HEARING REQUIRED TO DETERMINE WHETHER ARBITRATION AGREEMENT WAS ENFORCEABLE.
In re Nicholas Schreiber, Petitioner-Respondent, v K-Sea Transportation Corp., et al., Respondents-Appellants.
5410N, Index 104992/04, 107571/04
SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FIRST DEPARTMENT
2006 NY Slip Op 3033; 2006 N.Y. App. Div. LEXIS 4732
April 25, 2006, Entered
PROCEDURAL POSTURE: Plaintiff seaman sued defendant employers in the Supreme Court, New York County (New York). The seaman alleged a claim that one employer violated the Jones Act, 46 U.S.C.S. § 688. The seaman alleged claims against both employers for unseaworthiness and for maintenance and cure. The employers filed a motion to compel arbitration. The seaman filed a motion to stay arbitration. The trial court permanently stayed arbitration. The employers appealed.
OVERVIEW: When the seaman was injured in an accident, a claims manager for the employers extended an offer to pay the seaman his average two-thirds net weekly wage as an advance against settlement if the seaman agreed to participate in the employers' claims arbitration program and pursue legal claims against the employers in arbitration rather than in court. The seaman signed an agreement which provided for the arbitration of his claims. The employers contended that the seaman was thus required to arbitrate his claims pursuant to the agreement. On appeal, the court found that the arbitration agreement was not a release under N.Y. Gen. Oblig. Law § 15-108. Additionally, the seaman failed to show that Congress intended to preclude a waiver of judicial remedies for the statutory rights at issue. Finally, a question remained as to whether the seaman was sufficiently apprised of the consequences of his agreement to arbitrate so that his decision to waive the right to jury trial could have been deemed an informed one. Thus, a trial was necessary to decide if the contract entered into between the parties was equitable and was to be enforced under N.Y. C.P.L.R. 410 and 7503(a).
OUTCOME: The order was reversed to the extent of vacating the permanent stay and preliminarily enjoining arbitration of the dispute. The matter was remanded to the trial court for a hearing as to whether the subject arbitration agreement was enforceable.
