SMALL CLAIMS LITIGATION - A Large Hassle
(Published October
1994)
Perhaps the loss of a suitcase by an airport baggage handler ruined a couplets "perfect cruise," planned in advance for three years; or a passenger was "mortified" because she had to wear her husband's underwear for two days because of a delay in receipt of luggage. Maybe the ship's food was not up to a passenger's epicurean tastes; or someone was frightened because the seas were unusually rough. A foreign national was denied boarding because of an expired visa; or, another passenger missed embarkation by one and one-half hours because they were stuck in traffic! Unbelievable as it may seem, passengers are filing these types of cases in increasing numbers, and cruise line representatives are often forced to travel to distant forums to defend their reputations and defeat such frivolous claims.
As a consequence of doing business, most cruise lines now find themselves being summoned into small claims court, where the jurisdictional amount that can be awarded has been increased in most states. Although the monetary limit for filing in these courts is still "small" (e.g., S5,000 in California), the steer volume of such cases makes the stakes high and the battles are being vigorously fought.
Having handled numerous small claims appeals and assisted most of our clients with preparation for initial small claims proceedings, we summarize below the applicable procedures and our practical tips for a successful defense.
Rules and Procedures
Most states have established smell claims courts to provide a forum for resolving minor civil disputes because they are "of special importance to the parties and of significant social and economic consequence collectively...." California Code of Civil Procedure ("CAP") § 116.120. In California, one of the stated purposes for creating these courts was to "ensure that the convenience of parties and witnesses who are individuals shall prevail, to the extent possible, over the convenience of any other parties or witnesses. " CAP § 116.120. This certainly proves true when a corporation is forced to defend itself in a forum thousands of miles away from its principal office, notwithstanding a valid forum selection clause in its passenger ticket contract.
The small claims court's concern for the individual plaintiff does not stop with the statutory language quoted above. In addition to extending to plaintiffs the "convenience" of a local forum, most small claims courts also have an advisory panel. These advisory panels provide claimants with assistance in preparing and serving their claims, free of charge. Small claims plaintiffs in California file a single page form complaint and must then serve it on the defendant (certified mail is sufficient). After plaintiff files the form complaint, a hearing is normally set approximately thirty days from the date of filing. In many instances when suing a cruise line, the plaintiff will improperly serve a local sales agent or even a travel agent.
The rules governing venue in small claims actions are generally the same as in other civil actions. For small claims cases in California a defendant may simply write to the court to contest venue without personally attending the hearing. If the court determines venue is not proper, it can, on its own motion, dismiss the case. Such an order will usually be made "without prejudice," which enables the plaintiff to re-file in a proper venue. If the court determines venue is proper, but the defendant was not present, it will continue the hearing until all parties are present.
Small claims hearings are very informal and are designed to "dispense justice promptly, fairly and inexpensively." CAP § 116.510. Neither party may be represented by counsel, and no formal discovery is permitted. With settlement as the court's objective, the parties are usually encouraged to meet together prior to being heard by the judge to exchange any documents and discuss their case. Witnesses are allowed to testify at the hearing or, in the alternative, declarations can be submitted. Most judges will consider any written documents submitted by either side. Most small claims courts utilize temporary judges, or "pro tem" judges, who are not full time judges, but rather local members of the State Bar. Both parties to a small claims proceeding must stipulate to having their case heard by a pro tem judge, although the practice seems to vary in different California counties and may vary from county to county in other states as well.
In California, once a ruling has been issued, the defendant has 30 days from the date on which the court mails a Notice of Judgment to either: (1) pay the judgment or (2) appeal the matter. Only the defendant may appeal a small claims judgment, not the plaintiff.
An appeal from a small claims judgment is generally made by serving the small claims court with a formal Notice of Appeal. In California, this is accomplished by completing a one page form and filing it with the Municipal Court clerk. Appealing a small claims judgment automatically places the case on the Superior Court docket, and a hearing is then set approximately 30 days thereafter.
Although a small claims appeal is likened to a trial, the proceeding is actually conducted almost identically to the initial hearing, except that parties may be represented by attorneys. The parties, or attorneys, are allowed to produce evidence and may submit written briefs for the court's consideration. Most courts will also accept declarations from witnesses (such as from corporate representatives), rather than requiring them to travel long distances to attend the hearing. It is important to note that the proceedings in the original small claims suit are essentially irrelevant to the appeal. The judge on appeal is free to consider new evidence and enter a lower or higher verdict (up to the $5,000 maximum). The judgment rendered in the smell claims appeal trial is final and cannot be appealed further by either side.
Practical Tips
Upon receiving notice of a small claims complaint, whether by personal service or mail, advise the court immediately if venue is contested, both by phone and in writing. If the court is not immediately contacted, you risk waiving the chance to contest venue and may have to make arrangements for someone to appear at the hearing. When you contest venue, it will be helpful to: (1) provide the court with a copy of the passenger's ticket contract, (2) provide the citation for Carnival Cruise Line v. Shute, 111 S.Ct. 1522,113L.Ed.2d 2622 (1991) (upholding such clauses), and (3) request that the court dismiss the case.
If notice of the hearing was not received and judgment was entered against the cruise line, upon receipt of the Notice of Judgment you should request, in writing, that the court vacate the judgment. In California, this must be done within 30 days of judgment being entered, and other states may have similar provisions. Provide the court with the reason for nonappearance, for example, non-service of the complaint, and then request the court reset the hearing or, in the alternative, contest venue.
At the initial small claims hearing (or on appeal), never consent to having the matter heard by a pro tem judge. Since pro tem judges are practicing attorneys who do not routinely act as judges, they are not, as a general rule, accustomed to dispensing justice with a blind eye. Rather than ruling according to the letter of the law, it has been our experience that pro tem judges are more likely to "split the baby," and attempt to appease both parties. In the "worst case" scenario, these judges might also allow the individual to triumph over the wealthy corporate defendant, regardless of the merits of the case. The results are often disastrous to corporate defendants who can otherwise clearly demonstrate a complete defense to a plaintiff's claim.
Practicing judges are also more likely to grasp the key issues of law, including passenger ticket contract provisions, and should rule accordingly. If either party contests having their case heard by a pro tem judge, the court clerk will either assign the matter to a judge immediately or assign the case a new hearing date before a judge. Although you might have to wait several hours or even reschedule your hearing, the wait is probably worthwhile.
Make sure you have all your documents available at the small claims hearing. If you have a ticket contract defense, make sure you provide the judge with: (1) copies of the contract, (2) any other travel documents referring to the contract, and (3) any correspondence to plaintiff communicating the contract provisions. If the claim is time-barred, provide documents evidencing the limitation period was communicated, and if settlement negotiations were ongoing, provide evidence plaintiff's claim was, in fact, denied or all defenses were preserved. If you appeal a judgment, we recommend providing the judge with a written brief, clearly and concisely setting forth the facts of the case and citing applicable law.
In California, one of the express purposes of the small claims court system is to ensure an individual can resolve his or her minor disputes. Many argue this stated goal tends to disfavor the "giant" corporate defendant, and the outcome is not always dictated by the law or the facts. Nevertheless, in our experience, small claims matters can be effectively contained and in many cases defeated with careful planning and prompt action.
(Editor's Note: RT&M partners volunteer regular as pro tem judges presiding over small claims trials.)
