Federal Employer’s Liability Act Does Not Apply to Seamen’s Arbitration Agreements
April 23, 2010
In Harrington v. Atlantic Sounding Co., plaintiff Harrington suffered injuries to his back in April 2005 while working as a seaman aboard the Candace, which required lumbar surgery. Defendant employers sent Harrington a letter in July 2005 pursuant to 9 U.S.C. § 2, the Federal Arbitration Act ("FAA"), stating that plaintiff and defendant would agree to arbitrate plaintiff's claim with the American Arbitration Association. Moreover, the letter stated that the decision of the arbitration panel would be binding, and that plaintiff would be precluded from bringing suit in the future. Defendants also agreed to send Harrington an advance of funds under a reservation of rights.
Harrington signed the agreement and remitted it to defendants. Just over a year later, in June 2006, plaintiff commended the present action under the Jones Act, 46 U.S.C. § 688, which incorporates the Federal Employer's Liability Act ("FELA") in a maritime context by giving injured workers the right to seek compensation for injuries via trial by jury. Obviously, plaintiff's suit under the Jones Act was in conflict with the signed arbitration agreement.
The United States District Court for the District of New Jersey found the arbitration agreement to be both procedurally and substantively unconscionable, defendants appealed, and the U.S. Court of Appeals for the Second Circuit reversed. The Court found that that Section 6 of FELA did not apply to arbitration agreements at all, and thus the arbitration agreement was not unenforceable as a matter of law under § 2 of the FAA. Moreover, the Second Circuit found no substantive unconscionability, noting that that a completely one-sided agreement (which this concededly was) is not necessarily an unconscionable one. Therefore, because the arbitration agreement was enforceable, plaintiff's suit for personal injuries was precluded.
This decision reflects "a healthy regard for federal policy favoring arbitration." Moreover, the court notes that the when FELA was drafted, the drafters in no way contemplated an arbitral forum at all, and therefore, FELA can not mandate a right to a trial by jury when an arbitration agreement, executed by both plaintiff and defendant, is already in place. It will be interesting to see whether future scenarios where FELA and FAA are in conflict have a similar result.
Thanks to Brian Gibbons for his contribution to this post.