(CN) - A San Diego man does not have to arbitrate claims against the moving company whose alleged screwup landed him behind bars in Abu Dhabi, where he faces deportation from the United Arab Emirates after pleading guilty to weapons smuggling, the 9th Circuit ruled Tuesday.
After a company hired Gary Smallwood to work in Abu Dhabi four years ago, he hired Allied Van Lines (AVL) to do the moving for him. Smallwood gave the movers two sets of boxes - one destined for his new home in Abu Dhabi, and the other bound for storage in Southern California. The box meant to stay in the states, which contained some guns and ammunition, somehow got shipped to Abu Dhabi instead, according to the complaint. Smallwood says he was arrested by UAE officials, imprisoned for 11 days, and then "tricked ... into pleading guilty to smuggling firearms," according to the ruling.
Facing deportation, Smallwood sued AVL in state court for negligence and negligent infliction of emotional distress, intentional infliction of emotional distress, defamation, breach of fiduciary duty, fraudulent deceit and breach of contract. AVL removed the case to federal court in San Diego and moved to compel arbitration. But U.S. District Judge Barry Moskowitz would not allow it, finding that any foreign arbitration clause in the parties' contract was pre-empted by the century-old Carmack Amendment to the Interstate Commerce Act.
A three-judge panel of the 9th Circuit agreed Tuesday, finding that the amendment, born in 1906, is "clearly intended to protect shippers from being forced to submit to foreign arbitration as a condition of contracting with a carrier of household goods." It also "explicitly guarantees shippers certain venues to seek recourse against their carriers," according to the court.
"AVL's foreign arbitration clause would allow AVL to compel Smallwood to arbitrate, probably in the UAE," Judge Raymond Fisher wrote for the Pasadena-based panel. "The parties' foreign arbitration clause plainly contravenes Carmack's directive that Smallwood have recourse in the enumerated venues unless he agrees to arbitrate elsewhere after the dispute arises."