Acab et al v. Chenrosa, LLC et al

Filing 14

ORDER: (1) Denying Plaintiffs Motion To Remand; And (2) Granting DefendantsMotion To Compel Arbitration. [ECF Nos. 3 , 4 ]. Signed by Judge Roger T. Benitez on 3/26/2024. (ddf)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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RICHY ACAB, an individual; and
RICHY ACAB, JR., an individual,

Case No.: 3:23-cv-00994-BEN-AHG
ORDER:

Plaintiffs,
v.

(1) DENYING PLAINTIFFS’
MOTION TO REMAND; and

CHENROSA LLC, a Florida limited
liability company; JOSEPH D’ALFIO, an
individual; and DOES 1 through 20,

(2) GRANTING DEFENDANT’S
MOTION TO COMPEL
ARBITRATION.

Defendants.

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[ECF Nos. 3,4]

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On April 13, 2023, Plaintiffs Richy Acab and Richy Acab, Jr. (“Plaintiffs”) filed a

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civil complaint in the San Diego Superior Court against Defendants Chenrosa, LLC

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(“Chenrosa”), Joseph D’Alfio and DOES 1 through 20 (collectively, “Defendants”)

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alleging five claims for relief. ECF No. 1-2 (“Compl.”). On May 30, 2023, Defendant

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Chenrosa removed the action to this Court on several grounds, one being jurisdiction

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pursuant to 9 U.S.C. §§ 203, 205. ECF No. 1.

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Before the Court are two motions—a motion to remand this action to state court

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filed by Plaintiffs, and a motion to compel arbitration and dismiss the complaint filed by

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Chenrosa. ECF Nos. 3, 4. Both motions are fully briefed. See ECF Nos. 9-12. Both
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motions were submitted on the papers without oral argument pursuant to Civil Local Rule

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7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure. See ECF No. 13. For

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the reasons set forth below, the Court DENIES Plaintiffs’ motion to remand and

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GRANTS Defendant’s motion to compel arbitration.

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I. BACKGROUND
Plaintiffs, citizens of the Philippines, were residing and working out of the U.S.

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Port in Pago Pago, American Samoa before signing on to Defendant’s Vessel. Compl. ¶¶

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2-3; ECF No. 4-2 ¶¶ 4-5, Decl. of Richy Acab Sr. (“RAS Decl.”). Plaintiff Acab Sr. was

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hired to work on the engine of the F/V Evelina Da Rosa (the “Vessel”) in June 2021, with

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repairs completed by July 2021. Compl. ¶ 5; RAS Decl. ¶¶ 5-6. After the repairs were

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completed, the Vessel departed American Samoa for the intended fishing ground with

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both Plaintiffs aboard working as crew. RAS Decl. ¶ 6. However, the main engine broke

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down one day into the journey and the Vessel was towed back to Pago Pago. Id.

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Afterwards, a plan was made to tow the Vessel to Honolulu for repairs and then

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immediately leave for the next fishing trip. Id. ¶ 7-8. Plaintiffs, along with most of the

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crew, agreed to accompany the Vessel to Honolulu and onto the next fishing trip. Id.

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The Vessel left Pago Pago for Honolulu on August 3, 2021. RAS Decl. ¶ 9. In April

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2022, the Vessel was still docked in Honolulu. Compl. ¶ 12.

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On April 1 and 2, 2022, Plaintiffs were ordered to empty the Vessel’s diesel fuel

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settling tank of diesel sludge. Id. During this process, Richy Acab Sr. had to physically

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enter the tank to shovel and sweep the sludge into a bucket to be hauled out. Id. The

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diesel tank contained toxic fumes and was not well ventilated. Id. Richy Acab Sr.

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alleges he was not provided any protective equipment while he performed this task. Id.

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Richy Acab Sr. alleges he suffered permanent damage to his heart because of exposure to

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the toxic fumes and he needed to seek life-saving medical treatment at a hospital. Id.;

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RAS Decl. ¶ 3. Richy Acab Sr. spent approximately two weeks in the hospital

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recuperating. Id. This event is referred to as the “Incident.” Compl. ¶ 12; RAS Decl. ¶ 3.

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Relevant here, Plaintiffs claim they were not provided their employment

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agreements until August 4, 2021 (the first day after leaving Pago Pago for Honolulu).

