876 F.3d 996 (9th Cir. 2017), 15-16881, Yang v. Majestic Blue Fisheries, Llc

Docket Nº:15-16881
Citation:876 F.3d 996
Opinion Judge:NGUYEN, Circuit Judge:
Party Name:Esther Margarita Lima Suarez Viuda De YANG, Individually and as Personal Representative of the Estate of Chang Cheol Yang, Deceased; Brandon Cheol Yang Lima, Minor; Ji Hea Yang Lima, Minor; Camila Romina Yang Lima, Minor, Plaintiffs-Appellees, v. MAJESTIC BLUE FISHERIES, LLC, a Delaware limited liability company, Defendant, and and
Attorney:Jerry D. Hamilton (argued) and Michael J. Dono, Hamilton Miller & Birthisel LLP, Miami, Florida, for Defendant-Appellant. Scott A. Wagner (argued), Michael T. Moore, and Clay M. Naughton, Moore & Company P.A., Coral Gables, Florida, for Plaintiffs-Appellees.
Judge Panel:Before: Raymond C. Fisher, Richard A. Paez, and Jacqueline H. Nguyen, Circuit Judges.
Case Date:November 30, 2017
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
SUMMARY

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards does not allow nonsignatories or non-parties to compel arbitration. The Federal Arbitration Act (FAA) expressly exempted from its scope any contracts of employment of seamen. In this maritime action, the Ninth Circuit affirmed the denial of a motion to compel arbitration arising from the death of a seaman in the sinking... (see full summary)

 
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Page 996

876 F.3d 996 (9th Cir. 2017)

Esther Margarita Lima Suarez Viuda De YANG, Individually and as Personal Representative of the Estate of Chang Cheol Yang, Deceased; Brandon Cheol Yang Lima, Minor; Ji Hea Yang Lima, Minor; Camila Romina Yang Lima, Minor, Plaintiffs-Appellees,

v.

MAJESTIC BLUE FISHERIES, LLC, a Delaware limited liability company, Defendant,
and

Dongwon Industries Co., Ltd., a corporation incorporated under the laws of Korea, Defendant-Appellant.

No. 15-16881

United States Court of Appeals, Ninth Circuit

November 30, 2017

Argued and Submitted June 13, 2017 Honolulu, Hawaii.

Page 997

Appeal from the United States District Court for the District of Guam, Frances Tydingco-Gatewood, Chief District Judge, Presiding, D.C. No. 1:13-cv-00015

Jerry D. Hamilton (argued) and Michael J. Dono, Hamilton Miller & Birthisel LLP, Miami, Florida, for Defendant-Appellant.

Scott A. Wagner (argued), Michael T. Moore, and Clay M. Naughton, Moore & Company P.A., Coral Gables, Florida, for Plaintiffs-Appellees.

Before: Raymond C. Fisher, Richard A. Paez, and Jacqueline H. Nguyen, Circuit Judges.

SUMMARY [*]

Arbitration

The panel affirmed the district court's order denying a motion to compel arbitration in a maritime action arising from the death of a seaman in the sinking of a fishing vessel.

A defendant sought arbitration based on an employment agreement between the seaman and the vessel's owner. Pursuant to a contract with the owner, the defendant supplied the vessel's crew and supervised its repairs and maintenance.

The panel held that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, an act implementing a treaty of the same name, does not allow non-signatories or non-parties to compel arbitration. Agreeing with other circuits, the panel held that, like an arbitration agreement, an arbitral clause in a contract must be "signed by the parties" in order to be enforceable under Article II(2) of the Convention Treaty.

The panel further held that the defendant could not compel arbitration under the Federal Arbitration Act, which expressly exempts from its scope any "contracts of employment of seamen." The panel declined to import into the court's Convention Act analysis precedent permitting a litigant who is not a party to an arbitration agreement to invoke arbitration under the FAA if the relevant state contract law allows the litigant to enforce the agreement.

OPINION

NGUYEN, Circuit Judge:

Chang Cheol Yang was a seaman who died when the fishing vessel he worked on sank because of inadequate repairs and an incompetent crew provided by Dongwon Industries Co. Ltd (" Dongwon" ). His widow

Page 998

commenced a wrongful death action against Dongwon on behalf of his three minor children, herself, and his estate. Dongwon moved to compel arbitration based on an employment agreement between Mr. Yang and the vessel's owner, Majestic Blue Fisheries, LLC (" Majestic" ). Because Dongwon is neither a signatory nor a party to the employment agreement, the district court denied Dongwon's motion. We affirm.

I.

In 2008, Dongwon sold the vessel, the F/V Majestic Blue, for $10 to Majestic, which is owned by the same family that owns Dongwon. In re Majestic Blue Fisheries, LLC, No. CV 11-00032, 2014 WL 3728556, at *10-11 (D. Guam July 25, 2014). Around that time, Majestic and Dongwon entered into contracts that required Dongwon both to supply the vessel's crew and to supervise its repairs and maintenance. Id. at *11. By then, the vessel was the oldest in Dongwon's fleet. Id.

