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Carnival Reaches Consumer Settlement as Wreck Sparks Lawsuits

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Jan. 27 (Bloomberg) -- Carnival Corp.’s Italian unit said it reached a damage-settlement agreement with consumer groups, as the company was sued for the first time in the U.S. over the wreck of the Costa Concordia cruise ship.

Costa Crociere SpA agreed to pay 11,000 euros ($14,500) to every passenger of the cruise ship that ran aground off the Italian coast on Jan. 13, killing at least 16, plus reimburse expenses including the cost of the cruise, according to a statement from the Genoa-based company today. The agreement was reached with consumer groups in countries including Italy, Germany, France and Spain, a company spokesman said.

The U.S. complaint, alleging negligence and breach of contract, was filed yesterday in federal court in Chicago by crew member Gary Lobaton, who seeks class-action status to represent all victims of the disaster off Giglio Island. A spokesman for Costa, a unit of Miami-based Carnival, declined to comment on the U.S. lawsuit.

Italian criminal lawyer Giulia Bongiorno next week will file a complaint on behalf of clients with Italian prosecutors investigating the wreck. Concordia’s Captain Francesco Schettino was placed under house arrest on Jan. 17 for allegedly causing the wreck and abandoning the ship.

“My clients aren’t happy with just a financial compensation,” Bongiorno, who helped overturn the murder conviction of Amanda Knox’s former boyfriend Raffaele Sollecito in October, said in a phone interview today. The aim is to request that prosecutors investigate all responsibilities and not just the captain’s, she said. Bongiorno, 45, who’s also a member of Italy’s Parliament, will represent more than 50 passengers, Corriere della Sera said.

Eighteen Missing

The Concordia struck rocks near Giglio after Schettino deviated from the planned route and steered close to the island, court documents show. The accident happened hours after the vessel left a port near Rome on a Mediterranean cruise carrying about 4,200 passengers and crew. Eighteen are still missing, though that number probably includes two of the dead who have not yet been identified.

The compensation proposal “is higher than the current indemnification limits that are provided for in international conventions and the laws currently in force,” Costa Crociere said. Families of victims and injured will be offered a separate compensation, Costa said. A Costa spokesman declined to immediately comment on the U.S. lawsuit.

Total Costs

Italian consumer group ADOC estimated that about 3,000 passengers would get about 14,000 euros each if they accept the offer, including expenses, according to an e-mailed statement. ADOC forecast 85 percent of passengers will accept the offer. That would bring the total cost to about 42 million euros. Carnival has liability cover of as much as $3 billion with the Standard Club, a mutual insurance association owned by ship owners, and the Steamship Mutual Underwriting Association Ltd., according to spokesmen for the two firms.

Italian consumer group Codacons advised clients not to accept the offer, according to a statement on its website today. The association is putting together a class-action lawsuit with U.S. law firms Napoli Bern Ripka Shkolnik and Proner Proner LLP to be filed in Miami, it said. The group is seeking “at least” 125,000 euros per passenger and more than 1 million euros for “most serious cases,” according to the statement.

Bruno Leporatti, Schettino’s lawyer, has said the captain didn’t abandon the ship and wrote in a Jan. 16 statement that his actions saved many lives. Schettino said he made an emergency maneuver after hitting the rocks to prevent the vessel from heading out to sea and sinking, according to the judge’s written decision. Magistrates are also investigating another crew member while Costa Crociere is not under probe.

Unauthorized ‘Salute’

Schettino also said that Costa Crociere asked him to navigate close to Giglio to salute the island, newspapers including la Repubblica have said. The salute wasn’t authorized, Costa Crociere Chairman Pier Luigi Foschi has said.

Search operations resumed this morning as Royal Boskalis Westminster NV’s Smit Salvage unit prepares to start pumping 500,000 gallons of fuel out of the ship tomorrow, Italy’s civil protection agency said.

The insurance costs related to the sinking may reach $1 billion once environmental damage and injuries are added to the count, Moody’s Investors Service said. Reinsurers will likely take on most of the burden, Moody’s said.

In a separate report, Jefferies International Ltd. estimated the liability cost at 250 million euros.

To contact the reporters on this story: Marco Bertacche in Milan at mbertacche@bloomberg.net; Chiara Vasarri in Rome at cvasarri@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net

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