Lim v. Offshore Specialty Fabricators, Inc.

• Decision Date: 24 March 2005
• Docket Number: No. 03-30380.,03-30380.
• Parties: Joselito Madriaga LIM, on behalf of himself and all other current and former employees of Offshore Specialty Fabricators, Inc., similarly situated; Adelito M. Aganon; Richard Agcaoili; Luis Agnabo; Antonio P. Alcantara; et al., Plaintiffs-Appellees, and Mario M. Cabanlit, on behalf of himself and all other current and former employees of Offshore Specialty Fabricators, Inc., similarly situated; Jimmy Gadlaw Lim, on behalf of himself and all other current and former employees of Offshore Specialty Fabricators, Inc., similarly situated, Plaintiffs-Intervenor Plaintiffs-Appellees, v. OFFSHORE SPECIALTY FABRICATORS, INC., Defendant-Intervenor Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

404 F.3d 898

Joselito Madriaga LIM, on behalf of himself and all other current and former employees of Offshore Specialty Fabricators, Inc., similarly situated; Adelito M. Aganon; Richard Agcaoili; Luis Agnabo; Antonio P. Alcantara; et al., Plaintiffs-Appellees, and Mario M. Cabanlit, on behalf of himself and all other current and former employees of Offshore Specialty Fabricators, Inc., similarly situated; Jimmy Gadlaw Lim, on behalf of himself and all other current and former employees of Offshore Specialty Fabricators, Inc., similarly situated, Plaintiffs-Intervenor Plaintiffs-Appellees, v. OFFSHORE SPECIALTY FABRICATORS, INC., Defendant-Intervenor Defendant-Appellant.

No. 03-30380.

United States Court of Appeals, Fifth Circuit.

March 24, 2005.

William Steven Mannear (argued), Poynter, Mannear & Colomb, Baton Rouge, LA, for Plaintiffs-Appellees.

Cornelius R. Heusel, Jennifer Lynn Anderson (argued), Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, LA, for Offhore Specialty Fabricators, Inc.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before WIENER, BARKSDALE and DENNIS, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:

In this 28 U.S.C. § 1292(b) interlocutory appeal, Offshore Specialty Fabricators, Inc. (OSFI), challenges the denial of its motions to dismiss for lack of subject matter jurisdiction and for improper venue. See Fed.R.Civ.P. 12(b)(1), (b)(3). Plaintiff seamen are residents and citizens of the Philippines. Their international employment contracts at issue, controlled by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 10 June 1958, 21 U.S.T. 2517, T.I.A.S. No. 6997, 330 U.N.T.S. 38, reprinted in 9 U.S.C.A. § 201 note (hereinafter, Convention), require arbitration of plaintiffs' Fair Labor Standards Act claims, notwithstanding exceptions claimed by plaintiffs. (One claimed exception is pursuant to a Louisiana statute which expresses that State's strong public policy against forum selection clauses in employment contracts.) VACATED and REMANDED.

I.

OSFI, a Louisiana corporation, employed Joselito Madriaga Lim, a Philippine resident and citizen, to work aboard the OSFI DB-1, a foreign-flagged vessel whose home port is Port Vila, Vanuatu. The Philippine government requires foreign employers or their agents to employ Filipino workers through the Philippine Overseas Employment Administration (POEA), a department of the Ministry of Labor and Employment. The POEA-mandated employment contracts for seamen incorporate the Philippine government's Standard Terms and Conditions Governing the Employment of Filipino Seafarers On Board Ocean-Going Vessels (Standard Terms).

Lim's employment contract was executed through the POEA and subject to the Standard Terms. Those terms include dispute resolution procedures, which require, inter alia, resolving employment claims through arbitration in the Philippines. Section 29 of the Standard Terms states:

In cases of claims and disputes arising from this employment, the parties covered by a collective bargaining agreement shall submit the claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators. If the parties are not covered by a collective bargaining agreement, the parties may at their option submit the claim or dispute to either the original and exclusive jurisdiction of the National Labor Relations Commission (NLRC), pursuant to Republic Act (RA) 8042 otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995 or to the original and exclusive jurisdiction of the voluntary arbitrators or panel of arbitrators....

Lim filed this action against OSFI in the United States District Court for the Eastern District of Louisiana, claiming violations of the minimum wage and maximum hour (overtime) requirements of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (FLSA). See 29 U.S.C. §§ 206, 207. Lim's first amended complaint (before OSFI answered) made this an opt-in collective action, pursuant to 29 U.S.C. § 216(b). Approximately 100 similarly-situated Filipino seamen have opted in.

In its answer, and based on the Standard Terms' arbitration clause, OSFI claimed, inter alia, lack of subject matter jurisdiction (Rule 12(b)(1)) and improper venue (Rule 12(b)(3)). OSFI moved to dismiss, claiming: the Standard Terms require arbitration in the Philippines; and the Convention, as implemented at 9 U.S.C. § 201 et seq. as Chapter 2 of the Federal Arbitration Act (FAA), requires district court enforcement of the arbitration clause. (Both the Philippines and the United States are signatories to the Convention.)

