After the respondents Shute, a Washington State couple,
purchased passage on a ship owned by petitioner, a Florida-based
cruise line, petitioner sent them tickets containing a clause
designating courts in Florida as the agreed-upon fora for the
resolution of disputes. The Shutes boarded the ship in Los Angeles,
and, while in international waters off the Mexican coast, Mrs.
Shute suffered injuries when she slipped on a deck mat. The Shutes
filed suit in a Washington Federal District Court, which granted
summary judgment for petitioner. The Court of Appeals reversed,
holding,
inter alia, that the forum-selection clause
should not be enforced under
The Bremen v. Zapata Off-Shore
Co., 407 U. S. 1, because
it was not "freely bargained for," and because its enforcement
would operate to deprive the Shutes of their day in court in light
of evidence indicating that they were physically and financially
incapable of pursuing the litigation in Florida.
Held: The Court of Appeals erred in refusing to enforce
the forum-selection clause. Pp.
499 U. S.
590-597.
(a)
The Bremen Court's statement that a freely
negotiated forum-selection clause, such as the one there at issue,
should be given full effect, 407 U.S. at
407 U. S. 12-13,
does not support the Court of Appeals' determination that a
nonnegotiated forum clause in a passage contract is never
enforceable simply because it is not the subject of bargaining.
Whereas it was entirely reasonable for
The Bremen Court to
have expected the parties to have negotiated with care in selecting
a forum for the resolution of disputes arising from their
complicated international agreement, it would be entirely
unreasonable to assume that a cruise passenger would or could
negotiate the terms of a forum clause in a routine commercial
cruise ticket form. Nevertheless, including a reasonable forum
clause in such a form contract well may be permissible for several
reasons. Because it is not unlikely that a mishap in a cruise could
subject a cruise line to litigation in several different fora, the
line has a special interest in limiting such fora. Moreover, a
clause establishing
ex ante the dispute resolution forum
has the salutary effect of dispelling confusion as to where suits
may be brought and defended, thereby sparing litigants time and
expense and conserving judicial resources. Furthermore, it is
likely that passengers purchasing tickets
Page 499 U. S. 586
containing a forum clause like the one here at issue 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. Pp.
499 U. S.
590-594.
(b) The Court of Appeals' conclusion that the clause here at
issue should not be enforced because the Shutes are incapable of
pursuing this litigation in Florida is not justified by
The
Bremen Court's statement that
"the serious inconvenience of the contractual forum to one or
both of the parties might carry greater weight in determining the
reasonableness of the forum clause."
Id. at
407 U. S. 17.
That statement was made in the context of a hypothetical "agreement
between two Americans to resolve their essentially local disputes
in a remote alien forum."
Ibid. Here, in contrast, Florida
is not such a forum, nor -- given the location of Mrs. Shute's
accident -- is this dispute an essentially local one inherently
more suited to resolution in Washington than in Florida. In light
of these distinctions, and because the Shutes do not claim lack of
notice of the forum clause, they have not satisfied the "heavy
burden of proof,"
ibid. required to set aside the clause
on grounds of inconvenience. Pp.
499 U. S.
594-595.
(c) Although forum selection clauses contained in form passage
contracts are subject to judicial scrutiny for fundamental
fairness, there is no indication that petitioner selected Florida
to discourage cruise passengers from pursuing legitimate claims or
obtained the Shutes' accession to the forum clause by fraud or
overreaching. P.
499 U. S.
595.
(d) By its plain language, the forum selection clause at issue
does not violate 46 U.S.C. App. § 183c, which,
inter alia,
prohibits a vessel owner from inserting in any contract a provision
depriving a claimant of a trial "by court of competent
jurisdiction" for loss of life or personal injury resulting from
negligence. Pp.
499 U. S.
595-597.
897 F.2d 377 (CA9 1990), reversed.
BLACKMUN, J., delivered the opinion of the Court, in which
REHNQUIST, C.J., and WHITE, O'CONNOR, SCALIA, KENNEDY, and SOUTER,
JJ., joined. STEVENS, J., filed a dissenting opinion, in which
MARSHALL, J., joined,
post, p.
499 U. S.
597.
Page 499 U. S. 587
JUSTICE BLACKMUN delivered the opinion of the Court.
In this admiralty case we primarily consider whether the United
States Court of Appeals for the Ninth Circuit correctly refused to
enforce a forum selection clause contained in tickets issued by
petitioner Carnival Cruise Lines, Inc., to respondents Eulala and
Russel Shute.
I
The Shutes, through an Arlington, Wash., travel agent, purchased
passage for a 7-day cruise on petitioner's ship, the TROPICALE.
