March 21, 2014
John Doe v. Star Clippers, Ltd., et al
Objections to Report and Recommendation
The experienced maritime lawyers at Lipcon, Margulies & Winkleman, P.A. fight to make sure that our clients get their day in court. Often times seaman injured aboard cruise ships face arbitration and/or forum selection clauses aimed at denying them access to U.S. Courts. When this happens, our attorneys fight to protect seafarers hard won rights.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO.: 12-CV-23768-KING/McALILEY
STAR CLIPPERS, LTD. CORP.,
STAR CLIPPERS GSA, INC., d/b/a
STAR CLIPPERS AMERICAS and
LUXEMBOURG SHIPPING SERVICES, S.A.,
d/b/a STAR CLIPPERS,
PLAINTIFF’S OBJECTIONS TO THE REPORT AND RECOMMENDATION OF THE MAGISTRATE JUDGE REGARDING DEFENDANTS’ MOTION TO DISMISS
Plaintiff, JOHN DOE, by and through his undersigned counsel, hereby files his objections to the Hon. Magistrate’s report and recommendation regarding the Defendants’ Motion to Dismiss [D.E. 66] , and as good cause therefore relies on the following:
This case involves a seaman who was injured while working aboard the vessel Star Flyer. At the time of the incident, the Star Flyer was owned by Defendant Star Clippers, Ltd., (“LTD”), and Plaintiff had an employment contract with Luxembourg Shipping Services, S.A. (“LSS”). Defendant Star Clippers GSA, Inc. (“GSA”) is an American company who allegedly handles bookings for Star Clippers Cruises. All of these entities are a part of the cruise line known as Star Clippers Cruises.
Plaintiff alleged that each of the three Defendants were his Jones Act employer. [D.E. 63 ¶ 5]. All three Defendants moved to dismiss Plaintiff’s claims on various grounds including, forum non conveniens¸ lack of personal jurisdiction, and insufficient service of process. [D.E. 24 and 66]. The parties agreed to take jurisdictional discovery so the Plaintiff could more fully respond to the arguments made in the Defendants’ Motion to Dismiss. [D.E. 25]. The Court granted the parties 120 days in which to conduct jurisdictional Discovery. [D.E.26].
After completion of jurisdictional discovery, Plaintiff filed his response in opposition to the Defendants’ Motion to Dismiss. [D.E. 47]. The Defendants withdrew their challenge to service of process in their reply brief [D.E. 53, pg. 2], and the Hon. Magistrate never addressed Defendants’ challenge to jurisdiction. Instead, the Hon. Magistrate’s report recommends that the Defendants’ motion be granted on grounds of forum non conveniens. As will be demonstrated below, this Honorable Court should use its discretion to deny the Defendants’ motion because the Plaintiff has shown that the forum selection clause in his employment contract is void, and further that the Defendants have a base of operations in Miami, FL that warrants the application of U.S. Law.
II. Standard of Review
When reviewing a Magistrate Judge’s report, a District Judge reviews “de novo any part of the magistrate judge’s disposition that has been properly objected to.” Fed. R. Civ. P. 72(b); see also 28 U.S.C. § 636(b). The District Judge has discretion to “accept, reject, or modify” the recommended disposition made by the magistrate judge. Fed. R. Civ. P. 72(b); 28 U.S.C. § 636(b).
III. The forum selection clause in Plaintiff’s employment contract with Defendant LSS is invalid on its face, thus the Magistrate wrongfully relied on this clause to grant LSS’s Motion to Dismiss.
In response to the Defendants’ Motion to Dismiss, Plaintiff argued that the forum selection clause in his employment contract is per se invalid. This argument is given more weight pursuant to the 2008 amendment to the Jones Act.
“The amendment to the Jones Act deleted the venue clause…. Such action by Congress evidences its strong policy to protect seaman. Accordingly, seaman may rely on the FELA venue clause at 45 USC Section 56, and the federal cases interpreting it. Since a Jones Act seaman’s legal rights are derived expressly from FELA, including the FELA venue clause, the Boyd decision, which prohibits enforcement of venue selection clauses for FELA workers, appears to apply in Jones Act cases to prohibit venue selection clauses… from being enforced.” Rozanska v. Princess Cruise Lines, Ltd., 07-23355-CIV, 2008 WL 8883868 (S.D. Fla. Aug. 5, 2008).
