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Javier v. Carnival Corp.

September 9, 2010


The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge


Maria Javier, a crew member on the Carnival cruise ship Spirit, has sued Carnival for injuries she sustained during an offshore excursion - an all-terrain vehicle tour - when the Spirit was docked in Acapulco, Mexico. Now before the Court is Carnival's motion to compel arbitration in Panama pursuant to an arbitration clause in Javier's employment contract. Javier argues that the arbitration clause is against public policy, and that the employment contract is invalid in the first place.

I. Factual Background

At the time Javier was injured on the ATV tour, she was employed by Carnival as the Shore Excursion Manager on the Spirit; Carnival had asked her to take the tour to evaluate its safety and determine whether it was worth offering to Carnival passengers. It turned out not to be. The ATV in which Javier was a passenger tipped over, landed on the passenger side, and crushed Javier's right arm. She has since undergone eleven surgeries and claims to be permanently disabled and disfigured.

Javier's employment at the time of the accident was governed by a Seafarer's Agreement that she signed on December 15, 2007. The Agreement contains an arbitration clause that provides, in relevant part any and all disputes arising out of or in connection with this Agreement... shall be referred to and finally resolved by arbitration.... The place of arbitration shall be London, England, Monaco, Panama City, Panama or Manila, Philippines whichever is closer to the Seafarer's home country. (Doc. No. 18.) Javier is a resident and citizen of Peru, so Panama is where the Agreement would require her to arbitrate any claims against Carnival. The Agreement contains additional language, in bold type, that is there to reinforce its binding nature:

The undersigned Seafarer has read, understands, and accepts the terms and conditions of employment as contained and incorporated herein. It is agreed by and between Seafarer and Carnival that the parties entered freely into this Agreement. It is further agreed by the parties that the language of the Agreement cannot be construed against the drafter because it represents the parties' mutual and bargained for terms and conditions for Seafarer's employment.

In consideration for the offer of employment made herein, Seafarer accepts each and every term and condition of this Agreement, including but not limited to... the arbitration/choice of law provisions in paragraphs 7 and 8. Seafarer acknowledges that CCL would not have entered into this Seafarer's Agreement or otherwise employed Seafarer if the Seafarer had not agreed to all such terms and conditions. (Doc. No. 18.) Finally, the Agreement provides that "the laws of the flag of the vessel" - Panamanian law, in the Spirit's case - will govern all disputes that go to arbitration. Javier admits that she signed the Agreement, but says that she did so under conditions that approximated duress. She explains that the Agreement was presented to her for a signature the moment she boarded the Spirit, and that the circumstances didn't allow for her to read the Agreement carefully or negotiate its critical terms. (Doc. No. 17 ¶ 7.) It had taken Javier eleven hours to get from her home in Peru to California, and all she wanted to do was get her cabin assignment and recuperate before she'd have to start working. (Id.) In her words,

As an employee, I was compelled to sign without reading because there are so many tasks to be completed when one first boards the vessel and commences a voyage. I could not receive my cabin keys or unpack luggage until I signed the Carnival contract. This entire event of boarding the vessel, signing the Carnival contract, and receiving cabin keys occurs in a matter of minutes and only after employees have traveled from their home country, passed through immigration, and boarded the vessel. (Id.)

II. Legal Background

Javier brings causes of action against Carnival for Jones Act negligence and unseaworthiness, basic negligence, and maintenance and cure. These are standard causes of action for personal injury cases that arise in the maritime context. See Sementilli v. Trinidad Corp., 155 F.3d 1130, 1137 (9th Cir. 1998).

