Noel W. Deering, Boston, Mass., for New York, N. H. & H. R. Co., appellant.
John V. Higgins, New York City, with whom Thomas J. O'Neill, New York City, Joseph P. Coughlin, Boston, Mass., and O'Neill, Higgins & Latto, New York City, on brief, for appellee.
The plaintiff-appellee, a citizen of Rhode Island, brought suit in the court below under its diversity jurisdiction to recover for personal injuries allegedly caused by the combined negligence of the defendants-appellants, The New York, New Haven and Hartford Railroad Company and Metropolitan Coal Company, Inc., both Massachusetts corporations. A trial by jury resulted in a verdict for the plaintiff on which the court below, after denying motions by the defendants for judgment n. o. v., entered the judgment for the plaintiff from which the defendants have taken these appeals.
There is no serious dispute over the following basic facts.
The plaintiff, a veteran employee of the defendant railroad, although carried on the rolls as a spare freight conductor, was actually serving on the date of his injury as a flagman on one of the railroad's regularly scheduled freight trains running between Boston, Massachusetts, and New Haven, Connecticut. On the afternoon of February 8, 1950, he boarded an express passenger train of the defendant railroad in Rhode Island to go from his home in that state to join the crew of his freight train in Boston prior to the start of its run to New Haven. As the express train carrying the plaintiff was proceeding over the railroad's main line at a speed of 65 to 70 miles per hour past the defendant coal company's yard located on a siding beside the main line in Forest Hills, a few miles south of Boston, it ran over a manila covered steel cable belonging to the coal company and used by it in connection with a winch to move coal cars on its siding when no locomotive was available. It could readily be found on the evidence, indeed it is reasonably certain and appears to be conceded, that just before the express train reached the scene mischievous boys had taken the cable from where the coal company employees had left it stretched out beside the coal company siding and dragged it across the railroad tracks as a prank. When the front wheels of the train went over the cable a hook weighing about 10 pounds attached to one end of it flew up and shattered the car window beside the plaintiff showering him with broken glass and inflicting the injuries upon him for which he seeks to recover in this action.
"This pass is issued and accepted as a gratuity by the person named therein, who further agrees that it forms no part of the compensation for his or her services. Except when used in the performance of service required by the user's employment by the Company, the user expressly assumes all risk of accident and of personal injury and loss or damage to property, regardless of their causes, and absolves the Company from all liability therefor. As a condition to its issue, it is declared by the user that such user is not prohibited by law from receiving free transportation, and further that the pass will be lawfully used. This pass will be taken up if presented by any other than the person named therein."
The questions presented on this appeal are whether there is any legally sufficient evidence in the record to warrant a finding that either defendant was causally negligent, and, if there is evidence of the railroad's causal negligence, whether it is liable to the plaintiff therefor under the terms and conditions of the pass on which he was riding. Before we take up these questions, however, we must dispose of a preliminary matter.
The plaintiff's complaint asserts two causes of action; one against both defendants grounded upon their common law negligence and one against the railroad alone grounded upon its liability under the Federal Employers' Liability Act, 35 Stat. 65 (1908), as amended, 45 U.S.C.A. §§ 51-60, and the Federal Safety Appliance Act, 27 Stat. 531 (1893), as amended, 45 U.S.C.A. §§ 116.1 The court below at the trial indicated that it was "disposed to direct a verdict" for the defendant on the count under the FELA and counsel for the plaintiff thereupon, apparently to save whatever rights his client might have with respect to that cause of action, agreed to withdraw it and was permitted to do so. Counsel for the plaintiff acquiesced in these rulings, and of course the plaintiff has taken no appeal. But this does not dispose of the matter, for it is well established that the Federal Employers' Liability Act, when applicable, is the exclusive remedy against a railroad for injuries to its employees. Camerlin v. New York Central R. Co., 1 Cir., 1952, 199 F.2d 698. Thus disregard of the Act by the parties does not relieve the court of the necessity for determining whether it applies. See Sassaman v. Pennsylvania R. Co., 3 Cir., 1944, 144 F.2d 950.
