Dippin’ Dots, Quilt Museums and the Intricacies of Maritime Federal Venue – Southern District of Texas Considers Forum Selection Clauses under FELA and the Jones Act

Many folks across this great country might not be familiar with Paducah, Kentucky. As a public service, the Court provides some basic background information about this relatively small community first settled as Perkin in 1821 and renamed Paducah in 1827 by William Clark (of the famed Lewis & Clark expedition). Paducah is located in the far western part of Kentucky at the confluence of the Tennessee and Ohio rivers, halfway between St. Louis and Nashville. Approximately 25,000 men, women, and children reside in Paducah. Designated by UNESCO as a Creative City of Crafts and Folk Art, the city is home of the National Quilt Museum and, as the local convention and visitor’s bureau likes to boast, “a haven for creative thinkers and doers who find inspiration here.” There is a laundry list of famous people who grew up in Paducah, including Alben W. Barkley (the 35th Vice President of the United States during the presidency of Harry S. Truman), John Scopes (the teacher accused for teaching the theory of evolution in the legendary Scopes trial) and PGA golfer Kenny Perry. Saving the best for last, Paducah is also the corporate headquarters for Dippin’ Dots, a favorite treat of this judge and his family.

With this opening paean to Paducah, the U.S. District Court for the Southern District of Texas addressed an intriguing legal question in In the matter of Complaint of Marquette Transportation Company Gulf-Inland LLC: can a limitation of liability action in federal court, filed in response to a Jones Act claim in state court, be transferred to a different venue than the pending state court action under a contractually bargained for forum-selection clause? See 2018 WL 4443141, 3:18-cv-00074 (S.D. Tex. 2018). The Court concluded that transfer of the limitation action was proper pursuant to the forum-selection clause in the seaman’s employment contract.  Further, the court rejected plaintiff’s argument that the forum selection clause was invalid pursuant to the prohibition against forum selection clauses in railroad workers’ employment contracts pursuant to the Federal Employers Liability Act (FELA), which the Jones Act incorporates by reference.

In Marquette Transportation Robert McCoun brought claims under the Jones Act and general maritime law in Texas State Court for personal injuries sustained in November 2017 while working as a deckhand on a barge in tow of the M/V Corpus Christi, a vessel owned by Marquette Transportation Company Gulf-Inland LLC. Id. at 1–2. Marquette then instituted limitation proceedings in the Southern District of Texas seeking (1) exoneration from, or a limitation of, liability under the Limitation of Liability Act (46 U.S.C. §§30501 et seq,); (2) and also a declaration that the federal limitation action be sent to the U.S. District Court for the Western District of Kentucky; and (3) separately filed a motion to transfer venue to Kentucky pursuant to the following forum selection clause executed by McCoun as part of his employment contract. Id.:

In consideration for Marquette Transportation Company Gulf-Inland, LLC (“Marquette”) considering a prospective employee’s application and conditionally offering an employment opportunity, the later payment of wages and benefits and the payment of maintenance, cure and advances against lost wages should an employee suffer a work-related personal injury and Marquette either determines or is found to have the legal duty to make such payments, all parties agree that any legal action seeking relief for a covered dispute must be filed in either (1) the United States District Court for the Western District of Kentucky, or (2) the McCracken County Circuit Court of Paducah, Kentucky.

Id. at 2–3. Under this agreement, personal injury, Jones Act, or any tort claims against Marquette were explicitly considered “covered disputes.” See id. at 3.

In addressing whether Marquette’s Motion to Transfer Venue should be granted, the Court began by laying out the legal and procedural framework of Marquette’s claim under the Limitation of Liability Act. While the Court did briefly address the purpose of the act, more specifically, the Court looked to the Supplemental Admiralty and Marine Claims Rule F’s discussion of the proper venue for limitation claims. See id. As the Court noted, under Rule F(9) “that if the owner has been sued with respect to any claim to which the plaintiff seeks to limit liability, the limitation complaint must be filed in the district in which the owner has been sued.” Id. at 4 (quoting In re Complaint of the Tug of Danielle M. Bouchard Corp., 1998 WL 164849, *2 (E.D. La. 1998)). The Court also noted that Rule F(9) allows any party to transfer a limitation action to any district “for the convenience of parties, in the interest of justice.” Id. (quoting Fed. R. Civ. P. Supp. R. F(9)). The Rule F(9) venue transfer provision is to be analyzed under the same framework as the venue transfer provisions found in 28 U.S.C. § 1404(a). Id. (citing In the Matter of the Complaint of Weeks Marine, Inc., 2016 WL 34101566, at *2 (D. N.J. 2016)).

The Court went on to discuss the typical analytical framework for a §1404(a) transfer (i.e. for convenience of parties/witnesses to another district where the case could have originally been filed) pursuant to the so-called “public and private interest factors.”  However, in light of the valid forum-selection clause,, the Court was bound to consider only the public interest factors (not the private interest factors), pursuant to the Supreme Court’s holding in M/S Bremen v. Zapata Off-Shore Co (as recently reaffirmed, Atl. Marine Canst. Co. v. US. Dist. Court for W. Dist. of Tex., 571 U.S. 49, 62 (2013)..: “[I]n light of the present-day commercial realities and expanding international trade . . . [a] form[-selection] clause should control absent a strong showing that it should be set aside.” 407 U.S. 1, 15, (1972).  Accordingly, the Marquette Court held under the Atlantic Marine/Bremen jurisprudence that the forum selection clause was binding viz. §1404(a) transfer analysis.

