CARNIVAL CRUISE LINES, INC. v. SHUTE
Argument of Richard K. Willard
Chief Justice Rehnquist: We'll hear next in argument No. 89-1647, Carnival Cruise Lines, Inc., v. Eulala Shute.
Mr. Willard: Mr. Chief Justice, and may it please the Court:
The first question in this case is whether a State long arm statute constitutionally can reach a nonresident defendant in a case involving an out-of-state accident based on the defendant's advertising and promotional activities within the State.
Now this is not a general jurisdiction case.
Both courts below found that Carnival had not engaged in the kind of continuous and systematic contacts with the State of Washington that would support an assertion of general jurisdiction, and the plaintiff has not chosen to raise that issue before this Court.
Unknown Speaker: Mr. Willard, you say this question you're about to discuss is the first question in the case.
Is it necessarily the first?
Would we ever have to resolve this if we resolve the other one preliminarily?
Mr. Willard: Each question, Justice Scalia, is independent and the Court could certainly resolve the case in our favor by deciding the second issue, the second question presented--
Unknown Speaker: And this one's a constitutional question, isn't it?
Mr. Willard: --That is correct.
Unknown Speaker: And the other one is not.
Mr. Willard: And the other one is not a constitutional question.
Unknown Speaker: We'd normally do the other one first then, wouldn't we?
Mr. Willard: The Court has certainly indicated that that is appropriate.
I would propose, if the Court pleases, to go ahead with the first question presented, although I understand that they're both independent issues.
Unknown Speaker: Please do so.
Mr. Willard: The court of appeals, although it rejected generalist jurisdiction, found specific jurisdiction, because it said there was a sufficient nexus in this case between the Carnival's advertising activities in the State of Washington and the resulting... and the ultimate accident.
They applied a test of but for causation.
The court said that but for Carnival's advertising and promotional activities, Mrs. Shute would not have gone on this cruise and but for going on the cruise, of course, she would not have been injured.
We submit that this connection is too tenuous to support the assertion of jurisdiction.
And we recognize the State of Washington has an interest in providing a forum for its residents who may want to pursue claims for injuries they have suffered while traveling out of State.
But this Court has never held that that kind of interest is sufficient to support an assertion of jurisdiction over a nonresident defendant.
No matter how strong the State's interest in providing a convenient forum for its plaintiffs to pursue claims, those claims still must arise out of or relate to contacts with the forum State by the defendant in order to support an assertion of long arm jurisdiction.
This Court has been mindful of the territorial limits on State power in connection with the assertion of personal jurisdiction, and those territorial contacts here are pretty close to their nadir.
Here we have a nonresident corporation that does not have continuous and systematic contacts in a case involving acts of negligence which occurred out-of-state and which caused injury out-of-state.
Thus, this case is readily distinguishable for situations where a defendant, for example, may send a libellous publications into a State or may send a defective product into a State where it causes injury.
In this case, all of the acts on which liability is based and all of the injuries that support the claim for damages occurred out-of-state.
The sole contact of the defendant with the State involved the advertising and promotional activities and the relationship between these activities and the allegations of negligence and failing to maintain a safe passageway through the galley are so slight as to create really a virtual fiction.
This case is many ways like the case of Kulko against Superior Court.
In that case, as the Court recalled, you rejected an assertion of jurisdiction in a case where, admittedly, the marriage of the parties had originated in California during a brief visit, but thereafter they moved to New York.
Later, the wife moved back to California and the Court held that California could not assert long arm jurisdiction over the husband, who had remained in New York.
Now it could be said that the marriage in that case was a but for cause of the subsequent lawsuit to establish a divorce decree, since but for a marriage you do not have a divorce.
But the Court did not devote much attention and found it unnecessary even to seriously consider the thought that the prior marriage in California, even though that sort of a but for cause could form the basis for the establishment of long arm jurisdiction over the husband in a lawsuit involving, among other things, child support and establishment of the marriage decree.
So, for those reasons, we would submit that the contacts here were too tenuous and unrelated to the cause of action to support an assertion of personal jurisdiction.
Unknown Speaker: The complaint alleges negligence, does it not?
I'm not sure that that's necessary for the cause of action, but the complaint alleged negligence.
If the plaintiff here were... had shown that she relied on the advertising to find the safe and reliable ship line, could you say that there's some connection between the negligence cause of action and the advertising that she saw?
I recognize that those aren't shown in the case, but just to test whether or not it's arising out of or related to.
Mr. Willard: Well, certainly, Justice Kennedy, if she were to sue on the basis of fraudulent or false advertising, that would be like the Keeton case in which the contact with the forum gave rise to the cause of action, because the advertising itself would cause the injury.
In your hypothetical, though, the advertising would not be a necessary part of the cause of action.
She might allege that the advertising promised a safe ship.
But of course she could sue for negligence whether the advertising promised a safe ship or not.
Unknown Speaker: Well, but the context... do the context have to be necessary to the cause of action under your test?
It has to be related to I thought our cases say.
Mr. Willard: In our view it has to have a substantive relationship.
That is, it should relate to the substance of the cause of action and not just a sort of a narrative relationship in which it's something that is part of the story that's told.
And so, although she could have drafted her complaint in a way that might have indicated that the advertising somehow contained a promise of a safe ship, unless she were actually suing for a breach of warranty or something like that, it would be necessary to a cause of action for negligence.
Unknown Speaker: Mr. Willard, what if you... I understood your brief to suggest that the outcome here would be different if the cause of action had been for breach of contract.
Suppose they'd simply claimed that there was a warranty of safety implicit in the undertaking so that instead of suing in tort, they are suing in assumpsit.
Mr. Willard: Well, that would be certainly a stronger case for the assertion of specific jurisdiction where the act took place in the forum.
And in our view, however, this is not an issue that could be resolved simply by clever pleading.
