RECENT
DEVELOPMENTS IN THE COURTS - PART IX
(Published October 2003)
The following survey represents some of the more significant recent court rulings around the nation affecting shipping lines generally:
U.S. Supreme Court To Decide Whether NVOCC Agent For Cargo Owner
Green Fire Ins. Co. v. M/V HYUNDAI LIBERTY, 123 S.Ct.1822 (2003); Norfolk Southern Rwy. Co. v. James N. Kirby, 123 S.Ct.1822 (2003)
The U.S. Supreme Court granted certiorari to review these two companion cases, formerly cited as Kukje Hwajae Ins. Co. v. M/V HYUNDAI LIBERTY, 294 F.3d 1171 (9th Cir. 2002) and James N. Kirby, PTY Ltd. v. Norfolk & Southern Ry., 300 F.3d 1300 (11th Cir. 2002).
In these two cases, the Ninth and Eleventh Circuits rendered conflicting decisions as to the primary issue of whether a plaintiff, cargo owner or its subrogated insurer, should be bound by the terms and conditions in an ocean carrier’s bill of lading when the plaintiff or plaintiff’s subrogor was a party to a bill of lading issued by an NVOCC or freight forwarder, and not to the bill of lading issued by the ocean carrier to the NVOCC or freight forwarder. Plaintiffs however, did not sue the ocean carriers, or invoke the ocean carriers’ bills of lading.
The Ninth Circuit held that plaintiff’s subrogor was bound by the terms and conditions of the ocean carrier’s bill of lading, including a forum selection clause in that bill of lading, because the NVOCC was acting as agent for the plaintiff’s subrogor when the NVOCC accepted the ocean carrier’s bill of lading. On the contrary, the Eleventh Circuit ruled that a defendant railway carrier could not enforce a limitation clause in the ocean carrier’s bill of lading because plaintiff was not bound by the terms and conditions of the ocean carrier’s bill of lading as it was not a party to the ocean carrier’s bill of lading issued to the freight forwarder. The Eleventh Circuit held when a freight forwarder issued a bill of lading to the cargo owner as a carrier, the freight forwarder was acting as a principal, not as an agent for the cargo owner. In such a scenario, the Eleventh Circuit stated the ocean carrier is deemed to be a subcontractor or agent for the freight forwarder who issued a bill of lading to the cargo owner.
The Supreme Court decision will either affirm or reject the widely-recognized commercial norm in the shipping industry that an NVOCC is considered to act as an agent for the cargo owners when it contracts with an ocean carrier for carriage on a vessel.
Fifth Circuit Adopts New Test Of Incorporation Of Charter Party In Bill Of Lading
Cargill Ferrous International v. M/V SEA PHOENIX, 325 F.3d 695 (5th Cir. 2003)
The Fifth Circuit held that a shipowner, non-signatory to a voyage charter party, could enforce an arbitration clause in the charter party against plaintiff, the charterer on the voyage charter party and consignee on negotiable bills of lading issued under the charter party, when the bills of lading were not negotiated to third parties, even if the bills of lading did not specifically incorporate the charter party.
The Court distinguished this case from its earlier decision in Cargill, Inc. v. Golden Chariot MV, 31 F.3d 316 (5th Cir. 1994), in which the same court found no incorporation of the charter party in a bill of lading where the date and name of the charter party was left blank in the bill of lading. The Court stated "The Golden Chariot test does not, however, apply when the bills of lading remain in the hands of a party to the voyage charter."
The Court held the correct test for whether a bill of lading issued under a charter party that remains in the hands of the charterer incorporates the charter party is whether "no confusion" exists as to who in fact was the charterer on a voyage or which charter party governs the rights of the charterer. Bills of lading, issued pursuant to the voyage charter party in this case, had a provision stating "All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration Clauses, are herewith incorporated." The bills of lading, however, did not name the parties to the charter party, or state the date or place of its making. Despite the unspecified reference to the charter party, the court found the charter party’s requirement that bills of lading incorporate its arbitration clause was persuasive evidence there was no confusion over who was a party to the charter party or which charter party should govern.