To provide context for these claims, the Jones Act is the popular name for Merchant Marine Act, enacted in early June 1920. It provides that "[a] seaman injured in the course of employment... may elect to bring a civil action at law, with the right of trial by jury, against the employer." 46 U.S.C. § 30104. The doctrine of seaworthiness refers to a shipowner's duty to keep a vessel in working order. It has been developed "[b]ecause of the unique status of seamen, necessitated by the rigors of the sea." Hudson Waterways Corp. v. Schneider, 365 F.2d 1012, 1014 (9th Cir. 1966). Finally, "maintenance and cure" is a common-law maritime remedy that refers to payments employers must make to seaman injured on the job to cover their subsistence (maintenance) and medical expenses (cure). "[A] seaman who falls ill while in the service of his vessel is entitled to... maintenance and cure." Dragich v. Strika, 309 F.2d 161, 163 (9th Cir. 1962.) The obligation to make payments for maintenance and cure "does not depend on the negligence or fault of the shipowner, nor is it limited to cases in which the seaman's employment caused his illness. Traditionally, courts have construed this obligation liberally." Sana v. Hawaiian Cruises, Ltd., 181 F.3d 1041, 1044 (9th Cir. 1999).

The Supreme Court has recognized an "emphatic federal policy in favor of arbitral dispute resolution," a policy that "applies with special force in the field of international commerce." Rogers v. Royal Carribean Cruise Line, 547 F.3d 1148, 1158 (9th Cir. 2008) (citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985)). As the Supreme Court stated in Mitsubishi, "the concerns of international comity, respect for the capacities of foreign and international tribunals, and sensitivity to the need of the international commercial system for predictability in the resolution of disputes require that we enforce [international arbitration agreements], even assuming that a contrary result would be forthcoming in a domestic context." Mitsubishi, 473 U.S. at 629.

Not only is there an institutional preference for the arbitration of international disputes, but the arbitration clause in Javier's Seafarer Agreement is presumptively enforceable under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which the United States adopted in 1970. In fact, the Convention embodies this preference. See 9 U.S.C. §§ 201--208. Article II(1) of the Convention requires that

[e]ach Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.

The Court must compel arbitration pursuant to the Convention, generally speaking, if four jurisdictional prerequisites are satisfied: (1) there is a written agreement to arbitrate; (2) the agreement provides for arbitration in the territory of a signatory of the Convention; (3) the agreement arises out of a legal relationship that's considered commercial; and (4) a party to the agreement is not an American citizen. Bautista v. Star Cruises, 396 F.3d 1289, 1294 n. 7). There's no question that the prerequisites are satisfied here.

But, an agreement to arbitrate isn't enforceable if it is "null and void, inoperative or incapable of being performed." Art. II(3). The concern here isn't with the underlying, substantive fairness of an arbitration clause, but rather the validity of, in this case, the Seafarer Agreement that contains that clause. As the Eleventh Circuit explained in Bautista, "[t]he Convention's 'null and void' clause... limits the bases upon which an international arbitration agreement may be challenged to standard breach-of-contract defenses." Bautista, 396 F.3d at 1302 (internal citations and quotations omitted). It then listed those defenses as fraud, mistake, duress, and waiver, and noted that "[d]omestic defenses to arbitration are transferable to a Convention Act case only if they fit within the limited scope" of that list. Id. The parties appear to disagree on whether domestic or some other law determines the validity of the Seafarer Agreement, but it seems obvious to the Court that domestic law ultimately controls. See Davis v. O'Melveny & Myers, 485 F.3d 1066, 1072 (9th Cir. 2007). While Panamanian law may govern the parties dispute in arbitration, if the dispute makes it that far, such choice-of-law provisions "say nothing, and mean nothing, as to the threshold issue of arbitrability." Sea Bowld Marine Group, LDC v. Oceanfast Pty, Ltd., 432 F.Supp.2d 1305, 1312 (S.D. Fla. 2006). "[T]he first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute." Mitsubishi, 473 U.S. at 625. As to that task, obviously, the Seafarer Agreement's choice of Panama law is irrelevant. To proceed otherwise and actually consult Panamanian law on contract formation would be to treat the Seafarer Agreement as a valid agreement.

Apart from an agreement embodying an arbitration clause being invalid as a matter of contract law, an arbitration clause itself may be invalid as a violation of public policy. The concern here is with "choice-of-forum and choice-of-law clauses operat[ing] in tandem as a prospective waiver of a party's right to pursue statutory remedies," specifically those remedies available under United States law. Mitsubishi, 473 U.S. at 637 n. 19. That concern is heightened when there is "no ...

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