Eleventh Circuit Affirms Order Compelling Arbitration of Cruise Liner Class Action

Plaintiffs filed a putative class action against Norwegian Cruise Lines claiming that Norwegian failed to disclose profits it earned when the plaintiffs elected to purchase travel insurance during the cruise booking process. Each plaintiff acknowledged accepting the terms of a "guest contract" with Norwegian, which contained a mandatory arbitration clause covering any dispute "relating to or in any way arising out of or connected with this Contract or Guest's cruise." The district court granted Norwegian's motion to compel arbitration and the plaintiffs appealed, claiming the arbitration clause was inapplicable. According to the plaintiffs, Norwegian was not being sued as a cruise line carrier, but for its role in a purported "reinsurance scheme" whereby it received "kickbacks" on the sale of each travel insurance plan. Thus, the plaintiffs claimed, the class action was unrelated to the guest contract or their cruises. The district court disagreed, however, as did the Eleventh Circuit. Both courts concluded that the plaintiffs' claims "arose out of," were "related to," and were "connected with" Norwegian's obligations under the guest contract, as any alleged wrongdoing by Norwegian was inextricable from the transaction that culminated in the contract, as well as the plaintiffs' cruises. The Eleventh Circuit also rejected the notion that Norwegian was being sued in its capacity as a "distribution participant" for the travel insurer. As such, the court affirmed the district court order enforcing the arbitration clause and dismissing the plaintiffs' allegations.

Phillips v. NCL Corp., No. 19-12463 (11th Cir. Aug. 10, 2020).