Gosalvez v. Celebrity

Lipcon, Margulies & Winkleman, P.A

November 08, 2010

Gosalvez v. Celebrity

Response in Opposition to a Motion to Dismiss

Here a seafarer is opposing the Defendant’s attempt to dismiss his claims from arbitration for not following grievance procedures set out in his contract.

In Arbitration
Miami, Florida
Before Robert B. Hoffman, Arbitrator





COME NOW, CLAIMANTS, Agnelo Gosalvez, et. al., (hereinafter “Seafarers”) by and through undersigned counsel, and hereby file their Response in Opposition to Respondent’s (“Celebrity”) Motion to Dismiss. In support thereof, Claimants’ allege as follows:


This action arises out of Respondent employer’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.

In support of their Motion to Dismiss Defendant alleges that this action is not arbitrable because the seafarers allegedly never submitted grievances to Celebrity or to the Claimant’s union. As shown below, however, Celebrity’s argument has no merit.

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). 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 a tribunal or through the grievance process] to enforce his claim. Id.

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 supreme law of the land 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. On this ground alone, Celebrity’s Motion to Dismiss should therefore be denied.[1]

Further, for the sake of argument, even if these claimants had not been seafarers – but workers in another industry – and therefore not exempted from the grievance process; Celebrity’s argument would still be defective for several reasons.

<strongFirst, throughout the course of their employment with Celebrity, the Seafarers never received copies of the collective bargaining agreement, and were never informed that in the event of a dispute concerning wages, they had to submit their claims through a formal grievance process. The CBA is an agreement entered into between a foreign union and Celebrity. At all times material, employee-seafarers are excluded from the negotiation and implementation of the CBA. Further, as shown below, during the relevant time period, these seafarers did not even know that they were members of a union. All in all, 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. Celebrity, therefore, cannot expect to have employees follow hypertechnical grievance procedures, when its own business practice is to conceal the information of such grievance procedures from the employees themselves.

Second, Celebrity has waived any defenses to timeliness under the grievance procedure. As shown below, Celebrity chose to skip over the grievance process under the CBA, and instead sought to compel adjudication of the claims in arbitration. In doing so, Celebrity breached what it now calls a pre-condition to arbitration, and is therefore estopped from asserting its timeliness defense.

Third, Celebrity’s timeliness argument is itself untimely, and therefore further grounds for waiver. At the time that it vigorously called upon the Court to compel adjudication of these types claims – four years ago– it did not raise its timeliness defense. The failure to do so constitutes inexcusable delay and waives the defense.

Fourth, Celebrity’s failure to pay wages constitutes “ongoing, continuous violations,” as opposed to single one-time events. As a result, the grievance can be filed at any time without being deemed a violation of the specific time limit set forth in the agreement.


1.The CBA and the underlying Claims

This is a claim being brought by Claimants for their former employer’s conduct which deprived them of a substantial portion of their wages, in breach of their employment contracts. The twenty-one claimants herein, all Indian nationals, worked for Celebrity as stateroom attendants aboard its ships. Stateroom attendants are generally responsible for housekeeping duties, including cleaning, preparation and sanitation of cabins.[2]

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.

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.[3]

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. See also Seafarers affidavits, attached hereto as Exhibit 1:

“…It is from these sources that I was able to learn that Celebrity recommended that passengers pay me $3.50 per passenger per day. Up until approximately August, 2002, I therefore, expected and to the best of my knowledge received earnings in the amount of $3.50 per passenger per day. Further, up to that point, I never shared – or was required to share – my gratuities with any other crewmembers.”

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.” (See CBA Excerpts attached hereto as Exhibit 2). As set forth in Claimants affidavits(Exhibit 1):

ldquo;.. To the best of my recollection, during my tenure with Celebrity, up to that point there had never been an assistant stateroom attendant position. On or about the aforementioned time, however, Celebrity required me to work in pairs with these newly hired assistant stateroom attendants.”

