Further Easing of U.S. Cuba Sanctions Regulations

September 21, 2015

On September 18, 2015, the Department of the Treasury and the Department of Commerce announced additional revisions to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR).  The changes take effect on Monday, September 21, 2015, as published in the Federal Register. 

These measures are intended generally to do the following:

• to further facilitate travel to Cuba for authorized purposes;

• expand the telecommunications and internet-based services general licenses, including by authorizing certain persons subject to U.S. jurisdiction (which includes individuals and entities) to establish a business presence in Cuba, such as through subsidiaries or joint ventures;

• allow certain persons to establish a physical presence, such as an office or other facility in Cuba to facilitate authorized transactions;

• allow certain persons to open and maintain bank accounts in Cuba to use for authorized purposes;

• authorize additional financial transactions, including those related to remittances;

• authorize all persons subject to U.S. jurisdiction to provide goods and services to Cuban nationals located outside of Cuba; and

• allow a number of other activities, including those related to legal services, imports of gifts, and educational activities. 

These amendments also implement certain technical and conforming changes. Major elements of the changes in the revised regulations involving travel, transportation and legal services include the following:

Transportation by vessel of authorized travelers – between the United States and Cuba only and without stops in third countries – will be authorized by general license.  Certain related lodging services aboard vessels used for such travel will also be authorized.

License Exception Aircraft, Vessels, and Spacecraft (AVS) will authorize temporary sojourns to Cuba of certain categories of vessels.  Eligible categories of vessels are cargo vessels for hire for use in the transportation of items; passenger vessels for hire for use in the transportation of passengers and/or items; and recreational vessels that are used in connection with travel authorized by the Treasury.

License Exception AVS will authorize aircraft on temporary sojourn to remain in Cuba for up to 7 consecutive days and authorizes vessels on temporary sojourn to remain in Cuba for up to 14 consecutive days.

Close relatives will be allowed to visit or accompany authorized travelers for certain additional activities.  In the January changes, OFAC permitted close relatives to join visits related to official government business and certain educational activities, and to visit additional family members residing in Cuba.  Close relatives now also will be allowed to visit or accompany authorized travelers for additional educational activities, journalistic activity, professional research, and religious activities, as well as activities related to humanitarian projects and activities of private foundations or certain research or educational institutes.  For purposes of this provision, a close relative is defined as someone related to a person by blood, marriage, or adoption – and who is no more than three generations removed from that person or a common ancestor with that person. 

All authorized travelers will be allowed to open and maintain bank accounts in Cuba in order to access funds for authorized transactions while in Cuba.

Physical Presence and Operations in Cuba –

Persons subject to U.S. jurisdiction engaging in the following categories of authorized activities will be allowed to establish and maintain a physical presence, such as an office, retail outlet, or warehouse, in Cuba: news bureaus; exporters of certain goods authorized for export or re-export to Cuba by Commerce and OFAC, such as agricultural products and materials for construction or renovation of privately-owned buildings; entities providing mail or parcel transmission services or certain cargo transportation services; providers of telecommunications or internet-based services; entities organizing or conducting educational activities; religious organizations; and providers of carrier and certain travel services.  These individuals and entities will also be authorized to employ Cuban nationals, open and maintain bank accounts in Cuba, and employ persons subject to U.S. jurisdiction in Cuba.

License Exception Support for the Cuban People (SCP) will authorize certain exports and reexports of items to Cuba for use in establishing, maintaining, and operating a physical presence in Cuba.  Eligible end-users of the items include certain persons providing telecommunications or internet-based services; establishing telecommunications facilities; providing travel or carrier services; organizing or conducting educational activities; or transporting authorized items between the United States and Cuba.

Certain temporary reexports from a foreign country to Cuba will be authorized by License Exception SCP when the items are for use in scientific, archeological, cultural, ecological, educational, historic preservation, sporting activities, or in the traveler’s professional research and meetings.  Previously, this provision was limited to temporary exports by persons departing the United States.

Certain commodities and software for use in software development may be exported or re-exported to eligible end-users in Cuba pursuant to License Exception SCP.

License Exception SCP will authorize temporary exports and reexports to Cuba of additional categories of items, including certain tools of trade to install, service, or repair items; and certain commodities and software for exhibition or demonstration.