Respondents paid the fare to the agent, who forwarded the payment
to petitioner's headquarters in Miami, Fla. Petitioner then
prepared the tickets and sent them to respondents in the State of
Washington. The face of each ticket, at its left-hand lower corner,
contained this admonition:
"SUBJECT TO CONDITIONS OF CONTRACT ON LAST PAGES
[bb]IMPORTANT![eb] PLEASE READ CONTRACT -- ON LAST PAGES 1, 2,
3"
App. 15. The following appeared on "contract page 1" of each
ticket:
"
TERMS AND CONDITIONS OF PASSAGE CONTRACT TICKET"
* * * *
"3. (a) The acceptance of this ticket by the person or persons
named hereon as passengers shall be deemed to be an acceptance and
agreement by each of them of all of the terms and conditions of
this Passage Contract Ticket."
* * * *
"8. It is agreed by and between the passenger and the Carrier
that all disputes and matters whatsoever arising under, in
connection with or incident to this Contract
Page 499 U. S. 588
shall be litigated, if at all, in and before a Court located in
the State of Florida, U.S.A. to the exclusion of the Courts of any
other state or country."
Id. at 16.
The last quoted paragraph is the forum selection clause at
issue.
II
Respondents boarded the TROPICALE in Los Angeles, Cal. The ship
sailed to Puerto Vallarta, Mexico, and then returned to Los
Angeles. While the ship was in international waters off the Mexican
coast, respondent Eulala Shute was injured when she slipped on a
deck mat during a guided tour of the ship's galley. Respondents
filed suit against petitioner in the United States District Court
for the Western District of Washington, claiming that Mrs. Shute's
injuries had been caused by the negligence of Carnival Cruise Lines
and its employees.
Id. at 4.
Petitioner moved for summary judgment, contending that the forum
clause in respondents' tickets required the Shutes to bring their
suit against petitioner in a court in the State of Florida.
Petitioner contended, alternatively, that the District Court lacked
personal jurisdiction over petitioner because petitioner's contacts
with the State of Washington were insubstantial. The District Court
granted the motion, holding that petitioner's contacts with
Washington were constitutionally insufficient to support the
exercise of personal jurisdiction.
See App. to Pet. for
Cert. 60a.
The Court of Appeals reversed. Reasoning that, "but for"
petitioner's solicitation of business in Washington, respondents
would not have taken the cruise and Mrs. Shute would not have been
injured, the court concluded that petitioner had sufficient
contacts with Washington to justify the District Court's exercise
of personal jurisdiction. 897 F.2d 377, 385-386 (CA9 1990).
*
Page 499 U. S. 589
Turning to the forum selection clause, the Court of Appeals
acknowledged that a court concerned with the enforceability of such
a clause must begin its analysis with
The Bremen v. Zapata
Off-Shore Co., 407 U. S. 1 (1972),
where this Court held that forum selection clauses, although not
"historically . . . favored," are "
prima facie valid."
Id. at
407 U. S. 9-10.
See 897 F.2d at 388. The appellate court concluded that
the forum clause should not be enforced because it "was not freely
bargained for."
Id. at 389. As an "independent
justification" for refusing to enforce the clause, the Court of
Appeals noted that there was evidence in the record to indicate
that "the Shutes are physically and financially incapable of
pursuing this litigation in Florida," and that the enforcement of
the clause would operate to deprive them of their day in court, and
thereby contravene this Court's holding in
The Bremen. 897
F.2d at 389.
We granted certiorari to address the question whether the Court
of Appeals was correct in holding that the District Court should
hear respondents' tort claim against petitioner. 498 U.S. 807-808
(1990). Because we find the forum selection clause to be
dispositive of this question, we need not consider petitioner's
constitutional argument as to personal jurisdiction.
See
Ashwander v. TVA, 297 U. S. 288,
297 U. S. 347
(1936) (Brandeis, J., concurring) ("
I
t is not the habit of the Court to decide questions of a
constitutional nature unless
Page 499 U. S. 590
absolutely necessary to a decision of the case,'" quoting
Burton v. United States, 196 U. S. 283,
196 U. S. 295
(1905)).
III
We begin by noting the boundaries of our inquiry. First, this is
a case in admiralty, and federal law governs the enforceability of
the forum selection clause we scrutinize.
See Archawski v.
Nanioti, 350 U. S. 532,
350 U. S. 533
(1956);
The Moses
Taylor, 4 Wall. 411,
71 U. S. 427
(1867); Tr. of Oral Arg. 36-37, 12, 47-48.
Cf. Stewart
Organization, Inc. v. Ricoh Corp., 487 U. S.
