Carnival Cruise Lines, Inc. v. Shute
Yeazell, pp. 169-172
Facts: The Shutes
went on a cruise. On the ticket, there was
a forum selection clause that said any litigation related to the cruise must be
Procedural Posture: The suit was first brought in the Western District of Washington. The Ninth Circuit refused to enforce the clause, and the cruise line appealed to the United States Supreme Court.
Issue: Is the forum selection clause enforceable?
Rule: Courts have the responsibility to determine whether forum selection clauses in form passage contracts are fair.
Analysis: The Court says that the ticket contract was a routine commercial passage contract. It was not negotiated, and the parties did not have equal bargaining power.
The Court enumerates several good reasons for a forum selection clause in a cruise ticket contract:
1. A cruise will have passengers from all over the country, and absent a forum selection clause, the cruise company could be subject to suit in all sorts of places.
2. A forum selection clause eliminates uncertainty about the forum and avoids costly pretrial motions.
3. Forum selection clauses mean lower fares for passengers because the cruise company passes along savings from limiting the forums where the company must defend itself.
Court says that the key question is whether the clause is fair. In evaluating the fairness of such clauses,
the Court must consider whether Carnival was, in bad faith, discouraging
legitimate claims from its passengers.
The Court says that because Carnival does business primarily in
Stevens, in his dissent, refers to two “strands” of contract law that come into play in this case.
1. Courts look closer at contracts made between parties with unequal bargaining power, especially “take it or leave it” contracts.
2. At least in the past, forum selection clauses have been found to be counter to public policy. In particular, they are not enforced if they (1) “were not freely bargained for”, (2) “create additional expense for one party”, or (3) “deny one party a remedy”.
Notes and Problems
a. It is most
likely that the suit would either be brought in
a. So there’s a contract law issue.
b. So there’s a public policy issue.
c. The majority spends more time on the enforceability issue. They argue that the contract clause is enforceable even though the passengers were not allowed to negotiate it. The court gives three reasons why this is acceptable: (1) the diversity of Carnival’s passengers could subject them to suit in a variety of jurisdictions; (2) a forum selection clause reduces the uncertainty, time and money involved in determining a forum; and (3) forum selection clauses have benefits for Carnival that they pass along to their customers as lower fares.
d. The majority implies that they would not enforce a forum selection clause that is intended to “discourag[e] cruise passengers from pursuing legitimate claims”. They also would not enforce a forum selection clause that was obtained by “fraud or overreaching”.
a. A forum
selection clause will only help in cases that involve a contractual
relationship. In Pennoyer, I suppose Mitchell could have
included a forum selection clause in his service contract with Neff such that
Neff agreed to appoint an agent in
b. I don’t know what constitutes malpractice, but I suppose a lawyer ought to study contracts so far as the benefits outweigh the costs. It’s tempting to say that lawyers must study every clause exhaustively (charging zillions of dollars in fees while doing so), but I think there’s a cutoff.
a. This kind of clause says we’ll use the laws of such-and-such a forum, even if we don’t do the trial in that particular forum.
b. This one says “we definitely can do the suit in forum X, but not necessarily only forum X”.
c. Here we’re doing any and all suits in forum X and only forum X.
d. I like arbitration.
e. This is pretty extreme.
Conclusion: The forum selection clause is enforceable.