Prior to the amendment of the FELA in 1939, 53 Stat. 1404, the test to determine whether or not it applied was to inquire whether the employee was "at the time of the injury engaged in interstate transportation, or in work so closely related to it as to be practically a part of it." Shanks v. Delaware, L. & W. R. Co., 1916, 239 U.S. 556, 558, 36 S. Ct. 188, 189, 60 L. Ed. 436. The amendment of 1939, however, abolished the so-called "moment of injury" rule of the Shanks case by making the Act applicable to "Any employee of a carrier, any part of whose duties as such employee shall be the furtherance of interstate or foreign commerce; or shall, in any way directly or closely and substantially, affect such commerce * * *." See Southern Pacific Co. v. Gileo, 1956, 351 U.S. 493, 497, 76 S. Ct. 952, 956, 100 L. Ed. 1357. There can be no doubt whatever that when the plaintiff was actually at work for the railroad his duties as an employee were in furtherance not only of interstate, but in all probability also of foreign commerce as well. But, was he employed by the railroad "in such commerce" within the meaning of § 1 of the Act while he was riding to work on the railroad's passenger train? We think this question must be answered in the negative.
It has long been established that the FELA applies not only when an employee is injured while actually engaged in performing duties of the kind required for application of the Act, that is, duties any part of which are in "the furtherance of interstate or foreign commerce," or "in any way directly or closely and substantially" affecting such commerce, but also when an employee is traversing the employer's premises (and perhaps in some circumstances even adjacent premises, see Bountiful Brick Co. v. Giles, 1928, 276 U.S. 154, 48 S. Ct. 221, 72 L. Ed. 507), on his way to or from his work. See Erie R. Co. v. Winfield, 1917, 244 U.S. 170, 173, 37 S. Ct. 556, 557, 61 L. Ed. 1057, wherein it is said: "In leaving the carrier's yard at the close of his day's work the deceased was but discharging a duty of his employment," and further, "Like his trip through the yard to his engine in the morning, it was a necessary incident of his day's work, and partook of the character of that work as a whole * * *."
While it can no longer be seriously suggested that an employee of a carrier is covered by the FELA only when he is actually at work on his job, Morris v. Pennsylvania R. Co., 2 Cir., 1951, 187 F.2d 837, 841, we have not found any satisfactory precise verbal formula, and we do not see how any can be laid down, which can be applied automatically to determine the distinction between an employee's activities within and those without the coverage of the Act. See Cudahy Packing Co. of Nebraska v. Parramore, 1923, 263 U.S. 418, 424, 44 S. Ct. 153, 68 L. Ed. 366. Situations of the kind under consideration will have to be resolved as they arise on past decisions and general considerations.
The only case closely in point which has come to our attention is Sassaman v. Pennsylvania R. Co., 3 Cir., 1944, 144 F.2d 950, referred to above and to be mentioned briefly on another point hereinafter. In that case a majority of the full bench of the Court of Appeals for the Third Circuit held that a railroad employee whose actual duties brought him within the coverage of the FELA was not thereby precluded from maintaining an action at common law against his employer to recover for injuries received when he stepped into a hole in the defendant's station platform when alighting from one of its trains which he had taken at the end of his day's work to go from the place of his employment to his home. That case is essentially on all fours with this one (it is of course legally inconsequential whether the employee suffers his injury on his way to work or on his way home), and we think it was correctly decided. Indeed there is little for us to add to the discussion in the Sassaman case of the point we now have under consideration herein. We would like to emphasize two matters, however, which we think are important in deciding the question before us. The first of these is that although the plaintiff was on the carrier's premises when he was injured, he was not on a part of its premises which it was necessary for him to use to reach his work. He was not required to go to work on the defendant's passenger train. He could have taken any one of a number of other routes, trains or means of transportation to go from his home to his work. The other consideration we think to be material is that the obvious purpose of the FELA is to enlarge the remedy of railroad employees injured as a result of the hazards incident to their work, and the plaintiff's employment as a flagman on a freight train did not subject him to any peculiar or abnormal danger while he was riding to work on one of his employer's passenger trains. On that train he was exposed to no other or greater hazard than any other passenger.