OFAC’s existing general license authorizing the provision of certain legal services to Cuba and Cuban nationals will be expanded to allow the receipt of payment for such services. Certain limitations will apply, related to payments from prohibited Cuban Government or Cuban Communist Party officials.  Additionally, a new general license will authorize persons subject to U.S. jurisdiction to receive, and make payment for, certain legal services from Cuba or Cuban nationals.

A case-by-case review policy will apply to license applications for exports and re-exports to Cuba of items to help ensure the safety of civil aviation and the safe operation of commercial passenger aircraft.  Items that are to be reviewed pursuant to this policy include aircraft parts and components; software and technology related to safety of flight; air traffic control, aviation communications, and aviation weather related equipment; airport safety equipment; and devices used for security screening of passengers and baggage.

Under an expanded general license, additional educational activities involving Cuba and Cuban nationals, including the provision of standardized testing services and internet-based courses, will be authorized.  Academic exchanges and joint non-commercial academic research with universities or academic institutions in Cuba will also be authorized.  Travel-related transactions in connection with these activities will also be authorized.

The provision of air ambulance and other related emergency medical services to travelers in Cuba will be authorized by general license, and a general license will clarify that the provision of nonscheduled emergency medical services to Cuban nationals in the United States is authorized.

To see the announcement in the Federal Register, please see here => FR-2015-09-21/pdf/2015-23587.pdf. Now it is up to the Cuban government as to whether they will go along with these expanded rights.

If you are interested in communicating with me, you may do so via this blog or at lawofficesofmov@gmail.com.

Third DCA Allows Class Action by Doctors Against Celebrity Cruises

September 17, 2015

In Celebrity Cruises, Inc. v. Rankin, et al, No. 3D14-3137 (Fla. 3d DCA Sept. 16, 2015), Celebrity failed to stave off a class certification case filed by a group of cruise ship doctors suing the company for breach of contract. The Third District Court of Appeal affirmed the trial court decision certifying a class of about 41 doctors who claim they are owed commissions from medication sales.

The Miami-based cruise line owned by Royal Caribbean Cruises Ltd. argued each doctor's understanding of the contract would overwhelm issues common to the class. The court disagreed, finding that common issues dominated individual issues because the class members were all "beneficiaries of [an] identical written contractual provision."

The order included an excerpt from Celebrity management's internal emails that stated, "According to the signed contracts, physicians' commission should be on total medical revenue (procedure and medication sales) as opposed to commission on procedure only."The doctors claim they are paid only for medical services and revenue from medication was improperly omitted from their pay calculations.

The class includes ship doctors who worked under Celebrity contracts from September 2004 to December 2009.

This is a big win for the doctors, as the appellate court clearly found that because all the doctors were subject to the same contract, this meant that Celebrity intended to treat them in a similar or common way. The cruise lines are notorious for having all personnel that serve aboard sign contracts of employment and in this instance, having the same category of personnel signing the same contract has seemingly worked against them in this instance.

if you are interested in receiving a copy of the decision, you may reach me via this blog or at lawofficesofmov@gmail.com.

Uberrimae Fidei Defense Now Requires Showing of Reliance in 8th Circuit

September 16, 2015

In St. Paul Fire & Marine Ins. v. Abhe & Svoboda, Inc., No. 14-2234 (8th Cir. Aug. 20, 2015), the Eighth Circuit Court of Appeals held that reliance is an element of the defense of uberrimae fidei. Prior to Abhe, only the Second Circuit had so held. This case is extremely important to insurers and should be required reading for marine insurers and their coverage counsel.

Abhe, an industrial painting contractor, used stationary leased barges as platforms while painting Pell Bridge over Narragansett Bay. Abhe changed insurance carriers three months into the project. St. Paul Fire did not request that Abhe complete an application, but accepted the application provided to its previous insurer in 2010. The attached schedule of vessels was outdated and did not include vessels leased for the Pell Bridge project. Abhe sent St. Paul an updated schedule in 2011, listing those vessels, but did not provide a 2010 survey that showed that one barge had non-watertight bulkheads. St. Paul did not attempt to survey any of the equipment, as it was entitled to do under the policy. After the barge sunk in a storm, St. Paul denied Abhe’s claims and sought a declaration that the policy was void under the doctrine of uberrimae fidei, which requires that parties to an insurance contract accord each other the highest degree of good faith. Abhe counterclaimed, alleging negligence. The district court granted St. Paul summary judgment, finding the package policy void because Abhe failed to disclose the survey. The Eighth Circuit remanded, stating that reliance is an element of the defense, and that there are disputed issues of fact as to whether it is satisfied.

