ThePopTort

You Cruise, You Lose

This week, the Huffington Post’s home page has been running “6 Reasons To Never Go On A Cruise Vacation.”  The post lists the usual stuff: sinking ships and debilitating fires in pirate-infested waters, not to mention fast-spreading viruses and sexual assaults.  We’d add reason #7: where buying a ticket forces you to assume all risk for your own safety so nothing’s ever the company’s fault. 

Actually, we’ll see how far that argument goes, now that at least one lawsuit has indeed been filed in Florida against Miami-based Carnival Cruise Lines and its subsidiary Costa Cruise Line, owner of the Costa Concordia that recently sunk off the coast of Italy.  Said one Venezuelan passenger, “Our goal ‘is to get the cruise lines to stop ... spending money on ads that market dream vacations that can't be fulfilled because they invest nothing in security or personnel training.”

I’m guessing Sen. Jay Rockefeller (D-W.Va), who challenged the industry at Senate hearings yesterday, might add #8: this is an industry of tax dodgers. We learned at these hearings that Carnival Corp., which is incorporated in Panama and is Carnival Cruise Line’s parent company, pays on average only 1.1% in federal, state, local or foreign taxes despite making $11.3 billion in profit.  Money they don't seem to be putting into safety.

Earlier, the industry and many members of the House Transportation and Infrastructure Committee insisted the cruise industry is “safe,” but Chairman John Mica (R-Fla.) noted, “It’s sort of a warning when you have a fairly new mega-liner hit rocks and sink.”

You might say.

Cruising Through the Legal Quagmire

I was never one for cruises.  It’s not that I’m risk averse, and I’m certainly not vacation averse (although I am boredom averse) but between the assaults, on-board illnesses, environmental dumping and sweatshop labor conditions (check out this book for example), it just didn’t seem that much fun.  Besides, stopping by tourist shops in cruise ports isn’t my idea of a good anything.  And now we learn, they sink!  (OK, that photo’s a bit exaggerated.) 

But also, in the past few days, I’ve learned a lot about the liability of cruise lines, and now, you couldn’t get me on a cruise.  Especially an international cruise like the now shipwrecked Costa Concordia.  And when everyone starts learning about these liability issues, hopefully the industry changes because they sure can’t afford to lose business right now.

While the captain of the Costa Concordia, who took the ship off course and then abandoned the boat after “tripping” into a lifeboat, may be held criminally responsible in Italy, the ship’s owner – Miami-based Carnival Corp., which is the parent of operator Costa Crociere - is another story altogether.   I’m going to run through a few of the legal obstacles facing victims.

Writing for Forbes yesterday, staff writer Deborah L. Jacobs explains, “Carnival Corporation of Miami, Costa Concordia’s parent company, posts their contract (it’s nearly 8,000 words long) on the company website.”   And here are some things it says:

You assume all risk for your own safety and nothing’s the company’s fault, i.e., “Guests assume responsibility for their own safety and Carnival cannot guarantee Guest’s safety at any time.”  You may be able to insure your valuables, but the cruise sure goes out of its way to make that process as difficult as possible. 

Here’s another gem:

“If your voyage ‘is hindered or prevented’ for various reasons which the contract lists, or for ‘any other cause whatsoever,’ you and your baggage ‘may be landed at the port of embarkation or at any port or place at which the Vessel may call, at which time the responsibility of Carnival shall cease and this contract shall be deemed to have been fully performed.”  In other words, pay your own way home. 

In this case, the “contracts written into the tickets” state that lawsuits can’t be brought in U.S. courts since there were no U.S. ports on the cruise.  So you have to sue in Genoa, Italy, in a country not exactly known for its stellar justice system.

According to Florida attorney Mike Eidson, per Reuters, “[I]nternational contracts, such as the ones the passengers of the Costa Concordia likely agreed to when they boarded their ship … is subject to an international agreement called the ‘Athens Convention,’ which limits liability to about $80,000, according to legal experts. Because of the egregious nature of this case, lawyers like Eidson will seek to blow through those limits by claiming the ship's owners and operators were reckless.”  Thank goodness for that.  The law is different for cruises with at least one U.S. port, but that’s another whole ball o’ wax.  More from Mr. Eidson here, including valuable tips about time limits on filing claims.

The contract also says that unless you are alleging “physical harm,” you can’t even get into court.  You are forced into arbitration.  And it all has to be done in Miami.  Granted, that's closer than Genoa, but not exactly convenient for most of the country. If you are a crew member, forget it.  Just to get the job, you already signed away your rights to go to court and must arbitrate.

Now, a class action has been filed in Italy, but let’s just say, the expectations are low. “Our objective is to get each passenger at least 10,000 euros [about $13,000] compensation for material damage and also for ... the fear suffered, the holidays ruined and the serious risks endured," said Carlo Rienzi, head of Italy’s consumer rights' association Codacons   But even this won’t be easy.  Says Stefano Zunarelli, a maritime law professor at the University of Bologna, “For historic reasons, the balance of rules in maritime law tends in a certain way to protect the shipowner due to the risks of its business.”   

According to European maritime rules:

In case of death or bodily harm, compensation paid out by the company starts at 21,000 euros ($27,000) but it does not constitute an acknowledgement of responsibility.

If responsibility is proven, total indemnity is limited to 400,000 Special Drawing Rights (SDR) -- international reserve assets allotted to countries by the International Monetary Fund, equivalent to 480,000 euros [$617,064].

And as far as the French, “The chairman of Costa's French subsidiary, George Azouze, said Tuesday that French passengers would receive compensation along with ‘other things’ such as a refund of the tickets. He did not elaborate.” 

Not expecting much there. Let’s hope the U.S. courts somehow have their say.  As for me, I’ll take my chances flying through the air like a bird, sitting on a chair in the sky. [Props to Louis C.K. on that one!]  Seems much safer.

UPDATE: More explanation from the New York Times.