In short we think that to extend the coverage of the FELA to prevent the plaintiff from recovering at common law would not only conflict with the only case we have found in point, the Sassaman case, but would also go beyond any test, none of which we find entirely satisfactory, laid down in any of the decided cases which have come to our attention. And furthermore, it seems to us unwarranted to extend the coverage of the Act to an employee who is miles away from his job and only proceeding to it in a public conveyance, operated to be sure by the defendant-employer, but still only one of several other means of transportation the plaintiff might have chosen.
The next matter for our consideration is the effect of the conditions printed on the back of the plaintiff's pass on his right to recover from the railroad for negligence.
The plaintiff-appellee contends that at the time he was injured he was rendering a "service" required by his employment by the railroad within the meaning of the language used by the railroad on the back of his pass so that the clause exempting the railroad from liability to him for negligence, by its very terms, does not apply. In more detail, the plaintiff's argument is that although he was not engaged in actual employment at the time he was injured so as to have a right of action under the FELA, he was, nevertheless, in going from his home to his work, "in the performance of service" required by his employment on the defendant railroad's freight train.2 Wherefore he contends that his situation is squarely within the exception of the clause on the back of his pass wherein he undertook to assume the risk of accident or injury to himself and to absolve the railroad from liability therefor. We find this argument persuasive.
The testimony is clear and not contradicted that over the years the plaintiff had been assigned to work on various trains starting from various yards and stations, that such assignment of railroad men doing the kind of work done by the plaintiff was necessary to provide experienced men to handle trains, and that it was an established custom in the railroad business to provide train operating personnel with passes for use to reach the starting points of their trains which might well be at points distant from their homes. Obviously the plaintiff would not have any need to use his pass when he was actually at work on the freight train to which he was assigned as a crew member. Moreover, when he was actually at work as a member of his train crew, the plaintiff's rights would be governed exclusively by the FELA, and under § 5 of that Act, 45 U.S.C.A. § 55, the railroad is expressly prevented from exempting itself from the statutory liabilities imposed upon it by any "contract, rule, regulation, or device whatsoever." The only uses the plaintiff would have for his pass would be to travel for purely personal reasons or to go to his job. In traveling for reasons purely personal he certainly would not be using his pass in the performance of any service required by his employment. Thus if any meaning whatever is to be given to the exception from the assumption of risk clause printed on the back of the pass, it must be held to mean that the railroad did not purport to exempt itself from liability when the pass was being used by the employee to whom it was issued in traveling between his home and his work.
Taking this view of the language used on the particular pass involved in this case, there is no occasion for us to consider the plaintiff-appellee's second contention that, as held in the Sassaman case, supra, a railroad as a matter of law cannot limit its liability for negligence on a pass issued by it to an employee pursuant to a collective bargaining agreement when the pass is used by the employee when traveling between his work and his home.
Under Massachusetts law the duty of a carrier by rail to its passengers is to exercise reasonable care under the circumstances, and among those circumstances are the carrier's control over the passenger and the likelihood of serious consequences to the passenger in the event of the carrier's negligence. "Accordingly it is held that reasonable care under the circumstances is the highest degree of care — not the highest degree of care imaginable, but the highest degree of care that is consistent with the requirements of the public for speedy and inexpensive as well as safe transportation and with the practical operation of the business." Carson v. Boston Elevated Railway Co., 1941, 309 Mass. 32, 35, 33 N.E.2d 701, 703.
The problem is to apply this test to the evidence, and the evidence is that the accident occurred in an urban area, partly residential and partly commercial, where the railroad's tracks are on an embankment some 15 or 18 feet above street level, and that for years the railroad had been plagued by juvenile trespassers on its right of way in the vicinity of the scene of the accident who almost daily put stones, pieces of wood, pieces of iron or other objects on its tracks. The case is close, but we think in view of the high degree of care required of the railroad and its long experience with mischievous interlopers on its right of way through the built-up area where the accident happened, the jury could reasonably have concluded that the railroad should, and without too great burden could, have taken more precautions than it did for the safety of its passengers by fencing its main line right of way in the area, or by patrolling it, or perhaps by running its trains a little bit slower. While we might not agree with the result reached by the jury, we cannot say that there is no warrant whatever in the evidence for the finding of the jury that the railroad failed to conform to the standard of care required of it by law and that its negligence was the cause of the plaintiff's injuries.
