Judicial Terrorism At Its Worst
We all knew it was coming. It was like watching an accident in slow motion, witnessing the great destruction that was coming and not being able to do anything about it. I personally talked to bar associations around the world, spoke with courts and corporations to prepare them for the coming tide, but all our preparation did nothing to stop them from coming. Now they are here: class actions against corporations during the COVID crisis.
To be honest, most professionals expected major cases to form up earlier. The world is already 7 (by some counts 9) months into the COVID crisis and law firms have had ample times to stoke the fires of fear and hatred. The first major global case, the Australian Private Class Action suit against the Ruby Princess, sets the stage for hundreds of billions of dollars in class action suits that will further depress the global economy.
For those of you who are unaware, the Ruby Princess was the second cruise ship to have had an outbreak of COVID on board. The first ship, the Diamond Princess, was quarantined at sea by Japanese authorities on February 4th, 2020. The Ruby Princess did not leave port for its ill-fated voyage until March 19th, over a month later. Now lawyers have cobbled together a group of passengers, family members of passengers, and estates into a class action coalition.
What is a Class Action?
A class action lawsuit is a lawsuit by a large group of people against a larger corporate entity. Originally designed as a way to ‘level the field’ between individuals and corporations, class actions have quickly become ‘cash cows’ for law firms. When there is an incident, a party comes to a lawyer’s office and states that they have been wronged. The lawyer then looks to see if this is a ‘one-off’ incident or if this is something that has happened to a large group of people.
When there is a large group, the firm then asks the court to certify a class (there are several technical steps here we are glossing over). Once the class is certified, a case can be filed on behalf of the class against the corporation. While the class action process was originally formed to help individuals, the largest group of beneficiaries of the system is tort lawyers. They are often paid a percentage based on the overall award and the percentage can range from 10% to 50% of the award! Individuals in the suit either get an award as agreed upon (generally small) or are given a voucher.
Overall, class actions are great for the lawyers and only slightly less beneficial to the large corporations. While the corporations pay out billions in class actions, it would otherwise be hundreds of billions or trillions of dollars if each case was tried individually as it should be. The state also makes out well as it only has to try one or two cases (and most of them settle). Only the consumer gets the shaft in the class action system.
How This Amounts to Judicial Terrorism
Normally, a class action suit is a good thing for a company that has multiple claims against it. They can all be dealt with in one simple package. While the initial outlay is expensive, the overall cost is lower than traditional litigation. However, some law firms have made a career of attacking companies that are already on the ropes. This is exactly what is happening with the Ruby Princess case.
Carnival Cruise lines has been taking a beating because of the COVID crisis. When government recommendations to restrict cruising went into effect, Carnival, like the other major players, voluntarily ceased operations. This costs the company millions of dollars each day because of port fees, employees and simple lost revenue. Because of a lack of understanding of the travel industry and political pressure, politicians around the world denied COVID aid (some would argue illegally) to cruise lines that were registered corporations in the nation. Other businesses got aid while these massive economic indicators idled off the coast.
Why This Class Action is Questionable
Carnival has seen some dire straights as they were forced to sell four ships (2 for scrap and 2 to an unknown buyer). This seems to have given law firms an incentive to strike. In this case, Shine Lawyers have started a class action.
The Ruby Princess cruise did not leave port until March of 2020, more than a month after the Diamond Princess disaster. The Shine Lawyers accuse the cruise line of being “misleading and deceptive” in its practices. Arguing for the plaintiffs, lawyer Vicky Antzoulatos stated that passengers were not told of the risks on board. This makes the supposition that the cruise line had a duty to predict there would be an outbreak on the ship. At this point in time, little was known about the disease. This argument is problematic because it expects the company to know in foresight what we now know in hindsight.
The argument by the lawyers, at least according to the information that is publicly available, also ignores the assumption of risk by the passengers. While little was known about the cause, transmission and mortality of the disease, passengers likely knew there had been an outbreak on board the Diamond Princess. People took advantage of the lowered prices and extra perks because of the negative news.
This climate paved the way for a situation in which the class action lawsuit ignores the assumption of the risk by the individuals and demands the company shoulder the responsibility of predicting the future. While the question before the court should be, “Did Carnival follow reasonable safety precautions in the operations of its ships which were put into effect after the Swine Flu?” the issue will more likely become, “How can we abandon these people who took advantage of a deal and went on a cruise during a global pandemic?”
The Tobacco Model
According to the preliminary articles on the lawsuit, it appears that Shine law firm will follow the Tobacco Model. The modus operandi when using the Tobacco Model is to distract the jury of a class action suit from the facts of the case (and comparative liability) in order to increase the verdict. In most jurisdictions, comparative or contributory negligence can decrease the award in a case by an impressive amount. This legal theory is underpinned by the axiom that if a plaintiff had a portion of the liability, then the award should be lowered by that amount. In some areas, any liability by the plaintiff can end the case with a zero verdict.
To counter this, the lawyers in the case against big tobacco appealed emotion rather than to the facts. They made tobacco out to be a big evil company. Now this was easy at the time as they knew the effects of smoking and were marketing to children. The result was larger verdicts and large settlements, contrary to the case law on the subject. This model is often repeated, not just in the courts, but in politics as well. If you can win in the court of public opinion, the rights of the accused mean nothing.
Carnival’s Conundrum
Carnival is in a difficult situation at the present moment because global sympathy is with the victims of COVID. While the world knows Carnival could not have predicted the ship would have had an outbreak after protocols were followed, opinion will still hold them liable. The opportunity to take advantage of the cruise line’s predicament will overcome any wavering urged by the conscience. This is where class actions become judicial terrorism.
The firm knows that Carnival is in a precarious situation. Carnival cannot afford a major award against them in the middle of a crisis. Thus, this case is more about using fear to get people what they want rather than using the law to get people what they need. We all feel bad for the passengers and families of the Diamond and Ruby Princess but we cannot allow feelings to negate the reality of the situation. News of the illness aboard the Diamond Princess was amply broadcast before the Ruby Princess set sail.
Experts warned that another outbreak could take place. It just so happened that of the 3.8 million people who sailed between January and February of 2020, the 1,600 people who were affected on the Diamond and Ruby Princesses drew the short straw. They should have known going into the cruise that getting sick was a possibility. They should have known the possibility was higher during the pandemic. To act as though the cruise line ‘tricked’ them into going on the ill fated cruise is dangerously close to libel, given the present facts.
The global phenomenon of using the courts to terrorize companies, people, and politicians needs to come to an end. Law firms must be held responsible for their actions. The mouthpiece argument no longer works when they say, “I was just representing my client.” Today they are coming for the cruise lines. If we do not speak out, who will take your side when they come for you?
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