RECENT
DEVELOPMENTS IN THE COURTS - PART IV
(published January
2001)
The following survey represents some of the more significant recent court rulings around the nation affecting shipping lines generally:
ADA Applies To Foreign Flagged Cruise Ships In U.S. Waters
Stevens v. Premier Cruise Lines, Inc., 215 F.3d 1237 (11th Cir. 2000)
A wheelchair bound plaintiff, Tammy Stevens, booked passage on Premier's Bahamian-flag ship S.S. Oceanic. Plaintiff alleged the cruise ship was not wheelchair accessible. She filed suit in the U.S. District Court seeking injunctive relief under the ADA and damages under Florida state law.
The trial court granted Premier's Motion to Dismiss holding that Stevens lacked standing to sue for injunctive relief under Title III of the ADA because she failed to allege likelihood of cruising with Premier again. The trial court also found that as a matter of law, the ADA does not apply to foreign-flag cruise ships. The 11th Circuit Court of Appeals reversed.
The 11th Circuit first held that while Stevens' original complaint failed to allege a genuine threat of future injury, the district court erred in not allowing her to file an amended complaint, which would have cured the defect. The court then ruled, in the part of the opinion that presents far-reaching ramifications, that the plain meaning of the language in the statute demonstrated Congress intended for a comprehensive definition of the term 'public accommodation.' The court found that a cruise ship contains many 'public accommodations' and Title III of the ADA applies to foreign-flag cruise ships which embark U.S. passengers in U.S. waters. In addressing the extraterritorial application of the ADA, the court noted that the law of the ship's flag ordinarily governs the internal affairs of a ship. However, in the court's view this case did not involve the internal affairs of the cruiseship. In the court's opinion, the case was about whether Title III requires a foreign-flag ship to reasonably accommodate a disabled, fare-paying, American passenger while the ship sails in American waters. To justify its holding, the court relied on the analysis of a 1923 Prohibition Act case.
Editor's Note: Subsequent to the entry of the appellate court's opinion, Premier filed a petition for rehearing by the Court en bane, and subsequently a suggestion of bankruptcy inasmuch as Premier ceased operations. The current status of the 11th Circuit's opinion and its precedential effect is still unknown.
State Of Florida Can Prosecute Crimes Committed On High Seas
State of Florida v. Stepansky, 761 So.2d 1027 (FL 2000)
This case presents interesting federalism issues as the Florida Supreme Court upheld the constitutionality of a Florida state statute which enabled Florida to prosecute defendant Matthew Stepansky for burglary and attempted sexual assault aboard a cruise ship which was located approximately 100 nautical miles from the coast of Florida at the time the crimes were committed. The High Court disagreed with defendant's contention that his criminal prosecution by Florida for alleged crimes committed while at sea violated: 1) the United States Constitution's grant of power to Congress to define and punish Piracies and Felonies committed on the high seas, 2) the United States Constitution's prohibition of states to enter into treaties, and 3) the United States Constitution's grant of power to federal courts to hear all cases of admiralty and maritime jurisdiction.
The Court found no conflict with federal law, in part because the statute specifically stated Florida would not exercise jurisdiction if the federal government, the foreign flag state, or the state in whose territory the act occurred prosecuted the defendant. Therefore, under the Tenth Amendment federalism principles, Florida's exercise of jurisdiction in this case was not preempted by federal law. The Court also noted that if Florida was precluded from prosecuting defendant under its narrowly-drawn statutory scheme, defendant's crimes would go unpunished. The Court found that states have been afforded wide latitude by the United States Constitution and the Supreme Court of the United States, and pertinent federal legislation asserts concurrent jurisdiction over maritime criminal matters extending beyond the State's territorial limits, just as the federal government has the authority to prosecute crimes under these circumstances without offending international law. Therefore, basic principles of federalism allowed Florida to prosecute defendant because there was no conflict with federal law and the exercise of Florida state jurisdiction was reasonable.
