$29.8 Million Judgment in First-Ever Helms-Burton Jury Trial

A Cuban-American plaintiff has won a major jury verdict in the Southern District of Florida against four corporate defendants associated with Expedia Group. The case involves an island off the coast of Cuba, which the plaintiff, Mario Echevarría, claimed was expropriated from his family in 1959. The defendants provided digital platforms that allowed travelers to book hotels which are now located on the confiscated property. The jury found that by providing these booking services, the defendants trafficked in confiscated property in violation of Title III of the Helms-Burton Act. The Helms-Burton Act has been controversial, in part because it potentially applies U.S. law to the actions of foreign defendants outside the United States. It has also been difficult for plaintiffs to sue under the act, in part because there is no personal jurisdiction over many foreign defendants who could be held liable under its terms.  Echevarría is the first to win a jury verdict under Title III.

Background

The Cuban Liberty and Democratic Solidary Act, also known as Title III of the Helms-Burton Act, provides that “any person that … traffics in property which was confiscated by the Cuban government on or after January 1, 1959, shall be liable to any United States national who owns the claim to such property[.]”  When it passed the statute in 1996, Congress condemned the Cuban government’s confiscation of property as contrary to “the comity of nations, the free flow of commerce, and economic development.”  The statute, however, allows the president to suspend the private cause of action, which all presidents did until 2019 when President Trump lifted the suspension, making Title III effective. Plaintiff filed this case soon after.

It is not obvious that providing an online platform to book hotels constitutes trafficking in confiscated property, but the statutory definition of “traffics” is broad.  A “person ‘traffics’ in confiscated property if that person knowingly and intentionally” engages “in a commercial activity using or otherwise benefiting from confiscated property,” or “causes, directs, participates in, or profits from, trafficking” by another person.

Did Expedia Traffic in Confiscated Property?

The defendants had moved for summary judgment on several grounds. They argued that they did not “knowingly and intentionally” sell hotel reservations in violation of the act, that the plaintiff lacked a proper claim to the property in question, that the property in question was not confiscated under Cuban law, and that statutory damages should be limited to the value of land (not including the improvements, such as the hotels).  One of the defendants – Expedia Group, Inc. – also argued that as the parent company of the other defendants, it could not be held liable for the acts of its subsidiaries.

District Judge Federico Moreno issued a well-reasoned opinion denying summary judgment. Both the plaintiff’s ownership interest in the property, and whether the property had been confiscated, depended upon disputed questions fact, as well as contested questions about Cuban law governing property and inheritance.  The Court deferred the questions of fact for the jury to resolve and noted that it would hold a separate hearing to determine the content of Cuban law based on expert testimony.  The damages question, too, was deferred for trial.

The Court also had to decide whether summary judgment was appropriate under ‘trafficking’ prong of Helms-Burton. As to Expedia Group, Inc. – which never offered or sold reservations – the plaintiff conceded that he should have sued Expedia, Inc., the operating company. Not having done so, he argued that “Expedia Group blurred the lines between itself and its subsidiaries to conduct business in Cuba and now tries to evade accountability by drawing strict lines” and that Expedia Group “benefitted from trafficking the subject hotels, both directly and through its subsidiaries.” The judge noted the high burden that the plaintiff would have at trial to hold Expedia Group, Inc. liable on an agency theory, but also refused to grant summary judgment, reasoning that there were issues of fact about the level of control exercised by the corporate entities within the conglomerate.  Additionally, although Expedia Group, Inc. did not itself sell reservations, it did apparently sign lodging contracts with the hotels and partner with the Cuban Ministry of Tourism to advertise tourism in Cuba – which might be enough to impose direct liability for trafficking under the statute. The plaintiff’s victory at trial suggests that one or both of these theories of liability was successful, which should be a warning for other corporate entities with some relationship to operations in Cuba.

The defendants also asserted that they did not “knowingly and intentionally” engage in activity benefitting from confiscated property.  Here, there were two issues of fact that made summary judgment inappropriate. First, did the defendants fail to adequately investigate the possibility that the hotels were on confiscated property and second, once they had notice of the lawsuit, did they profit from past or continued bookings? Again, the verdict means that the jury must have found for the plaintiffs on one or both of those factual questions.

Conclusion

The case illustrates the power of Helms-Burton. The treble damages provision and the broad definition of trafficking allow for large judgments based on a range of commercial conduct related to Cuban property. On the other hand, this case avoids some of the most problematic applications of the statute.  The judge applied a U.S. statute, as well as Florida and Cuban law, to resolve the liability of U.S. corporations to a U.S. citizen for conduct involving Cuban property. Neither the choice of law nor the exercise of personal jurisdiction in this case raises significant problems under international law and they will not engage the European, Canadian, or Mexican blocking statutes.  Of course, one might disagree wholesale with Helms-Burton as an inappropriate effort to compensate for expropriations that took place more than sixty years ago. For those critics, this case is still a problematic application of the statute. Indeed, the complex factual questions about who owned what and when only illustrate how difficult it is to untangle historic property compensation claims.