PROPOSALS OF SETTLEMENT IN AN ADMIRALTY CASE

Typically, the plaintiff has the choice of forum in an admiralty personal injury claim, that is, the plaintiff and her counsel may choose whether to file suit in state court with a jury trial or in federal court under its admiralty jurisdiction with no right to a jury trial. I often choose state court so as to try my case before a jury. However, in state court in Florida, the defendants often file a proposal of settlement which places a heavy burden on the plaintiff’s shoulders throughout the duration of the case: will she win her case by the necessary percentage to keep her from being responsible for the defendant’s attorneys’ fees and costs?

If my clients are faced with just such a proposal of settlement/offer of judgment, I immediately file a Motion to Strike arguing that Florida’s proposal of settlement/offer of judgment statute has no applicability in a maritime case as federal maritime law controls. I have been very successful with this argument as follows:

PLAINTIFF’S BRIEF IN SUPPORT OF HER MOTION TO STRIKE DEFENDANT’S PROPOSAL OF SETTLEMENT

Plaintiff has moved to strike Defendant’s Proposal of Settlement served on Plaintiff on May 5, 2014, as Fla. R.Civ.P.1.442 and Fla.Stat. §768.79 are inapplicable to the instant case because they conflict with federal maritime law which is the substantive law of the above captioned case. Federal maritime law holds that attorney’s fees may not be awarded pursuant to state fee-shifting statutes in an admiralty case. Her argument and summary of the applicable law follows:

STATEMENT OF THE CASE AND FACTS

On July 1, 2012, Plaintiff was vacationing in Walton County and was seriously injured in a waverunner accident involving waverunners owned by Defendant; the accident occurred in the navigable waters of Choctawhatchee Bay.
Plaintiff filed her Complaint against Defendant in the Circuit Court for Walton County, FL, with a jury trial request.

DEFENDANT’S PROPOSAL OF
SETTLEMENT AND PLAINTIFF’S MOTION TO STRIKE

Subsequently, Defendant submitted its Proposal of Settlement pursuant to Rule 1.442 of the Florida Rules of Civil Procedure and §768.79, Fla. Stat. (1997), upon Plaintiff; Plaintiff responded immediately with her Motion to Strike Defendant’s Proposal of Settlement arguing that §768.79 and Fla.R.Civ.P.1.442 impermissibly conflicted with federal maritime law.

I. ADMIRALTY JURISDICTION

A. APPLICATION OF FEDERAL MARITIME LAW

Federal maritime law controls the rights and liabilities of the parties in state court admiralty cases. See, Carnival Corporation v. Carlisle, 953 So.2d 461, 464 (Fla. 2007).

II. THE SUBSTANTIVE LAW

A. Federal maritime law applies the American Rule that each party should bear its own attorneys’ fees, a long-entrenched rule across the country and in the Eleventh Circuit.

In Misener Marine Constr. Inc. v. Norfolk Dredging Co., 594 F.3d 832, 838- 841 (11th Cir. 2010), cert.denied, ____U.S.____, 130 S.Ct. 3505, 177 L.Ed.2d 1091 (2010), the Court of Appeals for the Eleventh Circuit held that the Georgia Prompt Pay Act could not be incorporated into substantive maritime law so as to entitle the prevailing party in a maritime dispute to attorneys’ fees, noting that “…the rule that each party bear its own attorneys’ fees is a characteristic feature of substantive maritime law.” Similarly, the US District Court for the Middle District of Florida held in Stires v. Carnival Corp., 243 F. Supp. 2d 1313, 1323 (M.D. Fla. 2002), that “{t}he federal law regarding the award of attorney’s fees in the maritime context is clear and directs each side to pay its own fees.”

In an earlier case, in denying the request for attorney’s fees in a maritime case, the US District Court for the Middle District of Florida found that that the provision regarding attorney’s fees contained in TPA’s (Tampa Port Authority’s) regulations conflicted with preexisting federal admiralty law and therefore was preempted by federal admiralty law. See, Tampa Port Authority v. M/V Duchess, 65 F. Supp. 2d 1279, 1296-1297 (M.D. Fla. 1997). The Court went on to explain “{t}he general rule is that the prevailing party’s attorney’s fees are not recoverable in an admiralty case. The exceptions to this rule are: 1) when there is statutory authority providing for attorney fees; and 2) when the non-prevailing party has acted in bad faith.” Id. Similarly, the US District Court for the Southern District of Florida in Doe v. Celebrity Cruises, Inc., 145 F. Supp. 2d 1337, 1348 (S.D. Fla. 2001) held that “{u}nder federal maritime law, absent specific federal statutory authorization for an award of attorneys’ fees, the prevailing party is not entitled to those fees.”