Under Massachusetts law the coal company is not necessarily insulated from liability by the wrongful act of the mischievous boys who trespassed upon its property and took its cable to stretch across the railroad tracks. In Stone v. Boston & Albany Railroad Co., 1898, 171 Mass. 536, 540, 51 N.E. 1, 3, 41 L.R.A. 794, it was said: "It cannot however, be considered that in all cases the intervention even of a responsible and intelligent human being will absolutely exonerate a preceding wrongdoer." And in Horan v. Inhabitants of Watertown, 1914, 217 Mass. 185, 186, 104 N.E. 464, 465, the rule in Massachusetts was clearly and succinctly stated as follows: "Where as here the original negligence of the defendant is followed by the independent act of third persons which directly results in injurious consequences to the plaintiff, the defendant's earlier negligence may be found to be the direct and proximate cause of those injurious consequences, if according to human experience and in the natural and ordinary course of events the defendant ought to have seen that the intervening act was likely to happen." See also Lane v. Atlantic Works, 1872, 111 Mass. 136; Glassey v. Worcester Consolidated St. R. Co., 1904, 185 Mass. 315, 70 N.E. 199; Geary v. H. P. Hood & Sons, Inc., 1957, 336 Mass. 369, 145 N.E.2d 716.
The coal company's cable had been left where it posed no hazard to anyone. It was not possible for a slight or casual contact by some passer-by to set it in motion in a way to injure others. Cf. Ryder v. Robinson, 1952, 329 Mass. 285, 107 N.E.2d 803, wherein verdicts for the plaintiffs, a father and his minor daughter, were allowed to stand on evidence that the defendant's employees left a heavy section of iron fence leaning so precariously against another section of fence in a passageway that children playing in the passageway dislodged it so that it fell and injured the minor plaintiff. Moreover, the cable was heavy and bulky, and not the sort of thing one would think attractive to children as a plaything. This likens the case at bar to Glassey v. Worcester Consolidated St. Ry. Co., 1904, 185 Mass. 315, 70 N.E. 199, in which the court sustained a directed verdict for the defendant in actions brought against it to recover damages for personal injuries and loss of consortium resulting from injuries to the wife caused by boys rolling a heavy reel of wire belonging to the defendant down a highway, the reel having been left by the defendant's employees on its side in the grass beside the road. The cable is not even to be likened to a plank and wooden horse which children could and might well be expected to convert into a seesaw. And this makes the case at bar even stronger for the defendant than Caissie v. City of Cambridge, 1944, 317 Mass. 346, 58 N.E.2d 169, wherein a finding for the defendant city was affirmed on evidence that the plaintiff was injured when children who had made a seesaw out of a wooden horse and a plank left in the street by city employees lost control of their improvised plaything so that it fell across a sidewalk and broke the plaintiff's leg. See also Geary v. H. P. Hood & Sons, Inc., 1957, 336 Mass. 369, 145 N.E.2d 716, in which the court said there was no basis for finding negligence on evidence that the defendant's driver left a case of milk in the vestibule of a primary school with a five or six pound chunk of ice on top of it, as he had done for years, and at recess a child threw the ice on the ground to break it and a piece struck the plaintiff in the eye. Furthermore there is nothing inherently dangerous about the cable and this makes the case at bar stronger for the defendant than Horan v. Inhabitants of Watertown, 1914, 217 Mass. 185, 104 N.E. 464, wherein the court sustained a directed verdict for the defendant town in an action brought against it for personal injuries caused by the explosion of dynamite, carelessly left unguarded by town employees in a public street, which was taken by boys and thrown into a fire they had built on adjoining premises.
On the basis of the application of the Massachusetts rule in the cases cited above it seems to us that the Supreme Judicial Court of the Commonwealth of Massachusetts would hold on the facts of the case at bar that the coal company could not be found chargeable for failure to use ordinary care for the reason that its employees during business hours left its cable stretched out beside its siding unguarded.
Since in our view the defendant-appellant coal company is entitled to prevail as a matter of law, there is no need for us to consider its objections to the admission and exclusion of evidence.
A judgment will be entered in No. 5400 affirming that part of the judgment of the District Court which provided for recovery from The New York, New Haven and Hartford Railroad Company; and a judgment will be entered in No. 5399 vacating that part of the judgment of the District Court which provided for recovery from the Metropolitan Coal Company and, as to this part, remanding the case to that Court for the entry of judgment in accordance with the views expressed in this opinion.