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RAS Decl. ¶ 10; ECF No. 4-3 at ¶ 8, Declaration of Richy Acab Jr. (“RAJ Decl.”).

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Plaintiffs allege they were instructed to date the document August 3, 2021 not August 4,

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2021. RAS Decl. ¶ 12; RAJ Decl. ¶ 8.

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II. LEGAL STANDARDS

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This case concerns written maritime employment agreements containing

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arbitration clauses. Plaintiffs do not dispute that they signed the written employment

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agreements which Chenrosa attached to its motion to compel. See ECF No. 3-2,

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Declaration of Irene Chen (“Chen Decl.”) Exhibit A (Richy Acab Sr. Agreement),

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Exhibit B (Richy Acab Jr. Agreement). As Plaintiffs are not U.S. citizens, the arbitration

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clause is analyzed under the Convention on the Recognition and Enforcement of Foreign

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Arbitral Awards, implemented in 9 U.S.C. §§ 201-208 (“the New York Convention” or

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“the Convention”). See also Lindo v. NCL (Bahamas), Ltd., 652 F.3d 1257, 1262-63

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(11th Cir. 2011).

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A. Motion to Remand

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A motion to remand challenges the removal of an action. Moore-Thomas v. Alaska

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Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009). In general, a state civil action may be

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removed to federal court only if, at the time of removal, it is one that initially could have

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been brought in federal court. Miller v. Tri Marine Fish Co., 16-cv-2203-JAK-SSx, 2016

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WL 3545523 at *3 (C.D. Cal. Jun. 28, 2016) (citing 28 U.S.C. § 1441(a)). The removing

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party has the burden of establishing that removal was proper. Gaus v. Miles, Inc., 980

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F.2d 564, 566 (9th Cir. 1992). For cases removed under the New York Convention,

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district courts are granted “remarkably broad removal authority.” Infuturia Global Ltd. v.

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Sequus Pharm., Inc., 631 F.3d 1133, 1138 n.5 (9th Cir. 2011) (citing Beiser v. Weyler,

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284 F.3d 665, 674 (5th Cir. 2002) (“[E]asy removal is exactly what Congress intended in

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§ 205.”)). Section 205 is triggered by “just about any suit in which a defendant contends

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that an arbitration clause falling under the Convention provides a defense.” Id. at 1138

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(citing Beiser, 284 F.3d at 669).

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B. Motion to Compel Arbitration

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The Convention “provides two causes of action in federal court for a party seeking

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to enforce arbitration agreements covered by the convention: (1) an action to compel

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arbitration… and (2) at a later stage, an action to confirm an arbitral award[.]” Lindo,

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652 F.3d at 1263 (internal citation omitted). When considering a motion to enforce an

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arbitration clause pursuant to an agreement covered by the Convention, a court “shall…

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refer the parties to arbitration unless it finds that the said agreement is null and void,

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inoperative or incapable of being performed.” Id. (citing Convention, art. II(3))

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(emphasis added). See also Bautista v. Star Cruises, 396 F.3d 1289, 1301 (11th Cir.

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2005).

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III. DISCUSSION

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Defendant Chenrosa moves to dismiss Plaintiffs’ complaint and enforce the

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arbitration clause in their employment agreements. ECF No. 3, “Compel Mot.”

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Plaintiffs oppose this motion on the ground that the employment agreements are void.

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ECF No. 9, “Compel Oppo.” at 11-16. Plaintiffs move to remand the case on essentially

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the same grounds, that removal was improper because the employment agreements are

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void. ECF No. 4, “Remand Mot.” at 10-15. Defendant Chenrosa argues the narrow

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jurisdictional analysis involved in removal and enforcement of an arbitration clause does

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not encompass inquiry into the “enforceability” of the agreements. ECF No. 10,

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“Remand Oppo.” at 5-6.

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A. Motion to Remand—Jurisdiction Inquiry

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Federal district courts have subject matter jurisdiction over actions or proceedings

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falling under the New York Convention. 9 U.S.C. §§ 202-203; Hayday Farms, Inc. v.

