Carnival Cruise Lines, Inc. v. Shute

In Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991), the Schutes, residents of Washington, purchased tickets on a Carnival ship cruise from Los Angeles to Mexico. Carnival mailed the tickets to the Shutes' home in Washington from its headquarters in Florida. Id. at 587. The tickets contained a forum-selection clause specifying Florida as the forum for any dispute regarding the cruise. Id. at 587-88. Ms. Shute was injured on board the ship when it was in international waters off the coast of Mexico. Id. at 588. She sued Carnival in Washington. Carnival sought to enforce the forum-selection clause and move the action to Florida. The U.S. Supreme Court enforced the clause holding that even in a form contract in which one party does not have bargaining parity, a forum-selection clause is not per se invalid. Id. at 593-94. The Court expressly rejected the lower court's conclusion that the clause should not be enforced because of the expense and inconvenience to the Shutes of litigating in Florida. The lower court only made a conclusory reference to the inconvenience and financial problems created to the Shutes by having to litigate in Florida. Id. at 594-95. The Supreme Court held this to be insufficient. The Court held that Florida was not a "remote alien-forum," and the dispute was not "an essentially local one, " and thus the Shutes did not satisfy the "heavy burden of proof . . . required to set aside the clause on grounds of inconvenience." Id at 595. The Court continued, "It bears emphasis that forum-selection clauses contained in form passage contracts are subject to judicial scrutiny for fundamental fairness." Id at 595. The Court found no evidence that Florida was chosen to discourage pursuit of legitimate claims. The Court held any suggestion of such bad faith was allayed by the fact that Florida is Carnival's principal place of business and it does extensive business in Florida. The Court found no evidence that the clause was obtained by fraud or overreaching, and the Shutes had the option of rejecting the clause by declining to travel with Carnival. Id. The Texas supreme court adopted the test set forth in The Bremen and Carnival in AIU Insurance. In re AIU Ins. Co., 148 S.W.3d at 111. The Supreme Court upheld a forum selection clause in a cruise line's passage contract ticket which required litigation of all disputes in Florida, finding that "a cruise line has a special interest in limiting the fora in which it potentially could be subject to suit. Because a cruise ship typically carries passengers from many locales, it is not unlikely that a mishap on a cruise could subject the cruise line to litigation in several different fora. Bremen v. Zapata Off-Shore Co., supra at 13 and n.15;. Additionally, a clause establishing ex ante the forum for dispute resolution has the salutary effect of dispelling any confusion about where suits arising from the contract must be brought and defended, sparing litigants the time and expense of pre-trial motions to determine the correct forum and conserving judicial resources that otherwise would be devoted to deciding those motions. Finally, it stands to reason that passengers who purchase tickets containing a forum clause like that at issue in this case benefit in the form of reduced fares reflecting the savings that the cruise line enjoys by limiting the fora in which it may be sued." (Carnival Cruise Lines, Inc. v. Shute, supra at 593-594.) In sum, plaintiffs purchased tickets for a cruise on defendant's ship. The tickets contained a forum-selection clause. Plaintiffs sought to sue defendant in another jurisdiction. Defendant obtained a summary judgment based upon the forum-selection clause. (At pp. 587-588.) The Court of Appeals then held the forum-selection clause to be unenforceable. (Id. at p. 589.) In determining whether the Court of Appeals was correct, the Supreme Court began by noting, "this is a case in admiralty, and federal law governs the enforceability of the forum-selection clause we scrutinize." (Id. at p. 590.)