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Homeward Bound – Judge Orders
Filipino Seamen or Their Survivors to Arbitrate Miami Explosion
Claims Back Home. The case of Rizalyn Bautista, et
al, v. Star Cruises and Norwegian Cruise Line, Ltd., No. 03-21642(S.D.
Fla. Oct. 14, 2003)(Seitz, J.)
On October 14, 2003 a Miami Federal Judge
rocked the Plaintiff’s bar in the Cruise Capital of
the World by rejecting a bid by Filiipino seamen injured or
killed in the SS Norway boiler blast to have their claims
heard in the United States judicial system. Instead, the Honorable
Patricia A. Seitz ruled the employment contracts negotiated
between their government and Norwegian, Carnival and other
South Florida-based cruise lines would be enforced thus sending
the cases to the Philippines for resolution by arbitration.
Until this definitive ruling, judges in the Southern District
of Florida had ruled that such claims could be heard in the
United States court system. This view began to change in late
2002 and earlier in 2003, when Southern District Judges Paul
Huck and James Lawrence King ruled in favor of the cruise
lines on similar facts. See Adolfo v. Carnival Corp. No. 02-23572
(S.D. Fla. Mar. 17, 2003)(Huck, J.) and Amon v. Norwegian
Cruise Lines, Ltd. No. 02-21025 (S.D. Fla. Sept. 26, 2002)
and Santos v. Carnival Corp. No. 03-20914 (S.D. Fla. Sept.
16, 2003)(King, J. ). These cases were all settled before
appeal so it is not possible to know how the11th Circuit would
rule. The 11th U.S. Circuit Court of Appeals will now have
to decide whether to affirm or reverse Judge Seitz’s
decision unless the Bautista case (and the nine related and
consolidated cases are also settled before appeal.
The instant cases arose in late May 2003,
when, while at the dock in Miami, the venerable cruise ship
NORWAY experienced an unexpected, heart and metal rending
explosion. As a result 6 lives were lost and 4 others badly
burned by super heated steam escaping from the steam boilers
of the 41 year old ship. A blast, from as yet to be determined
origins, ripped through the casings of the ship’s boilers.
In the days which followed the incident, the global regime
in which the cruise industry operates would be brought under
the microscope of instant experts who, only moments earlier,
were mere land-based journalists.
The reportage which followed highlighted
the ethnocentric way those who depend on the sea for their
livelihoods are viewed by mostly U.S. based media organizations.
The legendary ship itself was routinely referred
to as “foreign registered” as if Norway were some
strange, remote even primative isle. While it is true that
the world’s oceans are the last vestige of the earth’s
surface which remain to some extent ungoverned , one would
have thought that Norway would have been given more consideration.
Initially, the United States wasted no time
asserting jurisdiction since the NORWAY was literally at the
dock and fully within the jurisdiction of the United States
of AmErina at the time of the accident. Quite properly, the
National Transportation Safety Board was immediately dispatched
to the scene to investigate. The NTSB investigation seemed
particularly appropriate in as much as the vast majority of
the 2100 passengers disembarking in Miami were almost certainly
United States citizens.
Meanwhile the press routinely, frequently
and ominously referred to the boilers as “French made”
thus giving the French no more credit than Norway in the matter.
Perhaps it was the horrific prospect of being
engulfed in steam which captured the popular imagination and
interest in the incident. The steam, we read, had expanded
some 1,700 times from a liquid to a gaslike state. The intense
heat of the gas was reported to have reached some 900 to 100
degrees.
So, while the focus might have been rightly
on what caused the explosion, for example, (metal fatigue,
unseen corrosion, a part failure or human error) the media
seemed to more interested in the cruise industry’s employment
practices. Ironically, the media may have unintentionally
laid the groundwork for what was to come in Court but with
an unintended consequence as the Court cases which followed
focused on exactly what the media seemed so enamored of, namely,
the employment practices which led to the hiring of the deceased
and injured seamen.
