Carnival Cruise Lines v. Shute

Brief Fact Summary.

Woman is injured on a cruise ship and tries to bring her claim in Washington where she is from. But the cruise ticket she agreed to had a forum selection clause that stipulated that Florida was to be the forum for all disputes.

Synopsis of Rule of Law.

Forum selection clauses are prima facie valid absent a showing of unreasonableness.

Facts.

Plaintiff Schute and her husband buy tickets from a local Washington travel agent. The cruise departed from California and went to Mexico. While on the cruise Plaintiff Schute is injured. Plaintiff Schute attempted to sue Defendant Carnival Cruise in Washington, but on the back of the non-refundable ticket that she received after purchasing the cruise were 25 paragraphs of a forum selection clause stipulating that all disputes must be addressed in the Southern District of Florida.

Issue.

Are forum selection clauses presumptively valid?

Held.

Yes, forum selection clauses are presumptively valid as long as it is fundamentally fair. Judgement of the Court of Appeals is reversed.

Dissent.

Justice Justice Stevens with Justice Marshall, dissenting

The forum selection clause violates the Limitation of Vessel Owner’s Liability Act because it places a limitation on the shipowner’s liability, something the Act seeks to prevent. Zapata would not allow enforcement of the forum selection clause. Form contracts are viewed with heightened scrutiny for fairness and contract clauses that limit a passenger’s ability to bring a negligence suit have been invalidated for being contrary to public policy.

Discussion.

1. The Bremen v. Zapata Off-Shore Co. applies but the facts of this case are a bit different.
2. In Zapata, the contract between two companies from different countries was enforced as prima facie valid because there was no “fraud, undue influence or overweening bargaining power.”
3. But this does not mean that the forum selection clause here is unenforceable for lack of fundamental fairness because it was not negotiated.
4. The forum selection clause here is fair and enforceable even though it appeared in a form contract on the Plaintiffs’ cruise tickets and there was no opportunity to negotiate
5. Plaintiffs admit they were on notice.
6. The contract is fair and reasonable because it limits where Defendant Carnival can be sued. This resulted in savings for the company which resulted in lower cruise fare prices for consumers.
7. There is no indication that Defendant Carnival chose Florida in bad faith; the company’s headquarters is in Florida and a lot of cruises depart from Florida.