Carnival Cruise Lines, Inc. v. Shute

Carnival Cruise Lines, Inc. v. Shute
499 U.S. 585 (1991)

Justice Blackman delivered opinion

Facts:

• Shutes, through Arlington, WA travel agent, purchased 7-day cruise on Carnival (ship named Tropicale)
• Shutes paid agent for tickets, agent forwarded pymt to C.C. headquarters in Miami, FL
• Carnival sent tickets to Shutes in WA
• On face of ticket was info re: contract contained w/in paperwork
• #8 reads that "all disputes and matters whatsoever arising under, in connection with or incident to this contract shall be litigated, if at all, in and before a court located in the state of FL, U.S.A., to the exclusion of the courts of any other state or country"
• Shutes board ship (in CA), while in intl water off coast of Mexico, Eulala Shute slips and falls injuring herself
• Shutes file suit in U.S. District Court for Western District of WA, claiming defendant was negligent
• Carnival moves for summary judgment
• arguing clause on ticket requires Shutes to bring suit in FL court

Issue:
Was the U.S. Court of Appeals for the Ninth Circuit correct in refusing to enforce a forum selection clause contained in tickets issued by petitioner Carnival Cruise Lines, Inc. to the Shutes?

Holding: No. U.S. Sup Ct. held that the Court of Appeals erred in refusing to enforce the forum selection clause

Reasoning:
Note: This is an admiralty case, Fed. cts have jurisdiction over these matters

• Court does not review if Shutes had sufficient notice of forum clause
• Shutes (plaintiffs) say forum clause should not be enforced because clause was not a product of negotiation and enforcement would deprive them of their day in court

Court says:

• Unreasonable to assume in this type of contract that plaintiff would negotiate contract w/ defendant
• it is a form contract, terms are not subject to negotiation
• individual buying ticket has not "bargaining parity" w/ cruise line
  
• Reasonable to include forum clause
• cruise line has special interest in limiting the fora in which it could be subject to suit
• dispels any confusion about where suits arising from contract must be brought
• sparing litigants time & expense of pretrial motions to determine correct forum
• benefits consumers by reduced fares because company is able to limit where it can be sued
• there is judicial scrutiny of forum selection clauses for "fundamental fairness"
• no indication Carnival included forum clause to discourage legitimate suits
• defendant has principal place of bus. in FL and many cruises depart/return there
• no evidence plaintiff agreed to clause because of fraud or the state overreaching
• plaintiff had option of rejecting contract
  

Judgment: Reversed

Opinions:
Justice Stevens and Justice Marshall dissent

• Contracts of adhesion, offered on take-or-leave basis by stronger party
• Adhering party enters into contract without knowing and voluntary consent to all terms
• Contractual provisions which seek to limit court where suit can be brought are invalid as contrary to public policy
• Prevailing rule is still that forum selection clauses are not enforceable if they

1. were not freely bargained for
2. create addtl expenses for one party
3. deny one party a remedy