June 23, 2014
John Doe v. Seven Seas Cruises, et al
Response to Motion to Dismiss
In this case, an elderly passenger was injured when his mobility scooter fell off the edge of an unprotected ramp. This accident at sea resulted in a broken hip. In this document our experienced maritime cruise ship lawyers respond to a motion to dismiss filed by the provider of the mobility scooter.
IN THE UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 13-61632-CV-DIMITROULEAS/SNOW
SEVEN SEAS CRUISES S. DE R.L. d/b/a
REGENT SEVEN SEAS CRUISES;
CLASSIC CRUISES HOLDINGS S. DE R.L.; and
SPECIAL NEEDS GROUP, INC. d/b/a
SPECIAL NEEDS AT SEA,
PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT,
SPECIAL NEEDS GROUP, INC.’S AMENDED MOTION TO DISMISS
PLAINTIFF’S AMENDED COMPLAINT WITH PREJUDICE OR,
ALTERNATIVELY, MOTION TO COMPEL ARBITRATION
The Plaintiff, JOHN DOE, by and through undersigned counsel, hereby files his response in opposition to Defendant, SPECIAL NEEDS GROUP, INC. d/b/a SPECIAL NEEDS AT SEA’S (“Special Needs[’]”) Amended Motion to Dismiss Plaintiff’s Amended Complaint with Prejudice or, Alternatively, Motion to Compel Arbitration [D.E. 36]. In furtherance thereof, the Plaintiff relies in good faith on the following memorandum of law:
The instant matter arises out of the personal injuries Plaintiff sustained while he was on a cruise aboard Defendants, SEVEN SEAS CRUISES S. DE R.L. d/b/a REGENT SEVEN SEAS CRUISES and CLASSIC CRUISES HOLDINGS S. DE R.L.’S (collectively referred to as “Regent[’s]”) vessel, the Voyager. [D.E. 27, 12].
Specifically, before the cruise, the Plaintiff, who is disabled, rented a mobility scooter through his travel agent. [Id. at 9]. That scooter was furnished by Defendant, Special Needs. [Id. at 9-10]. On or about September 2, 2012, while aboard the vessel, the Plaintiff suffered a fractured hip that required surgery when he fell while operating the mobility scooter through Regent’s ship. [Id. at 12].
As a result thereof, the Plaintiff initiated this lawsuit alleging negligence against both Regent and Special Needs. [D.E. 27]. At issue herein is Special Needs’ Motion to Dismiss [D.E. 36], wherein Special Needs argues that Plaintiff’s Amended Complaint fails to state a cause of action against Special Needs, or alternatively, that Plaintiff’s claim against Special Needs is subject to arbitration. As set forth in detail below, however, both of these arguments fail because 1) Special Needs improperly relies on an unauthenticated document beyond the four corners for its failure to state a claim argument; and 2) the alleged arbitration agreement is unenforceable because the Plaintiff was never given an opportunity to review the contract, and the contract improperly imposes all of the arbitration costs upon the Plaintiff, improperly waives Special Needs’ liability, and leaves the Plaintiff without any meaningful remedy.
1. Plaintiff’s Amended Complaint properly and succinctly states claims for Negligence against Special Needs, and Special Needs’ argument to the contrary would require this Court to improperly review documents beyond the four corners of the complaint.
In its motion, Special Needs argues that Plaintiff’s Amended Complaint fails to state a claim based on alleged contradictions between the Plaintiff’s allegations and the terms of an alleged agreement between the Plaintiff and Special Needs. This argument, however, is both without merit and improper at this motion to dismiss stage.
It is well settled that, at this stage, the scope of a court’s “review must be limited to the four corners of the complaint.” St. George v. Pinellas County, 285 F.3d 1334, 1337 (Cir. 2002) (citing Grossman v. Nationsbank, N.A., 225 F.3d 1228, 1231 (11th Cir. 2000)). In fact, pursuant to binding Eleventh Circuit precedent, the general rule is that a district court does “not consider anything beyond the face of the complaint… when analyzing a motion to dismiss.” Financial Sec. Assur., Inc. v. Stephens, Inc., 500 F.3d 1276, 1284 (11th Cir. 2007) (citation omitted). The only exception to this rule does not apply in this case.
Specifically, the Eleventh Circuit “recognizes an exception… in cases in which  a plaintiff refers to a document in its complaint,  the document is central to its claim,  its contents are not in dispute, and  the defendant attaches the document to its motion to dismiss.” Id. (emphasis added). Clearly, the facts herein do not meet all four requirements.
