Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991)

Facts

The Shutes, through a Washington travel agent, booked a cruise with Carnival. When receiving the tickets, the terms and conditions stated that all litigation would be before a court in Florida. Ms. Shute was injured when she slipped on a deck mat while on a tour of the ship’s galley.

Procedural History

The Shutes brought suit in the District Court for the Western District of Washington. Carnival moved for summary judgment contending that the forum clause required the Shutes to bring suit in Florida, which was granted. The Court of Appeals reversed, refusing to enforce the forum-selection clause.

Issue(s)

Did the Court of Appeals err in refusing to enforce the forum-selection clause?

Holding(s)

Yes.

Reasoning/Analysis

The Shutes argued the clause was not a product of negotiation. The court found that it would be unreasonable to assume Carnival would negotiate with the Shutes on the terms of a forum-selection clause. A cruise line has special interest in limiting the for a because of the may locales it goes to, the clause has a salutary effect of dispelling confusion about the forum, and benefits are derived in reduced fares because the cruise line limits the fora.

Judgment/Outcome

The court reversed and remanded the judgment of the Court of Appeals.

Concurring Opinions/Dissenting Opinions/Comments

Stevens dissented stating that 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.

Burns v. Anderson, 502 F.2d 970

Facts

Plaintiff, Burns, was involved in an auto accident with defendant, Anderson. Burns’ principal injury was a broken thumb. Burns claimed $1,026 for lost wages and medical bills and $60,000 for pain and suffering.

Procedural History

The District Court for the Eastern District of Louisiana dismissed the case for want of jurisdiction to which plaintiff appealed. The Appeals Court found that Burns’ disability was very minimal with the total medical bills being $250 and the total lost wages less than $300, which fell below the $10,000 minimum.

Issue(s)

May a district court dismiss a personal injury diversity suit where it appears the claim was really for less than the jurisdictional amount?

Holding(s)

Yes.

Reasoning/Analysis

The court found that the determinant is plaintiff's good faith claim and that to justify dismissal it must appear to a legal certainty that the claim is really for less than the jurisdictional amount and, once it is clear that as a matter of law the claim is for less than $10,000.00, the Trial Judge is required to dismiss. The court felt that Burns’ actions spoke louder than his words in the very short amount of time for his disability and taking a job as a carpenter’s assistant approximately one month after the accident. Even if the case had gone to trial and the jury returned a verdict in excess of $10,000, the judge would have been compelled as a matter of law to order a remittitur.

Judgment/Outcome

The court affirmed the decisions of the district and appellate courts.

Burnham v. Superior Court, 495 U.S. 604 (1990)

Facts

The Burnhams, who had married and lived in New Jersey, were going through a divorce when Ms. Burnham moved to California. Mr. Burnham filed the divorce proceedings in New Jersey as “desertion,” contrary to their agreement of “irreconcilable differences.” Ms. Burnham brought suit for divorce in California. While Mr. Burnham was in California for business, he traveled to San Francisco to visit his children, at which time he was served with the California papers.

Procedural History

Burnham made a special appearance to quash the service of process on the grounds that the court lacked personal jurisdiction because his only contacts were a few short visits for business and his children. Superior Court denied the motion and the Court of Appeal denied relief.

Issue(s)

Did the California courts err in asserting personal jurisdiction over an individual who entered the forum state?

Holding(s)

No.

Reasoning/Analysis

The court found that courts of a state have jurisdiction over nonresidents who are physically present in the state. The Due Process Clause requires analysis to determine whether traditional notions of fair play and substantial justice have been offended. But a doctrine of personal jurisdiction dating back to the adoption of the Fourteenth Amendment and is still generally observed, unquestionably meets that standard.

Judgment/Outcome

The court affirmed the judgments of the lower courts.

Concurring Opinions/Dissenting Opinions/Comments

Brennan concurred stating though that history is not the only factor but that Burnham availed himself of the benefits of the state. His health and safety by the police, travel on the roads, and likely enjoying the fruits of the state’s economy. Stevens also concurred that Scalia, Brennan, and White’s (omitted from casebook) approaches all combine.

Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)

Facts

Rudzewicz, a Michigan resident and citizen, was approached by MacShara about starting a Burger King in the Detroit area. Rudzewicz would front the capital and MacShara would manage the franchise and they would split the profits. They jointly applied through the Michigan district office which was forwarded to the Miami headquarters. The final agreements were signed, obligating Rudzewicz to payments exceeding $1 million over the 20-year franchise. Shortly after, business began to deteriorate, the rent payments fell behind then Burger King sued in federal district court in Florida.

Procedural History

Rudzewicz and MacShara challenged personal jurisdiction and the district court rejected the challenge. The judge awarded Burger King both damages and injunctive relief. The Appeals Court reversed the judgment concluding Florida could not exercise personal jurisdiction.

