November 28, 2010
Costa, Fernandez, D’Acosta v. Celebrity Cruises
Seamans Complaint to Vacate Arbitration Award Without Pre-payment of Filing Fee Pursuant to 28 U.S.C
Plaintiff seafarers who worked for Celebrity Cruises filing a complaint to vacate an unfair award they obtained at an arbitration against Celebrity.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
BERNARD FERNANDES, and
CELEBRITY CRUISES, INC.
SEAMAN’S COMPLAINT TO VACATE ARBITRATION AWARD WITHOUT PRE-PAYMENT OF FILING FEE PURSUANT 28 U.S.C. 1916
COME NOW, CAMILO COSTA, BERNARD FERNANDES AND MENINO D’ACOSTA (hereinafter “the seafarers”) by and through undersigned counsel and pursuant to the Federal Arbitration Act, 9 U.S.C. §§1, et. seq., and specifically 9 U.S.C. §§10 and 12, hereby file their Complaint to Vacate the Arbitration Award issued by arbitrator Stanley H. Sergent on August 28, 2010, and in support thereof allege as follows:
I. GENERAL ALLEGATIONS, JURISDICTION AND VENUE
1. This is an action seeking to vacate an arbitration award pursuant to 9 U.S.C. §§10 and 12.
2. This Court has jurisdiction under the Federal Arbitration Act as the Subject Matter of the underlying arbitration involved interstate commerce. Thus, this Court has jurisdiction pursuant to 28 U.S.C. §1331.
3. In addition, there is jurisdiction based on diversity of citizenship and the amount in controversy exceeds $75,000.00. Plaintiffs are, and at all times material hereto were, citizens of India. Defendant is, and at all times material hereto was, a Corporation with its principal place of business in Miami, Florida. Thus, this Court has jurisdiction pursuant to 28 U.S.C. §1332.
4. Venue is proper in the Southern District of Florida pursuant to 9 U.S.C. §9, because the arbitration hearing was held in Miami, Florida at 701 Brickell Avenue, Suite 3000, Miami, FL 33131.
5. The underlying claims in this action arise out of Defendant employer Celebrity’s wrongful conduct, consisting in requiring employees – working as stateroom attendants aboard employer’s ships – to share a substantial share of their earned wages with other employees (for a period of approximately three years); conduct in clear breach of their employment contracts and in violation of the Seaman’s Wage Act, 46 U.S.C. §10313.
6. On or about October 21, 2009, Plaintiffs’ Costa and Fernades submitted their demand for arbitration to Defendant Celebrity and Federazione Italian Transporti (hereinafter “Union”). On or about December 9, 2009, Defendant D’Acosta submitted his demand for arbitration to Defendant Celebrity and the Union. A true and correct copy of Plaintiffs’ demands for arbitration are attached hereto as Exhibit “1.” On or about December 29, 2009, the Union formally demanded arbitration on behalf of all three Plaintiffs. A true and correct copy of the Union’s demand is attached hereto as Exhibit “2.”
7. Celebrity and the Union appointed Stanley H. Sergent as arbitrator of the proceedings. At all times material, Celebrity and the Union exchanged names of proposed arbitrators without the seafarers knowledge or input. Further, Celebrity and the Union unilaterally appointed an arbitrator with minimal experience or knowledge in maritime matters, and in particular seamen wage law.
8. On or about May 28, 2010, Defendant Celebrity moved to dismiss Plaintiffs claims at arbitration arguing that the Seafarers claims were “non-arbitrable due to the Claimants’ failure to submit grievances.”
9. On July 27, 2010, a one (1) day arbitration hearing was held in Miami, Florida at the offices of counsel for Celebrity, at 701 Brickell Avenue, Suite 3000, Miami, FL 33131. A true and correct copy of the hearing transcript is attached hereto as Exhibit “3.”
10. On August 28, 2010, the arbitrator granted Celebrity’s Motion to Dismiss, holding that the seafarers claims were non arbitrable for failing to exhaust the grievance procedure under their Collective Bargaining Agreement (“CBA”). A true and correct copy of the arbitrator’s ruling is attached hereto as Exhibit “4.”
11. The Seafarers timely file the instant Complaint seeking an order from this Court vacating the Award. Pursuant to the Federal Arbitration Act, 9 U.S.C. §10, a Court may vacate an award were (a)(3) the arbitrators … refused to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or (a)(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made. Finally, under (a)(1) a Court may vacate an award were it “was procured by corruption, fraud or undue means.”
