On February 1, 2019, the U.S. District Court for the Southern District of Florida rejected a passenger’s third attempt to pursue a putative class action lawsuit against Royal Caribbean Cruises Ltd. (“Royal Caribbean”) based on a class action waiver provision contained in the passenger’s ticket contract.1
The passenger-plaintiff filed her first putative class action complaint against the defendant cruise line in September 2017, following the cancellation of the cruise she purchased from Royal Caribbean, which was scheduled to depart from Galveston, Texas on August 27, 2017, in the midst of Hurricane Harvey. The plaintiff alleged that Royal Caribbean’s decision not to cancel the cruise until the day it was set to depart, coupled with the notices that Royal Caribbean issued in the days leading up to the departure date assuring passengers that the cruise was still on schedule and that no refunds would be made for cancellations, effectively forced thousands of ticketed passengers to travel to Texas while it was in a state of emergency due to the Category 4 hurricane. The plaintiff’s putative class action complaint asserted causes of action for intentional infliction of emotional distress, negligent infliction of emotional distress, and negligence, and sought to recover damages under general maritime law.
Royal Caribbean filed a motion to dismiss the plaintiff’s first complaint on several grounds, including that: the ticket contract it issued to the plaintiff contained a class action waiver provision stating that claims could only be brought “in passenger’s individual capacity”; the complaint failed to allege that plaintiff herself had traveled to Texas and sustained injuries or damages; and the plaintiff’s allegations failed to establish that Royal Caribbean’s actions or inactions were sufficiently outrageous to state a claim for intentional infliction of emotional distress.
Without addressing the class action waiver provision, the district court granted Royal Caribbean’s motion on the basis that the plaintiff had failed to allege that she herself had suffered injuries or damages as a result of Royal Caribbean’s alleged actions and inactions.2 However, while the court dismissed the plaintiff’s claim for intentional infliction of emotional distress with prejudice, the court ruled that the dismissal of the plaintiff’s negligence-based claims were without prejudice, thus allowing her to file an amended complaint.
The plaintiff filed her first amended putative class action complaint in February 2018, and Royal Caribbean moved to dismiss on the basis of the class action waiver provision. The plaintiff argued that Royal Caribbean’s motion to dismiss should be denied because the class action waiver provision was void against public policy and so unconscionable as to be unenforceable.
Addressing the enforceability of Royal Caribbean’s class action waiver provision, the district court found that it satisfied the requirement under general maritime law that a term or condition of a cruise ticket contract be “reasonably communicated to the passenger”3 in order to be enforceable. The district court rejected the plaintiff’s argument that the class action waiver provision violated public policy set forth in 46 U.S.C. § 30509, governing limitations on liabilities in shipping contracts. The district court found that the class action waiver provision did not limit the plaintiff’s right to bring a claim against Royal Caribbean in a court of competent jurisdiction. The district court also rejected the plaintiff’s contention that the class action waiver clause was unconscionable. Noting that the plaintiff had been put on notice of the class action waiver provision and citing to other decisions upholding the enforceability of class action waivers, the district court found that Royal Caribbean’s class action waiver was enforceable. The district court dismissed the class allegations in plaintiff’s first amended complaint with prejudice, but granted the plaintiff leave to refile the complaint “in Plaintiff’s individual capacity.”
The district court issued its order granting Royal Caribbean’s second motion to dismiss on April 10, 2018, and, on April 30, 2018, the plaintiff filed her second amended complaint against Royal Caribbean. Although not asserting claims on behalf of putative class members, the plaintiff’s second amended complaint identified 130 other Royal Caribbean passengers as named plaintiffs, each asserting negligence-based claims against the cruise operator for cancellation of the August 27, 2017 cruise departing from Galveston, Texas. Royal Caribbean filed another motion to dismiss, this time arguing that the plaintiff had violated the court’s limited leave to refile her claims in her individual capacity only and the second amended complaint failed to allege that each of the named plaintiffs had sustained injuries or damages as a result of the cancelled cruise.
Royal Caribbean’s third motion to dismiss was assigned to a magistrate judge, who issued a report recommending that the motion be denied or that the plaintiffs be allowed to amend the complaint to set forth allegations as to the injuries or damages that each sustained as a result of the cancelled cruise. Royal Caribbean filed an objection to the magistrate judge’s recommendation with the district court.
On February 1, 2019, the district court issued its opinion and order, declining to follow the magistrate judge’s recommendation and dismissing the plaintiff’s complaint with prejudice. Instead of addressing the arguments raised in the parties’ briefs, the district court found that the plaintiffs’ allegations failed to establish that the court had subject matter jurisdiction over the action. Noting that class action jurisdiction was no longer available and that Florida law limited the recovery of damages for emotional distress, the court found that plaintiffs’ allegations of emotional distress damages could not satisfy the $75,000 threshold for diversity jurisdiction. The district court dismissed the action with prejudice.
While the latest McIntosh decision is perhaps most notable for the message it sends to plaintiffs, the McIntosh court’s second decision upholding the enforcement of class action waivers in ticket contracts is a significant development for carriers. The court’s decision granting Royal Caribbean’s motion to dismiss adds to the growing line of case law upholding the permissible use of class action waivers in consumer contracts.4 It also demonstrates how permissible class action waiver provisions can be effective tools to mitigate carriers’ risk of class action exposure.
1 See McIntosh, et al. v. Royal Caribbean Cruises Ltd., No. 17 cv 23575, 2019 WL 409297 (S.D. Fla. Feb. 1, 2019).
2 See 2018 WL 791342 (S.D. Fla. Feb. 7, 2018)
3 See 2018 WL 1732177 (S.D. Fla. Apr. 10, 2018).
4 Soon after the district court issued its class action waiver decision in April 2018, the U.S. Supreme Court issued its ruling in Epic Systems Corp. v. Lewis, finding that that class action waiver provisions in employment arbitration agreements are enforceable. 138 S. Ct. 1612 (2018).
Contributing Advisors
Myles CulmerDirector, BDO Advisory Services