Florida Appellate Court Follows Guevara Holding That Punitive Damages Not Available For Alleged Willful Failure To Pay Maintenance And Cure
Nurkiewics v. Vacation Break U.S.A, Inc, et al., 2000 FLA. App. LEXIS 15234 (November, 2000).
Plaintiff captain of a sport yacht injured his back and alleged unseaworthiness and Jones Act negligence. He argued that defendant had not trained him to load heavy objects without injuring his back, had not given him a protective belt and had not provided more accessible storage space. At the summary judgment hearing, defendant was able to show plaintiff made the decision to purchase 24-can cases of soda, made the decision to store them in the hatch, and also made the decision to load the soda two cases at a time. Thus, plaintiff's injury was entirely his fault.
The appellate court reversed the trial court's grant of summary judgment on the claim of maintenance and cure. However, in addressing the maintenance and cure issue, the appellate court also addressed plaintiff's claim that punitive damages were available for defendant's alleged willful failure to pay maintenance and cure. The Florida Appellate Court noted that some federal district courts were at odds over whether punitive damages were available. The Florida Appellate Court also noted that when a state appellate court is asked to decide a federal question as to which there is no United States Supreme Court authority and the circuit courts are split, the state appellate court must guess how the Florida Supreme Court would likely decide the issue. After analyzing the federal court decisions, the Florida Appellate Court ruled, without discussion, that the Florida Supreme Court would agree with the Fifth Circuit's opinion in Guevara v. Maritime Overseas Corp., 59 F.3d 1496 (5th Cir., 1995) and found punitive damages unavailable.
Forum Selection Clause In Crew Collective Bargaining Agreement Presumptively Valid
Webster v. Royal Caribbean Cruises, LTD, Case No. 99-3176-CIV-GOLD (U.S. Dist. Court, S.D. Fla. 2000)
The United State District Court in the Southern District of Florida, in an unpublished opinion, upheld a foreign forum selection clause contained in the Collective Bargaining Agreement (CBA) between Royal Caribbean Cruises (RCCL) and the Norwegian Seaman's Union. Plaintiff, a crew member, brought a class action suit against the cruise line on behalf of members of defendant's crew alleging, among other causes of actions, failure to reimburse the cost of pre-employment medical examinations as provided in the CBA between the crew's union and RCCL. Plaintiff argued he should be able to bring suit against RCCL in Florida because the forum section clause in the CBA was unenforceable. In support of his claims, plaintiff argued 1) the forum selection clause should not be enforceable because plaintiff was not a member of the Norwegian Seaman's Union; 2) the forum selection clause was unenforceable and a violation of public policy because neither Norway nor Nicaragua permit class actions; and 3) the forum selection clause was used as a means of discouraging plaintiff from pursuing his claims.
In addressing plaintiff's first contention, the Court noted plaintiff was trying to enforce Article I of the CBA (reimbursement for pre-employment examinations) and simultaneously trying to disavow Article 13 of the CBA (the forum section clause). The Court would not permit plaintiff to pick and choose the provisions of the CBA that he wished to enforce and those he wished to ignore. The Court also rejected plaintiff's argument of "serious inconvenience" because he ignored the provision in the CBA which allowed him to bring his suit in either Norway or his country of residence (Nicaragua in this case). Plaintiff was unable to explain why a suit brought in Florida was more convenient than bringing a suit in his own country.
Plaintiff next argued that because neither Norway nor Nicaragua permit class action suits, the forum section clause violated public policy. Both parties agreed that class actions are not permitted in Norway. However, after considering affidavits submitted by both parties, the Court found that alternative means of collective actions and of bringing a multi-plaintiff case are available in Nicaragua. Thus, plaintiff failed to meet his heavy burden of proof required to set aside the forum selection clause, based on the grounds of inconvenience and violation of public policy. In this regard, the Court cited Carnival Cruise Line v. Shute, a 1991 passenger forum selection clause case of the U.S. Supreme Court, for the proposition that a plaintiff has a heavy burden to set aside a forum selection clause in a maritime contract.
