The opinion of the court was delivered by: D. LOWELL JENSEN
The present motions came on for hearing before this Court on June 14, 1991. Richard Dodson appeared for plaintiffs. Frederick Wentker appeared for defendants. For the reasons set out below, plaintiffs' motion for summary judgment is GRANTED IN PART and DENIED IN PART. Defendants' motion for summary judgment is DENIED, subject to the terms of this Order. Plaintiffs' motion for class certification is DENIED. Defendants' motion for dismissal of plaintiffs' class allegations without leave to amend is GRANTED. Defendants' motion to strike paragraph 15 of the complaint
is DENIED. Defendants' motion for leave to deposit funds into the Court is GRANTED.
The present motions arise from an action by twenty Filipino seamen working aboard the M/S Kiso (the "Kiso") against the Kiso, in rem, and the owners and managers of the Kiso. The Kiso is a Liberian flagged vessel which carries goods between the U.S. and Japan. The title owner of the Kiso is defendant Vesta Company, Ltd, ("Vesta") a Liberian corporation. The beneficial owner of the Kiso, however, is a Japanese corporation, defendant Nippon Yusen Kaisha Ship Management Corporation ("NYK"). The officers of the Kiso are also all Japanese. Vesta contracted the responsibility for managing the Kiso to defendant Orion Shipping Co., Ltd. ("Orion"), a Japanese corporation.
The gist of the plaintiffs' allegations is that plaintiffs were subject to a pervasive pattern of abuse by the owners, officers, and managers of the Kiso, including the underpayment of wages. The parties now bring cross-motions regarding class-certification and for summary judgment. Defendants also bring a motion to dismiss paragraph 15 of the complaint and a motion for leave to deposit funds into the Court. The relevant facts are as follows.
A. Plaintiffs' Contracts At The Time Of Boarding.
All of the plaintiffs are members of the Association of Marine Officers' and Seamens' Union of the Philippines (AMOSUP), which is the Philippine national affiliate of the International Transport Workers' Federation (ITF). In the fall of 1989, plaintiffs were hired in the Philippines through a Filipino vessel manning agency, Trans-Phil Marine Enterprises ("Trans-Phil"). At the time they were hired, the plaintiffs signed a number of documents.
First, plaintiffs executed two contracts at the office of Trans-Phil. One of these contracts was a form prescribed by the Philippine Overseas Employment Administration (POEA), a government agency which regulates the employment of Philippine seamen on foreign vessels. The other contract was a form prescribed by AMOSUP. Defendants caused these contracts to be processed in accordance with Philippine law, and the POEA issued an Overseas Employment Certificate (OEC).
The two contracts, and the resulting OEC all adopted the wage rates and terms of the 1989 AMOSUP Collective Bargaining Agreement (the "1989 CBA"). On the basis of the two signed contracts and the OEC, Trans-Phil issued each plaintiff "Embarkation Orders" in an envelope. It is undisputed that the Embarkation Orders contained terms which were different, and less favorable to plaintiffs than the 1989 CBA. Plaintiffs' state in their declarations, however, that the envelopes containing the Embarkation Orders were sealed, and that they had no knowledge of the contents of the Orders. Defendants deny that the envelopes were sealed, but have come forward with no evidence that plaintiffs knew the terms of the Embarkation Orders at the time they were issued.
With their OEC and Embarkation Orders in hand, plaintiffs left Manila and boarded the Kiso. Upon boarding the Kiso, plaintiffs signed shipboard articles. These articles also described the wages and working conditions applicable to plaintiffs, and adopted the wage rates and provisions of the 1989 CBA.
B. Critical Contract Terms.
The terms governing compensation to plaintiffs for their service aboard the Kiso are critical to the present motions and have been heavily briefed by the parties. Most relevant are the terms of the 1989 CBA identifying the wage components, and governing the resolution of wage disputes.
Second, Article IX of the 1989 CBA provides for vacation pay accumulated at the rate of six days wages for every month of employment. Third, Article VII of the 1989 CBA, and Appendix A attached at the back, set working hours and provide for overtime pay for work outside of normal working hours.