In other words, simply putting a paragraph in the complaint that talked about the advertising as somehow containing an implied representation would not be enough unless it were actually a lawsuit based on that theory.
In our view, there's no basis for asserting that kind of theory in this case.
Unknown Speaker: May I ask this?
This accident took place in international waters, as I understand it.
So is it correct that under your view of the proper causation, the only places in the United States where the defendant could be use would be where general jurisdiction would be available?
Mr. Willard: That would be our general view, although it's certainly possible that there would be a situation where some act of negligence in another case would have taken place... correct.
Unknown Speaker: No, I'm talking about this case, where the act of negligence allegedly was she slipped in what she... visiting part of the ship, as I remember.
Mr. Willard: That's correct, Justice Stevens.
Unknown Speaker: So that even if the ship had docked in Seattle but still not often enough to support general jurisdiction, but she had gotten on board the ship and sailed, and so that still would not justify it then?
Mr. Willard: That would be our position here, because there's no allegation of an act of negligence on the land portion of the journey.
Unknown Speaker: Right.
Mr. Willard: The allegation is that water was spilled on the galley during the cruise, and so all of the acts occurred outside of any State.
Unknown Speaker: Well, didn't the cruise ship operate out of Los Angeles though?
I mean, might there not have been sufficient jurisdiction in the superior court of Los Angeles County or the central district of California?
Mr. Willard: Our view is, Mr. Chief Justice, there would not be, although there would certainly be a stronger tie there.
But in our view where the... all of the acts of negligence occur out of State and all of the injury occurs out of State, that the mere fact that the cruise began and ended in the State would not be enough.
Unknown Speaker: Well, where could the plaintiff sue?
Mr. Willard: Well, it could sue--
Unknown Speaker: Anywhere?
Mr. Willard: --The plaintiff could sue anywhere where she could obtain general jurisdiction over the--
Unknown Speaker: Well, where is that, for example?
Mr. Willard: --In this case, it's Florida which is where Carnival has its principal place of business and also where, in the forum selection clause in the ticket, it is implicitly consented to jurisdiction.
Unknown Speaker: For the purposes of our analysis and yours on this part of the case, would it make any difference if she could not have sued in Florida, if she would have had to go to a foreign country?
Or is the analysis the same?
Mr. Willard: In our view the analysis is the same.
The... Congress has never provided a special rule of service for foreign defendants in this kind of a case, and so as long as Rule 4(e) provides that the State long arm statute is the basis for service of process, this Court's decision in the Omni case indicates that that would be the form of analysis.
We certainly don't suggest Congress is constitutionally required to adopt that, and it could if it chose adopt a special rule for service of foreign defendants.
But it has not done so in this situation.
I had indicated that there is one place for sure where Carnival could be sued, and that is Florida.
And that's because it has its principal place of business there, and as the second issue in the case indicates, there is a provision in the passenger ticket requiring litigation to take place in the State of Florida.
Now the Ninth Circuit and the respondents in this case make two arguments as to why this clause should be not enforced.
The first argument is a very broad one, which apparently is that ticket conditions of this nature are never enforceable, because passenger tickets are preprinted.
They're contracts of adhesion.
They're offered on a take-it-or-leave-it basis.
And then their second argument is that even if this kind of a clause is sometimes enforceable, here in this particular case it's so unreasonable and burdensome that it should not be enforced.
Unknown Speaker: Mr. Willard, before you get into those two arguments, is it clear to you and should it be clear to us that this is a question of purely Federal law and it doesn't matter how the State of Washington would have treated this forum selection clause?
Mr. Willard: Yes, Your Honor.
This Court has regarded this issue as one of Federal admiralty law, and I see no--
Unknown Speaker: When did we do that?
Mr. Willard: --Well, The Majestic, which of course, predated Erie was a decision on a passenger ticket condition.
Unknown Speaker: What about post-Erie?
Do you know a case where the point was argued where we've decided that?
Mr. Willard: I don't believe this... well, under Bremen, the Court viewed that--
Unknown Speaker: It wasn't argued.
Mr. Willard: --If it wasn't argued in the Bremen, then this Court hasn't decided it.
But I don't see any reason why it should be a doubtful proposition when you're dealing with a question within the Court's admiralty and maritime jurisdiction.
Almost every other aspect of admiralty law is viewed as Federal law, and in fact the Court did indicate in the Bremen the importance of having uniform Federal law for admiralty and that certainly was one of the reasons the Constitution made that an item of Federal jurisdiction.
Unknown Speaker: Even if the agreement is entered into within a particular State where jurisdiction is asserted?
Mr. Willard: Yes, Justice O'Connor, that's our position.
Is it still a question of Federal Admiralty law, and I think... I'm not aware of any line of cases that would indicate that that would be questionable.
Unknown Speaker: So you'd say Washington has to follow us.
You'd still achieve uniformity, but instead of our following the State of Washington, the State of Washington, had this suit been brought in State courts, would have to follow our view of the effectiveness of the forum selection clause.
Mr. Willard: Well, that raises a slightly different question as to whether a suit brought under the Savings to Suitors Clause in State court, whether the state court would be required to apply Federal admiralty law.
I think there are a couple of decisions from the early part of the 20th century that indicate that that would be the case.
And that's generally thought to be true, but again that's not specifically prevented... presented here.
I think the better view would be that the State court would be required to follow Federal law on the enforceability of a forum selection clause in that kind of a suit.
Unknown Speaker: Is that somewhat at odds with the Erie principle?
Mr. Willard: In our view it's not at all at odds with the Erie principle, because this falls in the area of admiralty and maritime law where there is a very strong need which the framers of the Constitution recognized to have a uniform body of law.
It certainly would be strange to think that the States would be empowered to make up their own rules of admiralty law and very burdensome to the orderly conduct of maritime business to have different States having different laws that would apply here.
