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Keywords

contractlawsuitappealtrialmotionclass actionappellant

contractappealtrialmotionappellant

Related Cases

Stobaugh v. Norwegian Cruise Line Ltd., 5 S.W.3d 232, 2001 A.M.C. 215

Facts

In the spring of 1996, Kent and Nancy Stobaugh and Richard and Doris Heidbrink decided to take a cruise with Norwegian Cruise Line (NCL) aboard the M/S Dreamward. After paying in full for the cruise, they received a passenger ticket that included a 'Contract of Passage' with a forum selection clause designating Florida as the venue for disputes. Just before the cruise, they learned of a hurricane and expressed concerns to NCL, which advised them to proceed with the trip. The ship sailed into Hurricane Eduardo, resulting in injuries to the passengers, leading them to file a class action lawsuit against NCL.

In the spring of 1996, appellants decided to take a cruise. They contacted their Houston travel agent and received NCL's promotional brochures. Appellants selected a seven-day cruise aboard the M/S Dreamward departing New York for Bermuda on August 31, 1996. Full payment was sent in June, but NCL did not send the appellants a passenger ticket until August 8, 1996. The ticket included a “Contract of Passage,” which purported to contain all of the terms of the agreement between the parties, including the now disputed forum selection clause.

Issue

Is the forum selection clause in the passenger ticket enforceable, or is it fundamentally unfair?

The issue presented in this appeal is the enforceability of a forum selection clause that rears its head for the first time after the appellants paid in full for a cruise selected from NCL's promotional brochure which made no reference to the clause.

Rule

Forum selection clauses are generally enforceable unless they are found to be fundamentally unfair, which requires judicial scrutiny of the circumstances under which they were imposed.

The enforceability of forum selection clauses was first addressed by the United States Supreme Court in The Bremen v. Zapata Off–Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972).

Analysis

The court found that the forum selection clause was imposed after the appellants had already paid for the cruise and was not adequately disclosed in the promotional materials. The clause was buried in the passenger ticket, and the timing of its introduction did not allow the appellants to reject the contract without incurring significant penalties. This lack of fair notice and opportunity to reject the clause contributed to the court's determination that it was fundamentally unfair.

After reviewing the record in this case, we find that the forum selection clause runs afoul of the fundamental fairness test because of both how and when NCL attempted to impose the forum selection clause upon the appellants.

Conclusion

The Court of Appeals reversed the trial court's decision and remanded the case for trial on the merits, finding the forum selection clause unenforceable.

The judgment is reversed and remanded for trial on the merits.

Who won?

The appellants, Kent and Nancy Stobaugh and Richard and Doris Heidbrink, prevailed because the court determined that the forum selection clause was fundamentally unfair and unenforceable.

The appellants prevailed because the court found that the forum selection clause was fundamentally unfair.

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