JOHN N. HEARN, Plaintiff,
TOTE SERVICES, INC., Defendant.
Submitted: July 21, 2017
Defendant Tote Services, Inc.'s Motion in Limine Seeking
a Declaration that Florida Law Applies to This
Laurence V. Cronin, Smith, Katzenstein & Jenkins LLP,
Wilmington, Delaware, Attorney for Plaintiff John N. Hearn.
B. Ladig and Meghan A. Adams, Morris James LLP, Wilmington,
Delaware; John R. Fornaciari and Thomas E. Hogan, Baker &
Hostetler LLP, Washington, D.C., pro hac vice, Attorneys for
Defendant Tote Services, Inc.
Richard R. Cooch, R.J.
a breach of contract action alleging reputational harm to
Plaintiff, John N. Hearn. The contract at issue is a three-party
Settlement Agreement ("Agreement") between
Plaintiff, Defendant Tote Services, Inc. ("Tote"),
and American Maritime Officers Union ("Union"). The
Union is not a party to this action. The Agreement
"arose out of Florida-employer Tote's termination of
Union-member John Hearn from his employment as Master of the
Florida-based vessel the El Morro following the arrest of
crew members in Florida for smuggling illegal drugs aboard
the vessel." Plaintiff alleged in his complaint that
Defendant breached the Agreement when it failed to expunge
certain records pursuant to that agreement and otherwise
provided such materials to a participant at an unrelated
federal administrative hearing.
term of the Agreement at issue in this case provides that
"Tote agrees that any records of the circumstances
giving rise to Employee's grievance shall be expunged,
and that it shall respond to any future inquiries concerning
Employee's employment by Tote with his sailing positions,
dates of employment, and without reference to this
matter." The employment records referencing
Plaintiff that were not expunged were referenced at a federal
administrative hearing to purportedly "attack
threshold issue at this stage is whether, if Florida law
applies to this Delaware litigation, Defendant is protected
under Florida's absolute litigation privilege, which
precludes any lawsuit against Defendant stemming from a court
or administrative proceeding, where Defendant had apparently
not expunged certain records prior to the federal
administrative hearing, the disclosure of which, Plaintiff
claims, was harmful to his reputation. Both parties have
asked the Court to determine which state law should be
applied, and second, whether the absolute litigation
privileges of the applicable state protects Defendant in this
Court concludes that Florida law applies in this action
because the parties and the Agreement have the strongest
relationship with Florida, not with Delaware or any other
state. This Court additionally finds that Tote is protected
by the absolute litigation privilege as defined by that
state. Tote's motion in limine is granted.
II. STIPULATED PROCEDURAL HISTORY AND FACTS
parties, at the Court's request, filed a "Joint
Choice of Law Stipulation" that they agree set forth the
procedural history and the facts that are determinative for
resolution of Defendant's motion. It is set forth below
I. The Procedural History of This Action
On August 19, 2016, Mr. Hearn instituted the instant action.
On October 31, 2016, TSI filed its Motion to Dismiss the
Complaint under and pursuant to Superior Court Rule 12(b)(6),
and filed its memorandum in support thereof. On November 18,
2016, Mr. Hearn filed his Opposition to TSI's motion and,
as part of that opposition, filed the Affidavit of John N.
Hearn. On December 8, 2016, TSI filed its Reply to Mr.
Hearn's Opposition and, as part of the Reply, filed the
Affidavit of Jeffrey J. Corradino. On January 23, 2017, the
Court convened a hearing on TOTE's motion, and TSI's
motion was withdrawn without prejudice to TOTE filing a later
motion for partial summary judgment. At the January 23, 2017
hearing, the parties agreed to file the instant Joint Choice
of Law Stipulation.
II. The Stipulated Facts on Which the Court Should Decide the
Choice of Law Issue
1. Plaintiff John N. Hearn has been a resident of Lewes,
Delaware since 1994. Prior to moving to Lewes, he lived in
Milton, Delaware beginning in about 1989.
2. Since 1974, Mr. Hearn worked almost continuously for
Defendant Tote Services, Inc. ("TSI") and its
affiliates and predecessors. At the time he was hired, he was
also a resident of Delaware. "TSI" will herein
refer to TOTE Services, Inc. and its predecessors.