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. (See Exhibit “1”).Celebrity’s wrongful conduct continued until January 1st 2005, when the Company changed the terms of the CBA. [4]See (Exhibit 1):

“At first I complained to supervisors to no avail. I did not want to push them hard with questions or send any letters to shore side management out of fear of being retaliated against and losing my job. I am from Goa, India. This is a poor rural community where it is not easy to find work. Therefore, due to the pressure of having to make a living to sustain my family in India, I did not feel in a position to challenge my employer’s decision. Throughout my employment with Celebrity I was aware and it was well known that employees who complained or questioned orders to often would be terminated.”

2. Claimants asserted their claims through their spokesperson, Inacio Lobo.

In light of Celebrity’s breach of the CBA, on July 29, 2004 (well within the claim period) 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. § 10313. At that time, seafarer Lobo filed his 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 claimants. In effect, Mr. Lobo was acting as Claimants spokesperson.[5] On April 11, 2005 the lawsuit was moved to Federal Court.

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.” 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. See Celebrity’s Motion to Dismiss Plaintiffs Amended Complaint (moving to compel arbitration) attached hereto as Exhibit “3”. In doing so, as indicated below, Celebrity waived its defenses to enforce the grievance procedure. Celebrity is therefore estopped now from seeking to enforce the same process that it previously breached.

The Court, citing the CBA’s arbitral provision,[6] compelled Mr. Lobo to litigate the merits of those claims at arbitration. In compliance with the Court order, and pursuant to Celebrity’s petition to arbitrate, on July, 2008 Mr. Lobo and Celebrity commenced arbitral proceedings. Once again, at that time, Mr. Lobo proceeded on his own behalf and on behalf of all other similarly situated stateroom attendants, including the above named Claimants. On or about September, 2008, Mr. Lobo’s petition to be the Seafarers’ spokesperson was denied at that arbitration. Subsequently, on or about March 2009, Mr. Lobo stepped down as the seafarers proposed representative to settle his individual claims. As a result, the above named claimants sought to proceed, through their counsel, on their own behalf and on behalf of all other similarly situated employees. (See Exhibit “1”).



The crux of Celebrity’s argument in its Motion to Dismiss is that the Seafarers claims are non-arbitrable, because of their alleged failure to exhaust the grievance procedures set forth in their Collective Bargaining Agreements. In support thereof, Celebrity cites several arbitral decisions strictly enforcing deadlines for the timely submission of grievances. Celebrity’s entire argument and the decisions it cites, however, are inapposite and contrary to law.

It is well settled that a seaman is not required to exhaust grievance procedures before seeking a resolution of his claims in Court. See Larkins v. Hudson, 640 F. 2d 997, 1000 (9th Cir. 1980), citing the United States Supreme Court in Bulk v. Arguelles, 400 U.S. 351 (1971):

Larkins [seafarer] decided to forego the grievance process outlined in the Collective Bargaining Agreement and to pursue his claims in federal court. That was his right. It is well settled that a seaman is not required to exhaust grievance procedures before seeking a resolution of his wage claims in Court. United States Bulk Carriers, Inc. v. Arguelles, 400 U.S. 351, 356 (1971).

This is particularly the case when a seafarer is attempting to make claims for wages. See also Suissa v. American Export Lines, 507 F. 2d 1343 (2nd Cir. 1974):

The Court [in United States Bulk Carriers, Inc. v. Arguelles] read the provisions of 46 U.S.C. 596 [the Seaman’s Wage Act], concerning the amount and schedule for payment of seamen’s wages, and penalties for employer non-compliance, to imply a judicial remedy which an aggrieved maritime worker might in the first instance pursue in lieu of the grievance procedures favored by §301 of the Labor Management Relations Act, 29 U.S.C. §185 (1970) … In allowing an individual to bring his claim for wages directly before a judicial tribunal, Arguelles established an exception to the otherwise rigid principle that contract grievance procedures must be exhausted before any redress may be sought in Court. (Emphasis Added).