Finally, the court found no evidence that the forum selection clause discouraged plaintiff from pursuing his claims. Such a suggestion was belied by the fact plaintiff could bring his suit in Norway or his home country. All evidence pointed to the fact that the CBA was bargained for on behalf of plaintiff by a union and that the forum selection clause's terms were not unreasonable.
Selection Of Governing State Law In Maritime Case
Calhoun v. Yamaha Motor Corporation, 216 F.3d 338 (3rd Cir., 2000), cert den. 2000 U.S. LEXIS 8159.
The parents of Natalie Calhoun asserted state wrongful death and survival statute causes of action for the death of a non-seaman based on Pennsylvania state law against Yamaha Motor Corporation for the accidental death of their daughter aboard a 'WaveJammer' pleasure craft in Puerto Rico. The Calhouns' complaint, which alleged defects in the WaveJammer, was grounded in theories of strict liability, negligence, and breach of implied warranties of merchantability and fitness for a particular purpose. The complaint sought both compensatory and punitive damages. Because the law of Puerto Rico does not allow a plaintiff to recover punitive damages, the Calhouns asserted that all questions concerning the appropriate form of remedy should be governed by the law of Pennsylvania. On the other hand, Yamaha argued for the application of the law of Puerto Rico for resolution of the damages issues.
The District Court held that Pennsylvania law should govern compensatory damages and that Puerto Rico law should govern punitive damages and Yamaha's liability. The Court pointed out that the purpose of compensatory damages is "to make the plaintiff whole." Given that the individuals who ought to be made whole - the Calhouns and Natalie's estate - were all Pennsylvania domicilliaries, Pennsylvania had a strong interest in having its law of compensatory damages applied to the matter. Further, the Court found it hard to dispute that Pennsylvania had a substantial interest in obtaining compensation for its citizens in order to remedy wrongs that had been committed against them. That interest, however, did not apply insofar as Puerto Rico was concerned, as the Calhouns had virtually no connection to Puerto Rico. Accordingly, Puerto Rico had very little interest in either making the Calhouns whole or remedying wrongs that Yamaha may have committed against them.
Punitive damages, on the other hand, are intended to punish wrongdoers and deter future wrongdoing. Although Pennsylvania had an interest in punishing those who harm its citizens, the Court was persuaded that Puerto Rico's interest in regulating the activity that occurs in its territorial waters - whether commercial or recreational - was more dominant. Indeed, the tragic death that befell decedent easily could have been visited upon a Puerto Rican citizen. Puerto Rico also had a particularly strong interest in maintaining the safety of the waterways surrounding the island to preserve the economic benefits it derives from both tourism and other commercial enterprises.
** Denotes cases handled by Kaye, Rose & Partners, LLP.
With respect to liability, after a lengthy analysis, the court held that federal maritime standards governed the adjudication of a defendant's (here, Yamaha's) liability in an admiralty action brought pursuant to a state wrongful death/survival statute.
Bill Of Lading's Written Notice Requirement Bars Recovery Despite Actual Notice And Communication Between Parties
Security Insurance Company of Hartford v. Sea-Land Service, Inc. Case No. 99-0018 SI (N.D. Cal, 1999).**
In an unpublished opinion of the United State District Court for the Northern District of California, the Court dismissed an insurance company's subrogation claim against Sea-Land Service, Inc. for recovery of the cost of cargo that was hijacked, because the cargo owner failed to give written notice of the claim to Sea-Land within one year as provided in the bill of lading. The Court ruled for Sea-Land despite the fact that all parties had actual notice of the loss and there were several communications between Sea-Land and the claimant throughout the first year after the loss. Plaintiff sought to recover the cost of cargo that was hijacked from Sea-Land while in transit. Plaintiff had agreed to insure the cargo while in transit for the consignee, The Harwood Companies (Harwood). Sea-Land was to transport the cargo pursuant to a bill of lading from Shanghai, China, to Puerto Cortes, Honduras. The bill of lading specifically provided that Sea-Land was to be discharged from all liability in respect to loss or damage unless a claim in writing was received within one year after delivery of the goods.