II. FACTUAL AND PROCEDURAL BACKGROUND
12. For the benefit of the Court and to provide context to Plaintiffs’ claims; Plaintiffs first set forth the following procedural and factual background to the arbitration herein.
The Underlying Claims
13.On May 14, 2001, Celebrity and Federazione Italianan Tranporti, the labor union, entered into a Collective Bargaining Agreement (“CBA”) covering the Seafarers as part of a “bargaining unit” consisting of cabin stewards. Following the enactment of the aforementioned CBA, the Seafarers’ employment contracts incorporated to and made part of the agreement, the CBA between Celebrity and the Union; setting forth that both Celebrity and the Seafarers were bound by its terms and conditions.
14. Both the CBA and the employment contracts established the seafarers compensation from two sources: base pay and gratuities. Since basic pay consisted of only $50.00 per month, the majority of the Seafarers’ wages were gratuities from passengers. Under the gratuity payment scheme, set forth in the CBA, Celebrity was required to recommend to its passengers that they pay gratuities in accordance with an incorporated pay scale in the CBA.
15. Throughout the course of the Seafarers employment, Celebrity widely disseminated to passengers the recommended gratuity for stateroom attendants. This included brochures, announcements and other materials.
16. Beginning on or before August 31, 2002, Celebrity placed “assistant cabin stewards” or “assistant stateroom attendants” on its ships. It is important to note that although the CBA made reference to cabin stewards, waiters, and assistant waiters, nothing in the subject CBA contained any reference to an employment position titled “assistant cabin stewards.”
17. Despite the CBA’s provisions, clearly delineating Celebrity’s obligations, Celebrity breached the CBA by: 1) requiring the Seafarers to pay/share their earned wages with the assistant cabin stewards at a rate of $1.20 per passenger, per day, and 2) requiring the above named seafarers to pay/share their earned wages with the Chief Housekeeper, at a rate of $0.50 per passenger, per day.
18. Celebrity’s wrongful conduct continued until January 1st 2005, when the Company changed the terms of the CBA.
The Grievance Procedure and the Arbitration Provision under the CBA
19. The Grievance Procedure: Article 26 of the CBA provides, in part, the following grievance procedure: Unless Extenuating Circumstances exist justifying delay, no grievance shall be recognized if raised more than thirty (30) days after the Seafarer has left the vessel… If the Seafarer feels that a provision of this agreement has been violated or that he/she has been unfairly treated, the seafarer shall have the right either personally or through a fellow seafarer spokesperson, to present the complaint to his/her department head and, if the seafarer remains dissatisfied, to the Master. If the grievance remains unresolved, the decision of the Master shall govern until the grievance can be resolved by the representatives of the Company and the Unions.(See Article 26, attached hereto Exhibit 5).
20. The Arbitration Provision: Article 26 of the CBA also provides, in part the following arbitration provision: Grievances and disputes arising on the vessels or in connection with this Agreement which cannot be resolved on board or between the parties shall be referred to the arbitration… If a matter is not resolved within forty-eight (48) hours after the conference, either party may refer it to an arbitrator for final resolution. Arbitrator to be jointly appointed by the Union and the Company. The place of arbitration shall be either the country of the seafarer’s citizenship or Miami, Florida.(See Article 26, attached hereto Exhibit 5).
Lobo v. Celebrity Cruises, Case No. 04-22132-GOLD (S.D. Fla. 2005).
21. In light of Celebrity’s breach of the CBA, on July 29, 2004 seafarer Inacio Lobo brought a lawsuit in Florida State Court against Celebrity for Celebrity’s violations under the Seamen’s Wage Act, 46 U.S.C. At that time, seafarer Inacio Lobo (not a Plaintiff in this action) filed a complaint as a proposed class action, on his own behalf as well as on behalf of all other similarly situated Celebrity cabin stewards, including the above named Plaintiffs. In effect, Mr. Lobo was acting as Claimants spokesperson. On April 11, 2005 the lawsuit was moved to Federal Court.
