Eleventh Circuit Splits on Whether Non-Signatory Yacht Owners Can Force Seaman's Jones Act Claim to Arbitration Under New York Convention

Byron Chemaly worked as a crewmember on the M/Y Fountainhead, a Cayman Islands-flagged yacht home-ported at the Island Gardens Marina on Watson Island in Miami, Florida. On August 8, 2020, while helping recover a Sea Bob underwater scooter from the water off Sag Harbor, New York, Chemaly alleges he suffered a right shoulder injury after Captain Grant Gold dropped his radio and released his side of the scooter, shifting the full weight onto Chemaly. Chemaly alleges he was then ordered to forgo pain medication, placed on night shifts so the yacht guest would not see him in his sling, and required to continue performing physical work before being repatriated to South Africa without his personal effects.

Chemaly sued Eddie Lampert — whom he alleges was the beneficial owner of the yacht and the real party in interest behind two Cayman Islands entities, R. Operations, Ltd. and Fountainhead Marine Limited — along with Captain Gold, yacht manager Camper & Nicholsons, and insurer XL Catlin Syndicate 2003. His employment agreement with R. Operations contained an arbitration clause requiring that disputes be submitted to arbitration in the Cayman Islands. The defendants removed the case to federal court under the New York Convention and moved to compel arbitration of all claims.

The majority, written by Judge Jordan and joined by Judge Marcus, first reaffirmed that Bautista v. Star Cruises and Lindo v. NCL (Bahamas) Ltd. remain binding Eleventh Circuit precedent. The court held that GE Energy Power Conversion Fr. SAS, Corp. v. Outokumpu Stainless USA, LLC did not abrogate those decisions because the Supreme Court in Outokumpu did not consider whether the Convention's null-and-void clause encompasses the Jones Act or the FAA's seaman exemption. The panel acknowledged some tension between Outokumpu's instruction to use domestic law to fill Convention gaps and Bautista's and Lindo's statements limiting defenses to those applicable on an international scale, but held that tension falls short of abrogation. The court also rejected Chemaly's argument that a perceived conflict between the employment agreement's arbitration clause and its Cayman Islands venue-and-choice-of-law provision rendered the arbitration clause inoperative, reading the two provisions as complementary rather than contradictory.

The central dispute on appeal was whether non-signatories Lampert and Fountainhead Marine could invoke equitable estoppel to compel arbitration of Chemaly's claims. The majority applied a two-prong test asking whether the plaintiff alleged substantially interdependent and concerted misconduct between the signatory and non-signatories, and whether that misconduct gave rise to claims falling within the scope of the arbitration agreement. On the Jones Act claim, the majority held that Chemaly's complaint pleaded the identity of his Jones Act employer in the alternative — not that all three defendants acted in concert to cause his injury — and that the complaint alleged Lampert was not on board the yacht at the time of the Sea Bob incident. That was insufficient to satisfy the concerted-misconduct prong. On the maintenance, cure, and failure-to-treat claims, however, the majority reached the opposite conclusion: Chemaly's complaint attributed the post-injury mistreatment collectively to the defendants, and the broad maritime duty of maintenance and cure — owed by the shipowner without regard to negligence — created a common relationship among R. Operations, Fountainhead Marine, and Lampert that made the concerted-misconduct standard satisfied.

Judge Hull concurred in part and dissented from the reversal on the Jones Act claim. In her view, Chemaly's Jones Act allegations similarly did not distinguish between R. Operations and the non-signatories, and his Jones Act claim rested in part on the same alleged failure to provide adequate medical care underlying the failure-to-treat claim — making the misconduct indistinguishable across all three defendants and, in her view, sufficient to satisfy the concerted-misconduct standard for the Jones Act claim as well. The panel unanimously dismissed the defendants' cross-appeal seeking arbitration of the remanded claims — including the unseaworthiness and Camper negligence claims — for lack of jurisdiction under circuit precedent the defendants acknowledged but urged the court to overrule.