Fourth, Article III obligates the operator of the Kiso to "furnish transportation . . . from the port/seaport of Manila to the port of employment and return[,] and to give [covered seamen] a per diem [while in transport] of U.S.$ 7.00 per day per licensed crewmember and U.S. $ 3.00 per non-licensed crewmember . . . ."
Fifth, Article XI provides for a monthly longevity wage bonus for seamen who have worked continuously on Trans-Phil contracts for two or more years. Finally, Article XXV provides that seamen who are not taken aboard the Kiso, but are placed on "standby" in Manila or a foreign port shall be paid fifty percent of their basic monthly wage for the period during which they are on standby.
In addition to the above terms setting the rate of compensation, the 1989 CBA establishes grievance arbitration procedures covering disputes under the contract. The two contracts signed at Trans-Phil also set the term of employment at ten months.
For the purposes of this motion, it is undisputed that plaintiffs were paid the lower wage stated in their Embarkation Orders, not the wage rate uniformly called for by the 1989 CBA, the two Trans-Phil contracts, the OEC, and the shipboard articles. It is also undisputed that the in furtherance of defendants' decision to pay the lower rate, the officers and managers of the Kiso maintained two sets of books. At the end of each pay period plaintiffs executed two receipts, one real receipt showing payments based on a base pay rate of $ 400.00 per month, and one false receipt showing payments based on the rate of $ 821.00 per month as called for in the 1989 CBA. The receipts were then recorded in separate books. Plaintiffs allege that this practice of "double booking" is widely employed by defendant NYK, which owns many vessels.
Defendants note that plaintiffs cooperated in this double booking arrangement, and never complained or requested the higher wage. Plaintiffs assert that their cooperation was the result of economic duress. In particular, plaintiffs assert that the officers of the Kiso told plaintiffs that if they did not cooperate they would be blacklisted in the Philippines and would not work again. In support of this allegation, plaintiffs have filed a memorandum allegedly circulated by defendants after the arrest of the Kiso in San Francisco. The memorandum is entitled "WATCHLIST" and was circulated to manning agencies in Manila. The memorandum identifies nineteen seamen, all plaintiffs in this action, and explains that all "have been dismissed/repatriated for ITF INVOLVEMENT WHILE ONBOARD M/S KISO." (Emphasis original). Defendants deny drafting or circulating this memorandum.
The 1989 CBA expired on April 9, 1990. Prior to this date, NYK entered into negotiations with AMOSUP. These negotiations resulted in an new Collective Bargaining Agreement (the "1990 CBA") which became affective on April 9, 1990. The 1990 CBA deviated from the terms of the standard ITF contract, and lowered the base pay rate for AMOSUP members to $ 360.00 per month.
The 1990 CBA also substantially reiterates the grievance and arbitration rules of the 1989 CBA.
On April 9, 1990, the Kiso was at sea. Nonetheless, on that day defendants presented plaintiffs with new shipboard articles and asked each plaintiff to re-sign. The wage provisions of the articles were blank at the time of signing. The blanks were later filled in by officers of the Kiso to state the lower pay rate established by the 1990 CBA.
Plaintiffs state at the time they signed the new articles they did not know the terms of the 1990 CBA. Defendants do not concede plaintiffs knowledge or lack of knowledge. However, defendants have submitted no evidence indicating that plaintiffs knew of the 1990 CBA or its lower wage terms.
D. The First Attempted Arrest Of The Kiso And The Japanese Arbitration.
On July 12, 1990, the Kiso docked in Los Angeles, California. While on shore, certain plaintiffs contacted Sidney Kalban, a New York attorney, informed him that they were being underpaid through a double booking scheme, and asked him to represent them.
On Saturday, July 14, the Kiso sailed from Los Angeles to Oakland, California. Sydney Kalban had arranged for the vessel to be met by local counsel and a representative of the ITF named Anthony Sasso ("Sasso"). Sasso and local counsel determined that double booking was being practiced. Sasso reported this practice to the ITF, and local counsel initiated an attempt to arrest the Kiso by filing suit and seeking a court order arresting the vessel. The Kiso, however, sailed for Japan on Monday, July 16, 1990 at 5:00 a.m., and a court order could not issue while the Kiso remained in port.