22. At that time, Celebrity did not seek to compel the grievance procedure. Further, Celebrity did not raise or assert any defenses concerning “untimely filing of grievances.” Further, Celebrity did not even represent to the Federal Court, that the Seafarer’s claims under the CBA were “non-arbitrable.” Instead, Celebrity made the deliberate choice of skipping the grievance procedure under the CBA, and directly moved the Federal Court to compel resolution of the dispute at arbitration – arguing that the claims were arbitrable. See Celebrity’s Motion to Dismiss Plaintiffs’ Amended Complaint (moving to compel arbitration only) in the matter of Lobo v. Celebrity Cruises, Case No. 04-22132-GOLD (S.D. Fla. 2005), attached hereto as Exhibit “6.”
23. The Court, citing the CBA’s arbitral provision, compelled Mr. Lobo to litigate the merits of those claims at arbitration. Judge Gold’s order compelled only arbitration – not the grievance process. Subsequently, the Eleventh Circuit affirmed the lower Courts order compelling arbitration – but not the grievance process. See Lobo v. Celebrity Cruises Inc., 488 F. 3d 891, 894-95 (11th Cir. 2007).
24. Based on the aformentioned precedent (compelling the arbitration of claims under the aformentioned CBA) the above named Plaintiffs – who have identical substantive wage claims as Mr. Lobo and arising under the same CBA – made their formal demands for arbitration.
II.FIRST BASIS TO VACATE
25. Plaintiffs adopt and reallege Paragraphs 1 through 24 as if fully set forth herein, and further allege as follows:
26. The whole premise behind Celebrity’s Motion to Dismiss and the arbitrator’s ruling was that Plaintiffs’ claims were not arbitrable because Plaintiffs’ failed to exhaust the grievance procedure under the Seafarers Collective Bargaining Agreement. At the arbitration hearing, however, the Plaintiffs clearly and unequivocally introduced evidence to show that Plaintiffs’ were “seafarers;” a status which pursuant to Supreme Court precedent, does not require them to exhaust grievance procedures. In support thereof, at the arbitral hearing, Plaintiffs’ submitted the following:
a.At all times material, during the course of their employment with Celebrity the Claimants’ were “seamen.”
b.It is well settled law, that a seaman is not required to exhaust grievance procedures before seeking a resolution of his claims in a tribunal. Larkins v. Hudson, 640 F. 2d 997, 999 (9th Cir. 1980), citing the United States Supreme Court in Bulk v. Arguelles, 400 U.S. 351 (1971).
c.In fact, in allowing individual seafarers to bring claims for wages directly before a judicial tribunal, in Bulk v. Arguelles, the United States Supreme Court established an exception for seafarers to the requirement that contract grievance procedures must be exhausted. Suissa v. American Export Lines, Inc., 507 F. 2d 1343 (2d Cir. 1974), citing Arguelles, 400 U.S. at 356.
d. All in all, through this long-standing principle, the United States Supreme Court declared that a seaman had the option of choosing either route [filing suit in a tribunal or through the grievance process] to enforce his claim. Id.
e. Celebrity’s entire argument and basis for dismissal is contrary to this well known and long-standing precedent. Herein, it is undisputed by Celebrity that the claimants are seafarers. By virtue of being seafarers the law exempted them from the requirement of exhausting grievance procedures. As a result, they properly exercised their legal right to 1) bring their wage claims directly before this tribunal and 2) forego any grievance process.
f. On this ground alone, Celebrity’s Motion to Dismiss should therefore be denied.
See Arbitral Hearing Transcript, Exhibit “3,” at pg. 28 – 34 and 83 – 88.
27. The arbitrator’s ruling (Exhibit “4”) did not address or even mention the aforementioned evidence submitted to him by the Plaintiffs. Therefore, pursuant to 9 U.S.C. §10(a)(3), in rendering his final ruling, the arbitrator did not address evidence pertinent and material to the controversy, prejudicing Plaintiffs’ rights.
28. Additionally, pursuant to 9 U.S.C. §10(a)(4), the arbitrator “exceeded his powers or so imperfectly executed them,” by entering an order holding that pursuant to the Federal Labor Laws the Plaintiff-seafarers were required to exhaust grievances under a Collective Bargaining Agreement – when in fact the law exempts them from doing so. As a result, because no hearings on the actual merits of the case were ever held (the seafarers substantive wage claims); pursuant to §10(a)(4)the act, “a mutual and definite award upon the subject matter submitted was not made.”
III. SECOND BASIS TO VACATE
29.Plaintiffs adopts and realleges paragraphs 1 through 24 as if fully set forth herein, and further allege as follows:
30. Although, the first ground addressed above is in and of itself sufficient to vacate the arbitrator’s award – even if these claimants had not been seafarers – but workers in another industry – and therefore not exempted from the grievance process; the arbitrator’s award should be vacated on an additional basis.
