Ferry Owners Beware … and Be Clear

Friday, March 05, 2004

By James P. Nader, Esq. & Joseph A. Poblick, Esq.

It is common in today's litigious environment for businesses to attempt to limit their liability through contracts. Courts have struggled with the "boilerplate" language used in many contracts today. This is true even in the admiralty and maritime world. Although lawsuits involving maritime injuries generally must be filed within three years, passenger vessels such as ferries and cruise ships may stipulate a shorter time frame. Federal maritime law allows a passenger vessel to limit its liability to lawsuits which are filed within one year of the accident. Passenger vessels may stipulate time limitations for filing claims and commencing lawsuits on their tickets. The time within which a claim must be filed begins on the date when the injury occurred. The passenger, however, must receive adequate notice for the time limitations to apply.

A recent case out of the U.S. Court of Appeals for the Second Circuit in New York reviewed the issue of contractual limitations regarding an injured person's ability to sue. In this case a passenger sued the ferry owner after she fell and was injured while boarding the vessel. The plaintiff's husband purchased the tickets two or three minutes before boarding the ferry. The plaintiff fell on the gangway and had to be carried aboard by her husband. While carrying his wife the husband handed both tickets to the collector. The tickets contained restrictions regarding an injured person's ability to sue. The trial court found that the plaintiff had reasonable notice of the terms of the contract and ample opportunity to review the limitations. The passenger contested the court's ruling and the Appellate Court reviewed the issue of whether reasonable notice of the contractual limitations was provided by the vessel. The Court found that the passengers only had possession of the ticket for two to three minutes. The Court determined that this was not sufficient time to give the passengers reasonable notice of the ticket's limitations.

The issue of time limitations appearing on passengers' tickets is one that arises with some regularity within the court system. Essentially the only restriction on these limitations is that the passenger vessel is required to "reasonably communicate" the presence and importance of a limitation. Previously courts have found that a limitation would not be enforceable unless the carrier had done all it reasonably could to warn the passenger of the terms and conditions limiting their legal rights. The current trend is that passenger vessels must "reasonably communicate" any limitations to their passengers.

Over time a two-part test has developed to assist courts with their determination of the "reasonableness" of the vessel's communication. The first part of the test is whether the physical characteristics of the ticket reasonably communicate to the passenger the existence of important terms and conditions. The courts have held that mere notices which do not attract a passenger's attention to the restrictions on the reverse side of the ticket are not enforceable. A limitation of liability clause should be displayed prominently in the terms of the ticket in a manner that directs the passenger's attention to the restrictions. Many tickets attract a passenger's attention by using different type size and style, offsetting color(s), underlining the limitations, and using a heading of "Notice" or "Restrictions."

The second part of the test to determine the reasonableness of the notice is whether the circumstances surrounding the passenger's purchase and retention of the ticket permitted the passenger to become meaningfully informed of the ticket limitations. In layman's terms, did the passenger have enough time to notice and review the limitations? The courts will typically examine the notice as it relates to this part of the test on a case-by-case basis. Cases in which the shorter time limitations have been upheld have been based in part on the passenger receiving the ticket several days in advance of the trip and being permitted to retain a portion of the ticket indicating the terms and condition of travel. There also have been cases where despite the ticket being surrendered upon boarding, the plaintiff was deemed to have received reasonable notice because he had possession of the ticket for what the Court determined was a sufficient period of time. The Courts, unfortunately, have not defined what is "sufficient time" under all circumstances. Essentially, different circumstances may cause the same ticket provisions to be invalid or valid.

The courts may also take into account the familiarity of the passenger with the ticket when determining whether he had reasonable notice of any limitations. This relates not only to the amount of time the passenger had possession of the ticket, but also how often the passenger used the particular mode of transportation. Some courts have upheld the ticket restrictions when a passenger's representative had the ticket for several days before travel even though the passenger never had possession of the ticket. The passengers in those cases were deemed to have had constructive notice. The argument that one never read the limitations is not a defense; ignorance is not an excuse.

As a passenger vessel operator is it imperative that if you wish to restrict the passenger's rights and your liability, you do so by clear and explicit language. This includes any limitation clauses on the ticket. To be enforceable the limitation clause must be written on the ticket in a manner which is distinct and easy to comprehend by the passenger. Additionally, the passenger must have adequate time to review the limitations. As the courts have held, two to three minutes prior to departure may be insufficient. If you have any doubts about the adequacy of your restrictions, consult with legal counsel before you have a problem.

About the Authors

James Nader is a partner and Joseph A. Poblick is an associate with the law firm of Lobman, Carnahan, Batt, Angelle & Nader in New Orleans, La. Mr. Nader's trial practice over the last eighteen years has included Admiralty and Maritime Law, an area in which he is an adjunct professor at Tulane University. Mr. Poblick's primary practice areas include admiralty, maritime law, and insurance defense. For more information on the firm, please see it's Website at www.lcba-law.com, or contact them at 400 Poydras St., Suite 2300, New Orleans, LA 70130, phone (504) 586-9292.**

**This article is for general information and educational purposes only, and should not be construed as legal advice. The authors are available to discuss any specific questions or concerns regarding any issues related to this article.

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