The Court of Appeals for the Second Circuit just published a decision that presents the question of what happens when two federal policies (protection of merchant seamen and preference for arbitration) run headlong into the other. The policies are codified in the Jones Act (46 U.S.C. s. 688) and the Federal Arbitration Act (9 U.S.C. s. 2). The case is Harrington v. Atlantic Sounding Co., Inc. and the opinion can be downloaded here.
In this case a merchant seaman was injured and was provided maintenance and cure payments. While receiving those payments, he sought out additional monies from his employer. In response, he received an agreement to arbitrate which included voluntary advances against his claim for unpaid wages. In pain, and apparently influenced by his alcohol consumption, he signed the agreement. He subsequently signed an addendum to the agreement. Thereafter, he was terminated and filed suit. The employer sought to dismiss his cause of action or compel arbitration. The trial court found the agreement to violate the Jones Act and further found the agreement arbitrate to be unconscionable.
The Court of Appeals reversed the decision. Noting that federal law favors arbitration, the court found that this dispute could validly be submitted to arbitration. It distinguished the case of Boyd v. Grand Trunk Western Railroad Co., 338 U.S. 263 (1949), which found that the Federal Employer's Liability Act (which regime the Jones Act mirrors) could not be circumscribed in terms of a contractual venue provision that purported to change the statutory venue provision. Passing this threshold issue, the court rejected the trial court's determination that the agreement was unconscionable.
Circuit Judge Calabresi dissented in a 19 page opinion. One need only look to his closing paragraphs to get the sense of his thoughts:
Because the underlying right for workers protected by the Jones Act and FELA have been judged non-amenable to private resolution by legislative bodies conferring analogous rights in the workers’ compensation context, we should be reluctant to interpret the Jones Act and FELA to cede to the policy of the FAA. This is especially so as there are strong indications that Congress sought to insulate FELA and the Jones Act from agreements that would undercut the procedural structures of these laws, as arbitration inevitably would, just as many state legislatures have sought to do—mutatis mutandis—for state workers’ compensation laws. See Boyd, 338 U.S. at 266. FELA section 5 does not expressly reference agreements to arbitrate in the scope of its prohibition in the same manner as some states laws do with respect to workers’ compensation claims. This is not surprising given the modest use of arbitration at the time FELA and the Jones Act were enacted. Yet FELA section 5, much like those state laws, reflects an understanding that the procedural protections provided by laws for the compensation of injured workers are “part and parcel” of the substantive remedy provided. And that provision also demonstrates a judgment that agreements that we ordinarily allow and even favor—whether venue agreements or arbitration agreements—can be abused when applied to injured workers at a time of vulnerability. One need look no further than to the procedural background of the agreement in this case to understand the basis for such a judgment!
I don't see any circuit splits yet, but the policy conflict between the two statutes make this issue good to watch for further litigation in the appeals courts and in time, the Supreme Court.
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