Himalaya Clause Found Ambiguous in Florida State Court--What Now?

In the case of Aquachile, Inc. v. Williams, 2021 Fla. App. LEXIS 15944 (Fla. 4th DCA Dec. 22, 2021), a passenger of a Royal Caribbean cruise line fell extremely ill after being served contaminated fish while aboard the ship. The passenger claims that the fish originated from AquaChile, although the fish was sold to at least one other company prior to it being sold to Royal Caribbean. The passenger filed her complaint in Broward County Circuit Court against AquaChile, and two other companies in the supply chain, for strict liability, negligence, violations of the Florida Food Safety Act, breach of implied warranty, and breach of express warranty. Prior to the cruise, Royal Caribbean provided the passenger with a “guest ticket booklet” which contained the contract between the cruise and the passengers. On the cover of the booklet, and in bold print at the top of the first page of the contract, was an “important notice” advising the passengers to carefully read the contract, directing attention specifically to section 3 and section 9 through 11. In Section 9(a), printed in all-capital letters, the forum clause stated that “any dispute between the passenger and the carrier must be litigated in Miami-Dade County.” However, the Himalaya clause at issue, was contained in section 2(a), the definitions section of the contract. In non-bold, regular-case letters,  the first two sentences of section 2(b) define "carrier" to include the vessel, the operator, and related entities and individuals.[1] Then, the third sentence, the Himalaya clause, stated in relevant part that: “[t]he exclusions or limitations of liability of Carrier set forth in the provisions of this Ticket Contract, as well as all rights, defenses or immunities set forth herein, shall also apply to and be for the benefit of agents, independent contractors, concessionaires and suppliers of Carrier . . . .”

[1] "Himalaya clause"—purports to extend the forum selection clause, among other rights and defenses, to parties other than the carrier.

AquaChile filed a motion to dismiss the passenger’s claim on two grounds. First, AquaChile argued that Broward County Circuit Court was an improper venue pursuant to the forum selection clause contained in the guest ticket booklet provided to the passenger by Royal Caribbean. Second, AquaChile argued that it was entitled to enforce the forum selection clause, pursuant to the Himalaya clause, as a "supplier" of Royal Caribbean.

The Circuit Court denied AquaChile’s motion to dismiss and held that the Himalaya clause did not apply to AquaChile as an indirect supplier to Royal Caribbean, and was not engaged in the sort of maritime activity that would be expected to be covered under the contract. Furthermore, the circuit court held that the Himalaya clause was not reasonably communicated to the plaintiff due to its physical characteristics and ambiguous language.

The question to the District Court for consideration was whether the Himalaya clause in the plaintiff’s cruise ticket contract applies in her suit against a non-party to the contract. The District Court found that it did not. First, the appellate court found that the interpretation of the Himalaya clause was ambiguous and could not be construed to extend the rights and defenses of Royal Caribbean to AquaChile. AquaChile sold the contaminated fish to at least one company before reaching Royal Caribbean. Thus, Royal Caribbean had an indirect, tangential relationship with AquaChile, such that AquaChile cannot be considered a supplier of Royal Caribbean pursuant to the contract. Moreover, AquaChile’s non-maritime business of farming and selling fish to several on-land purchasers was not deemed a maritime activity just because “some of its fish ended up being sold to Royal Caribbean at the end of the supply chain.”  In sum, the interpretation of the Himalaya clause was ambiguous as applied to AquaChile and can be construed against them.

 Second, the appellate court found that the Himalaya clause was not reasonably communicated to the plaintiff based on its physical characteristics, and the plaintiff’s inability to become meaningfully informed of the clause and reject its terms.  Not only was section 2(a) not included in the “important notice,” or anywhere else in the contract to capture the plaintiff’s attention, it was written in non-bold, regular-case letters. Therefore, section 2(a) could not have suggested to the plaintiff or any reader that it contained a clause extending the rights and defenses of Royal Caribbean to unrelated parties where the Himalaya clause was buried in fine print in the definitions section of the contract.

This case is very important where carriers and their servants are involved, as now, a Florida state court has refused to extend the clause to a party that was clearly a provisions provider to the carrier. The reasoning that the provider was tangentially related should be of no import in the cruising context, as that same provider would be entitled to assert a maritime lien if it had not been paid by that same carrier. It is the second holding, that the clause was not reasonable communicated to the passenger is more troubling, as there is no binding precedent requiring Himalaya clauses to be bolded and conspicuous. This holding will require all carriers to rethink their Himalaya clauses to ensure they are “conspicuous enough” for a consumer.

If you are interested in receiving a copy of this decision and wish to contact me to discuss it further, please feel free to do so by calling 305.377.3700 or reaching out to me at blog@miamimaritimelaw.co.
 

