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Not Sure If Your Arbitration Agreement With Your Employer Applies to Your Disputes Against Your Employer? 11th Circuit Says Likely So.

In the case ofMartinez v. Carnival Corp., decided by the 11th Circuit on Feb. 24, 2014, the Court found that when language of an employment agreement requiring arbitration is vague – a finding that the parties contemplated arbitration is not error. The 11thCircuit recognized a federal policy favoring arbitration of labor disputes to require Carnival employee Melvin Martinez to litigate his claims against Carnival in arbitration – rather than state or federal court.

By way of background, Carnival employee and Honduran citizen Melvin Martinez suffered a back injury while aboard the ship, and required surgery. His surgery was performed by the company’s selected physician off the vessel. After surgery, Mr. Martinez continued to experience back pain. Mr. Martinez brought a claim against Carnival, under the Jones Act in Florida state court, alleging that the physician negligently performed surgery, in addition to his claims of unseaworthiness, and failure to provide adequate maintenance and cure. Mr. Martinez’ claim of negligence was based on the premise that the Jones Act’s negligence claims did not fall within his employment contract, and thus, did not require arbitration under the Seafarer’s Agreement.

Specifically, the Seafarer’s Agreement stated that it should cover “any and all disputes arising out of or in connection with this Agreement, including any question regarding its existence, validity, or termination, or Seafarer’s service on the vessel, shall be referred to and finally resolved by arbitration.” Mr. Martinez’ contended that the Agreement terminated before the dispute arose, as the Agreement states it should “automatically terminate without notice immediately upon Seafarer’s unscheduled disembarkation of the assigned vessel…” The case was then removed by Carnival to federal court.

On appeal, Carnival claimed the 11th Circuit lacked jurisdiction to hear the appeal of the order because the district court’s order was non-appealable by interlocutory order. Finding to the contrary, the 11th Circuit looked to the Federal Arbitration Act, which holds that a party may appeal “a final decision with respect to an arbitration,” to find it had jurisdiction to hear the matter. Notably, the 11th Circuit found that the district court not only administratively closed the case, but denied all pending motions as moot, which was the equivalent of a functionally final and appealable decision.

In affirming the trial court’s order compelling arbitration, the 11th Circuit acknowledged that the Seafarer’s Agreement terminated when Martinez disembarked the ship, but that the arbitration clause was ambiguous as to whether it survived the termination of the Agreement. Looking to the plain language of the Agreement, the 11th Circuit concluded that the parties contemplated some circumstances wherein the arbitration clause would survive the termination of the Agreement. Therefore, the Court held that the district court did not err in its order to compel arbitration – noting a federal policy favoring arbitration of labor disputes.

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Florida 561-653-0008 California 213-377-5200
* Cathleen Scott is licensed to practice in Florida only.

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