As printed in the Daily Business Review
By Cameron W. Eubanks | August 04, 2020
On June 30, 2020, the U.S. Court of Appeals for the Eleventh Circuit in Carnival v. Deroy, No. 18-12619, — F.3d — (11th Cir. June 30, 2020), held that a Florida-resident cruise ship passenger was only permitted to sue Carnival Cruise Line in federal court in Miami in accordance with her cruise ticket contract. The district court below previously dismissed the passenger’s federal lawsuit to allow her to proceed in a Florida state court in Miami. Carnival appealed that decision. The appellate court agreed with Carnival, reversing the dismissal order.
Cruise lines and passengers commonly enter ticket contracts that contain terms and conditions applicable to the passenger’s cruise. One such common term is a forum selection clause. A forum selection clause is an agreement between the parties where disputes will be litigated. The U.S. Supreme Court has approved the use of these clauses in cruise ticket contracts, noting that cruise lines transport their passengers through many jurisdictions. Clarifying the forum for litigation spares the parties the time and expense of litigating the issue, which allows the cruise line to pass those savings to passengers. The forum selection clause in Deroy provided, in relevant part, that “all disputes … shall be litigated, if at all, before the U.S. District Court for the Southern District of Florida in Miami, or as to those lawsuits to which the federal courts … lack subject matter jurisdiction, before a court located in Miami-Dade County, Florida.” Courts had previously referred to this as a “federal” forum selection clause, and cruise passenger litigation was primarily occuring in federal court in Miami as a result of this forum selection clause and similar ones in the ticket contracts of other, major cruise lines.
The passenger alleged that she suffered a personal injury during her cruise. She simultaneously sued Carnival for negligence in both Florida state and federal court as a result. In her federal suit, the passenger tried to plead in such a way to avoid invoking federal jurisdiction even though federal jurisdiction could exist over her claims. The passenger argued that the forum selection clause contained a loophole that allowed her to sue the cruise line in a Florida state court if federal jurisdiction was lacking. Federal courts are courts of limited jurisdiction. They have subject matter jurisdiction—meaning the power to hear a case—only over certain types of cases. For instance, federal courts have diversity jurisdiction over disputes between citizens of different states when a certain monetary amount is in controversy. They have federal question jurisdiction over cases presenting questions of federal law. Federal courts also have admiralty jurisdiction over cases alleging torts committed on vessels in navigable waters. A federal court cannot entertain a case unless subject matter jurisdiction exists.
The passenger argued that diversity jurisdiction did not exist since she and Carnival were citizens of Florida. She next argued that federal question jurisdiction was lacking since she brought a negligence claim. The passenger then argued that admiralty jurisdiction did not exist because she was bringing her claim “at law” not “in admiralty” and was not invoking the federal court’s jurisdiction. She invited the district court to dismiss her federal lawsuit, which it did.
In reversing, the appeals court determined that the passenger’s claim fell within federal admiralty jurisdiction. She did not need to expressly invoke the court’s admiralty jurisdiction when the facts of the case demonstrated that such jurisdiction existed. The passenger did not have an unlimited right to sue in state court where she already had agreed to an enforceable federal forum selection clause. The court held that the plain meaning of the forum selection clause reflected a mandatory federal court filing requirement; the passenger did not get to choose to file in state court when her claims were amenable to federal jurisdiction.
Deroy will have far-reaching implications in cruise passenger personal injury litigation in Miami. Other legal challenges had been brought against cruise line federal forum selection clauses in the past, with limited success for passengers trying to avoid federal court. Appellate courts in Florida previously upheld the federal forum selection clauses and other federal courts had dismissed legal challenges as procedurally improper. After Deroy was initially dismissed, similar challenges cropped up against the federal forum selection clauses of other major cruise lines, creating uncertainty as to proper venue for cruise passenger litigation. Deroy reaffirms the federal filing requirement for cruise passenger personal injury lawsuits.
Cameron W. Eubanks is a shareholder in the Miami office of Fowler White Burnett in the firm’s maritime and appellate practice groups. Contact him at email@example.com.