Sherwood v. Marquette Transp. Co., LLC

Sherwood v. Marquette Transp. Co., LLC

Opinion

 [*842]  EASTERBROOK, Chief Judge. Michael Sherwood filed this suit under the Jones Act, 46 U.S.C. §§ 30101-06, and general maritime law, alleging that he suffered an injury while working as a deckhand. Defendants (collectively Bluegrass Marine, Sherwood's employer), whose vessels ply the Mississippi River, asked the judge to stay the suit in favor of arbitration. The Federal Arbitration Act does not apply because Sherwood was a seaman, and ] "nothing [in the Act] shall apply to contracts of employment of seamen" and some other workers. 9 U.S.C. § 1. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 121 S. Ct. 1302, 149 L. Ed. 2d 234 (2001) (discussing § 1). But Bluegrass Marine did not rely on  [**2] the federal Act. Instead it invoked a clause of Sherwood's employment contract providing that all disputes will be arbitrated under the Illinois Uniform Arbitration Act, 710 ILCS 5/1 to 5/23.

Sherwood replied with a number of arguments that are difficult to square with the law of this circuit, such as a contention that arbitration clauses in form contracts are inadequate to waive the right to trial by jury. See Carbajal v. H&R Block Tax Services, Inc., 372 F.3d 903 (7th Cir. 2004) (rejecting that position). The district court nonetheless denied the motion to stay. Bypassing all issues that the parties had briefed, the judge concluded that the Federal Arbitration Act preempts any state law that concerns arbitration. If the federal Act applies, then arbitration must proceed under its terms; if the federal Act does not apply, because of § 1 or any other clause, then arbitration is forbidden. Any other outcome, the judge wrote, would interfere with the federal Act's objectives. 2009 U.S. Dist. Lexis 26934 (S.D. Ill. Mar. 31, 2009).

Perhaps because the issue had not been briefed, the district court did not consider a third possibility: When a contract  [*843]  is covered by the federal Act, states  [**3] are forbidden to interfere with the parties' agreement (save on a ground, such as the need for a signed writing, applicable to any contract, see 9 U.S.C. § 2), but that, when a contract is not covered by the federal Act, states are free to favor, disfavor, or even ban arbitration. At least two courts of appeals have reached this conclusion, rejecting the argument that exceptions to the federal Act preempt state law. See Palcko v. Airborne Express, Inc., 372 F.3d 588, 595-96 (3d Cir. 2004); Davis v. EGL Eagle Global Logistics, L.P., 243 Fed. App'x 39, 44 (5th Cir. 2007) (nonprecedential disposition). And this court has held that the limited scope of a federal enactment does not preempt state legislation on subjects that Congress has chosen not to regulate. See, e.g., Amanda Acquisition Corp. v. Universal Foods Corp., 877 F.2d 496 (7th Cir. 1989); Joliet v. New West, L.P., 562 F.3d 830 (7th Cir. 2009). This means, we concluded in Omni Tech Corp. v. MPC Solutions Sales, LLC, 432 F.3d 797 (7th Cir. 2005), that provisions for alternative dispute resolution may be enforced as contracts under state law, even if the provisions are outside the Federal Arbitration Act's scope. See also Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 128 S. Ct. 1396, 1406-07, 170 L. Ed. 2d 254 (2008)  [**4] (agreements that differ from the federal Act's rules may be enforced as contracts, though not under the Act's procedures). But the district court, acting sua sponte, appears to have been unaware of these decisions.

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