The Eleventh Circuit on Tuesday reversed a lower court’s decision to ax a proposed class action accusing Royal Caribbean of endangering passengers when it didn’t cancel a cruise as Hurricane Harvey approached Texas, finding that a lower court failed to signal to the passengers its intent to address diversity jurisdiction.
In an 11-page published opinion, a three-judge panel unanimously ruled that a lower court got it wrong when it had decided on its own accord that the cruise passengers could not meet the $75,000 amount-in-controversy requirement needed to establish diversity jurisdiction.
Though the panel recognized that federal courts have independent duties to make sure that they have subject-matter jurisdiction, which allows for them to take up such matters independently, it still determined that notice is needed to give all parties an opportunity to be heard.
“Because the district court acted sua sponte, it did not give the plaintiffs an opportunity to satisfy their burden,” the panel wrote. “Nevertheless, based on our review of the record, we are convinced that at least some of the plaintiffs sufficiently pled damages over $75,000.”
Lead plaintiff Nikki McIntosh originally filed suit in September 2017, claiming that Royal Caribbean put passengers at risk by not canceling the cruise as Hurricane Harvey bore down on Texas.
McIntosh said thousands of passengers traveled to the Galveston port area before and during Hurricane Harvey because the cruise line had said it wouldn’t refund their fares for the Aug. 27-Sept. 3 cruise in 2017, repeatedly advising that if they canceled, they would lose the entire cost of the trip. She estimated in her initial complaint that the class would number at least 500 members.
Royal Caribbean officially canceled the cruise during the afternoon of the scheduled departure date, leaving passengers who had traveled to Texas for the trip trapped for five to six days of “terror, hardship and inconvenience in a place foreign to them,” the suit said.
In an amended complaint filed in 2018, McIntosh claimed that she and other passengers were told that they would not receive refunds if they canceled their reservations for the Liberty of the Seas cruise that was scheduled to leave Texas while it was in a state of emergency due to the hurricane.
They were “strong-armed” into traveling to Houston for the cruise, her suit said, noting that Royal Caribbean didn’t offer an option to reschedule until the morning of the departure date.
But Senior U.S. District Judge James Lawrence King dismissed the suit in April 2018 after finding that the claims in suit are barred by a waiver included in the ticket contract. Still, the judge found that the waiver did not prevent McIntosh from bringing claims against the cruise line in an individual capacity and gave her time to amend her complaint to include the allegations on an individual basis.
Royal Caribbean escaped the suit once again in February 2019, with Judge King dismissing the suit with prejudice after finding that the court lacked jurisdiction to hear the case. Judge King ruled that there was a deficiency with the amount-in-controversy and that the plaintiffs “could not aggregate their emotional distress claims to satisfy” a $75,000 threshold for diversity jurisdiction.
McIntosh urged the panel on appeal to reverse and remand the case, arguing that the lower court did not provide the plaintiffs an opportunity to prove that their claims satisfied the $75,000 amount-in-controversy requirement.
And on Tuesday, the panel said it was convinced that at least some of the passengers sufficiently pled damages that surpass $75,000.
The panel pointed out that since Royal Caribbean was not quick to cancel the cruise or offer refunds, passengers traveled to Galveston and other nearby areas that were in a state of emergency because of the hurricane. As a result of spending time in those locations affected by the hurricane, some passengers were injured or sustained pain and suffering, the panel’s decision noted.
“They also incurred medical expenses for the care and treatment of their injuries,” the panel wrote. “These alleged injuries and expenses — accepted as true — are sufficient to plead damages that exceed the $75,000 amount-in-controversy requirement.”
The panel further observed that the lower court dismissal of the complaint permanently over lack of subject-matter jurisdiction was in error, saying the dismissal should have been without prejudice in the absence of subject-matter jurisdiction.
The panel also directed the lower court to figure out whether maritime jurisdiction exists, noting that two past orders contradict one another over the applicability of maritime law to the plaintiffs claims.
“On remand, even though diversity jurisdiction may exist as to some or all of the plaintiffs, the district court will need to address whether any of their claims arise under federal maritime law because the elements of a tort can differ under maritime law and state law,” the panel wrote.
Daniel Wayne Grammes, an attorney representing McIntosh, told Law360 that the plaintiffs are pleased with the decision.
“We have been fighting this case for nearly four years now, and we will continue to fight as long as it takes,” he said.
U.S. Circuit Judges Elizabeth L. Branch, Jill A. Pryor and Adalberto Jordan sat on the panel for the Eleventh Circuit.
Counsel and representatives for Royal Caribbean did not immediately respond to Law360’s request for comment on Tuesday.
McIntosh is represented by Daniel Wayne Grammes of Lipcon Margulies & Winkleman PA.
Royal Caribbean is represented by Sanford L. Bohrer of Holland & Knight LLP.
The case is Nikki McIntosh et al. v. Royal Caribbean Cruises Ltd., case number 19-10562, in the U.S. Court of Appeals for the Eleventh Circuit.