Zolt Sabo v. Carnival Corporation , 762 F.3d 1330 ( 2014 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_________________________
No. 13-11765
_________________________
D.C. Docket No: 1:12-cv-22653-DLG
ZOLT SABO,
ILIJA JANEV,
STEFAN VIDOJKOVIC,
individually and on behalf of all others similarly situated,
Plaintiffs - Appellants,
versus
CARNIVAL CORPORATION,
d.b.a. Carnival Corporation & PLC,
CARNIVAL PLC,
d.b.a. Carnival Corporation & PLC,
CARNIVAL CORPORATION & PLC,
Defendants - Appellees.
_____________________
Appeal from the United States District Court
for the Southern District of Florida
_______________________
(August 12, 2014)
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Before MARCUS, Circuit Judge, and PROCTOR * and EVANS, ** District Judges.
PROCTOR, District Judge:
Today, we consider whether Carnival Corporation & PLC, which is a dual-
listed company -- i.e., a corporate structure that joins separate corporations in a
common economic enterprise, while allowing the corporations to maintain their
individual legal identities -- is properly suable under the laws of Florida in this
action. After careful review and with the benefit of oral argument, we conclude
that it is not. We therefore affirm the district court’s dismissal of this lawsuit.
I. The Pleadings and Dismissal Below
From time immemorial, there have been those who have made their living
on the sea, a long tradition joined by Zolt Sabo, Ilija Janev, and Stefan Vidojkovic,
all of whom worked aboard Cunard Line cruise ships. Unfortunately, their careers
were not without interruption, as all of them sustained back injuries that required
land-based rest and recuperation. Injured sea workers are entitled by law to certain
medical and unemployment benefits, commonly referred to as “maintenance and
cure,” and Sabo, Janev, and Vidojkovic (hereinafter sometimes referred to as “the
*
The Honorable R. David Proctor, United States District Judge for the Northern District
of Alabama, sitting by designation.
**
The Honorable Orinda D. Evans, United States Senior District Judge, for the Northern
District of Georgia, sitting by designation.
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Seafarers”) each collected such benefits, with each receiving three months of
wages and two months of medical expenses. Those are the benefits that these and
other employees agreed to in their contracts with Cunard Celtic Hotel Services,
Ltd., a company that operates under the corporate umbrella of Carnival
Corporation & PLC — the dual-listed company (“DLC”) comprised of Carnival
Corporation (a Panamanian corporation headquartered in Miami, FL)
and Carnival PLC (a British corporation headquartered in Southampton,
England). However, the Seafarers became unsatisfied with the extent of their
maintenance and cure, believing that their contracts impermissibly limited their
compensation.
On July 18, 2012, Plaintiffs Sabo, Janev, and Vidojkovic filed a class action
complaint against Defendants Carnival Corporation and Carnival PLC alleging
failure to provide maintenance and cure in accordance with general United States
maritime law and the Jones Act, a federal statute that provides legal remedies not
otherwise guaranteed under general maritime law. Defendants responded by filing
a Motion to Dismiss, arguing, among other things, that the Seafarers’ claims were
due to be dismissed because (1) the district court lacked in personam jurisdiction
over Carnival PLC, (2) Carnival Corporation was an improper party to the case (as
it was adequately shielded from liability by its corporate form), and (3) the
Complaint failed to meet federal pleading standards.
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The Seafarers’ Response made clear that they only intended to sue one
defendant, Carnival Corporation & PLC,1 completely re-orienting the focus of the
case and making Plaintiffs’ ability to bring suit against a DLC the operative issue.