The Hon. Magistrate disagreed with the above argument, finding that the later Eleventh Circuit Court of Appeals case of Lindo v. NCL (Bahama), Ltd., 652 F.3d 1257 (11th Cir. 2011), had rejected it. However, the Lindo case dealt only with an arbitration provision applying foreign law in a seaman’s contract, not a forum selection clause. As the Court in Lindo phrased it “[w]e style this argument as a claim that Congress has created a ‘subject-matter exception’ to arbitrability.” This is an important distinction because Lindo’s holding is very narrow. Specifically, the court was asked to determine whether the amendment meant that 46 U.S.C. § 55 prohibited arbitration clauses because they sought to “exempt [employers] from any liability created by [FELA]” and thus created an entire class of persons who were exempt from arbitration agreements, which courts had previously enforced pursuant to the New York Convention. The heading of the Court’s opinion on this issue demonstrates that forum selection clauses were not considered in the analysis: “Congress has not excepted Jones Act Claims from Arbitration.” Accordingly, Lindo’s holding should be limited to arbitration provisions in seaman’s contracts.
Plaintiff is not trying to invalidate an arbitration provision in his contract. Rather, Plaintiff is dealing with the purely procedural issue of the appropriate forum for bringing his suit. Plaintiff relies on Rozanska to demonstrate that a forum selection clause specifying a foreign forum is invalid when the Plaintiff’s employer can be found in the present forum.
The Committee Report on the 2008 Amendment demonstrated that congress meant to simplify what had been a confusing issue regarding venue for Jones Act cases, stating:
[The venue clause was] repealed to make clearer that the prior law regarding venue, including the holding of Pure Oil Co. v. Suarez, 384 U.S. 202 (1966) and cases following it, remains in effect, so that the action may be brought wherever the seaman’s employer does business.
The Jones Act specifically incorporates FELA including the venue provisions therein. See Kernan v. Am. Dredging Co., 355 U.S. 426 (1958). Accordingly, the prior law on venue selection clauses in a contract governed by the Jones Act can be found in the case law interpreting FELA. The pertinent case is the U.S. Supreme Court opinion of Boyd v. Grand Trunk W. R. Co., 338 U.S. 263, 70 S. Ct. 26, 94 L. Ed. 55 (1949), which holds that an employee bringing an action under FELA should not be limited in his choice of forum. The only exception to this rule, as noted by the Eleventh Circuit in Lindo¸ is when a seaman has entered into a valid arbitration agreement which is enforceable pursuant to the New York Convention. Because no such arbitration agreement exists herein, the Plaintiff’s choice of forum cannot be restricted and Plaintiff may bring suit wherever his employer is doing business pursuant to Pure Oil Co. v. Suarez, 384 U.S. 202 (1966). As will be more fully set forth below, the Plaintiff’s employer is doing business in Miami.
IV. This Honorable Court should deny Defendants LTD and GSA’s Motion to dismiss for forum non conveniens, because these Defendants have a base of operations in Miami, FL and thus U.S. law applies to this case.
As noted in the Hon. Magistrates report and recommendation, an eight factor test determines whether U.S. law applies to Plaintiff’s case against Limited and GSA. Although Plaintiff concedes that seven of those factors weigh in favor of the foreign forum, the eighth factor “operational business contacts with United States”) weighs in favor of applying U.S. law and is the most compelling and determinative in the analysis. See Membreno v. Costa Crociere S.p.A., 425 F. 3d 932 (11th Cir. 2005) (“… the only significant question is whether the defendants have a substantial base of operations in the United States warranting the application of United States law. If Defendant’s have a substantial base of operations in the United States, this factor alone can justify the application of United States law.”)
As noted by the Hon. Magistrate, GSA maintains a substantial base of operations in Miami. For this reason alone Plaintiff’s claims against GSA should not have been dismissed for forum non conveniens as U.S. law clearly applies to those claims and Plaintiff has alleged that GSA is one of his Jones Act employers. See Szumlicz v. Norwegian American Line, Inc., 698 F. 2d 1192 (11th Cir. 1983). As to LTD and LSS, jurisdictional discovery demonstrated that there is simply no meaningful distinction between any of the three Defendants. Although each Defendant plays different roles in the Star Clippers Cruise business, they are indistinct as corporations. They are more akin to three different employees working for the same company, rather than three separate companies working together.