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FeeDx Holdings, Inc., 55 F.4th 1232, 1239 (9th Cir. 2022). The Convention further

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states, “Where the subject matter of an action or proceeding pending in a State court

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relates to an arbitration agreement or award falling under the Convention, the defendant
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or defendants may, at any time before the trial thereof, remove such action or proceeding

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to the district court of the United States[.]” 9 U.S.C. § 205. “[T]he plain language of §

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205 provides federal courts with remarkably broad removal authority.” Infuturia, 631

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F.3d at 1138 n.5 (citation omitted). Accordingly, a district court is said to have federal

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jurisdiction under the Convention where: (1) an arbitration agreement exists which falls

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under the Convention; and (2) the agreement relates to the plaintiff’s suit. Miller, 2016

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WL 3545523 at *4 (citation omitted). An arbitration agreement “falls under the

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Convention” if four jurisdictional prerequisites are met: (1) there is a written agreement

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to arbitrate; (2) the agreement provides for arbitration in the territory of a signatory of the

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Convention; (3) the agreement arises out of a legal relationship that is considered

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commercial; and (4) a party to the agreement is not an American citizen. Bautista, 396

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F.3d at 1294.

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Plaintiffs make three general challenges to removal: (1) the void arbitration

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agreements do not legally exist to confer subject matter jurisdiction; (2) Plaintiff Richy

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Acab Jr.’s tort claim does not arise from his purported agreement; and (3) Chenrosa did

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not obtain the consent of co-Defendant Joseph D’Alfio prior to removal. Remand Mot. at

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10, 20-23. These arguments will be addressed in reverse order.

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Plaintiffs argue Chenrosa must submit written proof of the unanimous consent by

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all Defendants to make removal proper. Remand Mot. at 23 (citing Proctor v. Vishay

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Intertechnology, Inc., 584 F.3d 1208, 1224-25 (9th Cir. 2009)). In response, Chenrosa

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argues: (1) the Convention does not require consent of all Defendants prior to removal;

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and (2) Defendant Joseph D’Alfio has never been served. Remand Oppo. at 14. The first

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argument is both sufficient and convincing. Plaintiffs’ consent argument relies on the

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text of the removal statute, which states, “When a civil action is removed solely under

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section 1441(a)…” 28 U.S.C. § 1446(b)(2)(A) (emphasis added). However, Defendant

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Chenrosa removed the action under 9 U.S.C. § 205, as well as 28 U.S.C §§ 1333, 1441(a)

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and 1446. See ECF No. 1, Notice of Removal. In other words, “[b]ecause removal in

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this case was effectuated under 9 U.S.C. § 205, the traditional diversity removal

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provisions of 28 U.S.C § 1441 do not apply.” Infuturia, 631 F.3d at 1137.

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Plaintiffs next argue that Plaintiff Richy Acab Jr.’s tort claim does not “relate” to

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any purported agreement because intentional torts are not seen as “foreseeable result[s] of

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the performance of the parties’ contractual duties or [the plaintiffs’] services as …

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employees.” Maglana v. Celebrity Cruises, Inc., No. 20-14206, 2022 WL 3134373 at *4

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(11th Cir. 2022) (citing Doe v. Princess Cruise Lines, Ltd., 657 F.3d 1204, 1219 (11th

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Cir. 2011)). The Court is not convinced these cases are directly applicable.

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First, while Plaintiffs describe Richy Acab Jr.’s tort claim as “intentional infliction

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of emotional distress” in the moving papers, it is pled as a claim for retaliatory discharge

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in the complaint. See Remand Mot. at 20; Compl. at ¶¶ 34-39. This shifts the focus to

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the remedies Plaintiff seeks instead of the factual basis of his claim. But it is the factual

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basis of the claim, not just its nature, that is determinative. Plaintiffs’ cited authority does

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not suggest otherwise. In Maglana, plaintiffs’ tort claims were based on their

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confinement to a cruise ship for months after their employment ended. Maglana, 2022

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WL 3134373 at *4-5. In Doe, plaintiff’s claims were based on a sexual assault by a

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coworker, which occurred while she was employed on a cruise ship. Doe, 657 F.3d at

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1209-10. The logic of these cases does not flow into the proposition that a claim for

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wrongful discharge from employment cannot relate to that employment just because it is

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a tort. “The phrase ‘relates to’ is plainly broad, and has been interpreted to convey

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sweeping removal jurisdiction in analogous statutes …. Nothing in § 205 urges a

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narrower construction.” Infuturia, 631 F.3d at 1138.

