Carnival Cruise Lines v Shute Et Vir Case – Case Study Example

CARNIVAL CRUISE LINES v. SHUTE ET VIR, 111 S. Ct. 1522, 499 U.S. 585 (U.S. 04/17/1991) Case Brief Issue – The issue is whether or not the forum selection clause in enforceable, as contained in the Passage Contract Ticket of Carnival Cruise Lines.
2. Rule –
2.1 The terms of a contract are considered the law between the parties to the contract. The terms & conditions of Passage Contract Ticket specify: in No. 3 (a) that acceptance of ticket is deemed agreement to the terms and conditions thereon; and in No. 8 signifying agreement between passenger and Carrier that all disputes arising from the contract ticket shall be exclusively litigated before a court in Florida.
2.2 The Case Law principally is Bremen v Zapata Off-Shore Co., 407 U.S. 1 (1972), which found that “in light of present-day commercial realities and expanding international trade we conclude that the forum clause should control absent a strong showing that it should be set aside.”
2.3 Statutory Law is 28 U.S.C. 1404(a), which provides: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought" (forum non conveniens).
3. Analysis –
The spouses Shute boarded the Tropicale in Los Angeles, California, on a cruise to Puerto Vallarta, Mexico and back. On the return trip, as the ship passed international waters, Eulala Shute slipped on a deck mat during a guided tour of the ship’s galley and was injured. The spouses filed suit, alleging negligence against the ship’s owners, Carnival Cruise Lines, and its employees. The action was filed in the U.S. District Court for Washington’s Western District. Carnival contended that the proper forum for the resolution of the dispute is in Florida, on the basis of the terms and conditions of the Passenger Contract Ticket. The Appellate Court had ruled in favour of the Shutes, for which reason Carnival elevated the case on a question of law.
4. Conclusion –
The Court ruled that the forum selection clause is enforceable. The Court based its analysis on the standards applied in the Bremen case, noting that the Shutes admitted being informed of the terms of the contract, and that they failed to meet the “heavy burden of proof” required to set aside the clause on the basis of forum non conveniens. It also noted that a cruise line has a special interest in limiting the fora where it may be brought to court, because its customers can come from any number of locations as it is a business that transports people from place to place, and that passengers benefit from reduced fares due to the savings the cruise line realizes by limiting the fora for litigation.
Upon reading the full text of the decision and after careful consideration, I would tend to disagree with the decision of the majority, and side with the dissenting opinion by Justice Stevens and joined by Justice Marshall. On the reasons given, I disagree that Carnival would be open to litigation in any number of places, because its customers would be concentrated in those areas it does business in. If Carnival has agents that market its services in certain areas, then Carnival earns money from them in their place of residence; they have sufficient operations in that area because their agent acts in their name and with their authorization. Furthermore, I disagree with the decision that savings from not incurring costs from filing pretrial motions directly translate to customers’ lower fares; what is certain is that without assuming anything else, it automatically adds to the firm’s profits.
“Section 1404(a) is...intended to place discretion in the district courts to adjudicate motions for transfer according to an individualized, case-by-case consideration of convenience and fairness.” (Stewart Organization, Inc. v Ricoh Corporation, 487 U.S. 22 [1988]). The conditions in Bremen are unlike those in Carnival. I side with Justices Stevens and Marshall in observing that in Bremen the parties were equals, and the contract was not pro-forma but carefully negotiated between them. In Carnival, the Shutes had much weaker parity, moreso because by the time they had a chance to read the forum selection clause they had already purchased and were bound to the contract, since by its own terms they may not recover a refund if they cancelled – thus, the Court’s observation that they may “reject the contract with impunity” is not true in this case. The standard form, the inability to cancel without penalty, and the inequality of the parties makes the ticket a contract of adhesion from which the weaker party needs protection.
Requiring the case to be filed in Florida is beyond the financial ability of the Shutes, particularly since they would have to spend for the air fares of the witnesses and the transport of other evidences, not to mention their frequent travel back and forth from Washington where they lived. Giving force to the forum selection clause in this case would in effect defeat the claim, not on the merits but on financial considerations, which may well do a disservice to the pursuit of justice. The absence of bad faith or fraud is immaterial; as a contract of adhesion the clause should be construed strictly against Carnival, which caused its creation, and liberally against the Shutes. Clearly, enforcing the forum selection clause not only is highly inconvenient to the Shutes, but will be fatal to their case for lack of funds.
28 U.S.C. 1404 (a) Forum non conveniens
Bremen v Zapata Off-Shore Co., 407 U.S. 1 [1972]
Carnival Cruise Lines v. Shute et Vir, 111 S. Ct. 1522, 499 U.S. 585 [U.S. 04/17/1991]
Horton, D. (2008) “Flipping the Script: Contra Proferentem and Standard Form Contracts.” University of Colorado Law Review, 80
Stewart Organization, Inc. v Ricoh Corporation, 487 U.S. 22 [1988]