8. Carnival Cruise Lines, Inc. v.

Shute

Facts
Eulala and Russel Shute (plaintiffs) purchased tickets through a travel agent in Washington state for a
cruise operated by Carnival Cruise Lines, Inc. (Carnival) (defendant). Defendant Shute purchased
passage for a seven day cruise on the Tropicale, a ship owned by Plaintiff, through a Washington travel
agent. The face of each ticket contained terms and conditions of passage, which included an agreement
that all matters disputed or litigated subject to the travel agreement, would be before a Florida court.
Defendant boarded the ship in California, which then sailed to Puerto Vallarta, Mexico before returning to
Los Angeles. While the ship was in international waters, Defendant Eulala Shute was injured from slipping
on a deck mat. Defendants filed suit in Federal District Court in Washington. Defendant filed a motion for
summary judgment, alleging that the clause in the tickets required Defendants to bring their suit in Florida.

Only after purchasing their tickets from the travel agent did the Shutes receive paper tickets containing a
form contract with a forum selection clause requiring all disputes to be brought in Florida. The form
contract was comparable to form ticket contracts used by other cruise lines. The face of the ticket warned
that passage was subject to acceptance of the terms of the ticket contract and the Shutes admitted
having been made aware of the forum selection clause. The ticket contract also contained a provision that
no refunds were available for the tickets once purchased. While on the cruise in international waters, Mrs.
Shute fell during a tour of the ship and the Shutes sued Carnival for damages in District Court in
Washington. Carnival moved to dismiss citing the forum selection clause, and asserted a lack of personal
jurisdiction in Washington. The District Court granted the motion finding insufficient contacts for personal
jurisdiction in Washington. The Court of Appeals reversed, finding sufficient contacts with the state of
Washington and refused to enforce the forum selection clause. Carnival appealed.

Issue. Whether the court should enforce a forum-selection clause forcing individuals to submit to
jurisdiction in a particular state.

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 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.

(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.

(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.

(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. 
9. THE BREMEN V. ZAPATA OFF-SHORE CO.

Facts: Zapata Off-Shore Company (Zapata) (plaintiff) was a United States corporation. Zapata contracted
with Unterweser (defendant), a German corporation, to tow Zapata’s drilling rig, the Chaparral, from
Louisiana to Italy. During the voyage, a severe storm in the Gulf of Mexico caused serious damage to
the Chaparral. Zapata instructed Unterweser’s ship, the Bremen, to tow the Chaparral to a port in Tampa,
Florida. Zapata filed suit in federal district court in Florida against Unterweser. Unterweser moved to
dismiss the complaint based on the contract’s forum-selection clause, which selected the London Court of
Justice as the exclusive forum. The district court denied Unterweser’s motion. Unterweser appealed, and
the court of appeals affirmed. The United States Supreme Court granted certiorari to review.

ISSUE: Whether or not the forum selection clause in the towing contract of Bremen and Zapata is
enforceable and binding among the parties

Held: The forum-selection clause, which was a vital part of the towing contract, is binding on the parties
unless respondent can meet the heavy burden of showing that its enforcement would be unreasonable,
unfair, or unjust, vacated and remanded. The Court held that in admiralty cases forum selection clauses
"are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be
"unreasonable' under the circumstances," and that courts should enforce such clauses unless the
resisting party "could clearly show that enforcement would be unreasonable and unjust, or that the clause
was invalid for such reasons as fraud or overreaching."

Courts have also suggested that a forum clause, even though it is freely bargained for and contravenes
no important public policy of the forum, may nevertheless be "unreasonable" and unenforceable if the
chosen forum is seriously inconvenient for the trial of the action. Of course, where it can be said with
reasonable assurance that at the time they entered the contract, the parties to a freely negotiated private
international commercial agreement contemplated the claimed inconvenience, it is difficult to see why any
such claim of inconvenience should be heard to render the forum clause unenforceable.  We are not here
dealing with an agreement between two Americans to resolve their essentially local disputes in a remote
alien forum. 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. The
remoteness of the forum might suggest that the agreement was an adhesive one, or that the parties did
not have the particular controversy in mind when they made their agreement; yet even there the party
claiming should bear a heavy burden of proof

