Employment Law Daily Arbitration of rape-related claims against employer compelled, but not against non-signatory cruise line
Friday, December 15, 2017

Arbitration of rape-related claims against employer compelled, but not against non-signatory cruise line

By Joy P. Waltemath, J.D.

Although a federal district court in Florida compelled arbitration of Jones Act negligence and sexual assault claims, among other claims against an employer arising out of an alleged on-ship rape of an employee, citing the arbitration clause in her employment contract, it would not compel arbitration of claims against the cruise line that owned the ship (or the individual defendant) because they were not signatories to the agreement (Haasbroek v. Princess Cruise Lines, Ltd., December 12, 2017, Moore, K.).

Allegedly raped at sea. The employee worked for Steiner Transocean Limited on board the M/S Crown Princess, which was owned, operated, managed and maintained or controlled by Princess Cruise Lines. She executed a Shipboard Employment Agreement (the SEA) governed by Bahamian law with Steiner and lived on board ship. She alleged that in June 2014, a Princess employee working aboard the ship raped her; as a result of the rape, she became pregnant and gave birth to a child. She later filed suit in Florida state court alleging claims under the Jones Act, including negligence, unseaworthiness (for lack of security and supervision on board ship), sexual assault, wrongful birth, and failure to provide maintenance and cure following the rape (maintenance would have been her day-to-day living expenses and cure her medical costs).

Motion to compel arbitration. All defendants (Princess, the Steiner companies, and the individual alleged attacker) removed the suit to federal court because the SEA included an arbitration clause enforceable under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards; they then moved to compel arbitration. Arguing the arbitration clause did not cover the subject matter of her claims, or alternatively, at least not her claims against Princess because it had never signed the SEA, the employee sought to have her case remanded in whole or in part.

If the arbitration clause in the SEA were applicable to all of the employee’s claims, including claims made against non-signatories, then the court said it would have subject matter jurisdiction to compel arbitration of all of those claims pursuant to the Convention, as it was undisputed that the SEA’s arbitration clause fulfilled Convention requirements and the employee was a citizen of South Africa, while Steiner Transocean was a Bahamian Corporation.

Rape unrelated to her employment. Although the employee contended the claims “arising out of rape, sexual assault, and sexual harassment are beyond the scope” of the arbitration clause because the rape lacked a “significant relationship” to her employment, given that she was off-duty and far from her work environment at the time of the rape, the court did not agree. She contended her claims would exist “even in the absence of an employment relationship,” but the court pointed out that independent torts—including those involving rape—do not necessarily fall outside the scope of an arbitration clause in an employment agreement.

Citing 2006 Eleventh Circuit precedent involving the alleged rape of an employee who also was aboard the M/S Star Princess, the court here noted that while the appeals court found some of those employee’s claims were not subject to arbitration, they were excluded only because of language in that arbitration provision that was not present in the arbitration clause in the SEA. That arbitration provision had required that, to be arbitrable, the dispute had to “relate to, arise from, or be connected with her crew agreement or the employment services that she performed for the cruise line.”

Conversely, the arbitration clause in the SEA was not limited in the least, covering “any and all disputes, claims or controversies whatsoever, whether in contract, regulatory, tort or otherwise, including but not limited to, constitutional, statutory, common law, intentional tort and equitable claims, as well as Jones Act and Wage Act claims, claims for negligence, unseaworthiness, maintenance and cure, failure to provide prompt, proper and adequate medical care, personal injury, death or property damage and whether accruing prior to, during or after the expiration of this Agreement.” That was “sufficient to compel arbitration of claims premised on an after-hours, off-duty, rape,” concluded the court.

Claims against non-signatories to SEA. Princess, Steiner Leisure Limited, and Steiner Transocean U.S., Inc., and the individual defendant were not signatories or parties to the SEA. However, the court found that the arbitration clause provided the Steiner defendants the right to compel arbitration because having found Steiner Transcocean Limited had the right to compel arbitration, it was uncontested that the remaining Steiner defendants could compel arbitration based on the same clause.

Equitable estoppel. They also argued that equitable estoppel permitted non-signatories to enforce the arbitration clause because the employee’s claims against Princess and the Steiner defendants arose out of the same incident and were intertwined with the claims against the employer that signed the agreement. Whether a non-signatory to an agreement can use an arbitration clause in that agreement to force a signatory to arbitrate a dispute between them is controlled by state law, said the court, but the defense never argued that the contract law of the Bahamas “recognizes the equitable estoppel doctrine in this context.” Accordingly, the court rejected arguments premised on equitable estoppel.

The court also rejected the defense argument that the SEA contemplated a non-signatory vessel owner such as Princess enforcing the arbitration clause “because one of the causes of action (unseaworthiness) that is listed as an example claim covered by the arbitration clause can be lodged only against a vessel and the vessel owner, like Princess.” That argument, said the court, failed because it was “not supported by the plain text of the arbitration clause, would lead to absurd results, and is devoid of legal support.” As a result, the court sent the negligence claim for failure to provide a safe place to work, the failure to provide maintenance and cure claim, and the wrongful birth claim against the Steiner defendants to arbitration. But the remaining counts against Princess and the individual defendant for negligence, unseaworthiness, sexual assault and vicarious liability, and wrongful birth all were remanded to state court.

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