IUMI 2020: Class actions in the cruise industry in the Covid-19 world

The Covid-19 pandemic has affected no marine industry more than the cruise sector, which was shut down almost overnight in mid-March and which only now is making tentative steps towards re-emergence.

John Kimball, partner at legal firm Blank Rome LLP in New York, yesterday updated delegates at the 2020 International Union of Marine Insurance (IUMI) conference, which this year is being hosted online by Insurance Sweden after the physical conference had to be cancelled because of the pandemic.

Kimball recalled that the marine industry had not particularly pleasant memories of class actions in the US. After the Deepwater Horizon disaster in 2010, a class action of $20bn was approved against BP. There had also been a class action of $500m in the case of the Exxon Valdez. Kimball said that, if that did not seem a particularly large sum of money, it should be remembered that the defending legal firms had to take it all the way to the US Supreme Court to get the initial award of $5bn reduced.

When Covid-19 emerged, the cruise lines were quickly in the firing line, with allegations that they had failed to act correctly and/or failed to keep passengers fully informed as to the nature of risks.

He said that at the moment there were three cases involving passengers, on the:

·         Grand Princess (IMO 9104005)

·         Coral Princess (IMO 9229659)

·         Zaandam (IMO 9156527)

There were a range of types of claim being seen, in order of severity:

1) Emotional distress. The claimants had not tested positive, but asserted that the negligence of the cruise line resulted in unnecessary emotional distress. Kimball said that a case such as this had already been dismissed by a California District Court and had not been appealed.

2) Claimants were tested positive, but had no physical symptoms

3) Claimants tested positive, and were sick

4) Death. There were seven claims as a result of death. Kimball noted that, because of the small number of fatalities, they were not suited to a class action, and any litigation was likely to be on an individual basis

5) Punitive Damages. Kimball said that in this instance the US Death On The High Seas Act (DOHSA) was of some significance, because, depending on where the disease was contracted and where the claimant died, punitive damages might be ruled out by law.

There had been three cases of class actions against cruise lines:

·         Hoffman v Princess (2003)

·         Barton v Princess (2002)

·         McCurly v Royal Sea Cruises (2019)

which Kimball said would be a case law basis for anything that came to trial.

Rule 23 of the US Federal Rules of Civil Procedure require a number of conditions to be fulfilled before a class action can be certified, said Kimball. Two factors must always be present. The factual and legal issues must be common to all the members of the class, and it must be impracticable to bring individual civil lawsuits.

If a claim is certified, a common plaintiff is appointed, who almost invariably will be working on a contingency fee basis. A notice is sent to class members, who can “opt out” if they wish. Class members who do not respond are by default included in the class action.

One other requirement for a class action is that the “experience” of the members of the class action needs to have been similar.

The complaints submitted thus far generally assert negligence and deciding to proceed with voyages without giving passengers due warning.

Most passenger contracts include a one-year time bar on legal actions. Kimball said that as we were only six months in, there was still time for a number of suits to be submitted for certification.

Currently the defences have been motions to dismiss. For example Costa Cruise Lines submitted a motion to dismiss in Florida. The justification for the motion to dismiss has generally included the fact that passengers agree to waive the right to class actions in their passenger contracts.

Kimball said that defences against certificated cases would likely include an argument that the different backgrounds of the claimants meant that their experiences could not be classed as sufficiently similar to qualify as a class action.

Other matters that could arise could include causation. It would need to be shown that the claimants contracted the virus on the vessel.

One interesting point raised by Kimball that the Limitation of Liability Act 1851, which states that the owner of a vessel may limit damage claims to the value of the vessel at the end of the voyage plus “pending freight” (provided the owner can prove it lacked knowledge of the problem beforehand) has not been invoked in any defence.

Because the situation is still at a very early stage in legal terms, Kimball said that he would be able to offer a more detailed update on the progress of the legal cases if and when IUMI convened in Seoul in 2021.

1998-built, Bermuda-flagged, 107,517 gt Grand Princess is owned by Fairline Shipping Intl Corp care of Princess Cruise Lines Ltd of Valencia, California, USA. It is entered with Steamship Mutual (Americas Division) on behalf of Princess Cruise Lines Ltd (a Bermuda Company).

2002-built, Bermuda-flagged, 91,627 gt Coral Princess is owned by Brittany Shipping Corp Ltd care of Princess Cruises Ltd of Valencia, California, USA. It is entered with Steamship Mutual on the same basis as Grand Princess.

2000-built, Netherlands-flagged, 61,396 gt Zaandam is owned by Hal Antillen NV care of Holland America Line NV of Seattle, Washington, USA. It is entered with Steamship Mutual (Americas Division) on behalf of Hal Antillen NV.