Cruise Pax Must Not Leave the Castle Walls and Must Bring Case in Fed Court

Another cruise passenger tries, but fails to get out from federal court jurisdiction in DeRoy v. Carnival Corp., No. 18-12619 (June 30, 2020), appealing the decision at No. 1:18-cv-20653-UU. After injuring her foot on a rug while onboard a Carnival ship, the plaintiff filed suit against Carnival in both state and federal court, seeking damages for the injuries she allegedly suffered onboard the ship. In this case, the plaintiff entered into a contract with Carnival that contained a forum-selection clause.

Under the forum-selection clause's plain language, when jurisdiction for a claim could lie in federal district court, federal court is the only option for a plaintiff under the contract. The court held that plaintiff's claim for negligence at sea falls well within the walls of the federal court's admiralty jurisdiction. Even without explicitly invoking admiralty jurisdiction, the court held that plaintiff's complaint is subject to Federal Rule of Civil Procedure 9(h)'s provision rendering her claim an admiralty or maritime claim.

The case is amusing in that it starts off explaining the background of the “loophole” and the fact that the plaintiff could not assert a loophole in the contract, allowing her to “get through the castle walls” to allege she could bring her claim in state court. It is a well written decision that explains why the court retains subject matter jurisdiction in these circumstances.

If you are interested in obtaining a copy of this decision or wish to discuss it further, please feel free to reach out to us at blog@miamimaritimelaw.co.

Cruise Pax, Crew and Shareholders Suing Over COVID-19

The last cruise ship carrying passengers reportedly docked on Tuesday, April 21, 2020. The COSTA DELIZIOSA disembarked passengers in Genoa, Italy, allowing more than 1,500 people to return home after a 113-day round the world voyage. Under orders from the Centers for Disease Control and Prevention, it will be some time until cruise ships will once again be able to sail from U.S. ports. In the meantime, cruise lines are dealing with a host of lawsuits filed by passengers, crew and their own shareholders who accuse the companies of negligence in exposing them to the Coronavirus or otherwise downplaying the risk.

One of the first cases filed was for 40 passengers on board the GRAND PRINCESS, who claimed emotional distress due to an outbreak of COVID-19 onboard. Princess has defended the suits, stating that allowing cruise ship passengers to sue over emotional distress because they could have been exposed to the COVID-19 pandemic would “open the door to open-ended liability.” Princess cited the U.S. Supreme Court case of Metro-North Commuter R. Co. v. Buckley, 521 U.S. 424 (1997), which generally holds that Plaintiffs are prohibited from suing for fear of exposure, in this case, to the Coronavirus. Such an “unprecedented theory of liability for emotional distress” could unleash lawsuits against all types of businesses, reasons Princess. Princess further notes that “[i]f accepted, plaintiffs’ theory would open the door to open-ended liability for every business, school, church, and municipality across America, stalling economic recovery in the wake of the COVID-19 pandemic and complicating the ability of businesses to reopen…If individuals in plaintiffs’ situation can recover, businesses, school, churches and other venues across America will be forced to keep their doors closed long after state stay-at-home orders are lifted, lest they risk crushing liability to each and every one of their invitees for emotional distress, based on the mere possibility of infection, because some employee or other current or past customer of the business was later discovered to have the virus.”

Maritime law generally allows recovery for emotional distress if there is physical injury to the claimant. However generally, maritime law does not permit recovery for mental anguish or wholly emotional injuries absent some physical impact and unless the emotional injury is associated with some actual physical injury to the claimant.

In addition to the lawsuits for emotional distress, Princess faces wrongful death claims on behalf of passengers who died from COVID-19 and at least one class action on behalf of more than 2,000 passengers on the GRAND PRINCESS. The suit claims Carnival and Princess failed to protect passengers and contain the spread of the virus. At least 100 of the passengers contracted COVID-19, and two died after disembarking, according to the complaint.

A shareholder also filed a class action against Carnival Corp., the parent company of Princess. The same occurred to Norwegian Cruise Lines, where a shareholder filed a stock drop securities class action in the Southern District of Florida. The shareholder’s suit challenged statements made by NCL on and after February 20, 2020, in which the company allegedly minimized the likely impact of the Coronavirus outbreak on NCL’s operations and omitted information about allegedly deceptive sales practices undertaken in response to the virus.

Rpyal Caribbean faces a wrongful death lawsuit after a 27-year-old crew member on the CELEBRITY INFINITY died from the virus and two others were airlifted off of the OASIS OF THE SEAS.