31. As set forth above, the Collective Bargaining Agreement in this matter contained a hyper-technical grievance procedure setting forth that:
“Unless Extenuating Circumstances exist justifying delay, no grievance shall be recognized if raised more than thirty (30) days after the Seafarer has left the vessel.”
The arbitrator’s ruling was premised on the fact that the Seafarers had knowledge of Celebrity’s hyper-technical grievance procedure requiring submission of claims within 30 days.
In fact, the opposite is true. At the arbitration, the Plaintiffs submitted sworn affidavit testimony setting forth that they: 1) never received copies of any collective bargaining agreements; 2) were never informed and therefore never knew that they were members of a labor union; 3) never knowingly paid any union fees (this is so because during the relevant period Celebrity – not the employees – paid for union dues); 4) never met, talked, corresponded with any representative of Federazione Italianan Transporti (“Union”), or any other union; 5) never attended any union meetings, or any other meetings where rights to submit grievances under Collective Bargaining Agreements were discussed; 6) were never informed by either Celebrity or representative from any union that in the event of a dispute concerning their wages, they were required to submit their claims to a union in Italy and to Celebrity in Miami within 30 days.
Further, the Plaintiffs showed that Celebrity not only prevented these seafarers from participating in the collective bargaining process, but also failed to communicate to them the contents of a CBA negotiated behind closed doors. Therefore, in light of their lack of knowledge, Celebrity could not expect to have employees follow hyper-technical grievance procedures, when its own business practice was to conceal the information of such grievance procedures from the employees themselves.
32. Despite the factual evidence submitted to the Arbitrator, in the award (Exhibit “4”, pg. 11), the arbitrator held, in part:
The Claimants’ argument that their failure to submit the grievances in accordance with the time limits set out in the CBA should be excused or ignored because they were unaware that they were subject to the CBA’s and were not provided copies of the CBA’s is without a basis in fact. It is undisputed that the employment contracts they signed the claimants explicitly acknowledged that they were subject to the terms of the CBA’s and that they received copies of the agreements.(Emphasis added).
33. As shown above, however, Plaintiffs did have a factual basis (affidavit testimony) to support their assertion. Further, the Plaintiffs’ affidavits created a material dispute, such that there were questions of fact regarding whether the seafarers in fact knew that they had to file grievances within 30 days.
34. Therefore, because the arbitrator’s ruling (Exhibit “4”) did not address the evidence submitted by Plaintiffs (affidavit testimony); pursuant to 9 U.S.C. §10(a)(3), in rendering his final ruling, the arbitrator did not address “evidence pertinent and material to the controversy, prejudicing Plaintiffs’ rights.”
35. Additionally, pursuant to 9 U.S.C. §10(a)(4), the arbitrator “exceeded his powers or so imperfectly executed them,” by improperly making determinations of fact at a motion to dismiss stage. See Brandt v. Bassett, 69 F. 3d 1539, 1550 (11th Cir. 1995) (A motion to dismiss a complaint does not decide whether the plaintiff will ultimately prevail on the merits, but instead whether such plaintiff has properly stated a claim and should therefore be permitted to offer evidence in support thereof). See also American United Life Ins. Co. v. Martinez, 480 F. 3d 1043, 1066 (11th Cir. 2007) (When a complaint is challenged under Rule 12(b)(6), a Court will presume that all well-pleaded allegations are true and view the pleadings in light most favorable to the Plaintiff).
All in all, because the arbitrator improperly made determinations of fact at a motion to dismiss stage, no hearings on the actual merits of the case (the seafarers substantive wage claims) were ever held, and therefore, pursuant to §10(a)(4) of the act, “a mutual and definite award upon the subject matter submitted was not made.”
IV. THIRD BASIS TO VACATE
36. Plaintiff adopts and realleges Paragraphs 1 through 24 as if fully set forth herein.
37. The third ground in support of dismissal is the arbitrator’s affirmation of conduct which has effectively completely deprived these Seafarers of their day in Court. Celebrity has advanced a number of procedural technicalities with the aim to assure that the substantive wages claims of these seafarers are never adjudicated. As explained below, enforcement of the award will severely prejudice Plaintiffs rights and is therefore a violation of public policy.
