United States District Court, D. Hawaii
JOHN JOHNSON and LOIS JOHNSON, d/b/a SEA FARMERS, LLC, Plaintiff,
THE F/V KILAUEA, in rem, and F/V KILAUEA, INC., a Washington Corporation, and MICHAEL OSTENDORP, IN PERSONNAM, Defendants.
ORDER DENYING DEFENDANTS' MOTION TO COMPEL
ARBITRATION AND LIFTING STAY ORDERED ON MARCH 3,
E. KOBAYASHI, District Judge.
January 14, 2016, Defendants F/V Kilauea, in rem,
and F/V Kilauea, Inc., a Washington Corp. (collectively
"Defendants"), filed a Motion to Compel Arbitration
("1/14/16 Motion to Compel"). [Dkt. no. 58.] On
February 8, 2016, Plaintiffs John Johnson ("Mr.
Johnson") and Lois Johnson ("Mrs. Johnson"),
doing business as Sea Farmers, LLC (collectively
"Plaintiffs"), filed their memorandum in
opposition, and Defendants filed their reply on February 15,
2016. [Dkt. nos. 68, 69.] On February 25, 2016, this Court
issued an entering order ("2/25/16 EO") finding
this matter suitable for disposition without a hearing
pursuant to Rule 7.2(d) of the Local Rules of Practice of the
United States District Court for the District of Hawaii
("Local Rules") and ruling on the 1/14/16 Motion to
Compel. [Dkt. no. 71.] The instant Order supersedes the
2/25/16 EO. After careful consideration of the motion,
supporting and opposing memoranda, and the relevant legal
authority, Plaintiff's 1/14/16 Motion to Compel is HEREBY
DENIED because under Hawaii law, there must be bilateral
consideration for an arbitration agreement and it must be in
writing. As to Mrs. Johnson, she did not sign the agreement,
and therefore she cannot be compelled to arbitrate. As to Mr.
Johnson, he did sign the agreement, but Defendants reserved
the right to alter its terms unilaterally - that is, without
input or notice to Mr. Johnson, and therefore there is no
bilateral agreement and he cannot be compelled to arbitrate.
March 19, 2015, Defendants filed a Motion to Compel Mediation
and Arbitration ("3/19/15 Motion to Compel"). [Dkt.
no. 14.] On May 12, 2015, the magistrate judge filed an order
("5/12/15 Order") granting in part and denying in
part the 3/19/15 Motion to Compel. [Dkt. no. 27.] The
background of this case is well known to the parties and was
explained in the 5/12/15 Order. See 5/12/15 Order at 2-4.
5/12/15 Order, the magistrate judge ordered Plaintiffs to
mediate their claims pursuant to Local Rule 88.1(d)(2), and
he stayed the case pending mediation. [5/12/15 Order at 12.]
On December 2, 2015, the magistrate judge lifted the stay.
[Minutes, filed 12/2/15 (dkt. no. 49).] The 1/14/16 Motion to
Compel moves to compel arbitration on all of Plaintiffs
claims. [1/14/16 Motion to Compel at 2.] Plaintiffs argue
that the agreement at issue, see 1/14/16 Motion to Compel,
Exh. A (Captain Employment Agreement)
("Agreement"), "is unenforceable due to
Defendants' misrepresentations, for lack of
consideration, under the doctrine of unconscionabilty, and
for failure to satisfy the requirement of signing written
employment agreements before the commencement of fishing
voyages in violation of 46 U.S.C. Â§ 10601." [Mem. in
Opp. at 2.]
Court must first determine the law that applies to the
instant matter. Insofar as Defendants argue that the Federal
Arbitration Act ("FAA"), 9 U.S.C. Â§ 1, applies
here, see Mem. in Supp. of 1/14/16 Motion to Compel at 7
("[S]hould Plaintiffs attempt to contend that the
present matter cannot be subject to arbitration because it
supposedly falls beyond the scope of the [FAA], no such
argument can be availing."), they are incorrect. The FAA
states, in relevant part, "nothing herein contained
shall apply to contracts of employment of seamen, railroad
employees, or any other class of workers engaged in foreign
and interstate commerce." 9 U.S.C. Â§ 1. "Although
the FAA does not define seamen, ' courts have relied on
judicial interpretation of the Jones Act, such that a seaman
under the Jones Act is also a seaman for the purposes of
exemption under Â§ 1 of the FAA." Veliz v. Cintas
Corp., No. C 03-1180 SBA, 2004 WL 2452851, at *4 (N.D.