En route to its final destination, the cargo was hijacked by armed guerrillas in Guatemala. On July 29, 1996, SeaLand confirmed the theft in a letter to Harwood. Between July 1996 and November 1996, Harwood informed SeaLand through several telephone calls and letters that a Certificate of Loss was required in order for Harwood to obtain payment from its insurer, the plaintiff. Despite the fact that the Certificate of Loss was never received, plaintiff insurer paid Harwood the market value of the cargo, $218,088, in March 1997. By letter dated November 11, 1997, the insurer filed a written claim against Sea-Land. Despite plaintiff's claims that 1) Sea-Land could not have believed that compensation for the cargo valued at $200,000 would not be sought, 2) Sea-Land's letters left the impression that no further notice was required by the cargo owner, and 3) Sea-Land's written notice indicated that Sea-Land did not expect claims for non-deliveries, only damage and shortages, the Court ruled that plaintiff failed to comply with the bill of lading's provision that required written notice of the claim within one year, thus barring suit against Sea-Land.
Prior Notice Of Unsafe Condition Required To Prove Negligence Based On Failure Of Shipboard Furnishings
Sherry Camps v. Princess Cruises, Inc., et al., Case No. B130693 (Cal. 2nd App. Dist., 2000)**
Camps sued for injury allegedly sustained aboard a cruise ship after a couch in the vessel lounge collapsed when she sat on it. Defendant prevailed on summary judgment when plaintiff did not produce evidence to establish that the vessel either knew or should have known before the incident that the couch presented a risk of harm to its passengers. Princess argued that such prior notice is an essential element of any claim for vessel negligence grounded on the presence of a dangerous shipboard condition. Camps offered no evidence in support of her case, but argued that the doctrine of res ipsa loquitur ('the thing speaks for itself') entitled her to have her case heard by a jury notwithstanding the absence of any evidence of notice to the ship. The Appellate Court affirmed the Superior Court's decision, finding that the application of res ipsa was not appropriate in this case in the face of the ship's undisputed evidence of regular inspections of the couches in the lounge and ship records which reflect that no prior similar incident had occurred aboard the vessel in the three years prior to plaintiff's accident. Camps' petition for review by the California Supreme Court has been denied.
Latent Injury Statute of Limitations For Asbestosis
Robert Wagner v. Apex Management Co., Inc., et al., 83 Cal. App. 4th, 1444, 10 Cal. Rptr.2d 533.**
In a follow-up to a Cruise & Carrier Legal Update case summary contained in Issue No. 26 (August, 1999), plaintiff Wagner appealed from a San Francisco Superior Court ruling that sustained defendant shipowners' demurrer in this action on the grounds that the three year statute of limitations for maritime torts, 46 USC 763(a), barred his claim for asbestos-related disease. On the face of his complaint, plaintiff stated that he was diagnosed with asbestosis in 1998 and had been diagnosed with a prior non-malignant asbestos related illness (pleural disease) in 1993, 5 years before he filed suit.
The state Court of Appeal refused to apply maritime decisional law and reversed the decision of the lower court. The Appellate Court relied on a DC Circuit opinion analyzing a local statute of limitations, and held Mr. Wagner was entitled to sue for a 'second disease' notwithstanding the fact that the statute of limitations had run on his claim for pleural disease. In arriving at this decision, the Appellate Court took the position that United States Supreme Court prece Hulls 1/10/83, current circulars, The Articles of Association and Swedish Law was insufficient to constitute a valid forum selection clause and venue was proper in Jacksonville.