Although the Magistrate’s Report and Recommendation says that Plaintiff makes this accusation without any factual support, the opposite is true. In Plaintiff’s response to Defendants’ Motion to Dismiss, he laid out three pages of bullet points highlighting some of the facts obtained during jurisdictional discovery that demonstrate that all three Defendants were merely corporate shells. [D.E. 47 pgs. 11-13]. Those facts included but are not limited to:
1. The entities share offices. [D.E. 47-1, pg. 6, L: 3-13 and pg. 27, L: 5-8].
2. One entity pays 70% of another entities managing directors salary. [D.E. 47-1 pg. 34, L: 5 to pg. 35, L: 7].
3. Even though the Plaintiff had an employment contract with LSS, his salary was paid by LTD. [D.E. 47-1, pg. 59, L: 4-7.]
4. The various companies share employees. [D.E. 47-2, pg. 37, L: 25 – pg. 38, L: 9.]
5. The boards of director for LSS and LTD share members and GSA’s board has a single member who is the son of the owner of Star Clippers Cruises. Eventhough GSA has a board of directors, it “doesn’t meet often.” D.E. 49 (Deposition of Jack Chattam filed under seal), pg. 9, L: 25 – pg. 10, L: 13] and [D.E. 47-2, pg. 37, L: 25 – pg. 38, L: 9].
6.All three companies are majority owned by the same man, Mikael Kraft (both individually and through other corporations that he owns), the owner of Star Clippers Cruises. [D.E. 47-2, pg. 8, L: 3 – pg. 9, L: 22*; pg. 25, L: 1-22, pg. 26, L: 2-24]. The Defendants in this case readily admit that two of them have zero value. [D.E. 47-2, ¸pg. 8, L: 3 – pg. 9, L: 22*; pg. 25, L: 1-22, pg. 26, L: 2-24]. It could not be more apparent that these two entities (GSA and LSS) are simply corporate shells for LTD, who is doing business in Miami, FL.
a. LSS and GSA have no assets and LTD guarantees the office that GSA leases in Miami, FL. [D.E. 47-2,, pg. 9, L: 23 – pg. 10, L: 1]. [D.E. 49, pg. 31, L: 13-17].
b. LTD loans GSA hundreds of thousands of dollars to keep GSA afloat. [D.E. 49, pg. 38, L: 23 – pg. 39, L: 8].
c. GSA makes only a token “profit” each year. This profit is so small that it is clear that GSA is only acting as a shell for LTD and LSS. This is even clearer when one considers the actual value of the total ticket sales that are processed in the Miami office. [D.E. 49, pg. 44, L: 13 – pg. 45, L: 14].
The above facts are not indicative of “sister corporations” as reported by the Hon. Magistrate, but rather one corporation, operating through various shells for convenience and tax purposes. Accordingly, the substantial base of operations GSA maintains in Miami should be imputed to LTD and GSA.
The Hon. Magistrate argues that even if these corporate ties were close enough to impute GSA’s base of operations to LTD and LSS, this would not matter because the Eleventh Circuit Court of Appeals case of Meier ex rel. Meier v. Sun Int’l Hotels, Ltd., 288 F.3d 1264, 1272 (11th Cir. 2002) on which the Plaintiff relied, dealt only with personal jurisdiction. What the Hon. Magistrate failed to recognize is that the Meier analysis has direct bearing on a seaman’s forum non coveniens analysis under Pure Oil. To wit, the Eleventh Circuit in Meier held, “[o]n the other hand, if the subsidiary is merely an agent through which the parent company conducts business in a particular jurisdiction or its separate corporate status is formal only and without any semblance of individual identity, then the subsidiary’s business will be viewed as that of the parent and the latter will be said to be doing business in the jurisdiction…” citing Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1069.4 (3d ed. 2002). Moreover, it should be noted that when conducting a forum non conveniens analysis the Court should look beyond the corporate formalities to see if the entity is doing business in Miami. See Williams v. Cruise Ships Catering, Serv. Int’l, N.V., 299 F.Supp.2d 1273, 1279 (S.D.Fla.2003). Again, the Plaintiff may sue wherever his employer does business. Star Clippers clearly does business in Miami, Florida, in fact, the front page of their website lists only one business address: 760 NW 107th Avenue, Suite 100 Miami, Florida 33172.