As explained by the Court in Suissa, the reason for the unique departure from the established rule lays in the policy which for nearly two hundred years the Seaman’s Wage Act and its predecessors, had been designated to effectuate. Suissa, at 1347. Seafarers – unlike workers in other industries – have been designated by Congress and the Federal Courts as a protected class with special rights and privileges.[7] These laws aim to secure prompt payment of seamen’s wages … and thus to protect them from the harsh consequences of arbitrary and scrupulous action of their employers, to which, as a class, they are particularly exposed. Id. Therefore, by carving out this exception – and allowing seafarers to skip the grievance process – “it was the [Supreme] Court’s objective to give full measure to this established purpose.” Suissa, at 1347. “Thus the Court resolved the literal conflict … by allowing a seaman the option of choosing either route to enforce his claim.Id., at 1347, citing United States Bulk Carriers, Inc. v. Arguelles, 400 U.S. 351, at 356 (1971).

Here, it is undisputed by Celebrity that Claimants are Seafarers/Maritime Workers, bringing claims for wages pursuant to the Seaman’s Wage Act. Therefore, at all times material, the supreme law of the land gave these Seafarer-claimant’s the right to skip the contractual grievance process and bring their claims directly before this tribunal. Celebrity’s argument that exhausting the grievance process was a pre-requisite to arbitration – while possibly applicable to workers in other industries – is therefore inapposite and contrary to law in the case of these seafarer/maritime worker claimants.[8]

On this ground alone, Celebrity’s Motion to Dismiss should be denied. However, even if, for the sake of argument, these workers had not been seafarers – but employees in another industry – Celebrity’s argument fails for the additional reasons outlined below.


As set forth in their affidavits (see Exhibit 1), throughout their employment period with Celebrity, Claimants: 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 – pay 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.

To be employed with Celebrity during the relevant period, Claimants’ were required to enter into a series of sign-on employment contracts. Each contract had a duration of approximately 9 months. Once a contract expired, the seafarer went home for a three month vacation, and subsequently returned and signed a new 9 month contract.

During the relevant period, on the first day of such contract, Claimants reported to a supervisor to sign the new agreement. At that time, the supervisor did not hand the employee copies of the CBA or the grievance process. The supervisor also did not talk to the employee about the grievance process or any other comparable provisions under the CBA. In fact, the sign-up was limited to the employee signing the contract and then reporting to work. (See Exhibit 1):

“The only documents provided to me by Celebrity, throughout the course of my employment were copies of my sign-on employment agreements. These agreements did not contain or explain any grievance or arbitration process.

Every time I signed on a Celebrity vessel, I had to sign the contract quickly, so that I could report to my post promptly. As a result, I did not have time to ask questions to the purser or other supervisors handing me the contract.

With every sign-on employment contract, I could either accept it or reject it. Further, I was never in a position in which I could modify the terms of the sign-on employment contract, or argue its contents with the Celebrity supervisor handing it to me. If I wanted the work, I needed to sign.”

Therefore, although as set forth above, at all times material the Seafarers complained to supervisors and other Celebrity representatives aboard the ship; Celebrity’s implementation of a system in which Seafarer-employees could not possibly know the exact hypertechnical requirements of the grievance procedure (drafted by the Company and a union that the Seafarers were not aware even existed) – made compliance with requirements such as notifying the Company in Miami and the Union in Rome impossible. (See In re. Yokohama Tire Corporation, Salem, Virginia and Local 1023, 117 Lab. Arb. Rep. (BNA) 509 (Sergent, 2002) (… arbitrators are frequently reluctant to dismiss a grievance without reaching the merits … where it results from innocent inadvertence or excusable neglect, and where the opposing party is not injured, thereby either in its ability to present the case or in the extent of damages that are suffered). (“emphasis added”). See also In re Cedar Coal Company, Denny Division, and United Mine Workers of America, 79 Lab. Arb. Rep. (BNA) 1928 (Dworkin, 1982):

“…the purpose of incorporating grievance procedure into a labor-management contract is to provide an alternative to strikes and other destructive forms of economic warfare. It is important, in order to preserve that goal, that employees be accorded full access to the contractual grievance procedure and their rights to have their claims heard and determined at each level.” (Emphasis added).

