On April 9, 2014, the Third District Court of Appeal of Florida issued an en banc opinion in Royal Caribbean Cruises, Ltd. v. Cox, Case No. 3D09-2712. The case put to rest decades of unrest and tension between the status of Florida's offer of settlement law as interpreted by the Third District and federal maritime law. The Third District finally aligned itself with its sister courts and Florida's federal courts in holding that Florida's offer of judgment laws conflict with federal maritime law and a prevailing party is not entitled to recover attorney's fees.
There is a protracted procedural history to this matter. The plaintiff, Mr. Bryon Cox, brought suit against Royal Caribbean in the underlying suit to recover for personal injuries sustained while employed aboard a Royal Caribbean vessel. Mr. Cox served an offer of judgment pursuant to Florida Statute §768.79 and Florida Rule of Civil Procedure 1.442. Royal Caribbean moved to strike the offer of judgment, arguing that §768.79 conflicted with federal maritime law. In response, Mr. Cox cited Royal Caribbean Corp. v. Modesto, 614 So. 2d 517 (Fla. 3d DCA 1992) (holding that Florida statute providing for confidentiality of mediation proceedings was not preempted by maritime law and finding "no conflict between Florida's rule of law regarding offers of judgment and federal maritime law."). The case proceeded to trial and the jury found in favor of Mr. Cox, who sought attorney's fees based on his offer of judgment. The trial court judge granted an award of $245,856.87 in attorney's fees pursuant to plaintiff's offer of judgment.
The original appeal was taken from the trial court's order, which the Third District affirmed, relying on the rationale enunciated in Modesto. Royal Caribbean moved for a rehearing en banc. The en banc panel consisted of Chief Judge Frank Shepherd and Judges Well, Suarez, Rothenberg, Lagoa, Salter, Emas, Fernandez, Logue and Scales. On rehearing, Royal Caribbean argued that the Third District should recede from the ruling in Modesto.
By way of background, and contrary to Modesto,several other state and federal courts have held that "under federal admiralty law, the prevailing party is not entitled to attorney's fees . . . even when a state statute establishes an entitlement to fees." See Nicoll v. Magical Cruise Co., 110 So. 2d 98, 98 (Fla. 5th DCA 2013) (citing Misener Marine Constr., Inc. v. Norfolk Dredging Co., 594 F.3d 832, 841 (11th Cir. 2010) (explaining that federal maritime law follows the American rule regarding attorney's fees); Texas A&M Research Found. v. Magna Transp. Inc., 338 F.3d 394, 405 (5th Cir. 2003); Am. Nat'l Fire Ins. Co. v. Kenealy, 72 F.3d 264, 270 (2d Cir. 1995); Southworth Mach. Co. v. F/V Corey Pride, 994 F.2d 37, 41 (1st Cir. 1993); Su v. M/V S. Aster, 978 F.2d 462, 475 (9th Cir. 1992); Sosebee v. Rath, 893 F.2d 54, 56–57 (3d Cir. 1990)); see also Garan, Inc. v. M/V Aivik, 907 F.Supp. 397, 400 (S.D. Fla. 1995) (finding that Modestomisconstrued the holding in Vaughan v. Atkinson, 369 U.S. 527, 82 S.Ct. 997, 8 L.Ed.2d 88 (1962), involving an exception for a discretionary award of attorneys' fees in the maritime context when the non-prevailing party has acted in bad faith).
Given the uncertainty Modesto generated, the issue of whether state-based recovery of attorney's fees is compatible with federal maritime law was ripe for clarification and decision. Ultimately, the Third District Court of Appeal receded from Modestoand finally clarified that Florida's offer of judgment statute conflicts with federal maritime law. The Third District stated a prevailing party is not entitled to attorney's fees under federal maritime law absent certain exceptional circumstances (i.e. bad faith) even when a state statute establishes entitlement.
One of the overarching and central tenets of maritime law is uniformity, which the recent en banc decision aims to serve. See Texas A&M Research Found., 338 F.3d at 405. The decision has the practical and immediate impact of rendering any already filed or pending proposals for settlement relying on Modesto in a maritime action a nullity and non-enforceable. This ruling is especially significant given the prevalence of forum selection clauses in Miami, which is the epicenter of the cruising industry. The en banc decision is a neutralizer for both plaintiffs and defendants as the offer of judgment rule and statute can apply pressure and encourage settlement on both sides. The recent decision also impacts the already strategic choice-of-law decision and manner of pleading between admiralty and state substantive law.
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