In its subsequent Order, the district court addressed the Seafarers’ newly
articulated position, and wholly rejected the notion that it could exercise
jurisdiction over a DLC, including Carnival Corporation & PLC:
[The] Class Action Complaint fails to convince the Court that the
enterprise formed through the dual-listed company structure
overcomes the individual corporate identity of Carnival Corporation
and Carnival PLC to give the Court jurisdiction over the dual-listed
company Carnival Corporation and PLC.2
The district court did not completely foreclose the possibility that a DLC could be
haled into court, but noted that “the case or controversy would have to arise from
said corporate structure (i.e., the shared assets or investments [of the DLC]).” 3
Dismissing their complaint without prejudice, the district court gave the Seafarers
ten days to file an amended complaint.
1
Response in Opposition to Motion to Dismiss at 1-2, Sabo v. Carnival Corp., No. 12-
22653 (S.D. Fla. Sept. 17, 2012) (“First and foremost, Plaintiffs have sued one entity and one
entity only: The dual-listed company known as Carnival Corporation & PLC. Plaintiffs have not
sued Carnival Corporation in its individual corporate capacity. Plaintiffs likewise have not sued
Carnival PLC in its individual corporate capacity.”).
2
Order Granting Defendants’ Motion to Dismiss at 5, Sabo v. Carnival Corp., No. 12-
22653 (S.D. Fla. Nov. 29, 2012).
3
Id. at 6.
4
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The Seafarers filed an amended class action complaint that named Carnival
Corporation & PLC as the sole defendant. The amended complaint closely
resembled the initial complaint, but devoted greater space to describing the nature
of the DLC, in an apparent attempt to demonstrate the corporate structure’s
amenability to suit in the Southern District of Florida. However, the amended
complaint failed to directly address the district court’s initial misgivings about the
legal status of DLCs, an omission that would prove fatal to the Seafarers’ case.
Indeed, the district court bluntly rebuffed their creative attempt to amend their
pleading, writing:
Plaintiffs, by amending their Class Action Complaint to name the
dual-listed corporation Carnival Corporation and PLC as the sole
defendant, have ignored the Court’s prior determination that the dual-
listed corporation was not a proper entity . . . The Amended Class
Action Complaint contains the same allegations as the original Class
Action Complaint. The Court declines to delineate from its previous
position that this action does not arise from the structure of the dual-
listed corporation. Therefore, the Court does not have personal
jurisdiction over the dual-listed corporation Carnival Corporation and
PLC. 4
The Seafarers appealed the district court’s Order, presenting the question that we
answer today: based upon the record before us and the laws of Florida, was
Carnival Corporation & PLC, a DLC, subject to suit as a corporation, according to
4
Order Granting Defendants’ Second Motion to Dismiss at 5-6, Sabo v. Carnival Corp.,
No. 12-22653 (S.D. Fla. March 18, 2013).
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the doctrine of estoppel, or under a joint venture theory of liability? We conclude
it was not.
II. Standard of Review
In evaluating the district court’s decision to dismiss a case for lack of
personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), we
review the legal conclusions of the district court de novo. See Meier ex rel. Meier
v. Sun Int’l Hotels, Ltd., 288 F.3d 1264, 1268 (11th Cir. 2002).
III. Discussion
A dual-listed company (DLC) is a corporate structure that binds two separate
corporations into a unified economic enterprise, but allows the participating
entities to maintain their individual legal identities. The arrangement is established
through the execution of an equalization agreement, a contract that defines and
governs the relationship between the two companies. Such a structure bears many
merger-like qualities, such as common ownership of assets and integrated
management, but also exhibits some hallmarks of corporate independence, such as
separate stock exchange listings. Almost always utilized by corporations of
disparate national origin, DLCs are employed for a variety of reasons, including
the advantages they potentially offer in the areas of tax, investor/public relations,
and regulatory oversight. Carnival Corporation and Carnival PLC (formerly P&O
Princess Cruises) chose to dual list (rather than merge) because it allowed them to
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gain access to multiple financial markets (both the New York Stock Exchange and
the London Stock Exchange), avoid divestment from British institutional investors
(many of whom are restricted from holding shares in foreign-owned companies),
and maintain their distinct, individual brands.