The... with regard to the broader issue of whether, as a matter of Federal Admiralty law, this kind of provision should ever be enforced, there's a longstanding body of case law that holds that ticket conditions are valid if they're reasonably communicated.
And in this case the respondents do not challenge that these conditions were reasonably communicated within the meaning of that body of law.
Their argument is, instead, that they just should never be enforced.
In this regard, there is a statute, the Limited Liability Act, that regulates but does not outlaw ticket provisions in steamship passenger tickets.
The law says the ticket condition of this nature cannot--
Unknown Speaker: This is a Federal statute?
Mr. Willard: --Yes, Mr. Chief Justice.
The Limited Liability Acts, sections 183(b) and (c) which is cited in the briefs, provides that ticket conditions cannot disclaim liability for negligence.
They can't require arbitration.
They can't require less than 6 months' notice, and they can't require a lawsuit to be filed in less than a year.
But they do not say you can't have a forum selection clause in a ticket.
In our view, when Congress chose in this particular area to regulate ticket conditions to a certain extent, but chose not to prohibit forum selection clauses, this Court should not go further and on its own outlaw forum selection clauses, or for that matter, particularly on a theory that ticket conditions are products of contracts of adhesion.
To the fallback argument in this case that petitioners make is that even if forum selection clauses are generally all right, that Florida is an unreasonable and burdensome forum in this case.
But their argument here really confuses what would be a proper forum, non conveniens-type analysis with the question of whether or not the contractual forum choice should be enforced.
The question here is not is Florida the most reasonable forum, but is the... Florida such an unreasonable forum that the contractual choice should be disregarded.
In our view, however, even if the question were what is the most reasonable forum, the answer would be Florida.
In fact, if Carnival were to designate in all of its tickets that all lawsuits had to be litigated in the State of Washington, that would be far more unreasonable than what we have here.
Florida is where Carnival has its principal place of business.
Its... most of its ships arrive and depart at one time or another from Florida.
The headquarters, the books, records, and other information is available.
Unknown Speaker: Well, it will be the most reasonable if you have to pick one place, but it could have designated on all its... you know on its tickets that all suits brought by citizens of Washington shall be brought in Washington.
You're insisting on one forum for everything.
Maybe that's unreasonable.
Mr. Willard: Well, one reason why it is reasonable to have a single forum is that the time a cruise occurs it's difficult to know where all of the witnesses in evidence will be months or years later when a lawsuit occurs.
For example, the respondents seems to suggest that if the designated forum had been the place where the ship departed and returned, that would have been more reasonable, by analogy to the Hodes case which designated Naples.
Unknown Speaker: But doesn't that indicate Miami as unreasonable?
To assume all suits should be brought in Miami.
Mr. Willard: Well, the reason--
Unknown Speaker: You suggest that you don't know where the witnesses will be.
Mr. Willard: --That's correct and so Miami is chosen, because that's where the company is headquartered.
And so that is more likely to be a forum where at least some documents, some witnesses will be available.
The company's records are there.
Its ships frequently land and take off there, so employees of the shipping line may be thought to be more readily available there than they would be somewhere else.
But back to the question, if I may, of whether it's reasonable to select one forum rather than saying every passenger can bring a lawsuit in their own home city.
Many situations can arise in which an incident involves passengers from all over the country.
Carnival carries hundreds of thousands of passengers from all of the states and many foreign countries.
And if each of them could go home and file a lawsuit about an injury, there would be a litigation on these conditions all over the country, maybe arising out of the same incident.
We cite the California... the Williams litigation in California in our briefs.
And that case, which Carnival has sought a stay from this Court and announced an intention to file a petition for certiorari, involves this same forum selection issue.
There, over 200 passengers from a number of different States filed a lawsuit claiming to have been injured in an incident of rough passage on the same cruise from Los Angeles to Puerto Vallarto.
Now, if all of them could go home and litigate the same issue in different State courts or Federal courts, that would be very inefficient and burdensome.
And so by designating a signal forum in the passenger ticket, Carnival's designation serves the interest of judicial efficiency as well as reducing its costs by providing that all the litigation should take place in one place.
Unknown Speaker: Don't the Federal rules have some kind of provision for consolidating all these cases when you have a large accident like this?
Mr. Willard: That's certainly true if they file in Federal court, Justice Stevens, but under the Savings to Suitors Clause, they can file in State court.
Unknown Speaker: Can't you remove?
Mr. Willard: --If there is not complete diversity, you cannot remove.
But it was--
Unknown Speaker: But you're talking about individual suits by 200 different plaintiffs, and each one of those, I suppose, there would be complete diversity?
Mr. Willard: --Well, it depends on who else they name.
In the California case I was just mentioning that we cited in our briefs, they named some in-state defendants as well--
Unknown Speaker: I see.
Mr. Willard: --in order... and some John Doe defendants under State practice in order to defeat diversity and prevent removal.
So there would be some cases where that could happen.
So, in summary, our view is that it makes sense in a situation where a cruise line operates with passengers from all different States as well as different countries to designate in the ticket a single forum.
And certainly if a single forum had to be designated, Florida is the most reasonable forum that could have been selected in this case.
And therefore, it's our position that the clause should be enforced.
Unless the Court has further questions, I would reserve the balance of my time for rebuttal.
Unknown Speaker: Thank you, Mr. Willard.
Mr. Wall, we'll hear now from you.
Argument of Gregory J. Wall
Mr. Wall: Mr. Chief Justice, and may it please the Court:
This is a case brought in admiralty in the western district of Washington dealing with an injury to a Washington resident which occurred in international waters.
The question for this Court is whether that case can be brought where the plaintiff purchased her tickets, where she resides, where the witnesses mainly reside, or will she have to travel 3,000 miles to probably the farthest point in the continental United States from where she resides to try this case and to do so in a State where there are no witnesses which are relevant to this lawsuit and which, in effect, have very little to do with this lawsuit.
