Royal Caribbean Hit With Overtime Class Action

On March 25, 2010, a former cook filed a class action against Royal Caribbean and several related entities alleging that the cruise line failed to pay ship workers overtime wages and also made unlawful deductions from their tips.  The suit was filed in the United States District Court for the Southern District of Florida.

The allegations against Royal Caribbean are familiar.  The plaintiff, Glen Roy Ellis, contends that Royal Caribbean failed to pay he and other workers (cooks, waiters and servers) overtime wages even though they regularly worked in excess of 14 hours per day.  The suit also alleges that Royal Caribbean made unlawful deductions from workers’ tips, although the lawsuit offers few specifics and it is not immediately clear that all class members would even be entitled to tips.  (Cooks, for example, are not typically considered tipped employees.)

What is unusual about the lawsuit is the statute it seeks to enforce.  The Fair Labor Standards Act (FLSA) typically governs unpaid overtime claims.  But the FLSA specifically exempts seaman on foreign vessels from its minimum wage, equal pay and overtime provisions. 

Mr. Ellis therefore has brought his claim under the Seaman’s Wage Act, 46 U.S.C. § 10313, et seq.  That statute requires vessel owners to pay seaman their wages within a certain number of days of the completion of a voyage (usually four) at risk of statutory penalties for non-compliance. 

The Seaman’s Wage Act does not, however, compel foreign vessels to pay overtime wages.  Generally, overtime is due only if a seaman’s employment contract expressly or impliedly calls for it.

Mr. Ellis’s complaint does not specify whether the ships on which he worked were foreign or American vessels (although the absence of any FLSA claims suggests the former).  It also does not identify the basis for Mr. Ellis’s overtime claim.  Thus, the foundation for the overtime claim remains unclear–an issue Royal Caribbean’s attorneys will no doubt explore as the lawsuit progresses.

Federal Judges Ponder Whether, Where to Consolidate Toyota Cases

The U.S. Judicial Panel on Multidistrict Litigation convenes in San Diego today to decide whether to consolidate more than 100 lawsuits that have been filed against Toyota, and in which jurisdiction to consolidate them.

Toyota’s recent recalls have prompted a variety of lawsuits against the company.  Toyota buyers have filed class action lawsuits against the company over the plummeting value of their vehicles.  Toyota shareholders have filed class action lawsuits against the company accusing it of hiding its problems in order to boost its share price.   And dozens of personal injury lawsuits have been filed against the auto maker for injuries and deaths caused by sudden acceleration and other product defects.  Perhaps the most high profile of those personal injury cases was filed in San Diego, site of today’s hearing, on behalf of Officer Mark Saylor, a California Highway Patrol Officer who was killed, along with three of his family members, when the Lexus he was driving suddenly accelerated out of control.

Today’s hearing before the Judicial Panel addresses only the consumer lawsuits concerning diminution in value.  However, the court in which those cases are ultimately consolidatedm if they are consolidated, will become the likely destination for other other lawsuits against the company.  For example, a Mississippi federal judge recently stayed a sudden acceleration lawsuit in that state pending the Judicial Panel’s decision.

The seven-member Judicial Panel can send the cases anywhere in the country.  The judges weigh factors such as a court’s caseload, the convenience of the location for the parties, and whether a judge with experience managing complex litigation is available.  Of these factors, the last is likely the most important.

Toyota is pushing for the cases to be consolidated in a Los Angeles federal court, where the most lawsuits have been filed and where the company’s North American headquarters is located.  Lawyers for the plaintiffs are divided over location, with 19 different sites being urged by different factions.  Likely destinations for the consolidated litigation include Kentucky, New Orleans and Los Angeles.  A decision is expected within two weeks.

To a listen to an NPR story regarding today’s hearing, click here.

Georgia Will Not Challenge Health Care Reform

Georgia Attorney General Thurbert Baker announced today that he would not join thirteen other state attorneys general in challenging the constitutionality of the recently enacted health care reform legislation.  In a letter to Gov. Perdue, Mr. Baker said a state lawsuit “is likely to fail and will consume significant amounts of taxpayers’ hard-earned money.”  Mr. Baker’s position is in lockstep with the White House, which has defended the constitutionality of the health care law and dismissed the state lawsuits as unlikely to succeed.

