CECILIA M. ALTONAGA, District Judge.
Last September Anna Dockeray, an Englishwoman employed by Carnival as a dancer on the Panamanian-flagged Miracle, broke her wrist when a chair she was performing on as part of the show Generations collapsed. This January she filed a six-count complaint in state court against Carnival for Jones Act negligence; breach of the warranty of seaworthiness; failure to provide maintenance and cure; failure to provide prompt, proper, and adequate maintenance and cure; failure to pay unearned wages; and failure to pay earned wages and penalties under 46 U.S.C. § 10313.
On February 3 Carnival filed an answer and affirmative defenses, none of which raised arbitration. On February 26 Dockeray filed a Notice of Trial in accordance with Florida Rule of Civil Procedure 1.440(b), indicating the cause was at issue and ready to be tried. On March 5 Carnival moved for an extension of time to respond to Dockeray's discovery requests, which she had served with her complaint, and, on March 10 Dockeray "noticed" Carnival's motion for a hearing. Dockeray also filed a notice of taking the deposition of Carnival's corporate representative on March 16.
The next day Carnival removed the case to the U.S. District Court for the Southern District of Florida under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38 (the "Convention"), and its implementing legislation, 9 U.S.C. §§ 202-208 (the "Convention Act"). Carnival did so in order to compel arbitration of the case in accordance with an agreement Dockeray had entered into with Carnival:
(SEAFARER'S AGREEMENT CARNIVAL CRUISE LINES [D.E. 1-2] [hereinafter AGREEMENT]).
Dockeray opposes the Motion for three principal reasons. The first is that Carnival waived its right to arbitrate by litigating in state court before removing the case to federal court. The second is that the arbitration provision is procedurally unfair. The third is that, relying chiefly on Thomas v. Carnival Corp., 573 F.3d 1113 (11th Cir.2009), cert. denied, ____ U.S. ____, 130 S.Ct. 1157, ____ L.Ed.2d ____ (2010), the arbitration agreement is contrary to public policy.
Courts having jurisdiction under the Convention Act "may direct that arbitration be held in accordance with the agreement at any place therein provided for, whether that place is within or without the United States." 9 U.S.C. § 206. "In deciding whether `to compel arbitration under the Convention Act, a court conducts "a very limited inquiry."'" Hodgson v. Royal Caribbean Cruises, Ltd., 706 F.Supp.2d 1248, 1252 (S.D.Fla.2010) (quoting Bautista v. Star Cruises, 396 F.3d 1289, 1294 (11th Cir.2005)). This inquiry requires determining whether:
Id. (quoting Bautista, 396 F.3d at 1294 n. 7). If these "four jurisdictional prerequisites" are met, then the Court must order arbitration "[u]nless there is an affirmative defense that prevents the application of the Convention Act." Thomas, 573 F.3d at 1117; accord Bautista, 396 F.3d at 1294-95.
The parties do not dispute whether the four jurisdictional prerequisites are met;
In Thomas the U.S. Court of Appeals for the Eleventh Circuit concluded that Article V, in addition to Article II(3), "provides specific affirmative defenses to a suit that seeks a court to compel arbitration." 573 F.3d at 1120. Article V(2)(b) provides that the "[r]ecognition and enforcement of an arbitral award may also be refused if... [t]he recognition or enforcement of the award would be contrary to the public policy of that country."
Dockeray contends first that Carnival waived its right to arbitrate. As the Court previously observed,
Hodgson, 706 F.Supp.2d at 1256-57 (citations and internal quotation marks omitted).
According to Dockeray, Carnival waived its right to arbitrate by filing an answer and affirmative defenses, none of which raised arbitration; by moving for an extension of time to respond to Dockeray's discovery requests; and by taking two months to demand arbitration. (See Pl.'s Mot. 8; Pl.'s Resp. [D.E. 26] 8). Meanwhile, Dockeray filed an answer to Carnival's affirmative defenses; filed a notice of trial; served paper discovery and, based on Carnival's promise that it would respond, noticed Carnival's corporate representative for deposition; and noticed Carnival's motion for an extension of time. Carnival's actions, contends Dockeray, amount to a waiver, which, as explained, "occurs where a party seeking arbitration substantially participates in litigation to a point inconsistent with an intent to arbitrate and this participation results in prejudice to the opposing party." Morewitz v. W. of Eng. Ship Owners Mut. Prot. & Indem. Assoc. (Luxembourg), 62 F.3d 1356, 1366 (11th Cir.1995) (citing Price v. Drexel Burnham Lambert, Inc., 791 F.2d 1156, 1158 (5th Cir.1986)).
