Court Opinion

ID: 9401418
Source: CourtListenerOpinion
Date Created: 2023-06-13 00:01:25.759814+00
Date Added: 2024-06-11T17:19:52.639970
License: Public Domain

Case: 22-30412        Document: 00516782938             Page: 1      Date Filed: 06/12/2023

             United States Court of Appeals
                  for the Fifth Circuit
                                                                                     United States Court of Appeals
                                                                                              Fifth Circuit

                                     ____________                                           FILED
                                                                                        June 12, 2023
                                      No. 22-30412                                     Lyle W. Cayce
                                     ____________                                           Clerk

   Servando Paraon Calicdan, individually, and on behalf of those
   similarly situated,

                                                                    Plaintiff—Appellant,

                                            versus

   M D Nigeria, LLC; Megadrill Services, Limited; Anjalex
   Investments, LLC; M & D Management, LLC; Michael A.
   Topham; Wendy Dunn; Dan Topham; Ian Dunn; Judy M.
   Dunn; Robert P. Dunn Estate,

                                              Defendants—Appellees.
                     ______________________________

                     Appeal from the United States District Court
                        for the Western District of Louisiana
                              USDC No. 6:21-CV-3283
                     ______________________________

   Before Jones, Dennis, and Willett, Circuit Judges.
   Per Curiam:*
         Under Philippine law, all contracts intended to employ Filipino
   citizens as overseas seafarers must comply with the Standard Terms set by
   the Philippine Overseas Employment Administration (POEA). One such

         _____________________
         *
             This opinion is not designated for publication. See 5th Cir. R. 47.5.
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                                       No. 22-30412

   term is that the parties must, with limited exceptions, arbitrate any
   employment disputes before the National Labor Relations Commission
   (NLRC).
          Servando Calicdan, a Filipino national, contracted with a manning
   agency to work for Megadrill Services, Limited as a seafarer for five months.
   Calicdan expected to work as a welder on a ship on the outer continental
   shelf. Instead, he worked on a ship moored in Louisiana waters in what he
   describes as deplorable conditions. After completing his initial contract,
   Calicdan entered into a one-month extension and another five-month
   contract with Megadrill.
          After his employment ended, Calicdan sued Defendants1 for his
   working conditions and pay under various theories of liability under federal
   and Louisiana law. Defendants asserted that Calicdan must arbitrate his
   claims under the Standard Terms incorporated into the employment
   contracts. The district court, upon the magistrate judge’s recommendation,
   agreed and granted Defendants’ motion to compel arbitration and dismissed
   Calicdan’s suit. The court denied Calicdan limited discovery in the process.
          Calicdan appeals. He raises several contract-enforcement defenses
   against the application of the arbitration requirement to his dispute.
   Alternatively, he asks that we reverse the district court’s denial of limited
   discovery and allow him discovery on the questions surrounding arbitrability.
          Calicdan’s allegations against Defendants are concerning. But our
   review is confined to whether the parties have a valid and enforceable

          _____________________
          1
           The individual defendants are agents or members of one or more of the corporate
   defendants. Calicdan does not differentiate between Defendants in his briefing.

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                                           No. 22-30412

   arbitration agreement. Because many of Calicdan’s contentions go to the
   merits, we AFFIRM.
                                                 I
           Our inquiry into the validity of arbitration agreements in international
   contracts is “very limited.” Francisco v. STOLT ACHIEVEMENT MT, 293
   F.3d 270, 273 (5th Cir. 2002) (citation omitted), holding modified on other
   grounds by Freudensprung v. Offshore Tech. Servs., Inc., 379 F.3d 327 (5th Cir.
   2004); see also 9 U.S.C. §§ 201–08. Under the Convention on the
   Recognition and Enforcement of Foreign Arbitral Awards, we must “compel
   arbitration if (1) there is an agreement in writing to arbitrate the dispute, (2)
   the agreement provides for arbitration in the territory of a Convention
   signatory, (3) the agreement arises out of a commercial legal relationship, and
   (4) a party to the agreement is not an American citizen.” Id. (citation
   omitted).
           Calicdan only challenges the first requirement—whether there is a
   written agreement to arbitrate.2 We hold that there is. The employment
   agreements themselves lack an arbitration provision. But the agreements
   incorporate the POEA Standard Terms, which require arbitration.