In addition to arranging for an attempted ship arrest, Kalban contacted the head office of the ITF in London and requested a union investigation of double booking on the Kiso. This report was in addition to the report which the ITF had already received from Sasso. Plaintiffs state that they did not specifically authorize or request Kalban to initiate an extended Union investigation or a Union grievance proceeding. While the record is not entirely clear, a formal Union investigation apparently went forward through the ITF's Japanese affiliate, the Japan Seamen's Union (JSU). The Japanese officers of the Kiso are members of the JSU, and played some role in the investigation.
The union investigation confirmed that double booking was occurring. The JSU then invoked the grievance provisions set out in both the 1989 and 1990 CBA's. The JSU contacted Orion and attempted to negotiate the payment of full wages. Specifically, Takemi Nakao of the JSU contacted Captain H. Kawasaki of Orion, and demanded payment to plaintiffs of money that would conform their compensation to the base rate of $ 821.00 per month. Nakao and Takemi eventually reached a negotiated agreement. Nakao and Takemi's negotiations, and the resultant agreement, are hereinafter referred to as the Japanese Arbitration.
The record regarding the terms of this agreement is not entirely clear. However, it appears that Nakao and Takemi agreed that all plaintiffs would receive payments raising their compensation to the level required by a base rate of $ 821.00 through the date of the negotiated agreement. Plaintiffs' shipboard payments would thereafter be made at the lower base rate of the 1990 CBA. However, whenever the Kiso docked in Japan, plaintiffs would have a right to supplemental payments which would raise their pay to the rate required by a base rate of $ 821.00.
It is undisputed that the negotiations between JSU and Orion occurred without the knowledge or participation of the plaintiffs, who were at sea and proceeding toward Japan while the negotiations went forward. It is also undisputed that plaintiffs never specifically requested such negotiations. However, upon the arrival of the Kiso in Japan, the JSU and Orion held a meeting with plaintiffs at which the terms negotiated by Nakao and Takemi were described.
E. Wage Payments Subsequent To The Japanese Arbitration.
Following the Japanese Arbitration, defendants began a series of supplemental payments to plaintiffs designed to bring their wages in accord with the base rate of $ 821.00 set out in the 1989 CBA. These payments were based on recalculation of plaintiffs, base monthly salary and overtime pay. These supplemental payments did not include any recalculation or payment of longevity pay, standby pay, or transportation pay.
Specifically, on July 27, 1990, sixteen plaintiffs received payments designed to bring their pay rate for the period from April 9, 1990, through July 27, 1990, into line with a base wage rate of $ 821.00 per month. On August 6, 1990, the same sixteen plaintiffs received similar payments covering the period from the date of their engagement through April 8, 1990. At the time they accepted payments, these plaintiffs signed receipts stating that the payments were "in full compliance with and satisfaction of the Articles and CLAUSES OF ITF AMOSUP Collective Agreement." Plaintiffs have all testified at deposition that at the time they accepted these payments, they did not believe that these payments fully satisfied their wage claims, and that they were entitled to more money under their employment contracts.
Following these payments the Kiso returned to its usual course, and sailed for the U.S. It is undisputed that once back onboard the Kiso plaintiffs were again paid at the lower base rate of $ 400.00 per month. Defendants assert that this was in line with the Japanese Arbitration, which allowed low pay while at sea, but required special compensatory payments to plaintiffs ever time the ship returned to Japan. Plaintiffs deny knowledge of this special payment arrangement.
D. The Successful Arrest Of The Kiso And Plaintiffs 'Repatriation To The Philippines.
The Kiso completed its traverse of the Pacific Ocean in roughly ten days, and arrived in Oakland in mid-August of 1990. Upon its arrival, plaintiffs again contacted counsel and complained of being underpaid. On or about August 19, 1990, plaintiffs' counsel again attempted to arrest the Kiso. This effort was successful and the Kiso was allowed to sail two days later following the posting of a five million dollar bond by defendants.
