Suing Atlantis

Image by Ralph Häusler from Pixabay

The Atlantis Resort in the Bahamas (“Atlantis”) is, by most accounts, a nice place to visit. There are water slides and pools, beaches and private cabanas. There is a casino and a spa and a nightclub and a comedy club. Over the past two decades, tens of thousands of American tourists have traveled to Atlantis. Inevitably, some of these visitors suffered injuries and sued Atlantis in U.S. court. These cases raise a host of fascinating legal issues. This post discusses one recent case, Doe v. Marriott International, Inc., brought in the Federal District Court for the Southern District of Mississippi (Judge Kristi H. Johnson).

The key issue in this case relates to a forum selection clause in the Atlantis guest registration form:

I agree that any claims I may have against the Resort Parties resulting from any events occurring in The Bahamas shall be governed and construed in accordance with the laws of the Commonwealth of The Bahamas, and further, I irrevocably agree to the Supreme Court of The Bahamas as the exclusive venue for any such proceedings whatsoever.

After recounting the facts of Doe, the post first considers whether this clause was a part of the agreement between the resort and the plaintiffs. It then considers whether and to what extent one person may bind another to a forum selection clause.

Facts

In June 2021, a Mississippi resident and attorney named Ashley Ogden traveled to Atlantis with a number of companions. Several days into their stay, Ogden awoke to discover that someone had entered their hotel room and was stealing their possessions. Ogden tried to stop the intruder, a struggle ensued, and Ogden and his companions suffered injuries. Upon returning to Mississippi, Ogden and the other guests sued Atlantis and its affiliated entities for negligence and breach of contract, among other claims. Atlantis moved to dismiss based on the exclusive forum selection clause selecting the courts of the Bahamas in its guest registration form.

Contract Formation

Although Ogden acknowledged that he signed the guest registration form at check-in, he argued that he was not bound by the forum selection clause in that agreement because he (1) orally informed the front desk clerk that he was declining the forum selection clause when he checked in, and (2) offered that same clerk a written document stating that he would not be bound by the clause. As Ogden explained in a sworn affidavit:

As a personal injury attorney, I have a practice of not agreeing to forum selection clauses, release waivers, or arbitration agreements. When I stay at the Atlantis I instruct the front desk staff that I do not agree to any forum selection clauses or liability releases contained in the check-in documents. . . . I have never been told by any employee that Atlantis would not accept my rejection of the forum selection clause or liability release. I have never been told by Atlantis employees to take a pen and mark up the guest registration card.

[W]hen I checked into The Atlantis on June 13, 2021, I informed the Atlantis employees that I was declining the release as usual. . . . The employees did not instruct me to alter or mark out any terms on the paper or tell me that I was required to mark up or alter the guest registration card . . .  I also informed the Atlantis employees that I had a handwritten document I use to show I am declining to agree to their release that they can accept but as usual they did not . . . ask to keep it in the file.

Atlantis took the position that Ogden was bound by the forum selection clause because he had not crossed it out. The terms and conditions on Atlantis’s website state that if “you are unwilling to agree to these terms and conditions, prior to signing the form and checking into the Resort, you may revise the language by crossing out any words you do not accept.” Atlantis contended that Ogden’s attempts to disclaim the clause were ineffective because he did not physically alter the form to delete the clause.

Ogden argued in response that nobody from Atlantis ever informed him that it was necessary for him to mark up the form to avoid the forum selection clause after he (1) orally disclaimed it, and (2) offered to provide a written document indicating his refusal to be bound by it. He also pointed out that the guest registration form contained no place where he could acknowledge that he was declining the terms. Had he been informed at check-in that his verbal disclaimer was insufficient, and that he was required to physically mark up the document, he states he would have done so immediately. The failure on the part of the Atlantis employee to explain this to him, he argued, amounted to fraudulent inducement.

Decision

The district court ruled for Atlantis. First, it stated that even if the court accepted the plaintiff’s allegations as true, it “would still enforce the [forum selection clause] because allowing Plaintiffs to rely on contrary oral or written agreements would ‘defeat the ability of written contracts to provide certainty and avoid dispute.’” Second, it stated that “even if the FSC were not enforceable, the case should still be dismissed on traditional forum non conveniens grounds.” Third, it stated that Atlantis “should not be forced to continue to litigate in an improper venue because it undermines the very purpose of the [forum selection clause].”