           _____________________
           2
              Calicdan also argues that the magistrate judge erroneously construed every
   factual dispute in favor of Defendants and arbitration. We disagree. Calicdan is correct that
   whether there is an agreement to arbitrate cannot be weighed with a thumb on the scale in
   favor of arbitration. See Banc One Acceptance Corp. v. Hill, 367 F.3d 426, 429 (5th Cir. 2004).
   But we do not read the magistrate judge’s opinion as doing so. As the magistrate judge
   explained, the operative agreements require arbitration as a matter of general contract law.
   See Calicdan v. MD Nigeria LLC, No. 6:21-CV-3283, 2022 WL 2165638, at *12 (W.D. La.
   May 17, 2022), adopted 2022 WL 2162645, at *1 (W.D. La. June 15, 2022) (“[T]he Court’s
   conclusions were drawn from analyses of legal precedent and undisputed facts, though
   potential factual discrepancies were noted.”).

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           To begin, “[u]nder general contract principles, where a contract
   expressly refers to and incorporates another instrument in specific terms
   which show a clear intent to incorporate that instrument into the contract,
   both instruments are to be construed together.” One Beacon Ins. Co. v.
   Crowley Marine Servs., Inc., 648 F.3d 258, 268 (5th Cir. 2011) (citing 11
   Williston on Contracts § 30:25 (4th ed. 1999)). “[A] separate
   document will become part of the contract where the contract makes ‘clear
   reference to the document and describes it in such terms that its identity may
   be ascertained beyond doubt.’” Id. (quoting 11 Williston § 30:25).3
           Each of Calicdan’s employment agreements state that the agreement
   will faithfully follow Memorandum Circular No. 10. In turn, Circular No. 10
   provides that all employment contracts must follow the POEA Standard
   Terms. The Standard Terms require arbitration of all employment-related
   disputes. So through incorporation, each of Calicdan’s employment
   agreements, by expressly referencing Circular No. 10, incorporate the
   Standard Terms and its arbitration provision.4 See One Beacon Ins. Co., 648
   F.3d at 268.

           _____________________
           3
             We apply “ordinary contract principles” in determining whether there is an
   agreement to arbitrate. Am. Heritage Life Ins. Co. v. Lang, 321 F.3d 533, 538 (5th Cir. 2003).
   In other contexts, we have looked to state law in answering that question. See Banc One, 367
   F.3d at 429 (arbitration under the Federal Arbitration Act). The parties did not brief what
   forum’s law applies. But the parties seemingly agree that Louisiana law applies if we must
   look to the law of a specific forum. Louisiana courts have recognized incorporation by
   reference of arbitration agreements. Dufrene v. HBOS Mfg., 03–2201, p. 5–6 (La. App. 4
   Cir. 5/28/04), 872 So.2d 1206, 1210–11 (allowing incorporation by reference as long as
   “the arbitration clause in the contract that is referred to has a reasonably clear and
   ascertainable meaning”) (quotation omitted)).
           4
              We have recognized that standard, POEA-approved Philippine seafarer
   contracts incorporate the POEA Standard Terms. See Lim v. Offshore Specialty Fabricators,
   Inc., 404 F.3d 898, 900 (5th Cir. 2005) (“Lim’s employment contract was executed

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           Calicdan also knew of the Standard Terms. He signed a copy of the
   terms with his second five-month term contract. Before that, he had signed
   dozens of other POEA-approved contracts. Calicdan also received training
   in both English and Filipino on the Standard Terms. And he does not dispute
   that the Standard Terms contained an arbitration provision.
           Still, Calicdan challenges the applicability of the Standard Terms’
   arbitration provision, arguing that: (1) Defendants failed to show the
   requisites for incorporation by reference; (2) even if the Standard Terms
   were incorporated into the employment contracts, the contracts are voidable
   because Defendants fraudulently induced him to sign them; (3) at the very
   least, his extension contract is void because his signature on it was allegedly
   forged; and (4) public policy warrants allowing Calicdan to proceed in federal
   court. We address and reject each argument in turn. 5
                                               A
           In arguing that the Standard Terms were not properly incorporated,
   Calicdan points to Defendants’ failure to produce signed copies of the
   Standard Terms for each employment contract. But we have held that an
   incorporated document does not have to be attached, much less signed, to be
   enforceable. See One Beacon Ins. Co., 648 F.3d at 268; see also Cashman Equip.

           _____________________
   through the POEA and subject to the Standard Terms. Those terms include dispute
   resolution procedures, which require, inter alia, resolving employment claims through
   arbitration in the Philippines.”). The Eleventh Circuit and the Second Circuit have also
   recognized incorporation by reference to memoranda requiring compliance with the
   Standard Terms. See, e.g., Bautista v. Star Cruises, 396 F.3d 1289, 1293 (11th Cir. 2005);
   Pagaduan v. Carnival Corp., 709 F. App’x 713, 716 (2d Cir. 2017).
           5
             Calicdan seemingly separately argues that the district court erred in adopting the
   magistrate judge’s statement that “without the contracts, the basis for Plaintiff’s wage
   claims is uncertain.” 2022 WL 2165638, at *8. We do not take this to be an independent
   holding and thus do not address it as a separate point of error.

