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Class action waiver in cruise ticket held enforceable in COVID-19 lawsuit

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Christopher B. Kende explains how a California court denied a motion to certify a class action, based on a class action waiver in the passenger ticket
In this expert briefing Christopher B. Kende of Cozen O'Connor analyzes a recent court decision related to COVID-19 on cruise ships.

We have previously reported on several purported class action lawsuits against Princess Cruise Lines and its parent, Carnival Corporation, involving the ill-fated Grand Princess cruise to Hawaii in February 2020. The cruise suffered an outbreak of COVID-19 on board and numerous passengers contracted the virus.

In essence the lawsuits allege Princess was aware that several passengers on board the previous cruise were suffering from COVID-19 symptoms, and that the cruise line knew or should have known that passengers on the Hawaii cruise would be exposed to the virus. Notwithstanding, Princess failed to provide protective equipment to passengers, or take other measures to prevent virus spread but chose to 'keep the fun going,' by allowing and even encouraging large public gatherings on board, even as certain passengers were beginning to show symptoms.

Theories of liability

The theories of liability include negligence, gross negligence, negligent infliction of emotional distress and intentional infliction of emotional distress.

In September, a federal judge in California dismissed Carnival from one lawsuit, based on the finding that the plaintiffs had not properly alleged that Carnival was the 'alter ego' of Princess. In addition, the court found that the plaintiffs had failed to adequately allege causation and dismissed the claims for negligence and negligent infliction of emotion distress, without prejudice. The court let stand the claim for intentional infliction of emotional distress. Archer v. Carnival Corporation and PLC et al., 2:20-cv-04203, USDC, CDCA (dec. September 22, 2020).

On the third iteration of this lawsuit, that same court has now expressly denied a motion that a class action be 'certified,' based on a class action waiver in the passenger ticket. This is a significant defeat for the plaintiffs, as class action certification would mean that one class representative could sue on behalf of all the claimed victims, rendering the potential exposure to Princess hundreds or thousands of times greater than if the case were brought on behalf of the individual plaintiff only.

Class action 'certification' under the federal rules is a complex process on which tomes have been written. Although the court discussed the certification requirements in some detail, it did not have to determine whether the class action vehicle was appropriate and legally permissible, in view of its finding as to the waiver.

The Passenger Contract

Like most other cruise lines, Princess handles most of its bookings on line and the terms and conditions of the cruise, which Princess calls the 'Passage Contract,' are set forth in a website link on which the passenger must click in order to review them. However, when the passenger receives his or her booking confirmation via email, the passenger is advised that booking the cruise is tantamount to expressly agreeing to the terms of the Passage Contract. Further, the confirmation advises passengers to click on a 'Cruise Personalizer' and complete necessary information before sailing.

Once the passenger logs on to the Personalizer, a copy of the Passenger Contract appears on the screen and the passenger may scroll the terms or print them out before checking the acceptance box and before proceeding to the Cruise Personalizer. The passenger must accept the contract terms before being allowed to fill in the personal information in the Personalizer. The Passage Contract itself has numerous notices in large block letters recommending that passengers carefully read all the terms and conditions, especially those limiting liability, and the passenger’s right to sue in favor of arbitration.

Section 15 of the contract, again in large block capital letters, provides for the waiver of class action and in part states: 'This Passage Contract provides for the exclusive resolution of disputes through individual legal action on your behalf instead of through any class or representative action. Even if the applicable law provides otherwise, you agree that any arbitration or lawsuit whatsoever shall be litigated by you individually and not as a member of any class or as part of a class or representative action …'

'Reasonable communicativeness' test met

In finding the clause enforceable and binding on the passenger, the federal court applied a multi-part test as provided in the general maritime law, since the Passage Contract is maritime in nature. First, the court found that the clause met the 'reasonable communicativeness' test, as the physical characteristics were reasonably conspicuous, and that 'extrinsic factors' established that passengers were given ample opportunity to review the terms and conditions of the contract before, during and after the cruise. Notably, the court found it reasonable to expect that passengers who were allegedly exposed to the virus would consult their tickets and possibly an attorney to determine their rights before disembarking.

No evidence of fraud or bad faith

Next the court found that the requirements of 'fundamental fairness' were met, and that there was no evidence of fraud, overreaching or bad faith notice on the part of Princess, noting that class action waivers in many industries are generally upheld.

The court also found that the waiver was not 'unconscionable,' citing several other cases so holding. Essentially, given the fact that the waiver was reasonably communicated and did not take away from the passenger’s substantive rights, it should be enforced.

Finally, the court found no public policy violation as several other courts have upheld similar waivers.

In sum, this is a significant setback for plaintiffs who have, no doubt, suffered great injury and trauma a result of this pandemic. It will require that each individual victim bring his or her separate lawsuit. However, the decision is a clear vindication of the freedom to contract under maritime law, so long as the terms and limitations of the passenger ticket are clearly communicated and meet the tests set forth above. The industry may well be advised to review this decision and ensure that all the requirements in the tests set forth above are met.

Christopher B. Kende can be reached at [email protected]

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