Guaranty Trust Co. v. York

Guaranty Trust Co. v. York
326 U.S. 99 (1945)

Justice Frankfurter delivered opinion

Facts:

• Plaintiffs sued bond trustee in federal diversity action alleging misrepresentation and breach of trust
  
• New York substantive law governed
• Defendant invoked statute of limitations
• Plaintiffs argued statute of limitations didn't bar suit because it was on the "equity side" of federal court
  
• Courts of equity considered length of time between maturing of claim and bringing of suit but didn't find themselves traditionally bound by statute of limitations (why not? what's different about courts of equity?)
  
• Second Circuit ruled plaintiffs' suit was not barred but Supreme Court disagreed
  

Issue:
Under what circumstances are the federal courts bound by state law in a diversity action?

Holding: Where it would significantly affect the result of litigation for a federal court to disregard a state law that would be controlling in state court

Reasoning:

• Erie overruled judicial process of federal courts disregarding state laws where it would lead to different results in the state vs. federal court in a diversity action
• Fed ct. is acting as just another state ct.
• It cannot afford recovery for a state-given right if the state itself would not afford recovery
• Difference between "substance" and "procedure" is not the place to determine when to apply state law.
• Does state law concern the "manner and means by which a right to recover is enforced" or would it "substantially affect the result"?
• State bars the action so the fed. ct. should be the action for the same reason

Judgment: Reversed

Opinions:
Justice Rutledge dissented (omitted in text)

Haver v. Hinson (a.k.a. runover kid)

Haver v. Hinson
385 So.2d 605 (Miss. 1980).

Justice ___ delivered opinion

Facts:

• Def. drove car to Havers' house
• Def. pulled over and parked on left side of street, immediately in front of Plain.'s residence
• Plain. came out with child (Elizabeth) to speak to def.
• Few minutes later, def. started to drive away, heard thud, stopped car, and found child underneath, lodged by exhaust pipe and seriously injured
• Plain. sues, alleging def. negligent per se in driving and parking on wrong side of the street, violating Mississippi Code Annotated section 63-3-601 (1972)
  

Issue:
Was the defendant negligent per se in parking and driving on the wrong side of the street?

Holding: No.

Reasoning:

• Statute constitutes negligent per se only where (1) the plaintiff is a member of the class sought to be protected by the statute, and (2) the resultant harm is of the type sought to be presented by the passage of the statute

Court says:

• Clear class sought to be protected only includes pedestrians and drivers who act in reliance of the orderly flow of traffic dictated by the statute
• Risk of accident just as likely had def. driven and parked facing the "appropriate" direction

People v. Navarro (a.k.a. steal wood beams)

People v. Navarro
Appellate Department, Los Angeles County Superior Court, 1979.
99 Cal.App.3d Supp. 1, 160 Cal.Rptr. 692.

Judge Dowds delivered opinion

Facts:

• Defendant was charged with stealing four wooden beams from a construction site
• Jury could have found either
• the beams had been abandoned as worthless and owner would not object to def. taking them
• beams had substantial value, were not abandoned, and he had no right to take them
  

Issue:
Whether a good faith but unreasonable mistake is a defense to a charge?

Holding: Yes. Only reasonable mistakes removes liability from gen. intent. crimes. For specific intent crimes, still has to be good faith, reasonable or unreasonable.

Reasoning:

• Specific intent is negated by good faith
  
• Mistake of reasonable/unreasonableness doesn't matter

Judgment: Reversed

Rule: Mistake of fact

Robinson v. Lindsay (a.k.a. dude, where's my thumb)

Robinson v. Lindsay
92 Wash.2d 410, 598 P.2d 392 (1979).

Chief Justice Utter delivered opinion

Facts:

• Kelly Robinson lost full use of a thumb in a snowmobile accident when she was 11 years old
• Billy Anderson was driving the snowmobile at the time of the accident
• He was 13 at the time of the accident
• Jury verdict in favor of the defendant
• Trial court ordered new trial because trial ct failed to instruct jury as to the standard of care
• Appeals court agreed w/ tr. ct. and ordered new trial
• Plain. excepted to giving of instruction that compared Anderson's act to that of a child of the same age, intelligence, maturity, etc to determine reasonableness (WPI 10.05)
  
• arguing jury should have heard s.o.c. instructions for adults
  

Issue:
Can a minor operating a snowmobile be held to an adult standard of care?