38. As set forth above, in light of Celebrity’s breach of the CBA, on April 11, 2005 Seafarer Inacio Lobo filed a lawsuit in Federal Court.
39. At that time, Celebrity did not seek to compel the grievance procedure. Further, Celebrity did not raise or assert any defenses concerning “untimely filing of grievances.” Further, Celebrity did not represent to the Federal Court, that the Seafarer’s claims under the CBA were “non-arbitrable.” Instead, Celebrity made the deliberate choice of skipping the grievance procedure under the CBA, and directly moved the Federal Court to compel resolution of the dispute at arbitration – arguing that the claims were arbitrable. See Celebrity’s Motion to Dismiss Plaintiffs Amended Complaint (moving to compel arbitration only) in the matter of Lobo v. Celebrity Cruises, Case No. 04-22132-GOLD (S.D. Fla. 2005), attached hereto as Exhibit “6.”
40. The Court, citing the CBA’s arbitral provision, compelled Mr. Lobo to litigate the merits of those claims at arbitration. Judge Gold’s order compelled only arbitration – not the grievance process. The Eleventh Circuit Court affirmed the lower Courts order compelling arbitration – but not the grievance process. See Lobo v. Celebrity Cruises Inc., 488 F. 3d 891, 894-95 (11th Cir. 2007). See also Exhibit “8” Celebrity’s Answer Brief to the Eleventh Circuit; seeking to affirm the Court’s decision to compel arbitration and therefore devoid of any representations that the claims of these seafarers are not arbitrable.
41. Once at arbitration, Celebrity – for the first time ever, and contrary to its representations to the Southern District and Eleventh Circuit in Lobo v. Celebrity Cruises– argued at arbitration that the claims “were not arbitrable” for the seafarers failure to exhaust grievances.
42. At all times material, Celebrity’s choice not to raise or assert any defenses concerning “untimely filing of grievances” in Federal Court in the matter of Lobo v. Celebrity Cruises was a deliberate choice of strategy to deprive – not only Mr. Lobo, but also all other former cabin stewards subject to the same CBA (including Plaintiffs’ herein) of their day in Court.
As set forth above, pursuant to binding supreme Court precedent, seamen are not required to exhaust grievance procedures before seeking a resolution of their claims in a tribunal. Larkins v. Hudson, 640 F. 2d 997, 999 (9th Cir. 1980), citing the United States Supreme Court in Bulk v. Arguelles, 400 U.S. 351 (1971). In fact, in allowing individual seafarers to bring claims for wages directly before a judicial tribunal, in Bulk v. Arguelles, the United States Supreme Court established an exception for seafarers to the requirement that contract grievance procedures must be exhausted. Suissa v. American Export Lines, Inc., 507 F. 2d 1343 (2d Cir. 1974), citing Arguelles, 400 U.S. at 356. All in all, through this long-standing principle, the United States Supreme Court declared that a seaman had the option of choosing either route [filing suit in atribunal or through the grievance process] to enforce his claim. Id.
Therefore, had Celebrity moved to compel the grievance process, the Lobo Court would have inevitably ruled that “the seafarers had the legal choice to bring their claims for wages before a judicial tribunal.” Celebrity, therefore, deliberately did not represent to the Federal Courts that once at arbitration they would “argue that the claims were not-arbitrable” for failing to timely exhaust the grievance procedure within 30 days.
Celebrity’s deliberate strategy deprived Plaintiffs of their day in Court and their ability to adjudicate their substantive wage claims in any forum. When Lobo went to Federal Court, Celebrity moved to compel arbitration – arguing that the claims “were arbitrable.” After securing that precedent, when the seafarers went to arbitration, Celebrity argued to the arbitrator that the claims were “non arbitrable” because they failed to timely follow the grievance process within 30 days. This conduct constitutes a misuse of the judicial process – and a manifest injustice severely prejudicing the Plaintiffs due process rights.
WHEREFORE, Plaintiffs respectfully request that this Court enter an Order vacating the arbitration award, and grant Plaintiffs any other further relief as this Court deems just and proper. Plaintiffs further demand trial by jury.
 The Union’s involvement in this matter has been limited to appointing the arbitrator with employer Celebrity. The Union did not participate in the arbitral hearing, nor did it submit any briefing to state its position. Therefore, for all purposes, this was an arbitration with only two participants: Celebrity and the employee-Seafarers. Only one of the participants to the arbitration (employer Celebrity), however, had a say in the selection and appointment of the attorney.