SCOTUS News: Justices revive $100M judgments against cruise lines

Four cruise lines that used docks seized by the Castro regime in 1960 can be liable for $100 million-plus judgments rendered for violating a federal law creating a private right of action for U.S. companies with claims to property confiscated by the Cuban government, a divided U.S. Supreme Court has ruled.

Congress enacted the Cuban Liberty and Democratic Solidarity Act in 1996. The statute creates a private right of action for U.S. nationals with claims to property confiscated by the Cuban Government on or after Jan. 1, 1959. Specifically, Title III of the act makes any person who “traffics in property which was confiscated by the Cuban Government … liable to any United States national who owns the claim to such property.”

While Presidents Clinton, Bush, and Obama exercised their authority under the statute to suspend the Title III right of action, in May 2019 President Trump allowed the suspension of the statute to expire.

In 1928, the petitioner in the case, U.S.-based Havana Docks Corporation, acquired from the Cuban Government a property interest in the development and operation of docks at the Port of Havana. The docks were seized by the Cuban government in 1960.

From 2016 to 2019, Royal Caribbean Cruises, Norwegian Cruise Line Holdings, Carnival Corporation and MSC Cruises used the docks the petitioner had built to transport nearly 1 million paid passengers to Cuba.

In 2019, the petitioner sued the cruise lines in Florida federal court under Title III.

The cruise lines argued they were not liable because Havana Docks’ property interest would have expired in 2004 under the terms of the original 1928 agreement with the Cuban government.

A federal judge disagreed, entering summary judgment against the four cruise lines. The judge awarded Havana Docks more than $100 million against each of the defendants.

A panel of the 11th U.S. Circuit Court of Appeals Eleventh Circuit reversed in a 2-1 decision. The majority reasoned that a defendant is liable for trafficking in confiscated property under the act only if its actions would have interfered with the plaintiff ‘s property interest had there been no confiscation. Accordingly, because Havana Docks’ ownership interest would have expired before 2016 in any event, the cruise lines’ use of the docks from 2016 to 2019 did not constitute trafficking within the meaning of the statute.

The Supreme Court granted Havana Docks’ petition for certiorari.

In reversing the lower court, a majority of the Supreme Court held that the cruise lines’ use of the confiscated docks was sufficient to establish their liability under the act. The court remanded the matter for the 11th Circuit to consider the cruise lines’ remaining arguments against liability.

Click here to read the full text of the Supreme Court’s May 21 decision in Havana Docks Corp. v. Royal Caribbean Cruises.

To the point

“The Act generally makes those who use property tainted by a past confiscation liable to any United States national who owns a claim to that property. Havana Docks did not have to prove that the cruise lines interfered with a property interest that would have existed in the counterfactual scenario in which the Cuban Government did not confiscate it. Instead, Havana Docks had to prove only that the cruise lines used confiscated property—such as the docks—to which Havana Docks owns a claim. …

“In sum, the Cuban Government seized control of ‘property — the docks that Havana Docks built — in 1960. At that point, the docks were tainted as confiscated property, the ‘the use of’” which the United States sought to ‘deter.’ [22 U.S.C. ] §§6081(8), (11). The cruise lines later used the confiscated docks — property to which Havana Docks owns a certified claim — when they transported nearly a million passengers to Cuba between 2016 and 2019. The Court of Appeals therefore erred in concluding that Havana Docks failed to establish these requirements for Title III liability.”

— Justice Clarence Thomas, opinion of the court

“I agree with the Court’s resolution of the narrow question before it and join the majority opinion in full. I write to highlight two issues that the Court does not reach but that raise significant concerns for remand or in other future Title III cases.

“First, petitioner’s reading of Title III, if adopted, could allow it to recover a potentially unlimited amount of money from an unlimited number of people who use the confiscated docks at issue. …

“Second, there is a significant question as to whether respondents’ conduct fell within a statutory exception to Title III liability for ‘transactions and uses of property incident to lawful travel to Cuba.’ Indeed, the Federal Government appears to have previously taken the position that these cruises were lawful and beneficial to both Cuba and the United States.”

— Justice Sonia Sotomayor, joined by Justice Brett M. Kavanaugh, concurring

“Today the Court misconstrues the Cuban Liberty and Democratic Solidarity Act to allow plaintiffs to recover for trafficking in property that was not theirs. … The majority holds that because four commercial cruise lines used docks in the Port of Havana between 2016 and 2019, they can be held liable to Havana Docks Corporation, a U.S. company that built, operated, and once held a property interest in those docks. That may seem sensible at first blush. But there is a problem: The docks are not ‘property which was confiscated by the Cuban Government’ within the meaning of Title III. Why? Because the docks belonged to the Cuban Government — not Havana Docks — all along. What Havana Docks owned was only a property interest allowing it to use those docks for a specified time. And that time-limited interest expired in 2004 — more than a decade before the cruise lines ever used the docks.”

— Justice Elena Kagan, dissenting