On May 21, 2010, after undergoing repairs and despite a known rudder leak, the vessel set sail from Guam with Mr. Yang on board. Id. at *22, 32. Three weeks later, on June 14, 2010, the vessel sank in fair weather after being flooded with water. Id. at *29, *42. The crew failed to properly respond to the flooding, leaving Captain David Hill to execute critical abandon ship procedures on his own. Id. at *30, *48. Shortly after Mr. Yang re-boarded to look for Captain Hill, the vessel sank and both men died. Id. at *26.

Following this tragedy, the widows of Mr. Yang and Captain Hill filed separate wrongful death actions with overlapping claims and legal theories. Both widows contend that the vessel's inadequate repairs and incompetent crew rendered it unseaworthy and caused it to sink. The complaints in both actions assert the same four claims against Dongwon and Majestic: (1) a survival action based on negligence for pre-death pain and suffering under the Jones Act, 46 U.S.C. § 30304; (2) a wrongful death action under general maritime law; (3) a wrongful death action under the Death on the High Seas Act, 46 U.S.C. § 30301 et seq. ; (" DOHSA" ); and (4) a wrongful death action under the Jones Act.

Unencumbered by an arbitration clause, Captain Hill's widow successfully litigated her claims, obtaining a $3.2 million judgment that we affirmed on appeal. Hill v. Majestic Blue Fisheries, LLC, 692 Fed.Appx. 871 (9th Cir. 2017). In that case, the district court found that the vessel sank because it was unseaworthy due to shoddy repairs (which resulted in the rudder leak) and an incompetent and untrained crew (who failed to close watertight doors or properly abandon ship). Majestic Blue, 2014 WL 3728556 at *30-31, *37, *49. But while Captain Hill's widow accessed a judicial forum for her claims against Majestic and Dongwon without litigating the arbitration issue, Yang's litigation has been stalled by a motion to compel arbitration filed by Dongwon (and joined by Majestic). Dongwon's motion relies on a March 23, 2010 employment agreement in which Majestic agreed to hire Mr. Yang as a Chief Engineer aboard the vessel. The agreement, which contains an arbitration clause, is signed by Mr. Yang and by Dongwon " on behalf of MAJESTIC BLUE FISHERIES, LLC."

The district court compelled arbitration of the claims against Majestic, but denied the motion as to Dongwon. Dongwon now appeals.

II.

A. The Convention Act Does Not Allow Non-Signatories or Non-Parties to Compel Arbitration

Dongwon seeks to compel arbitration under the Convention on the Recognition

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and Enforcement of Foreign Arbitral Awards, 9 U.S.C. § 201 et seq. (" Convention Act" ), which implements a treaty of the same name1 (" Convention Treaty" ) regarding arbitration agreements entered into by foreign entities or individuals. See Rogers v. Royal Caribbean Cruise Line, 547 F.3d 1148, 1152-53 (9th Cir. 2008). A party seeking to compel arbitration under the Convention Act must prove the existence and validity of " an agreement in writing within the meaning of the Convention" Treaty. Balen v. Holland Am. Line Inc., 583 F.3d 647, 654-55 (9th Cir. 2009) (citation omitted). The Convention Treaty in turn defines an " agreement in writing" to " include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams." Convention Treaty, art. II(2) (emphasis added). Recognizing that it is neither a signatory nor a party to Mr. Yang's employment agreement, Dongwon seeks to compel arbitration under the theory that the " signed by the parties" requirement in Article II(2) applies only to " an arbitration agreement" and not " an arbitral clause in a contract." We disagree.

We do not write on a blank slate. In Kahn Lucas Lancaster, Inc. v. Lark International Ltd., the Second Circuit conducted the first reasoned analysis of Article II(2)'s text and legislative history to reverse an order compelling arbitration because, as here, the arbitration clause in the contract was not signed by one of the litigants. 186 F.3d 210, 215-18 (2d Cir. 1999) abrogation on other grounds recognized by Sarhank Grp. v. Oracle Corp., 404 F.3d 657, 660 n.2 (2d Cir. 2005). Turning first to the text, the court concluded that the comma before the phrase " signed by the parties" signaled that it modified both " an arbitral clause in a contract" and " an arbitration agreement." Id. at 217. The court relied on two common canons of construction. First, it explained that, under the rule of punctuation, a modifying phrase that is set off from a series of antecedents by a comma applies to each of those antecedents. Id. at 216-17.2 The court reasoned that interpreting the phrase " signed by the parties" to modify only an " arbitration agreement" rendered the comma superfluous, thereby violating the rule against surplusage. Id. at 217. Next, the court considered not only the final English text of the Convention Treaty but also the official French and Spanish texts, each of which used a plural form of the word " signed," consistent with the conclusion that the signature requirement applies not only to an " arbitration agreement" but also to an " arbitral clause...

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