The petitioner has taken the position, both in oral argument and in its brief, that due process only allows it to be sued where its corporate headquarters are currently located which is in Miami, Florida.
We take the position that due process, based upon their contacts with the State of Washington, allow them to be sued in Washington.
And the forum selection clause I will address a little bit later, but we take the position that it essentially shouldn't be enforced in this case, because it is unreasonable under the facts of this case.
Counsel's correct that the contacts with the State of Washington are primarily promotional and advertising in nature.
However, many of these... some of these promotions took place in the State of Washington... these seminars for travel agents.
He left, however, the very important ones which are the sales of these tickets in the State of Washington which occur there, and in addition, the purchasing of travel agents' services, essentially, by paying a commission.
These are significant contacts, and they are systematic and they are continuous.
While the Ninth Circuit did not feel they were sufficient for the exertion of general jurisdiction, we've never taken that position.
But in any case, we feel that a specific jurisdiction is warranted here.
This case has already been to the Ninth Circuit and the Ninth Circuit, because of a question... because State laws play such a large part in jurisdictional questions involving the Long Arm Act, certified a question to the Washington Supreme Court which specifically asked them if the long arm statute would encompass this case if the conduct of the petitioner was sufficient in order to invoke long arm jurisdiction.
Specifically, does this accident arise out of their contacts with the State?
In a unanimous decision, the Washington Supreme Court decided that as a matter of State law--
Unknown Speaker: Do you agree that the accident must be said to have arisen out of the acts of the defendant in the State?
Mr. Wall: --Yes, Your Honor.
If we are relying on specific jurisdiction, it has to arise out of--
Unknown Speaker: Well, that's all you're relying on, isn't it?
Mr. Wall: --That's the Ninth Circuit decision.
Yes, Your Honor, and that is what we're relying on in this case.
And it does... according... that is a matter of State law, since it--
Unknown Speaker: Now, did you argue general jurisdiction at any point?
Mr. Wall: --We did in the Ninth Circuit, Your Honor, and the Ninth Circuit disagreed with us.
They felt that there were enough contacts here for the exercise of specific jurisdiction but that we did not meet the threshold necessary for general jurisdiction.
Unknown Speaker: Mr.--
--The act out of which this accident you say arose was the sale of tickets?
Mr. Wall: --It arose out of the minimum contacts of the defendants with the State of Washington, one of which was the sale of tickets.
Unknown Speaker: The solicitation in Washington and the sale of the ticket to this person?
Mr. Wall: That's correct, Your Honor.
Unknown Speaker: Mr. Wall, I thought as far... maybe I got my facts mixed up... but I thought as far as Carnival Cruise Lines is concerned, the sale took place in Florida.
But your client bought it... bought the ticket from a travel agent, but the travel... but the sale by Carnival Lines was made in Florida.
Am I wrong about that or is that right?
Mr. Wall: I suppose it's a matter of one's view, Justice Scalia.
One is... my client paid her money to a travel agent and received her money... received her ticket from the same travel agent, who was an agent paid a commission by Carnival.
Carnival's assertion is that, because the ticket is printed in Miami and that it is... the money is eventually received in Miami, that the sale took place there.
Our contention is is that's a rather illogical way of looking at it, because cars are made in Detroit and the money finally... usually winds up there, too, but that doesn't mean the sale occurs there.
It occurs where you pay your money and where you receive the product.
And in this case my client paid her money in Washington and received the ticket in Washington from the agent of the defendants.
And so we contend that the sale and numerous sales... other sales take place in Washington.
And I should point out the travel agent in this case was specifically trained by Carnival at seminars in the State.
Unknown Speaker: Well, it's clear that her purchase occurred in Washington.
It may not be clear that Carnival's sale occurred in Washington.
I mean, I don't know what the arrangements were.
Maybe the travel agent stood liable for the money.
I mean, the travel agent may buy and resell these things.
I don't know what the arrangement is.
Mr. Wall: According to her affidavit, which is in the respondents' appendix, she forwards the money to Carnival.
They forward the ticket to her.
She gives it to my client.
At least from the consumer standpoint, the sale took place in the State of Washington.
And I think the fact that they are receiving money from citizens of the State and that they are providing a product or a service, depending on how it's related, certainly shows a business or a commercial presence in the State of Washington in addition to advertising.
And we've never taken the position that the advertising alone is sufficient.
Unknown Speaker: Well, how did they advertise?
Just through magazines, national magazines, or did they have specific advertisements on radio, or television, or in newspapers or--
Mr. Wall: The petitioner advertises both in the national media, Your Honor, and also in the local media.
Unknown Speaker: --In newspapers?
Mr. Wall: In newspapers, magazines, as well as providing brochures, and in fact, then... the record indicates that they regularly run large ads in the largest newspapers in the State of Washington.
Unknown Speaker: Travel agents have their brochures?
Mr. Wall: That's correct.
And the travel agent in this case attended seminars in the State where she was provided with brochures and essentially trained by Carnival to sell their product, and those were conducted inside our State of Washington.
Unknown Speaker: Do you know exactly how this particular purchase took place?
Did your client want to go on a trip and come to the travel agent and say, what have... have you got any suggestions?
Mr. Wall: That is precisely how it occurred and the record would... has her affidavit.
Unknown Speaker: And has the travel agent suggested this?
Mr. Wall: That's... the affidavit of Mrs. Shute is part of the record and she says she went to the travel agent.
She had never been on a cruise before.
She discussed with the agent--
Unknown Speaker: So she didn't see any of these advertisements in this... she just... the whole thing happened with the travel agent?
Mr. Wall: --The travel agent is certainly the largest part of it.
And I don't know whether she saw the ads in the newspapers or not, quite frankly.
Unknown Speaker: Does her affidavit indicate that she did?
Mr. Wall: No, Your Honor, it does not.
It indicates that her principal source of information was the agent itself.
