Dahiya v. Talmidge Intern. Ltd.

• Citation: 931 So.2d 1163
• Decision Date: 26 May 2006
• Docket Number: No. 2005-CA-0514.,2005-CA-0514.
• Parties: Vinod Kumar DAHIYA v. TALMIDGE INTERNATIONAL LTD., Neptune Shipmanagement Services (PTE), Ltd., American Eagle Tankers, Inc., Ltd., American Eagle Tankers Agencies, Inc. and The Britannia Steam Ship Insurance Association Ltd.
• Court: Court of Appeal of Louisiana (US)

931 So.2d 1163

Vinod Kumar DAHIYA v. TALMIDGE INTERNATIONAL LTD., Neptune Shipmanagement Services (PTE), Ltd., American Eagle Tankers, Inc., Ltd., American Eagle Tankers Agencies, Inc. and The Britannia Steam Ship Insurance Association Ltd.

No. 2005-CA-0514.

Court of Appeal of Louisiana, Fourth Circuit.

May 26, 2006.

Rehearing Denied June 30, 2006.

COPYRIGHT MATERIAL OMITTED

Kevin C. O'Bryon, Sherri L. Hutton, O'Bryon & Schnabel, PLC, New Orleans, LA, for Plaintiff/Appellant.

Gary A. Hemphill, Terriberry, Carroll & Yancey, L.L.P., New Orleans, LA, for Defendant/Appellant.

(Court composed of Judge CHARLES R. JONES, Judge DENNIS R. BAGNERIS SR., and Judge EDWIN A. LOMBARD).

CHARLES R. JONES, Judge.

This matter results from the district court's judgment in favor of the plaintiff, Vinod Dahiya, in the total amount of $579,988.00, and against the defendants, Talmidge International, Ltd., Neptune Shipmanagement Services (PTE.), Ltd, and American Eagle Tankers Agencies, Inc. Prior to rendering judgment in this matter, the district court denied the defendants' Exceptions of No Right of Action, and Improper Venue, finding that a Louisiana statute that nullifies forum selection clauses in contracts of employment preempts federal law, specifically, The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter "the Convention"), an international treaty of the United States. Having reviewed the record before this Court, the judgment in favor of the plaintiff, Vinod Dahiya, is reversed, and this matter is remanded to the district court.

FACTS

This is a maritime personal injury case in which the district court awarded damages for extensive burn injuries suffered by a seaman, Mr. Dahiya, in the service of his vessel. Mr. Dahiya is a citizen of India. In 1999, he applied for a job with Singapore-based Neptune Shipmanagement Services (Pte., Ltd.) (hereinafter "Neptune"), was hired, and signed a contract of employment or "deed" that specified the terms and conditions of his employment. Neptune then paid for Mr. Dahiya to be sent to a maritime training school and eventually employed him on the M/V EAGLE AUSTIN, a Singaporean flag vessel, as an engine room cadet.

The incident which gave rise to this litigation occurred on the vessel in November 1999, while Mr. Dahiya was operating an incinerator in the engine room. The cause of the incident was contested at trial, but the district court found that the cause of Mr. Dahiya's burn injuries was Neptune's negligence and the Eagle Austin's unseaworthiness. Judgment was entered against Neptune and against Talmidge International, Ltd., the vessel owner.¹ These liability findings are not contested on appeal.

The accident occurred while the vessel was on the high seas in international waters. Because the vessel was en route to Louisiana at the time, Mr. Dahiya was transported to the burn unit at the Baton Rouge General Medical Center where he received medical care for approximately 30 days before being repatriated to his home in India. His employer paid all medical and travel expenses, so at trial there was no claim for past medical expenses.

Mr. Dahiya returned to Louisiana in 2001, when he came here on a student visa. He subsequently filed suit in 2002. While this suit was pending, Mr. Dahiya's status with the United States Immigration and Naturalization Service became tenuous because of his failure to maintain his status as a student. Whether Mr. Dahiya has been permitted to return to the United States as of this time is not of record.

PROCEDURAL HISTORY

Although the legal issue before this Court is relatively narrow, the procedural history of this case is fairly convoluted. Mr. Dahiya filed suit in the 25th Judicial District Court for the Parish of Plaquemines in March, 2002, against his employer, Neptune Shipmanagement Services; the owner of the ship on which he was injured, Talmidge International; co-owners of the fleet to which the ship belongs, American Eagle Tankers and American Eagle Tankers Agencies; and the ship's insurer, Brittania Steam Ship Insurance Association. Pursuant to the Convention and the holding of the United States Fifth Circuit Court of Appeals in Francisco v. Stolt Achievement, 293 F.3d 270 (5th Cir.) cert. den. 537 U.S. 1030, 123 S.Ct. 561, 154 L.Ed.2d 445 (2002), the defendants removed the case to the United States District Court for the Eastern District of Louisiana on July 15, 2002. Once in federal court, the defendants moved to compel arbitration and to stay the proceedings or, in the alternative, to dismiss Mr. Dahiya's suit. Mr. Dahiya moved to remand, arguing that the contract's terms did not qualify as an arbitration agreement under the Convention and therefore could not support removal under 9 U.S.C.A. § 205² which provides in pertinent part that:

[w]here the subject matter of an action or proceeding pending in a State court relates to an arbitration agreement or award falling under the Convention, the defendant or the defendants may, at any time before the trial thereof, remove such action or proceeding to the district court of the United States for the district and division embracing the place where the action or proceeding is pending.