Holding: Yes, when child is operating a powerful motorized vehicle, he/she should be held to an adult s.o.c.

Reasoning:

• When the activity a child engages in is inherently dangerous, as is the operation of powerful mechanized vehicles, the child should be held to an adult s.o.c.
• protects children
• discourages immature individuals from engaging in inherently dangerous activities
• Children can enjoy childhood activities w/o being subjected to adult s.o.c. in the event an injury occurs as a result of such activities
• Ct agrees w/ Minn. Sup. Ct.'s language "we should be skeptical of a rule that would allow motor vehicles to be operated to the hazard of the public with less than the normal minimum degree of care and competence"
• Minn. court cited cases in which minor had been operating tractor, motorcycle, minibike, and an automobile
• Operation of a snowmobile requires adult care
• stats show incidence of accidents w/ snowmobiles is particularly high among inexperienced drivers
• Boy was operating a powerful motor vehicle at time of accident
  

Judgment: Affirmed (order for new trial by lower trial court)

Wilson v. Sibert (a.k.a. back that car up)

Wilson v. Sibert
535 P.2d 1034 (Alaska 1975).

Chief Justice Rabinowitz delivered opinion

Facts:

• Appellee Sibert was stopped in vehicle in line at bank window in Anchorage, appellant Mary Wilson was behind him.
• Car in front of Sibert unexpectedly starting back up
• Sibert throws car into reverse and backs into Wilson's car
• fender goes into wheel, rendering car immobile
• Appellee Sibert did not use his horn or look behind him before backing up, only became aware of car there when he hit it

Issue:
Did the trial court err in 1. denying motions for directed verdict on issue of liability and did they further err in 2. giving a sudden emergency instruction to the jury?

Holding: No.

Reasoning:
Wilson claims "total absence" of care shows Sibert didn't exercise care toward her and that jury couldn't find otherwise

Court says:

• Issue 1: Appellant's position doesn't take into account the speed at which a person in an emergency may act
• Law requires same negligence test in emergency situations (i.e., the standard of conduct of a reasonable person under the same circumstances)
• In an emergency conduct that may otherwise be unreasonable becomes reasonable
• that appellee failed to show normal care is proof of the emergency situation, he had an "apparent need to act almost instantaneously"

• Issue 2: Looking at other court decisions, ct determines it is predominantly accepted that it is not prejudicial error for trial ct to give "superfluous" sudden emergency instructions
• No evidence that giving the emergency instructions impropertly influenced the jury

Judgment: Affirmed

Stewart v. Motts (a.k.a. gasoline stan. of care)

Stewart v. Motts
539 Pa. 596, 654 A.2d 535 (1995).

Justice Montemuro delivered opinion

Facts:

• July 15, 1987, plain. Stewart stopped at def.'s shop and offered assist. to repair an auto fuel tank
• Plain. suggested and poured gasoline into the carburetor
• Def was to turn the key in the ignition when specified
• Car backfired, there was an explosion, and Plain severely burned on upper body
• Plain. asked judge to instruct jury gasoline reqr'd "high degree of care"
• Judge didn't and jury ruled in favor of def.
  

Issue:
Whether there exists a higher standard of "extraordinary care" for the use of dangerous instrumentalities over and above the standard of "reasonable care" such that the trial court erred for failing to give an instruction to the jury that the Appellee should have used a "high degree of care" in handling gasoline?

Holding: No. There is only one standard of care and that standard is "reasonable care".

Reasoning:

• Is only one standard of care and it is reasonable care (restatement (second) of torts)
• Standard doesn't vary, but care that is reasonable to require of actor varies w/ danger involved in act and is proportionate to it
• greater the danger, greater the care to be exercised
• Konchar v. Cebular reaffirmed general principle that care employed by reasonable man must be proportionate to danger of activity
• References to "higher standard of care" did not create second tier of "extraordinary care" over and above reasonable care
• level of care is in proportion to danger involved in his act
• Commonwealth only recognizes one s.o.c. in negligence actions involving dangerous instruments
• Looked at jury instructions
• judge properly instructed jury
• found nothing misleading, confusing or unclear in judge's instructions
• Jury had tools to examine case and determine if def. was reqr'd to use a "higher degree of care"
  

Judgment: Affirmed

Rule: Only one standard of care and that is reasonable care; under said standard, level of care must be proportionate to the danger involved

Owens v. State (a.k.a. not driving my car drunk)

Owens v. State
Court of Special Appeals of Maryland, 1992.
93 Md.App. 162, 611 A.2d 1043.

