Yesterday, in the case of Lindo v. NCL, a federal appellate court entered a decision which further stripped the legal rights away from seriously injured cruise employees.
The Lindo case is the latest decision which reflects that our judiciary has little concern for the rights of cruise employees outside of the U.S.
Eight years ago the Norwegian cruise ship Norway blew up at the port of Miami. Originally bearing the name SS France, the Norway was an old decrepit cruise ship built in 1960. It was poorly maintained. Over the course of 40 years, the ship's old boilers had been neglected to the point of criminal wrongdoing The cruise ship suffered from a long history of safety problems. The NCL executives refused to invest the money necessary to replace the dangerous boilers which were cracking and ready to burst.
The cruise ship was a time bomb waiting to explode.
On May 25, 2003, the faulty boilers blew up while the Norway was docked at the port of Miami. Vapors, smoke and human flesh billowed hundreds of feet into the air. The explosion scalded eight Filipinos and one Jamaican crewmember to excruciatingly painful deaths, leaving dozen of family members grieving the loss of their husbands, fathers and brothers.
The families filed lawsuits against NCL and its parent company, Star Cruises, for negligence under the Jones Act, unseaworthiness, failure to pay maintenance and cure under the general maritime law of the United States, and punitive damages
NCL paid what is described as a confidential settlement, rumored to be over $7,000,000, to the family of the dead Jamaican crewmember.
But NCL responded to the lawsuits filed by the families of the eight dead Filipino men by moving to enforce language in the crewmembers' employments agreements which purported to prohibit the filing of lawsuits in the U.S. NCL argued that the dead men's lives were to be valued by a compensation scheme set up in the Philippines which set the value of a dead seafarer at around $60,000.
Even though the cruise line is headquartered here in Miami and the accident occurred here, NCL instructed its Miami defense lawyers to argue that the families had to pursue arbitration in Manila where a dead Filipino was considered less valuable than the luxury cars driven by NCL's executives.
Why the discrepancy between the compensation owed to the wife and children of a Jamaican crewmember versus the family of a Filipino?
The answer lies in the word "arbitration." Unlike the Filipinos, Jamaican crewmembers were not subject to arbitration agreements, which are designed by large corporations to take away a crewmember's right to a jury trial in the U.S. The Jones Act has provided crewmembers - both U.S. and "foreign" seafarers - the right to seek compensation from juries in the U.S. for dangerous work conditions aboard ships for the past 90 years.
Recognizing that a U.S. jury would fairly consider compensation for the Jamaican seafarer, NCL paid a fair amount of compensation to the surviving family members in Jamaica.
But for a Filipino who might have to arbitrate the case? NCL gambled that it could convince a U.S. federal court to kick the Filipino families' cases out of the U.S. because of an "arbitration" clause in the Filipino crewmembers' employment agreements. Without a jury trial under the Jones Act in the U.S., the Filipinos' cases would be worth peanuts.
NCL's strategy worked.
On October 14, 2003, in the case of Bautista v. Star Cruises, 286 F. Supp. 2d 1352 (S.D. Fla. 2003), a federal district court in Miami granted NCL’s motion to compel arbitration and closed the cases. On January 18, 2005, in Bautista v. Star Cruises, 396 F.3d 1289 (11th Cir. 2005), the Eleventh Circuit affirmed the order compelling arbitration.
The Bautista case stripped the NCL crewmembers of their right to try their cases in state court before a jury in the U.S. The opinion was a result-oriented decision for big business and against the "little man." NCL thereafter settled the death cases for a small fraction of what anyone in a civilized country would consider fair and just
After NCL's stunning success in Bautista, other cruise lines based in Miami began inserting language in their crewmember contracts of employment taking away the right to a jury trial under the Jones Act. Carnival and Royal Caribbean began requiring the cruise employees to arbitrate their cases outside of the U.S. without a jury. The cruise lines unilaterally deprived their ship employees of U.S. remedies and inserted language requiring the application of foreign law.