California Court Rules DOHSA Preempts State Law Claims, But State Court Has Concurrent Jurisdiction
Jackie Garofalo v. Princess Cruises, Inc., Case No. B 127126 (California Second Appellate District, Division 3, 2000)**
Decedent Garofalo had filed a personal injury action against Princess in California, alleging a small shipboard fire. She claimed that the fire aggravated her preexisting, terminal chronic obstructive pulmonary disease (COPD). Southern California Permanente Medical Group ("Kaiser") had previously been ordered to pay Garofalo's lifelong medical expenses as Garofalo's COPD was originally caused by Kaiser's negligence during her employment with Kaiser. Kaiser intervened in Garofalo's personal injury action against Princess, seeking to recoup medical expenses it paid following Garofalo's cruise, an amount in excess of $1.2 million.
Garafalo died approximately 18 months after the cruise. Her husband and daughter then filed a state law wrongful death claim. This second suit was ultimately dismissed on summary judgment, on the grounds that DOHSA preempted the wrongful death action, and California state courts lacked subject matter jurisdiction to hear DOHSA claims, as set forth in Chromy v. Lawrence (1991) 233 Cal.App.3d 1521. Garofalo's prior personal injury action was also dismissed, leaving Kaiser as the sole party versus the cruise line.
Princess then filed a motion for summary judgment on the grounds that Kaiser's subrogation claim under California Labor Code Sections 3852 and 3853, as derivative of Garofalo's claim, was also preempted by DOHSA. The lower court denied the motion, and Princess sought a writ of mandate from the appellate court. The appellate court issued the writ ordering the trial court to vacate its order. The trial court issued a new order granting Princess's motion for summary judgment on grounds DOHSA preempted Kaiser's action, and thus the court lacked subject matter jurisdiction.
Kaiser then appealed the new ruling. The appellate court, stressing the U.S. Supreme Court decision in Dooley v. Korean Airlines (1998) 524 U.S. 1160, affirmed the lower court's ruling to the extent it was based on DOHSA preempting Kaiser's state law claims. However, the appellate court overruled the lower court's finding that state courts lack subject matter jurisdiction to hear DOHSA claims. The appellate court criticized its own earlier decision in Chromy, holding "California courts may exercise concurrent jurisdiction with federal courts over DOHSA claims." The appellate court did not, however, remand Kaiser's action, because Kaiser had filed its complaint-in-intervention only in Garofalo's personal injury action and had never amended its complaint to allege a wrongful death claim.
RECENT REGULATORY DEVELOPMENTS
Pollution Study By Cruise Ships In California Territorial Waters
Governor Gray Davis recently signed a California bill which creates a task force to track waste and smog generated by cruise ships near ports of call in San Diego and Los Angeles. The final bill was less stringent than the original one introduced by Assemblyman George Nakano. The retooled measure has the cruise industry's support. Substantial growth in the cruise ship industry has elevated concerns that waste from cruise ships could pose serious threats to human health and marine life. Cruise lines provide an estimated $1 billion dollar boost to the California economy alone in vacation spots like Los Angeles and San Diego, where cruise ships make about 600 stops a year.
The measure creates a task force representing state environmental agencies that review industry records on dumping and air pollution over the next two years. A final report will be due by June 1, 2003. Supporters of the measure argued that a data-gathering mission is necessary to arm environmental watchdogs with evidence to press tougher regulation of the industry.
Cruise ship offficials, while concerned with the bill's final provisions which fail to put any representatives from the industry on the task force, predict that the study will exonerate the industry. They pointed out that the industry has made a concerted effort to voluntarily address environmental concerns by engaging in practices such as no longer dumping wastewater close to shore, instead now waiting until they are at least three miles out to sea at a high speed. The exact implementation of the bill has not yet been determined and the outcome study will not be known until the final report in June 2003.
New California Statute Regarding San Francisco Bay Area Pilotage
Pursuant to a recent addition to the California Harbors and Navigation Code (Section 1198), effective January 1, 2001, vessel owners hiring a pilot for San Francisco, San Pablo and Suisun bays are required to pay for trip insurance for the pilot, or to defend, indemnify and hold pilots harmless from specified liabilities resulting from an act, omission or negligence of the pilot. For more information on this statute, please contact KRP's San Francisco office.