First, the Plaintiff never referred to any agreement between himself and Special Needs in the Amended Complaint. Second, the alleged agreement is not central to the Plaintiff’s negligence claim against Defendants. Plaintiff is not relying on the agreement to prove his claims. Rather, the claims arise from the negligent conduct of Regent and Special Needs. See Gentry v. Carnival Corp., 11-21580-CIV, 2011 WL 4737062 (S.D. Fla. Oct. 5, 2011) (“… [plaintiff] does not assert any breach of contract claims against [defendant]. Instead, she asserts claims based on tort theories. As such, the ticket contract is not essential or integral to her claims, rather, it is part of [defendant’s] defenses.”). Thus, as in Gentry, because the Plaintiff is not asserting any breach of contract claims, the alleged agreement between Plaintiff and Special Needs is not essential or integral to the Plaintiff’s claims.
Third, the contents of the document are in dispute. “A document is considered ‘undisputed’ when the ‘authenticity of the document is not challenged.’” Fuller v. SunTrust Banks, Inc., 744 F.3d 685, 696 (11th Cir. 2014) (citation omitted). In his deposition, the Plaintiff testified that he had never seen the first two pages of the alleged agreement. Therefore, the Plaintiff disputes the authenticity of the agreement that Special Needs alleges is applicable to his claim. Lastly, although Special Needs attached the alleged agreement to its Motion to Dismiss (the fourth requirement), that – alone – is not sufficient for the exception to apply. See SIG, Inc. v. AT & T Digital Life, Inc., 971 F. Supp. 2d 1178, 1188 (S.D. Fla. 2013) (noting that “each of [the] requirements” must be met).
Furthermore, Special Needs’ reliance on Crenshaw v. Lister, 556 F. 3d 1283, 1292 (11th Cir. 2009) and Associated Builders, Inc. v. Ala. Power Co., 505 F. 2d 97, 100 (5th Cir. 1974) for the proposition that a district court may review exhibits, is misplaced. Pursuant to the explicit language of both Crewshaw and Associated Builders, the Court may review exhibits that contradict the allegations of the complaint only if such exhibits are attached to the complaint (not a motion to dismiss). See Crenshaw, 556 F. 3d at 1292 (“conflict between allegations in a pleading and exhibits thereto”; applied to officers’ police reports attached to the complaint) (emphasis added); see also Associated Builders, 505 F. 2d at 100 (“contradicted by facts disclosed by a document appended to the complaint”; applied to the prospectus attached to the complaint) (emphasis added). Herein, the Plaintiff did not attach any documents to his Complaint. [D.E. 27].
Accordingly, because Special Needs failed to demonstrate the applicability of the exception set forth in Stephens or the applicability of contradictory exhibits, this Honorable Court should not depart from the general rule that it does “not consider anything beyond the face of the complaint… when analyzing a motion to dismiss.” Stephens, 500 F.3d at 1284. Considering only the allegations in the Complaint, which are taken as true and construed in the light most favorable to the Plaintiff, the Plaintiff’s Amended Complaint sets out a claim for negligence sufficient to state a plausible entitlement to relief against Special Needs. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Special Needs’ grounds for dismissal are therefore without merit and improper at this juncture of the case.
2. Special Needs’ alternative argument to compel arbitration also fails because the alleged unauthenticated arbitration agreement is unenforceable for being both procedurally and substantively unconscionable and in violation 46 U.S.C. § 30509.
As its alternative relief, Special Needs requests that this Honorable Court compel arbitration. In doing so, Special Needs repeatedly references the policy favoring arbitration clauses. It is well settled, however, that “[n]either the statutes validating arbitration clauses nor the policy favoring such provisions should be used as a shield to block a party’s access to a judicial forum in every case.” Global Travel Mktg., Inc. v. Shea, 908 So. 2d 392, 397 (Fla. 2005) (citation omitted) (alteration in original).
To that end, “[b]oth the Federal Arbitration Act and the Florida Arbitration Code permit a challenge to the validity of an arbitration provision based upon any state-law contract defense.” Gainesville Health Care Ctr., Inc. v. Weston, 857 So. 2d 278, 283 (Fla. 1st DCA 2003) (citing Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996)). Thus, “generally applicable contract defenses under state law, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements”. Shea, 908 So. 2d at 397 (citing Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996)).