22,
487 U. S. 28-29
(1988). Second, we do not address the question whether respondents
had sufficient notice of the forum clause before entering the
contract for passage. Respondents essentially have conceded that
they had notice of the forum selection provision. Brief for
Respondent 26 ("The respondents do not contest the incorporation of
the provisions nor [sic] that the forum selection clause was
reasonably communicated to the respondents, as much as three pages
of fine print can be communicated."). Additionally, the Court of
Appeals evaluated the enforceability of the forum clause under the
assumption, although "doubtful," that respondents could be deemed
to have had knowledge of the clause.
See 897 F.2d at 389
and n. 11.
Within this context, respondents urge that the forum clause
should not be enforced because, contrary to this Court's teachings
in
The Bremen, the clause was not the product of
negotiation, and enforcement effectively would deprive respondents
of their day in court. Additionally, respondents contend that the
clause violates the Limitation of Vessel Owner's Liability Act, 46
U.S.C. App. § 183c. We consider these arguments in turn.
IV
A
Both petitioner and respondents argue vigorously that the
Court's opinion in
The Bremen governs this case, and each
side purports to find ample support for its position in that
Page 499 U. S. 591
opinion's broad-ranging language. This seeming paradox derives
in large part from key factual differences between this case and
The Bremen, differences that preclude an automatic and
simple application of
The Bremen's general principles to
the facts here.
In
The Bremen, this Court addressed the enforceability
of a forum selection clause in a contract between two business
corporations. An American corporation, Zapata, made a contract with
Unterweser, a German corporation, for the towage of Zapata's
ocean-going drilling rig from Louisiana to a point in the Adriatic
Sea off the coast of Italy. The agreement provided that any dispute
arising under the contract was to be resolved in the London Court
of Justice. After a storm in the Gulf of Mexico seriously damaged
the rig, Zapata ordered Unterweser's ship to tow the rig to Tampa,
Fla., the nearest point of refuge. Thereafter, Zapata sued
Unterweser in admiralty in federal court at Tampa. Citing the forum
clause, Unterweser moved to dismiss. The District Court denied
Unterweser's motion, and the Court of Appeals for the Fifth
Circuit, sitting en banc on rehearing, and by a sharply divided
vote, affirmed. 446 F.2d 907 (1971).
This Court vacated and remanded, stating that, in general,
"a freely negotiated private international agreement, unaffected
by fraud, undue influence, or overweening bargaining power, such as
that involved here, should be given full effect."
407 U.S. at
407 U. S. 12-13
(footnote omitted). The Court further generalized that,
"in the 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."
Id. at
407 U. S. 16. The
Court did not define precisely the circumstances that would make it
unreasonable for a court to enforce a forum clause. Instead, the
Court discussed a number of factors that made it reasonable to
enforce the clause at issue in
The Bremen and
Page 499 U. S. 592
that, presumably, would be pertinent in any determination
whether to enforce a similar clause.
In this respect, the Court noted that there was
"strong evidence that the forum clause was a vital part of the
agreement, and [that] it would be unrealistic to think that the
parties did not conduct their negotiations, including fixing the
monetary terms, with the consequences of the forum clause figuring
prominently in their calculations."
Id. at
407 U. S. 14
(footnote omitted). Further, the Court observed that it was not
"dealing with an agreement between two Americans to resolve their
essentially local disputes in a remote alien forum," and that, in
such a case,
"the serious inconvenience of the contractual forum to one or
both of the parties might carry greater weight in determining the
reasonableness of the forum clause."
Id. at
407 U. S. 17. The
Court stated that, even where the forum clause establishes a remote
forum for resolution of conflicts, "the party claiming [unfairness]
should bear a heavy burden of proof."
Ibid.
In applying
The Bremen, the Court of Appeals in the
present litigation took note of the foregoing "reasonableness"
factors and rather automatically decided that the forum selection
clause was unenforceable because, unlike the parties in
The
Bremen, respondents are not business persons, and did not
negotiate the terms of the clause with petitioner. Alternatively,
the Court of Appeals ruled that the clause should not be enforced
because enforcement effectively would deprive respondents of an
opportunity to litigate their claim against petitioner.
The Bremen concerned a
"far from routine transaction between companies of two different
nations contemplating the tow of an extremely costly piece of
equipment from Louisiana across the Gulf of Mexico and the Atlantic
Ocean, through the Mediterranean Sea to its final destination in
the Adriatic Sea."
407 U.S. at
407 U. S. 13.
These facts suggest that, even apart from the evidence of
negotiation regarding the forum clause, it was entirely reasonable
for the Court in
The
Page 499 U. S. 593
Bremen to have expected Unterweser and Zapata to have
negotiated with care in selecting a forum for the resolution of
disputes arising from their special towing contract.