MAGRUDER, Chief Judge (dissenting in part).
I do not express dissent from most of the opinion of the court. As to the liability of the coal company, I think it is probably true, from the state court decisions referred to in Judge WOODBURY'S opinion, that the Supreme Judicial Court of Massachusetts would probably say, on the facts presented in this case regarding the liability of the coal company, that there was not enough evidence of negligence to be submitted to a jury, and that, therefore, a trial judge should direct a verdict for defendant.
But is this a matter of "substance" or "procedure", within the test of Erie R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188? This seems to me to be not an easy question. Though I do not dissent from the conclusion reached by the court, I want to say that I reserve judgment on this point, and will feel free, in another case, to determine the issue after full argument.
We have many times pointed out that, though the preliminary function of the trial judge in these cases is sometimes spoken of as the determination of a "question of law" (because the decision is made by the judge), what he is really called upon to do, in the traditional division of functions as between judge and jury, is to exercise a preliminary judgment on the facts; to say whether, in his judgment, the conclusion to be reached as to the existence of negligence is sufficiently debatable, on the facts, so that a reasonable jury of twelve men might rationally decide that the defendant had done a negligent act. See Channell v. Sampson, 1 Cir., 1939, 108 F.2d 315; Marshall v. Nugent, 1 Cir., 1955, 222 F.2d 604, 611, 58 A.L.R.2d 251; New York, New Haven & Hartford R. Co. v. Dox, 1 Cir., 1957, 249 F.2d 572, 573. See also Smith v. Reinauer Oil Transport, Inc., 1 Cir., 1958, 256 F.2d 646, certiorari denied 1958, 358 U.S. 889, 79 S. Ct. 133, 3 L. Ed. 2d 117.
In the case at bar, there is no difference between the state and federal courts as to the substantive rule to be applied — the defendant is liable if he has proximately caused harm as the result of a negligent act. So, the standard to be applied is the same, the care of a reasonable man under like circumstances. Also, the state courts have determined that there may be liability for negligence on the part of a more remote actor, when he sets up an undue risk through negligence in failure to take account of the propensities of meddling children, even though the harm is more immediately caused by the intervening act of such meddlesome children.
Under these circumstances, when a negligence case gets into federal court by virtue of diversity of citizenship, it might be said that, despite Erie R. Co. v. Tompkins, the federal court, applying the state-created rules of substantive law, should determine the issue of negligence in accordance with its historic division of functions as between judge and jury, without looking over its shoulder to speculate whether a state court, on these same facts, would direct a verdict for the defendant. Cf. Byrd v. Blue Ridge Rural Electric Co-operative, Inc., 1958, 356 U.S. 525, 78 S. Ct. 893, 2 L. Ed. 2d 953; Dice v. Akron, Canton & Youngstown R. Co., 1952, 342 U.S. 359, 72 S. Ct. 312, 96 L. Ed. 398.
"The record in this very case discloses that, at a former time when the plaintiff was resident in Newark, his services as a train dispatcher were utilized by the railroad in Philadelphia between which place and his home he travelled back and forth on his pass. In so travelling, he was not performing the service for which he was employed and, therefore, had no right of action as an employee for any injury received in the course of travel."
So far as any requirement by the railroad was concerned, the employee was not "required" to ride from Providence to Boston on the railroad. All the railroad "required" was that Johnson present himself for work at the appointed place and time; his travel was no "service". He would have been free to stay at a hotel in Boston or he might have driven to work in a private car or taken a bus. The railroad received no additional benefit from Johnson's having chosen to ride the train that particular morning, and hence I do not see that it should be required to bear any increased risk. It seems strange that, whereas the railroad would not have owed him anything more in the way of compensation nor would have been responsible for his safety in walking across the street or riding the subway, driving, or taking the bus, it should be liable to him in this case. If Johnson had been riding to inspect the work of the train crew or had been "deadheading" between working runs, pursuant to a work assignment, he would have been in "performance of service required" by his employment, but this is neither of those cases.
