Class Action Suit Against Royal Caribbean Cruises Ltd.

August 11, 2011

The Maritime Executive reported today that all persons or entities who purchased Royal Caribbean securities from April 23, 2009 through and including July 27, 2011 ("Class Period") have filed a class action lawsuit against Royal Caribbean Cruises Ltd. and certain of its officers, alleging violations of Sections 10(b) and 20(a) of the Exchange Act, 15 U.S.C. Sections 78j(b) and 78t(a); and SEC Rule 10b-5 promulgated thereunder by the SEC, 17 C.F.R. Section 240.10b-5.

The Complaint alleges that throughout the Class Period, defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the company's business, operations, and prospects. Specifically, the defendants are alleged to have made false and/or misleading statements and/or failed to disclose that: (1) the company improperly accounted interest expenses related to the amortization of certain financing fees related to certain of the company's export credit agency guaranteed loans; (2) the company lacked adequate internal and financial controls; and (3) as a result of the foregoing, the company's statements were materially false and misleading at all relevant times.

On July 27, 2011, after the market closed, the company disclosed "an error in the previous accounting treatment of interest expense relating to its amortization of certain financing fees and has revised its past financial statements to reflect the correct accounting." As a result of the "error," the plaintiffs allege that the company admitted that it had overstated the earnings per share ("EPS") for 2009, 2010, and the first quarter of 2011 by $0.05, $0.15 and $0.06, respectively. The company has reduced its full-year earnings guidance by $0.10 per share excluding the "error," and by an additional $0.20 per share upon correcting the "error," rending the company's new outlook for 2011 EPS to a range of $2.85-$2.95, down from a previous range of $3.10-$3.30.

On this news, the company's shares declined $4.50 or more than 12.5% and closed at $31.26 the following day.

If you would like more information on this case or wish to contact me, you may do so at miampandi@comcast.net or motero@houckanderson.com.

Southern District Denies Joinder of Non-diverse Defendants in Coverage Action

August 10, 2011

In IBIS VILLAS AT MIAMI GARDENS CONDO ASS'N, INC. v. ASPEN SPECIALTY INSURANCE CO., 23 Fla. L. Weekly Fed. D21a (S.D. Fla. May 24, 2011), Judge Abalberto Jordan, President Obama's nominee for the U.S. Circuit Court for the Eleventh Circuit Court of Appeals, held that the plaintiff should not be permitted to join the additional non-diverse defendants in an attempt to defeat the court's diversity jurisdiction. This case is an important one, as insurers routinely attempt to remove cases to federal court on diversity of citizenship grounds. It is considered by most out-of-state insurers that federal court, rather than state court, is a more preferential forum for insurers.

In October of 2010, Ibis Villas filed a one-count complaint against Aspen Specialty Insurance Co. and James River Insurance Co. in Florida state court for breach of contract. Ibis Villas alleges that the defendants breached insurance policies issued to it by failing to provide coverage or payment for damages it sustained to its property on October 24, 2005, due to Hurricane Wilma. The defendants were served with the complaint on January 20, 2011, and on February 10, 2011, removed the case to this court based on diversity jurisdiction. See 28 U.S.C. § 1332.

Justice for Sale? A Review of Private Trials in Florida

August 08, 2011

Private trials have been an option for Florida for 12 years. A judge-for hire renders a decision that must be rubber-stamped by a circuit judge but can be appealed. Only a few attorneys have offered the service, and most are retired judges. They report its use remains rare. In last several months, numerous individuals have written about Florida's law allowing private trials since 1999 and admit that few lawyers even know that the statute allowing such trials even exists.

No one has promoted the cause more than retired Miami-Dade Circuit Judge Paul Siegel, who advertises offering his first trial for free. Siegel argues that the time has come for lawyers to embrace this option, which offers a speedy trial that likely costs upwards of $20,000. Siegel argues that while the price seems hefty, for cases destined for trial, it offers potential savings by avoiding delays.

Those of us who practice in Miami-Dade county know what these delays are--a rolled-over trial calendar after months spending preparing the case for trial; judges advising the parties after they have advised the court that a case will take one week to try, the court setting the trial schedule from 10:00 am to 4:00 pm, cutting out two hours a day of trial testimony, potentially pushing the case towards mistrial if the one week trial cannot be completed; and the list goes on and on. 

