Opinion
Civil Action No. 02-2126, Section: "J" (5)
January 28, 2003
Before the Court is the Motion to Dismiss for Improper Venue and Lack of Subject Matter Jurisdiction (Rec. Doc. 11) filed by defendant. Plaintiff/Intervenors (collectively referred to hereinafter as "plaintiffs") oppose the motion. The motion was set for hearing on briefs on December 18, 2002. Because the Court concludes that the forum selection clauses defendant seeks to enforce by the instant motion are void as violative of Louisiana public policy, the Court finds the motion must be denied as more fully explained below.
BACKGROUND
Plaintiffs are Filipino seamen employed by defendant Offshore Specialty Fabricators, Inc. ("OSFI"), a Louisiana corporation, through its agent, Cream Ship Management. Plaintiffs worked for OSFI aboard a vessel named OSFI DB-1, a foreign-flagged vessel whose home port is Port Vila, Vanuatu. Plaintiffs filed suit alleging that defendant violated the minimum wage requirements of the Fair Labor Standards Act ("FLSA") by failing to pay them for overtime hours they worked. Defendant has filed the instant motion arguing that plaintiffs' suit must be dismissed because their claims in this action are subject to a valid and enforceable forum selection clause and mandatory arbitration agreement incorporated in the plaintiffs' employment contracts with OSFI.
Plaintiffs were hired by OSFI through the Philippine Overseas Employment Administration ("POEA"), a Philippine agency whose duties include, inter alia, prescribing standard employment contracts for Philippine overseas workers. In accordance with POEA requirements, plaintiffs' contracts include Standard Terms which govern their employment, including a forum selection clause and an arbitration clause. Under Section 16 of the Standard Terms, grievances which go beyond the administrative process are to be appealed to the management of the company, the Philippine Overseas Labor Office or consular office overseas, or alternatively, to the POEA or the National Labor Relations Commission ("NLRC"), both located in the Philippines. Section 29 provides for "original and exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators," or, if not covered by a collective bargaining agreement, to the NLRC in the Philippines. That section further provides that the POEA "shall exercise original and exclusive jurisdiction to hear and decide disciplinary action on cases, which are administrative in character, involving or arising out of violations of recruitment laws, rules and regulations involving employers, principal, contracting partners and Filipino seafarers."
The full contract may be found in the record at Rec. Doc. 11, Exh. 1.
Plaintiffs oppose the motion to dismiss based on three arguments: first, that arbitration is not required in wage litigation, citing U.S. Bulk Carriers, Inc. v. Aguelles, 400 U.S. 351, 91 S.Ct. 409 (1971); second, that plaintiffs' congressionally created wage and hour claims and other rights rooted in United States law are incapable of resolution by foreign arbitration; and third, that Louisiana's prohibition of forum selection clauses in employment contracts under Louisiana Revised Statutes title 23, section 921 applies to the contracts between OSFI and plaintiffs, rendering the forum selection and arbitration clauses in their contracts void. Because the Court is persuaded by plaintiffs' third argument, it pretermits a discussion of the first two.
DISCUSSION
In M/S BREMEN v. Zapata Offshore, 407 U.S. 1, 92 S.Ct. 1907 (1972), the Supreme Court recognized that forum selection clauses (of which arbitration clauses are a subset) are presumptively valid in admiralty cases. At the same time, however, the Court observed that "[a] contractual choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or judicial decision." 407 U.S. at 15, 92 S.Ct. at 1916 (citations omitted).
Louisiana has expressed its hostility to forum selection clauses in employment contracts in both statute and judicial decision. Louisiana Revised Statute 23:921A(2) provides:
The provisions of every employment contract or agreement, or provisions thereof, by which any foreign or domestic employer or any other person or entity includes a choice of forum clause or choice of law clause in an employee's contract of employment or collective bargaining agreement, or attempts to enforce either a choice of forum clause or choice of law clause in any civil or administrative action involving an employee, shall be null and void except where the choice of forum clause or choice of law clause is expressly, knowingly, and voluntarily agreed to and ratified by the employee after the occurrence of the incident which is the subject of the civil or administrative action.