Assuming, as seems clear to me, that the plain purport of the language of the pass indicated an intention to exempt the railroad from liability for negligence (with the exception noted above), I have no doubt that such exemption cannot be held to be either against public policy or against any provision of the Hepburn Act, 49 U.S.C.A. § 1(7). In that respect I am content to rely upon the argument by Biggs, Ch. J., dissenting in the Sassaman case, supra. This pass was no more a thing of value to the employee, perhaps in lieu of additional wages (or no less gratuitous), than, for example, a pass for his family. See Kansas City Southern Ry. Co. v. Van Zant, 1923, 260 U.S. 459, 43 S. Ct. 176, 67 L. Ed. 348.
Accordingly I would reverse the judgment against the defendant railroad.
That evidence consists of the answer "Yes" to the following question directed to the retired superintendent of the coal company's yard: "The trouble I asked you about, whether it was common for children to be on the railroad track and more or less in gangs of hoodlums raising the devil all the time, throwing things and taking things?"


This letter concerns your firm’s marketing of numerous veterinary products as “nutraceuticals for pets.” The U.S. Food and Drug Administration (FDA) reviewed your website at the internet address www.ambertech.com, and product labeling obtained during the inspection of your facility at Amber Technology, LLC 1963 Pebble Circle Lake Point, UT 84074 from May 14-16, 2013.
We have determined that several of your products marketed as “nutraceuticals for pets” are intended for use in the mitigation, treatment, or prevention of disease in animals, which makes them drugs under section 201(g)(1)(B) of the Federal Food, Drug, and Cosmetic Act (the FD&C Act) [21 U.S.C. § 321(g)(1)(B)]. Further, under the FD&C Act, drugs intended for use in animals require an approved new animal drug application unless they are generally recognized as safe and effective. As discussed below, we have determined that your drugs are not generally recognized as safe and effective and therefore your marketing of them without an approved new animal drug application violates the law.
“An herbal supplement formulated to promote normalization of the digestive tract functions in the face of diarrhea, vomiting, gas, cramps, and other intestinal dysfunctions"
"A special combination of herbs demonstrated to enhance immunity through natural antibiotic antioxidant and microscopic parasitical activities".
"Vibactra Plus is an herbal supplement for bacterial, viral, and micro-parasitical infections (such as Coccidia and Giardia)"
"An aid to help animals fight heartworms".
Canine Distempaid™ – Administer 2 times daily to support neurological symptoms of tremors, hard pad, and seizures.
Derma NERV™ – Administer 3 times daily as an important part of recovery due to the fact that the virus attacks the nervous system.
Because your productsare intended to prevent, mitigate or treat diseases in animals, they are drugs within the meaning of section 201(g)(1)(B) of the FD&C Act, [21 U.S.C. § 321 (g)(1)(B)]. Moreover, these products are new animal drugs, as defined by section 201(v) of the FD&C Act, [21 U.S.C. § 321(v)], because they are not generally recognized among experts qualified by scientific training and experience to evaluate the safety and effectiveness of animal drugs, as safe and effective for use under the conditions prescribed, recommended, or suggested in the labeling. They are not the subject of an approved new animal drug application, conditionally approved new animal drug application, or index listing under sections 512, 571, and 572 of the FD&C Act [21 U.S.C. §§ 360b, 360ccc, and 360ccc-1]. Therefore, the products are unsafe within the meaning of section 512(a) of the FD&C Act, [21 U.S.C. § 360b(a)], and adulterated under section 501(a)(5) of the FD&C Act [21 U.S.C. § 351(a)(5)]. Introduction of an adulterated drug into interstate commerce is prohibited under section 301(a) of the FD&C Act [21 U.S.C. § 331(a)].
This letter is not intended to be an all-inclusive review of your products. It is your responsibility to ensure that all of your products are in compliance with the FD&C Act and its implementing regulations. Failure to promptly correct the violations specified above may result in enforcement action without further notice. Enforcement action may include seizure of violative products and/or injunction against the manufacturers and distributors of violative products.
You should notify this office, in writing, within fifteen (15) working days of the receipt of this letter of the steps you have taken to bring your firm into compliance with the law. Your response should include any documentation necessary to show that correction has been achieved. If corrective action cannot be completed within fifteen (15) working days, state the reason for the delay and the date by which the corrections will be completed. Include copies of any available documentation demonstrating that corrections have been made.
