The issue of whether arbitration provisions pertaining to cruise line seaman personal injury claims has been a hotly litigated issue over the past seven years. Nearly every major line today inserts arbitration provisions into their seafarer’s contracts or collective barging agreements. Along with arbitration provisions, the lines include foreign choice of law provisions. The purpose for these provisions is to limit personal injury liability exposure. These provisions take personal injury claims away from juries and place it in the hands of arbitrators (generally lawyers) and apply the less liberal foreign laws than the Jones Act, Penalty Wage Act and United States general maritime law. Since the 2005 landmark decision of Bautista v. Star Cruises, courts have overwhelming enforced such arbitration provisions. Despite wide enforcement of these arbitration provisions, Courts have made some exceptions. The recent case of Cappello v. Carnival Corp. handled by the maritime attorneys of Brais law is one example where a court made such an exception.
This case involved an Italian engineer who was blinded when mixing caustic chemicals needed to clean the cruise ship’s desalination plant. The cruise ship was operated by Carnival Corporation. Cappello was a contract employee of Golden Falcon, a wholly owned company of Carnival. The employment contract required “[a]ny and all disputes arising out of or in connection with [the] Agreement, including any question regarding its existence, validity, or termination, or Officer’s service on the vessel, shall be referred to and fully resolved by arbitration.” The contract was signed by Cappello and Golden Falcon but not Carnival.
Brais law filed Cappello’s personal injury claim against Carnival in Florida state court alleging Jones Act negligence and other violations of United States general maritime law. The cruise line removed the action to federal court under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Convention Act (9 U.S.C. § 201, et seq.) based upon the Cappello/Golden Falcon contract. Brais law’s attorneys moved to remand the case arguing lack of federal jurisdiction as Carnival failed to produce a signed written agreement to arbitrate between the parties of the dispute as required by the Convention. The cruise line argued the Cappello/Golden Falcon contract required arbitration of the claim against Carnival under the doctrine of equitable estoppel.
The equitable estoppel doctrine allows a non-contract signatory to compel if: (1) the signatory to a written agreement containing an arbitration clause must rely on the terms of the written agreement in asserting its claims against the nonsignatory, of (2) the signatory to the contract containing the arbitration clause raises allegations that are substantially interdependent and concerted misconduct by both the nonsignatory and one or more of the signatories to the contract. Carnival relied on the first situation arguing the dispute is controlled by contract because Cappello’s claims invoke the contractual terms as his injury incurred during his service on the vessel. The Court rejected Carnival’s argument finding it conflates two distinct concepts — the scope of the arbitration clause, and the scope of the agreement containing the arbitration clause. The Court reasoned it is not a matter of a straightforward reading of the arbitration clause to determine whether a claim must be referred to arbitration. Instead, an examination of the scope of the contract containing the arbitration provision in light of the claims asserted must be conducted. Upon undertaking such an analysis the Court determined the compliant does not presume the existence of the contract and the cruise line made no particularized showing of why the contract is relevant to these claims. Based upon these findings, the Court determined federal jurisdiction was wanting and remanded the entire claim to Florida state court to be tried by a jury under United States law.
The import of this decision is that the federal courts will not blindly compel seaman personal injury cases to arbitration. Cruise lines must firmly establish the dispute arises from the employment contract signed by the seaman in order to obtain the benefit of arbitration.