Flores v. American Seafoods Co.

• Citation: 335 F.3d 904
• Decision Date: 09 July 2003
• Docket Number: No. 02-35526.,No. 02-35195.,No. 02-35150.,02-35150.,02-35195.,02-35526.
• Parties: Elias FLORES, Jose Toledo, and the class of similarly situated persons who worked aboard the factory trawlers Ocean Rover, American Triumph, Northern Eagle, Northern Hawk, Northern Jaeger, and Katie Ann, Plaintiffs-Appellants, v. AMERICAN SEAFOODS COMPANY; American Seafoods Company LLC; Ocean Rover F/T; American Triumph F/T; Northern Eagle F/T; Northern Hawk F/T; Northern Jaeger F/T; Katie Ann F/T, their engines, tackle, equipment, appurtenances, freights, and cargo, In Rem, Defendants-Appellees. Elias Flores, Jose Toledo, and the class of similarly situated persons who worked aboard the factory trawlers Ocean Rover, American Triumph, Northern Eagle, Northern Hawk, Northern Jaeger, and Katie Ann, Plaintiffs-Appellees, v. American Seafoods Company and American Seafoods Company LLC, Defendants-Appellants, Ocean Rover F/T; American Triumph F/T; Northern Eagle F/T; Northern Hawk F/T; Northern Jaeger F/T; Katie Ann F/T, their engines, tackle, equipment, appurtenances, freights, and cargo, In Rem, Defendants-Appellees. Elias Flores, Jose Toledo, and the class of similarly situated persons who worked aboard the factory trawlers Ocean Rover, American Triumph, Northern Eagle, Northern Hawk, Northern Jaeger, and Katie Ann, Plaintiffs-Appellees, v. American Seafoods Company and American Seafoods Company LLC, Defendants-Appellants, Ocean Rover F/T; American Triumph F/T; Northern Eagle F/T; Northern Hawk F/T; Northern Jaeger F/T; Katie Ann F/T, their engines, tackle, equipment, appurtenances, freights, and cargo, In Rem, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

335 F.3d 904

Elias FLORES, Jose Toledo, and the class of similarly situated persons who worked aboard the factory trawlers Ocean Rover, American Triumph, Northern Eagle, Northern Hawk, Northern Jaeger, and Katie Ann, Plaintiffs-Appellants, v. AMERICAN SEAFOODS COMPANY; American Seafoods Company LLC; Ocean Rover F/T; American Triumph F/T; Northern Eagle F/T; Northern Hawk F/T; Northern Jaeger F/T; Katie Ann F/T, their engines, tackle, equipment, appurtenances, freights, and cargo, In Rem, Defendants-Appellees.

Elias Flores, Jose Toledo, and the class of similarly situated persons who worked aboard the factory trawlers Ocean Rover, American Triumph, Northern Eagle, Northern Hawk, Northern Jaeger, and Katie Ann, Plaintiffs-Appellees, v. American Seafoods Company and American Seafoods Company LLC, Defendants-Appellants, Ocean Rover F/T; American Triumph F/T; Northern Eagle F/T; Northern Hawk F/T; Northern Jaeger F/T; Katie Ann F/T, their engines, tackle, equipment, appurtenances, freights, and cargo, In Rem, Defendants-Appellees.

Elias Flores, Jose Toledo, and the class of similarly situated persons who worked aboard the factory trawlers Ocean Rover, American Triumph, Northern Eagle, Northern Hawk, Northern Jaeger, and Katie Ann, Plaintiffs-Appellees, v. American Seafoods Company and American Seafoods Company LLC, Defendants-Appellants, Ocean Rover F/T; American Triumph F/T; Northern Eagle F/T; Northern Hawk F/T; Northern Jaeger F/T; Katie Ann F/T, their engines, tackle, equipment, appurtenances, freights, and cargo, In Rem, Defendants-Appellees.

No. 02-35150.

No. 02-35195.

No. 02-35526.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 6, 2003.

Filed July 9, 2003.

COPYRIGHT MATERIAL OMITTED

Bradley H. Bagshaw, Helsell Fetterman LLP, Seattle, WA, for the plaintiffs-appellants-cross-appellees.

Jay H. Zulauf, Hall Zanzig Zulauf Claflin & McEachern, PLLC, Seattle, Washington, and J. David Stahl and Christopher S. McNulty, Mundt MacGregor LLP, Seattle, Washington, for the defendants-appellees-cross-appellants.

Appeal from the United States District Court for the Western District of Washington; Thomas S. Zilly, District Judge, Presiding. D.C. No. CV-00-00740-TSZ.

Before: O'SCANNLAIN, GOULD, Circuit Judges, and BOLTON,^* District Judge.

GOULD, Circuit Judge.

In this case we must clarify the requirements of a federal maritime statute whose origins date back to the late eighteenth century. When enacted in 1792, the requirement that a fishing agreement must be "in writing" applied only to seamen fishing for cod. Congress has gradually broadened the scope of this requirement, and it no longer includes any limitation based on the kind of fish that the seamen catch. When the events occurred that gave rise to this litigation, the applicable statute, 46 U.S.C. § 10601(a) (2000), provided simply that a "fishing agreement" must be "in writing" if the fishing vessel met other statutory requirements that are not in dispute here. The fishing agreement also had to be signed by both the "master or individual in charge of [the] fishing vessel," pursuant to 46 U.S.C. § 10601(a) (2000), and by "the owner of the vessel," pursuant to 46 U.S.C. § 10601(b) (2000).¹ These statutory requirements are intended to protect seamen and to ensure they have a clear and enforceable written commitment defining the consideration for which they risk their life at sea. The questions of statutory interpretation raised here are (1) whether the fishing agreement was "in writing" when a provision for bonus was explained orally, and (2) whether the vessel masters satisfied the signature requirement by delegating to an agent the authority to sign on their behalf.

