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The Fifth Circuit Court of Appeals rejected a seaman's claim that an arbitration clause in a settlement agreement fell within the Federal Arbitration Act (FAA) exception for contracts for the employment of seamen.
In Terrebonne v. K-Sea Transportation Corp., No. 06-30041, 2007 WL 196532 (5th Cir. Jan. 26, 2007), Terrebonne, an employee of K-Sea Transportation, developed a hernia after an incident at work. Subsequently, the parties entered into a partial settlement agreement that included an agreement to arbitrate any disputes relating to the alleged incident.
However, when Terrebonne injured himself again, he filed suit. K-Sea asked the court to compel arbitration of the claim, but Terrebonne argued that that the arbitration agreement was subsumed into his employment contract and therefore unenforceable under the FAA exclusion "for contracts of employment of seamen" (See 9 U.S.C. § 1).
Noting that nothing in the settlement agreement purported to employ or modify the terms of Terrebonne's employment, the Court rejected Terrebonne's argument and compelled arbitration of the dispute.
The Court concluded that on its face, the settlement agreement did not fall under the FAA exception. Addressing Terrebonne's assertion that "maintenance and cure" are employment issues, the Court held that such issues related to the employment relationship, not the employment contract.
Finally, the Court rejected Terrebonne's "conclusory" public policy argument that "pre-injury arbitration agreements" are unfair, noting that nothing in the record indicated that this particular agreement was unfair or inadequate.
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