Destination: Arbitration
Phillips v. NCL Corp., 2020 U.S. App. LEXIS 25202, 2020 WL 4581244 (11th Cir. Aug. 10, 2020).
By: Blake Daigle
In this case out of the United States District Court for the Southern District of Florida, Martha and Jerry Phillips, Darren Brown, Rosemary Elias, and Luis Perez-Hernandez (the Passengers) brought a putative class action suit against Norwegian Cruise Lines (Norwegian) alleging violations of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) and unjust enrichment on behalf of Norwegian.[1] These accusations stem from cruise tickets sold by Norwegian to the Passengers. When someone purchases a ticket, Norwegian offers a “Booksafe Travel Protection Plan” (the Travel Plan), which includes a travel insurance policy. Both the passenger ticket and the insurance plan contain arbitration clauses, which the lower court decided to honor by compelling arbitration and dismissing the class allegations in accordance with the contract. Here, the plaintiffs appeal.
The Passengers were less than thrilled when they made a certain discovery. The administered insurance policies were underwritten by two separate entities who gave commissions to Norwegian as part of their effort to sell their policies. Norwegian only offered the Travel Plan through ticket purchases and included a separate contract with its own arbitration clause attached in the contract. Here, the Passengers claimed Norwegian violated the FDUTPA by receiving “kickbacks” for the sale of the insurance policies. The reason provided was that Norwegian had used “deceptive and unfair marketing and sales practices” by not disclosing those commissions to passengers and by using a “reinsurance scheme” in which a Norwegian-owned insurance company reinsured the insurance policies. The plaintiffs further alleged that the arbitration clause was not applicable to their FDUTPA claims because the claims were brought against Norwegian in its capacity as an insurer and not a cruise line. Norwegian responded by noting that the passenger contract and the insurance contract were so intertwined with the original guest contract that the arbitration clause should be enforced.
The Eleventh Circuit reviewed the arbitration agreement by expansive interpretation without limiting the wording of the contract.[2] The judged relied upon key phrasing in the arbitration provision of the guest contract and found that the words “relating to or in any way arising out of or connected with this Contract or [the] Guest’s cruise” contained within the arbitration clause also encompassed the insurance contract. The Eleventh Circuit panel reasoned that there would be no insurance contract independent of the passenger ticket because Norwegian only offered it at the time of ticket sale; the transactions were simultaneous and not separate or independent.[3] Because of this, the court found that if Norwegian engaged in any unfair practices, the company could not have done so outside of the contractual relationship between itself and the Passengers.[4] The Passengers conceded that the class action waiver contained within the arbitration clause would apply if the arbitration provision itself applies.[5] The Eleventh Circuit held that the arbitration clause was enforceable; therefore, the class action waiver also applied.
The panel also affirmed the lower court’s judgment by holding that the claims asserted were directly related to the contract of carriage. Therefore, the contract governed. The court also used the language in the contract to find and hold that the relatedness of the claims to the contract itself would set the Passengers to sail to one destination only: arbitration.
[1] See Phillips v. NCL Corp., 2020 U.S. App. LEXIS 25202, at 1 (11th Cir. Aug. 10, 2020).
[2] Id. at *9-*10; see also Doe v. Princess Cruise Lines Ltd., 657 F.3d 1204, 1213 (11th Cir. 2011).
[3] Phillips, 2020 U.S. App. LEXIS 25202, at *12.
[4] Id.; see also Doe, 657 F.3d 1204 at 1219-20.
[5] Phillips, 2020 U.S. App. LEXIS 25202, at *13.