Plaintiffs responded that, although our court had held the Convention applies to seamen's contracts, see Francisco v. STOLT ACHIEVEMENT MT, 293 F.3d 270, 273 (5th Cir.), cert. denied, 537 U.S. 1030, 123 S.Ct. 561, 154 L.Ed.2d 445 (2002), the decision was in error and the Convention should not apply. In the alternative, plaintiffs asserted that the arbitration clause is unenforceable for three reasons. First, arbitration has never been required in seamen's wage litigation. Second, the arbitration clause is contrary to Louisiana public policy against a forum selection clause in an employment contract. (An arbitration clause is a subset of a forum selection clause. See Scherk v. Alberto-Culver Co., 417 U.S. 506, 519, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974).) And third, the arbitration clause is invalid under the terms of the Convention, because plaintiffs' FLSA claims are rooted in United States law and can not be resolved through foreign arbitration.

The district court denied dismissal, holding the arbitration clause violated Louisiana law, which signaled a strong public policy against a forum selection clause in an employment contract and rendered the clause unenforceable. Accordingly, the district court stated it did not need to address the other two exceptions advanced by plaintiffs.

OSFI moved for rehearing or, in the alternative, for the district court to certify the jurisdiction and venue issues to this court for interlocutory appeal, pursuant to 28 U.S.C. § 1292(b). The district court chose the latter and offered the following controlling questions for interlocutory appeal: (1) whether the Convention or the Supremacy Clause of the United States Constitution, Article VI, clause 2, requires enforcement of the arbitration agreement in the employment contract; (2) if so, whether there is an exception, based on Louisiana's anti-forum selection clause statute, La.Rev.Stat. Ann. § 23:921(A)(2) (2004); (3) if the Louisiana statute is not preempted, whether it applies to the employment contract; and (4) if so, whether plaintiffs agreed to, or ratified, the arbitration clause pursuant to the exception in the Louisiana statute. Our court granted OSFI's motion to appeal.

II.

"As the text of § 1292(b) indicates, appellate jurisdiction applies to the order certified to the court of appeals, and is not tied to the particular question[s] formulated by the district court." Yamaha Motor Corp. v. Calhoun, 516 U.S. 199, 205, 116 S.Ct. 619, 133 L.Ed.2d 578 (1996) (emphasis in original). The above-noted questions presented in the district court's order assist in determining the propriety of the ruling; but they fail to include the other two exceptions claimed in district court by plaintiffs, which are also advanced here and which we address. (No authority need be cited for the rule that an issue presented in district court, but not ruled on there, may be raised on appeal in support of the ruling being challenged.) OSFI's method of invoking the Convention must be addressed first, however.

A.

Plaintiffs seek relief because OSFI did not request the district court to stay these proceedings and order arbitration. OSFI responds that, based on the arbitration clause, it properly moved to dismiss, under Rules 12(b)(1) (lack of subject matter jurisdiction) and 12(b)(3) (improper venue). As noted, foreign arbitration clauses are deemed a "subset of foreign forum selection clauses in general". Vimar Seguros y Reaseguros, S.A. v. M/V SKY REEFER, 515 U.S. 528, 534, 115 S.Ct. 2322, 132 L.Ed.2d 462 (1995). Therefore, analysis of foreign forum selection clauses can be extended to foreign arbitration clauses. Id.

1.

Our court has noted, but declined to address, the "enigmatic question of whether motions to dismiss on the basis of forum selection clauses are properly brought as motions under Fed.R.Civ.P. 12(b)(1) [or] 12(b)(3) ...." Haynsworth v. The Corporation, 121 F.3d 956, 961 (5th Cir.1997), cert. denied, 523 U.S. 1072, 118 S.Ct. 1513, 140 L.Ed.2d 666 (1998). In any event, our court has treated a motion to dismiss based on a forum selection clause as properly brought under Rule 12(b)(3) (improper venue). Albany Ins. Co. v. Almacenadora Somex, S.A., 5 F.3d 907, 909 & n. 3 (5th Cir.1993). We have also affirmed, without comment on procedural posture, a district court's granting a Rule 12(b)(3) motion to dismiss based on a forum selection clause. Mitsui & Co. (USA), Inc. v. MIRA M/V, 111 F.3d 33, 37 (5th Cir.1997). And, other circuits agree that a motion to dismiss based on an arbitration or forum selection clause is proper under Rule 12(b)(3). See Continental Ins. Co. v. Polish S.S. Co., 346 F.3d 281, 282 (2d Cir.2003) (affirming Rule 12(b)(3) dismissal in favor of foreign arbitration); Lipcon v. Underwriters at Lloyd's, London, 148 F.3d 1285, 1290 (11th Cir.1998), cert. denied, 525 U.S. 1093, 119 S.Ct. 851, 142 L.Ed.2d 704 (1999) (motion to dismiss based on forum selection clause in international agreement should be brought under Rule 12(b)(3)); Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir.1996) (Rule 12(b)(3) motion proper method to invoke forum selection clause); Frietsch v. Refco, Inc., 56 F.3d 825, 830 (7th Cir.1995) (same).

Although circuits are split on the issue of whether Rule 12(b)(1) or 12(b)(3) is...