No Maritime Lien When Stevedore Had Notice Of No Lien Clause In Charter Party
Stevens Shipping and Terminal Company v. M/V Japan Rainbow II, 2003 U.S. App. LEXIS 11686 (5th Cir. 2003)
Plaintiff stevedoring company brought an in rem action against the vessel based on a maritime lien for agency and stevedoring services it rendered to the vessel. The district court dismissed the in rem action against the vessel on the grounds that plaintiff provided these services with actual knowledge that the charter party of the vessel contained a prohibition of liens clause and that the time charterer who hired plaintiff could not incur liens or pledge the credit of the vessel to secure plaintiff’s services or charges.
Plaintiff appealed the district court’s order dismissing its maritime lien claim against the vessel on the ground that it did not receive the notice of the non lien clause before it rendered the services and/or paid third parties for the services and goods it procured on behalf of the vessel. Plaintiff in this case served as stevedore and husbanding agent for a time charterer of the vessel. As stevedore, plaintiff loaded and unloaded the vessel, and as husbanding agent, plaintiff ordered goods and services for the vessel, such as tug and wharfage services. Plaintiff ordered the services and goods on behalf of the vessel, paid for them, and received reimbursement from the time charterer. Having been aware of the timer charterer’s financial problems, the vessel operator faxed notice of the prohibition of lien clause in the charter party to each agent listed in the charterer’s voyage instructions, including plaintiff.
The primary issue in determining the shipowners’ motion to dismiss the in rem action was whether plaintiff had actual knowledge of the no lien clause in the charter party before it rendered the services or paid to the third parties. The court stated that it would review the district court’s allocation of the burden de novo and its determinations as to whether the parties met their burdens under a clearly erroneous standard. The Fifth Circuit agreed with the district court that the fax confirmation sheet, submitted by defendant, created a rebuttable presumption that the shipowner delivered the notice and plaintiff received it. The Court also held that the district court did not clearly err in finding that the presumption of the evidence showed that the plaintiff had actual knowledge of the prohibition of liens clause.
Fourth Circuit Adopts Semi-Strict "Assumption of Risk" In Ocean Carrier’s Freight Recovery Action
Hawkspere Shipping Company, Ltd. v. Intamex, S.a., 2003 U.S.App.LEXIS 10447 (4th Cir. 2003, May 27, 2003, decided)
A carrier/shipowner brought an in rem action against cargo and in personam action against shippers to recover unpaid freight. The shippers arranged for ocean carriage of their cargo through a cargo consolidator, who chartered a vessel to carry the cargo as well as other cargoes on behalf of various other shippers. Bills of lading were issued by the shipowner to the shippers directly. However, the shippers were in no way involved in the voyage charter party entered into between the shipowner and the cargo consolidator, nor were they otherwise aware of the terms of the charter party. The shippers paid ocean freight to the cargo consolidator, who failed to forward the freight payment to the shipowner.
The Fourth Circuit rejected the shippers’ contention that the consolidator accepted the freight as agent of the ocean carrier/shipowner, and adopted a semi-strict "assumption of risk" approach of the Fifth Circuit that a shipper remains liable to a carrier, regardless of the shipper’s payment to a cargo consolidator, unless the carrier intentionally released the shipper from its duty to pay under the bill of lading. The Court affirmed the district court’s decision to hold the shippers remained liable for the ocean freight charges because there was no evidence that the carrier actually released the shippers from their duty to pay ocean freight under the bills of lading.
Florida Judge Rejects Filipino Seamen’s Suits in U.S. and Enforces Arbitration Clause
Riazlyn Bautista, et al. v. Star Cruises and Norwegian Cruise Line, Ltd., 2003 U.S. District LEXIS 18274 (S.D. Fl. 2003)
A steam boiler explosion killed six crewmembers aboard defendant’s cruise ship, and seriously injured four others. The four surviving seamen and personal representatives of the six decedent crewmembers filed suit for negligence and unseaworthiness under the Jones Act, and for failure to provide maintenance, cure and unearned wages under the general maritime law of the United States. The cases were removed to federal court based on plaintiffs’ employment contracts which were governed by the terms of a standard Contract of Employment approved by the Philippine Overseas Employment Administration ("POEA"), a division of the Department of Labor and Employment of the Republic of Philippines ("DOLE"). The employment contracts require all injury disputes to be resolved by a government-appointed arbitrator in the Philippines.
