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In upholding a post-dispute arbitration agreement between an employer and employee, a federal court in New York held that the "ward of the admiralty" doctrine does not shift the burden of proof from the party challenging the arbitration agreement to the party seeking enforcement of the agreement.
In Barbieri v. K-Sea Transportation Corp., No. 05-CV-04950 (ENV)(MDG), 2008 WL 2842937 (E.D.N.Y. July 23, 2008), Barbieri was employed by K-Sea as the captain of a petroleum barge. Barbieri was injured while on the ship, and, pursuant to a collective bargaining agreement, K-Sea paid Barbieri maintenance while he recuperated at home.
K-Sea subsequently offered Barbieri two-thirds of his weekly wage if he would sign an arbitration agreement. K-Sea fully informed Barbieri of the consequences of signing the agreement, and stated that it would continue to pay maintenance if Barbieri did not sign. Barbieri signed the agreement, but later sued, so K-Sea moved to compel arbitration.
Barbieri opposed arbitration on several grounds. First, he contended that the "ward of the admiralty" doctrine shifted the burden of proof onto K-Sea to show that the arbitration agreement was enforceable. The Court rejected the argument, holding that under the Federal Arbitration Act, the burden is on the party challenging the enforceability of the agreement to show the grounds for its revocation, and "[t]hat burden is not shifted simply because the objecting party is a seaman." The Court noted that unlike cases that Barbieri cited in support of his argument, "an agreement to arbitrate is not a release of any claim," and "arbitration is not a penalty." Thus, the doctrine was inapplicable.
Barbieri also argued that the agreement was unenforceable because he was not represented by counsel when he signed it. The Court rejected the argument, holding that there was no evidence that Barbieri was unable to properly evaluate the agreement, and no evidence that K-Sea misled, coerced or threatened Barbieri into signing the agreement.
In addition, Barbieri argued that K-Sea's wage offer unduly influenced and coerced him into signing the agreement. The Court again rejected Barbieri's argument, holding that the "settlement payments do not, by any stretch, constitute undue influence or economic coercion of any kind. Nor would the discontinuance of such payments amount to coercion. Under the [CBA], Barbieri was entitled only to maintenance and cure. K-Sea, effectively, offered the advance in exchange for Barbieri's agreement to an arbitral forum, period. The agreement did not require Barbieri to give up a penny of his claim – only the right to choose between the two forums of equal standing."
The Court did give some credence to Barbieri's argument that the filing fee of the American Arbitration Association (AAA) was prohibitive, but held that Barbieri only demonstrated a "risk" that the fee would be prohibitive, which was too speculative to invalidate the arbitration agreement. Nevertheless, the Court compelled arbitration with an order that K-Sea pay any filing costs not waived by the AAA.
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