Just as the creation of Carnival Corporation & PLC involved significant
tactical considerations, so too did the Seafarers’ decision to sue the DLC rather
than its different corporate components. Instead of pursuing a complicated,
convoluted case against Carnival Corporation & PLC, the Seafarers could have
asserted claims against Cunard Celtic Hotel Services, Ltd. (their direct, contractual
employer) or Carnival PLC (Cunard Celtic’s parent company). However, in this
matter the Seafarers have charted a course less traveled, making the tactical choice
to focus their suit on the DLC in hopes of reaping greater rewards. By suing the
DLC, the Seafarers apparently hoped to (a) invoke U.S. maritime law, which
affords injured seamen more extensive maintenance and cure than that provided
under the Seafarers’ U.K.-based contracts, and (b) tap into a larger pool of
potential class members, opening the class not only to workers from the Seafarers’
own Cunard Line, but also to employees from Carnival Corporation & PLC’s
entire fleet. Indeed, the Seafarers took a gamble in solely pursuing the DLC, one
that could pay off in broader, more viable claims, but only if they could
demonstrate that a DLC is a properly suable entity.
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Throughout this litigation, the Seafarers have primarily advanced three
theories 5 as to why Carnival Corporation & PLC -- despite its status as a DLC -- is
a suable entity. First, they assert that Carnival Corporation & PLC is, in reality, a
corporation and, thus, can be sued like one. Second, they aver that Carnival
Corporation & PLC is subject to the doctrine of corporation by estoppel, arguing
that it cannot avoid being sued as a corporation after holding itself out as a
corporate-like entity. Third and finally, they contend that Carnival Corporation &
PLC is essentially a joint venture between the participating corporations, making
the DLC suable pursuant to Florida’s law of joint ventures. These theories are
addressed in turn below.
A. Carnival Corporation & PLC is Not Suable as a Corporation
The Seafarers focus much of their briefing efforts on demonstrating the
unified, integrated nature of Carnival Corporation & PLC in an attempt to persuade
the court that the DLC should be treated like any other stand-alone corporation.
Indeed, they claim that “Carnival Corporation & PLC operate[s] as a single
enterprise sufficient to establish personal jurisdiction over both entities as a single
operation.”6 Although the Seafarers are correct in their assertion that Carnival
5
To be clear, the Seafarers’ arguments are not so precisely delineated in their briefing.
Nevertheless, the court has discerned these as the primary arguments made in support of reversal.
6
Brief of Appellants at 15, Sabo v. CCL, No. 13-11765 (11th Cir. June 10, 2013); see
also id. at 10 (“[W]hen those two aforesaid entities[,] Carnival Corporation and P&O Princess
Cruise Line . . .[,] merged in 2003, it formed one entity, whether incorporated or not, called
8
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Corporation & PLC resembles a corporation in many ways, their simplistic
argument badly misses the mark.
Indeed, regardless of whether an entity exhibits qualities common to
corporations, it is not properly subject to treatment as a corporation absent
incorporation, the fundamental act of corporate creation and the dividing line
between corporations and non-corporations. 7 In order for Carnival Corporation &
PLC to assume the characteristics of a corporation (particularly the ability to sue
and be sued),8 it must be incorporated, an action which the Seafarers at least
implicitly acknowledge has not occurred, neither in Florida, nor in any of the other
forty-nine states. Accordingly, despite their best efforts, the Seafarers cannot
maintain a suit against Carnival Corporation & PLC on the basis of its corporate-
like qualities.
B. Carnival Corporation & PLC is Not Estopped from Denying that
it is a Corporation
Carnival Corporation & PLC[,] the Appellee herein. Assuredly, if Appellee can use this singular
brand to retain stockholders in either of the two markets in which it list[s] its stocks, to sign
contracts, to make decisions regarding cruise operations and/or advertise to consumers, that same
entity can be held liable for their tortious acts in a court of law.”)).