Despite Carnival's reliance on Hodgson, where more state-court activity had taken place, the facts here present a closer question. In Hodgson the defendant, Royal Caribbean, filed a motion to dismiss or, in the alternative, a motion for a more definite statement; served discovery requests; responded to Hodgson's requests; and then, when its motion was denied, answered the complaint. Id. at 1250-51. In its answer, which Royal Caribbean filed in February 2009, Royal Caribbean raised the arbitration agreement as an affirmative defense. Id. Over the next month Hodgson then served a "reply" to Royal Caribbean's answer; moved to strike Royal Caribbean's affirmative defenses; served interrogatories; and served a notice for trial. Id. In March 2009, six months after Hodgson filed the complaint but only one month after filing its affirmative defenses, Royal Caribbean removed the case to federal court. Based on these facts, as well as the fact that Hodgson had never responded to Royal Caribbean's discovery requests, the Court concluded Royal Caribbean "did not substantially litigate to a point inconsistent with an intent to arbitrate, and Hodgson ha[d] not shown he ha[d] been prejudiced by [Royal Caribbean]'s] actions." Id. at 1258.
Here, unlike in Hodgson, Carnival's answer and affirmative defenses did not raise arbitration. To be sure, "simply failing to assert arbitration as an affirmative defense does not constitute default of a right to arbitration." Forrester v. Penn Lyon Homes, Inc., 553 F.3d 340, 343 (4th Cir.2009); accord Hill v. Ricoh Ams. Corp., 603 F.3d 766, 770-71 (10th Cir. 2010). Still, "not pleading arbitration in the answer can be used as evidence towards finding of waiver." Thyssen, Inc. v. Calypso Shipping Corp., S.A., 310 F.3d 102, 105 (2d Cir.2002). An early arbitration demand notifies a party that arbitration may be forthcoming, and therefore the party may prepare accordingly. See Price, 791 F.2d at 1161. It is for this reason that "[o]nce the defendant, by answer, has given notice of insisting on arbitration[,] the burden is heavy on the party, seeking to prove waiver." Gen. Guar. Ins. Co. v. New Orleans Gen. Agency, Inc., 427 F.2d 924, 929 n. 5 (5th Cir.1970).
In Hodgson Royal Caribbean responded to the complaint by filing a "mo[tion] to dismiss the complaint or, in the alternative, for a more definite statement." 706 F.Supp.2d at 1251. But "[a] party does not waive its right to arbitrate a dispute by filing a motion to dismiss or a motion to transfer venue." Halim v. Great Gatsby's Auction Gallery, Inc., 516 F.3d 557, 562 (7th Cir.2008); accord Khan v. Parsons Global Servs., Ltd., 521 F.3d 421, 427 (D.C.Cir.2008) ("[A] motion to dismiss may not be inconsistent with the intent to arbitrate, as where a party seeks the dismissal of a frivolous claim."); Rush v. Oppenheimer & Co., 779 F.2d 885, 888 (2d Cir.1985) ("[A motion to dismiss] alone... does not waive the right to arbitrate."). But cf. Hooper v. Advance Am.,
Here, because Carnival did not raise its right to arbitrate as an affirmative defense, Dockeray did not have notice of Carnival's intent to arbitrate. Dockeray therefore incurred expenses—filing an answer to Carnival's affirmative defenses and a notice of trial, serving discovery requests, and noticing a deposition and Carnival's motion for an extension of time— that she might have avoided if Carnival had notified her at the outset that it would seek arbitration. See Price, 791 F.2d at 1161. Dockeray cannot be said to have suffered no prejudice by Carnival's delay. Nevertheless, waiver occurs where a party "substantially participates in litigation to a point inconsistent with an intent to arbitrate and this participation results in prejudice to the opposing party." Morewitz, 62 F.3d at 1366 (emphasis added). Carnival filed an answer and affirmative defenses and a motion for an extension of time; Carnival did not substantially participate in litigation to a point inconsistent with an intent to arbitrate. Accordingly, and because any doubts "should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract itself or an allegation of waiver, delay, or a like defense to arbitrability," Hodgson, 706 F.Supp.2d at 1258 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) (internal quotation marks omitted)), the Court concludes that Carnival did not waive its right to arbitrate.