Following removal to federal court, defendant cruise line moved to compel arbitration pursuant to the written arbitration agreements between the company and the seamen, and argued the agreements were subject to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("Convention"), under which both the United States and the Philippines are signatories. Plaintiffs argued defendants’ motion to compel arbitration should be denied, claiming seamen employment contracts are exempted from the coverage of the Convention Act, based on § 1 of the domestic Federal Arbitration Act ("FAA"). The court rejected plaintiffs’ arguments, and found the application of the seamen exemption in the FAA to the international context was unsupported by the plain language of the Convention Act. The court also rejected plaintiffs’ claims that the seamen were precluded from negotiating the terms of their employment and coerced into signing the contracts, holding those claims are to be considered by the arbitrator, and not by the court. The court pointed out the standard employment contract each plaintiff signed was approved by the POEA, and in the form and language that their own government required to protect its own citizens.
Lauritzen Choice-of-Law Analysis Applies Only in Absence of a Contractual Choice-of-Law Clause
Flores, et al. v. American Seafoods Company, D.C. No. CV-00-00740-TSZ (W.D. Wash. 2003)
Plaintiff fishermen filed suit on behalf of a class alleging their fishing agreements with defendant violated 46 U.S.C. §10601(a) (2000), which mandated fishing agreements be in writing and signed by the master and owner of the vessel. The dispute arose over a "bonus pool" that was mentioned in the fishing agreement, but orally explained to the fishermen by defendant’s agent. The district court held the oral "bonus pool" explanation and agreement signature by defendant’s agent with authority to sign on behalf of the vessel owner and master did not violate §10601(a). Despite these findings, the district court held that defendant breached the "bonus pool" agreement and awarded plaintiffs $1.8 million and prejudgment interest. The district court then awarded plaintiffs $383,000 in attorneys’ fees and costs pursuant to a Washington statute, despite a choice-of-law clause in the agreement providing the agreement was governed exclusively by the general maritime laws of the United States and applicable U.S. statutes.
On appeal, the Court upheld the district court’s determination that defendant breached the bonus agreement. The Court found that where a fishing agreement includes both written and oral provisions, it is proper to void the agreement under §10601(a) only if the oral terms were imposed under duress, coercion or deception, which was not present in this case. The Court also held that the congressional goal underlying the signature requirement is to protect seamen from unscrupulous employers, and that goal is not frustrated when an agent signs the contract on behalf of the vessel owner or master, because the principal is still bound by the contract. With regard to the award of attorneys’ fees and costs, the Court found that where parties specify in their contractual agreement which will law will apply, admiralty courts will generally give effect to that choice. The Court relied on principles governing analysis of choice-of-law provisions that appear in Restatement (Second) of Conflict of Laws § 187 (1971), and found that to be effective, defendant’s choice of federal maritime law needs to satisfy only one of the two alternative requirements under the Restatement. The Court specifically held that a choice-of-law analysis under Lauritzen v. Larsen, 345 U.S. 571 (1953) only applies in the absence of a contractual choice-of-law clause and does not supercede the Restatement. Under federal maritime law, no attorneys’ fees may be awarded in the absence of bad faith. In this case, the district court explicitly held that defendant had acted in good faith and the award of attorneys’ fees and costs was reversed.
Miami Base of Operations Held Sufficient for Application of U.S. Law to Seaman’s Injury Claim
Henry v. Windjammer Barefoot Cruises, 851 So. 2d 731; 2003 Fla. App. LEXIS 7491(Fla. 3rd DCA. 2003)
Plaintiff, a crewmember aboard a passenger cruise ship, filed suit in a Florida state court seeking damages for Jones Act negligence, unseaworthiness, maintenance and cure for a slip and fall injury aboard the vessel. Defendants filed a motion to dismiss, alleging the trial court lacked subject matter jurisdiction under the choice of law analysis set forth in Lauritzen v. Larsen, 345 U.S. 571 (1953), and Hellenic Lines, Ltd. v. Rhoditis, 398 U.S. 306 (1970). The trial court dismissed plaintiff’s claim, finding under the established choice of law analysis that the Jones Act and United States law did not apply to plaintiff’s claim. The factual findings in the lower court included: a) plaintiff signed his employment on board the vessel in St. Maarten, which provided the contract was governed by the laws of the government in which the vessel sails; b) the home port of the vessel was St. Maarten; c) the vessel was Honduran-flagged; d) the vessel was owned by a Panamanian corporation; e) the day-to-day repairs and maintenance took place in various Caribbean ports; f) the incident occurred while the vessel was in the waters of St. Maarten; g) the vessel has never called on U.S. ports; and, h) plaintiff is a Guyana national and was treated in St. Maarten after the incident.