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Finally, the Court agrees with Defendant that, for the purposes of determining

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jurisdiction, the limited inquiry does not include whether the agreement is valid and

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enforceable. The district court in Miller also noted this issue, stating, “Although Plaintiff

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presents several colorable arguments in support of the claim that the arbitration

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agreements at issue may not be enforceable, they apply to the enforceability of the

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agreements, not their presence. The latter is a sufficient basis to establish initial
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jurisdiction under § 205.” Miller, 2016 WL 3545523 at *5-6. Miller reached this

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conclusion by comparing the text of the removal provision and the enforcement provision

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of the Convention, noting “The [enforcement provision] contemplates that only a court

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‘seized of’ the suit will turn to the question whether the arbitration clause shall be

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enforced.” Id. at *6. This Court agrees. Accordingly, the Court concludes Defendant has

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met its burden to show removal was proper under 9 U.S.C. § 205.

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B. Motion to Compel—Enforcement Inquiry

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Plaintiffs argue the employment agreements are “void” for two reasons: (1) the

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agreements violate several federal statutes relating to employment contracts of seamen;

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and (2) the plaintiffs were not able to understand the agreements due to limited English

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proficiency. Compel Oppo. at 11-19. To bolster these arguments, Plaintiffs argue that

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the “federal policy in favor of enforcing arbitration agreements” has been overturned in

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the Supreme Court decision in Morgan v. Sundance, 596 U.S. 411 (2022). Plaintiff

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argues Morgan, combined the Ninth Circuit’s comment thereon in Armstrong v.

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Michaels, negates the case law on which Chenrosa relies. Compel Oppo. at 9 (citing

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Armstrong v. Michaels Stores Inc., 59 F.4th 1011 (9th Cir. 2023)). Defendant Chenrosa

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responds that a searching inquiry into the contract’s validity and formation is not

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appropriate at this stage, and the reach of Morgan and Armstrong is far more limited than

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Plaintiffs claims. ECF No. 12, Compel Reply at 1-5.

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1. Morgan v. Sundance & Armstrong v. Michaels

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In Morgan, the Supreme Court held “the FAA’s ‘policy favoring arbitration’ does

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not authorize federal courts to invent special, arbitration-preferring procedural rules.” 596

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U.S. at 418. Morgan concerned a defendant who engaged in several months of litigation

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“as if no arbitration agreement existed[,]” including moving to dismiss and participating

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in mediation. Id. at 414. It was not until nearly eight months into the lawsuit that the

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defendant moved to compel arbitration. Id. at 415. The plaintiff in Morgan argued that

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the defendant had waived its right to enforce the arbitration clause. Id. Utilizing a

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waiver test, which included a “prejudice” requirement unique to arbitration cases, the
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district court agreed with the plaintiff that the defendant had waived its right, but this

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holding was overturned by the Court of Appeals. Id. at 415-16. In granting certiorari,

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the Supreme Court emphasized that the FAA’s policy favoring arbitration was to make

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“arbitration agreements as enforceable as other contracts, but not more so.” Id. at 418

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(citing Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 n.12 (1967)).

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The Court emphasized that courts “may not devise novel rules to favor arbitration over

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litigation[,]” and disapproved of the added prejudice requirement. Id. at 418.

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Next, the Ninth Circuit took up the issue in Armstrong v. Michaels Stores, Inc.,
where again a plaintiff argued the defendant waited too long to move for arbitration and

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waived its right to the arbitral forum. 59 F.4th at 1013. The Ninth Circuit recognized

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that Morgan overruled precedent in two respects: (1) that there is no “strong federal

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policy favoring enforcement of arbitration agreements”; and (2) party opposing

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arbitration need no longer demonstrate prejudice. Id. at 1014-15 (citation omitted,

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emphasis added).

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Plaintiffs argue Morgan and Armstrong effectively “abrogates any strong federal

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policy in favor of arbitration[.]” Compel Oppo. at 1 n.1. But the Court does not read

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Morgan and Armstrong so broadly, and certainly cannot agree that any decision

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mentioning a “strong policy in favor of arbitration” is now overruled. This is especially

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true when Plaintiffs’ specific examples of purportedly overruled authority are based on

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statutory interpretations of the FAA or the Convention, and did not involve the specific

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“novel” and “procedural” rule disavowed by Morgan and Armstrong.1 Plaintiffs merely