It is useful to examine each of these statements in turn.

The court’s first statement is difficult to defend. Ogden submitted a sworn affidavit stating that he notified Atlantis orally that he would not be bound by the forum selection clause in the resort’s standard terms and conditions. Those terms and conditions permit guests to opt out of terms and conditions that they find unacceptable. Although Ogden did not formally cross the words out on the guest registration form, this was not specifically required by the terms and conditions, which merely stated that unwilling guests could revise the language by crossing out words (“you may revise the language”). They did not state that this was the only way by which guests could signal their refusal to be bound. If all of this is true, then there is at a minimum a genuine issue of material fact as to whether the parties did, in fact, agree to resolve their disputes exclusively in the Bahamas. To hold that the clause must nevertheless be enforced in the name of the sanctity of written contracts does violence to basic principles of contract law. One must first determine that the relevant term is a part of the contract before one can conclude that that term should be enforced.

The court’s second statement calls into question the attention it gave to the forum selection clause in the first place. If the case should be dismissed on traditional forum non conveniens grounds, then there is no need to address whether the clause is a part of the contract. And yet the court devoted considerable time and attention to explaining why the clause had to be given effect. It is worth noting that the U.S. Supreme Court held in Piper that “a plaintiff’s choice of forum is entitled to greater deference when the plaintiff has chosen the home forum.” In this case, Ogden was suing in his home forum. It is also noteworthy that most of the defendants named in the lawsuit were not based in the Bahamas.

The court’s third statement is difficult to follow. It seems to be saying that the clause should be enforced because the purpose of the clause is to be enforced. Circular reasoning is a “logical fallacy in which the reasoner begins with what they are trying to end with.” The court appears to have fallen into precisely this trap.

Non-Signatories

After concluding that the forum selection clause bound Ogden, the court then considered whether it also bound the members of his party who never signed the guest registration form. The plaintiffs argued that “only Ogden signed the forms and he did not hold the authority to sign the cards for any other adults or children listed as Plaintiffs in this lawsuit.” As a matter of traditional agency law, this argument is inarguably correct. The court did not, however, look to traditional agency law to resolve this issue.

Instead, the court invoked the closely-related-and-foreseeable test. That test, which was recently adopted by the Fifth Circuit, posits that a non-signatory is bound by a forum selection clause when it is so “closely related” to the contract signatory that it is “foreseeable” that the non-signatory will be bound. The court then applied this test and concluded that all the plaintiffs—including those who never signed the form—were required to litigate in the Bahamas.

There are two problems with the court’s reasoning. The first is that the closely-related-and-foreseeable test has traditionally been used to bring willing defendants within the scope of forum selection clauses that they did not sign. In a classic case, the Ninth Circuit held that affiliates of an Italian manufacturer that agreed to a forum selection clause requiring all disputes to be resolved in Italy could take advantage of the clause even though the affiliates never signed the agreement. That is not what happened here. In Doe, the court used the test to bind unwilling plaintiffs to a forum selection clause in an agreement that they never signed. This is a far more problematic use of the test, as Robin Effron and I argued in a recent article.

The second problem with the court’s reasoning is that it applies U.S. law to determine the status of the non-signatories when the issue was arguably governed by Bahamian law. The contract at issue was negotiated and signed in the Bahamas. It was to be performed in the Bahamas. It contained a choice-of-law clause selecting the law of the Bahamas. There is little doubt that the agreement is governed by the laws of the Bahamas. It does not appear, however, that any court in the Bahamas has ever applied the closely-related-and-foreseeable test to bind a non-signatory. Instead, the courts in the Bahamas follow traditional principles of agency law similar to those apply by courts in England and the United States. If the contract is governed by the law of Bahamas, and if that nation has not adopted the closely-related-and-foreseeable test, then it is not at all clear that this test may be used in place of agency law to bind non-signatory plaintiffs to a contract provision in an agreement they never signed.

Conclusion

The decision in Doe v. Marriott Int’l, Inc. is yet another example where a U.S. court relied on questionable reasoning to conclude that a foreign forum selection clause was enforceable over the plaintiff’s objections. The court first bent the usual rules of contract formation to conclude that Ogden was bound by a forum selection clause that he specifically disclaimed. It then applied the closely-related-and-foreseeable test—a test that has never been applied by a Bahamian court—to bring a group of non-consenting plaintiffs within the scope of a clause in a contract governed by Bahamian law.