Castillo v. Spiliada Maritime Corp.

• Decision Date: 05 August 1991
• Docket Number: No. 90-3578,90-3578
• Parties: Rey CASTILLO, Carlos Abesamis, Lauro Malinas, Emetrio Noble, and Jerry Ramos, Plaintiffs-Appellants, v. SPILIADA MARITIME CORPORATION and Spiliada MV, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 240

937 F.2d 240

1992 A.M.C. 1153

Rey CASTILLO, Carlos Abesamis, Lauro Malinas, Emetrio Noble, and Jerry Ramos, Plaintiffs-Appellants, v. SPILIADA MARITIME CORPORATION and Spiliada MV, Defendants-Appellees.

No. 90-3578.

United States Court of Appeals, Fifth Circuit.

Aug. 5, 1991.

As Amended on Denial of Rehearing

Sept. 10, 1991.

Richard J. Dodson, Alfred B. Shapiro, Baton Rouge, La., and Joseph E. Mayer, Quasha Wessely & Schneider, Washington, D.C., for plaintiffs-appellants.

Robert Hugh Murphy, Douglas L. Grundmeyer and Peter Brooks Sloss, Chaffe, McCall, Phillips, Toler & Sarpy, New Orleans, La., for defendants-appellees.

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

Before POLITZ, JOHNSON, and GARWOOD, Circuit Judges.

JOHNSON, Circuit Judge:

Plaintiffs-Appellants Rey Castillo ("Castillo"), Carlos Abesamis ("Abesamis"), Lauro Malinas ("Malinas"), Emetrio Noble ("Noble") and Jerry Ramos ("Ramos") (collectively, "Plaintiffs") are licensed Filipino seamen who were discharged by their employer, Defendant-Appellee Spiliada Maritime Corporation ("Spiliada"), after a wage dispute. Plaintiffs brought suit against Spiliada and the M/V SPILIADA alleging, inter alia, wrongful discharge and breach of contract. The district court found that the seamen had freely and voluntarily relinquished all claims against Spiliada by executing settlement agreements in which they released all their claims. The district court ruled, therefore, that the seamen did not act in good faith in renouncing the settlement agreements and filing the instant lawsuit. Because good faith is a jurisdictional requirement under the applicable seamen's wage statute, 46 U.S.C. Sec. 10313, the district court dismissed Plaintiffs' suit. For the reasons set forth below, this Court reverses the district court's ruling and remands the case for further proceedings.

I. FACTS AND PROCEDURAL HISTORY

The M/V SPILIADA is a Liberian flag vessel owned by Spiliada. The ship regularly operates within the territorial waters of the United States. Buenamar Compania Upon boarding the M/V SPILIADA, Plaintiffs handed the ship's captain sealed envelopes which Philgrecian had given them. Plaintiffs were not aware that the envelopes contained individual employment contracts which Philgrecian had secretly altered. The altered contracts inside the sealed envelopes (the "sealed contracts") stated that Malinas was to receive a monthly salary of 4,010 Philippine pesos (approximately $180), and Castillo, Abesamis, Noble and Ramos were each to receive a monthly salary of 6,006 Philippine pesos (approximately $276). The wage terms specified in the sealed contracts comported with the terms of a Bilateral Agreement entered between the Union of Greek Shipowners and the Philippine Officers and Seaman's Union. Buenamar had instructed Philgrecian to hire seamen according to the terms of the Bilateral Agreement.

                Naviera ("Buenamar"), a Greek company, manages the M/V SPILIADA.  Buenamar uses Philgrecian Maritime Services ("Philgrecian"), a Philippine company, as its manning agent.  In 1988, Philgrecian recruited Plaintiffs to work aboard the M/V SPILIADA for a one year period to commence on August 5, 1988.  Philgrecian submitted Plaintiffs' employment contracts for approval with the Philippine Overseas Employment Administration ("POEA"). 1   These contracts (the "POEA contracts") stated that Malinas was to receive a monthly salary of 55,000 Greek drachmas (approximately $407), and Castillo, Abesamis, Noble and Ramos were each to receive a monthly salary of 58,000 Greek drachmas (approximately $429)
                

Plaintiffs complained after they failed to receive the salaries specified in their POEA contracts. Eventually, they contacted inspector John Sansone ("Sansone") with the International Transport Workers Federation ("ITF"), an international labor secretariat. Sansone met with the M/V SPILIADA captain in New Orleans, Louisiana, in July 1989, to present Plaintiffs' case. When negotiations failed, the captain paid Plaintiffs the wages specified in the sealed contracts and discharged them. ² The captain wrote "DUE ITF" as the reason for discharge in each of the plaintiff's books. ³

Sansone referred Plaintiffs to Richard Dodson ("Dodson"), an American attorney in Baton Rouge, Louisiana, with experience in maritime law. Plaintiffs signed an agreement authorizing Dodson to represent them. Before meeting Dodson, however, Plaintiffs were repatriated at Spiliada's expense to the Philippines.