The nationalities of those lost and injured
were Filipino with one exception, a Jamaican. Thus the media
focused on the plight of the world’s poor and reported
exploitation of the world’s poor and the possible implication
of the cruise industry.
Within a week of the incident, ten lawsuits
had been filed in separate actions, with one lawyer trumpeting
in the press his client’s demand for a “billion
dollars” in damages.
The Complaints alleged negligence and unseaworthiness
under the Jones Act, 46 U.S.C. Section 688 and failure to
provide maintenance, cure and unearned wages under the general
maritime law of the United States. All of the cases were originally
filed in the Florida State Court system and removed to the
United States District Court, Southern District of Florida
and consolidated before the Honorable Patricia A. Seitz.
Plaintiffs’ actions were met by defendants
Motion to Compel Arbitration bringing immediately into question
the enforceability of the written arbitration agreements between
the Defendant Cruise Line and the Plaintiff seamen. Defendants
maintained that the arbitration agreements were subject to
the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (“ the Convention”). Both the
United States and the Philippines are signatories to the Convention
with the United States implementing it in 1970 through the
enactment of 9 U.S.C. Section 201-298 (collectively, “the
Convention Act”).
Each plaintiff signed an employment contract
with the defendant cruise line which contracts were “verified
and approved” by the Philippine Overseas Employment
Administration (“POEA”). The Contracts were almost
uniform varying only respect to salary levels, position attained,
etc. All of the Contracts referred to Department Order No.
4 and Memorandum Circular No. 9 promulgated by the Department
of Labor and Employment of the Philippines.
In her Order of dismissal the Court noted
that Department Order No. 4 incorporated by reference the
Standard Terms and Conditions Governing the Employment of
Filipino seamen (“the Standard Terms”). Section
29 of the Standard Terms requires arbitration “[I]n
cases of claims and disputes arising from [the seaman’s]
employment”.
Proof was adduced that the seamen
had each signed the Standard Terms and that the meaning
of the Standard Terms had been explained to them and had even
attended an “Orientation Seminar” which reviewed
the Standard Terms.
Federal Arbitration Act Exclusion
of Seamen Contracts Does Not Apply to the Convention Act
Plaintiffs argued with the support of an
amicus brief filed by the Academy of Florida Trial Lawyers
that the Motion to Compel Arbitration had to be denied because
seaman employment contracts are exempted from the coverage
of the Convention Act. But Judge Seitz deferred to and followed
Francisco v. Stolt Achievement MT, 293 F. 3rd 270 (5th Cir.),
cert. Neneied, 537 U.S. 1030 (2002) the only United States
Circuit court decision on the question. In Francisco v. Stolt
Achievement MT the Fifth Circuit held that neither the Convention
nor its implementing legislation recognize an exception for
seamen employment contracts.
The Arbitration Agreements Between
Plaintiffs and Defendant Fall Within the Scope of the Convention
Act and Require Arbitration
Judge Seitz found that the “United
States Supreme Court has expressed a liberal federal policy
favoring the enforcement of arbitration provisions”
citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,
Inc. 473 U.S. 614, 625 (1985). She further found that there
is a strong presumption in favor of arbitration which “applies
with special force in the field of international commerce.”
There Was An Agreement In Writing Whereby the Parties
Agreed to Arbitrate the Dispute
Judge Seitz acknowledged that the Convention
requires “an agreement in writing between the parties
to arbitrate the dispute in question” and she specifically
found that the POEA-approved employment contract (which each
Plaintiff signed) qualified as such an agreement. She made
this finding even thought the one-page employment contract
did not contain an arbitration clause. By her reasoning the
fact section 29 of the Standard Terms contained an arbitration
clause was enough because the Standard Terms were expressly
referred to and incorporated by reference in Department Order
No. 4 and Memorandum Circular No. 9.