In any case, much is made by petitioner on the question of whether we should... "but for" should be adopted as the Ninth Circuit and two other circuits have adopted it, the Fifth and the Sixth, I believe.
But it's our position in this case that that question, whether this arises out of the activity of Carnival in Washington State, is a question of State law based upon Civil Rule 4(e).
And the only question really before this Court is whether that interpretation of Washington State law violates due process.
This Court's earlier decisions have shown that... particularly the Burger King v. Rudzewicz case... have said that once a substantial connection with the State is established, once we show that they have substantial minimum contacts, and we establish that this arises out of the accident, then it becomes a substantial... the burden is upon the petitioner, the person resisting jurisdiction to come up with the evidence to show that there... this is not... this is a substantial burden or unreasonable burden upon them in the area of jurisdiction.
Unknown Speaker: Burger King was a contract case, wasn't it?
Mr. Wall: It was a contract case, Your Honor, in which the... in fact it was a contract case in which a choice of law section was imposed.
However, the Keeton case is also one in which substantial contracts, once established, puts the burden upon the person who's contesting jurisdiction in order to show that it is unreasonable as applied to them.
Unknown Speaker: Well, if the forum selection clause is enforceable, it doesn't matter whether there was special jurisdiction.
Mr. Wall: If the forum selection clause is enforceable, Your Honor, you're correct.
We're going to Florida.
And so it really doesn't matter if Washington has jurisdiction or not.
I plan to address that as the second portion of my argument, but I can address it now if the Court desires.
But with the Court's indulgence, I will discuss the last part of my jurisdictional argument.
The Burger King case talks about the proximal relation between the action itself and the contacts with the State.
Proximal generally means but for, at least the jury instruction we give people in Washington does.
And we've taken the position that commercial reality in light of modern commercial practices have to be considered when you look at in personam jurisdiction.
This is not a case in 1940 or 1949 when International Shoe was decided.
This is a case now.
And with the modern state of telecommunications and computers and communications is not necessary for Carnival to have an office in our State, to have an exclusive agent in our State, or to physically even be in our State in order to do a substantial amount of business.
Consumers who deal with people who are doing a substantial amount of business in the State expect that they should be able to use the court system with these particular businesses.
Businesses which are doing a substantial amount of business in the State should reasonably expect that they will be hauled into court if there is something arising out of their activities.
That's our position in this case in a nut shell is that people... if Carnival comes to Washington to do business, sells its product... and it is really a product... and pays commissions to travel agents and induces people there to take voyages on their vessels, then it should also be willing to stay in Washington and to let the Washington courts operate in particularly this case of Federal--
Unknown Speaker: But that's general jurisdiction... I mean it sounds like general jurisdiction you're talking about.
You say induces people in general, therefore they ought to be liable.
You didn't say induce this person, because we really don't know whether this person was induced by the advertising.
Mr. Wall: --Well, we know she was induced by a travel agent who provided with the advertisements, Your Honor.
And so I think their efforts obviously are related to this.
This is... Shute didn't get the idea to go on their... this particular cruise line by herself.
She was shown that by a travel agent who was trained and had emotional materials available from Carnival Cruise Lines.
Unknown Speaker: So you say at least it says specific jurisdiction?
Mr. Wall: It is at least specific jurisdiction, because it arises out of their contacts with the State.
Now the argument is made that the "but for" analysis that has been applied by the Ninth Circuit and by the State of Washington, essentially is open ended.
And we would say that it is not open ended, because in most of the examples given, particularly in petitioner's brief, they leave out the first step of the "but for" test, which is there must be substantial business contacts with the State.
In this case there are substantial business contacts with the State.
Unknown Speaker: Why do you... why do you say there must be substantial business contact?
The Washington statute doesn't say that, as I read it.
It says there must be some act or some transaction in the forum State and then they say they... actually they say that in the second part, either arise from or be connected with the action.
Mr. Wall: Correct.
Unknown Speaker: But where do you get the requirement of a substantial business in the State?
Mr. Wall: Because the Court... this Court's decisions in the area of due process have said that you must have some substantial business connection.
The Burger King case in particular uses that language.
It says there must be a substantial relationship between the defendant and the State, even for specific jurisdiction.
The Washington statute does say the transaction of business is one of the enumerated--
Unknown Speaker: Yes.
Mr. Wall: --things that operate the long arm statute, but then it also says it must arise out of the transaction of business.
Unknown Speaker: What if this company had never sent any other advertising into the State... in fact didn't even send in this advertising.
But this travel agent happened to be in Florida and picked up this brochure from Carnival Cruise Lines, takes it back to the State.
However, shows that brochure in the State of Washington to this plaintiff.
You think that would not be enough then?
Because that's certainly not a substantial business contact.
Mr. Wall: No, and I would agree that it is not enough.
I think in that case that's a random and a fortuitous sort of connection with the State, much as if a relative of Mrs. Shute had mailed her a brochure from Florida.
In that case, there would not be jurisdiction.
It would be unreasonable to ask a corporation which is not doing business in the State to be hauled into court there.
And in this case... if that hypothetical were the case, or if... in fact if all they had done was advertising on a national media, we would take the... we would not be taking the position that there was--
Unknown Speaker: Well, I wonder if you mean that.
Supposing that the travel agent is a full-time employee, for the moment, that came to Washington to deliver the ticket or something, and while delivering it, the person picked up a ride and they got in an automobile accident together to the negligence of the agent.
Couldn't you sue the parent?
Could you sue the corporation there?
Mr. Wall: --We would sue the corporation if she were in the course of her employment.
Unknown Speaker: Yes, I'm assuming she is.
Mr. Wall: But probably not under this particular statute.
It would be because the accident occurred in the State of Washington, which is another portion of the long arm statute.
Unknown Speaker: I see.
But suppose... all right.
But I was thinking... well, say they drove across into Oregon.