Justice Moylan delivered opinion

Facts:

• Plain. found behind wheel of car in private driveway, intoxicated, with engine running and lights on
• two options:
• either vehicle and driver arrived at driveway from somewhere else
• driver got into vehicle, started up vehicle, and was about to go somewhere
• State's only witness was Trooper Samual Cottman
• responding to complaint about a suspicious vehicle
• found driver asleep behind the wheel of the car
• driver smelled intoxicated when officer woke him up and his speech was "slurred" and "unclear"
• driver would not submit to a blood test for alcohol
• Theory of state's case rests on present stasis on the driveway implies earlier motion on the hwy

Issue:
Is there sufficient evidence to conclude that the plain. was drunk driving?

Holding:
Yes. There is sufficient evidence to conclude that the driver was drunk when driving.

Reasoning:
Court says:

• Plain. was either coming or going
• Driveway were arrest took place did not match driveway listed on the charging document but license never offered into evidence
• Three beer cans (2 consumed, 1 partially consumed) were found in plain.'s vehicle
• suggested evening was ending rather than beginning
• also one is more likely to drink in car than drink outside of car and bring empty cans to car
• Is not a reasonable hypothesis that one would leave the house, get in car, turn on lights, start engine, and then drink enough to pass out in vehicle
• Erratic behavior caused person to report suspicious vehicle which brought trooper to house
• Taken all together, evidence is inconsistent with a reasonable hypothesis of innocence on the part of the plain.

Judgment: Affirmed

Shaheen v. Knight (botched vasectomy)

Shaheen v. Knight
Court of Common Pleas of Lycoming County
Pennsylvania, 11 Pa. D. & C.2d 41 (1957)

Justice Williams delivered opinion

Facts:

• Plain. contracts w/ doc to get vasectomy to make him sterile
• Operation occurred on Sept. 16, 1954
  
• "Blessed event" occurred on Feb. 11, 1956
• plain.'s wife, Doris, delivered 5th child as a result of marital relations cont'd after operation
• Plain. does not allege any negligence on part of the doc
• suit based on contract
• Operation was not necessary bec. of wife's health
• Plain. says wanted operation in order to be able to support wife and kids
• noted would not be able to abstain and was "emotionally unable to limit...family's size by reason or will power"
• Sues to have doc pick up expenses for supporting 5th child
• Def filed preliminary objections to complaint
• to sterilize a man whose wife may have a child w/o any hazard to her life is against public policy
• no "warranty of cure" under PA law
• complaint does not state negligence
• plain. made no allegation of fraud/deceit on the part of the doc
• not a contract but necessary part of his bus.
  
• plain. has been "blessed with the fatherhood of another child"

Issue:
Is a doctor responsible to pay for the upbringing of a child that results from a botched vasectomy?

Holding: No.

Reasoning:
Court says: (and makes you think they are going to go one way)

• Contract to sterilize a man is not void as against pub. pol.
• Doc. and patient able to contract for a particular result
• if result not attained, patient able to sue for breach of contract
• Plain. advsd there was a "special contract" in which he agreed to make him immediately and permanently sterile
  

And then court says:

• Def. argues plain. has not suffered and we [court] agree
• To allow damages for the normal birth of a normal child is "foreign to the universal public sentiment of the people"
• To allow damages would mean the plain. would receive money for the fun and joy that comes with raising a child
• Many people would be willing to adopt this child but plain. will not allow that
• To allow damages would be against public policy
  

Judgment: For defendant

Prosser v. Keeton (a.k.a. Hey, that's my watch!)

Prosser v. Keeton
143 Unrep. Case 1113.

