November 10, 2013

Carnival Cruise Lines, Inc. v. Shute | Case Brief Law Students - 499 U.S. 585, 111 S.Ct. 1522 (1991) - United States Supreme Court

FACTS: The Shutes went on a Carnival Cruise from L.A. to Mexico and back.  During the course of the cruise Mrs. Shute slipped on a deck mat and was injured.  The Shutes are residents of the state of Washington and the back of the ticket it states that the person who accepts the ticket is agreeing to have all matters litigated in the State of Florida.  

HISTORY: Carnival Cruise lines moved for a summary judgement claiming that the clause in the ticket required the matter to be handled in Florida and that the district court also lacked personal jurisdiction because of insubstantial contacts.  The District Court granted the motion. 

The Court of Appeals reversed saying that Carnival had solicited customers in WA and without that the Shutes wouldn't have gone on the cruise.  The court of appeals cited Bremen which said that forum-selection clauses were not "historically favored" and also that in the Shutes case the contract had not been freely bargained for.

ISSUE:
Should the forum-selection clause be enforced even though it wasn't the product of negotiations and does the clause violate the Limitation of Vessel Owner's Liability Act?

HOLDING:
No and No

RATIONALE:
It is unreasonable to apply Bremen as precedent to the case because the business contexts of the two transaction are completely different.

Reasonableness of the forum-clause is :

1) a cruise line has a special interest in limiting the fora in which it potentially could be subject to suit

2) clause spare the litigants time deciding correct forum and conserving scarce judicial resources

3) consumers enjoy reduced fares that result of costs the cruise line save by limiting the forum

Furthermore there has been no "heavy burden of proof" that the Shutes cannot financially afford to proceed with the litigation in Florida.

The clause also does no indicate any bad faith move on the part of Carnival to discourage litigation because much of Carnival's business takes place in Florida.

As for violation of the Act, the clause does not take away the right to pursue a trial and in so doing does in no way function to limit the petitioner's liability for negligence.

DISSENT:


Even the most meticulous passenger probably won't see the clause which is in the 8th of 25 paragraphs in small print.

Clause seems to be the result of disparate bargaining power between the big company and the small consumer.

The prevailing rule is still the forum-selection clauses are not enforceable when the are not freely bargained for.

Also, it will probably be harder for the Shutes to assemble witnesses to the incident in Florida than in Washington.