He picked... I don't know.
That's too hypothetical.
Mr. Wall: Yes, I understand the Court's position.
If it was a transitory-type of presence.
For instance, if the president or the resident agent of Carnival Cruise Lines happened to be at Sea Tack Airport and I happen to be there with a summons in my hand, in that case, yes, I think there would be jurisdiction based upon the court's decisions in that area.
But in this case, I think the key factor is is that they're actually doing business in our State and there is a large scale... fairly large scale commercial presence.
The last factor I'd like to talk about... the substantive relevance is a term that's used often in there in their particular argument.
It's a term essentially that has no place in the cases of this Court as far as I can tell.
Rather than giving a certain amount of judicial economy, I think... and our position is is that in effect it gives the defendants another tool and another fact-specific type of thing to argue with the courts about.
And if it's adopted, it essentially is going to limit long arm jurisdiction in cases like this to contract cases, and I think that's not the intention of the long arm statute or of the Court's prior decisions.
Unknown Speaker: Mr. Wall, can I review my ignorance in a question to you?
I know it's fairly common in State court decisions, but have we ever had any opinions in which we discussed the two categories, specific versus general jurisdiction?
Mr. Wall: Helicopteros discusses it.
Unknown Speaker: Helicopteros does it.
Mr. Wall: Particularly, Justice Brennan's dissent discusses it, and it is discussed to some extent in the Burger King case, too, I believe, Your Honor.
Unknown Speaker: It seems to me that you're kind of asking for sort of a middle type... and I'm not saying it's an impermissible argument, but it's not the classic specific jurisdiction case, and it's not the classic general jurisdiction case either.
Mr. Wall: We've... in our brief we've talked about a sliding scale--
Unknown Speaker: Right.
Mr. Wall: --whereas if they have a lot of activity but it's not quite enough for general jurisdiction, then perhaps it should be a somewhat more liberal arising out of--
Unknown Speaker: Does this sliding scale notion originate in that same law review note that the Washington Supreme Court relied on or is that--
Mr. Wall: --I don't know exactly what they relied upon, Your Honor, but I suspect that it may come from that, yes.
Unknown Speaker: --They say the whole thing started in some Georgetown student's law review note as I remember it.
Mr. Wall: It could be, but I think they looked at it in this case in the sense that if you're really there doing business, there's no requirement in any case I know of that says that the type of contact and the type of injury have to be identical, which is what the petitioner is arguing here.
And we think that's unreasonable to a large degree.
Unknown Speaker: Is there anything in the record about the contract between the agent and the... and the line?
Mr. Wall: Only that it is acknowledged by the petitioner that they pay a 10 percent commission on all sales.
Unknown Speaker: But there's no responsibility or anything on the record?
Mr. Wall: There's nothing to that extent, Justice Marshall, other than the commission and the fact that they are not the exclusive agent.
There are other agents in Washington also.
The... if I can I would like to move on to the forum selection clause, with the Court's indulgence.
I should point out that there are several ways that we feel this clause can be invalidated in this case.
It's not our position that--
Unknown Speaker: Well, what law governs do you think?
Mr. Wall: --Justice O'Connor, that is a question which occurred to me when it was asked by I believe Justice Stevens here or Justice Scalia.
The... ordinarily passage contracts are matters of admiralty law.
However, under the Erie Rule, procedural matters are generally matters of whatever the local law is.
Now, in this case we're in the United States district court and I think it's going to be Federal admiralty law regardless.
If this case were brought in State court--
Unknown Speaker: Is that what was applied, do you think, by the Ninth Circuit?
Mr. Wall: --Yes, Your Honor, I do.
I believe they have applied Federal Admiralty law.
Unknown Speaker: I didn't get that impression at all from the opinion.
Mr. Wall: As I say I didn't really address this in the brief because I didn't realize it was that much of a question, but I think they did apply Federal maritime law, since I don't recall them citing any particular Washington State cases of California State cases.
There is not a great deal of law on this issue.
And I should point out that the Ninth Circuit's decision was not that these clauses are per se unreasonable because they are not bargained for.
They are... this particular clause is not bargained for, and in fact the petitioners admit that and say that they can't really bargain with everybody, which is probably true.
However, what they said was it's not bargained for and it's unreasonable.
And what we're saying here is that if this clause is to be enforced and is to be essentially imposed on consumers... it's not an agreement that you agree to, and I don't think any passenger ticket either on a ship or an airplane is one where you sit down and read it.
People don't expect to get in lawsuit when they go on pleasure cruises... at least my client didn't.
And... but it must at least be a reasonable clause.
Unknown Speaker: What's your authority for that proposition?
Mr. Wall: Your Honor, basically the Bremen case.
The Bremen case says they are... these clauses are prima facie, reasonable and enforceable unless there is evidence of overwhelming [inaudible].
Unknown Speaker: Well, now the Bremen didn't put it that way.
The Bremen in a footnote said there's no indication here, isn't that right?
They didn't say unless.
Mr. Wall: The Court could be correct on that and I'm not sure.
But they... at least the implication of the case is that they did not deal... this clause... the Bremen clause is valid because the parties had approximately equal bargaining power and there was no evidence of overwhelming bargaining power or fraud or--
Unknown Speaker: So you would draw a negative implication from the language of the Bremen?
Mr. Wall: --That's correct, Your Honor.
And I... excuse me.
Unknown Speaker: Well, why do you say there's an overwhelming bargaining... this is a big corporation and just one individual, but you know when I go into a showroom and decide whether or not I'm going to buy a car from General Motors, General Motors and I are even-Steven as far as bargaining power is concerned, it seems to me.
You know, unless there's some reason like I need a car or I will lose my inheritance or something like that.
I need a car within 10 seconds.
You're not talking about food.
You're talking about a pleasure cruise.
You're client didn't have to go on a... on this boat.
