A manager for a number of cruise ships was sued by the shipowners in a court in the USA in respect of alleged failure to oversee the maintenance, negligence in the provision of the manning and for negligent advice in relation to stability problems experienced by one of the ships. The plaintiffs alleged that theses breaches of contract caused them to incur increased maintenance and repair costs as well as lost profits.
The rules on disclosure of documentation in US litigation are very onerous and the amount of documentation requested by the plaintiffs in this litigation was enormous. There were demands that the managers produce over 5 million documents and such was the magnitude of the request for documentation that the court ordered that a specialist company be employed to track emails specific to the management of these vessels.
The costs of the court appointed email tracking firm was USD 350,000. The average monthly legal costs incurred were USD 110,000 for each of the 12 months prior to trial.
At an early stage the managers and ITIC concluded that the case was without merit. However, the substantial legal costs likely to be incurred (which the winning party cannot recover in US litigation) meant that, if a sensible settlement offer was made, it would be considered. However, at no stage was such an offer made by the plaintiffs who continued to claim in excess of USD 20 million.
This case went to trial. The court dismissed all the claims. The plaintiffs appealed and the managers also put in a counter claim for their fees, costs and other expenses incurred. This helped to shorten the appeal process as the plaintiffs eventually dropped their appeal and their motion for fees and costs and paid to the managers a settlement of USD 375,000 to ensure that the managers dropped their counter claim.
Although the managers had comprehensively won the case the legal costs incurred of USD 2.7 million were covered by ITIC.