Ga. Supreme Court Strikes Med Mal Caps, Upholds Two Other Tort Reform Provisions

It’s been a busy couple of weeks for tort reformers and their opponents. 

As we reported in an earlier posting, the Georgia Supreme Court this week struck down the $350,000.00 cap on pain and suffering damages in med mal cases as an unconstitutional  with Georgians’ right to trial by jury.  The decision was a decisive victory for med mal victims and for opponents of tort reform.

The previous week, however, the Georgia Supreme Court upheld two other components of the contraversial 2005 tort reform legislation: (1) the “gross negligence” standard applicable to ER malpractice cases; and (2) the “offer of judgment” rule.

The “gross negligence” standard was challenged by Carol Gliemmo, who became paralyzed when a Columbus ER doctor failed to diagnose her with a brain hemorrhage.  She argued that the gross negligence standard–which required her to prove that the ER doc knowingly mistreated her–created an unreasonable and insurmountable hurdle.  The Georgia Supreme Court disagreed.  Justice George Carley, who wrote the majority opinion, stated that it was “entirely logical” for lawmakers to approve the legislation to stem the rising cost of medical malpractice lawsuits.

The “offer of judgment” rule was challenged by Salon and Cheryl Baptiste.  The Baptiste’s filed a defamation lawsuit against former Falcon Chuck Smith.  Mr. Smith made a $5,000.00 “offer of judgment”  to the Baptiste’s, which they rejected.  The court ultimately dismissed the Baptiste’s lawsuit.  Mr. Smith moved to collect his attorneys’ fees under O.C.G.A. § 9-11-68, the offer of judgment statute.  That statute permits either party to extend to the other an offer of judgment (as Mr. Smith had done) which, if rejected, could lead to the rejecting party paying the offering party’s attorneys’ fees.  The trial court, however, denied Mr. Smith’s motion on the grounds that O.C.G.A. § 9-11-68 unconstitutionally interferes with litigants’ right of access to Georgia courts.  The Supreme Court rejected that argument in upholding the offer of judgment statute.

CONSUMERS SEEK $10 BILLION IN DAMAGES FROM TOYOTA

Consumer class action lawsuits seeking damages for the diminished value of Toyota vehicles have been expanded to include racketeering allegations, ratcheting the potential damages in those cases upwards from $2 billion to potentially $10 billion.

The consumer class action lawsuits–which total around 80  in number–originally sought around $2 billion in damages for owners of Toyota vehicles.  The lawsuits were based upon data from auto evaluation services, such as Kelley Blue Book and Edmunds, that showed a 4% to 8% decline in the resale value of Toyota vehicles.

The new allegations are based upon evidence revealed during congressional testimony over the Toyota recalls.  That evidence, lawyers say, establishes that Toyota knew about sudden acceleration and other defects long before it initiated the recent recalls.  Toyota’s concealment of those defects, the plaintiffs allege, constitutes criminal conduct and subjects Toyota to liability under the Racketeer Influenced and Corrupt Organization Act (RICO).  Plaintiffs in RICO actions are entitled to three times their damages, thus the heightened damages projections.

STALLING PROBLEM LATEST TO DOG TOYOTA

A computer flaw affecting 1.2 million Corolla and Matrix models is the latest problem to dog embattled Japanese automaker Toyota.  The flaw causes engines to stall but, to this point, has not been linked to any injuries or deaths.  Toyota reports that it is still considering how to fix the problem.

The National Highway Traffic Safety Administration opened a probe last November into complaints of engine stalling in 2005 through 2007 Corolla and Matrix models.  Toyota attributes the problem to mechanical flaws in the vehicles’ engine-control units. 

Add the Corolla/Matrix engine stall problem to a growing list of defects and safety problems with a number of Toyota vehicles, including: sudden acceleration in various Toyota and Lexus models; steering issues with certain Corolla and Matrix models; braking problems with certain Prius models; and stability control problems with certain Sequoia SUV’s.