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   Corp. v. Boh Bros. Constr. Co., L.L.C., 643 F. App’x 386, 388 (5th Cir. 2016)
   (per curiam) (“[Incorporation by reference] may apply even if the second
   document is unsigned.”).6 Nor does Calicdan dispute that he signed a copy
   of the Standard Terms when signing his second five-month employment
   contract. He contends only that he did not see the page containing the
   arbitration agreement. The lack of a signed copy of the Standard Term for
   each employment agreement thus does not defeat incorporation.
                                               B
           Calicdan next argues that, even if the Standard Terms are
   incorporated, they cannot apply to him because he did not in fact work as a
   seafarer. He vigorously contends that his work as a welder on a moored vessel
   in Megadrill’s shipyard is not seafaring work under the 2016 Revised POEA
   Rules and Regulations Governing the Recruitment and Employment of
   Seafarers.7 At this stage in the litigation, however, we can address only
   whether an arbitration agreement exists. See Banc One Acceptance Corp. v.
   Hill, 367 F.3d 426, 430 (5th Cir. 2004). Calicdan’s arguments, by contrast,
   go to the merits of several of his claims and to his contention that Defendants
   fraudulently induced him to sign the employment agreements and thus are
   not properly before us.
           Calicdan does not dispute that the parties contracted for him to work
   as a seafarer. And, as explained above, these employment contracts expressly

           _____________________
           6
            Cashman, of course, “is not controlling precedent,” but it “may be [cited as]
   persuasive authority.” Ballard v. Burton, 444 F.3d 391, 401 n.7 (5th Cir. 2006) (citing 5th
   Cir. R. 47.5.4).
           7
             The Rules’ definition of seafarer requires only that a worker be employed “in any
   capacity on board a ship” to count as a seafarer. The Rules further define “ship” as “a ship
   other than one which navigates exclusively in inland waters or waters within, or closely
   adjacent to, sheltered waters or areas where port regulations apply.”

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   incorporated the Standard Terms as governing over the contracts. Calicdan
   argues that his actual employment, rather than the terms of his employment
   agreements, must govern whether the Standard Terms apply. Adopting
   Calicdan’s position would practically require us to decide in Calicdan’s favor
   on whether he indeed worked as a seafarer. That is an inappropriate
   conclusion to draw at this stage. We would also be theoretically assuming that
   an arbitration provision is inapplicable any time the contract’s terms are
   violated. That swallows any merits analysis.
          We are similarly restrained from deciding whether Defendants
   fraudulently induced Calicdan into signing the employment agreements by
   allegedly misrepresenting that he would work as a seafarer. The Supreme
   Court has long held that arguments claiming that the entire contract is void
   for fraudulent inducement does not go to whether the arbitration agreement
   itself is void. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395,
   403–04 (1967) (applying the United States Arbitration Act of 1925). We later
   explained that “[e]ven if this contract had been induced by fraud, the
   arbitration clause is enforceable unless the plaintiffs were fraudulently
   induced into agreeing to the arbitration clause itself.” Downer v. Siegler, 489
   F.3d 623, 627 (5th Cir. 2007) (emphasis added) (applying the Federal
   Arbitration Act).
          In his opening brief, Calicdan argues that because the “employment
   contracts were predicated on fraud—Appellees’ knowing misrepresentation
   that Appellant would be employed as a seafarer—the alleged agreements to
   arbitrate cannot be enforced.” This argument tracks his allegations in the
   First Amended Complaint that Defendants persuaded him to sign the
   employment agreements knowing that Calicdan would not in fact work as a
   seafarer. Both go to the fraud surrounding the entire agreement, not the
   arbitration clause specifically. That is, Calicdan contends only that
   Defendants lied to get him to sign the employment contracts, which

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   incorporated the Standard Terms. This issue should be “considered by the
   arbitrator in the first instance.”8 Buckeye Check Cashing, Inc. v. Cardegna, 546
   U.S. 440, 445–56 (2006).
                                              C
           Calicdan argues that, at the very least, he does not have to arbitrate
   any dispute from the time covered by the extension contract because his
   signature on that contract was forged. Calicdan provides circumstantial
   evidence of the alleged forgery. Under the Standard Terms incorporated into
   his first employment contract, however, Calicdan remained under its terms
   “until the seafarer’s date of arrival at the point of hire upon termination of
   his employment pursuant to Section 18 of this Contract.” Section 18—
   “Termination of Employment”—provides: “The employment of the
   seafarer shall cease when the seafarer completes his period of contractual
   service aboard the ship, signs-off from the ship and arrives at the point of
   hire.” Calicdan was thus bound under his first employment contract until he
   returned to the Philippines (his point of hire) regardless of the extension
   contract. As a result, he must arbitrate any employment disputes arising
   during that period.

