Harrington v. Atlantic Sounding Co., Inc.

Decision Date16 April 2010
Docket NumberDocket No. 07-4272-cv.
Citation602 F.3d 113
PartiesFrederick J. HARRINGTON, Jr., Plaintiff-Appellee, v. ATLANTIC SOUNDING CO., INC., Weeks Marine, Inc., and MV Candace, her engines, equipment and tackle, in rem, Defendants-Appellants.
CourtU.S. Court of Appeals — Second Circuit

Todd P. Kenyon (Ronald Betancourt, of counsel), Betancourt, Van Hemmen, Greco & Kenyon, New York, NY, for Defendants-Appellants.

Jacob Shisha, Tabak, Mellusi & Shisha, New York, NY, for Plaintiff-Appellee.

John P. James, Friedman & James LLP, New York, N.Y. (James P. Jacobsen, Vice-Chair, AAJ Admiralty Law Section, Seattle, WA, Ross Diamond, Chair, Admiralty Law Section, American Association for Justice, Mobile, AL, on the brief, Kathleen Flynn Peterson, President, American Association for Justice, Minneapolis, MN, of counsel), for Amicus Curiae American Association for Justice.

Before: WINTER, WALKER, and CALABRESI, Circuit Judges.

Judge CALABRESI dissents in a separate opinion.

JOHN M. WALKER, JR., Circuit Judge:

Plaintiff-Appellee Frederick J. Harrington, Jr., ("Harrington") filed this action in the United States District Court for the Eastern District of New York (Nina Gershon, Judge), against Defendants-Appellants Atlantic Sounding Co., Inc., Weeks Marine, Inc. (Atlantic Sounding's corporate parent), and the vessel MV CANDACE (collectively, "Defendants") pursuant to the Jones Act, 46 U.S.C.App. ž 688, seeking recovery for injuries sustained while he was employed as a seaman on the CANDACE. Defendants sought to dismiss the complaint or, in the alternative, to compel arbitration and to stay the district court action, pursuant to a post-injury arbitration agreement between the parties. Harrington opposed Defendants' motion, arguing that the arbitration agreement, which he signed in return for cash advances against his claim, was unenforceable as the result of intoxication and lack of mental capacity, and because the agreement was unconscionable.

After an evidentiary hearing, the district court determined that the arbitration agreement was unenforceable under New Jersey law due to substantive and procedural unconscionability, and did not address the claims of intoxication and lack of mental capacity. On appeal, Harrington resists arbitration on the basis that the arbitration agreement is unenforceable as a matter of law under ž 6 of the Federal Employer's Liability Act ("FELA"), 45 U.S.C. ž 56, and alternatively, that the unconscionability finding below was correct under New Jersey law.

We find that FELA ž 6 does not apply to seamen's arbitration agreements, and thus the arbitration agreement is not unenforceable as a matter of law, and that the district court's finding that the arbitration agreement was unenforceable due to unconscionability was erroneous. Therefore, we vacate the district court's decision and remand to the district court for consideration of Harrington's remaining contractual defenses.

BACKGROUND

After more than two years with Weeks Marine as an Able Bodied Seaman, Harrington suffered a back injury in April 2005 while working aboard the CANDACE, a vessel owned and operated by Weeks Marine. Shortly thereafter, Harrington left the CANDACE to live with his father in Massachusetts and began receiving maintenance payments of twenty dollars per day from Weeks Marine. Weeks Marine also paid all medical expenses resulting from Harrington's back injury.

In Massachusetts, Harrington's doctor prescribed painkillers and cortisone shots to help him cope with his injury. At the evidentiary hearing held on the instant motion, Harrington testified that the medications interfered with his concentration and made him drowsy. He also testified that during this time he was drinking upwards of a half-gallon of vodka every two or three days. He added that he has a history of alcohol abuse for which he has undergone substance abuse treatment on several occasions, most recently in March 2006.

Thereafter, Harrington was diagnosed with herniated discs and was told by his doctor that he required lumbar surgery. In early July 2005, he called Weeks Marine to request additional financial support for his injury and upcoming surgery. In response, on July 11, 2005, Harrington received a "Claim Arbitration Agreement" (the "Agreement") from Defendants in the mail. Defendants prepared and signed the Agreement in New Jersey, the location of their principal place of business, and sent it to Harrington for his signature at his father's house in Massachusetts.