As to unconscionability specifically, trial courts are to make a determination as to whether an arbitration agreement is unconscionable prior to compelling arbitration. See Shotts v. OP Winter Haven, Inc., 86 So. 3d 456, 471 (Fla. 2011); see also Rappa v. Island Club W. Dev., Inc., 890 So. 2d 477, 480 (Fla. 5th DCA 2004). For an arbitration clause to be unenforceable on grounds of unconscionability, both procedural and substantive unconscionability must be found. Basulto v. Hialeah Auto., SC09-2358, 2014 WL 1057334, *10 (Fla. Mar. 20, 2014). While both elements (procedural and substantive unconscionability) must be present, however, they need not be present to the same degree. Id. at *10-12; see also VoiceStream Wireless Corp. v. U.S. Commc’ns, Inc., 912 So. 2d 34, 39 (Fla. 4th DCA 2005). “Instead, a balancing approach is employed allowing one prong to outweigh another provided that there is at least a modicum of the weaker prong.” Id. Ultimately, “[a] party may not be forced to submit a dispute to arbitration that the party did not intend and agree to arbitrate.” Toca v. Olivares, 882 So.2d 465 (Fla. 3d DCA 2004).
Herein, the arbitration clause in the alleged agreement is unenforceable for three reasons. First, the alleged arbitration agreement is procedurally unconscionable because the Plaintiff was prevented from reading the terms of the contract. [See 7 of the Plaintiff’s affidavit attached as Exhibit 1.] Second, it is substantively unconscionable because it imposes substantial costs upon the Plaintiff and waives Special Needs’ liability, thereby leaving the Plaintiff without any meaningful remedy. Third, the arbitration clause is void as a matter of law under 46 U.S.C. § 30509. Each reason is addressed separately below.
a. The alleged arbitration agreement is procedurally unconscionable because the Plaintiff was prevented from reading the terms of the contract.
As briefly mentioned above, the Plaintiff testified in his deposition that he never saw the first two pages of the alleged arbitration agreement. In fact, the Plaintiff was never even given the first two pages of the contract – the second of which contains the arbitration clause. [See Exhibit 1, 7]. Under well-settled Florida law, this makes the contract procedurally unconscionable.
The procedural component of unconscionability relates to the manner in which the contract was entered, and it involves consideration of such issues as the relative bargaining power of the parties and their ability to know and understand the disputed contract terms. See Consol. Res. Healthcare Fund I, Ltd. v. Fenelus, 853 So.2d 500, 504 (Fla. 4th DCA 2003) (citing Powertel, Inc. v. Bexley, 743 So. 2d 570, 574 (Fla. 1st DCA 1999)). Thus, “[a] party normally is bound by a contract that the party signs unless the party can demonstrate that he or she was prevented from reading it or induced by the other party to refrain from reading it.” Fenelus, 853 So.2d at 504 (emphasis added); see also Allied Van Lines, Inc. v. Bratton, 351 So.2d 344, 347-48 (Fla. 1977) (“It has long been held in Florida that one is bound by his contract. Unless one can show facts and circumstances to demonstrate that he was prevented from reading the contract”) (emphasis added).
For instance, in Prieto v. Healthcare & Ret. Corp. of Am., 919 So. 2d 531 (Fla. 3d DCA 2005), the Third District Court of Appeal reversed an order compelling arbitration when it found inter alia “sufficient irregularity in the circumstances surrounding the execution of the contract amounting to some degree of procedural unconscionability.” Id./em> at 533. Explaining those “irregularities,” the court stated:
The arbitration agreement was included in a package of numerous documents which Ms. Prieto was asked to sign in order to complete the admission process while her father was on route to the nursing home. The terms of the agreement were never explained to her.
Id. (emphasis added).
Herein, the Plaintiff was prevented from reading the arbitration agreement because the agreement was never even given to him, let alone explained to him. Specifically, when asked about the alleged agreement at his deposition, the Plaintiff testified as follows:
Page 74, Line 7:
Q. Have you ever seen this three-page document or a copy of this document before?
Page 75, Line 10:
Q. The credit card, last four digits, 6663, are those the last four of your Visa?
Page 75, Line 24:
Q. When you say it’s not yours, it’s not yours on one of the cards that’s here in this room, right?
A. Well, that’s the only cards I have.
Q. Did you have a different card in July of 2012?
Q. Did you have a card in 2012 with the numbers that were shown on Defendant’s Exhibit 4, if you know?
A. What’s that?
Q. The credit card numbers on this exhibit, have you ever had a credit card with those numbers?
A. Evidently not.
Page 77, Line 15:
Q. And I just want to be clear on Exhibit 5, the three pages, you don’t have any memory of seeing any of these three pages before today; is that right?
A. No, I don’t.
Q. Not just page three. I mean, not just page one and two, right?
A. Well, I must have seen page three because my signature is on it, but I don’t recollect seeing pages one and two.
Q. Now, this also says you weighed 149 on the first page.
A. I weighed 149?
Q. Well, maybe — yes, yes.
A. I’ve never weighed 149.
See pages above from the Plaintiff’s deposition, attached as Exhibit 2.
