ground to hold Defendant’s arbitral provision void as against public policy under Thomas is that arbitration would deprive Plaintiff of his statutory right to a jury trial.
Pursuant to the Jones Act, 46 U.S.C. §30104, Plaintiff, a seafarer, has a statutory right to a trial by Jury. Section 30104, Personal Injury or Death to Seamen, provides in part:
A seaman injured in the course of employment or, if the seaman dies from injury, the personal representative may elect to bring an a civil action at law, with the right of a trial by jury against the employer.
Further, although a seafarer’s statutory right to a trial by Jury originates in the Jones Act, the right has been extended by the United States Supreme Court to other non-statutory claims, such as unseaworthiness, and failure to provide maintenance and cure. See Fitzgerald v. United States Company, 374 U.S. 16 (1963):
For years it has been a common if not uniform, practice of District Courts to grant jury trials to Plaintiffs who join in one complaint their Jones Act, unseaworthiness, and maintenance and cure claims, as here, grow out of a single transaction or incident. This practice of requiring issues arising out of a single accident to be tried by a single tribunal is by no means surprising… Since Congress in the Jones Act has declared that the negligence part of the claim shall be tried by a jury, we would not be free, even if we wished to require submission of all the claims to the judge alone. Therefore, the jury, a time-honored institution in our jurisprudence, is the only tribunal competent under the precedent congressional enactment to try all the claims. Accordingly, we hold that a maintenance and cure claim joined with a Jones Act claim must be submitted to the jury when both arise out of one set of facts. The seaman in this case was therefore entitled top a jury trial as of right on his maintenance and cure claim. (Emphasis Added).
All in all, under 46 U.S.C. §30104 and Fitzgerald, Plaintiff herein has a statutory right to a trial by jury for both his statutory (i.e. Jones Act) and non-statutory claims. Therefore, under Thomas, even if – for the sake of argument – the subject contract had not included a foreign choice of law provision, the arbitration clause would still be void as against public policy because by compelling Plaintiff to arbitrate his claims, he would be completely barred from relying on his U.S. statutory right to a jury trial.
WHEREFORE, the Plaintiff, Ruel Andrew Hunter, respectfully requests this Honorable Court enter an Order denying Defendant RCCL’s Motion to Compel Arbitration.
[1] Concurrent with the filing of this Motion, Plaintiff is filing his Motion to Conduct Limited Discovery in regards to the arbitration provision contained in the subject employment contract and Motion to Stay Ruling on the Motion to Compel Arbitration until the completion of limited discovery.
[2] The Jones Act, 46 U.S.C. §30104, confers on seamen the statutory right to sue their employers in an American Court for the negligence of fellow crewmembers.
[3] “Maintenance and Cure is an ancient common-law maritime remedy for seamen who are injured while in the service of the vessel. The Eleventh Circuit has described the action as follows: “The seaman’s action for maintenance and cure may be seen as one designed to put the sailor in the same position as he would have been had he continued to work: the seamen receives a maintenance remedy, because working seamen normally are housed and fed aboard ship; he recovers payment for medical expenses in the amount necessary to bring him to maximum cure; and he receives an amount representing his unearned wages for the duration of his voyage or contract period.
[4] The Seaman’s Wage Act, 46 U.S.C. §10313, focuses on ensuring prompt wage payment to seamen via a treble-damages wage-penalty provision assessed on employers for late wages.
[5] Plaintiff’s Amended Complaint and Second Amended Complaint were filed in response to this Honorable Court’s sua sponte motions with regards to sufficiently pleading jurisdiction.
[6] See also Isbrandtsen Marine Servs. v. M/V Inagua Tania, 93 F. 3d 728 (11th Cir. 1996):
Seamen … are wards of admiralty whose rights federal courts are duty-bound to jealously protect.” Bass v. Phoenix Seadrill 78, Ltd., 749 F. 2d 1154, 1160-61 (5th Cir. 1985). Since the often cited opinion by Justice Story in Harden v. Gordon, 11 F. Cas. 480, 485 (C.C.D. Me. 1823) (No. 6047), it has been accepted that every Court should watch with jealousy an encroachment upon the rights of , because they are unprotected and need counsel; …. They are emphatically the wards of the admiralty; …. They are considered as placed under the dominion and influence of men, who have naturally acquired a mastery over them; and as they have little of the foresight and caution belonging to persons trained in other pursuits of life, the most rigid scrutiny is instituted in the terms of every contract, in which they engage. As the Supreme Court has held, is “often ignorant and helpless, and so in need of protection against himself as well as others. . . . Discrimination may thus be rational in respect of remedies for wages.” Warner v. Goltra, 293 U.S. 155, 162, 79 L. Ed. 254, 55 S. Ct. 46 1934)
[7] The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention). Article V of the Convention provides specific affirmative defenses to a suit that seeks a court to compel arbitration including the following: “Recognition and enforcement of an arbitral award may also be refused If the competent authority in the country where recognition and enforcement is sought finds that … [t]he recognition or enforcement of the award would be contrary to the public policy of that country.”