In contrast, respondents' passage contract was purely routine,
and doubtless nearly identical to every commercial passage contract
issued by petitioner and most other cruise lines.
See, e.g.,
Hodes v. S.N.C. Achille Lauro ed Altri-Gestione, 858 F.2d 905,
910 (CA3 1988),
cert. dism'd, 490 U.S. 1001 (1989). In
this context, it would be entirely unreasonable for us to assume
that respondents -- or any other cruise passenger -- would
negotiate with petitioner the terms of a forum-selection clause in
an ordinary commercial cruise ticket. Common sense dictates that a
ticket of this kind will be a form contract the terms of which are
not subject to negotiation, and that an individual purchasing the
ticket will not have bargaining parity with the cruise line. But by
ignoring the crucial differences in the business contexts in which
the respective contracts were executed, the Court of Appeals'
analysis seems to us to have distorted somewhat this Court's
holding in
The Bremen.
In evaluating the reasonableness of the forum clause at issue in
this case, we must refine the analysis of
The Bremen to
account for the realities of form passage contracts. As an initial
matter, we do not adopt the Court of Appeals' determination that a
nonnegotiated forum selection clause in a form ticket contract is
never enforceable simply because it is not the subject of
bargaining. Including a reasonable forum clause in a form contract
of this kind well may be permissible for several reasons: first, 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.
See The Bremen, 407
U.S. at
407 U. S. 13 and
n. 15. Additionally, a clause establishing
ex ante the
forum for dispute resolution has the salutary
Page 499 U. S. 594
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.
See Stewart
Organization, 487 U.S. at
487 U. S. 33
(concurring opinion). 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.
Cf. Northwestern Nat. Ins. Co. v. Donovan,
916 F.2d 372, 378 (CA7 1990).
We also do not accept the Court of Appeals' "independent
justification" for its conclusion that
The Bremen dictates
that the clause should not be enforced because "[t]here is evidence
in the record to indicate that the Shutes are physically and
financially incapable of pursuing this litigation in Florida." 897
F.2d, at 389. We do not defer to the Court of Appeals' findings of
fact. In dismissing the case for lack of personal jurisdiction over
petitioner, the District Court made no finding regarding the
physical and financial impediments to the Shutes' pursuing their
case in Florida. The Court of Appeals' conclusory reference to the
record provides no basis for this Court to validate the finding of
inconvenience. Furthermore, the Court of Appeals did not place in
proper context this Court's statement in
The Bremen
that
"the serious inconvenience of the contractual forum to one or
both of the parties might carry greater weight in determining the
reasonableness of the forum clause."
407 U.S. at
407 U. S. 17. The
Court made this statement in evaluating a hypothetical "agreement
between two Americans to resolve their essentially local disputes
in a remote alien forum."
Ibid. In the present case,
Florida is not a "remote alien forum," nor -- given the fact that
Mrs. Shute's accident occurred off the coast of Mexico -- is this
dispute an essentially local one inherently more suited to
resolution in the State of Washington than in Florida. In
Page 499 U. S. 595
light of these distinctions, and because respondents do not
claim lack of notice of the forum clause, we conclude that they
have not satisfied the "heavy burden of proof,"
ibid.
required to set aside the clause on grounds of inconvenience.
It bears emphasis that forum selection clauses contained in form
passage contracts are subject to judicial scrutiny for fundamental
fairness. In this case, there is no indication that petitioner set
Florida as the forum in which disputes were to be resolved as a
means of discouraging cruise passengers from pursuing legitimate
claims. Any suggestion of such a bad faith motive is belied by two
facts: petitioner has its principal place of business in Florida,
and many of its cruises depart from and return to Florida ports.
Similarly, there is no evidence that petitioner obtained
respondents' accession to the forum clause by fraud or
overreaching. Finally, respondents have conceded that they were
given notice of the forum provision and, therefore, presumably
retained the option of rejecting the contract with impunity. In the
case before us, therefore, we conclude that the Court of Appeals
erred in refusing to enforce the forum selection clause.
B
Respondents also contend that the forum selection clause at
issue violates 46 U.S.C. App. § 183c. That statute, enacted in
1936, see 49 Stat. 1480, provides:
"It shall be unlawful for the . . . owner of any vessel
transporting passengers between ports of the United States or
between any such port and a foreign port to insert in any rule,
regulation, contract, or agreement any provision or limitation (1)
purporting, in the event of loss of life or bodily injury arising
from the negligence or fault of such owner or his servants, to
relieve such owner . . . from liability, or from liability beyond
any stipulated amount, for such loss or injury, or (2) purporting
in such event to lessen, weaken, or avoid the right of any claimant
to a trial by court of competent
Page 499 U. S. 596
jurisdiction on the question of liability for such loss or
injury, or the measure of damages therefor. All such provisions or
limitations contained in any such rule, regulation, contract, or
agreement are declared to be against public policy and shall be
null and void and of no effect."