According to Dockeray, the arbitration provision is procedurally unfair because, on the one hand, the "Seafarer agrees to appear for medical examinations by doctors designated by [Carnival] in specialties relevant to any claims Seafarer asserts," while on the other, "the parties agree to waive any and all rights to compel information from each other." (AGREMENT ¶ 7). Although Dockeray "is mindful that, in choosing to arbitrate, there are certain sacrifices so that the dispute process can be streamlined," she contends "such streamlining cannot eviscerate a party's ability to establish its claim." (Pl.'s Mot. 11).
The Court is not persuaded by this argument. The agreement provides that arbitration will be held "under the American Arbitration Association/International Centre for Dispute Resolution International Rules," and incorporates those rules into the agreement. (AGREEMENT ¶ 7). Dockeray does not address why these rules are insufficient, nor does she cite law establishing these rules to be insufficient in resolving claims such as hers. See Krstic v. Princess Cruise Lines, Ltd.,
In Thomas the Eleventh Circuit held that the requirements of an agreement that a seafarer must arbitrate in the Philippines and under Panamanian law "operated in tandem as a prospective waiver" of his Seaman's Wage Act claim, and the arbitration clause was therefore null and void under Article V(2)(b) of the Convention. See 573 F.3d at 1123-24. For more than one year Thomas worked for Carnival on a Panamanian-flagged vessel, but he only signed a seafarer's agreement containing an arbitration clause in October 2005, two months before Carnival discharged him thanks to injuries he had received while working on the vessel earlier. Thomas later brought an action in state court for Jones Act negligence, unseaworthiness, maintenance and cure, and wages under the Seaman's Wage Act. See id. at 1115. Carnival removed the action to federal court under the Convention Act and moved to compel Thomas to arbitrate his claims.
The Eleventh Circuit reversed the district court's grant of the motion. As an initial matter, it concluded that none of Thomas's claims, except his Seaman's Wage Act claim, was subject to the agreement, chiefly because each arose from injuries he received before he signed the agreement in late 2005. See id. at 1118-19. As to the Seaman's Wage Act claim, Thomas argued the arbitration clause, which required him to resolve his claim in an arbitral forum that would apply Panamanian law, operated as a prospective waiver of his U.S. statutory rights and was therefore unenforceable as against public policy. See id. at 1120. On a review of Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985), and Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 115 S.Ct. 2322, 132 L.Ed.2d 462 (1995), the Eleventh Circuit observed that the Supreme Court "has held that arbitration clauses should be upheld if it is evident that either U.S. law definitely will be applied or if, there is a possibility that it might apply and there will be later review." Thomas, 573 F.3d at 1123. Applying that principle to Thomas's Seaman's Wage Act claim, the court concluded that the arbitration clause was null and void:
Id. at 1123-24. The court made two caveats along the way: First, because Thomas's Jones Act claim was not subject to the agreement, the court did not reach whether a Jones Act claim would also be barred. See id. at 1120 n. 9. Second, the court emphasized the import of the decision: "the narrow holding is that the Convention does govern but, applying its affirmative defenses provision, we find that the particular arbitration clause in question is null and void as a matter of public policy." Id. at 1124 n. 17 (emphasis in original).
Dockeray asserts the same result follows here because her agreement, which requires her to arbitrate her claims under Panamanian law, would bar her Seaman's Wage Act claim and other claims, for which Panamanian law does not provide comparable remedies, according to Francisco Carreira-Pitti, a Panamanian lawyer. (See Decl. of Carreira-Pitti [D.E. 26-10]). Yet Carnival contends Thomas does not control this case. In Thomas the only claim the Convention governed was the plaintiffs Seaman's Wage Act claim; Dockeray, instead, "has asserted a mix of statutory and non-statutory claims." (Def.'s Reply [D.E. 32] 11). Dockeray thus has remedies apart from her statutory claims, and "because [Dockeray] has not shown consistent with Thomas that there is a `distinct possibility' of not obtaining an award from which this Court may review the arbitrator's ruling, Thomas does not require the invalidation of [her] agreement[] to arbitrate." (Id. 12).