3. Since 1974, Mr. Hearn worked on ships for TSI and its
affiliates and predecessors around the world. TSI always paid
him to travel from his home in Delaware to wherever he was
assigned to join a ship.
4. Masters, and other officers, were members of the American
Maritime Officers Union ("AMO"). TSI had a
collective bargaining agreement ("CBA") with the
AMO which governed some aspects of the employment
relationship between TSI and its Masters, including, Mr.
Hearn. Mr. Hearn would not have remained employed by TSI if
he did not become a member of AMO.
5. TSI is a Delaware corporation which operates several
ocean-going cargo vessels. TSI has no offices or operations
in Delaware and does not employ any individuals who perform
work for them in Delaware.
6. Two of the vessels operated by TSI were two sister
container and roll-on roll-off ships: the El Faro and the El
Morro. These vessels were owned by a sister company of TSI,
TOTE Maritime Puerto Rico, formerly called Sea Star Lines.
Container ships are cargo ships that carry cargo in truck
size intermodal containers -- a technique called
containerization. The El Morro and El Faro also had the
ability to carry some RoRo cargo, roll-on and roll-off cargo.
7. During the time period May 29, 2012 through July 2013, the
El Yunque (a third sister ship) and the El Morro transported
cargo exclusively on one route, from Jacksonville, Florida to
San Juan, Puerto Rico and back to Jacksonville. The El Faro
was taken out of service for that period.
8. Since at least 2011, TSI's Crewing Department was
located in Jacksonville, Florida and made the assignments of
the crews on the El Faro and the El Morro. The Crewing
Department had authority to assign personnel to ships, except
it could not assign or reassign Mr. Hearn or any other Master
from his ship without his consent. Discretion and authority
to assign Masters who were not already assigned on vessels or
whose vessels were taken out of service was under authority
of the VP, Personnel at TSI headquarters in New Jersey,
subject to the approval of the President of TSI, who was
located in Florida as of July 2014. The Crewing Department,
after approval by the VP Personnel, assigned Mr. Hearn to be
the Captain (Master) of the El Faro, and then of the El
Morro. From July 2007 until April 2012, Mr. Hearn was Master
of the El Faro. From May 2012 until July 2013, Mr. Hearn was
one of the Masters of the El Morro on its run between
Jacksonville and San Juan. During this time period, May 2012
to July 2013, Mr. Hearn regularly joined and left the El
Morro in Florida traveling directly from his home in
9. Before May 2012, Mr. Hearn was assigned to the El Faro and
he joined El Faro up to May 2012 in various locations around
10. On or about July 2014, TSI had moved its headquarters
offices from New Jersey to Jacksonville, Florida. TSI's
crewing and operations offices were already in Jacksonville,
and TSI had its maritime operations in Florida, at Blount
Island on the St. Johns River, Jacksonville, by July 2014. At
the time of the Settlement Agreement in December 2014,
TSI's headquarters, maritime and commercial functions
were in Jacksonville, Florida.
11. In 2013, U.S. Customs and Border Protection Agents
arrested crew members of the El Morro in Florida for
smuggling 43 kilos of illegal drugs on the vessel. The
smuggling activities occurred in Florida, Puerto Rico and at
sea in international waters. The arrests prompted TSI to send
two executives (Mitch Walker and Harry Rogers) from New
Jersey to inform Mr. Hearn on July 16, 2013 in a face-to-face
meeting, on board the El Morro in Jacksonville, Florida, that
he must either resign or he would be terminated for cause. In
response, that same day, July 16, 2013 in that same
face-to-face meeting, Mr. Hearn submitted a handwritten note
of resignation to TSI, while on board the El Morro in
Jacksonville. On July 17, 2013, Mr. Hearn submitted a letter
to TSI withdrawing his July 16, 2013 letter of resignation.
TSI thereafter discharged Mr. Hearn for cause by mailing him
a letter from TSI's offices in New Jersey to his
residence in Delaware.