By its plain language, the forum selection clause before us does
not take away respondents' right to "a trial by [a] court of
competent jurisdiction," and thereby contravene the explicit
proscription of § 183c. Instead, the clause states specifically
that actions arising out of the passage contract shall be brought
"if at all," in a court "located in the State of Florida," which,
plainly, is a "court of competent jurisdiction" within the meaning
of the statute.
Respondents appear to acknowledge this by asserting that,
although the forum clause does not directly prevent the
determination of claims against the cruise line, it causes
plaintiffs unreasonable hardship in asserting their rights, and
therefore violates Congress' intended goal in enacting § 183c.
Significantly, however, respondents cite no authority for their
contention that Congress' intent in enacting § 183c was to avoid
having a plaintiff travel to a distant forum in order to litigate.
The legislative history of § 183c suggests, instead, that this
provision was enacted in response to passenger ticket conditions
purporting to limit the shipowner's liability for negligence or to
remove the issue of liability from the scrutiny of any court by
means of a clause providing that "the question of liability and the
measure of damages shall be determined by arbitration."
See S.Rep. No. 2061, 74th Cong., 2d Sess. 6 (1936);
H.R.Rep. No. 2517, 74th Cong., 2d Sess., 6 (1936).
See
also Safety of Life and Property at Sea: Hearings Before the
Committee on Merchant Marine and Fisheries, 74th Cong., 2d Sess.,
pt. 4, pp. 20, 36-37, 57, 109-110, 119 (1936). There was no
prohibition of a forum selection clause. Because the clause before
us allows for judicial resolution of claims against petitioner and
does
Page 499 U. S. 597
not purport to limit petitioner's liability for negligence, it
does not violate § 183c.
V
The judgment of the Court of Appeals is reversed.
It is so ordered
* The Court of Appeals had filed an earlier opinion also
reversing the District Court and ruling that the District Court had
personal jurisdiction over the cruise line, and that the forum
selection clause in the tickets was unreasonable, and was not to be
enforced. 863 F.2d 1437 (CA9 1988). That opinion, however, was
withdrawn when the court certified to the Supreme Court of
Washington the question whether the Washington long-arm statute,
Wash.Rev.Code § 4.28.185 (1988), conferred personal jurisdiction
over Carnival Cruise Lines for the claim asserted by the Shutes.
See 872 F.2d 930 (CA9 1989). The Washington Supreme Court
answered the certified question in the affirmative on the ground
that the Shutes' claim "arose from" petitioner's advertisement in
Washington and the promotion of its cruises there.
113 Wash. 2d
763,
783 P.2d
78 (1989). The Court of Appeals then "refiled" its opinion "as
modified herein."
See 897 F.2d at 380, n. 1.
JUSTICE STEVENS, with whom JUSTICE MARSHALL joins,
dissenting.
The Court prefaces its legal analysis with a factual statement
that implies that a purchaser of a Carnival Cruise Lines passenger
ticket is fully and fairly notified about the existence of the
choice of forum clause in the fine print on the back of the ticket.
See ante at
499 U. S.
587-588. Even if this implication were accurate, I would
disagree with the Court's analysis. But, given the Court's preface,
I begin my dissent by noting that only the most meticulous
passenger is likely to become aware of the forum selection
provision. I have therefore appended to this opinion a facsimile
[omitted] of the relevant text, using the type size that actually
appears in the ticket itself. A careful reader will find the forum
selection clause in the eighth of the twenty-five numbered
paragraphs.
Of course, many passengers, like the respondents in this case,
see ante at
499 U. S. 587,
will not have an opportunity to read paragraph 8 until they have
actually purchased their tickets. By this point, the passengers
will already have accepted the condition set forth in paragraph
16(a), which provides that "[t]he Carrier shall not be liable to
make any refund to passengers in respect of . . . tickets wholly or
partly not used by a passenger." Not knowing whether or not that
provision is legally enforceable, I assume that the average
passenger would accept the risk of having to file suit in Florida
in the event of an injury, rather than canceling -- without a
refund -- a planned vacation at the last minute. The fact that the
cruise line can reduce its litigation costs, and therefore its
liability insurance premiums, by forcing this choice on its
passengers does not, in my opinion, suffice to render the
Page 499 U. S. 598
provision reasonable.