Also on August 19, 1990, ITF representative Anthony Sasso again boarded the Kiso and met with the Kiso's crew. Following a private discussion, Sasso informed Captain Ushida of the Kiso that he would be leading plaintiffs off the Kiso to meet with their attorneys ashore. Plaintiffs assert that Sasso then made a wage demand, and informed Captain Ushida that plaintiffs would return to work if they immediately received compensatory pay covering all back wages. Defendants assert that Sasso made no wage demand, and merely informed Captain Ushida that plaintiffs would be leaving the ship.
At some point subsequent to their departure from the Kiso, eighteen
of the plaintiffs informed Captain Ushida that they would not be returning to work, and that they wished to be paid off and repatriated. On August 21, 1990, these eighteen plaintiffs received payments based on a base wage of $ 821.00 per month covering salary and overtime pay. The August 21 payment did not include vacation, longevity, standby, or transportation pay.
On August 23, 1990 plaintiffs were repatriated to the Philippines. Defendants assert that they were prepared to make a final payment covering remaining vacation pay owed immediately upon plaintiffs arrival in Manila, but that defendants did not contact plaintiffs at the request of plaintiffs counsel. In any event it is undisputed that plaintiffs did not receive their final payment of vacation pay until mid-October of 1990, when plaintiffs went into the offices Trans-Phil in Manila.
F. The Procedural Posture Of The Present Motions.
Plaintiffs filed this action on August 17, 1990. In this action plaintiffs claim, among other things, that they have not received the wages they are owed in full. The shortfall arises in part because plaintiffs use different formula for calculating certain wage components, such as base salary and overtime, and in part because plaintiffs claim defendants have categorically failed to make any payments regarding other wage components, including longevity and transportation pay.
The parties now bring various motions for resolution by the Court. First, defendants have moved to strike plaintiffs' class action allegations, and plaintiffs have cross-moved for class certification under Federal Rule of Civil Procedure
23. Second, plaintiffs and defendants cross-move for summary judgment. Finally, defendants have moved for leave to deposit funds equal to plaintiffs' wage claim with the Court. These motions are discussed in order below.
A. The Requirements Of Rule 23 And The Applicable Standard Of Review.
Class certification is governed by Rule 23, which provides a two step procedure. First, subsection (a) of Rule 23 sets out four conjunctive requirements which must be met in all class actions: "(1) the class [must be] so numerous that joinder of all members is impracticable, (2) there [must be] questions of law or fact common to the class, (3) the claims or defenses of the representative parties [must be] typical of the claims or defenses of the class, and (4) the representative parties [must] fairly and adequately protect the interests of the class." Rule 23(a).
Second, if all the requirements of Rule 23(a) are met, then the party seeking certification must also show that they have met one of the four disjunctive tests set out in Rule 23(b). Thus, to certify a class the Court must find either:
(1) That common questions of law or fact predominate and that a class action is superior to other available methods of adjudication, Rule 23(b)(3); or
(2) that the defendant acted or refused to act on grounds generally applicable to the class, rendering declaratory or injunctive relief appropriate with respect to the class as a whole, Rule 23(b)(2); or
(3) that the prosecution of individual actions would create a risk of inconsistent verdicts which would establish incompatible standards of conduct for defendant, Rule 23(b)(1)(A); or finally
(4) that adjudication of individual claims would be dispositive of the claims or non-party class members, or substantially impede the ability of non-party class members to pursue their own claims. Rule 23(b)(1)(B).
In determining whether plaintiffs have carried their burden, the Court may not consider the merits of plaintiffs' claims. In re Unioil Securities Litigation, 107 F.R.D. 615, 618 (1985). Instead, "the court is bound to take the substantive allegations of the complaint as true, thus necessarily making the class order speculative in the sense that plaintiff may be altogether unable to prove his allegations." Blackie v. Barrack, 524 F.2d 891, 901 n. 17 (9th Cir. 1975).
However, the Court's obligation to accept plaintiffs' substantive allegations as true does not mean that the Court must accept conclusory or generic allegations regarding the suitability of the litigation for resolution through class action. Morrison v. Booth, 763 F.2d 1366 (11th Cir. 1985) (rejecting certification in the absence of factually specific allegations). Before ordering that a lawsuit may proceed as a class action, the trial court must rigorously analyze whether the class action allegations ...