Cruise Law News : Maritime Lawyer & Attorney : James M. Walker : Walker & O'Neill Law Firm : Admiralty Law, Cruise Ship Accidents & Injuries

A rather ordinary couple of weeks in the world of cruising: 1,000 passengers or so sick with diarrhea and vomiting caused by gastrointestinal outbreaks on five cruise ships, 16 brawling passengers kicked off a cruise, a crewmember (a child activities supervisor no less) arrested on charges of molesting a child, a cruise passenger acquitted of rape due to jurisdictional loopholes, two passengers sentenced to 6 years in prison for smuggling pot, 3 passengers arrested for smuggling 13 kilos of coke, 1 dead and 9 sickened with flu on a cruise in Brazil, and another dead cruise passenger found face down in the water in the Cayman Islands.

All of this is in addition to the continued bad press caused by the Costa Concordia disaster.  The latest bad news out of the Concordia mess is that cocaine was found on a hair sample of Captain Schettino. The news is confusing because the captain's drug tests were reportedly negative.  The cocaine was allegedly found on the hair rather than in the hair - meaning that Schettino apparently did not ingest the drug.  These fine points will undoubtedly be lost on the public who now will associate the word "cocaine," along with "coward" and "womanizer," with the infamous captain.

Last week also saw the filing of an amended lawsuit against Costa and its parent company Carnival in the Miami-Dade courthouse in Miami.  You will recall that non-maritime lawyers from New York announced that they would be filing a "class action" lawsuit, which turned out to be be a dud. They finally filed suit on behalf of just 6 passengers, 2 from New York, Florida and Italy each.  The amended complaint adds an additional 33 passengers for a total of 39 plaintiffs.  The lawyers said that the media mis-characterized the lawsuit as a class action, even though their website advertised the case as a class action.

The lawyers filed suit in Miami, even though the passenger ticket requires the lawsuit to be filed in Genoa, Italy, because Carnival and its deep pockets are located here.  

The lawsuit now seeks $528,000,000, for just the 39 passengers.   

Good luck with that. 

Photo credit:  Reddit

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There is a lot of talk in the media about so-called "class action" lawsuits, arising out of the Costa Concordia cruise disaster, seeking hundreds of millions of dollars in compensation and other far fetched claims.  Most of these exaggerated claims are being made by lawyers who have absolutely no experience handling maritime claims.

What is not being discussed in the media is that the Costa Concordia survivors are facing a deadline as early as the end of this week. The deadline pertains to the passenger's claim for their lost luggage, clothing, electronics, jewelry and other personal effects.

According to the terms of the Costa Cruises passenger ticket, passengers must provide written notice to the company identified in the ticket for all claims other than physical or emotional injury, illness or death within thirty (30) days of the incident.  Here is the pertinent language: 

" . . . The Carrier shall not be liable for any claims whatsoever, other than for physical or emotional injury, illness or death of the Passenger, unless written notice of the claim with full particulars is delivered to the Carrier or its duly authorized agent within thirty (30) days after the Passenger shall be landed from the Vessel, or in the case the voyage is abandoned within thirty (30) days thereafter.  No legal proceeding whatsoever, other than for personal injury, illness or death, shall be maintainable in any event unless filed within six (6) months after the Passenger shall be landed from the Vessel, or in the case the voyage is abandoned within six (6) months thereafter, and unless valid notice or service is effected upon the Carrier within 120 days after commencement of the proceeding."  (emphasis added) 

Thirty days from the January 13th incident is next Sunday, February 12th.  All passenger intending to make a claim for their personal belonging must send a  "written notice of the claim with full particulars" and deliver it to the carrier identified in the passenger ticket, or its duly authorized agent, within the next week.

If you don't send the notice in timely and to the correct company, the passengers risk not satisfying one of the "conditions precedent" necessary before a lawsuit can be filed.

The fact that Costa has offered 11,000 Euros (around $14,600) for a settlement does not extend a passenger's obligation to provide the required notice within 30 days.

The deadline again is Sunday, February 12, 2012. 

If you need assistance in sending the notice to the correct company and correct address, do not delay.  We will be pleased to assist you free of charge in sending the property damage notice in.

Our firm and our co-counsel, Glenn Holzberg, are also assisting about two dozen passengers who suffered physical and / or psychological injuries during the Costa Concordia disaster.

Unlike many non-maritime lawyers rushing to file suit in the U.S. (and are probably filing suit in the wrong jurisdiction), we are recommending patience to our client once they send in the necessary notices to the cruise line.  We will be negotiating directly with the cruise line to obtain fair compensation for those who have suffering emotional or physical injuries.  We are not charging a fee on any portion of the first $14,600 obtained by our clients.  All passengers are offered this amount and it would not be fair to obtain a percentage of what is already offered. 

Claims for emotional anguish and personal injury and death must be filed within one year, and require a notice letter being sent within 6 months.  

Claims for property losses must be filed in six (6) month for the date of the incident, after the aforementioned notice letter sent within 30 days.

If you are confused about whether to accept the Costa $14,600 offer, or need assistance preparing the correct forms, please send me an email jwalker@cruiselaw.com or give us a call.     