She didn't have to go on any boat.
She didn't have to go on a vacation.
She could have stayed home.
What was the disparity in bargaining power?
Mr. Wall: Disparity in bargaining power... there are different aspects to every transaction, Your Honor, and one of them... the hypothetical you just cited... certainly you have a great deal of bargaining power by not buying the car... in this case my client did want to go on a cruise... or about the price of the car or the terms.
However, I suspect that if you tried to bargain about the terms of the warranty, the terms of the contract, you would have a very difficult time.
Unknown Speaker: Oh, well, that doesn't go to bargaining power.
I mean, it seems to me that goes to whether it is a take-it-or-leave-it type contract, but she's still entirely free to leave it.
Mr. Wall: She is entitled--
Unknown Speaker: It's a different point from the one that Bremen was making.
Mr. Wall: --Your Honor, I would disagree with that, because in this case if the plaintiff wants to buy this product, she has to go to a cruise line.
And, as you know, there's an amicus brief filed in this case from the International Cruise Line Committee, which is... represents I believe 10 different cruise lines, in which they essentially say we all have these same clauses.
So, there's no bargaining power on this at all.
If you want to go on a cruise, it's take it or leave it.
Now, admittedly, she doesn't have to go on a cruise and it's not a necessity of life, but neither are most things and neither are most contracts we enter into.
But they still should be fair.
Unknown Speaker: Isn't that what the Bremen meant by disparity of bargaining power?
Mr. Wall: I think that the Bremen means is that if you have two commercial entities who can bargain over the contract terms and those contract terms are accepted, fair or unfair, you know, advantageous or disadvantageous, you're stuck with it.
And in the Bremen case, maybe it's tough on Zapata or Bremen, the owners of the drilling rig to go to Lloyd's and arbitrate it, but they agree to it.
In this case, I think what the Ninth Circuit meant when they said it was not bargained for and was unreasonable was that because it's not bargained for, we can look at it and say, is this reasonable?
This is imposed on my clients.
They didn't get the chance to look at this thing over.
You don't get to look at this ticket until it shows up, until you pay your money.
And we cited the Carnival Cruise Lines v. Superior Court case, which is the Williams case counsel referred to, in which he says... in which it's made pretty clear.
A lot of times you don't get this ticket till you actually get on the ship.
So, if you're going to impose this on consumers, it ought to at least be fair.
It ought to at least be reasonable.
And I think it's a legitimate function of the court to look at these contract revisions in a case like this and for a district court judge to say, I'm not going to enforce this because it's very unreasonable.
Now, there's also nothing here to stop the petitioners from bringing a motion to transfer this case to Miami if they think that they can win it.
In this case--
Unknown Speaker: Of course the Federal statute doesn't say that.
I mean, Congress has addressed what, you know, what's likely to be unreasonable in steamship tickets, and it hasn't said that you can't include this kind of a clause.
Mr. Wall: --It doesn't specifically mention that.
It further doesn't specifically mention any kind of clause at all.
It just says you can't use these ticket provisions to lessen, weaken, or avoid the right of a person to get into court.
And there are a couple of ways you could read that.
We think the intent of Congress is to protect the passenger from unreasonable clauses.
And if this case... if we have to go some place where there are no witnesses and which is 3,000 miles away from where my client and the witnesses reside, it very easily does lessen, weaken, or avoid our attempts.
Unknown Speaker: Where are these... the witnesses in your particular case?
Mr. Wall: Most of the fact witnesses and the... all the medical witnesses with the exception of an unknown Mexican doctor are located in the State of Washington.
Well, I should say also the ship's doctor... as a--
Unknown Speaker: They were fellow cruise passengers?
Mr. Wall: --That's correct.
Some of the cruise passengers that we know of are in California.
At the time this lawsuit commenced, the ship was in California.
We don't know exactly when, and... or if it's still there or not.
I think it may have been moved, but at least when we started this lawsuit, they were in California.
The... I would suggest that if the ticket in this case had said, you may sue us in Miami or at the point of embarkation, it would be a reasonable ticket.
But it doesn't say that.
It says no matter where you're hurt, you have to go to Miami to sue us.
In this case, if we were... assume Mrs. Shute was from Los Angeles, had bought her ticket in Los Angeles, had boarded the vessel on Long Beach Harbor, had walked out the gangplank and had slipped in the aisle going to her stateroom, before the vessel ever left the dock, and was injured, she would then... according to the petitioner's position you have to go to Miami to sue her, to bring her action under this.
And we think that is fatally unreasonable and although I didn't address the statutes specifically, Justice Scalia brought it up and it's my feeling that the statute is intended to prevent this sort of thing, although the Ninth Circuit never got that far.
But I think this Court could very easily rule on that basis.
Unknown Speaker: Well, do we look at the forum selection clause from its overall fairness standpoint, just kind of a facial attack or do we look at it with reference to the reasonableness of its application to the plaintiff in this case?
Mr. Wall: Our position is that it should be applied to this case and to persons in a similar class.
Unknown Speaker: Well, then the California example has nothing to do with it.
Mr. Wall: It does, because if you're in California they get the same clause and they have to go to Miami.
Unknown Speaker: Well, but the analysis might be different.
Mr. Wall: I agree, Your Honor, and I don't mean to restrict it to just this case, but I think... the point I was trying to make is that we don't feel that a forum selection clause was outlawed by Congress per se or that they're invalid per se, because I think they do have a reasonable commercial purpose.
I think the example counsel cited is a little weak, because there are multidistrict litigation rules in the Civil Rules for Federal Procedure... or Federal Rules for Civil Procedure which allow the handling of plane crashes and multi-district kind of things.
Unknown Speaker: Well, what if your clients had filed in the Superior Court of King County?
Mr. Wall: In that case, I think State law because it probably is a procedural matter, would control whether or not this is to be enforced.