Justice Allen delivered opinion

Facts:

• Prosser was owner of a valuable watch
• Watch was stolen by an unknown person (later discovered to be Thurlow)
• Thurlow sold stolen watch to Keeton
• Thurlow told Keeton needed to sell watch to raise money for ill mother
• Keeton and Thurlow attended the same church
• Keeton reasonably believed Thurlow was owner and paid Thurlow for watch
• Thurlow disappears
• Prosser sees Keeton wearing watch about a month later
• Prosser able to identify watch by secret mark on back
• Prosser demanded return, Keeton declines advising pd money and would not return it
• Trial ct orders Keeton to return watch or pay its reasonable value
  

Issue:
Does a person who acquired an item that turns out to be stolen have to return it or give the original owner the value of the item?

Holding:
No, the person does not have to return the item or pay the value of the item to the original owner.

Reasoning:
Judge Bateman

• Since neither party is guilty of wrongdoing, Keeton keeps the watch
• Prosser was in a better position to prevent the loss
  

Justice Compton

• Making buyer liable for purchases would stop capitalism
• Social policy requires Keeton to keep the watch
• No evidence that Prosser was better able to prevent theft than Keeton was able to detect watch was stolen
  

Judgment: Affirmed

Opinions:
Justice Allen dissented

• thief did not have title to watch so therefore was unable to transfer it
• Keeton is liable because he converted the watch
  

Vincent v. Lake Erie Transportation Co. (a.k.a. damaged dock)

Vincent v. Lake Erie Transportation Co.
109 Minn. 456, 124 N.W. 221 (1910)

Justice O'Brien delivered opinion

Facts:

• Def.'s steamship, Reynolds, was moored to plain's dock in Duluth to unload cargo on Nov. 27, 1905
• Storm hit with winds at 50 mph
• Navigation in waters suspended from approx. 10pm until morning
• Once unloading was completed, Reynolds unable to get tugboat to take off dock bec. of storm
• Lines held steamship to dock, and dock damaged as a result of steamship slamming into it repeatedly
• damage amounted to $500

Issue:
Is a boat moored to a dock during a storm liable for its damages to the dock?

Holding: Yes. The defendant is liable.

Reasoning:
Note: Ct. states only question for jury was the amount of damages which plaintiffs were entitled to recover, but no complaint was made on that score

Court says:

• Def. chose to keep boat attached to dock to preserve ship at expense of the dock
• Def. are responsible to pay plain. for injury done to dock
• Ploof v. Putnam - if boat had remained attached and dock destroyed, most likely boat owner would have had to pay damages
• Not a case where life or prop. was menaced by object of thing belonging to plain. that the destruction of would been necessary to prevent a disaster
• Def. prudently availed itself of plain's prop. for the purpose of preserving its own more valuable prop.
• Plain is entitled to compensation for damages done

Judgment: Affirmed

Opinions:
Justice Lewis dissented

• If boat lawfully in position at time storm hit and master could not move it w/o sustaining damaging vessel, any harm done to dock was by accident
• Def. had permission to dock to unload by plain., which entered them into contract
• plain enters into such contract assuming risk of damage to dock if boat moored gets caught in storm

Rule: While ordinary rules of property are suspended by forces beyond human control, in this case, the defendants purposefully attached to the dock, knowing it was likely to cause damage. Def. may use dock in such instances but must pay for the privilege with reasonable compensation.

Surocco v. Geary (a.k.a. the house is on fire)

Surocco v. Geary
3 Cal. 69 (1953).

Chief Justice Murray delivered opinion

Facts:

• Geary, the Alcade (mayor) of San Fran., had authority to burn down plain.'s bldg to stop fire from spreading
• Fire passed over and burned beyond plain's bldg
• Plain. was in process of remving items from bldg at time it was dstryd
• Plain. argues could have remvd most/all items if given more time
  

Issue:
Can a person who, under apparent necessity, burns down/destroys an individual's house during time of conflagration to save adjacent buildings and stop fire's progress, be held personally liable for damages to owner of property purposefully destroyed?

Holding: No, value life over property.

Reasoning:

• Right to destroy prop. to prevent conflag. is traced to highest law of necessity
• Individual rights of prop. give way to higher laws of impending necessity
• Private rights of individual yield to considerations of general convenience and interests of society
• Who is to judge necessity?
• necessity of blowing up house might not be apparent to homeowner who has personal interest
• Difficulty in determining necessity is not obviated by making parties responsible in every case, whether necessity existed or not
• Bec. of absence of any legislation, ct falls back on common law
• facts clearly establshed
• blowing up house was necessary

Judgment: Reversed

Opinions: N/A

Thoughts: Public necessity case. Not arguing against principle but how it was applied. Plain. argues ok to blow up house but let me get my stuff!