The Agreement included the following language (with "You" referring to Defendants and "I" referring to Harrington):

Although You are obligated to pay maintenance and cure, You are not currently responsible or liable for any other damages under general maritime law, the Jones Act or any other applicable law. Nonetheless, You are prepared to make voluntary advances against settlement of any claim that could arise out of the personal injury/illness claim I have made . . ., provided I agree to arbitrate any such claim under the American Arbitration Association (AAA) Rules. . . . The decision of the arbitrators shall be final and binding on the parties and any United States District Court shall have the jurisdiction to enforce this agreement, to enter judgment on the award and to grant any remedy provided by law in respect of the arbitration proceedings.

(emphasis omitted.)

Under the Agreement, in exchange for Harrington's undertaking to arbitrate his claims, Defendants "agreed to advance sixty percent (60%) of the gross wages Harrington would have otherwise earned based upon his earnings history . . . as an advance against settlement until Harrington was declared fit for duty, and/or at maximum medical improvement, and/or October 10, 2005, whichever occurs first." The Agreement further "credited the advance against any settlement Harrington might eventually reach with Defendants or against any future arbitration award he might receive." Pursuant to the Agreement, Defendants also agreed to advance "up to $750.00 and any deposit for compensation of the arbitrators . . ., subject to subsequent allocation."

A cover letter accompanying the Agreement explained:

Our company recognizes the value in its long term employees and the hardship that can be associated with a dramatic income decrease during a period of incapacity. Although we are under no legal obligation to advance funds in this type of situation, our towing division has approved such voluntary payment in your case, so long as you are willing to agree to arbitrate any disputes that might arise from this claim.

According to Harrington's affidavit, he was told by Defendants that they "wanted to help him out because of his situation," and that the payments made under the Agreement would constitute "an advance against any claim he may bring." Pl. Decl. Â 9. Harrington also alleges that Defendants "did not tell him that he was giving up any rights" by signing the Agreement. Pl. Decl. Â 9.

On July 18, 2005, Harrington underwent lumbar surgery, and was released from the hospital the next day. On July 23, 2005, Harrington went to a local bank with his father to sign the Agreement and have it notarized. Harrington was still taking painkillers and drinking heavily during his recovery from surgery, and he testified to being in "tough shape" on July 23 because he "was taking medication and . . . had a couple of drinks that day."

The notary read aloud the Agreement's acknowledgment section, which stated, "other than the promises contained in this agreement, I have been given no other promises to induce me to sign this Claim Arbitration Agreement. I have not been coerced in any way into signing this agreement. I have signed this agreement knowingly and willingly." The notary asked Harrington if he understood what he was signing before she notarized the Agreement. Harrington answered that he did and signed the Agreement. The notary testified that Harrington did not appear to be drunk when he signed the Agreement, and that she would not have notarized the Agreement if he appeared intoxicated or in any way impaired. The notary testified, however, that Harrington appeared to be in pain and had to be assisted by his father when sitting down and standing up and that Harrington "appeared disheveled and unkempt," Harrington v. Atl. Sounding Co., No. 06-cv-2900(ng)(vvp), 2007 WL 2693529, at *2 (E.D.N.Y. Sept.11, 2007), whenever the notary saw him at the bank and was incoherent whenever he spoke, which was not often.

Pursuant to the Agreement, Defendants sent support checks to Harrington, which Harrington's father cashed for him, ending with the last payment on October 10, 2005. Because he was still unable to work, Harrington contacted Weeks Marine to request continued payment of sixty percent of his wages until he was fit to return to work. In response, on December 2, 2005, Weeks Marine sent him the Addendum Claim Arbitration Agreement (the "Addendum"). The Addendum amended the Agreement by extending the partial payment of Harrington's wages until January 10, 2006 and specified that, apart from this amendment, "the prior Claim Arbitration Agreement, executed on July 23, 2005, remained in full force and effect." The Addendum, like the Agreement, also stated: "I have been given no other promises to induce me to sign this Addendum thereto. I have not been coerced in any way into signing this Addendum agreement. I have signed this Addendum agreement knowingly and willingly."

On December 8, 2005, Harrington, who testified that he was drinking two quarts of vodka and six beers every day at the time he received the Addendum, brought the Addendum to the same notary he had used to execute the Claims Arbitration Agreement. The notary again read the acknowledgment aloud and asked Harrington if he understood what he was signing. Harrington again answered that he did and signed the Addendum. The notary testified...

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