If you fall down in a foreign country, and you have paid money to be there, you probably have to sue there.

The exception is cheap vacations where the hotels and resorts won’t have you sign a forum selection clause when you arrive.

Mcarthur v. Kerzner International Bahamas Limited, 2015 U.S. App. LEXIS 5058

State: Kansas, United States Court of Appeals For The Eleventh Circuit

Plaintiff: John C. Mcarthur, Sandra S. Mcarthur

Defendant: Kerzner International Bahamas Limited, Kerzner International Limited, Island Hotel Company Limited, Paradise Island Limited

Plaintiff Claims: negligence

Defendant Defenses: Forum Selection Clause

Holding: For the Defendant

Year: 2015

The plaintiffs, husband and wife, went to the Bahamas to watch a college basketball tournament. While at a resort, the husband slipped and fell near the pool injuring his back. The plaintiff’s filed a lawsuit in the federal district court in Kansas. The defendants filed a motion to dismiss based on the forum selection clause the plaintiff’s had signed.

A forum selection clause is the same as a jurisdiction and venue clause. It identifies the place and the law that will be applied to the case.

The district court dismissed the plaintiff’s claims and the plaintiff’s, husband and wife, appealed to the Eleventh Circuit Court of Appeals. This is the decision of the Eleventh Circuit Court of Appeals.

Analysis: making sense of the law based on these facts.

The plaintiff’s booked their travel through a travel agent who was hired by the university or done in conjunction with the university. The travel agent upon booking the rooms received a contract from the hotel which required the travel agent to inform the guests of the rules and contract provisions.

The relationship between a travel agent and the hotel is different from most contracts. First whether or not a contract exists is based on the relationship. If a contract exists it is to pay a commission a specific way to the travel agent and/or be based on a relationship. However, in every situation there is a third party beneficiary to the contract or third parties that are part of the contract, the travelers. Either way the travelers have an interest in the contract. The travel agent usually has requirements as part of the contract to communicate parts or the entire contract to their customers, the travelers.

Sometimes the travel agent is the agent of the travelers. In cases where the travel agent is an agent, then the travel agent must communicate all things known or required by the hotel to the traveler.

Those terms and provisions, which were to be communicated in this case included:

…two provisions in which the travel agent agrees to notify their clients that when they book their reservation through the travel agent, they are subject to certain terms and conditions governing their stay at Atlantis.

A section of the contract indicates that the additional terms and conditions are available on the Atlantis website.

The terms and conditions provide that the guest will be asked to sign a form agreeing to certain terms related to any claims the guest may have as a result of the guest’s stay at the Atlantis Resort. It specifically states that “I agree that any claim I may have against [several named defendants and others], along with their parent, related and affiliated companies at every tier, . . . resulting from any events occurring in The Bahamas shall be governed by and construed in accordance with the laws of the Commonwealth of The Bahamas, and further, irrevocably agree to the Supreme Court of The Bahamas as the exclusive venue for any such proceedings whatsoever.”

Because the travel agent is an “agent” of the plaintiff the plaintiff had constructive notice of the terms of the agreement before they arrived in the Bahamas. Constructive notice means you legally had notice of the facts or pleadings at issue even if you did not have actual notice.

When the plaintiff’s arrived at the resort, they signed a registration card titled Acknowledgement, Agreement and Release. This too had a choice of forums clause requiring all suits to be brought in the Bahamas.

The court first reviewed the law surrounding forum selection clauses.

A forum selection clause will be invalidated where “(1) its formation was induced by fraud or overreaching; (2) the plaintiff would be deprived of its day in court because of inconvenience or unfairness; (3) the chosen law would deprive the plaintiff of a remedy; or (4) enforcement of the clause would contravene public policy.”

The test on whether a forum selection clause goes too far or overreaches is:

To determine whether there was fraud or overreaching in a non-negotiated forum selection clause, the court looks to “whether the clause was reasonably communicated to the consumer. A useful two-part test of ‘reasonable communicativeness’ takes into account the clause’s physical characteristics and whether the plaintiffs had the ability to become meaningfully informed of the clause and to reject its terms.”

The court found “The Bahamas is an adequate alternative forum, and the public interest factors weigh in favor of transfer.” The court then looked at the arguments raised by the plaintiffs as to why the forum selection clause should be invalidated. However, the plaintiff’s did not argue any of the four factors necessary to overcome the selection in the clause.

Consequently, the court upheld the District Court’s dismissal of the claim. The plaintiffs were free to go to the Bahamas and file their claim again.

So Now What?

The legal term for deciding the case should be dismissed is forum non conveniens. Latin for the forum is not convenient, meaning the right one based on the contract.

There are two keys here that were critical for the court to rule this way. The first was the forum selected was reasonable for the situation. Normally, you have to choose the forum of the defendant, where the defendant is served or where you may catch the defendant temporarily. (There are classic “stories” of serving defendants in airplanes as they flew over a particular state.)  

There must be a reasonable reason for the selection you choose. If you are based in one state and the plaintiff’s come from others, you cannot just choose any state with the best law or the hardest courts to find. You must choose a state where the accident happens if you are fixed, what the accident may happen if you are running trips in other states or the state where you are legally based.

The second is the plaintiff’s had the opportunity, whether or not they took it, to see the forum selection clause, and the other contractual terms, prior to leaving their homes. This might have resolved with a different result if the forum selection clause and other contracts, such as a release, had been handed to the plaintiff’s upon the arrival without any notice they would be required to sign it.

If the client had not signed the agreement at the time of check in, and if they claimed they had not read or received the contract, the plaintiff’s might still have been held to the contract because they took advantage of the benefits the contract offered.

Get your release, with its forum selection clause, in front of the plaintiff as soon as possible. Now days it can be part of the sign up process online or posted on your website or emailed to the guest when their credit card is run.

What do you think? Leave a comment.

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By Recreation Law       Rec-law@recreation-law.com              James H. Moss

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