Carnival notes there is an intra-district "split of authority" on this issue, but it understates matters. Compare Willis v. Carnival Corp., No. 10-cv-20732-JLK, at 3 (S.D.Fla. Apr. 23, 2010) (compelling arbitration of Jones Act and nonstatutory claims), Bulgakova v. Carnival Corp., No. 09-cv-20023-PAS, at 5 (S.D.Fla. Feb. 26, 2010) (denying reconsideration of an order compelling arbitration of statutory and nonstatutory claims, including a Seaman's Wage Act claim), Pineda Lindo v. NCL (Bahamas) Ltd. d/b/a NCL, No. 09-cv-22926-DLG, at 7-8 (S.D.Fla. Dec. 23, 2009) (compelling arbitration of Jones Act claims), Henriquez v. NCL (Bahamas) Ltd. d/b/a NCL, No. 09-cv-21950-DLG, at 5-7 (S.D.Fla. Nov. 19, 2009) (same), with Rivas v. Carnival Corp., No. 09-cv-23628-PCH, at 2-3, 2010 WL 2696676 (S.D.Fla. Mar. 30, 2010) (compelling arbitration where cruise line stipulated U.S. law would apply to Jones Act claims), Sorica v. Princess Cruise Lines, Ltd., No. 09-cv-20917-PCH (S.D.Fla. Aug. 4, 2009) (same), and with Krstic, 706 F.Supp.2d at 1278-83 (severing choice-of-law clause yet compelling arbitration of all claims), Cardoso v. Carnival Corp., No. 09-cv-23442-ASG, 2010 WL 996528, at *5 (S.D.Fla. Mar. 16, 2010) (same), and further with Pavon v. Carnival Corp., No. 09-cv-22935-JAL, at 8 (S.D.Fla. May 6, 2010) (granting motion for reconsideration, remanding Jones Act and Seaman's Wage Act claims, and reserving ruling on whether to compel arbitration of nonstatutory claims), and with Sivanandi v. NCL (Bahamas) Ltd. d/b/a NCL, No. 10-cv-20296-UU, at 7 n. 7 & 9, 2010 WL 1875685 (S.D.Fla. Apr. 14, 2010) (considering severing choice-of-law clause yet ultimately remanding all statutory and
Most of these orders have been appealed from. And therefore the U.S. Court of Appeals for the Eleventh Circuit will decide the question of what a district court must do where a seafarer's complaint raises statutory and nonstatutory claims, but her agreement requires her to arbitrate and apply law that does not recognize Seaman's Wage Act or Jones Act claims. But until the Eleventh Circuit does, the judges of the Southern District, to which the bulk of these actions are removed, will continue to try to arrive at the correct solution (if there is just one), trying to comply with Thomas, on the one hand, while balancing the parties' express agreements to arbitrate and our "healthy regard for the federal policy favoring arbitration," Moses H. Cone, 460 U.S. at 24, 103 S.Ct. 927—one that "applies with special force in the field of international commerce," Mitsubishi Motors, 473 U.S. at 631, 105 S.Ct. 3346— on the other.
With this background in mind, and because Dockeray's agreement contains a clearly written and stand-alone severability clause, the Court, having reviewed the various decisions of the Southern District of Florida, adopts Judge Gold's approach in Krstic v. Princess Cruise Lines, Ltd.:
Plaintiff further argues that the Bermuda choice-of-law provision contained in the Principal Terms renders the agreement to arbitrate unenforceable because the two clauses operate in tandem to impermissibly limit Plaintiff's U.S. statutory and common law remedies, relying on Thomas v. Carnival Corp., 573 F.3d 1113 (11th Cir.2009). There is no dispute that the Principal Terms, as written, would require Plaintiff to arbitrate his claims in Bermuda applying Bermuda substantive law. However, the parties disagree as to whether the arbitration clause is void as a matter of public policy given Defendant's purported "stipulation" to the applicability of U.S. statutory law in the arbitral forum. Defendant argues that because of its choice-of-law "stipulation," Thomas does not control. Plaintiff responds that Defendant's "stipulation" is of no consequence because "stipulations" require the consent of counsel for both parties, and even if it were, it could not salvage an otherwise void arbitration agreement.