As evident from the above testimony, the Plaintiff never even saw the first two pages of the agreement, including the arbitration clause that Special Needs is attempting to enforce herein. Rather, the Plaintiff was only given the third page of the contract, which he signed reasonably believing that it was a receipt for payment of the mobility scooter [Exhibit 1, ¶9]; and, like Prieto, this third page was provided with a package of other documents for the booking of the subject cruise. Furthermore, it is clear that the Plaintiff did not fill out the information contained in the first two pages of the contract because that information (including the Plaintiff’s weight) is incorrect.
At the very least, these issues should be sufficient for this Honorable Court to hold an evidentiary hearing to determine if the agreement is unconscionable before deciding on whether to compel the parties to arbitration. See Rappa v. Island Club W. Dev., Inc., 890 So. 2d 477, 480 (Fla. 5th DCA 2004) (citing Chapman v. King Motor Co. of S. Fla., 833 So.2d 820, 821 (Fla. 4th DCA 2002) (holding that purchasers were entitled to evidentiary hearing on unconscionability of arbitration agreement); Food Assocs., Inc. v. Capital Assocs., Inc., 491 So.2d 345, 345 (Fla. 4th DCA 1986) (finding that trial court erred in determining issue of unconscionability of equipment leases without first conducting evidentiary hearing on the issue)).
B. The alleged arbitration agreement is substantively unconscionable because it requires the Plaintiff to pay all arbitration costs, waives Special Needs’ liability and deprives the Plaintiff of any meaningful remedy.
In addition to being procedurally unconscionable, the arbitration agreement is also substantively unconscionable, as it requires the Plaintiff to pay all of the arbitration costs, waives Special Needs’ liability completely, and deprives the Plaintiff of any meaningful remedy.
Substantive unconscionability “focuses on the agreement itself” and whether the terms of the agreement are “unreasonable and unfair.” Powertel, Inc. v. Bexley, 743 So.2d 570, 574 (Fla. 1st DCA 1999) (citation omitted). An agreement is substantively unconscionable if the terms are “so outrageously unfair as to shock the judicial conscience.” Prieto v. Healthcare & Ret. Corp. of Am., 919 So. 2d 531 (Fla. 3d DCA 2005) (citation omitted). To determine substantive unconscionability, courts consider, inter alia, whether the disputed terms limit available remedies and/or impose substantial costs. See Palm Beach Motor Cars Ltd., Inc. v. Jeffries, 885 So.2d 990, 992 (Fla. 4th DCA 2004).
Herein, the subject arbitration agreement contains two “unreasonable and unfair” terms that amount to substantive unconscionability. Those terms are as follows:
LIMITATION OF LIABILITY. IT IS UNDERSTOOD AND AGREED THAT [SPECIAL NEEDS] HEREBY DISCLAIMS ANY AND ALL LIABILITY. [SPECIAL NEEDS] MAKES NO WARRANTIES, EXPRESS OR IMPLIED. [SPECIAL NEEDS] SHALL IN NO EVENT BE LIABLE FOR ANY INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES OF ANY NATURE, EVEN IF [SPECIAL NEEDS] HAS BEEN NOTIFIED OF SUCH DAMAGES.
MEDIATION AND ARBITRATION…. The arbitration shall be held in the County of the principal office of [Special Needs] and the Client shall bear the cost of said arbitration.
[D.E. 36-1, p. 2] (emphasis added).
Therefore, under the terms of the contract (which was never provided or explained to the Plaintiff), the Plaintiff has to bear all costs of arbitration and has no remedies against Special Needs due to the waiver of liability. These are exactly the types of one-sided terms that the Florida Supreme Court recently advised courts to be mindful of:
When analyzing unconscionability, courts must bear in mind the bargaining power of the parties involved and the interplay between procedural and substantive unconscionability. In the typical case of consumer adhesion contracts, where there is virtually no bargaining between the parties, the commercial enterprise or business responsible for drafting the contract is in a position to unilaterally create one-sided terms that are oppressive to the consumer, the party lacking bargaining power.
Basulto v. Hialeah Auto., SC09-2358, 2014 WL 1057334 (Fla. Mar. 20, 2014) (emphasis added).
