Civil Procedure I, Pages 155–158

Carnival Cruise Lines, Inc. v. Shute

Supreme Court of the United States, 1991

Facts:

The Shutes, through a Washington travel agent, purchased a 7-day cruise on defendant's ship. They paid through the travel agent, who sent the money to defendant's Florida headquarters, from whence the tickets were sent to the plaintiffs. In the corner of the face of the ticket it said that it was subject to conditions of contract. The Terms and Conditions said that the acceptance of the ticket was an acceptance to all of the terms and conditions and that all matters related to it would be agreed to be settled in Florida courts. The ship boarded in California and traveled to and back from Mexico. Plaintiff was injured off the Mexican coast by slipping on a deck mat onboard. They filed suit in the US District Court for Western Washington, claiming defendant's negligence caused the injuries. Defendant moved for summary judgment because the plaintiffs' tickets required suit in Florida.

Issue:

Is a cruise line's fine print contract's clause on potential forums binding?

Plaintiff's Argument:

Forum clause should not be enforced because it was not the product of negotiation and would deprive plaintiffs of their day in court.

Rule:

  1. 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.
  2. 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 pretrial motions to determine the correct forum and conserving judicial resources that otherwise would be devoted to deciding those motions.
  3. 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.

Reasoning:

The contract was routine and it was unlikely the plaintiffs would have had any bargaining power if they had tried to negotiate. They nonetheless had the opportunity to read the contract and reject it based on that clause.

Holding:

Yes, a cruise line's fine print contract's clause on potential forums is binding.

Dissenting Opinion:

Stevens:
  1. Courts have traditionally reviewed the terms of take-it-or-leave-it contracts with heightened scrutiny.
  2. Contractual provisions that seek to limit the place or court in which an action may be brought are invalid as contrary to public policy.
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