The Court of Appeal adopted and incorporated the entire unpublished Eleventh Circuit decision in Fantome, S.A. v. Frederick, No. 02-010890 (11th Cir. 2003), 58 Fed. Appx. 835 and reversed and the remanded the case. The Fantome court, applying the Lauritzen and Rhoditis factors to various claims of surviving family members of deceased crewmembers of M/S FANTOME, found U.S. law applied because the shipowner’s principal place of business was Miami, Florida. The factors to be considered in examining whether the Jones Act applies include: 1) the place of the wrongful act; 2) the law of the ship’s flag; 3) the allegiance or domicile of the injured seaman; 4) the allegiance of the shipowner; 5) the place where the shipping articles were signed; 6) the accessibility of the foreign forum; 7) the law of the forum; and 8) the shipowner’s base of operations. The court noted the importance of the eight factors in the analysis and found the lower court placed too much emphasis on the fact the ship never entered the United States and not enough emphasis on the extensive contacts between the United States and the shipowners. The court found FANTOME, like the vessel in question, is a member of the Windjammer Fleet, which is operated by several Florida corporations all based at the same Miami Beach office and run and owned by a single family. Although the vessel is owned by a Panamanian corporation, the corporation was utilizing funds in Florida bank accounts, the ship’s employee files were maintained in Miami, the captains of each vessel reported solely to the family owners in the Miami office, all decisions regarding the ship’s itineraries, and coordination of maintenance and repairs were directed by the Miami headquarters, all the communication equipment was in Miami, the various foreign corporations created for each vessel were in fact owned by the same family operating out of Florida, and there were no corporate agents located in any foreign countries. Additionally, the fleet’s advertising, reservations, and sales were handled by Windjammer Barefoot Cruises, operating out of Miami. The court noted that the Supreme Court in Rhoditis stressed the need to look beyond corporate formalities to examine both the ship’s and the shipowner’s operational contacts with the United States to effectuate the liberal purposes of the Jones Act. Thus, a court must look beyond the "facade" of the operation and consider the real nature of the operation and the contacts with the United States. The court found that while the facts that the vessel did not sail in American waters nor enter U.S. ports were significant in the "base of operations" analysis, these factors were not determinative, and the shipowner’s substantial contacts with the United States were sufficient to establish that the vessel’s true base of operations was Miami Beach, Florida. Thus, the court found it would be reasonable to apply United States law even though the ships never entered a United States port.
First Circuit Rejects Operator’s Claim Against Seamen For Negligent Failure To Maintain Vessel
Kenth Persson v. Scotia Prince Cruises, Ltd., 2003 U.S.App. LEXIS 10441 (1st Cir.2003, May 27, 2003)
Three former officers of a cargo and passenger ferry brought suit against defendant operator for unpaid wages under their employment contracts after they resigned or were fired by defendant. Defendant filed a counterclaim for breach of fiduciary duty for failure to maintain the vessel. The First Circuit rejected the operator’s counter-claim and stated:
"While a seaman has a duty to perform the duties of his position with diligence, faithfulness, and reasonable skill, SPC [defendant] has not shown that any of the Officers were responsible for maintaining the woodwork on the vessel. There is no authority in the lengthy history of admiralty cases to support the position that, on these facts, the Officers can be held liable (under a fiduciary or negligence theory) to the owner of the vessel for non-intentional negligent maintenance, and we refuse to establish such jurisprudence here."
Crew and Common Owner Of Salving and Rescued Vessels Entitled to Salvage Award
Bartholomew v. Crowley Marine Services, Inc., 337 F.3d 1083, 2003 U.S. App. LEXIS 15062 (9th Cir. 2003)
The ancient doctrine of a salvage award for saving a ship rewards persons who assist an imperiled ship at sea. The owner of the salving vessel generally shares in the award for risking an expensive ship. The award induces seamen and others to readily engage in such an undertaking and assist in saving life and property. However, there is no compensation if the salvage is unsuccessful or the person would have been paid regardless of his success.