The above facts could not be more on point with the Eleventh Circuit’s analysis in Meier, and LTD and LSS should be found to be doing business in Miami, FL with a substantial base of operations here. Accordingly, this case should not be dismissed for forum non conveniens.
The District Court should use its discretion to deny the Defendants’ Motion to Dismiss. Forum selection clauses in seaman’s contracts are void pursuant to well established law under FELA and the Jones Act. The magistrate incorrectly relied on case law interpreting arbitration provisions under the New York convention to find otherwise.
Pursuant to long standing maritime jurisprudence, the Plaintiff may sue his employer wherever it is doing business. Jurisdictional Discovery revealed that Star Clippers Cruises has a very substantial base of operations in Miami, FL. Although there are three separate corporate Defendants involved in this case, they are truly only one cruise line who maintains thin corporate shells for legal and tax purposes. Accordingly, Plaintiff should be able to sue each Defendant in Miami, FL.
WHEREFORE Plaintiff respectfully requests that this Honorable Court Deny the Defendants’ Motion to Dismiss, and allow Plaintiff to maintain his suit in the Southern District of Florida.
LIPCON, MARGULIES, ALSINA & WINKLEMAN, P.A.
Attorneys for Plaintiff
Suite 1776, One Biscayne Tower
Miami, Florida 33131
Telephone: (305) 373-3016
Fax: (305) 373-6204
By: s/ Eric C. Morales
ERIC CHARLES MORALES
FLORIDA BAR NO. 91875
 The Plaintiff filed an amended complaint to add two additional parties that were discovered during the jurisdictional discovery period. [D.E. 63]. The Defendants filed a renewed motion to dismiss incorporating the previous arguments [D.E. 66] that were made in their original motion to dismiss. [D.E. 24]. Ultimately, the parties stipulated to the dismissal of the two additional defendants. [D.E. 81].
 The Plaintiff was injured when his superior ordered him to fix a food elevator in the galley. The Plaintiff was instructed to cut a cable suspending the elevator and told that the elevator had been secured. When the Plaintiff did as he was ordered, the food elevator fell onto his forearm, breaking both bones therein. [D.E. 63 ¶ 9].
 The venue clause in the Jones Act stated that “An action under this section shall be brought in the judicial district in which the employer resides or the employer’s principal office is located.” 46 U.S.C. § 30104(b)(2007). The Boyd decision referenced in Rozanska above, is the U.S. Supreme Court case of Boyd v. Grand Trunk W. R. Co., 338 U.S. 263, 70 S. Ct. 26, 94 L. Ed. 55 (1949), which held that a railway employer could not limit an employee’s choice of forum contrary to the choice of venue provided to employees in FELA.
 Notably, the Lindo opinion does not mention the Rozanska opinion.
 Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
 As Plaintiff will make clear below, there is little to no distinction between all three Defendants. They are simply corporate shells of the same cruise line. Further, two of those shells are registered to do business in Florida, and one maintains a substantial base of operations a few miles from this courthouse.
 As such, GSA cannot be dismissed at this stage of the proceedings as the question of which party is the Plaintiff’s Jones Act employer is a question of fact for a jury.
 The managing director of LSS testified that the money to pay crewmembers salary was given to LSS by LTD.
 The Hon. Magistrate also argued that Plaintiff did not provide express analysis regarding piercing the corporate veil. Respectfully, Plaintiff disagrees. The above facts showed that 1) one shareholder (Mikael Kraft) dominated and controlled all of the corporations; 2) LTD uses GSA to avoid paying U.S. Taxes (booking and processing millions of dollars in passenger fares through the U.S. but paying de minimus taxes; and 3) Star Clippers is using their foreign status to push Plaintiff’s claims from U.S. courts, depriving him of his rights under U.S. law.