Here Defendant has filed a Proposal of Settlement pursuant to Florida Statutes §768.79 and Florida Rule of Civil Procedure 1.442. This substantive state law mandates an attorney’s fee award to the prevailing party upon that party’s compliance with the statute’s requirements when the non-prevailing party has rejected an offer of judgment. See, Southeast Floating Docks, Inc., v. Auto-Owners Insur. Co., 82 So. 3d 73, 79 – 80 (Fla. 2012), (holding that section 768.79 is substantive for both constitutional and conflict of law purposes). “[S]tate courts may entertain maritime causes of action and may apply state law to supplement federal maritime law if the state law does not conflict with federal law or interfere with uniformity….State law will not apply if: (1) the state law is found to conflict with substantive maritime law, or (2) the state law affects remedies peculiar to maritime law. In other words, states may apply state law to supplement maritime law if that application does not flatly contradict maritime law.” Royal Caribbean Cruises, LTD v. Cox, 137 So.3d 1157, 1160 (Fla. 3d DCA 2014), quoting Norwegian Cruise Lines, Ltd. V. Zareno, 712 So. 2d 791, 793 (Fla. 3d DCA 1998).

Conversely, Florida’s offer of judgment statute mandates that the prevailing party be awarded its attorneys’ fees provided that the procedural requirements of the statute are satisfied, regardless of whether or not the non-prevailing party has acted in bad faith. See § 768.79(1), Fla. Stat. (1997). This award is not discretionary if the technical prerequisites are satisfied. See §768.79(6), Fla. Stat. (1997).

The statute is punitive in nature, and must therefore be strictly construed. See Hilyer Sod, Inc. v. Willis Shaw Express, Inc., 817 So. 2d 1050, 1054 (Fla. 1st DCA 2002). It is also a substantive state law providing a new right to recovery, and not merely a procedural rule. . See, Southeast Floating Docks, Inc., v. Auto-Owners Insur. Co., 82 So. 3d 73, 79 – 80 (Fla. 2012), (holding that section 768.79 is substantive for both constitutional and conflict of law purposes); Jones v. United Space Alliance, L.L.C., 494 F. 3d 1306, 1309 (11th Cir. 2007)(“This circuit has found §768.69 to be substantive law for Erie purposes.”).

B. A recent Florida decision by the 3rd District Court of Appeal holds that Florida Statutes Section 768.79 is preempted by admiralty law.

In Royal Caribbean Cruises v. Cox, 137 So.3d 1157, (3rd DCA, 2014), Defendant Royal Caribbean Cruise Ltd, appealed an order awarding seaman Byron Cox attorney’s fees pursuant to Florida’s offer of judgment statute, §768.79, following a jury verdict in his favor in an admiralty case. On April 9, 2014,
the 3rd District Court of Appeals sitting en banc held that the Florida offer of judgment statute, FS 768.79 and Florida Rule of Civil Procedure 1.442, conflicted with federal maritime law that parties pay their own attorney’s fees and reversed a lower court decision awarding fees under the statute. The Court recognized that though “[w]e are not bound by the decisions of the lower federal courts, see Carnival Corp.v. Carlisle, 953 So.2d 461, 465 (Fla. 2007), we follow the Florida Supreme Court’s admonition that ‘because this is a maritime case, [the Florida Supreme] Court and the Florida district courts of appeal must adhere to the federal principles of harmony and uniformity when applying federal maritime law.’” Id. at 470.

In 2013, in Nicoll v. Magical Cruise Co., 110 So.3d 98,99 (Fla.5th DCA 2013), the 5th District Court of Appeals earlier reached the same conclusion and held that “Under federal admiralty law, the prevailing party is not entitled to attorney’s fees absent circumstances not applicable here, even when a state statute {768.79} establishes an entitlement to such fees.”

C. The Overwhelming Weight of Authority Holds That Automatic Fee-Shifting Statutes Like Section 768.79 Impermissibly Conflict With Maritime Law And Cannot Be Applied In Admiralty Cases.