Crewmembers of SEA VOYAGER were called upon to rescue SEA VIXEN, which caught fire in the Gulf of Alaska. Both vessels are owned by Crowley Marine Services ("CMS"). Under CMS’ labor agreement, its crew may be called upon to perform salvage work, as CMS lists salvage work among the services it offers its clients. However, the crewmembers’ job descriptions made no reference to salvage work and they were not trained to perform such work. Crewmembers who risked their lives by jumping from one ship to the other sued to recover a salvage award. The district court awarded nearly $300,000 to some of the crew, while denying CMS’s request for a portion of the award.
CMS appealed arguing the crew was not entitled to the award because they were bound by the labor agreement to perform the salvages and had done no more than perform their duties as employees of CMS, a company engaged in part in the salvage business. CMS also argued that if a salvage award is due, then CMS as owner of the salving vessel should share in the award. The crewmembers argued in response that CMS is not entitled to a portion of the award because it owned both vessels.
The Ninth Circuit held that while CMS’ crewmembers may be called upon to perform salvage work as part of their Collective Bargaining Agreement ("CBA"), the CBA did not expressly provide a wage rate for salvage work and such a provision is the only way to substitute a seaman’s wages for a salvage award. An employer may not bar such an award simply by including "salvage work" as part of the ship’s services, without more. Instead, if an employer intends employees to be paid normal hourly wages for salvage work, the agreement must say so expressly. Because the CBA was ambiguous and because crewmembers voluntarily placed themselves under risks not required by their contract, the crewmembers were entitled to a salvage award.
The court further rejected the crewmembers’ argument that CMS is not
entitled to a salvage award because it owned both vessels. The court held that
while CMS had an inherent incentive to save its own vessel, it was still entitled
to an award because: a) under 46 U.S.C. § 727 the right to remuneration
for salvage services is not affected by common ownership of the vessels rendering
and receiving such assistance; and b) CMS placed one of its vessels at risk
to save the other vessel, thus risking additional assets, in the form of a
second ship in the salvage work. The court remanded the case to the District
Court to determine CMS’ portion of the salvage award, to be determined
according to the ship’s role in the salvage operation.
Eleventh Circuit Bars Loss of Society Damages For Nondependent Survivor of Non-Seaman
Tucker v. Fearn, 2003 U.S.App.LEXIS 11536 (11th Cir. 2003)
The Eleventh Circuit granted plaintiff’s petition for interlocutory review under 28 USC §1292(b) on a single issue of whether plaintiff, as a nondependent parent of a non-seaman, may recover loss of society damages for the wrongful death of his minor child under general maritime law. The Court affirmed the district court’s ruling that a nondependent survivor of a non-seaman cannot recover loss of society damages in his wrongful death action under general maritime law for the death of his minor child.
Plaintiff brought action for wrongful death of his minor child who was killed
in a boating collision in Alabama’s territorial waters. Plaintiff sought
to recover nonpecuniary damages in the form of loss of society damages under
general maritime law as well as Alabama’s wrongful death statute. The
district court granted defendant’s motion to strike plaintiff’s
general maritime claim for nonpecuniary damages.
To guide its analysis, the Eleventh Circuit examined the U.S. Supreme Court’s decisions in Moragne v. States Marine Lines, Inc., 398 U.S. 375 (1970), Mobile Oil Corp. v. Higginbotham, 436 U.S. 618 (1978) and Miles v. Apex Marine Corp., 498 U.S. 19 (1990). In Moragne, the Supreme Court recognized a cause of action for wrongful death for a non-seaman in territorial waters under general maritime law. In Higginbotham, the Supreme Court held that loss of society damages are not recoverable under the Death on the High Seas Act ("DOHSA"). In Miles, the Supreme Court held that loss of society damages were not recoverable under the Jones Act. Applying the three U.S. Supreme Court’s decisions, the Eleventh Circuit determined that nondependent survivors of non-seamen equally cannot recover loss of society damages in a wrongful death action under general maritime law. In its decision the Court noted its denial of recovery to plaintiff for loss of society damages is consistent with Congress’ "considered judgment" in limiting nonpecuniary damages in DOHSA, and consistent with the principle of uniform vindication of federal maritime policies.
