Swift Action Could Stem Tide Of Lawsuits From Costa Concordia Shipwreck

Passengers of the Costa Concordia that ran aground off the coast of Tuscany arrive on a ferry in Porto Santo Stefano, Italy, on Jan. 14. (AP Photo/Gregorio Borgia)

Two lawsuits arising out of the Costa Concordia shipwreck were filed last week. Many more are likely to be on the way. They may include claims for everything from death and physical injury to lost property, pain and suffering, lost earnings and economic distress.

The ship�s operator, Costa Crociere, a unit of Miami-based Carnival Corporation, last week offered uninjured passengers �11,000 ($14,460) apiece to compensate them for lost baggage and psychological trauma. The company will also reimburse passengers for their cruise, travel and medical expenses.

That�s a step in the right direction, but the company and its parent need to go much further to stem the tide of litigation. While preparing for the inevitable lawsuits, Carnival should consider setting up a mass claims facility that could quickly evaluate and pay claims without the need for litigation. The sooner, the better.

So far two lawsuits are pending. One, filed Jan. 26 in the U.S. District Court for the Northern District of Illinois, is a class action by a crewmember from Peru.

The other, filed Jan. 27 in the 11th Circuit in Miami�a trial level state court�is a claim by six surviving passengers. (Two are residents of Florida, two are from New York and two are from Rome.) They seek damages for lost property (among other things, the complaint lists jewelry, contact lenses and iPods) as well as the consequences of their physical injuries: �severe discomfort, injuries and sickness, severe mental anguish, pain, loss of enjoyment of life, aggravation of any previously existing conditions, lost wages, loss of wage earning capacity.�

Although it�s still unclear how many of the other approximately 4,500 passengers and crew�or their families�will bring lawsuits or the claims they will make, the number could be enormous and the allegations creative, says Kenneth R. Feinberg, a mediator with the firm of Feinberg Rozen in Washington, D.C. Feinberg was Special Master of the September 11th Victim Compensation Fund set up by Congress 11 days after the terrorist attacks to handle claims against the U. S. government. He is currently administrator of the BP oil spill fund.

The Costa contract sets a short time frame for suing. To make a claim for �personal injury, illness or death� it says you must give the company �full particulars� in writing within 185 days �after the date of the injury, event, illness or death giving rise to the claim� and file the suit within one year of the event. Shorter time frames apply for other types of claims (you have 30 days after you get off the boat to give them notice and six months to file the case).

While maritime law experts ponder the pros and cons, some personal injury lawyers who don�t specialize in this narrow field seem to be rushing to the courthouse.

Pursuing these claims in U.S. courts is likely to be an uphill battle. Under the Costa contract, if a cruise does not touch U.S. soil�as this one didn�t�aggrieved parties can only sue in Genoa, Italy. This will not prevent claims from being filed in the U.S., but the cruise company could spend many months trying to convince the court to send it to Italy before even tackling the subject of liability.

With a claims facility, liability is assumed�there would be no need for cruise passengers to prove it. The only question, from consumers� perspective, is whether the payment is enough that they�re willing to forgo a potentially larger gain that they might get by suing.

Reimbursement of Carnival and Costa Crociere by other parties who may also be liable, waits for another day. They could turn around and seek contributions from them later.