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Three of the cases Plaintiffs identify are: (1) Rogers v. Royal Caribbean Cruise Line et
al, 547 F.3d 1148 (9th Cir. 2008); (2) Prima Paint Corp. v. Flood & Conklin Mfg. Co.,
388 U.S. 395, 403-04 (1967); and (3) Bautista, 396 F.3d 1289 (11th Cir. 2005). Rogers
concerned a statutory analysis of the Convention and FAA to determine whether the
FAA’s exclusion of seamen’s employment contracts carried over to the Convention,
ultimately ruling it did not. 547 F.3d at 1155. This is not a “novel” or “procedural” rule.
Prima Paint involved the Supreme Court’s determination that a party seeking to avoid
enforcement of an arbitration clause must challenge the clause itself not the contract as a
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repeat the same quote from Armstrong and declare Morgan and Armstrong have

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“completely changed the landscape with respect to cases alleged to arise under [the

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Convention][,]” which is both incorrect, as neither Morgan nor Armstrong involve an

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arbitration clause arising under the Convention, and lacks meaningful analysis into the

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cases allegedly overruled. The Court does not find this corollary argument convincing.

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2. Whether the Agreements are “Void”

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Plaintiffs argue the agreements are void because they do not comply with federal

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statutory requirements, and because they were presented in English instead of Plaintiffs’

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native language. Compel Oppo. at 18-19.2

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Employment contracts for seamen have several statutory requirements. See

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generally Merchant Seamen Protection and Relief, 46 U.S.C. § 10101 et seq. Plaintiffs

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argue the agreements did not comport with requirements under 46 U.S.C. §§ 10601,

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10502, and are accordingly deemed “void” under § 11107. Section 10601 concerns

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“Fishing agreements” and requires a “fishing agreement in writing” signed by each

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seaman and owner or representative of the fishing vessel “[b]efore proceeding on a

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voyage[.]” 46 U.S.C. § 10601(a).3 Section 10502 concerns “Shipping articles

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whole. 388 U.S. at 403-04. Far from being a novel procedural rule, Prima Paint’s
decision “ultimately arises out of … the FAA’s substantive command that arbitration
agreements be treated like all other contracts.” Buckeye Check Cashing, Inc. v.
Cardegna, 546 U.S. 440 (2006). Bautista discusses the Convention’s jurisdictional
inquiry and interprets the “null and void” provision of the Convention’s enforcement
section. 398 F.3d at 1302.

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Plaintiffs also appear to make public policy arguments against enforcement of the
arbitration clauses; however, public policy arguments are only available after arbitration.
See Lindo, 652 F.3d at 1263 (“After arbitration, a court may refuse to enforce an arbitral
award if the award is contrary to the public policy of the country.”) (citation omitted).
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The Court notes the agreements signed by Plaintiffs do not appear to be “fishing
agreements” covered under § 10601; by their terms they cover the period “[w]hile vessel
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agreements” and contains almost identical requirements, modified to state the agreement

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shall be made in writing “before the seaman commences employment.” 46 U.S.C. §

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10502(a). Finally, § 11107 states, “An engagement of a seaman contrary to a law of the

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United States is void.” 46 U.S.C. § 11107.

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Citing to the Ninth Circuit’s decision in Harper v. U.S. Seafoods LP, Plaintiffs

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argue §§10601 and 10502 are construed “literally” such that non-compliance with the

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requirements therein is grounds for finding an agreement void under § 11107. 278 F.3d

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971, 975-77 (9th Cir. 2002); see also Doyle v. Huntress, Inc., 301 F.Supp.2d 135, 145-47

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(D. RI 2004) (finding same). The Court finds these cases inapplicable here for three

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reasons. First, neither Harper nor Doyle dealt with an employment agreement including

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an arbitration clause arising under the Convention. Second, as noted in Bautista, “The

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limited scope of the Convention’s null and void clause must be interpreted to encompass

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only those situations—such as fraud, mistake, duress, and waiver—that can be applied

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neutrally on an international scale.” 396 F.3d at 1302 (citing DiMercurio v. Sphere

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Drake Ins. PLC, 202 F.3d 71, 79 (1st Cir. 2000)). A statute purporting to make ‘void’

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any agreement not comporting with United States federal law cannot “be applied

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neutrally on an international scale.”