Having considered the relevant submissions and the applicable law, I agree with Plaintiff that Defendant's choice-oflaw clause is void as a matter of public policy pursuant to Thomas. However, given the stand-alone nature of the choice-of-law clause and the Principal Terms' severability provision, the arbitration clause remains enforceable. Although the Eleventh Circuit's narrow holding in Thomas applied only to claims asserted pursuant to the Seaman's Wage Act, a holistic reading of Thomas indicates that the Eleventh Circuit's reasoning applies with equal force to claims brought pursuant to the Jones Act. Specifically, I note that the Eleventh Circuit did not focus on the unique nature of the Seaman's Wage Act in reaching its conclusion that foreign choice-of-law and arbitration clauses can—if enforced in tandem—constitute a prospective waiver of statutory rights in violation of public policy. Instead, the Eleventh Circuit focused on the fact that the clauses would "have operated in tandem to completely bar Thomas from relying on any U.S. statutorily-created causes of action." Accordingly, I conclude that Thomas' directives regarding
...
Having concluded that the choice-oflaw and arbitration clauses contained in the Principal Terms—if enforced in tandem—would render the agreement a prospective waiver of Plaintiff's statutory remedies in violation of public policy, I must now determine how this matter should proceed. In crafting a remedy, I note that there are ... two policy interests at issue here that must be respected, if possible. The first is the powerful "international policy favoring commercial arbitration," which, as the Supreme Court has expressly noted, requires the "subordinat[ion][of] domestic notions of arbitrability" in domestic courts. The second is the policy at the heart of the Thomas decision, which calls on courts to protect "a party's right to pursue statutory remedies" as a matter of "public policy." Having carefully considered the applicable law and the aforementioned policy interests, I conclude that the appropriate remedy is to sever the Bermuda choice-of-law provision in accordance with the Principal Terms' severability clause.
Courts "faced with arbitration agreements proscribing statutorily available remedies ... have either severed the illegal provision and ordered arbitration, or held the entire agreement unenforceable." "Courts finding severance appropriate rely on a severance provision in the arbitration agreement, or the general federal policy in favor of enforcing arbitration agreements." Here, there is both a severance provision and a strong policy favoring arbitration. Moreover, unlike the cases in which severance was held to be an inappropriate remedy, the clause in which the parties agreed to arbitrate their disputes stands separate and apart from the unenforceable foreign choice-of-law clause.... I am not faced with a few sentences embedded within an integrated arbitration provision that purport to limit a party's statutory remedies. Instead, I am faced with a stand-alone choice-of-law provision—in an agreement that expressly provides for severance of unenforceable provisions—that must be condemned as a matter of public policy. Accordingly, I conclude that severance of the unenforceable choice-of-law provision is the appropriate remedy, as it promotes both policies at issue without having to unnecessarily elevate one over the other; the arbitration provision remains enforceable.
706 F.Supp.2d at 1279-81 (citations, alterations, and footnote call numbers omitted).
According to Thomas, "arbitration clauses should be upheld if it is evident that either U.S. law definitely will be applied or if, there is a possibility that it might apply and there will be later review." 573 F.3d at 1123 (emphasis added). The Court rules that paragraph 8 of the agreement, which the parties agree requires the application of Panamanian law to Dockeray's claims, is unenforceable. Because there is now a possibility that U.S. law might apply and there will be later review,
Consistent with this analysis,
1. Carnival's Motion
2. Dockeray's Motion
3. All pending motions are
4. The Clerk of Court shall
Last, even assuming, in light of Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 124 S.Ct. 2466, 159 L.Ed.2d 355 (2004), that 28 U.S.C. § 1782 applies to private arbitrations, but see Republic of Kaz. v. Biedermann Int'l, 168 F.3d 880 (5th Cir.1999) ("[W]e conclude that the term `foreign and international tribunals' in § 1782 was not intended to authorize resort to United States federal courts to assist discovery in private international arbitrations. The provision was enlarged to further comity among nations, not to complicate and undermine the salutary device of private international arbitration."); Nat'l Broad. Co. v. Bear Stearns & Co., 165 F.3d 184, 191 (2d Cir.1999) ("[O]ur conclusion, based upon an analysis of the text and legislative history of § 1782, [is] that Congress did not intend for that statute to apply to an arbitral body established by private parties."), the Court declines to "retain jurisdiction," assuming it needs to, to compel Carnival to produce testimony and documents here. See In re Clerici, 481 F.3d 1324, 1332 (11th Cir. 2007) ("[Section] 1782 `authorizes, but does not require, a federal district court to provide assistance.'" (quoting Intel Corp., 542 U.S. at 255, 124 S.Ct. 2466)).