As described above, there is an inherent conflict between the automatic fee-shifting of state statutes like section 768.79, and the requirement of proof of bad faith or misconduct before the award of fees under the American Rule. As a result, the case law has repeatedly determined that such state laws conflict with federal maritime jurisprudence and cannot be used by state courts in admiralty cases.
The law in the Eleventh Circuit uniformly rejects the application of section 768.79 and other similar automatic fee-shifting state statutes in admiralty cases. This has been made abundantly clear by the Eleventh Circuit’s decision in Misener Marine Constr., Inc. v. Norfolk Dredging Co., 594 F.3d 832 (11th Cir. 2010) cert.denied, ____U.S.____, 130 S.Ct. 3505, 177 L.Ed.2d 1091 (2010). In Misener Marine, the Court had to decide whether a prevailing party in a maritime case could recover its fees under a Georgia statute providing for an automatic award of such fees, much like section 768.79. The lower court had ruled that “there is not an established federal rule regarding attorneys’ fees in maritime cases, and attorneys’ fees is not the type of issue that requires a uniform national rule,” making the recovery of fees under the Georgia statute not inconsistent with maritime law and allowing the Georgia statute to supplement such law. Id. at 836. The Eleventh Circuit disagreed, holding that “The American Rule barring the shifting of attorneys’ fees is a characteristic feature of maritime law” and the Georgia statute “is in direct conflict with this principle of maritime law” and could not be enforced. Id. at 835.

In reaching this conclusion, the Eleventh Circuit methodically examined whether the American Rule was a central characteristic of maritime law, whether uniformity in this area was important, and whether state laws inconsistent with the American Rule could be applied in admiralty. After describing how the American Rule had become entrenched in federal maritime cases with only a narrow exception for bad faith misconduct, the Court found that not only was this the default rule, but that “the consistent and continued application of the American Rule to maritime disputes has established the American Rule as a characteristic feature of substantive maritime law.” Id. at 841. As a result, it held that the Georgia statute’s “entitlement to attorneys’ fees is in direct conflict with this principle of substantive maritime law” and that the statute therefore “cannot be incorporated into substantive maritime law.” Id.

Numerous other decisions by Florida’s federal district courts are consistent with Misener Marine, with some specifically holding that section 768.79 should never be applied in a federal maritime case. See, Tampa Port Auth. v, M.V Duchess, 65 F. Supp. 2d 1279, 1296-97 (M.D. Fla. 1997), (“[T]his court finds that the provision regarding attorney fees contained in [defendant’s] regulations conflicts with preexisting federal admiralty law.”); Tai-Pan, Inc. v. Keith Marine, Inc., 1997 WL 714898 (M.D. Fla. 1997)(holding that section 768.79 conflicts with admiralty law and is preempted); Garan Inc. v. M/V Aivik, 907 F. Supp. 397, 400 (S.D. Fla.1995)(“The Florida statute [§768.79] conflicts with the American Rule set forth in federal common law, as the Florida substantive rule impermissibly imposes an additional obligation on the parties in direct conflict with long-standing federal maritime common law.”).

Federal courts across the country have reached the same conclusion. All five federal Circuit Courts of Appeal that have specifically addressed this issue have sided with the Eleventh Circuit and held that automatic fee-shifting state statutes cannot be applied in federal admiralty cases since that would undermine the substantive American Rule. See Texas A&M Research Found. V. Magna Transp., Inc., 338 F.3d 394, 406 (5th Cir. 2003)(“[T]he general rule of maritime law that parties bear their own costs, coupled with the need for uniformity in federal maritime law, precludes the application of state attorneys’ fee statutes…to maritime contract disputes.”); Narte v. All Alaskan Seafoods, Inc., 211 F. 3d 1274, 2000 WL 237923*4 (9th Cir. 2000)(affirming district court’s denial of attorneys’ fees under Washington fee-shifting statute because of preemption under admiralty law)(unpublished disposition); Am. Nat’l Fire Ins. Co. v. Kenealy, 72 F. 3d 264, 270-71 (2d Cir. 1995)(adhering to the “federal prohibition against attorneys’ fees in admiralty suits in the broadest of terms” which “must be followed instead of state law”); Southworth Mach. Co., Inc. v. F/V Corey Pride, 994 F. 2d 37, 42 (1st Cir. 1993)(Massachusetts fee-shifting law is “inconsistent with maritime law, [and] cannot be applied in this case”); Sosebee v. Rath, 893 F. 2d 54, 56-57 (3d Cir. 1990)(holding that “a general award of attorneys’ fees pursuant to a state statute which does not require a finding of bad faith directly conflicts with federal admiralty law” and therefore” should not be applied”).

D. RULING AND ORDER

On September 9, 2014, Judge Kelvin Wells of the Circuit Court in and for the First Judicial Circuit in Walton County, Florida, after oral argument, struck Defendant’s Proposal of Settlement/Offer of Judgment holding Fla R. Civ. P. 1.442 and Fla. Stat. §768.79 inapplicable in a maritime personal injury case because they conflicted with federal maritime law which was the substantive law of the case. Judge Wells held that federal maritime law holds that the rule that each party bear its own attorneys’ fees is a characteristic feature of substantive maritime law; thus Judge Wells ordered that the attorneys’ fees may not be awarded pursuant to Florida’s fee shifting statutes in an admiralty case.