This case, however, involves a freely negotiated international commercial transaction between a German
and an American corporation for towage of a vessel from the Gulf of Mexico to the Adriatic Sea. As noted,
selection of a London forum was clearly a reasonable effort to bring vital certainty to this international
transaction and to provide a neutral forum experienced and capable in the resolution of admiralty
litigation. Whatever "inconvenience" Zapata would suffer by being forced to litigate in the contractual
forum as it agreed to do was clearly foreseeable at the time of contracting. In such circumstances it
should be incumbent on the party seeking to escape his contract to show that trial in the contractual forum
will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in
court. Absent that, there is no basis for concluding that it would be unfair, unjust, or unreasonable to hold
that party to his bargain.
10. BURGER KING CORP v. RUDZEWICZ

Brief Fact Summary.  Plaintiff, a Florida corporation, and Defendants, Michigan residents, had a
franchise agreement specifying that Defendants may be subject to suit in Florida. Plaintiff sued
Defendants in Florida federal court based on diversity of citizenship for non-payment under the franchise
agreement. Defendants moved to dismiss on the grounds that Florida did not have personal jurisdiction
over Defendants.
Synopsis of Rule of Law. When the defendant has a business relationship and agreement with a
corporation located in the forum state and there is a forum-selection clause in the agreement, the forum
state may exercise personal jurisdiction if the long- arm statute permits. If exercising jurisdiction would
cause a grave hardship to the defendant, then exercising jurisdiction would violate due process.

Facts: Brian MacShara and John Rudzewicz (defendants) jointly applied for a Burger King franchise in
Detroit. MacShara and Rudzewicz negotiated the deal with Burger King Corp.’s (plaintiff) Michigan’s
district office and the Miami headquarters. The two men were granted a franchise, and MacShara
attended a management course on how to run a Burger King in Miami. Rudzewicz purchased $165,000 in
restaurant equipment from Burger King corporate division in Miami. Under the franchise agreement,
MacShara and Rudzewicz were to remit franchise fees and royalties to Burger King Corp. in Miami.
MacShara and John Rudzewicz were unable to make these payments due to low finances. Burger King
Corp. sued them for breach of contract in federal district court in Florida. Burger King claimed that federal
court was appropriate under diversity and trademark jurisdiction. MacShara and Rudzewicz claimed that
the court did not have personal jurisdiction over them. The court rejected their objection and awarded
Burger King damages and injunctive relief. The court of appeals reversed the judgment, concluding that
the district court did not have personal jurisdiction. The United States Supreme Court granted certiorari.

Issue. : May a court may exercise personal jurisdiction on a franchisee in an action for breach of contract
when the franchisee voluntarily accepts long-term and exacting regulation by the franchisor’s
headquarters, the franchisee had notice that he may be subject to suit in the forum state, and the
franchisee would not be gravely disadvantaged by exercising jurisdiction in the forum state?

Held: The District Court's exercise of jurisdiction pursuant to Florida's long-arm statute did not violate the
Due Process Clause of the Fourteenth Amendment.

(a) A forum may assert specific jurisdiction over a nonresident defendant where an alleged injury arises
out of or relates to actions by the defendant himself that are purposeful directed toward forum residents,
and where jurisdiction would not otherwise offend "fair play and substantial justice." Jurisdiction in these
circumstances may not be avoided merely because the defendant did not physically enter the forum.

(b) An individual's contract with an out-of-state party cannot alone automatically establish sufficient
minimum contacts in the other party's home forum. Instead, the prior negotiations and contemplated
future consequences, along with the terms of the contract and the parties' actual course of dealing, must
be evaluated to determine whether a defendant purposefully established minimum contacts within the
forum.

(c) Here, appellee established a substantial and continuing relationship with appellant's Miami
headquarters, and received fair notice from the contract documents and the course of dealings that he
might be subject to suit in Florida. The District Court found that appellee is an "experienced and
sophisticated" businessman who did not act under economic duress or disadvantage imposed by
appellant, and appellee has pointed to no other factors that would establish the unconstitutionality of
Florida's assertion of jurisdiction.