Former Norwegian Cruise Line ("NCL") CEO Colin Veitch’s trial against his successor, Kevin Sheehan, and their old cruise line, NCL, for defamation and breach of contract has been underway in the Miami-Dade County courthouse, here in Miami, Florida this past week.
Veitch worked at the helm of NCL from 2000 to 2008. According to Travel Weekly, Veitch was the architect of "Freestyle Cruising" and undertook an ambitious fleet renewal program, purchasing nine new cruise ships. By some accounts, but not all, Veitch was an innovative cruise executive who was successful in beginning the transformation of under-performing old cruise ships into a larger and far more profitable fleet.
Veitch turned the revitalized cruise line over to Sheehan in 2008. Things turned sour between the two rich cruise executives after a travel periodical, Travel Weekly, wrote a glowing article in December of 2014 about Veitch and his success at NCL. Sheehan then sent an email to Travel Weekly mocking the article and criticizing Veitch. The Miami Herald reported at the time, quoting the lawsuit allegations, that Sheehan sent a “vindictive, false and defamatory” email to Travel Weekly which eventually published. A few days later, Travel Weekly retracted the complimentary article about Veitch.
Veitch then sued Sheehan and NCL alleging defamation, as well as breach of contract, claiming that his former cruise line and its new CEO allegedly cheated him out of revenue sharing.
The overblown 187-page lawsuit which you can review here is, in my opinion, a rather fascinating insight into the hurt-feelings and out-of-control personalities of two multi-millionaire former NCL cruise executives.
The lawsuit which Veitch filed against Sheehan included allegations which have been characterized by the Skift travel publication as "incendiary" accusations that Mr. Sheehan engaged in “a long pattern of personal and professional misconduct and recklessness, stunning in its scope and hubris, corrosive and detrimental in its impact on the company, and deeply undermining of the workplace culture . . . ”
In response, Mr. Sheehan and NCL asked the court to strike what they characterized as "immaterial, impertinent and scandalous" allegations.
The bitter personal allegations between these two former cruise executives arise from a nasty dispute between two very wealthy former cruise executives. When Mr. Veitch resigned from NCL’s parent company, Star Cruises, he reportedly received $10,000,000 as part of a severance package. He also settled a $300,000,000 lawsuit which he filed against Sir Richard Branson and the Virgin Group after he alleged that the British billionaire and his company stole his ideas for a new cruise project. The precise amount of money that Veitch pocketed is confidential.
Sheehan also received a severance package from NCL in 2015 after it terminated his employment, totaling $13,400,000.
The many articles written by trade publications and major newspapers in Miami. like the Miami Herald and the Miami New Times, have covered the Veitch-Sheehan squabbles at length, but they are ignoring the biter irony of the litigation. Veitch was the NCL CEO in 2003 when a decrepit, poorly maintained steam boiler on NCL’s 40+ year-old SS Norway exploded at the port of Miami. The explosion killed eight crew members and seriously burned another nineteen NCL crew members.
The National Transportation Safety Board ("NTBS") concluded that the deadly boiler explosion was caused by NCL’s "improper operation, maintenance and inspection" of the old cruise ship’s steam chamber. The old boiler had "extensive fatigue cracking" and deteriorated materials that weakened the metal and caused it to rupture under pressure. The NTSB reported that NCL was aware of the dangerous condition but failed to take action to fix the problem.
CEO Veitch tried to deflect blame but NCL was forced to plead guilty to a criminal charge of gross negligence regarding the explosion. The Norway was subsequently sold for scrap.
When the families of the eight dead crew members who were scalded to death filed suit in Miami to obtain compensation for the loss of their fathers and husbands, Veitch’s lawyers argued that the crew members were not entitled to file suit before a judge and jury in Miami. Instead, NCL argued, because the crew members were Filipinos, their loved ones had to pursue the extremely limited death benefits pursuant to the arbitration process in the Philippines.
Kicking "foreign" (i.e., non-U.S.) crew members out of the American legal system was unprecedented. Foreign crew members injured or killed due to the negligence of U.S. based shipping companies have long been permitted to have their cases resolved through jury trials under the Jones Act here in the U.S. In addition to the Jones Act, crew members have also been entitled to obtain medical treatment and daily living expenses when they are injured aboard U.S. based cruise ships under the "maintenance and cure" doctrine, one of the oldest legal American legal doctrines dating back to the early 1800’s.
But NCL, which faced substantial liability and damages for the deaths of eight crew members and nearly twenty other ship employees burned in the explosion, sought to dismiss the cases, arguing that their only remedy was the limited benefits under the Filipino law. NCL argued that Miami was not the proper location to resolve the dispute even though it is based in Miami and the deaths occurred at the port of Miami. In Batista v. Star Cruises, our federal court agreed with NCL and sent the cases to Manila, where Filipino law limited the widows to just $50,000 and the children to just $7,500 for the loss of their dead husbands/fathers.
Like "freestlye cruising," NCL’s unprecedented legal posturing has also been copied by NCL’s competitors Carnival, Royal Caribbean and all other cruise lines, which quickly inserted one-sided arbitration clauses into their crew member employment agreements to escape or limit their liability when things go wrong on the high seas.
Except for Disney Cruises, all other cruise lines prohibit injured crew members from having their cases heard by juries in the U.S. legal system. Filipino seafarers are especially susceptible to being screwed by the Miami-based cruise lines, thanks to NCL’s efforts which started under Veitch’s tenure.
During the trial last week at the Miami-Dade courthouse, where NCL crew members are barred from filing suit, Veitch’s lawyer reportedly asked the jury to consider awarding $95,000,000 in damages, according to Court View Network (CVN). That may be a proper amount to finally compensate the families of the eight Filipino crew members who were burned to death on the SS Norway back in 2003, but it seems to be an awful lot for a healthy, millionaire former cruise executive with hurt feelings.
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December 11, 2017 Update: As reported by the Miami Business Review today, Norwegian Cruise Line Defeats $90M Lawsuit From Former CEO.
Colin Veitch: Associated Press via the Honolulu Star-Bulletin.
Kevin Sheehan: REUTERS/Brendan McDermid.
SS Norway: News7 Miami via CBS News video.