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Hearn v. Tote Services, Inc.

Superior Court of Delaware

October 17, 2017

JOHN N. HEARN, Plaintiff,
v.
TOTE SERVICES, INC., Defendant.

          Submitted: July 21, 2017

         On Defendant Tote Services, Inc.'s Motion in Limine Seeking a Declaration that Florida Law Applies to This Case.[1] GRANTED.

          Laurence V. Cronin, Smith, Katzenstein & Jenkins LLP, Wilmington, Delaware, Attorney for Plaintiff John N. Hearn.

          Peter 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.

          MEMORANDUM OPINION

          Richard R. Cooch, R.J.

          I. INTRODUCTION

         This is a breach of contract action alleging reputational harm to Plaintiff, John N. Hearn.[2] 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."[3] 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.

         The 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."[4] The employment records referencing Plaintiff that were not expunged were referenced at a federal administrative hearing to purportedly "attack [Plaintiff's] credibility."[5]

         The 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 action.

         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

         The 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 in toto:

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 Delaware.
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 the world.
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 Agreement.
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 arbitration.
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 that letter?
Hearn: Not completely, because you're only reading part of it.
Bennett: Do you want to read it in the full?
Hearn: No.
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 ...

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