Court Vacates $1 Million Judgment in Sexual Battery Case
Jane Doe v. Celebrity Cruises, Inc., et al., 2003 U.S. District LEXIS 17573 (S.D. Fl. 2003)**
Plaintiff passenger alleged sexual assault, rape and battery by a male crewmember when the cruise ship on which she was traveling was in port in Bermuda. Plaintiff sued the operator of the cruise ship, the ship owner, the catering service which employed the crewmember who allegedly raped her, the company that provided logistical services to the catering company, the crewmember, and the cruise ship in rem. However, neither the crewmember nor the vessel were formally served with process. After a week-long jury trial, the claims of sexual assault and battery were submitted to the jury which found the defendant crewmember did not sexually assault the plaintiff, but did sexually batter her. The jury was instructed that if the crewmember committed either assault or battery, the defendants were strictly, vicariously liable. The jury awarded plaintiff $1,000,000 in damages and attributed 25% responsibility to each of the four defendants.
Defendants filed post-verdict motions including a Motion for Judgment as a Matter of Law, Motion for a New Trial, and Motion for Remittitur. In considered the various motions, the Court asked the parties for supplemental briefing addressing whether all of the four defendants could be technically held strictly liable or if the strict liability ruling should only apply to some, if any, of the defendants.
Defendants argued in response that the Court’s order on strict liability was specifically worded such that a common carrier could be held strictly liable for the intentional torts of its employees. However, in this instant action, the crewmember found to have committed the intentional tort was not an employee of a common carrier, but was employed by a separate catering company. As such, defendants argued that under the Court’s prior ruling, even though the crewmember was found to have battered the plaintiff, none of the served defendants could be held strictly liable.
The Court first addressed the prior order on strict liability and, following the "law-of-the-case" doctrine, upheld that opinion. "A court has the power to revisit prior decisions of its own court or of a coordinate court in any circumstance, although as a rule courts should be loath to do so in the absence of extraordinary circumstances such as where the initial decision was clearly erroneous and would work a manifest prejudice." Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (1988). "Courts must rarely invoke the 'clear error’ exception, less [sic] the exception swallow the rule." Jenkins Brick Co. v. Bremer, 321 F. 3d 1366, 1370 (11th Cir. 2003).
In this case the Court found that the prior opinion on strict liability was not clear error and was thus binding on the future opinions of the Court on this case. Agreeing with defendants’ claim that said opinion specifically held that strict liability only applied to a common carrier for the intentional torts of its employees and that the common carrier(s) named herein did not employ the individual found to have committed the assault, none of the defendants could be held liable for the damages awarded to plaintiff. The Court vacated the verdict and entered judgment for defendants.
California Court Rejects Forfeiture Argument and Enforces Forum Selection Clause
Schlessinger v. Holland America, N.V., 2003 A.M.C. 892 (Cal. Sup. Ct. L.A. 2003) **
In this class action brought by five passengers arising out of Norwalk virus claims during their cruise, the California state court enforced a forum selection clause in the passenger ticket contracts over plaintiffs’ contention that the forum selection clause was unenforceable as to them because at the time they received their ticket contracts, they had already paid their full cruise fare and could not have cancelled their cruise without forfeiting the entire amount of their fare.
Denying plaintiffs’ forfeiture argument, the court stated that there was no evidence that plaintiffs wanted to cancel their cruise due to the forum selection clause, and/or were unable to do so because of the forfeiture of their cruise fare. The court further stated:
"If plaintiffs’ forfeiture argument were accepted, any party to a cruise contract could make any clause in the contract unenforceable after taking the benefit of the cruise contract (i.e. the cruise itself) by subsequently claiming they had wished to cancel the cruise, but did not do so, because they did not want to forfeit their money. Plaintiffs’ failure to timely object to the forum selection clause of their cruise ticket contract before the cruise, and their taking the cruise without doing so, is essentially tantamount to waiving their rights, if any, to object to the terms and conditions of their ticket contract."
Shipowner Not Liable Under ADA For Medical Disembarkation Of Disabled Passenger
Larsen v. Carnival Corp., Inc., 242 F.Supp.2d 1333 (S.D. Fl. 2003)
The district court for the Southern District of Florida held a cruise company was not liable to plaintiff passengers under Title III of the Americans with Disabilities Act of 1990, 42 U.S.C. §§12182 et seq ("ADA"), when it disembarked plaintiff and his wife from one of its cruise ships based on medical reasons. Plaintiff and his wife sued the shipowner for violation of the ADA on numerous grounds.