Cf. Steven v. Fidelity Casualty Co. of
New York, 58 Cal. 2d
862, 883, 27 Cal. Rptr. 172, 186, 377 P.2d 284, 298 (1962)
(refusing to enforce limitation on liability in insurance policy
because insured "must purchase the policy before he even knows its
provisions").
Even if passengers received prominent notice of the forum
selection clause before they committed the cost of the cruise, I
would remain persuaded that the clause was unenforceable under
traditional principles of federal admiralty law, and is "null and
void" under the terms of Limited Liability Act, 49 Stat. 1480, as
amended, 46 U.S.C. App. § 183c, which was enacted in 1936 to
invalidate expressly stipulations limiting shipowners' liability
for negligence.
Exculpatory clauses in passenger tickets have been around for a
long time. These clauses are typically the product of disparate
bargaining power between the carrier and the passenger, and they
undermine the strong public interest in deterring negligent
conduct. For these reasons, courts long before the turn of the
century consistently held such clauses unenforceable under federal
admiralty law. Thus, in a case involving a ticket provision
purporting to limit the shipowner's liability for the negligent
handling of baggage, this Court wrote:
"It is settled in the courts of the United States that
exemptions limiting carriers from responsibility for the negligence
of themselves or their servants are both unjust and unreasonable,
and will be deemed as wanting in the element of voluntary assent;
and, besides, that such conditions are in conflict with public
policy. This doctrine was announced so long ago, and has been so
frequently reiterated, that it is elementary. We content ourselves
with referring to the cases of the
Baltimore & Ohio &c.
Railway v. Voigt, 176 U. S. 498,
176 U. S.
505,
176 U. S. 507, and
Knott
v. Botany Mills, 179 U. S. 69,
179 U. S.
71 [(1900)], where the previously adjudged cases are
referred to and the principles
Page 499 U. S. 599
by them expounded are restated."
The Kensington, 183 U. S. 263,
183 U. S. 268
(1902).
Clauses limiting a carrier's liability or weakening the
passenger's right to recover for the negligence of the carrier's
employees come in a variety of forms. Complete exemptions from
liability for negligence or limitations on the amount of the
potential damage recovery, [
Footnote 1] requirements that notice of claims be filed
within an unreasonably short period of time, [
Footnote 2] provisions mandating a choice of law
that is favorable to the defendant in negligence cases, [
Footnote 3] and forum selection clauses
are all similarly designed to put a thumb on the carrier's side of
the scale of justice. [
Footnote
4]
Page 499 U. S. 600
Forum selection clauses in passenger tickets involve the
intersection of two strands of traditional contract law that
qualify the general rule that courts will enforce the terms of a
contract as written. Pursuant to the first strand, courts
traditionally have reviewed with heightened scrutiny the terms of
contracts of adhesion, form contracts offered on a take-or-leave
basis by a party with stronger bargaining power to a party with
weaker power. Some commentators have questioned whether contracts
of adhesion can justifiably be enforced at all under traditional
contract theory because the adhering party generally enters into
them without manifesting knowing and voluntary consent to all their
terms.
See, e.g., Rakoff, Contracts of Adhesion: An Essay
in Reconstruction, 96 Harv.L.Rev. 1173, 1179-1180 (1983); Slawson,
Mass Contracts: Lawful Fraud in California, 48 S.Cal.L.Rev. 1, 1213
(1974); K. Llewellyn, The Common Law Tradition 370-371 (1960).
The common law, recognizing that standardized form contracts
account for a significant portion of all commercial agreements, has
taken a less extreme position, and instead subjects terms in
contracts of adhesion to scrutiny for reasonableness. Judge J.
Skelly Wright set out the state of the law succinctly in
Williams v. Walker-Thomas Furniture Co., 121 U.S.App.D.C.
315, 319-320, 350 F.2d 445, 449-450 (1965) (footnotes omitted):
"Ordinarily, one who signs an agreement without full knowledge
of its terms might be held to assume the risk that he has entered a
one-sided bargain. But when a party of little bargaining power, and
hence little real choice, signs a commercially unreasonable
contract with little or no knowledge of its terms, it is hardly
likely that his consent, or even an objective manifestation of his
consent,
Page 499 U. S. 601
was ever given to all of the terms. In such a case, the usual
rule that the terms of the agreement are not to be questioned
should be abandoned and the court should consider whether the terms
of the contract are so unfair that enforcement should be
withheld."
See also Steven, 58 Cal. 2d at 879-883, 27 Cal. Rptr.
at 183-185, 377 P.2d at 295-297;
Henningsen v. Bloomfield
Motors, Inc., 32 N.J. 358,
161 A.2d
69 (1960).