7
See, e.g., Florida Business Corporation Act, Fla. Stat. § 607, et seq., which defines a
corporation as “a corporation for profit . . . incorporated under or subject to the provisions of this
act.” Fla. Stat. § 607.01401(5) (emphasis added).
8
See, e.g., Fla. Stat. § 607.0302 (“[E]very corporation . . . has the same powers as an
individual to do all things necessary or convenient to carry out its business and affairs, including
without limitation power: (1) To sue and be sued, complain, and defend in its corporate name.”).
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The Seafarers also argue that Carnival Corporation & PLC should be
estopped from denying that it is a corporation because it has publicly promoted
itself as a single entity. Indeed, they contend that Carnival Corporation & PLC
“should not be allowed to argue the lack of formal creation of its DLC when it
represents itself as a singular company. . . . Appellee should be estopped from
denying this company’s existence as a defense.” 9 Corporation by estoppel is a
recognized theory in the state of Florida, having been codified at Section 617.1904:
No body of persons acting as a corporation shall be permitted to set up the
lack of legal organization as a defense to an action against them as a
corporation, nor shall any person sued on a contract made with the
corporation or sued for an injury to its property or a wrong done to its
interests be permitted to set up the lack of such legal organization in his or
her defense.
Fla. Stat. § 617.1904 (1997). However, the theory is utilized infrequently, and
when it is, it is applied to far different circumstances than those found here. A
prime example of such circumstances exists in Harry Rich Corp. v. Feinberg, 518
So. 2d 377 (Fla. 3d DCA 1987), where a creditor sought to hold both a corporation
and a corporate representative liable for a disputed contract. When the creditor and
representative negotiated the contract in question, the corporation -- unbeknownst
to either the creditor or the representative -- had yet to be incorporated, creating a
question as to who the creditor could pursue for the failed contract. Harry Rich,
9
Reply Brief of Appellants at 4 & 6, Sabo v. CCL, No. 13-11765 (11th Cir. August 19,
2013).
10
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518 So. 2d at 378. The precise issue on appeal was whether the creditor could
maintain an action against the corporate representative, but the appellate court also
extensively discussed the doctrine of corporation by estoppel, which dictated that
the corporation be held liable on the contract despite its non-existence at the time
of contracting. Id. at 379-81. As the Harry Rich court explained, “[f]airness
dictates that a creditor dealing with what it believes to be a corporation should be
able to recover from that entity. . . . The doctrine of corporation by estoppel . . .
provides the creditor with that opportunity.” Id. at 381. In other words, the
doctrine of corporation by estoppel is most appropriately used to maintain the
expectations of parties to a contract, allowing a “corporation [to] sue and be sued
as if it existed if the parties to the contract behaved as if it existed.” Id. at 379.
A starkly different situation is before us here. The Seafarers entered into
employment contracts with Cunard Celtic Hotel Services, Ltd., but now bring suit
against Carnival Corporation & PLC, an entity which had no apparent involvement
in the formation of their contracts. Indeed, the Seafarers have not alleged that they
had reason to believe either that they were contracting with Carnival Corporation
& PLC, or that Carnival Corporation & PLC was a legal entity capable of being
sued. Absent such expectations, the Seafarers may not hold Carnival Corporation
& PLC liable by way of corporation by estoppel. The doctrine is simply
inapplicable to the facts alleged here.
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C. Carnival Corporation & PLC is Not Suable as a Joint Venture
Finally, the Seafarers argue that DLCs are analogous to joint ventures, and
attempt to graft the law of joint ventures onto DLCs, including Carnival
Corporation & PLC. Specifically, the Seafarers latch onto the notion -- articulated
in cases such as Sutton v. Smith, 603 So. 2d 693, 699 (Fla. 1st DCA 1992) -- that
all the parties to a joint venture are subject to personal jurisdiction in a forum state
when the joint venture contemplates and actually performs within that state. In
particular, the Seafarers contend as follows:
Since a DLC is like a joint venture, but the parties to the DLC have an
actual partnership and share everything they own, not just a single
project, it stands to incontrovertible reason that a DLC which involves
operating, conducting, engaging in, or carrying on the business of the
DLC in Florida as comprehensively as Carnival Corporation & PLC
does, places the DLC within the ambit of Fla. Stat. § 48.193(1)(a),
satisfies due process requirements, and confers personal jurisdiction on
the DLC’s members. 10
However, their joint venture argument is plagued by two major flaws.
