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A New York federal court held that a seaman's post-injury arbitration agreement did not fall within the FAA's exception for "contracts of employment of seamen," but that the agreement could still be deemed unenforceable on other grounds.
In Barbieri v. K-Sea Transportation Corp., No. 1:05-cv-04950-EVN-MDG, 2006 WL 3751215 (E.D.N.Y. Dec. 19, 2006), Barbieri was badly injured in 2003 during his stint as captain of a petroleum barge. He was unable to work following his injury and agreed to sign a post-dispute arbitration agreement with K-Sea, his employer, in exchange for his average two-thirds net weekly wages as an advance against settlement of the claim. K-Sea ceased making these payments in early 2005, and Barbieri filed suit for additional damages.
The Court found that disputed issues of material fact existed as to whether or not the arbitration agreement was obtained through fraud or duress. Accordingly, the Court denied K-Sea's motion to compel arbitration, pending a bench trial on the agreement's validity.
However, the Court rejected Barbieri's principal argument that his claims under the Jones Act were non-arbitrable under section 1 of the FAA. The Jones Act, 46 U.S.C. §688, was passed in 1920 to offer heightened judicial protection for seaman against the risk of injury. Chandris, Inc. v. Latsis, 515 U.S. 347, 354 (1995). Barbieri bore the burden of demonstrating "that Congress intended to preclude a waiver of a judicial forum" for his claim or claims. Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 483 (1989). He failed to carry this burden, since the Jones Act was silent on alternative dispute resolution, and the FAA, which was passed five years later, expressed a federal policy favoring arbitration of disputes.
The Court further determined that the exclusion did not apply because the arbitration agreement was not a contract of employment of a seaman, since it was negotiated after his active employment with K-Sea had ended.
On separate grounds, the Court ordered that a bench trial be held regarding the validity of the arbitration contract. Barbieri could prevail in having the arbitration agreement invalidated if he can demonstrate that he was left with no other alternative than to sign the agreement, due to economic duress.
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