Rule: The common law says that when it is necessary to give up one house in the interests of the society (public necessity) the person whose house was sacrificed can't sue.

Ploof v. Putnam (a.k.a. Protecting Ploof's sloop)

Ploof v. Putnam
81 Vt. 471, 71 A. 188 (1908).

Facts:

• Def. owned island in Lake Champlain
• Plain. w/ wife and 2 kids, were sailing a sloop on the lake when storm hit
• Plain. moored boat on def.'s dock to avoid destruction of boat and protect family from injury
• Def. had servant unmoor boat
• Sloop was destroyed and people on board were injured
• Plain. argued act of unmooring boat was a trespass to it and that def. had duty to permit sloop to remain attached to dock

Issue:
Does unmooring a boat from a dock, which is moored there to protect boat and avoid injury to members on board boat during a storm, constitute a trespass?

Holding: Yes, value life over property.

Reasoning:

• "There are many cases...which hold that necessity...will justify entries upon land and interferences with personal property that would otherwise have been trespasses..."
• Entry upon land to save goods in danger of being lost/destryd by water/fire is not a trespass

Judgment: Held for plaintiff

Opinions: N/A

Thoughts: privilege of private necessity

Wegner v. Milwaukee Mutual Ins. Co. (a.k.a. tear gas house)

Wegner v. Milwaukee Mutual Ins. Co.
479 N.W.2d 38 (Minn. 1991)

Justice Tomljanovich delivered opinion

Facts:

• Minn. police staking out house to apprehend two suspected felons believed to be coming to sell narcotics
• Before arrest could be made suspects fled in car, which abandoned to escape on foot after a high speed chase
• One suspect entered house of Harriet G. Wegner and hid in her front closet
• Wegner fled house and called police
• Police arrive to surround house and called for an "Operation 100"
• Op. 100 = calling the ERU (Emer. Res. Unit - read: SWAT team)
• Tried to make contact w/ suspect inside home via bullhorn and telephone
• When that wasn't successful, police shot at least 25 rounds of tear gas into house, breaking virtually every window in house in process
• Also threw in 3 "flash-bang" grenades to confuse suspect
• Eventually suspect caught trying to escape through basement window

Issue:
Does the city's admittedly legitimate police power result in a "taking" as defined in Article I, section 13, of the Minn. Constitution?

Note: Minn. Cons. section reads as follows: "Private property shall not be taken, destroyed or damaged for public use without compensation, first paid or secured." (Purpose of clause is to ensure private landowners are compensated not only for physical invasion of their property but also damages caused by the state where no physical invasion has occurred.)

Holding: No, not fair to allocate the entire risk of loss to an innocent homeowner for the good of the public.

Reasoning:

• City contends there was no taking for public use because police used legitimate power
• police power is indefinable
• Simply labeling actions of police as an exercise in power doesn't justify disregard constitutional inhibitions
• Minn. Sup. Ct. looked at "plain meaning" of article

Court says:

• Constitution itself is auth for compensation for des. of prop. and is a waiver of govt. immunity
• Clear police intentionally fired tear gas and grenades into house
• Resulting damage by police in course of apprehending suspect was for a public use w/in meaning of Const.
• Restatement (Second) of Torts section 196 describes doctrine as follows: "One is privileged to enter land in the possession of another if it is, or if the actor reasonably believes it to be, necessary for the purpose of averting an imminent public disaster..."
• Ct. not inclined to allow the city to defend its actions on the grounds of public necessity
• Better rule is for municipality to compensate innocent party for resulting damages using the basic notion of fairness and justice
• City must reimburse Wegner for losses sustained
• individual officers were acting in public interest, cannot be held individ. liable
• cost of damages should be paid by citizens of city

Judgment: Reversed and remanded for trial on issue of damages

Opinions: N/A

Thoughts: Court of Appeals rvwd McCoy v. Sanders, GA case when "taking" was limited to physical interference; Minn. Sup. Ct. stated never held that Minn. Const. art. I, section 13 is to be applied in this manner.

Brown v. Martinez (a.k.a. watermelon thief)

Brown v. Martinez
68 N.M. 271, 361 P.2d 152 (1961).