           _____________________
           8
              Calicdan also asserts that Defendants fraudulently induced him to sign the
   contracts by misrepresenting the ship number to mask that he would be working on a
   moored ship. He also argues that Defendants lied to the U.S. Government that Calicdan
   would be working offshore to obtain Calicdan’s entry into the United States. Because the
   first allegation goes to Defendants’ overall alleged scheme to mask Calicdan’s true
   employment as a land-worker so that Calicdan would sign the employment agreements, it
   similarly fails. As for the second, the magistrate judge found that Calicdan presented no
   evidence that Defendants defrauded the U.S. during the visa process. See 2022 WL
   2165638, at *6. And any alleged lies were made to the U.S. Government, not Calicdan. So
   they cannot be a basis for Calicdan’s claim that Defendants lied to him to get him to sign
   any contract.

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                                         D
          Finally, Calicdan argues that the arbitration agreement should not be
   enforced because it violates public policy. He contends that the agreement
   constitutes a prospective waiver of his federal rights, and the arbitration
   forum is unjust. Neither argument overcomes the “high bar” to avoid
   enforcement of the arbitration agreement. Lim v. Offshore Specialty
   Fabricators, Inc., 404 F.3d 898, 907 (5th Cir. 2005) (citation omitted).
          Calicdan fails to establish that he cannot raise his federal statutory
   claims in arbitration before the NLRC. Indeed, in Lim, we recognized that
   there is no reason the NLRC “could not consider an action arising under”
   federal law like the Fair Labor Standards Act, “if that statute applies to
   plaintiffs’ claims.” Id. at 908. Should the NLRC in fact fail to address
   Calicdan’s federal statutory claims, Calicdan can raise the issue at the award
   stage. See, e.g., Asignacion v. Rickmers Genoa Schiffahrtsgesellschaft mbH & Cie
   KG, 783 F.3d 1010, 1021 (5th Cir. 2015) (prospective-waiver doctrine is likely
   available at the award-enforcement stage where the tribunal “actually fail[s]
   to address causes of action under American statutes”); Balen v. Holland Am.
   Line Inc., 583 F.3d 647, 654 (9th Cir. 2009) (same).
          Nor does Calicdan try to show that “Congress intended to preclude a
   waiver of a judicial forum” for resolution of his federal statutory claims. See
   Lim, 404 F.3d at 907. Such a showing is generally required to exempt a
   federal statutory claim from a binding arbitration agreement. Id. Thus,
   Calicdan has not shown that the arbitration agreement constitutes a
   prospective waiver of his federal rights.
          Calicdan also has not met the “heavy burden of proof” to avoid
   arbitration for public policy reasons. Lim, 404 F.3d at 905. We have held
   many times that the NLRC is an acceptable forum for arbitration. E.g.,
   Asignacion, 783 F.3d at 1021–22 (reversing district court and requiring

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   enforcement of NLRC arbitration award); Lim, 404 F.3d at 908. “These
   decisions create a nearly airtight presumption that [NLRC] is an available
   forum.” In re Ford Motor Co., 591 F.3d 406, 413 (5th Cir. 2009). Calicdan
   does not present any changed circumstances showing that NLRC is no
   longer a valid forum. See id. His complaints about travel, affordability, and
   lack of process are matters of private concern, not public policy, and fail for
   that reason. Atl. Marine Constr. Co. v. U.S. Dist. Ct. for W. Dist. of Tex., 571
   U.S. 49, 67 (2013). Calicdan has not established that requiring him to
   arbitrate before the NLRC violates public policy.
                                           II
          Calicdan alternatively asks us to reverse the district court’s denial of
   limited discovery and remand the case for discovery on any factual dispute
   about arbitrability. We review discovery orders for abuse of discretion and
   affirm if the order is reasonable. Patterson v. Mobil Oil Corp., 335 F.3d 476,
   492 n.15 (5th Cir. 2003); see also Ameriprise Fin. Servs., Inc. v. Etheredge, 277
   F. App’x 447, 449 (5th Cir. 2008) (applying Patterson to limited discovery on
   arbitration). The district court’s discovery denial was reasonable as the
   question of arbitrability can be resolved on the law and the undisputed facts.
   The district court thus did not abuse its discretion.
                                   *        *         *
          We AFFIRM.

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