First, despite the simple allure of their portrayal of the DLC as “a joint
venture on steroids,”11 the Seafarers’ theory fails because a DLC simply does not
equate to a joint venture. In its most basic form, a Florida joint venture is “an
association of persons or legal entities to carry out a single business enterprise for
10
Brief of Appellants at 11, Sabo v. CCL, No. 13-11765 (11th Cir. June 10, 2013).
11
Response in Opposition to Motion to Dismiss at 8, Sabo v. Carnival Corp., No. 12-
22653 (S.D. Fla. Sept. 17, 2012).
12
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profit.” Florida Tomato Packers, Inc. v. Wilson, 296 So. 2d 536, 539 (Fla. 3d DCA
1974) (emphasis added). However, as the Seafarers themselves readily admit, 12
DLCs are more global and all-encompassing in purpose than are joint ventures.
Consequently, a DLC cannot be deemed a joint venture for jurisdictional purposes.
And it is of no consequence that the DLC and the joint venture are both
collaborative in nature; the scopes of the two structures are diametrically distinct,
thereby rendering inappropriate the application of Florida’s joint venture laws to
Carnival Corporation & PLC.
Second, even assuming arguendo that a DLC is properly treatable as a joint
venture, the Seafarers would still only be able to reach the joint venture
participants (i.e., Carnival Corporation and Carnival PLC) as a result of the joint
venture’s contacts with the state of Florida. This is because the rule set forth in
Sutton -- which forms the basis of the Seafarers’ joint venture theory -- stands only
for the proposition that the members of a joint venture, not the joint venture itself,
are subject to a forum state’s exercise of personal jurisdiction over them if the joint
venture contemplates and actually involves performance in that state. Sutton, 603
So. 2d at 698 (“We conclude that the sponsorship agreement, wherever made,
created a joint business venture between Appellees and Sutton that contemplated
12
Brief of Appellants at 11, Sabo v. CCL, No. 13-11765 (11th Cir. June 10, 2013) (“A
DLC is somewhat like a joint venture, but the two parties share everything they own, not just a
single project.”).
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and in fact involved significant performance in Florida and thereby subjected all
parties to that joint venture, including Appellees, to personal jurisdiction by Florida
courts in respect to causes of actions arising out of the joint venture activities in
Florida.”) (emphasis added). This analysis makes sense, because a joint venture is
not an independent legal entity, but rather a vehicle for limited collaboration
between individual entities. See Florida Tomato Packers, Inc., 296 So. 2d at 539
(“A joint venture has been defined as a special combination of two or more
persons, who, in some specific venture, seek a profit jointly without the existence
between them of any actual partnership, corporation, or other business entity.”)
(emphasis added). In other words, a joint venture itself is not an entity that is
properly subject to suit, which ultimately renders the Seafarers’ joint venture
argument meaningless as it relates to the question of whether Carnival Corporation
& PLC is a properly suable entity.
IV. Conclusion
Our ruling today -- that Carnival Corporation & PLC is not properly suable
in this action -- may appear, at first glance, to produce a harsh and unfair result.
However, the Seafarers could have pressed their claims against another entity.
Indeed, it seems abundantly clear that the Seafarers could have brought an action
against Carnival PLC (the Cunard Line’s parent company), but chose not to,
instead making a tactical decision to pursue potentially broader claims against
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Carnival Corporation & PLC. The Seafarers rolled the dice in targeting Carnival
Corporation & PLC exclusively in this case; unfortunately for them, that roll did
not pay off.
AFFIRMED.
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