Chief Justice Moise delivered opinion

Facts:

• Sept. 18, 1954, 15-yr old boy and 2 others went to steal watermelons from def.'s property
• Next evening (Sept. 19, 1954), 15-yr old boy returned w/ several boys to steal melons
• 2 boys enter melon patch; appellant goes to SE corner near hwy
• Appellee hears boys, comes out w/ rifle, calls out, and shoots opposite direction of where boys were running (they were heading SW) to try and scare them
  
• Appellee accidentally shoots boy standing in SE corner of property by fence (no intent)
  

Issue:
Is it reasonable to use a firearm to prevent trespass?

Holding: No, value life over property.

Reasoning:

• law marked out limitations on using force in self-defense
• life valued more than property
• "no privilege to use any force calculated to cause death or serious bodily injury where only property is threatened"
• no proof appellee felt safety was threatened
• appellee acted improperly and is liable for using gun in manner he did

Judgment: Reversed and remanded

Opinions: N/A

Thoughts: Transferred intent case; facts described do not equal battery. Court wanted to make clear its stance on folks shooting firearms to protect property (possible had no one been shot court might have decided differently)

McGee v. International Life Insurance Co. (a.k.a. suicide son)

McGee v. International Life Insurance Co.
355 U.S. 220 (1957)

Chief Justice Black delivered opinion, announced by Justice Douglas

Facts:

• In 1944, Franklin, resident of CA, purchased life ins. from (insurer bought by def.)
• Ins. co. mailed a reinsurance certificate to Franklin in CA, offering to cont. to insure him
• Franklin accepted offer and paid premiums until death in 1950
• pd from CA to TX
• Plaintiff (the beneficiary) notifies ins. co. of Franklin's death
• Ins. co. refused to pay
• claimed Franklin committed suicide
• Neither original insurer or respondent had any office/agent in CA

Issue:
Did the Due Process Clause preclude the CA court from entering a judgment binding on respondent?

Holding: No.

Reasoning:

• Suit was based on contract which had substantive contact w/ state
• Contract delivered in forum state
• premiums mailed there
• insured resident there when died
• Forum state had interest in providing redress to citizens of state when insurer refused to pay claim
• Resident would be at disadvantage if forced to follow ins. co. to distant state in order to hold it legally accountable
• No contention respondent did not have adequate notice of suit or sufficient time to prepare its defenses and appear

Judgment: Reversed

Opinions: N/A

Thoughts: Thinnest contacts upon which U.S. Sup. Ct. has allowed personal jurisdiction

Hanson v. Denckla (a.k.a. Mrs. D's fighting daughters)

Hanson v. Denckla
357 U.S. 235 (1958)

Chief Justice Warren delivered opinion

Facts:

• Case arose from family fight over trust established by Mrs. Donner
• funded primarily from publicly traded stocks
• Mrs. D lived in PA but trust was created in Delaware w/ Del. bank and trustee
• Mrs. D moves to FL and later dies
• Will probated in FL
• Three daughters involved in fight
• if settled in FL, two daughters get everything to exclusion of third
• if not, all three daughters share inheritance

Issue:
Can Florida acquire jurisdiction over Delaware trustee?

Holding: No.

Reasoning:
Requirements for pers. juris. expanded since Pennoyer v. Neff but this doesn't mean because rule is more flexible that minimum contacts test isn't still valid for determining jurisdiction

Court says:

• Fail to find such contacts here
• def. (trustee) has no office in FL
• conducts no bus. in FL
• doesn't solicit bus. from FL by mail or in person
• coa did not arise out of any bus. done by trustee in FL
• FL's contact was when Mrs. Donner moved there and trust followed her
• Mrs. D conducted some trust administrative bus. but no record of trustee performing acts in FL
• Unilateral activity of Mrs. D w/ nonresident def. (Del. trustee) doesn't satisfy min. con. rqrmnts
• essential that def. purposefully avails him/self of privilege of conducting activities w/ forum state (thereby getting protections and benefits from state)
• Unilateral activity of Mrs. D w/ nonresident def. (Del. trustee) doesn't satisfy min. con.

Judgment: Affirmed

Opinions:
Justices Black, Burton, Brennan, and Douglas dissented

Thoughts:
When arguing over jurisdiction, the substantive law of one state may be better for you than another.

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