Plaintiff was a paraplegic who used a motorized wheelchair. He also had severe obstructive sleep apnea, severe morbid obesity, and chronic obstructive pulmonary disease. His medical condition required him to use a Bi-Pap ventilator and oxygen concentrator at night to help him breathe. Prior to the cruise, plaintiff spoke with the cruise company’s representative and made special arrangements for his wheelchair, and a wheelchair-accessible cabin. On the first day of the cruise, plaintiff and his wife boarded the ship and brought the Bi- Pap machine to the ship through a porter. Prior to sailing, plaintiff discovered his Bi-Pap machine was not functioning. He contacted his medical supplier for a replacement, but the supplier could not deliver the machine to the ship’s next stop in time. Plaintiff inquired whether the ship’s infirmary carried Bi-Paps and was told it did not. The ship’s doctor decided to disembark plaintiff for medical reasons believing that in the absence of a functioning ventilator machine, plaintiff was at risk of a medical emergency and potentially death.
The court disagreed with plaintiff that the decision to disembark plaintiff for medical reasons was discriminatory and based on impermissible stereotype. Instead, the court found the cruise company’s policy requirement that someone, by boarding its cruse ship, should not critically jeopardize his or her own health was a neutral criterion that applied to those who were disabled and those who were not. The court noted for example, the cruise ship would not accept for passage a woman who is 28 weeks or more pregnant and pregnancy is not a disability under the ADA. Relying on the testimony of plaintiff’s own treating physician, the court stated the decision to disembark plaintiff was based upon a reasonable concern for safety, rather than mere speculation, stereotype, or generalizations about his disability.
Ship’s Physician Subject to Personal Jurisdiction Where Summons Served
Andras Pota v. Kenneth Holtz, M.D., et al., 852 So. 2d 379 (Fla. 3d DCA 2003)
Plaintiff passengers brought suit against defendant shipboard physician for the death of their infant son. At the time of their cruise, plaintiff’s wife was twenty-six weeks pregnant. Four days into the cruise, she began complaining of stomach pains. The ship’s doctor diagnosed a bladder infection and prescribed an antibiotic. When the wife’s pain became worse, the doctor conducted a gynecological examination, but determining that her cervix was closed, denied plaintiffs’ request for an emergency airlift off the vessel. The following morning, the wife’s water broke and she went into labor. The ship was docked in Cozumel at that point plaintiff and his wife were taken by ambulance to a clinic where she gave birth to a live child who subsequently died a few hours later.
Plaintiffs sued the ship’s physician and the cruise line. After several attempts to serve the doctor with process failed, the cruise line’s counsel agreed to help facilitate service on board the ship where the doctor was working. On the agreed date, counsel for the cruise line advised that he would be representing the doctor and that he was authorized to accept service of process for him. However, the attorney noted in the summons that all objections to service were preserved. Ultimately, the doctor moved to be dismissed for lack of personal jurisdiction and said motion was granted.
On appeal, the Third DCA reversed finding that personal service of process within the jurisdiction is sufficient to confer personal jurisdiction. As the doctor authorized his counsel to accept personal service, counsel could not "in the same breath" challenge that very service. The doctor additionally argued that he was not actually served with process in the jurisdiction since he was served aboard a foreign-flagged vessel. The Third DCA also rejected that argument holding that a "Liberian vessel moored at a dock in City of Miami is within the State of Florida, not Liberia."
Court Rejects Barbetta Immunity and Holds Carriers Vicariously Liable for Negligence of Shipboard Medical Staff
Darce Carlisle v. Carnival Corporation, 2003 Fla. App. LEXIS 12794 (Fla. 3d DCA 2003)**
A 14 year-old passenger fell ill with abdominal pain while traveling on a cruise. Over the course of several days and several visits to the ship’s physician, plaintiffs were repeatedly advised their daughter had the flu. Ultimately, the family decided to discontinue their cruise and return home to Michigan where their daughter was diagnosed with a ruptured appendix. Plaintiffs filed the instant suit against the cruise line and the ship’s physician. The trial court granted the cruise line’s Motion for Summary Judgment finding that established case law precluded a finding of vicarious liability against the ship for the actions of the ship’s physician and that the passenger ticket contract advised passengers that the ship’s medical staff were independent contractors.