The Court likewise rejected McCoun’s suggestion that transfer would be improper and inefficient due to the supposed superior experience of the court in Galveston to understand Jones Act issues than a federal court in Paducah, Kentucky. Magistrate Judge Andrew Edison dismissed this argument outright, noting that Paducah, Kentucky sits at the point where the Tennessee and Ohio Rivers meet and is only fifty miles from the confluence of the Ohio and Mississippi rivers, and 20 miles from the Cumberland and Ohio rivers. Based on this the Court noted that “Western Kentucky’s role as a major hub for inland river activity, any suggestion that the federal courts there are unfamiliar with maritime law is spurious and unsupported. Indeed, a simple Westlaw search reveals that the Paducah Division of the Western District of Kentucky routinely handles Jones Act cases.” Id. at 7.

The Court also rejected McCoun’s last and most novel and complex theory against transfer – namely, that FELA’s statutory bar against forum-selection clauses in railroad worker’s employment agreements (see 45 U.S.C. § 55; Boyd v. Grand T. W. R. Co., 338 U.S. 263, 266 (1949))  should also apply to Jones Act seamen’s claims. The Court addressed a long line  of Fifth Circuit cases that addressed similar arguments prior to 2008, when FELA’s venue provisions did not apply in Jones Act cases due to the Jones’ Act’s own specific venue provisions (as a result of which courts had held that forum-selection agreements involving domestic seamen were enforceable under the Jones Act). Id. at 8–9 (citing Great Lakes Dredge & Dock Co., LLC v. Larrisquitu, 2007 WL 2330187, *23 (S.D. Tex. 2007)). However, in 2008, Congress repealed the venue provision in the Jones Act. See id. at 9. Based on this repeal, McCoun argued that in the absence of those erstwhile  Jones Act venue provisions, the Jones Act’s incorporation of FELA must necessarily  include the FELA prohibition against forum selection clauses, thus invalidating the forum selection clause in his employment contract. See id. at 9.

Judge Edison found this argument “creative,” albeit unsupported in the current case law. Notably, a number of District Courts have addressed this issue in Louisiana, Minnesota, and California, finding that the FELA prohibition on forum-selection clauses did not suddenly become applicable  Jones Act claims upon repeal of the Jones-Act-specific venue statutes. See id. at *9–10 (citing Brister v. ABCL River Operations, LLC, 2018 WL 746390 (E.D. La. 2018); Riley v. Trident Seafoods Corp., 2012 WL 245074 (D. Minn. 2012); Utoafili v. Trident Seafoods Corp., 2009 WL 6465288 (N. D. Cal. 2009); In re OSG Ship Mgmt., Inc., 514 S.W.3d 331 (Tex. App. —Houston [14th Dist.] 2016, no pet.)). As the Court noted in Utoafili, if Congress had intended to include the FELA venue provisions, Congress would have an indication of this intent in the changes to the Jones Act. Id. at 10 (citing Utoafili, 2009 WL 6465288, at *5)).

The Court did address the awkward result of its ruling – namely, that the limitation claim would be pending in Kentucky, while the underlying state court claim would continue to proceed in state district court in Galveston, Texas. The Court, however, deemed it inappropriate to consider any issue or argument made in the state court action, as the only issue is whether the federal limitation of liability action should be transferred. See id. at 13. Since the limitation action is separate from the state court action and operates under separate procedural rules, the Court concluded that there was no credible argument that Marquette had waived any claim of a right to transfer in a separate state court action governed by different rules and legal principles. Id. at 13.

Finding all McCoun’s arguments unavailing, the Court concluded that the forum-selection clause was enforceable and that the liability limitation claim should be transferred to the Western District of Kentucky.1

While McCoun did object to Magistrate Judge Edison’s Opinion and Recommendation, on September 17, 2018, Honorable Judge Hanks accepted Judge Edison’s Opinion and Recommendation and issued an order transferring this case to the Western District of Kentucky. See In the Matter of Complaint of Marquette Transportation Company Gulf-Inland LLC, 2018 WL 4408937 (S.D. Tex. 2018).

Based on this case and the various cases from U.S. District Courts around the country, forum-selection clauses in seamen’s employment contracts continue to be permissible and enforceable with respect to Jones Act claims. However, despite multiple rulings at the district court level on this issue since 2008, a federal circuit court has not addressed the application of FELA to the Jones Act in light of Congress’ 2008 repeal of the specific Jones Act venue provisions. This is an issue and question we are monitoring for future rulings at the district court level or subsequent rulings at the various courts of appeals.

1Notably the Court also addressed McCoun’s argument that the venue agreement was not supported by consideration and found that the agreement was supported by consideration because Marquette had paid wages and advances to McCoun after the accident and this was sufficient consideration. See id. at 11 (citing In re OSG Ship Mgmt., 514 S.W.3d at 339).