The second doctrinal principle implicated by forum selection
clauses is the traditional rule that "contractual provisions, which
seek to limit the place or court in which an action may . . . be
brought, are invalid as contrary to public policy."
See
Dougherty, Validity of Contractual Provision Limiting Place or
Court in Which Action May Be Brought, 31 A.L.R.4th 404, 409, § 3
(1984).
See also Home Insurance Co. v.
Morse, 20 Wall. 445,
87 U. S. 451
(1874). Although adherence to this general rule has declined in
recent years, particularly following our decision in
The Bremen
v. Zapata Off-Shore Co., 407 U. S. 1 (1972),
the prevailing rule is still that forum selection clauses are not
enforceable if they were not freely bargained for, create
additional expense for one party, or deny one party a remedy.
See 31 A.L.R.4th, at 409-438 (citing cases). A forum
selection clause in a standardized passenger ticket would clearly
have been unenforceable under the common law before our decision in
The Bremen, see 407 U.S. at
407 U. S. 9, and
n. 10, and, in my opinion, remains unenforceable under the
prevailing rule today.
The Bremen, which the Court effectively treats as
controlling this case, had nothing to say about stipulations
printed on the back of passenger tickets. That case involved the
enforceability of a forum selection clause in a freely negotiated
international agreement between two large corporations providing
for the towage of a vessel from the Gulf of Mexico to the Adriatic
Sea. The Court recognized that such towage agreements had generally
been held unenforceable in American
Page 499 U. S. 602
courts, [
Footnote 5] but
held that the doctrine of those cases did not extend to commercial
arrangements between parties with equal bargaining power. The
federal statute that should control the disposition of the case
before us today was enacted in 1936, when the general rule denying
enforcement of forum selection clauses was indisputably widely
accepted. The principal subject of the statute concerned the
limitation of shipowner liability, but, as the following excerpt
from the House Report explains, the section that is relevant to
this case was added as a direct response to shipowners' ticketing
practices.
"During the course of the hearings on the bill (H.R. 9969) there
was also brought to the attention of the committee a practice of
providing on the reverse side of steamship tickets that, in the
event of damage or injury caused by the negligence or fault of the
owner or his servants, the liability of the owner shall be limited
to a stipulated amount, in some cases $5,000, and in others
substantially lower amounts, or that in such event the question of
liability and the measure of damages
shall be determined by
arbitration. The amendment to chapter 6 of title 48 of the
Revised Statutes proposed to be made by section 2 of the committee
amendment is intended to, and in the opinion of the committee will,
put a stop to all such practices and practices of a like
character."
H.R.Rep. No. 2517, 74th Cong., 2d Sess., 6-7 (1936) (emphasis
added);
see also S.Rep. No. 2061, 74th Cong., 2d Sess.,
6-7 (1936).
Page 499 U. S. 603
The intent to "put a stop to all such practices and practices of
a like character" was effectuated in the second clause of the
statute. It reads:
"It shall be unlawful for the manager, agent, master, or owner
of any vessel transporting passengers between ports of the United
States or between any such port and a foreign port to insert in any
rule, regulation, contract, or agreement any provision or
limitation (1) purporting, in the event of loss of life or bodily
injury arising from the negligence or fault of such owner or his
servants, to relieve such owner, master, or agent from liability,
or from liability beyond any stipulated amount, for such loss or
injury, or (2)
purporting in such event to lessen, weaken, or
avoid the right of any claimant to a trial by court of competent
jurisdiction on the question of liability for such loss or injury,
or the measure of damages therefor. All such provisions or
limitations contained in any such rule, regulation, contract, or
agreement are declared to be against public policy and shall be
null and void and of no effect."
46 U.S.C. App. § 183c (emphasis added).
The stipulation in the ticket that Carnival Cruise sold to
respondents certainly lessens or weakens their ability to recover
for the slip and fall incident that occurred off the west coast of
Mexico during the cruise that originated and terminated in Los
Angeles, California. It is safe to assume that the witnesses --
whether other passengers or members of the crew -- can be assembled
with less expense and inconvenience at a west coast forum than in a
Florida court several thousand miles from the scene of the
accident.
A liberal reading of the 1936 statute is supported by both its
remedial purpose and by the legislative history's general
condemnation of "all such practices." Although the statute does not
specifically mention forum selection clauses, its language is broad
enough to encompass them. The absence of a
Page 499 U. S. 604
specific reference is adequately explained by the fact that such
clauses were already unenforceable under common law, and would not
often have been used by carriers, which were relying on
stipulations that purported to exonerate them from liability
entirely.
Cf. Moskal v. United States, 498 U.