Judge Seitz noted that it would be for the
arbitrator to decide whether the Plaintiffs had been coerced
into signing the arbitration agreement, whether their had
been adequate notice of the arbitration provision, whether
the plaintiffs themselves were covered by the collective bargaining
agreement, or whether Plaintiff’s employment contracts
were negotiated on a “take it or leave it” basis”.
Judge Seitz noted that the “employment contracts, with
the incorporated Standard Terms, were in the form and language
that their own government required to protect its citizens”.
In short, Judge Seitz found that the Plaintiffs
lacked a factual basis for claiming that the Defendants took
advantage of them in negotiating the language and terms of
the contract because the contract had been expressly approved
and signed off on by the POEA. She then noted that it is against
Philippine law to hire a Filipino seaman except through the
POEA. This being said she indirectly acknowledged the application
of the Act of State doctrine when she stated “…it
is not the role of this Court to second –guess such
[Philippine government] actions”. It might be fairly
said that not only is it not the role of the Court, the Court
is expressly precluded from inquiring into the validity of
official acts of the Philippine government by the Act of State
Doctrine. See Fogade v. ENB Revocable Trust, 263 F. 3d 1274
(11th Cir. 2001)
The Agreements to Arbitrate Arise
Out of International – not Domestic - based Commercial
Relationships and Therefore Would Not Be Exempt from the Federal
Arbitration Act
It is well established that “contracts
evidencing a transaction involving interstate commerce”
fall within the Federal Arbitration Act (the FAA”).
It is also clear that as a general rule contracts of employment
are such contracts. But the FAA also expressly exempts certain
contracts of employment including those involving transportation
workers (including seaman). Against this backdrop, the Plaintiffs
argued that the Seamen’s contracts were expressly exempted
from the FAA and therefore the Plaintiffs should not be required
to arbitrate.
Judge Seitz found, not with standing this
exemption, that exemption only applied in the domestic context
because other legislation to govern disputes between seamen
and their employers had been passed to govern domestic employment
contracts for seaman. Plaintiff ‘s argument that Judge
Seitz should extend the exemption from the FAA to the international
context was not accepted. .
The Arbitration Agreements Are Not Null and Void,
Inoperative Or Incapable of Being Performed
In making this argument, Plaintiffs took
language right out of Article II, Section 3 of the Convention
which provides that disputes arising under the arbitration
agreements should be referred to arbitration unless the agreements
are “null and void, inoperative or incapable of being
performed”. But , Judge Seitz reasoned, there was no
clear indication from the Philippine government that it intended
to implement the alleged phase out of POEA as argued by Plaintiffs
and therefore the Agreement was not null and void..
Plaintiffs also argued that the claims were
not subject to arbitration because they sounded in tort. But
the only case cited by Plaintiffs – Tolosa v. National
Laor Relations Commission, et all, G.R. No. 149578, Apr. 10,
2003 - concerned injuries to the Plaintiff caused by third
parties namely the co-workers of the injured seaman. The instant
case, Judge Seitz reasoned, concerned alleged torts arising
as between the Plaintiff and the Plaintiffs’ employers.
Given the contractual relationship between the two parties
the tort claim exemption did not apply. In fact the Tolosa
Court, - the Philippine Supreme Court – specifically
noted that the widow’s claim did not arise from an employer-employee
relationship.
Removal of the Cases To Federal Court
was Proper Under 9 U.S.C. Section 205
As a final point, Judge Seitz noted that
the removal under 9 USC Section 205 of the FAA was appropriate
because the proceeding did relate to “an arbitration
agreement or award falling under the Convention”. She
found that it did not matter that Jones Act cases could not
be removed based on federal question jurisdiction under 28
U.SC 1331 because the Filipino seamen cases were removed under
the Convention Act which is construed broadly in favor of
removal.
Conclusion
First one, then two and now three Federal
Judges in the Southern District of Florida agree that foreign
seaman do not automatically have a right to bring their personal
injury complaints in United States Courts when there is an
employment contract which incorporates an arbitration clause
even if the incorporation in the employment contract is merely
by reference.
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