Baricuatro v. Indus. Pers. & Mgmt. Servs., Inc.

• Decision Date: 27 February 2013
• Docket Number: Civil Action No. 11–2777.
• Citation: 927 F.Supp.2d 348
• Parties: Isidro BARICUATRO, et al. v. INDUSTRIAL PERSONNEL AND MANAGEMENT SERVICES, INC., et al.
• Court: U.S. District Court — Eastern District of Louisiana

927 F.Supp.2d 348

Isidro BARICUATRO, et al.

v.INDUSTRIAL PERSONNEL AND MANAGEMENT SERVICES, INC., et al.

Civil Action No. 11–2777.

United States District Court, E.D. Louisiana.

Feb. 27, 2013.

Joseph C. Peiffer, Jeanette Amedee Donnelly, Loretta G. Mince, Fishman Haygood, New Orleans, LA, Carolyn H. Cottrell, pro hac vice, Matthew D. Carlson, pro hac vice, Todd M. Schneider, pro hac vice, Guy B. Wallace, Schneider Wallace Cottrell Konecky LLP, San Francisco, CA, Ellaine A. Carr, pro hac vice, Ellaine Carr & Associates, PLLC, Biloxi, MS, Peter B. Schneider, pro hac vice, Schneider Wallace Cottrell Konecky LLP, Houston, TX, for Plaintiffs.

Daniel Alfred Tadros, Alan Davis, Chaffe McCall LLP, New Orleans, LA, Seth A. Nichamoff, pro hac vice, Nichamoff & King P.C., Houston, TX, David M. Korn, Alexis A. Butler, Mary Jo L. Roberts, Phelps Dunbar, LLP, New Orleans, LA, Larry E. Demmons, The Demmons Law Firm, LLC, Metairie, LA, for Defendants.

ORDER AND REASONS

KURT D. ENGELHARDT, District Judge.

Before the Court is a “Motion to Dismiss for Improper Venue under 12(b)(3) or, Alternatively, Motion to Compel Arbitration and Stay Proceedings Pending Arbitration” (Rec. Doc. 214), filed by defendants V Manpower Philippines (“V People”) and Pacific Ocean Manning Inc. (“POMI”).

I. BACKGROUND:

The plaintiffs are Filipino workers (including welders and pipe fitters) who allege that they were fraudulently recruited in the Philippines, given E–2 or B–1/OCS visas, and then brought to Louisiana, where they were exploited in the oil and gas industry and housed in deplorable conditions. They have filed suit against three Louisiana companies (Grand Isle Shipyard, Inc.; Thunder Enterprises, Inc.; and D & R Resources, LLC) and four individuals connected to one or more of these companies: Mark Pregeant; Danilo N. Dayao; Nilfil Peralta; and Randolf Malgapo. In addition, they have sued four Philippines companies alleged to have recruited and/or obtained visas for certain of the plaintiffs: DNR Offshore and Crewing Services, Inc. (“DNR”); Pacific Ocean Manning, Inc. (“POMI”); V Manpower Philippines, Inc., f/k/a V People Manpower Philippines, Inc. (“V People”); and Industrial Personnel and Management Services, Inc. (“IPAMS”). See Rec. Docs. 1, 24, 172, 235, 311.

The plaintiffs allege that the defendants: (1) subjected them to forced labor in violation of the Trafficking Victims Protection Act of 2003 (18 U.S.C. §§ 1589–90); (2) violated the Racketeer Influenced and Corrupt Organization Act (“RICO”) (18 U.S.C. §§ 1961–68); (3) violated the plaintiffs' civil rights (42 U.S.C. § 1981); (4) violated the Fair Labor Standards Act (“FLSA”) (29 U.S.C. §§ 203(m), 206 & 207); (5) violated the Ku Klux Klan Act of 1871 (42 U.S.C. § 1985) and the Thirteenth Amendment; (6) committed the torts of fraud, negligent misrepresentation, false imprisonment, and intentional and negligent infliction of emotional distress under Louisiana law; and (7) breached contracts and/or covenants of good faith and fair dealing. Rec. Doc. 24; see also 2d Amended Complaint (Rec. Doc. 172). The plaintiffsalso assert these claims on behalf of others similarly situated, as a putative class action under FRCP 23 and a putative collective action under the FLSA. See Rec. Docs. 1, 24, 172, 235.

II. LAW AND ANALYSIS:

On November 8, 2012, defendants POMI and V People filed the instant motion to dismiss for improper venue or, alternatively, to compel arbitration.¹ The movants maintain that they are entitled to arbitrate the claims against them pursuant to a dispute resolution clause contained the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels (the “Seafarer Standard Terms”) of the Philippine Overseas Employment Administration (“POEA”). The clause provides:

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 voluntary 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 of 1995 or to the original and exclusive jurisdiction of the voluntary arbitrator or panel or [sic] arbitrators. If there is no provision as to the voluntary arbitrators to be appointed by the parties, the same shall be appointed from the accredited voluntary arbitrators of the National Conciliation and Mediation Board of the Department of Labor and Employment.

