Hodes v. S.N.C. Achille Lauro ed Altri-Gestione

Decision Date22 September 1988
Docket NumberNos. 88-5086,ALTRI-GESTIONE,88-5092,s. 88-5086
Citation858 F.2d 905
PartiesFrank R. HODES, Mildred Hodes v. S.N.C. ACHILLE LAURO edMontonoave Achille Lauro in Amministrazione Straordinaria and Commissario of the Flotta Achille Lauro in Amministrazione Straordinaria and Chandris (Italy), Inc. (Two Cases). Appeal of CHANDRIS, INC. Appeal of LAURO LINES S.R.L.
CourtU.S. Court of Appeals — Third Circuit

Daniel J. Dougherty (argued), Kirlin, Campbell & Keating, Caldwell, N.J., for appellant in No. 88-5086--Chandris, Inc.

John R. Geraghty, Raymond A. Connell (argued), Healy & Baillie, Bergenfield, N.J., for appellant in No. 88-5092--Lauro Lines S.R.L.

Stanley M. Brand, Abbe David Lowell, Sean Connelly (argued), Brand & Lowell, Washington, D.C., for appellees.

Before GIBBONS, Chief Judge, and HIGGINBOTHAM, Circuit Judge, and ROTH, District Judge *.


ROTH, District Judge.

Appellants, defendants below, contest the refusal of the district court to enforce a foreign forum selection clause contained in a cruise ship ticket, purchased by appellees, plaintiffs below, Mildred and Frank Hodes. Finding that the clause satisfies the "reasonable communicativeness" test this court set forth in Marek v. Marpan Two, Inc., 817 F.2d 242 (3d Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 155, 98 L.Ed.2d 110 (1987), and that its enforcement would not violate the principles the Supreme Court set forth in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), we hold the foreign forum selection clause should be enforced and thus reverse the decision of the lower court.


This suit arises out of the terrorist hijacking of the Achille Lauro. The oceangoing Italian-flag vessel left Genoa, Italy, on October 3, 1985, scheduled to return to Genoa 11 days later. During its voyage, the Achille Lauro was to sail the Mediterranean Sea, calling at various ports. On October 7, 1985, off the coast of Egypt, Palestinian terrorists on board seized the vessel. They held the crew and some of the passengers hostage for three days and killed one passenger, an American citizen. Appellee Mildred Hodes was on board the ship during its capture; her husband, Frank, had disembarked to tour Egyptian sights.

At the time of the hijacking, Achille Lauro ed Altri-Gestione M/N Achille Lauro s.n.c. ("ALA"), an Italian partnership, owned the Achille Lauro. ALA was one of a cluster of 19 Lauro entities, another being Societa di Fatto, Achille Lauro ed Altri Gestione Armatoriale Nava Noleggiate ("FAL"), also an Italian partnership. In February 1982, both ALA and FAL entered Italian reorganiation proceedings called Amministrazione Straordinaria On July 28, 1986, the entire cluster of Lauro entities, including ALA and FAL, were merged into one company, Lauro Lines s.r.l. ("Lauro Lines"). The merger was deemed retroactive to February, 1982.

On September 14, 1984, ALA chartered the Achille Lauro for a three-year period to a joint venture composed of FAL and Chandris S.A., a Greek corporation. The joint venture operated the vessel as a cruise ship in the Mediterranean. ALA provided the joint venture with blank passenger ticket contracts which were sold worldwide by Chandris and FAL. Included among the markets for which Chandris was responsible was the United States. A little over ten percent of the joint venture's advertising budget was allocated for the United States and Canada. Chandris S.A. retained Chandris, Inc., a Delaware corporation with its principal place of business in New York City, to distribute American tickets. However, only 4.7 percent of the passengers who sailed on the Achille Lauro during the joint venture charter were U.S. citizens. On the October 3, 1985 cruise, 72 of the 728 passengers were Americans.

The Hodeses became aware of the Achille Lauro cruises through a travel club, Club ABC Tours (the "Club"), of which they were members. The Club was operated by a travel agency, Crown Travel Service ("Crown"). Crown and the Club were in no way affiliated with ALA, FAL, or Chandris. Crown received information from Chandris, Inc. on the Achille Lauro cruises and negotiated with Chandris, Inc. a price for passage for its members on them. The Club then offered 16-day Mediterranean cruises to its members. The package included air travel from New York to Italy and return, 11 days on the Achille Lauro, leaving from and returning to Genoa, and then three days in a hotel on the Italian Riviera. The cost of the package was $1699 per person plus $60 Port Taxes. The cost of the cruise portion of the package was $825 per person in a two-bed outside cabin. The Club offered 15 different cruise dates to its members. The Hodeses signed up for the tour which left New York for Genoa on October 2, 1985, and sailed from Genoa on the Achille Lauro on October 3. In total, 57 members of the Club were booked for that cruise.