Likewise, the Louisiana Supreme Court has held: "the United States Supreme Court in M/S Bremen held that forum selection clauses will be upheld unless they contravene strong public policy of the forum in which the suit is brought. La. Rev. Stat. 23:921A(2) is an expression of strong Louisiana public policy concerning forum selection clauses." Sawicki v. K/S Stavanger Prince, 802 So.2d 598, 603 (La. 2002). Thus, the plain language of both La. R.S. 23:921A(2) and the Louisiana Supreme Court's opinion in Sawicki reflect that forum selection clauses in employment contracts, such as those invoked by defendant in the instant case, contravene a strong public policy of Louisiana; under the U.S. Supreme Court's decision in M/S Bremen, they are therefore unenforceable.
In arguing that the forum selection clauses included in plaintiffs' contract should be enforced notwithstanding Louisiana's stated public policy, defendant points to the Fifth Circuit's 1998 decision inMarinechance Shipping Ltd. v. Sebastian, in which the Fifth Circuit affirmed a district court's enforcement of nearly identical clauses in another POEA seaman's contract. However, Marinechance offers no guidance for the case at bar because it predates both the 1999 amendment to La. R.S. 23:921 which added section A(2) (upon which this decision rests), and the Louisiana Supreme Court's 2002 decision in Sawicki. Indeed, Judge Feldman, the district judge who authored the original Marinechance opinion enforcing the POEA contract forum selection clauses, recently issued an opinion taking the opposite view in light of the 1999 amendments to La. R.S. 23:921 and Sawicki. Dahiya v. Talmidge International, Ltd., Civ. Action 02-2135 (E.D. La., Oct. 11, 2002). Moreover, Sawicki itself represented a reversal of the Louisiana Supreme Court's prior stance (enunciated in Lejano v. K.S. Bandak, 705 So.2d 158 (La. 1997) and upholding such clauses in POEA contracts), based on the 1999 amendment to La. R.S. 23:921. Thus, all courts which have considered this precise question after the 1999 amendments have recognized the unenforceability of forum selection clauses in employment contracts in view of the current law in Louisiana.
While the Fifth Circuit's 2002 decision in Francisco v. Stolt Achievement MT, 293 F.3d 270 (5th Cir. 2002) did uphold an arbitration clause in a similar POEA contract, the Francisco plaintiffs did not argue that such clauses violated Louisiana public policy, and neither the district court nor the Fifth Circuit considered that precise question. Accordingly, Francisco is not controlling.
Defendant also argues that Louisiana's policy, both as expressed in statute and judicial decision, is of no moment because plaintiff brought this case in federal court, albeit one sitting in Louisiana. And, while acknowledging that plaintiffs could have originally filed in state court, defendant claims that had plaintiffs done so, defendant would simply have removed the case to federal court.
Setting aside the question whether grounds for removal would have been present, the Court notes that another federal court has already found that removal from state court does not nullify La. R.S. 23:921A(2) — that is exactly the posture of the Dahiya case in which Judge Feldman applied the statute. More to the point, defendant is a Louisiana corporation, and (as defendant concedes) plaintiffs could have brought their FLSA claims in state court. 29 U.S.C. § 216 (b). The fortuity (for defendant) of plaintiffs electing to bring their claims in federal court should not exempt defendant from Louisiana laws intended to apply to employers in this state.
Finally, the Court disagrees with defendant's assertion that La. R.S. 23:921 does not foreclose enforcement of the forum selection clauses in the instant case because by its terms, 23:921 does not apply when an employee "expressly, knowingly, and voluntarily agree[s] to and ratifie[s]" a forum selection clause contained in his or her employment contract, and, by signing the POEA contracts, plaintiffs "expressly, knowingly, and voluntarily agreed to and ratified" the forum selection clauses invoked by defendant herein. The ratification contemplated by 23:921 must take place "after the occurrence of the incident which is the subject of the civil or administrative action." While the Court recognizes that plaintiffs contracted to work hours deviating from those prescribed by the FLSA, nothing in the record suggests that they contracted in advance to work the hours they allege to have worked at the rate they allege to have been paid, and which they complain of in the instant action. Thus, as a matter of logic, they cannot have ratified the forum selection clauses after the occurrence of the incident that is the subject of their complaints.
In sum, based on the foregoing analysis, the Court finds that forum selection clauses invoked by defendant (including the arbitration provision which is a type of forum selection clause), are unenforceable. Accordingly;
IT IS ORDERED that defendant's Motion to Dismiss for Improper Venue and Lack of Subject Matter Jurisdiction (Rec. Doc. 11) should be and is hereby DENIED.