TOYOTA SHAREHOLDERS JOIN FRAY

Toyota shareholders have become the latest to sue the embattled auto manufacturer.  At least three class action lawsuits have been filed against the company by its shareholders alleging securities violations.  The lawsuits allege that the Japanese auto maker failed to disclose to its investors material information (namely, the existence of defects with its floor mats, accelerator pedals and its electronic throttle system that have led to the recall of millions of vehicles), and also issued materially false and misleading statements regarding the company’s operations, business and outlook.  Toyota also faces a separate investigation by the Securities and Exchange Commission over whether it properly disclosed to investors information about its recalls and safety issues.

The shareholder lawsuits are expected to go on for years and could cost the company billions of dollars.  Such lawsuits are common when alleged corporate malfeasance causes a company’s stock price to fall.  In Toyota’s case, its stock has lost more than $10.00 in per share value since January 21st–the date of its first major recall.

TOYOTA AVOIDED PRODUCING “BOOKS OF KNOWLEDGE”

Earlier this month, Toyota attorney Theodore Hester confirmed the existence of confidential “Books of Knowledge” that Toyota has, to this point, avoided producing to the National Highway Traffic Safety Administration or to its opponents in products liability lawsuits.  Toyota’s admission of the existence of the Books vindicates corporate whistleblower Dimitrios Biller, a former Toyota attorney who has accused the company of concealing evidence in civil cases.

Toyota began compiling the data that comprises the Books of Knowledge in 2002.  The Books were later converted to an electronic format.  According to Hester, the Books include “highly proprietary and commercially sensitive information regarding job process flow, procedures and regulatory information.” 

In an eight-page letter to the House Oversight and Government Reform Committee, Mr. Hester claimed that Toyota had settled lawsuits before it was required to produce the Books of Knowledge in any civil case.  If that is true, Toyota has arguably done nothing wrong.  It is commonplace for companies to confidentially settle lawsuits to avoid the disclosure of arguably privileged or irrelevant information when its production appears imminent, and there is nothing illegal or unethical about the practice.  But Biller’s allegations of concealing evidence cast doubts upon Toyota’s explanation for its non-disclosure of the Books of Knowledge.  Biller’s allegations suggest that the Books contain evidence that should have been produced.  If Biller is correct–and it’s looking as if we will soon find out–Toyota could be forced to re-open settlements with hundreds of accident victims from whom Toyota wrongfully withheld the Books during litigation.

CONNECTICUT AG DEMANDS TOYOTA INVESTIGATE THREE CRASHES

Connecticut Attorney General Richard Blumenthal has demanded that Toyota investigate three wrecks, one of them fatal, involving Toyota Camry vehicles.  The wrecks all happened the week of March 9, 2010.  Two of them involved recalled 2007 Camry models.  One of the wrecks killed a 77-year-old man named Norman Shankman. 

Mr. Blumenthal released a statement calling upon Toyota to ascertain whether vehicle defects played a role in the wrecks, characterizing it as “absolutely vital to public safety.”  Toyota pledged to cooperate with the Connecticut AG’s investigation.

GEORGIA SUPREME COURT STRIKES CAPS IN MED MAL CASES

The Georgia Supreme Court ruled Monday that the state may not limit the amount of money juries award to victims of medical malpractice. The ruling struck down that portion of Georgia’s 2005 Tort Reform bill that capped medical malpractice victims’ jury awards at $350,000 for pain and suffering. The court held that the cap removed a jury’s fundamental role to determine the damages in a civil case.

“The very existence of the caps, in any amount, is violative of the right to trial by jury,” Chief Justice Carol W. Hunstein wrote in the decision.

The court’s decision arose from the case of a 71-year-old woman, Betty Nestlehutt, who was permanently disfigured after face-lift surgery.  A jury awarded she and her husband $1.26 million in damages, including $900,000 for her pain and suffering. Because of the cap, her damages were reduced to $115,000 for medical expenses and $350,000 for pain and suffering. As a result of the ruling Monday, the original award was reinstated.

“The bedrock of our democracy — our ability to self-govern at the ballot box and in the jury box — remains intact,” said Adam Malone, the lawyer for Ms. Nestlehutt.

The lawyers at Fried & Bonder congratulate Adam Malone, along with all others involved, for their courageous and hard work.