Some of the advantages touted in private trials is that it is a good substitute for arbitration. This is because in private trials, the rules of evidence apply, where some argue that arbitration is a "free for all." Another advantage cited is cost. Arbitration is arguably more expensive because the cost of hiring a single judge is lower than hiring three arbitrators and paying administrative fees to entities like the American Arbitration Association. Another advantage of private trials is the fact that they are conducted in secret, which is seen as an advantage by some in family law cases. 

The disadvantages of private trials include the fear that private judging could give businesses another avenue for litigating on corporate-friendly turf. The concern is that the rarely used private trial option will gain popularity with credit card companies and cellphone service providers, which can insert clauses in customer agreements forcing customers to resolve disputes before a private judge. Companies already do that with arbitration, but private trials would allow for yet another layer of secrecy--and theoretically before a private judge who would lean in favor of the corporate clientele that funnels the private judge cases. Another cited disadvantage of private trials is that cutting the number of cases tried in public means a reduction in the legal precedent other judges and parties may draw upon. Finally, many representing consumers and average citizens say that the use of private trials basically says that "I have no faith in our current judiciary."

Ultimately, time will tell if private trials will gain traction. In other jurisdictions, it has created a system open mainly to the rich, such as divorcing celebrities, as a way to speed up their breakups, obtain the judge's undivided attention and keep the dispute and the findings, private. The parties will be able to hire a judge who will sit there as a captive audience from 9 in the morning to whenever the parties agree and the case will be heard according to the schedule set by the parties, not a congested docket. While private judging is "not a panacea", it does allow a constructive and practical response to the lack of resources being provided to an overworked, underpaid judiciary, that renders the our judicial system less responsive and more expensive than it should be.

More in-depth reporting on private judging is reported in the Daily Business Review for Miami-Dade County. If you are interested in receiving the full article or wish to contact me, you may do so by writing to me at miamipandi@comcast.net or at motero@houckanderson.com

A Federal District Court Approves Medicare Set-Aside

August 05, 2011

On July 28, 2011, the Federal District Court for the Western District of Louisiana in

Schexnayder v. Scottsdale Insurance Company, (2011 U.S. Dist. LEXIS 83687) approved a Medicare Set-Aside in a personal injury case brought in the District Court under its diversity jurisdiction.  The matter was settled and a Medicare Set-Aside specialist determined that the appropriate Medicare Set-Aside from the settlement was $239,253.84.  The matter was submitted to CMS who took no action, leaving the parties at a loss on how to obtain approval of the Medicare Set-Aside amount, which was a condition of the settlement.  The plaintiff and defendants made a joint application to the court for approval and the U.S. Magistrate ordered service to be made on the Secretary of Health and Human Services for an evidentiary hearing that was ordered to be conducted in order to determine approval or modification of the proposed set-aside amount.  Health and Human Services advised the court that it would not participate in the evidentiary hearing.  This left the court to take testimony and receive submissions based upon which Magistrate Judge Hanna made findings of fact that approved the set-aside amount. 

Obviously, the federal court can exercise its jurisdiction over the Department of Health and Human Services.  The parties to this litigation acted in the manner that has been advocated consistently, namely that the interests of Medicare be considered actively by both parties in a cooperative manner when reaching a settlement or, for that matter, paying a judgment.  Their cooperation allowed the federal court to exercise its jurisdiction over Health and Human Services and issue an order which, in all likelihood, will be binding upon the United States government, thereby relieving the parties of any further uncertainty with regard to Medicare issues.  This can only happen in the federal system, as state courts do not have jurisdiction over the United States government.  This may be yet one more reason to invoke the diversity jurisdiction of the court when appropriate so that these issues may be determined in a manner that satisfies the interests of all parties.  It is significant that CMS again declined to cooperate with the parties in reaching the Medicare Set-Aside amount and, it is further significant that the set-aside amount did not contain a reduction for procurement costs or attorney’s fees.  This appears to be in conformance with the regulations promulgated under the Medicare Secondary Payer Act.

If you are interested in receiving a copy of this decision or wish to contact me, you may write to me at miamipandi@comcast.net or motero@houckanderson.com.