Like Basulto’s forewarning, the business responsible for drafting the contract at issue herein (Special Needs), unilaterally created one-sided terms that are oppressive to the Plaintiff. For one, the terms “impose substantial costs” upon the Plaintiff by requiring him to pay all of the arbitration costs, including the arbitrator’s hourly fees and filing fees (among others). Under similar circumstances, courts have deemed the arbitration agreement unenforceable due to such cost-shifting terms. See, e.g., Paladino v. Avnet Computer Technologies, Inc., 134 F.3d 1054, 1062 (11th Cir. 1998) (“a clause such as this one that deprives an employee of any hope of meaningful relief, while imposing high costs on the employee, undermines the policies that support Title VII. It is not enforceable.”); Cole v. Burns Int’l Sec. Servs., 105 F.3d 1465, 1484 (D.C. Cir. 1997) (“it is unacceptable to require [plaintiff] to pay arbitrators’ fees, because such fees are unlike anything that he would have to pay to pursue his statutory claims in court.”); see also Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 90, 121 S. Ct. 513, 522, 148 L. Ed. 2d 373 (2000) (“It may well be that the existence of large arbitration costs could preclude a litigant such as Randolph from effectively vindicating her federal statutory rights in the arbitral forum.”). Herein, it is undisputed that the Plaintiff will incur costs in order to arbitrate his claims because, under the terms of the arbitration agreement, he is the only one responsible for such costs.
In addition, the arbitration costs that Plaintiff will incur will more than likely be to no avail because, under the terms of the arbitration agreement, Special Needs disclaimed “any and all liability” and is not liable for “any incidental, special, or consequential damages of any nature” [D.E. 36-1, p. 2]. In other words, to accept Special Needs’ argument, this matter would be compelled to arbitration where the arbitrator would be bound by the purported agreement that says that Special Needs has no liability under any circumstances. This can only be considered unconscionable.
The Florida Supreme Court recently reversed the Third District Court of Appeal’s opinion enforcing arbitration, and it agreed with the trial court’s finding that “it is unconscionable to employ an arbitration agreement to obtain a waiver of rights to which the signatory would otherwise be entitled under common law or statutory law.” Basulto, 2014 WL 1057334 at *3-4 (emphasis added). Further, the Florida Supreme Court has even considered it a violation of public policy when an arbitration clause includes a cap on damages. See Gessa v. Manor Care of Florida, Inc., 86 So. 3d 484, 494 (Fla. 2011).
Considering that Special Needs does not provide for “any incidental, special, or consequential damages of any nature” (let alone a cap on damages), and it requires the Plaintiff to pay all arbitration costs, this Honorable Court should find that the arbitration agreement is substantively unconscionable and therefore unenforceable.
C. The arbitration agreement is void as a matter of law because it improperly serves as a waiver of liability and requires arbitration in violation of 46 U.S.C. § 30509.
In addition to being substantively unconscionable, the arbitration provision and waiver of Special Needs’ liability is also in violation of 46 U.S.C. § 30509. That statute provides, in pertinent part, as follows:
(1) In general. The… agent of a vessel transporting passengers between ports in the United States, or between a port in the United States and a port in a foreign country, may not include in a regulation or contract a provision limiting—
(A) the liability of the… agent for personal injury or death caused by the negligence or fault of the owner or the owner’s employees or agents; or
(B) the right of a claimant for personal injury or death to a trial by court of competent jurisdiction.
(2) Voidness.–A provision described in paragraph (1) is void.
46 U.S.C. § 30509(a) (emphasis added).
As the U.S. Supreme Court noted in Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 111 S. Ct. 1522, 113 L. Ed. 2d 622 (1991), Congress enacted § 30509 “in response to passenger-ticket conditions purporting to limit the shipowner’s liability for negligence or to remove the issue of liability from the scrutiny of any court by means of a clause providing that ‘the question of liability and the measure of damages shall be determined by arbitration.’” Id. at 596 (citations omitted) (emphasis added).
To this point, the Eleventh Circuit held that a personal injury waiver for an activity aboard a cruise ship was void pursuant to § 30509, stating:
Congress has spoken on this very type of waiver and has unequivocally prohibited it and rendered it void. 46 U.S.C. § 30509(a)(2). The statute contains no exceptions regarding the type of activity—whether recreational, ultra hazardous, or otherwise—in which the passenger is partaking when the injury occurs nor where the particular provision is found—whether on the back of a ticket or in a separate, signed, electronic document as here. See 46 U.S.C. § 30509.
Johnson v. Royal Caribbean Cruises, Ltd., 449 F. App’x 846, 849 (11th Cir. 2011).
Additionally, in Smolnikar v. Royal Caribbean Cruises Ltd., 787 F. Supp. 2d 1308 (S.D. Fla. 2011), examining a similar provision to the one at issue herein, Judge Jordan held:
A provision in a passenger contract or disclaimer form attempting to limit a carrier’s liability as described above is deemed void. See § 30509(a)(2)…. I therefore apply § 30509(a)(1)(A) pursuant to its plain language, whic