Issue(s)

Did the Appeals Court err in finding there was no personal jurisdiction?

Holding(s)

Yes.

Reasoning/Analysis

The court found that the franchise grew out of a contract which had a substantial connection with Florida. Rudzewicz deliberately reached out beyond Michigan and negotiated with a Florida corporation for the purchase of a long-term franchise and the benefits that would derive from this affiliation. Rudzewicz knew he was affiliating himself with an enterprise based in Florida and when problems arose and they contacted the Michigan office, they were told the communications would be channeled to the Miami headquarters.

Judgment/Outcome

The court reversed the judgment of the Court of Appeals and remanded for further proceedings.

Concurring Opinions/Dissenting Opinions/Comments

Stevens and White dissented stating that Rudzewicz did business only in Michigan, his business, property and payroll taxes were payable there, and he sold all of his products there. There is a significant element of unfairness by requiring a franchisee to defend in the forum chosen by the franchsior.

Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987)

Facts

Zurcher was driving his motorcycle when he lost control and collided with a tractor. Zurcher was severely injured and his wife died. Zurcher claimed product liability against Cheng Shin, the manufacturer of the tube, claiming a loss of air and explosion from the rear tire. Cheng Shin filed an indemnification action against Asahi, who manufactured the valve stem.

Procedural History

Zurcher’s claims were settled leaving only Cheng Shin’s indemnity action against Asahi. Asahi moved to quash the service of summons arguing California could not exert jurisdiction. The Superior Court denied the motion to quash stating that “Asahi obviously does business on an international scale.” The Supreme Court granted certiorari.

Issue(s)

Did the California Superior Court err in denying the motion to quash on the grounds that Asahi does business on an international scale?

Holding(s)

Yes. The facts of the case did not establish minimum contacts such that the exercise of personal jurisdiction is consistent with fair play and substantial justice.

Reasoning/Analysis

The court offered two rationales for finding the California court’s error. First, one group found that Asahi, although placing their products into the stream of commerce, did not directly do so in California. A finding of minimum contacts must come by an action of the defendant purposefully directed toward the forum state. Second, the other group found Asahi did not meet the several factors used to determine reasonableness of the exercise of jurisdiction.

Judgment/Outcome

The court reversed and remanded the judgment of the California Superior Court.

Concurring Opinions/Dissenting Opinions/Comments

Brennan concurred with part two of the opinion regarding reasonableness and disagreed with part one arguing that injecting goods into a stream of commerce should suffice. Stevens also concurred with part two and felt that because part two had been met, it was not necessary to analyze part one. He also argued the court misapplied the facts arguing the volume of deliveries to Cheng Shin would constitute purposeful availment.

Whetstone v. Hossfeld Mfg. Co., 457 N.W.2d 390 (Minn. 1990)

Facts

Whetstone was a shareholder in Hossfeld, which consisted of 13 shareholders.  Whetstone owned 36% and the president and his wife, individually and as joint tenants, own 50.93%.  Hossfeld moved to amend its bylaws by a 2-1 vote; Whetstone was the dissent.  Hossfeld refused to buy Whetstone’s shares.

Procedural History

Whetstone filed suit and the trial court granted summary judgment for Whetstone.  The Court of Appeals reversed.

Issue(s)

Did the Court of Appeals err in finding that elimination of veto powers is not among the events which entitle dissenting shareholders to receive the fair value of their shares?

Holding(s)

Yes.

Reasoning/Analysis

The Court found that the use of veto power arrangements have long been recognized as a means of providing a minority shareholder in a closely held corporation protection against prejudicial conduct by the majority shareholders.  Amendments which eliminate these veto powers unquestionably limits the rights of the minority shareholder.  Before the amendments, Whetstone had the deciding vote; after the amendments, Whetstone’s vote was little more than a formality.

Judgment/Outcome

The Court reversed the judgment of the Court of Appeals.

Saltiel v. GSI Consultants, Inc., 788 A.2d 268 (N.J. 2002)

Facts

WPU awarded Edgewater the contract for the reconstruction of its athletic fields.  Edgewater subbed the turf grass job to GSI.  The turf was installed and did not drain properly, leaving the filed continuously soggy.

Issue(s)

Were the corporate officers of GSI personally liable under the participation theory?

Holding(s)

No.

Reasoning/Analysis

The Court found that under the participation theory, a corporate officer can be held personally liable for a tort committed by the corporation when he or she is sufficiently involved in the commission of the tort.  If the breach is governed by contract, instead of tort, the participation theory is inapplicable.  The scope of the obligations were defined by the contract that the responsibilities were imposed on GSI, not its corporate officers.  Because the allegations sound in tort, plaintiff cannot convert contract claims into negligence claims for personal liability.

Judgment/Outcome

The Court reversed the judgment of the Appellate Court.