S. 103,
498 U. S.
110-113 (1990).
The Courts of Appeals, construing an analogous provision of the
Carriage of Goods by Sea Act, 46 U.S.C. App. § 1300
et
seq., have unanimously held invalid as limitations on
liability forum selection clauses requiring suit in foreign
jurisdictions.
See, e.g., Hughes Drilling Fluids v. M/V Luo Fu
Shan, 852 F.2d 840 (CA5 1988),
cert. denied, 489 U.S.
1033 (1989);
Union Ins. Soc. of Canton, Ltd. v. S.S.
Elikon, 642 F.2d 721, 724-25 (CA4 1981);
Indussa Corp. v.
S.S. Ranborg, 377 F.2d 200, 203-204 (CA2 1967). Commentators
have also endorsed this view.
See, e.g., G. Gilmore &
C. Black, The Law of Admiralty 145, and n. 23 (2nd ed.1975);
Mendelsohn, Liberalism, Choice of Forum Clauses and the Hague
Rules, 2 J. of Maritime Law & Comm. 661, 663-666 (1971). The
forum selection clause here does not mandate suit in a foreign
jurisdiction, and therefore arguably might have less of an impact
on a plaintiff's ability to recover.
See Fireman's Fund
American Ins. Cos. v. Puerto Rican Forwarding Co., 492 F.2d
1294 (CA1 1974). However, the plaintiffs in this case are not large
corporations, but individuals, and the added burden on them of
conducting a trial at the opposite end of the country is likely
proportional to the additional cost to a large corporation of
conducting a trial overseas. [
Footnote 6]
Under these circumstances, the general prohibition against
stipulations purporting "to lessen, weaken, or avoid" the
passenger's right to a trial certainly should be construed to apply
to the manifestly unreasonable stipulation in these passengers'
Page 499 U. S. 605
tickets. Even without the benefit of the statute, I would
continue to apply the general rule that prevailed prior to our
decision in
The Bremen to forum selection clauses in
passenger tickets.
I respectfully dissent.
[
Footnote 1]
See 46 U.S.C. App. § 183c:
"It shall be unlawful for the . . . owner of any vessel
transporting passengers between ports of the United States or
between any such port and a foreign port to insert in any rule,
regulation, contract, or agreement any provision or limitation (1)
purporting, in the event of loss of life or bodily injury arising
from the negligence or fault of such owner or his servants, to
relieve such owner . . . from liability, or from liability beyond
any stipulated amount, for such loss or injury. . . ."
[
Footnote 2]
See 46 U.S.C. App. § 183b(a):
"It shall be unlawful for the manager, agent, master, or owner
of any sea-going vessel (other than tugs, barges, fishing vessels
and their tenders) transporting passengers or merchandise or
property from or between ports of the United States and foreign
ports to provide by rule, contract, regulation, or otherwise a
shorter period for giving notice of, or filing claims for loss of
life or bodily injury, than six months, and for the institution of
suits on such claims, than one year, such period for institution of
suits to be computed from the day when the death or injury
occurred."
See also 49 U.S.C. § 11707(e) ("A carrier or freight
forwarder may not provide by rule, contract, or otherwise, a period
of less than 9 months for filing a claim against it under this
section and a period of less than 2 years for bringing a civil
action against it under this section").
[
Footnote 3]
See, e.g., The Kensington, 183 U.
S. 263,
183 U. S. 269
(1902) (refusing to enforce clause requiring that all disputes
under contract for passage be governed by Belgian law because such
law would have favored the shipowner in violation of United States
public policy).
[
Footnote 4]
All these clauses will provide passengers who purchase tickets
containing them with a "benefit in the form of reduced fares
reflecting the savings that the cruise line enjoys by limiting [its
exposure to liability]."
See ante at
499 U. S. 594.
Under the Court's reasoning, all these clauses, including a
complete waiver of liability, would be enforceable, a result at
odds with longstanding jurisprudence.
[
Footnote 5]
"In [
Carbon Black Export, Inc. v. The Monrosa, 254 F.2d
297 (CA5 1958),
cert. dismissed, 359 U. S.
180 (1959),] the Court of Appeals had held a forum
selection clause unenforceable, reiterating the traditional view of
many American courts that 'agreements in advance of controversy
whose object is to oust the jurisdiction of the courts are contrary
to public policy, and will not be enforced.' 254 F.2d at
300-301."
The Bremen v. Zapata Off-Shore Co., 407 U. S.
1,
407 U. S. 6
(1972).
[
Footnote 6]
The Court does not make clear whether the result in this case
would also apply if the clause required Carnival passengers to sue
in Panama, the country in which Carnival is incorporated.