A recent decision from the 11th Circuit Court of Appeals (Deroy v. Carnival Corporation; 18-12619) rejected a cruise passenger’s clever argument of a loophole that Florida-based plaintiffs used to try to sue cruise lines in state court rather than federal court, where passengers agree to sue in their ticket contract. At issue was the intersection of the cruise line forum-selection clause and the saving-to-suitors clause.
Forum-Selection Clause
Pursuant to their ticket contract, passengers seeking to sue cruise lines must do so in the Southern District of Florida, a federal court, whenever the federal court has jurisdiction. Case law developed by Mase Mebane makes passenger forum-selection clauses enforceable because cruise lines, due to their international nature, have a right to limit their exposure to a single jurisdiction if passengers agree. Litigating in one location allows cruise lines to save money, and then they can pass those savings onto consumers. As a whole, it’s a win-win situation for passengers and cruise lines.
Some plaintiffs believe, however, that state courts are more advantageous. So, plaintiffs have attempted to find ways around the cruise lines forum-selection clause. The most recent strategy— rejected in Deroy —was to simultaneously sue a cruise line in both federal and state court to use the saving-to-suitors clause to try to twist things in a way that the federal court refuses to exercise its jurisdiction.
Using the Saving-to-Suiters Clause as a Loophole
Federal courts have original jurisdiction over admiralty or maritime claims (which are nautical claims) “saving to suitors in all cases all other remedies to which they are otherwise entitled.” 28 U.S.C. § 1333.
This clause allows plaintiffs to pursue a maritime claim in state court when the claim is based on common law (which most passenger lawsuits are) if the plaintiff so chooses. Florida-based plaintiffs attempted to circumvent the forum-selection clause by suing the cruise line in both federal and state court, and pleading the federal claim so that it was purposely defective (from a jurisdictional point of view): they would lay out the facts of a claim but not plead admiralty jurisdiction. Without admiralty jurisdiction, the court would need diversity jurisdiction, which requires the plaintiff and defendant live in different states. If the plaintiff lives in Florida, then there is no diversity. With neither diversity nor admiralty jurisdiction, the case was dismissed. After dismissal from federal court, only the state court claim remains.
The Eleventh Circuit Slams Closed the Claimed Loophole
DeRoy v Carnival Corporation eliminated that option. In a well-reasoned, and at times, humorous opinion released on June 30, 2020, the Appellate Court held that plaintiffs cannot avoid admiralty jurisdiction simply by pleading around it or by claiming it does not exist. Instead, judges must look to the substance of a complaint. In doing so, admiralty jurisdiction is found based on the facts alleged, not what plaintiffs say the facts add up to. In essence, plaintiffs can say 2+2≠4, but the court no longer has to take this as true simply because the plaintiff says so. The result is Floridian plaintiffs have no loophole to avoid federal courts, and the forum-selection clause in cruise line tickets is enforced fairly as to all passengers.