Costa Concordia shipwreck litigation could stall
Courts likely to uphold forum-selection clause in passenger tickets
April 2012
By Ashley Post
Just three months and two days shy of the 100-year anniversary of the infamous Titanic shipwreck,
history eerily seemed to repeat itself.
On the evening of Jan. 13, Captain Francesco Schettino of the Carnival Corp.-owned Italian cruise ship
Costa Concordia steered his vessel alongside the shore of the small Italian island Giglio, where he
intended to salute its residents.
But Schettino’s ceremonious greeting turned disastrous when the ship struck a rock, which tore a hole in
its hull and caused it to capsize. What followed was a bungled evacuation procedure with passengers
receiving minimal direction from crew members. Many of the 4,200 people onboard fought to get onto
lifeboats, while others opted to jump into the sea. At press time, the disaster’s official death toll was 25,
with seven people still missing.
In the wake of the catastrophe, Costa Crociere, the Italian business unit of Carnival, announced that it
would offer to pay about $14,460 in damages to each uninjured Costa Concordia passenger through
March 31. The company said it would compensate injured passengers and the families of dead and
missing victims based on their individual circumstances.
Jeffrey Maltzman, a partner at Maltzman Partners, which specializes in admiralty and maritime law, says
the $14,460 damages offer is in line with what cruise lines have extended to passengers in the past. “In
past sinking cases, almost all passengers accepted the cruise line’s settlement offer, even though those
offers were lower than what Costa has offered its guests,” he says. “For guests who survived the incident
without any significant injury, the offer provides a quick resolution to what might otherwise be a lengthy
legal process.”
Nonetheless, some survivors were unsatisfied with the offer and decided to sue the ship’s owners.
Plaintiffs firms were happy to oblige.
Permissible Passage
The 1991 Supreme Court case Carnival v. Shute could halt lawsuits against Carnival Corp. and its Italian
business unit in relation to the Costa Concordia disaster.
In 1988, Eulala Shute and her husband took a Carnival cruise from Los Angeles to Mexico. While the
boat was in international waters, Shute slipped and fell onboard. When Shute returned from her trip, she
sued Carnival in her home state of Washington, claiming the cruise line’s negligence caused her injuries.
Carnival moved for summary judgment, contending that a forum-selection clause in Shute’s cruise ticket
required her to sue in Florida. The district court granted Carnival’s motion. But the 9th Circuit reversed,
claiming Carnival had a direct tie to Washington because it solicited business there.
On appeal, the Supreme Court ruled 7-2 that “including a reasonable forum clause in a form contract of
this kind well may be permissible for several reasons,” one of which being the fact that such clauses
dispel “any confusion about where suits arising from the contract must be brought and defended, sparing
litigants the time and expense of pretrial motions to determine the correct forum.”
Offensive Offer
One lawsuit, which a group of plaintiffs firms filed on behalf of 39 plaintiffs, accuses Costa Crociere and
Carnival of gross negligence and fraud, and it seeks at least $528 million in damages.
“It has been more than 100 years since a disaster of this proportion has occurred on a cruise ship. Only
the most senseless, callous disregard for human life and safety could cause such a disaster,” says Marc
Jay Bern, a senior partner at Napoli Bern Ripka Shkolnik, one of the plaintiffs firms that filed the lawsuit.
Bern calls the cruise line’s damages offer “insulting,” and says a better offer would be $100,000 or more
per uninjured passenger.
But Bern and other lawyers representing Costa Concordia passengers might encounter a roadblock. The
contracts within the ship’s tickets state that ticketholders must bring lawsuits in Genoa, Italy. Bern and his
team filed their lawsuit in Florida. Even so, Bern says he’s willing to challenge the contract’s forumselection clause because “the nature of the conduct was so reckless … that the limitations of the ticket
are null and void.”
Common Clause
Cruise companies say they have good reason to incorporate forum-selection clauses into their tickets.
They claim the clauses simplify the litigation process while deterring frivolous claims and lowering overall
cruise costs for passengers.
Federal courts historically have upheld forum-selection clauses. For instance, in August 2010, the 11th
Circuit affirmed the dismissal of a woman’s lawsuit against Regent Seven Seas Cruises. Nina Janet
Seung was injured while onboard a Regent cruise in French Polynesia. Upon her return home to the U.S.,
she sued the cruise line in Florida. However, Regent’s contract required ticketholders to file claims in
Paris. Although Seung argued that the forum-selection clause was unfair and too burdensome, the 11th
Circuit said that it did “not believe that Seung has made the ‘strong showing’ required to prove that the
forum selection clause should not be enforced in this case.” To further bolster its decision, the court cited
a 1991 Supreme Court decision, Carnival v. Shute, which also found such clauses enforceable (see
“Permissible Passage”).
Therefore, experts say it’s likely that Costa Concordia plaintiffs will have to pursue their claims in Italy.
“Although plaintiffs lawyers will no doubt try creative arguments to keep the cases here, it seems fairly
clear that the courts will ultimately enforce the forum-selection clause,” Maltzman says. “Costa is an
independent company, and virtually all of its operational employees are based in Italy, and the incident
occurred in Italian waters.”
Stalled Suits
Plaintiffs who pursue lawsuits overseas are apt to face challenges.
“European courts tend to be more strict about the recovery of specific damages,” says Cozen O’Connor
Member David Loh, who adds that plaintiffs firms might be underestimating the complexity of maritime
law. “None of [the plaintiffs firms] have a lot of technical expertise in terms of how vessels are run and
operated.”
Furthermore, litigation in Italy can be expensive, and Italian lawyers rarely accept cases on a contingency
basis, which means plaintiffs will probably have to pay them upfront. The fact that Italy is pursuing a
criminal case against Captain Schettino also could make personal-injury lawsuits drag on for years. In
Italy, criminal investigations must be completed before plaintiffs attorneys in civil cases can have access
to evidence.
Additionally, although Carnival is the parent company of Costa Crociere, it might not be liable for
damages. “Some attorneys say the theory is that Costa and Carnival are identical in terms of who makes
the decisions, and therefore Carnival should be a defendant,” says James Chatz, of counsel at Arnstein &
Lehr. “That’s not true because they are separate entities.”
Still, some experts say Carnival’s decision to lay low and release minimal public statements concerning
the disaster may not have been the most appropriate response. “It’s going to be perceived as trying to
avoid the responsibility to these passengers,” says Robert A. McKenzie, a lawyer at Arnstein & Lehr. “In
terms of a PR maneuver, it doesn’t seem to be the best possible move.”