Cal. Apr. 5, 2004) (footnote and some citations omitted)
(citing Brown v. Nabors Offshore Corp., 339 F.3d
391, 393 (5th Cir. 2003)), modified on other grounds on
reconsideration, 2005 WL 1048699 (N.D. Cal. May 4,
2005). The United States Supreme Court has held:
We believe the better rule is to define... "seaman"
under the Jones Act solely in terms of the employee's
connection to a vessel in navigation. This rule best explains
our case law and is consistent with the pre-Jones Act
interpretation of "seaman" and Congress'
land-based/sea-based distinction. All who work at sea in the
service of a ship face those particular perils to which the
protection of maritime law, statutory as well as decisional,
McDermott Int'l, Inc. v. Wilander, 498 U.S. 337,
354 (1991) (citation omitted). The Court CONCLUDES that
Plaintiffs, who are connected to "a vessel in
navigation, " see id., are seamen for purposes of the
also appears to be some uncertainty about whether Hawaii law
or Washington law applies to the Agreement. See, e.g., Mem.
in Supp. of 1/14/16 Motion to Compel at 7 ("Further,
even if - as Plaintiffs have incorrectly contended in the
past - Washington law is applicable to the present matter,
they will be able to show no distinction between Washington
law and Hawaii law."). "A seaman's contract to
work aboard a vessel is a maritime contract." Madeja
v. Olympic Packer, LLC, 155 F.Supp.2d 1183, 1209 (D.
Hawaii 2011) (citing Aqua-Marine Constructors, Inc. v.
Banks, 110 F.3d 663, 670-71 (9th Cir.), cert.
denied, 522 U.S. 933, 118 S.Ct. 339, 139 L.Ed.2d. 263
(1997)). Further, "[u]nder choice of law
rules in maritime contract cases in the Ninth Circuit, the
court must apply the law of the state which has the most
significant relationship to the transaction."
Id . (citations and internal quotation marks
omitted). In making that determination, "the court must
consider: (a) the place of contracting; (b) the place of
negotiation; (c) the place of performance; (d) the location
of the subject matter of the contract; and (e) the domicile,
residence, nationality, place of incorporation, and place of
business of the parties." Id . (citing
Aqua-Marine, 110 F.3d at 673). Here, the Agreement
was signed in Hawaii, the work was performed in Hawaii, and
the subject of the contract is located in Hawaii. The Court
therefore FINDS that Hawaii has the most significant
relationship to the Agreement, and it will apply Hawaii law.
Hawaii Uniform Arbitration Act ("HUAA"), Haw. Rev.
Stat. Chapter 658A, "codifie[s] [the state's]
endorsement of the enforceability of arbitration
agreements." See Brown v. KFC Nat'l Mgmt.
Co., 82 Hawaii 226, 233, 921 P.2d 146, 153 (1996). The
HUAA states, in relevant part that, "[a]fter June 30,
2004, this chapter governs an agreement to arbitrate whenever
made." Â§ 658A-3(c). Section 658A-6(b) states that
"[t]he court shall decide whether an agreement to
arbitrate exists or a controversy is subject to an agreement
to arbitrate." Further,
[o]n motion of a person alleging that an arbitration
proceeding has been initiated or threatened but that there is
no agreement to arbitrate, the court shall proceed summarily
to decide the issue. If the court finds that there is an
enforceable agreement to arbitrate, it shall order the
parties to arbitrate.
Hawaii Supreme Court has held that, on "a motion to
compel arbitration, the court is limited to answering two
questions: 1) whether an arbitration agreement exists between
the parties; and 2) if so, whether the subject matter of the
dispute is arbitrable under such agreement."
Douglass v. Pflueger Haw., Inc., 110 Hawaii 520,
530, 135 P.3d 129, 139 (2006) (footnote, ...