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The DiMercurio court explained its ruling as follows:

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“The parochial interests of…any state, cannot be the measure of how the
‘null and void’ clause is interpreted. Indeed, by acceding to and
implementing the treaty, the federal government has insisted that not even
the parochial interests of the nation may be the measure of interpretation.
Rather, the clause must be interpreted to encompass only those situations—
such as fraud, mistake, duress, and waiver—that can be applied neutrally on
an international scale.”

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is enroute to shipyard for repair, and while vessel is in shipyard for repair[.]” Chen Decl.
Ex. A at 1.a, Ex. B at 1.a (same). This does not ultimately impact the Court’s analysis.
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202 F.3d at 80 (citation omitted). Cf. Scherk v. Alberto-Culver Co., 417 U.S. 506, 515-19

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(1974) (“We cannot have trade and commerce in world markets and international waters

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exclusively on our terms, governed by our laws, and resolved in our courts.”).4

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Accordingly, the Court declines to find non-conformity with § 10502 makes the

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agreements void as that term is used in the Convention.

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Finally, noted above, Plaintiffs’ arguments regarding Morgan and Armstrong do

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not assist them against Bautista’s interpretation of the null and void provision. Plaintiffs

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seem to acknowledge that precedent in Prima Paint and Buckeye would foreclose their

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void arguments under a standard FAA analysis. Still, Plaintiffs argue because the “strong

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federal policy favoring arbitration” has been overruled, this Court should disregard Prima

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Paint and Bautista and rely on contrary, older precedent.

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Specifically, Plaintiffs point to Three Valleys Mun. Water Dist. v. E.F. Hutton &

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Co., Inc., a Ninth Circuit case distinguishing Prima Paint and holding a court must

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analyze whether a contract was formed before determining whether to compel arbitration.

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925 F.2d 1136 (9th Cir. 1991). Even assuming Plaintiffs’ claims about Armstrong and

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Morgan’s reach is true, Three Valleys is distinguishable. In Three Valleys, the plaintiffs

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argued the arbitration clause was void because the person who signed the contract on

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their behalf lacked authority to contractually bind the plaintiffs. Id. at 1138. Three

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Valleys does not stand for the broad proposition that any arguments relating to ‘void’

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contracts must be adjudicated first, but rather “Three Valleys [] limited Prima Paint

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[severability holding] to challenges seeking to avoid or rescind a contract—not to

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Cf. Rogers, 547 F.3d at 1156 n.2 (“Section 10317 renders void any stipulation in an
agreement purporting to deprive a seafarer of a remedy to which the seafarer otherwise
would be entitled…Because Rogers and Kar have not been deprived of any statutory
remedy, we do not reach the question of whether Article V(1)(a) of the Convention
would allow our courts to refuse to recognize and enforce an arbitral award effectuating
such a deprivation.”) (internal citation and quotation marks removed).
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challenges going to the very existence of a contract that a party claims never to have

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agreed to.” Sanford v. Memberworks, Inc., 483 F.3d 956, 963 (9th Cir. 2007).

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It is also important to note that Armstrong and Morgan, Buckeye and Prima Paint,

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Three Valleys and Sanford are all cases discussing Chapter 1 of the FAA—while they are

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helpful to understanding federal landscape regarding arbitration clauses, they are not

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necessarily directly applicable to arbitration agreements arising under the New York

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Convention. Both parties made arguments regarding Prima Paint’s severability holding

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and its impact on the case but did not evaluate whether Prima Paint could be applied to

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cases falling under the Convention. While application of Prima Paint and Buckeye

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would certainly be decisive in favor of compelling arbitration, the Court need not decide

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on this ground.

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Given the Court does not agree that Morgan and Armstrong invalidate Rogers or

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Bautista, Plaintiffs’ argument does not prevail. Here, the Plaintiffs do not argue their

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signatures were obtained by fraud, duress, or mistake. Accordingly, the Court concludes

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the arbitration clauses in the employment agreements are enforceable, and “shall” enforce

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them pursuant to the Convention.

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IV. CONCLUSION

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For the foregoing reasons, the Court DENIES Plaintiffs’ Motion to Remand and

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GRANTS Defendant’s Motion to Compel Arbitration. The Court will STAY the case

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pending completion of arbitration. Parties are ORDERED to file a Joint Status Update

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with the Court no later than five (5) days after arbitration is complete.

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IT IS SO ORDERED.

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Dated: March 26, 2024

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_________________________________
HON. ROGER T. BENITEZ
United States District Judge

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