Congress has launched an investigation into Carnival’s response to the Coronavirus pandemic. Bloomberg reported that the U.S. House Committee on Transportation and Infrastructure is investigating the company's handling of the outbreak as more than 1,500 cases have been confirmed from aboard the company's ships and dozens of passengers and crew members have died.

The rapid developments in the spread and economic impact of COVID-19 present particular challenges for officers and directors of public companies trying to manage their businesses while providing timely and truthful information to shareholders. Shareholders have filed suits alleging that public companies materially misrepresented the impact of COVID-19 on their operations. If history is any guide, derivative litigation alleging director and officer mismanagement is likely to follow. Directors and officers of public companies should exercise great care in any public statements regarding the impact of COVID-19 on their businesses, and carefully consider and document the steps they are taking to oversee and respond to COVID-19 developments.

Cruise lines have been particularly hard hit as large numbers of COVID-19 cases were identified among cruise passengers, certain cruises faced lengthy quarantines at sea, and cruise ship operations were suspended from all U.S. ports of call. Add to the expenditures of cruise lines having to keep ships afloat, requires huge expense, while not generating revenue. There have been articles suggesting that with so many lawsuits already filed, and more likely to come, the hope is that some rulings will help write new case law and make it easier to bring future cases against cruise lines. The idea being that cruise lines have insurance to cover any possible awards or settlements. However such statements ignore the plain truth that cruise lines have high self-insured retentions. They would have to pay out a considerable amount of money for each individual claim before their insurance policies kick in. These same people suggest that high volume litigation against cruise lines are unlikely to have much of a financial impact on the companies. This is to not understand how cruise ships and their owners are insured. Add the fact that the no-sail orders in effect in the U.S. are crippling the cruise industry, there is the adage that you should not kill the goose that lays the golden egg.

This law firm does not represent cruise lines and has no “skin in this game.” Nevertheless, these are issues that will affect not just cruise lines but ordinary working ships. If the cruise lines all go down with some of these novel theories, smaller carriers, with less power, will likely be next. Please feel free to reach out to us at blog@miamimaritimelaw.co, if you would like to discuss these issues further.

Eleventh Circuit Court of Appeals Sinks Open and Obvious Defense

In Carroll v. Carnival Corp., No. 17-13602, 2020 U.S. App. LEXIS 11860 (11th Cir. Apr. 15, 2020), the Eleventh Circuit Court of Appeals found that where a cruise ship passenger tripped over the leg of a lounge chair while she was walking through a narrow pathway on a cruise ship, summary judgment on the open and obvious doctrine was not warranted where there was an inference that a reasonable person may not have observed the chair leg obstructing her path.

The general rule is that an operator of a ship has a duty to warn only of known dangers that are not open and obvious. In evaluating whether a danger is open and obvious, courts are guided by the reasonable person standard and not the plaintiff’s subjective perspective. Carroll had argued that while walking behind her heavy-set husband, due to the narrowing of the walkway she was transiting, her right foot clipped the leg of one of the lounge chairs, causing her to fall and suffer injuries. Carnival moved for summary judgment, arguing that the lounge chairs did not constitute a dangerous condition and even if they somehow did, it had no duty to warn of the condition because it was open and obvious and because Carnival had no notice of the hazard. Thus the issue framed by the Court was “whether a reasonable person would have observed the chair leg and appreciated the risk of walking through the narrow passageway under the circumstances.” Id. at *6.

The Court adopted the Third Restatement of Torts, which distinguishes between failure to warn claims and negligent maintenance claims in finding that the fact that a dangerous condition is open and obvious bears on the assessment of whether reasonable care was employed, but it does not pretermit the liability of the defendant. In other words, the Court found that while the Third Restatement of Torts treats the open and obvious nature of a dangerous condition as factor to be considered in a comparative fault analysis, it is not a bar to liability for negligently maintained premises.

This finding by this panel changes the tenor of open and obvious claims and increases litigation costs for marginal claims against shipowner defendants. While the Court properly applies “landlubber” principles to determine negligence of shipowners with respect to notice of defective or dangerous conditions aboard their vessels, the Court fashions the adoption of the Third Restatement of Torts from “whole cloth” by citing to an Eastern District of Virginia case so holding. The Court attempts to state that this approach is also dictated by the former Fifth Circuit decision in Arthur v. Float Mercante Gran Centro Americana S.A., 487 F.2d 561 (5th Cir. 1973), but in Arthur, the plaintiff was not a passenger but a “seaman.” Of course, the vessel owner owes a different duty to a different classes of persons aboard their vessels and the Court so noted in a footnote. Id. at *17, n.5.

If you are interested in discussing this case further or receiving a copy of this decision, please feel free to reach out to me at blog@miamimaritimelaw.co or at 305.377.3700.