Your written response should be sent to Matthew R. Dionne, Compliance Officer, U.S. Food and Drug Administration, 6th Avenue & Kipling Street – Building 20 DFC, P.O. Box 25087, Denver, Colorado 80225-0087. If you have any questions about this letter, please contact Compliance Officer Matthew R. Dionne at (303) 236-3064 or email at Matthew.Dionne@fda.hhs.gov.


On 10 May 2016, the US Court of Appeals for the Eleventh Circuit addressed the question of whether a cruise ship employee who is injured on the job, and whose employment contract contained an arbitration agreement governed by the New York Convention and Chapter 2 of the Federal Arbitration Act, can bar arbitration by showing that high costs may prevent him from effectively arbitrating his federal statutory rights. The Eleventh Circuit referred to its New York Convention precedent that suggests but does not hold that a party may only raise such public-policy defense in opposition to a motion to enforce an arbitral award and not in opposition to a motion to compel arbitration. However, the Eleventh Circuit did not need to definitively answer this question, because plaintiff failed to establish that the costs of arbitration would preclude him from arbitrating his federal statutory claims. The Eleventh Circuit, therefore, affirmed the district court’s order compelling the parties to arbitration and denied the defendant’s motion for sanctions (Suazo v. NCL (Bahamas), Ltd., No. 14-15351 (11th Cir. May 10, 2016)).
Suazo, a Nicaraguan citizen, signed an employment contract with NCL to work aboard one of its cruise ships. The employment contract required arbitration of any dispute arising out of his employment with NCL in Nassau, Bahamas pursuant to the New York Convention.
Suazo had sustained injuries during the exercise of his duties aboard the Bahamian vessel Norwegian Epic and his medical care was terminated before he was healed. When NCL ignored requests to reinstate his medical care, Suazo brought suit against NCL in Florida circuit court in Miami-Dade County, asserting claims for negligence under the Jones Act and under general maritime law. NCL removed the case to the US District Court for the Southern District of Florida pursuant to 9 U.S.C. § 205, which allows for the removal of state court actions relating to an arbitration agreement that fall under the New York Convention. Thereafter, NCL filed a motion to dismiss and compel arbitration.
Suazo opposed NCL’s motion to compel arbitration. He noted that, although the employment agreement was silent as to who would bear the costs of arbitration for individuals who forego representation by the Norwegian Seafarers’ Union, NCL had said that it would require him to pay half of the costs of arbitration. He claimed that he was too poor to bear that cost and that, therefore, the district court should refuse to compel arbitration.
On 4 November 2014, the district court granted NCL’s motion and compelled the parties to arbitrate, retaining jurisdiction of the case in order to enforce the arbitration award “if appropriate”. The court reasoned that Suazo’s argument that he could not afford to pay the costs of arbitration invoked the “effective vindication doctrine” which was a “public policy” defense that could not be considered at the arbitration-enforcement stage under the New York Convention.
On appeal before the Eleventh Circuit, Suazo raised the following question: whether he may defeat NCL’s motion to compel arbitration by showing that he was too poor to afford the costs of arbitration. On 6 May 2015, NCL moved to dismiss the appeal for want of jurisdiction, suggesting that the district court’s order compelling arbitration was a non-final, non appealable order under 9 U.S.C. § 16(b). While that motion was pending in the Eleventh Circuit, NCL moved for sanctions, arguing that Suazo’s appeal was frivolous and that the Court should award it double costs and reasonable attorneys’ fees.
On 23 June 2015, the Eleventh Circuit denied NCL’s motion to dismiss, concluding that the order compelling arbitration was a final, appealable order and on 10 May 2016 it opined on Suazo’s question on costs and NCL’s motion for sanctions.
The Eleventh Circuit stated that Article V of the Convention governs only the “award-enforcement” stage and provides for a substantially broader set of defences that may be raised in response to a motion to confirm an arbitral award. One of Article V’s seven permitted defences is a “public policy” defense. This public policy defense, like the other Article V defenses, “applies only at the award-enforcement stage”. Therefore, parties must “wait until the award-enforcement stage to assert an Article V public-policy claim”.