The Club members paid the Club for the entire tour, the Hodeses paying $3,530.44 by check. The Club in turn remitted all ship passage fares for its members to Chandris, Inc. The Club then received from Chandris, Inc., the individual passenger tickets. Appellees allege they did not actually receive their tickets until "immediately before boarding the ship" in Genoa when a Club representative distributed them to the members. Nobody discussed the terms of the ticket with the Hodeses. Appellees "were totally unaware that [they] were waiving any legal rights simply by accepting the ticket."

The cover of the passenger ticket contained the statement: "IMPORTANT: Passengers attention is drawn to the Shipowner's terms and conditions printed inside." Among the terms and conditions were 32 fine print articles on the back of the ticket. Article 31 stated: "All controversies that may arise directly or indirectly in connection with or in relation to this passage contract must be instituted before the judicial authority in Naples, the jurisdiction of any other authority being expressly renounced and waived." Article 32 provided for application of Italian law to any contractual disputes.

As a result of the highjacking, appellees filed suit on April 7, 1986, claiming negligence, intentional infliction of emotional distress, breach of the maritime law obligation to provide safe passage, and breach of contract and implied warranties. In essence, appellees charged that the defendants failed to provide adequate security. Appellees sought $5,000,000 to compensate Mildred Hodes, $1,500,000 to compensate Frank Hodes, and $10,000,000 punitive damages for "each plaintiff against each defendant." Appellants moved for dismissal. In the event the action was dismissed, appellants agreed to waive any statutory or contractual limitations on time for bringing suit and to appear and defend in the correct Italian forum if suit was brought within 90 days of dismissal. Upon referral, the Magistrate recommended that the court dismiss the complaint on the basis, inter alia, of the forum selection clause. The district court did not adopt that recommendation but held that the suit could proceed because the forum selection clause was unenforceable.


This court exercises appellate jurisdiction over decisions refusing to dismiss an action in order to enforce a forum selection clause on three grounds: (1) as interlocutory decisions under 28 U.S.C. Sec. 1292(a)(1); (2) as collaterally final orders under 28 U.S.C. Sec. 1291; and (3) under the All Writs Act, 28 U.S.C. Sec. 1651. In re Diaz Contracting, Inc., 817 F.2d 1047, 1048 (3d Cir.1987); General Eng'g Corp. v. Martin Marietta Alumina, Inc., 783 F.2d 352, 355-56 (3d Cir.1986); Coastal Steel Corp. v. Tilgham Wheelabrator, Ltd., 709 F.2d 190, 193-97 (3d Cir.), cert. denied, 464 U.S. 938, 104 S.Ct. 349, 78 L.Ed.2d 315 (1983). See also Farmland Indus. v. Frazier-Parrott Commodities, 806 F.2d 848, 850-51 (8th Cir.1986). Contra Chasser v. Achille Lauro Lines, 844 F.2d 50 (2d Cir.1988); 1 Rohrer, Hibler & Replogle, Inc. v. Perkins, 728 F.2d 860, 862-64 (7th Cir.), cert. denied, 469 U.S. 890, 105 S.Ct. 265, 83 L.Ed.2d 201 (1984). Cf. Nascone v. Spudnuts, Inc., 735 F.2d 763 (3d Cir.1984) (no appellate jurisdiction over a motion to transfer venue within the federal system based on a forum selection clause). In the words of Justice Kennedy, the "federal judicial system has a strong interest in the correct resolution of these questions [regarding enforcement of forum selection clause], not only to spare litigants unnecessary costs but also to relieve courts of time consuming pretrial motions." Stewart Org., Inc. v. Ricoh Corp., --- U.S. ----, 108 S.Ct. 2239, 2250, 101 L.Ed.2d 22 (1988) (Kennedy, J., concurring).

We note that, despite appellees' argument to the contrary, the recent Supreme Court decision in Gulfstream Aerospace Corp. v. Mayacamas Corp., --- U.S. ----, 108 S.Ct. 1133, 99 L.Ed.2d 296 (1988), does not deprive this court of Sec. 1292(a)(1) jurisdiction. Gulfstream Aerospace did renounce the Enelow-Ettelson rule under which appellate courts automatically exercised jurisdiction over an order staying or refusing to stay proceedings issued in an action historically brought at law on the basis of a defense or counterclaim historically recognized by equity. Id. 108 S.Ct. at 1138-43. Enelow v. New York Life Ins. Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440 (1935); Ettelson v. Metropolitan Life Ins. Co., 317 U.S. 188, 63 S.Ct. 163, 87 L.Ed. 176 (1942). Nevertheless, the Supreme Court has also ruled that appellate jurisdiction persists over orders that have the effect of denying an injunction if the party seeking review can "show that the order will have a ' "serious, perhaps irreparable, consequence," and that the order can be "effectually challenged" only by immediate appeal.' " Stringfellow v. Concerned Neighbors In Action, 480 U.S. 370, 107 S.Ct. 1177, 1184 (1987) quoting Carson v. American Brands, Inc., 450 U.S. 79, 84, 101...

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