Byron Chemaly, a seaman employed on the M/Y Fountainhead, a yacht registered in the Cayman Islands, suffered a shoulder injury while assisting in recovering an underwater scooter. He filed suit in Florida state court against the yacht's owner, his nominal employer, the yacht's beneficial owner, and other related entities. Chemaly asserted seven claims, including a Jones Act negligence claim, unseaworthiness, and failure to provide maintenance and cure. The defendants removed the case to federal court and moved to compel arbitration based on a provision in Chemaly's employment agreement requiring disputes to be resolved in the Cayman Islands. The district court compelled arbitration for the Jones Act, maintenance, and cure claims against all defendants, while remanding other claims to state court. Chemaly appealed the arbitration order.
The court first addressed whether the New York Convention applies to seamen's employment agreements. Relying on its prior decisions in Bautista and Lindo, the court held that the Convention's four prerequisites were met and that the Federal Arbitration Act's exemption for seamen does not apply to the Convention. The court rejected the argument that the Supreme Court's decision in Outokumpu abrogated these precedents, noting that Outokumpu did not address the specific statutory exemptions for seamen. The court also found that the arbitration provision did not conflict with the agreement's choice-of-law and venue clause, as the parties could arbitrate and then litigate enforcement in the Cayman Islands. Next, the court analyzed whether non-signatory defendants could compel arbitration under equitable estoppel. For the Jones Act claim, the court found that Chemaly alleged the defendants were liable in the alternative, not in concerted misconduct, which failed the interdependent and concerted misconduct test required to bind non-signatories. However, for the maintenance and cure and failure to treat claims, the court found that Chemaly alleged a common breach of duty by all defendants regarding his post-injury care. This interdependent sequence of events allowed the non-signatories to enforce the arbitration clause for those specific claims. The court declined to consider the alter ego theory as it was not raised below.
The decision clarifies that while seamen's arbitration agreements are generally enforceable under the New York Convention, non-signatory defendants must demonstrate specific interdependent and concerted misconduct to compel arbitration for Jones Act negligence claims. For maintenance and cure claims, the broad duty owed by all maritime entities may satisfy this standard. The ruling remands the case to the district court to proceed with arbitration for the maintenance and cure claims against all defendants, while the Jones Act claim against non-signatories proceeds in federal court. The court dismissed the defendants' cross-appeal regarding claims remanded to state court due to lack of jurisdiction.
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