Chapter 1 of the FAA governs domestic arbitration, and provides a broad array of defenses to the enforcement of arbitration agreements in the cases that it governs. However, the broad defenses applicable in the context of domestic arbitration are not generally available in cases governed by the New York Convention (Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 629 (1985)). The “effective vindication doctrine” is one defense that the federal courts have recognized in the context of domestic arbitration. The Supreme Court has never invoked the effective vindication doctrine to justify the refusal to enforce an arbitration clause in either the domestic or foreign arbitration context. Moreover, no court has ever applied the effective vindication doctrine to invalidate an arbitration agreement in the context of a New York Convention case.
The Eleventh Circuit noted that it reviews de novo a district court order granting a motion to compel arbitration. The district court was required to compel arbitration if the arbitration agreement satisfied the four jurisdictional prerequisites found in the New York Convention and none of Article II’s arbitration-enforcement stage defences applied. It was undisputed that the four jurisdictional prerequisites have been met. The parties agreed that: the employment agreement was in writing; the agreement provides for arbitration in Nicaragua, which has signed the Convention; Suazo’s employment with NCL was a commercial relationship; and Suazo is not an American citizen. Suazo argued, however, that the district court erred in compelling him to arbitrate because he cannot afford the costs of arbitration that he will be required to pay and, therefore, he would be unable to effectively vindicate his federal statutory rights in the arbitral forum.
The Eleventh Circuit stated that it has not decided whether a party can raise a cost-based effective vindication defense at the arbitration-enforcement stage under the New York Convention, and that it was not aware of no other federal circuit court that has done so. Nevertheless, three of its decisions provided substantial guidance (Bautista v. Star Cruises, 396 F. 3d 1289 (11th Cir. 2005); Thomas v. Carnival Corp., 573 F.3d 1113 (11th Cir. 2009); Lindo v. NCL (Bahamas), Ltd., 652 F.3d 1257 (11th Cir. 2011). The Eleventh Circuit also referred to Escobar v. Celebration Cruise Operator, 805 F. 3d 1279 (11th Cir. 2015) in which it was confronted with the same question presented in the case before it.
According to the Eleventh Circuit, because Suazo was attempting to defeat a motion to compel arbitration, he could only raise his cost-based effective vindication defense if it falls within the defences enumerated in Article II of the New York Convention. The Supreme Court has never applied the effective vindication doctrine and “no court  has applied it in the context of a New York Convention case.” The Eleventh Circuit has never determined whether a cost-based effective vindication defense could be raised under the “incapable of being performed” clause of Article II, and did not need to resolve that question in the case before it because Suazo has fallen far short of establishing that enforcing the arbitration agreement in this case will effectively deny him access to the arbitral forum.
Suazo’s factual foundation for regarding his “inability to pay [the arbitration] fees,” was insufficient. In any event, Suazo has not carried his burden of proving that it is likely that unaffordable costs would deny him “access to the forum”.
The Eleventh Circuit held that Suazo could not prevail on his effective vindication defense for a second and independent reason. The CBA between Suazo and NCL provided that, as long as Suazo was represented by the Norwegian Seafarers’ Union, NCL “shall bear the reasonable costs related to the arbitration process from beginning to end”. However, if Suazo chose to initiate arbitration “independently” of the NSU, the CBA was silent as to who must bear the costs of arbitration. On this record, it appeared that the only reason Suazo would be required to bear any cost in arbitrating his dispute with was is because he opted to retain private counsel instead of proceeding to arbitrate with union-appointed counsel. The agreement gave him a choice: arbitrate for free with the union-chosen representation, or pay his own way with counsel of his choice. Having chosen the latter course of action, the Eleventh Circuit would not second-guess the bargain struck in the contract and let Suazo eat his cake and have it too. Because the arbitration agreement and the CBA gave him the ability to arbitrate for free and thereby “vindicat[e] his [federal statutory] rights in the arbitral forum,” his effective vindication defense was unmeritorious.
Since Suazo has not established any basis on which to deny NCL’s motion to compel arbitration, the Eleventh Circuit affirmed the district court’s order compelling the parties to arbitrate the dispute. The Eleventh Circuit also held that sanctions were not appropriate in the case before it.