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As rescue and recovery attempts continue to try and locate the bodies of passengers missing from the Costa Concordia disaster, law firms in the United States are moving forward to file class action lawsuits against Costa Cruises and its parent company, Carnival Corporation, in Miami, Florida.

One of the firms advertising for such cases and taking a high profile position is the New York firm of Proner & Proner.  On its page "Costa Concordia Passengers: We Are Here for You," the Proner firm states that it intends to seek "at least $160,000 on behalf of each of the passengers aboard the ship at the time of the wreck. Those who were injured, as well as those with wrongful death claims, may be able to collect multiple times that amount." 

In a telephone interview with a local reporter in Miami, the Proner firm said it intends to represent passengers of "all nations" from "Peru to Shanghai."  It will be seeking to recover "millions" on behalf of the dead or missing passengers.  During the interview, the New York lawyer said a lawyer was flying to Miami to file the class action lawsuit and would include Carnival as a defendant.

Whoa Nellie!  Lets slow down and collect our thoughts for a second. 

Cases against cruise lines are governed by a specialized area of maritime law which is different than land based law.

The courts have applied maritime law to uphold certain contractual limitations set forth in the passenger ticket issued by the cruise lines.  These terms and conditions of the cruise passenger ticket are quite draconian in nature.  Take a minute and read one of our articles about this issue: Top 10 Shocking Clauses In Your Cruise Contract.

One of the most important contractual terms includes what is called a "forum selection clause."  This clause specifies where the lawsuit must be filed.  The cruise lines identify a location that it convenient for them and inconvenient for the passenger.  The location is usually where the cruise line is located, which gives the cruise line a home court advantage so to speak.  It is inconvenient, time consuming, and expensive for passengers injured during a cruise to travel to the location chosen by the cruise line to file suit.

The cruise lines have been successful in enforcing these type of clauses.  In the case of Shute v. Carnival, the United States Supreme Court required a passenger who lived in Oregon, and injured during a cruise from California to Mexico, to file suit here in Miami.  No the passenger terms and conditions are not fair, but they are routinely enforced.  

For the Concordia disaster, the Costa passenger ticket contains a clause specifying Genoa, Italy as the location for the lawsuit.  Most tickests issued by cruise lines based in Miami like Carnival and Royal Caribbean select Miami as the place where the lawsuit must be filed.  But Costa's ticket is different.  For Costa cruises which call on an U.S. port, the lawsuit has to be filed in Broward County in South Florida.  If the cruise itinerary does not include a U.S. port, the lawsuit must be filed in Italy.

Last year, we wrote about a similar situation.  In Seung v. Regent Seven Seas Cruises, a passenger was injured while cruising on the Paul Gauguin cruise ship, operated by Regent Seven Seas Cruises, in the Pacific Ocean.  After Ms. Seung filed suit in South Florida where the cruise line is based, the defense lawyers moved to dismiss the case arguing that the forum selection claim required the lawsuit to be brought in France.  The federal court here dismissed her case.  The 11th Circuit Court of Appeal affirmed the dismissal and held that the passenger, from California, had to travel to Paris to pursue her remedies.  Our article is entitled Cruise Forum Selection Clauses: Do You Speak French?

As soon as lawsuits are filed against Costa in this jurisdiction, the cruise line will move to dismiss the cases and will cite the Shute and Seung cases discussed above. 

The cruise line defense lawyers will argue that the lawsuits cannot be filed here.  The Costa company is incorporated in Italy and based in Genoa.  The cruise ship is flagged in Italy.  The disaster occurred in Italian waters.  The Italian Coast Guard responded.  The Italian authorities are investigating the cause of the crash and the casualties. The criminal proceedings are taking place in Italy.  The lawyers for the passengers will be hard pressed to explain why the cases should not be filed in Italy. 

The Costa cruise ticket has another curious twist.  It specifies that Italian law should apply.  For death cases, Italian law may actually provide for a more equitable remedy that the U.S. General Maritime Law and statutory law - particularly where the deceased passengers are retired. 

In the U.S., wrongful deaths on the "high seas" (non U.S, territorial waters, including territorial waters of other countries) are governed by a federal statute called the Death On The High Seas Act ("DOHSA").  There is no recovery under DOSHA for pre-death pain and suffering or emotional losses of the surviving family members such as grief and bereavement.  The only recovery is for financial losses such as lost wages of the decedent.   If the decedents are retired or children, then there are no recoverable damages except for burial and funeral expenses assuming the bodies are located. 

So if the wrongful death cases are filed in the U.S., and the court applies U.S. law, there may be no recovery in certain death cases.  Yet if the cases were filed in Italy, there could be recovery under Italian law.  A passenger could conceivably file suit in a more convenient forum in the U.S. yet receive no recovery; whereas if the passenger filed suit in a less convenient location in Italy there may be greater recovery in some cases.

Then there is the matter of Carnival.  Yes it is the parent company of Costa.  And yes, as the Proner lawyers mention to the news reporter, it collects over 14 and 1/2 billion dollars a year.  But  that does not automatically give anyone a basis to sue it in Miami every time one of its subsidiary company's cruise ships around the world suffer a casualty.  