Crewmembers have historically been entitled to special protection under U.S. law. Under the Jones Act, cruise employees are entitled to seek compensation for unsafe work conditions and must prove only that their injuries were caused by their employer's slightest degree of negligence. Under the "unseaworthiness" doctrine, cruise lines are liable to their employees for dangerous shipboard conditions without a showing of negligence. Crewmembers are also entitled to the payment of their living expenses and medical care under the "maintenance and cure" doctrine which has existed in the U.S. since around 1820. Another important right afforded to seamen is a Federal statute which provides penalties against maritime employers for not timely paying wages to the crewmembers.
Cruise lines instead chose to insert the law of countries like Panama or the Bahamas. These countries do not recognize the unseaworthiness or maintenance and cure doctrines. Although the concept of negligence exists, these countries apply a much higher threshold necessary to establish liability and do not provide nearly the same elements of compensation.
For the past six years, the cruise lines have sought to enforce arbitration clauses which send their employees outside of the U.S. to foreign countries which have few laws protecting the crewmembers.
In 2009, the crewmembers finally received a break when the Eleventh Circuit held an arbitration clause attempting to apply Panamanian law was null and void when it deprived the seaman of his U.S. statutory right to recover penalties wages when the cruise line refuses to timely pay wages.
In Thomas v. Carnival Corp., 573 F.3d 1113 (11th Cir. 2009), the court held that public policy prohibited a cruise line from enforcing arbitration where the result was that a crewmember was stripped of his rights under U.S. law.
Unlike the tortured and result-oriented reasoning in Bautista, the Thomas decision was regarded as a fair and logical decision by the Eleventh Circuit. Finally, the Eleventh Circuit pushed back against the cruise industry's wholesale assault against the rights of crewmembers.
Many maritime lawyers thought that the Eleventh Circuit would apply the logic of the Thomas decision to reject arbitration clauses which stripped crewmembers of their statutory rights under the Jones Act.
But yesterday, crewmembers received a cruel blow when the Eleventh Circuit upheld a decision enforcing a NCL arbitration agreement which required the application of the law of the Bahamas and prohibited a seaman from pursuing litigation in the U.S. applying the Jones Act. In Lindo v. NCL, a crewmember from Nicaragua employed on the Norwegian Dawn was seriously injured during his work. The NCL employment agreement contained language that crewmember claims would be arbitrated in Nicaragua (Lindo’s country of citizenship) under Bahamian law (the law of the flag state of cruise ship).
In a split decision, the Eleventh Circuit upheld the arbitration agreement even though the crewmember lost his right to a jury trial under the Jones Act. In a plodding and painfully reasoned 66 page opinion, the majority essentially upheld Bautista and effectively overruled the Thomas decision. The court prohibited the seaman from making a public policy argument that the effect of a forum clause sending his case to Nicaragua and a choice of law clause applying Bahamian law waived his rights. The court held that at the conclusion of the case, he might be able to raise this argument, although this appears to be at best an inefficient result and more probably an illusory remedy.
In a well written and compelling dissent, Judge Barkett cited the tradition of recognizing the “great public policy of preserving [seamen as an] important class of citizens for the commercial service and maritime defence of the nation.” Judge Barkett cited one of my favorite maritime cases, the case of Harden v. Gordon, 11 F. Cas. 480, 483 (No. 6,047) (C.C.D. Me. 1823) where U.S. Supreme Court Justice Story adopted "maintenance and cure" as part of American jurisprudence.
Seamen have historically been regarded as "wards of the admiralty," and their rights have been a special subject of U.S. maritime jurisdiction. The majority opinion in Lindo completely ignores this well established tradition and line of cases. The Lindo decision has no mention of equitable principles, public policy, or basic human rights.
The notion that a crewmember stripped of his Jones Act, unseaworthy and maintenance and cure remedies under U.S. law will find justice under the laws of the Bahamas in an arbitration proceeding in Nicaragua is preposterous.
Unless there is a reconsideration by the Eleventh Circuit en banc, the cruise industry will view the Lindo case as a green light to screw ship employees at every turn.