As pointed out by the Court of Appeals, there is scant authority discussing whether a showing of reliance is required to void an insurance policy under the doctrine of uberrimae fidei. Abhe relied, not on an Eighth Circuit case in finding that reliance is an element of the defense of uberrimae fidei, but rather, the case of Puritan Ins. Co v. Eagle S.S. Co., 779 F.2d 866, 871 (2d Cir. 1985), which held that the principles of utmost good faith and full disclosure do not require voiding the policy unless the undisclosed or misrepresented facts were both material and were relied on by the insurer.

However logically speaking, to show materiality, the insurer must show that the fact would influence the underwriter in accepting the risk or setting the premium. See, e.g., Royal Ins. Co. v. Flemming, 1986 AMC 2077 (M.D. Fla. 1985). Surely, when proving the fact that the insurer would have not accepted the risk or would have set the premium had it known that the barge did not have watertight bulkheads and thus not seaworthy, the insurer would have submitted an affidavit or other testimony that it relied on the basic assumption that a vessel it was insuring would be seaworthy. Furthermore, there is an implied warranty of seaworthiness at the inception of the risk and if the barge was not seaworthy, it will void the policy. See, e.g., The Connecticut Indem. Co. v. Palivoda, 2005 AMC 2047 (M.D. Fla. 2005).

It is expected that St. Paul will ultimately be able to show reliance. However, this case is an example of how the insurer's proffer of the evidence should squarely address reliance to avoid the needless expense of what occurred to St. Paul in Abhe.

If you are interested in receiving a copy of the Abhe opinion or wish to reach me, you may do so via this blog or by writing to me at lawofficesofmov@gmail.com.

Pretrial Stipulation is Trial Blueprint in Florida State Court

September 14, 2015

In Palm Beach Polo Holdings v. Broward Marine, 40 Fla. Law Weekly D1932 (Fla. 4th DCA Aug. 19, 2015), the issue of whether the underlying claim was barred by the statute of limitations was memorialized in the pretrial stipulation entered between the parties. By definition and policy, this should have been considered a matter officially at issue in dispute during the trial. However, the trial court concluded that because the relevant statute was not framed in the preliminary instructions to the jury and because the appellants did not argue it in their opening statement, the defense was not properly raised and was waived.

The Florida's Fourth District Court of Appeals disagreed. It took the opportunity to remind judges and litigators that the document upon which all parties can always rely on is the Pretrial Stipulation. The appellate court observed that any previous disputes or contentious pretrial issues become mostly irrelevant once the parties prepare and stipulate to the final agreed upon "executive summary” as to what the impending trial will be about and the specific issues that remain on the table. As noted by the court, the Pretrial Stipulation is one of the most “coveted and effective pretrial devices” enjoyed by the trial court and all the parties. The court further noted how the Pretrial Stipulation is a “powerful blueprint” that fully enables a well-run and fair trial. It also stated that the Pretrial Stipulation prescribing issues on which the case is to be tried are binding upon the parties and the court and should be strictly enforced.

Everyone connected with the trial, from the witnesses to well-prepared and efficient lawyers, benefit from a mandated and duly enforced Pretrial Stipulation. The appellate court then rejected the argument that because the statute of limitations issue was not in the preliminary instructions to the jury or referenced in the opening statement, that it was of no consequence.

While a seemingly simple decision, Palm Beach  Polo Holdings is an important one. In this day and age of "gotcha" litigation, parties are increasingly looking for ways to suggest that the other side waived arguments before the court. The Pretrial Stipulation is the document that sets the stage on the issues to be litigated before the trial court.

If you are interested in receiving a copy of this decision or otherwise reaching me, you may do so by writing to me at via this blog or at lawofficesofmov@gmail.com.