The Philippine Overseas Employment Administration (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, principals, contracting partners and Filipino seafarers.

See Rec. Doc. 214–4 at § 29 (emphasis added). Movants argue that at least twenty-one of the plaintiffs who contracted with POMI and/or V People did so pursuant to employment contracts that incorporated the Seafarer Standard Terms, including the above-quoted dispute resolution clause. See, e.g., Rec. Doc. 214–1 at 2–3. Consequently, they argue, the claims of these twenty-one plaintiffs should be dismissed for improper venue pursuant to Rule 12(b)(3) or, alternatively, stayed pending arbitration.²

A. Did the Movants Waive Their Rights To Arbitration, If Any, By Invoking the Judicial Process?

Plaintiffs argue that even if the movants were entitled otherwise to seek arbitration, which the plaintiffs dispute, they would nevertheless be barred from doing so because they have waived any such rights through their purposeful invocation of the judicial process in this litigation. “There is a strong presumption against finding a waiver of arbitration, and the party claiming that the right to arbitrate has been waived bears a heavy burden.” In re Mirant Corp., 613 F.3d 584, 589 (5th Cir.2010) (citation and internal quotation omitted). “Waiver will be found when the party seeking arbitration substantially invokes the judicial process to the detriment or prejudice of the other party.” Id. (citation and internal quotation omitted). “To invoke the judicial process, a ‘party must, at the very least, engage in some overt act in court that evinces a desire to resolve the arbitrable dispute through litigation rather than arbitration.’ ” Id. at 589 (quoting Subway Equip. Leasing Corp. v. Forte, 169 F.3d 324, 329 (5th Cir.1999)). “Prejudice in the context of arbitration waiver refers to delay, expense, and damage to a party's legal position.” Id. at 591 (quoting Nicholas v. KBR, Inc., 565 F.3d 904, 910 (5th Cir.2009)). The Fifth Circuit has stated that “[t]hree factors are particularly relevant to the prejudice determination: (1) whether discovery occurred relating to arbitrable claims; (2) the time and expense incurred in defending against a motion for summary judgment; and (3) a party's failure to timely assert its right to arbitrate.” Petroleum Pipe Americas Corp. v. Jindal Saw, Ltd., 575 F.3d 476, 480 (5th Cir.2009) (quoting Republic Ins. Co. v. PAICO Receivables, LLC, 383 F.3d 341, 346 (5th Cir.2004)) (internal quotation omitted).

Plaintiffs argue that the movants' actions amount to waiver. In particular, they point to the movants' two Rule 12(b) motions to dismiss and the movants' opposition to the plaintiffs' motion for conditional certification of the FLSA collective action.³See Rec. Docs. 81, 190, 208. At oral argument, the Court made the following statements regarding waiver:

[T]he closer call in this case is whether the alternative motion to compel the arbitration has been waived. I think there are good equitable arguments on both sides. There's no doubt that the movants in this case have substantially invoked the judicial process to the prejudice of the plaintiffs. They've filed two separate motions to dismiss under Rule 12 seeking a decision on the merits, including asking the Court to dismiss based on the affirmative defense [of] prescription. They did not seek in either of those motions to enforce a right to arbitrate. It's clear to the Court that the movants made the decision to not invoke the right to arbitrate in the first instance, but rather to take their chance first with the Court in an attempt to dismiss the allegations on the merits, as the Mirant court describes [,] keeping the arbitration option as a backup plan in case that effort failed. In this case[,] nearly a year into the litigation, there is now a seeking of arbitration. Thus, those facts would be similar to In re Mirant wherein the Circuit upheld the direct court's finding of waiver. However, in the first motion to dismiss—and this goes to the question that I asked counsel—in the first motion to dismiss [ ] and/or for more definite statement which appears as record document 81, the movants in the motion here today stated in the first paragraph that they were, quote, expressly reserving all of their rights, defenses and objections including but not limited to their right to proceed through arbitration without waiving same thereof. This is an express reservation. This would bring the facts closer to those set forth in Keytrade USA, 404 F.3d 891, Fifth Circuit opinion from 2005 in which the Circuit struck down finding of a waiver.

Granted, in Keytrade, the defendant had filed an answer asserting its right to arbitrate and simultaneously with its motion on the merits filed a motion to compel the arbitration. The movants here have not yet filed an answer and did not seek to enforce the alleged arbitration agreement either before or simultaneously with their motions seeking dismissal on the merits. Nevertheless, Keytrade states expressly that a finding of waiver is not favored in the Circuit...