There are often severe consequences of filing suit in the wrong location or against the wrong party, including the assessment of costs and in some circumstances attorney fees. 

We hope that the lawyers who are working faster than the recovery teams in Italy to file suit here in Miami know what they are doing and are not navigating their clients into dangerous legal waters. 

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Two stock fraud lawsuits recently filed against Royal Caribbean Cruises have placed the cruise line's corporate ethics under the microscope.

In the case of Todd Roth v. Royal Caribbean Cruises, Ltd, Richard D. Fain, Brian J. Rice, and Henry L. Pujol, United States District Court, Southern District of Florida, Case No. 22783 - MSC, a stockholder alleges that the cruise lines withheld disclosing certain accounting errors dating back to 2009, misrepresented the company's financial status, and misled investors about the cruise line's financial future. The case was filed by the New York and Louisiana law firm of Kahn, Swick & Foti and the Florida firm of Vianale & Vianale.   

The lawsuit alleges that on January 27, 2011, Royal Caribbean issued a press release where it made false and misleading statements that its fourth quarter results for 2010 were better than expected and it anticipated certain positive developments regarding its operations, expenses, costs, ratios and net income for 2010.  

On April 28, 2011, after the first quarter, Royal Caribbean again made misleading statements regarding its financial status.  The lawsuit alleges that CEO Richard Fain (photo left) falsely stated that "the year started off with a roar - strong bookings, low costs and solid profits - and in the first quarter every one of our brands exceeded its forecast . . . " 

However, on July 28, 2011,  Royal Caribbean suddenly and dramatically departed from its rosy projections regarding the company's financial operations.  The cruise line published a release revealing for the first time that it was performing well below expectations and that certain accounting errors (regarding treatment of interest income relating to amortization of certain financing fees) resulted in a drastic downward revision of the company's financial statements.

This news "shocked and alarmed" investors.  Royal Caribbean's stock price then fell precipitously in two days, from $35.75 to $30.50.  This development had a disastrous effect on the investments of individual shareholders.  The stockholder who filed suit, Todd Roth, had purchased 5,000 shares on July 26, 2011 at a price of $36.65 a share.  Three days later, with the stock trading at $30.50, he lost over $30,000. 

Included as defendants in the lawsuit are the CEO (Richard Fain), the Chief Financial Officer (Brian Rice) and the Corporate Financial Controller (Henry Pujol).  On January 28, 2011, the day after touting the financial strength of the cruise line, CEO Fain sold 200,000 shares at a price of $46.63 for a what the lawsuit alleges are total illicit proceeds of $9,326,000.  CFO Rice (photo right, below) quickly followed suit, selling 88,872 shares in the $46 to $47 range from February 1 - 14, 2011 for over $4,100,000 in illicit proceeds. 

Although not named personally in the lawsuit, Royal Caribbean President Adam Goldstein sold over 40,000 shares between February 1 - 16, 2011 - for a total of over $1,900,000.  Six other executives sold stock between January 28 and February 16, 2011, which combined with the stock sold by the named defendants totaled over $20,000,000.  

The lawsuit alleges that these individual defendants knew that the negative financial information had not been disclosed to the public and was being concealed, and they were participants in a "fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of Royal Caribbean securities . . . "      

Earlier this year, in an article entitled Royal Caribbean Executives Get Richer While Crew Members Get Poorer, I reported that  Royal Caribbean increased its 2010 compensation paid to CEO Richard Fain almost 60% to $8,600,000.  Royal Caribbean increased the compensation paid to the company's four other named executives from 18.5% to almost 50%.  The largest compensation increase of the four executives went to President Adam Goldstein whose total compensation increased to over $4,000,000. 

These increases were primarily incentive based, meaning that the executives claimed that they met or exceeded certain financial goals for the corporation.  With this recent revelation that the company's financial performance was overstated and that the executives allegedly committed fraud or recklessly misrepresented the cruise line's financial data, the question arises whether the incentive based millions of dollars in compensation should be returned voluntarily to the corporation or disgorged in the pending lawsuits.    

The Roth lawsuit seeks class action status for what is referred to as either hundreds or thousands of other shareholders who were defrauded by the cruise line between January 27, 2011 and July 28, 2011. 

A second lawsuit seeking class action status was reportedly filed yesterday by the Pomerantz law firm with offices in New York, Chicago and Washington D.C.  It is on behalf of stockholder Stanley Wolfe and was filed in the United States District Court, Southern District of Florida, Case No. 22855.  This lawsuit seeks class certification for stockholders who purchased securities between April 23, 2009 and July 27, 2011.

It will be interesting to see how these lawsuits turn out.  What did the cruise line executives know about the accounting errors?  When did they learn of the irregularities?  What did they do once they learned that the cruise line was performing substantially under expectations?  Did they dump their stock realizing that the price was artificially high?  Or did they act prudently and responsibly once the accounting mistakes were brought to their attention? 

Photo credits:  www.azamaraclubcruises.com

Chart credit:  Rick + Rick law firm

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