Unknown Speaker: No, I mean there certainly couldn't be any transfer to Florida.
Mr. Wall: Unless it was removed under... because it's an admiralty action and I will confess, Mr. Chief Justice, that not all admiralty actions are removable and I don't know if this one is or not.
I know Jones Act actions by crew members are not removable unless there's diversity.
But it poses a problem with the forum selection clause and one reason why it's somewhat unworkable and unfair to my clients.
This case is one in which the Court has the opportunity to essentially leave the in personam jurisdiction alone and let specific jurisdiction operate according to, I think, it's probably the minimum requirements which is the but for standard adopted by the Ninth Circuit and by the Washington supreme court.
Or it can add an additional requirement that the claim itself be identical to the claim... to the contacts with the State.
And I think that is an additional requirement, the substantive relevance.
And if it is adopted, it will essentially delay these cases one more time and give us much more to litigate about.
The Court also in our view should, at least in this case, agree with the Ninth Circuit and refuse to enforce the forum selection clause.
The forum selection clause, as the William case illustrates, is an important point across the country, because there are many litigants that want to sue either where they sailed on the ship or in their home States.
And many times the only thing preventing them is the forum selection clause.
It is unreasonable in this case, and it is depriving consumers of something that they ought to have, a right to sue for injuries when they are injured on board the claimant's... the petitioner's vessels.
If that is removed, then they have to go to Miami, the practical effect is that it will lessen, weaken, or avoid their right to recover from--
Unknown Speaker: You're not saying it's something that they ought to have.
You would have no objection to this, I gather, if your client had been protected... presented with a ticket that said check here if you're willing to agree that you can sue only in Florida in which case your ticket will be $10 cheaper, because it's going to cost us a lot more to defend suits all around the country.
That would have been okay, right?
Mr. Wall: --In a word, Your Honor, no.
Unknown Speaker: That wouldn't have been okay either?
Mr. Wall: No, because the question here is not whether it has been reasonably communicated to them or whether they knew about it.
The question is... because... or if... well, let me rephrase that.
Unknown Speaker: xxx.
Mr. Wall: If my client had bargained for this and said, yes, I agree to that specifically, then I would agree with Justice Scalia.
However, if it's going to be imposed upon them and every other cruise line does the same thing, then, no, I think we're back to determining whether it is reasonable because it is imposed upon them.
I see my time has expired.
Unknown Speaker: Thank you, Mr. Wall.
Mr. Willard, do you have rebuttal?
You have 9 minutes remaining.
Rebuttal of Richard K. Willard
Mr. Willard: Mr. Chief Justice, and my it please the Court:
The one question I wanted to address was the one of the choice of law.
The Ninth Circuit did hold, and it's in their opinion in page 21a of the appendix to the petition, that Federal law governs the validity of the forum selection clause, citing Manetti-Farrow and a Ninth Circuit decision.
And then the court went on to say, thus, the starting point for analysis is the Supreme Court's decision in the Bremen.
Unknown Speaker: And the court... the Ninth Circuit also said alternatively that there was an independent justification for refusal to enforce the clause... I'm looking at page 24a... because of the lack of inconvenience and lack of relationship between the chosen forum and the transaction.
Mr. Willard: That is correct, Justice O'Connor.
But it cited the Bremen, so it seemed to indicate that that was... it was deciding that as a matter of Federal admiralty law rather than looking to State law as the source of that doctrine.
Similarly, we did cite in our opening brief at page 21 in footnote 18 two decisions of this Court to the effect that the steamship passenger ticket contract would be governed by Federal admiralty law, one actually as recently as 1956.
So our position is that this is a question of Federal law.
Now the question of whether Federal law would control if this case were in State court or perhaps if it had been brought on the law side of a Federal court is one to which we think this Court's decisions in the past have indicated Federal law would control, and we think that's the better view.
But obviously it's not presented in this case.
It was brought as an admiralty case in Federal court.
I would be happy to respond to any additional question the Court has.
Chief Justice Rehnquist: Thank you, Mr. Willard.
The case is submitted.
Unknown Speaker: The honorable court is now adjurned until tomorrow at ten o'clock.
Argument of Speaker
Mr. Speaker: The opinion of the Court in No. 89-1647, Carnival Cruise Lines versus Shute will be announced by Justice Blackmun.
Argument of Justice Blackmun
Mr. Blackmun: The respondents, Mr. and Mrs. Shute, live in the State of Washington and they had purchased passage for a pleasure cruise on a ship owned by the petitioner, Carnival Cruise Lines.
And the tickets contained a clause designating Florida Courts as the place for the resolution of any dispute.
The respondents boarded the cruise ship in Los Angeles, and on the cruise, Mrs. Shute was injured in a fall.
She filed suite in Federal Court in the State of Washington.
It granted summary judgment for the cruise line.
The Ninth Circuit reversed.
It held that the forum-selection clause should not be enforced because it was not freely bargained for and because the plaintiffs were physically and financially incapable in pursuing the litigation in Florida.
In an opinion filed today with the clerk, we reverse that judgment.
It is true that a freely negotiated forum-selection clause of course should be given full effect.
This clause, however, was not the subject of bargaining.
But nevertheless, a responsible forum clause in a forum contract of this kind may be permissible.
If this happens, a cruise could subject for lying to litigation in several places, so the cruise line has a special interest in limiting these fora.
Further, the clause is the helpful effect of sparing time and expense and determining where suits may be brought.
The present dispute does not an essentially a local one inherently more suited to resolution in Washington than in Florida.
The Shutes do not claim lack of notice of the clause.
They have not sustained, in our view, the heavy burden required to set aside the clause on grounds of inconvenience.
These clauses are subject to judicial scrutiny for fundamental fairness.
There is no indication here that petitioner selected Florida to discourage the pursuit of legitimate claims.
Justice Stevens has filed a dissenting opinion and is joined therein by Justice Marshall.