12. Mr. Hearn was a member of the American Maritime Officers
Union ("AMO") whose national headquarters is in
Dania, Florida. TSI and the AMO were parties to a Collective
Bargaining Agreement. The AMO filed grievance on behalf of
Mr. Hearn challenging the discharge. Mr. Hearn was
represented by Attorney David Glanstein, located in New York
City. Glanstein also represented the AMO. Mr. Glanstein
engaged in settlement discussions with TSI on behalf of Mr.
Hearn. In addition, TSI sent a number of communications to
attorney Glanstein in New York from its attorney located in
New Jersey. Mr. Hearn received information regarding the
negotiations in Delaware, where he resided. Mr. Hearn never
travelled to Florida in connection with the grievance or the
settlement negotiations. Rather, the only negotiations in
which he participated in person occurred in Philadelphia on
the date the arbitration was scheduled in October 2014. A
copy of the executed Settlement Agreement between TSI, the
AMO and Mr. Hearn is annexed hereto as Exhibit 1.
13. TSI executed the Settlement Agreement in Florida, and TSI
in Florida caused the transfer of the payments required in
the Settlement Agreement. Mr. Hearn signed the Settlement
Agreement in Delaware on December 10, 2014 before sending it
to his attorney in New York. Mr. Glanstein then sent Mr.
Hearn a fully executed copy from New York to Delaware. Mr.
Hearn received in Delaware his payment under the Settlement
14. While Mr. Hearn stipulates that the facts included in
Paragraphs 15-22 are true, he disputes that any of those
facts are relevant for purposes of choice of law.
15. On or about May 2014, the El Morro was retired from
service and scrapped.
16. On October 1, 2015, the El Faro sank on route from
Jacksonville to Puerto Rico resulting in the death of all
thirty-three crew members on board.
17. The United States Coast Guard convened a Marine Board of
Investigation into the cause of the sinking of the El Faro
which conducted public hearings in Jacksonville, Florida. The
MBI is empowered to assess or recommend penalties and to
refer issues to the Department of Justice for criminal
prosecution, if the MBI suspects a crime was committed.
18. On May 17, 2016, Mr. Hearn was subpoenaed to appear as a
witness at the MBI hearings in Jacksonville. Mr. Hearn
offered testimony that reflected poorly on TSI both with
respect to the conditions of the El Faro and the El Morro and
TSI's policies and procedures regarding safety and ship
maintenance and operations. After Mr. Hearn testified in
response to questioning from the Coast Guard and the National
Transportation Safety Board, attorneys for the estate of
Michael Davidson, the Master of the El Faro who perished,
cross-examined Mr. Hearn. Davidson's counsel stated that
he had no questions but, after conferring with counsel for
TSI, conducted the following examination in an attempt to
discredit Mr. Hearn's testimony:
Bennett: Sir, you were terminated, weren't you?
Hearn: No. They tried to terminate me, it went to
Bennett: Weren't you given a letter on July 15, 2013 that
stated: Dear Captain Hearn, quote, Recently the U.S. Customs
and Border Protection arrested El Morro crew members for
smuggling 43 kilos of illegal drugs by vessel? Do you recall
Hearn: Not completely, because you're only reading part
Bennett: Do you want to read it in the full?
Bennett: I didn't think so. I have no further questions
of this witness.
Davidson's counsel obtained the July 15, 2013 termination
letter from TSI in order to attack Mr. Hearn's
credibility at the Marine Board Hearing.
21. At or about the time Mr. Hearn was discharged by TSI, TSI
discharged one other Master and two Chief Mates. The AMO
filed grievances on or behalf of Mr. Hearn and the other
three officers. TSI settled the grievances of the other three
officers as well as Mr. Hearn's. The AMO was a party to
the settlements of all four of the discharged officers. TSI
had settlement discussions with the AMO in Florida.
22. Either on or before January 1, 2013, TSI began
contributing to the Florida unemployment insurance fund on
account of wages it paid Mr. Hearn, including on account of
the back wages it paid Mr. Hearn under the Settlement
Agreement in 2015. Mr. Hearn did not know that TSI
contributed to Florida's unemployment insurance fund in
connection with his employment and he never paid state income