After Plaintiffs arrived in the Philippines, they discussed their wage dispute with Pompeyo Nolasco ("Nolasco"), a Filipino attorney whom Sansone recommended. The Filipino attorney soon established contact with Dodson in the United States. On August 1, 1989, Castillo, Abesamis, Malinas and Ramos (Noble was absent) met in Nolasco's office. Nolasco showed the four seamen a letter from Dodson. The letter advised that Dodson would soon file a suit in the United States on Plaintiffs' behalf, that Dodson would provide any necessary financial assistance until the United States litigation was resolved, and that Plaintiffs should inform Nolasco of any communication by Spiliada, Buenamar, or Philgrecian. With the four seamen's knowledge and consent, Nolasco sent Dodson a message stating that the seamen wished to continue prosecuting their claims in the United States.

At Buenamar's instigation, Philgrecian contacted Malinas to discuss a possible settlement. Malinas agreed to bring the other four seamen to talk with Captain A.C. Marmaras, a dock captain with Buenamar. On August 2, 1989, Malinas, Castillo, Noble and Ramos (Abesamis was absent) met with Captain Marmaras at the offices of Pandiman Philippines, Inc. ("Pandiman"). ⁴

Also present at the meeting was Frederick Clemo ("Clemo"), president of Pandiman. The four seamen advised Captain Marmaras and Clemo that they had Philippine and United States counsel, but their attorneys were not present. Nonetheless, Captain Marmaras and Clemo continued with settlement offers. Malinas, Castillo, Noble and Ramos eventually agreed to a settlement of $5,500 for each seaman, contingent upon acceptance of the same terms by the fifth seaman, Abesamis.

The next day, August 3, 1989, all five Plaintiffs returned to Pandiman's office. At this meeting, Crisolitio Dionido ("Dionido"), a Philippine attorney, was present. Clemo engaged Dionido to act as Plaintiffs' counsel for the settlement; Plaintiffs never requested that Dionido assist them. Dionido apparently spent the morning of August 3 explaining to Plaintiffs the terms of the settlement. Dionido also advised Plaintiffs that they could contact another attorney for further explanation. However, Dionido cautioned them that it was to their benefit not to contact their American lawyer. Finally, that afternoon, each of the Plaintiffs signed a settlement agreement, relieving Spiliada, Buenamar, Philgrecian, Pandiman, and the M/V SPILIADA from all obligations, in return for a payment of $5,500 and a change in the seamen's books as the reason for discharge from "DUE ITF" to "Mutual Consent." Plaintiffs also signed documents revoking any power of attorney they had previously given to Dodson.

On August 9, 1989, Plaintiffs met with their Philippine attorney Nolasco and C. John Caskey ("Caskey"), Dodson's associate. Plaintiffs signed affidavits averring that they agreed to the settlements only because of threats of blacklisting and that they were suffering from dire financial circumstances. On August 27, 1989, Plaintiffs filed the instant suit in federal district court. Plaintiffs' pleadings alleged claims for unpaid wages and statutory penalty wages and damages for breach of contract, wrongful discharge and blacklisting. Jurisdiction was based on 46 U.S.C. Sec. 10313(i), as well as general admiralty and maritime jurisdiction under Article III of the United States Constitution and 28 U.S.C. Sec. 1333. Spiliada filed a motion for summary judgment, asserting accord and satisfaction as a defense. Spiliada argued that Plaintiffs were barred from bringing suit as a result of the settlement agreements in which Plaintiffs released their claims. Plaintiffs then filed a cross-motion for summary judgment, contending that the releases were invalid as a matter of law because the releases were obtained through fraud, coercion, duress and without a full understanding of their rights.

The district court initially ruled that in order to exercise its jurisdiction under 46 U.S.C. Sec. 10313(i), Plaintiffs had to establish their good faith in bringing the suit. Construing good faith as an issue of fact, the district court ordered an evidentiary hearing solely to determine "whether plaintiffs acted in good faith when they entered a settlement, renounced it, and then filed this lawsuit." After the hearing, the district court concluded that the releases were valid as a matter of law. As a result, the district court ruled that Plaintiffs did not act in good faith in renouncing the settlement agreements and filing the federal action. The district court then granted Spiliada's motion for summary judgment, dismissing the case for lack of subject matter jurisdiction. 740 F.Supp. 409. Plaintiffs filed a timely notice of appeal.

II. DISCUSSION

Historically, seamen have enjoyed a special status in our judicial system. They enjoy this status because they occupy a unique position. A seaman isolated on a ship on the high seas is often vulnerable to the exploitation of his employer. Moreover, there exists a great inequality in bargaining position between large shipowners and unsophisticated seamen. Shipowners generally control the availability and terms of employment.

To shield seamen against unfair conduct by shipowners, Congress enacted special wage protection statutes. See 46 U.S.C. Secs. 10313, 10504. Congress did not limit this statutory coverage to American seamen; rather, Congress extended protection to seamen who...