The trial court’s holding was in line with the long line of decisions exemplified by Barbetta v. S/S Bermuda Star, 848 F. 2d 1364 (5th Cir. 1988) which held, "[W]hen a carrier undertakes to employ a doctor aboard ship for its passengers’ convenience, the carrier has a duty to employ a doctor who is competent and duly qualified. If the carrier breaches its duty, it is responsible for its own negligence. If the doctor is negligent in treating a passenger, however, that negligence will not be imputed to the carrier."
On appeal, plaintiffs argued the Barbetta cases are based on flawed and outdated assumptions and that the California decision of Nietes v. American President Lines, 188 F. Supp. 219 (N.D. Cal. 1959) is better reasoned. In Nietes, the cruise line was held vicariously liable for the negligence of the ship’s doctor.
Finding that the issues had never been addressed by a Florida state court, the Third DCA ignored the long line of Florida federal court precedent, reversed the finding of the trial court and followed the law of Nietes. In a lengthy opinion, the Third DCA attacked all of the grounds on which the Barbetta line of cases stand, concluding they were the result of a "shaky fiction." Furthermore, the Court rejected the language of the cruise line’s ticket contract concerning the independent contractor status of the ship’s medical staff as violative of 46 App. USCA 183c which invalidates certain purported disclaimers of liability.
Editor’s Note: The cruise line has filed a Motion for Re- hearing en banc and Certification for Appeal.
Vessel Operator/Manager’s Failure to Install and Maintain Water Chlorination and Recording System Constitutes "Gross Negligence"
Master Mariner A.B. v. Clipper Cruise Line, Inc., SMA No. 3768 (Aug. 30, 2002) SMA 3768-A (Feb. 10, 2003).
Clipper Cruise Line purchased the 4,363 gross ton passenger vessel "M/V ALLA TARASOVA" for conversion, modification, and refurbishment to use in Clipper’s cruise trade as M/S CLIPPER ADVENTURER. Shipowner Clipper contracted with Master Mariner A.B., a Swedish corporation, for the refurbishment and operation of the new vessel under two separate agreements. Under the first agreement, Master Mariner was responsible for the modification of the vessel suitable for Clipper’s cruise trade, including U.S. ports of call. Upon redelivery of the newly christened "M/S CLIPPER ADVENTURER," a vessel management agreement provided Master Mariner’s Swedish officers would be responsible for the vessel operation, management, and maintenance. Clipper terminated the vessel management agreement with Master Mariner seven months later under a termination provision for "acts of [Master Mariner’s] willful misconduct or gross negligence having a material effect on [Clipper]." Master Mariner sought breach of contract damages for early termination of the agreement, Clipper cross claimed damages and set offs, and the parties proceeded to contractually-stipulated arbitration before the Society of Maritime Arbitrators ("SMA") applying New York law.
The arbitrator found a number of grounds supporting Clipper’s early termination of the agreement, including a finding of "gross negligence" for Master Mariner’s multiple failures to ensure the installation and operation of the vessel’s water chlorination and recording system, and failure to notify the shipowner of same. During the vessel’s conversion, the shipowner arranged for the training of Master Mariner’s officers through the Center for Disease Control’s ("CDC") Vessel Sanitation Program to ensure proficiency with CDC requirements and the installation and operation of the vessel’s water chlorination system. Clipper’s first notice of any potential problems with the vessel’s chlorination system was when the ship called on the first North American port in Canada and was informally inspected by Health Canada (CDC’s Canadian counterpart). Health Canada’s inspection report found the potable water system’s chlorine analyzer and chart recorder had not been properly installed during the refurbishment. Master Marine’s Captain admitted there were problems with the water chlorination recorder and Clipper was not advised of its inoperable condition. As a result, there were no records of chlorine levels for the first months of operation of the vessel. The arbitrator found Master Mariner’s omissions not only constituted "gross negligence" but potentially compromised the health of Clipper's passengers and had an adverse material effect on the cruise line's reputation with Health Canada and the CDC, thus denying damages to Master Marine for Clipper's early termination of the vessel management agreement.