All in all, 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. Celebrity, therefore, cannot expect to have employees follow hypertechnical grievance procedures, when its own business practice is to conceal the information of such grievance procedures from the employees themselves.


As set forth earlier, contrary to Respondent’s assertions – Celebrity has had notice of these claims since 2004 (well within the claim period). At that time, Inacio Lobo, the designated spokesperson for Claimants, filed suit in Florida State Court on his own behalf and on behalf of all other similarly situated stateroom stewards (including above named Claimants). In response, Celebrity removed the case to Federal Court and sought to compel arbitration. In doing so, Celebrity never raised and never asked the Court to enforce the grievance procedures under the CBA. Instead, Celebrity and their counsel made the choice to skip over the grievance procedure requirements, and sought directly to compel arbitration. (See Exhibit “C”).

Now, in its Motion to Dismiss, Celebrity alleges that the grievance procedure is a “condition precedent to arbitration” rendering this action “non arbitrable.” Celebrity, however, cannot have it both ways. By passing over and skipping the “condition precedent,” and instead vigorously seeking to take this matter to arbitration – Celebrity effectively waived its procedural defense of untimely filing of grievances. See, e.g. Yapp v. Excel Corp., 186 F. 3d 12222, 1231 (10th Cir. 1996)(“A party who simply misunderstands or fails to predict the legal consequences of his deliberate acts cannot later, once the lesson is learned, turn back the clock to undo those mistakes.”); Cashner v. Freedom Stores, Inc., 98 F. 3d 572, 578 (10th Cir. 1996) (“Generally speaking, a party who takes deliberate action with negative consequences … will not be relieved of the consequences … when it subsequently develops that the choice is unfortunate”).

Further, even in the absence of the aforementioned, Celebrity has still waived its defense for another reason; Celebrity’s timeliness procedural defense is itself untimely. At the time it sought to compel the Seafarers to arbitrate, in its Motion filed on May 4th, 2005, Celebrity failed to raise any objections to the alleged untimely filing of grievances by the Seafarers. Instead, Celebrity waited 1,983 days (October 8, 2010) to raise the defense their present Motion to Dismiss. Such inexcusable delay constitutes further grounds for waiver of their procedural defenses. See In re The Jacksonville Port Authority and the Federal Public Employees FMCS, 123 Lab. Arb. Rep. (BNA) 183 (Sergent, 2006):

“the Employer’s timeliness argument is without merit and must be rejected for several reasons. First of all, ironically, the Employer’s timeliness argument is itself untimely… If such a defense could be raised at this late date, when the employer has made no effort to preserve the objection at any prior stage of the proceedings, the [claimants] would be unfairly and substantially disadvantaged. In that regard, well considered decisions, rendered by some of the leading arbitrators in the field, have determined that the timeliness defense is one that must be raised and preserved by the Company, and one that may not be raised for the first time at the arbitration hearing itself. (Emphasis Added).


Another reason why these claims are not untimely is that the Seafarers grievances are not single, one time-events. On the contrary, Celebrity’s failure to pay wages constitute “ongoing, continuous violations, as opposed to single, one-time events.See In re Guernsey County District Public Library and Ohio Association of Public School Employees, 107 Lab. Arb. Rep. (BNA) 435 (Sergent, 1995):

“The second and perhaps even more compelling reason the instant grievance istimely is because it pertains to an ongoing, continuous violation, as opposed to single, one-time event. A cogent explanation of this concept appears in “How Arbitration Works, Id. p. 197, as follows:

Many arbitrator’s have held that “continuing” violations of the agreement (as opposed to a single isolated and completed transaction) give rise to “continuing” grievances in the sense that the act complained of may be said to be repeated from day to day – each day there is a new “occurrence;” these arbitrators have permitted the filing of such grievances at any time, this not being deemed a violation of the specific time limit stated in the agreement.” (Emphasis Added).