I

Elias Flores and Jose Toledo ("appellants") are members of a class initially composed of 732 crew members who worked on ships owned by American Seafoods Company ("ASC") from January to April, 2000.² On January 11, 2000, shortly before setting out for the Bering Sea ground fisheries within the Exclusive Economic Zone off the coast of Alaska, the seamen signed employment contracts with ASC for the upcoming season at orientation meetings in Seattle. Cathy Udoff ("Udoff"), an ASC Human Relations official, signed for both ASC and the vessel masters. The vessel masters had completed a form delegating to Udoff the authority to sign on their behalf.

The contracts were signed at mass meetings where Udoff explained the terms of the contracts. 477 of the crew members, including the appellants, were hired as processors³ with the same form contract. The contractual section on compensation specified that each processor would receive three shares from the "crew share pool," whose value would be calculated by taking the number of fish caught and multiplying that figure by the "posted price" of the fish, which ASC would establish in advance with a "good faith estimate." The crew members were hired to work on six trawlers — five fished for pollock, and one fished for cod. The contracts provided that on the cod-fishing ship, the "crew share pool" was 28% of the total value of the harvest for the season, while on the pollock-fishing ships, the "crew share pool" was 21% of the harvest. The processors' contracts were otherwise identical.

The contracts stated that "[p]erformance bonuses may be awarded to processors based on factors identified on Crew Members' performance evaluation at the Employer's sole discretion. Employer makes no guarantee or promise of compensation to Crew Member other than [the three crew shares]." In explaining this provision orally at the orientation meetings, Udoff set out a formula showing how the processors' performance ratings, expressed as a total of ten factors on the evaluations, would be measured to produce a scaled number⁴ of shares in the "bonus pool" at the end of the fishing season. The corresponding number of "bonus shares" ranged from zero for poor performers to four for excellent performers. The method of distributing those shares was described on a handout. In essence, all of the processors' "bonus shares" were added to determine the total number of shares in the "bonus pool," and the value of a single share was equal to the total value of the pool divided by the number of shares in the pool. Because these calculations could be performed only after all performance evaluations were completed at the end of the season, neither the number of "bonus shares" in the pool nor the value of a single share could be determined until then. Udoff also described a forfeiture provision under which bonuses would be available only to those processors who worked for the entire season; any processor who left during the season would not be eligible for a bonus.

In addition to explaining how the bonus shares would be calculated, Udoff explained, albeit incompletely, how the "bonus pool" would be funded. It was assigned a value equal to a certain portion of the "crew share pool"; the portion was to be calculated with a formula that was spelled out on the handouts, and the details of which are not in dispute. What is in dispute is whether the funds allocated to the "bonus pool" were to be subtracted from the funds in the "crew share pool," or whether the "bonus pool" would be independent of the "crew share pool." Udoff did not clearly explain this feature. The written contract makes no mention of a "bonus pool." The only discussion of share value in the written contract appears in a provision stating that "[t]he value of one share [of the crew share pool] is calculated by totaling the number of shares assigned to Crew Members working at the start of the trip and dividing that sum into the crew share pool. The crew share pool is equal to twenty one percent (21%) of the value of each trip.... When vessels [fish for cod,] the crew share pool will be equal to 28% of the value of each trip." ASC interpreted this provision to mean that all funds allocated to seamen were to come from the "crew share pool," so that the seamen's total income for the season was capped at 21% of the harvest for the pollock-fishing ships, and 28% of the harvest for the cod-fishing ship. It appears that altogether, ASC paid the seamen about $16.3 million at the end of the season, on the basis of this interpretation of the contract. The appellants, however, argue that this provision pertains only to the value of the "crew share pool," and that the contract defines this pool in a way that excludes the "bonus shares," which would then be awarded over and above the 21% or 28% cap on the "crew share pool."

In April 2000, soon after returning to Seattle from the Bering Sea, the appellants filed suit against ASC in district court, arguing that because of the oral explanation of the bonus provision, the contracts were not "in writing" as required by section 10601(a). The appellants also argued that because the vessel masters had delegated the signing of the contracts to an agent, the contracts were not signed by the vessel masters, as required by section 10601(a). In addition, the appellants raised two claims alleging breach of contract. First, the appellants argued that ASC breached the contract by funding the "bonus pool" as a subset of the "crew share pool" rather than allocating 21% (or 28%) of the harvest to the "crew share pool" and funding the "bonus pool" separately. Second, the appellants argued that ASC had underpaid them by failing to make a "good-faith estimate" when posting the price for pollock roe for one of the trips during the season. About six weeks after the suit was filed, ASC gave the seamen a $2.725 million post-season adjustment to reflect the difference between the price realized at market and the "posted price" estimated for the pollock roe.

At trial, the district court found that ASC "breached its contract obligation to estimate roe prices in good faith," but the court concluded that the crew members "suffered no damage for [the] breach of contract" because of the post-season...