Although finding that the arbitration clause in Mr. Dahiya's contract was applicable and virtually identical to the one enforced by the Fifth Circuit in Francisco, Judge Martin L.C. Feldman of the Eastern District remanded the case to state court on October 21, 2002, on the ground that Louisiana Revised Statute 23:921 precluded enforcement of the arbitration clause. With respect to § 205, the court reasoned that because the deed contained no valid forum selection clause, the parties had not entered into an agreement to arbitrate valid under the Convention.

From that point, parallel proceedings, one in federal court and one in state court, went forward. Defendants filed a federal appeal of Judge Feldman's ruling. While that appeal was pending, Judge Feldman revisited the issue of the alleged preclusive affect of R.S. 23:921 in Lejano v. K.S. BANDAK, C.A. 00-2990, 2000 WL 33416866 (E.D.La.2000). In that decision, Judge Feldman recanted his prior remand order in this case with the following comment:

The plaintiffs' again argue that the Court's ruling in Vinod Kumar Dahiya v. Talmidge International, Ltd., et al, Civil Action No. 02-2135 (October 11, 2002), should apply to this case. The Court disagrees. Although the Court lacks jurisdiction to vacate its earlier ruling granting remand in Dahiya, after further review of the Supreme Court's ruling in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) and its reasoning in Southland Corp. v. Keating, 465 U.S. 1, 10, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984), the Court finds that its ruling in Dahiya was incorrect.

Because Judge Feldman no longer had jurisdiction at that point, however, he could not rectify his error and the federal appeal continued. Because of a general federal rule precluding appeals of remand orders, however, a split panel of the Fifth Circuit dismissed the appeal for lack of appellate jurisdiction, noting that federal statutory law "... bars a federal appellate court from reviewing the remand ruling `no matter how erroneous.'" Dahiya v. Talmidge International, Ltd., et al, 371 F.3d 207, 209 (5th Cir.2004), citing Arnold v. State Farm Fire & Cas. Co., 277 F.3d 772, 775 (5th Cir.2001); and 28 U.S.C.A. § 1447(d), (d) (West 1994).

DISCUSSION

In their first assignment of error, the Appellants assert that the district court erred as a matter of law when it failed to sustain the Appellants' Exceptions of No Right of Action, Improper Venue and Arbitration pursuant to an arbitration forum selection clause in Mr. Dahiya's contract of employment, or to dismiss or stay the case pending arbitration. We agree and find that federal law supercedes any state law that purports to nullify forum selection clauses in employment contracts and vitiate an international treaty obligation of the United States.

Standard of Review

We review the district court's failure to enforce the arbitration clause in Mr. Dahiya's employment contract de novo because it was based implicitly on the court's legal conclusion that Louisiana statutory law supercedes the Convention. The Louisiana Supreme Court stated in Cleco Evangeline, LLC v. Louisiana Tax Commission, 01-2162 (La.4/3/02), 813 So.2d 351, 353, with respect to an issue of law being reviewed on appeal that "[w]e review the matter de novo, and render judgment on the record, without deference to the legal conclusions of the tribunals below." The issue regarding whether federal law preempts state law is a question of law, so this issue must be reviewed de novo by this Court. In Re Medical Review Panel Proceedings for the Claim of Allan Tinoco, et al. v. Meadowcrest Hospital, et al., 03-0272 (La.App. 4 Cir. 9/17/03), 858 So.2d 99, 103, citing Crawford v. Blue Cross and Blue Shield of La., 00-2026, p. 3 (La.App. 4 Cir. 12/5/01), 814 So.2d 574, 577.

Analysis

The defendants contend that federal law, specifically the Convention, preempts state statutory law and thus, the arbitration clause in Mr. Dahiya's contract of employment is valid and should have been enforced. The Convention was negotiated in 1958 and entered into by the United States in 1970 pursuant to the Constitution's treaty power. That same year, Congress adopted enabling legislation, codified at 9 U.S.C. § 201 et seq., to make the Convention, "the highest law of the land." As such, the Convention must be enforced according to its terms over all prior inconsistent rules of law. F.A. Richard and Associates, Inc. v. General Marine Catering Co., Inc., 688 So.2d 199, 202 (La.App. 4 Cir. 1/29/97), citing Sedco, Inc. v. Petroleos Mexicanos Mexican National Oil Co., 767 F.2d 1140 (5th Cir.1985). The Supremacy Clause declares that federal law "shall be the supreme law of the land[,] ... any Thing [sic] in the...