Holland America cruise lines faces a potential class action lawsuit for allegedly defrauding passengers traveling on Alaska cruises.
Holland, a subsidiary of Carnival Corp., is accused of improperly fining passengers under the federal Jones Act and that Holland accepts kickbacks from shore-excursion providers without disclosing that arrangement from passengers.
Calls to Holland America's corporate offices in Seattle were not returned.
The suit was filed Sept. 22 in U.S. District Court in Seattle on behalf of Ohio resident J.B. Miller. Attorney on the case is Steve Berman, a managing partner with Hagens Berman Sobol Shapiro.
The filing asks the court to approve going forward with a national class-action suit.
The allegations stem from a trip taken by Miller and his family in July 2006. The Millers flight to Seattle was delayed, and the family missed their scheduled sailing for their Alaska cruise.
The complaint said the Millers were told to fly to Juneau to meet the ship. Once on board two days later, Holland America charged the family $300 per person for what it said was a "Jones Act penalty."
Attorney Berman said that the government has the ability to fine passengers under the similar Passenger Vessels Service Act, the government never imposed the fine on Holland America.
The Passenger Vessels act imposes a $300 penalty on foreign vessels for each passenger who embarks at one U.S. port, then disembarks on another U.S. port without visiting a distant foreign port between the two American ports, according to the court documents.
"Holland America forced the family to come up with $1,200 under the guise of a federal fine, and we know that Holland America knew the government would never ask for the money in return, and the government did not do so here," Berman said in a written statement. "In our view this is an egregious fraud, and we believe this may be a wide-spread practice, involving a large percentage of those fined."
The complaint also claims that Holland America accepts kickbacks from shore-excursion providers and hides that fact from passengers, violating Alaska law.
During his cruise, Miller booked a salmon fishing trip for $219 while on the ship. He was not told that the fishing charter company paid the cruise line to promote the trip to passengers, court documents said. Had Miller known about the arrangement, he would have bought a nearly identical trip not promoted by the cruise line.
Alaska statutes says cruise lines can collect a fee from providers of such activities as fishing trips or sightseeing tours, so long as the cruise company discloses the financial arrangement to passengers.
In many cases, passengers have the option to book excursions with outside vendors at lower prices when ships dock in a community, but opt to book such trips onboard the ship.
If passengers know that these recommendations are based on financial considerations that benefit the cruise line, passengers may have made different decisions, opting instead for less-expensive independent options, the court documents said.
In the August primary election, voters approved a ballot initiative that, among other things, imposes additional requirements on disclosures about on-ship promotions of shore-side businesses.
The statute says that if a cruise company has a financial agreement with a tour company, the cruise company will provide both oral and written disclosures that the featured businesses paid to be included in the promotion. Written notices must be in at least a 14-point typeface and in a contrasting color to draw attention to the disclosure.
On Sept. 21, Holland's parent company, Carnival Corp., reported a net income $1.86 billion on revenues of $9.03 billion for its first nine months of its fiscal year, which ended Aug. 31.
The company's third-quarter revenues increased 8.3 percent, driven in large part by strong Alaska cruise demand during the year, according to Carnival's financial release.
Holland America on Sept. 19 also announced it will reduce the number of its Seattle departures on cruises bound for Alaska to 58 departures, down from 61. The company said the number of passengers carried would remain about the same.
Melissa Campbell can be reached at melissa.campbell@alaskajournal.com.