Herein, the Seafarers claims are for unpaid wages and, therefore, in addition to being asserted as a breach of contract, they are also being brought pursuant to the Seaman’s Wage Act, 46 U.S.C. 10313.[9] Under to the Act, which was specifically enacted to protect seafarers such as claimants, a ship-owner (i.e. Celebrity) is required to pay its seafarer employees the “the balance of unpaid wages” at the end of the voyage. If payment is not made, in addition to the unpaid wages, the act penalizes the employer ship-owner, requiring it to pay the seafarers “two days wages for each day payment is delayed.” In light of this, as long as the employer’s delay in payment continues, the violation remains ongoing, and thereby, the assertion of the grievance can never be untimely.

To date, Celebrity has not paid back the Seafarers for the amount that it forcibly deducted from their wages. The failure to pay over the last four years has been continuously triggering new penalties against Celebrity, assessing new damages against it, for every day that the wages continue to remain unpaid. In other words, for every day that Celebrity fails to pay these Seafarers, their grievance will remain continuing and ongoing. Therefore, as in In re Guernsey, the ongoing nature of the Seafarers grievances allows them to be filed “at any time without being deemed a violation of the specific time limit set forth in the agreement.”[10] As long as Celebrity does not pay, the penalties will accrue daily, making Celebrity liable to these Seafarers for an additional “two days wages.”


For the aforementioned reasons Celebrity’s Motion should be denied.


[1] Celebrity’s omission of this binding precedent, constitutes a misrepresentation of the law to this Honorable Tribunal.

[2] Celebrity – like other cruise lines – hires foreign nationals to fill these positions. In doing so, Celebrity is able to pay low wages and also – using flags of convenience – circumvent compliance with a number of federal labor statutes. See Rory Bahadur, Constitutional History, Federal Arbitration and Seaman’s Rights Sinking in a Sea of Sweatshop Labor, Journal of Maritime Law and Commerce, 39 JMARLC 157 (2008).The majority of new workers are drawn from under-industrialized countries in Asia, Eastern Europe, and Central America. They are seduced by the idea of getting paid to travel the world on cruise ships. However, the image is not the reality. As the International Transport Worker’s Federation Reports, “below decks on virtually all cruise ships, there is a hidden world of long hours, low pay, insecurity and exploitation. Those who work continuously below deck, like in the galley’s [ship’s kitchens] rarely see the light of day, let alone the shimmering sea of the Caribbean.

A flag of convenience allows an American corporation to operate an American-owned vessel under the laws of whatever country the American business owner chooses to register with. American business owners obviously register their ships under the flag of the country with the least restrictive labor and compensation laws and the most favorable laws for profit. The cruiselines exploit this legal loophole which allows them to virtually expose cruise industry workers to “sweatshop” equivalent conditions. Of course, the American-based cruise lines simultaneously benefit from the protections of American corporate law. See Id.

[3] With regard to Group C employees, the CBA provides, in part:“ Employer will Recommend That Passengers Pay Gratuities According to the Following Scale: Cabin Steward USD 3.50 Per Passenger Per Day

Waiter USD 3.50 Per Passenger Per Day
Assistant Waiter USD 1.50 Per Passenger Per Day” (Emphasis added).

[4] At all times material, Celebrity’s actions frustrated the intent of the CBA. As the CBA’s Article 33 – Waivers and Assignments – provides: The Company undertakes not to demand or request any seafarer to enter into any document whereby, by way of waiver of assignment or otherwise, the seafarer agrees or compromises to accept variations to the terms of this agreement or return to the Company, their servants or agents, any wages (including back wages) or other emoluments due or to become due to him/her under this Agreement; and the Company agrees that any such document already in existence shall be null and void of no legal effect.

[5] Article 26 delineating “Grievances and Disputes” in the Collective Bargaining sets forth that “If the Seafarer feels that a provision of this Agreement has been violated or that she/he has been unfairly treated, the Seafarer shall have a 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.

[6] Article 26 of the Arbitral provision under the CBA provides in part that “[i]f the matter is not resolved within forty-eight (48) hours after conference, either party may refer it to an arbitrator for final resolution. Arbitrator to be duly appointed by the Union and the Company.”

[7] As succinctly explained by the Court in Isbrandtsen Marine Servs.