author: Justice Blackmun Justice Stevens,

text:
    CARNIVAL CRUISE LINES, INC. v. SHUTE et vir
    No. 89-1647.
    Argued January 15, 1991
    Decided April 17, 1991

      Blackmun, J., delivered the opinion of the Court, in which Rehnquist, C. J., and White, O’Connor, Scalia, Kennedy, and Souter, JJ., joined. Stevens, J., filed a dissenting opinion, in which Marshall, J., joined, post, p. 597.

      Richard K. Willard argued the cause for petitioner. With him on the briefs were David L. Roll and Lawrence D. Winson.

      Gregory J. Wall argued the cause and filed a brief for respondents.

      Briefs of amici curiae urging reversal were filed for the Chamber of Commerce of the United States by Herbert L. Fenster, Stanley IF. Land-

        fair, and Robin S. Conrad; and for the International Committee of Passenger Lines by John A. Flynn and James B. Nebel.

   Justice Blackmun

delivered the opinion of the Court.

In this admiralty case we primarily consider whether the United States Court of Appeals for the Ninth Circuit correctly refused to enforce a forum-selection clause contained in tickets issued by petitioner Carnival Cruise Lines, Inc., to respondents Eulala and Russel Shute.

HH

The Shutes, through an Arlington, Wash., travel agent, purchased passage for a 7-day cruise on petitioner’s ship, the Tropicale. Respondents paid the fare to the agent who forwarded the payment to petitioner’s headquarters in Miami, Fla. Petitioner then prepared the tickets and sent them to respondents in the State of Washington. The face of each ticket, at its left-hand lower corner, contained this admonition:

“SUBJECT TO CONDITIONS OF CONTRACT ON LAST PAGES IMPORTANT! PLEASE READ CONTRACT -ON LAST PAGES 1, 2, 3” App. 15.

The following appeared on “contract page 1” of each ticket:

“TERMS AND CONDITIONS OF PASSAGE CONTRACT TICKET
“3. (a) The acceptance of this ticket by the person or persons named hereon as passengers shall be deemed to be an acceptance and agreement by each of them of all of the terms and conditions of this Passage Contract Ticket.
“8. It is agreed by and between the passenger and the Carrier that all disputes and matters whatsoever arising under, in connection with or incident to this Contract shall be litigated, if at all, in and before a Court located in the State of Florida, U. S. A., to the exclusion of the Courts of any other state or country.” Id., at 16.

The last quoted paragraph is the forum-selection clause at issue.

II

Respondents boarded the Tropicale in Los Angeles, Cal. The ship sailed to Puerto Vallarta, Mexico, and then returned to Los Angeles. While the ship was in international waters off the Mexican coast, respondent Eulala Shute was injured when she slipped on a deck mat during a guided tour of the ship’s galley. Respondents filed suit against petitioner in the United States District Court for the Western District of Washington, claiming that Mrs. Shute’s injuries had been caused by the negligence of Carnival Cruise Lines and its employees. Id., at 4.

Petitioner moved for summary judgment, contending that the forum clause in respondents’ tickets required the Shutes to bring their suit against petitioner in a court in the State of Florida. Petitioner contended, alternatively, that the District Court lacked personal jurisdiction over petitioner because petitioner’s contacts with the State of Washington were insubstantial. The District Court granted the motion, holding that petitioner’s contacts with Washington were constitutionally insufficient to support the exercise of personal jurisdiction. See App. to Pet. for Cert. 60a.

The Court of Appeals reversed. Reasoning that “but for” petitioner’s solicitation of business in Washington, respondents would not have taken the cruise and Mrs. Shute would not have been injured, the court concluded that petitioner had sufficient contacts with Washington to justify the District Court’s exercise of personal jurisdiction. 897 F. 2d 377, 385-386 (CA9 1990).

Turning to the forum-selection clause, the Court of Appeals acknowledged that a court concerned with the enforceability of such a clause must begin its analysis with The Bremen v. Zapata Off-Shore Co., 407 U. S. 1 (1972), where this Court held that forum-selection clauses, although not “historically . . . favored,” are “prima facie valid.” Id., at 9-10. See 897 F. 2d, at 388. The appellate court concluded that the forum clause should not be enforced because it “was not freely bargained for.” Id., at 389. As an “independent justification” for refusing to enforce the clause, the Court of Appeals noted that there was evidence in the record to indicate that “the Shutes are physically and financially incapable of pursuing this litigation in Florida” and that the enforcement of the clause would operate to deprive them of their day in court and thereby contravene this Court’s holding in The Bremen. 897 F. 2d, at 389.

We granted certiorari to address the question whether the Court of Appeals was correct in holding that the District Court should hear respondents’ tort claim against petitioner. 498 U. S. 807-808 (1990). Because we find the forum-selection clause to be dispositive of this question, we need not consider petitioner’s constitutional argument as to personal jurisdiction. See Ashwander v. TVA, 297 U. S. 288, 347 (1936) (Brandeis, J., concurring) (“‘It is not the habit of the Court to decide questions of a constitutional nature unless absolutely necessary to a decision of the case,”’ quoting Burton v. United States, 196 U. S. 283, 295 (1905)).

l I — I H-i

We begin by noting the boundaries of our inquiry. First, this is a case in admiralty, and federal law governs the enforceability of the forum-selection clause we scrutinize. See Archawski v. Hanioti, 350 U. S. 532, 533 (1956); The Moses Taylor, 4 Wall. 411, 427 (1867); Tr. of Oral Arg. 36-37, 12, 47-48. Cf. Stewart Organization, Inc. v. Ricoh Corp., 487 U. S. 22, 28-29 (1988). Second, we do not address the question whether respondents had sufficient notice of the forum clause before entering the contract for passage. Respondents essentially have conceded that they had notice of the forum-selection provision. Brief for Respondents 26 (“The respondents do not contest the incorporation of the provisions nor [sic] that the forum selection clause was reasonably communicated to the respondents, as much as three pages of fine print can be communicated”). Additionally, the Court of Appeals evaluated the enforceability of the forum clause under the assumption, although “doubtful,” that respondents could be deemed to have had knowledge of the clause. See 897 F. 2d, at 389, and n. 11.

Within this context, respondents urge that the forum clause should not be enforced because, contrary to this Court’s teachings in The Bremen, the clause was not the product of negotiation, and enforcement effectively would deprive respondents of their day in court. Additionally, respondents contend that the clause violates the Limitation of Vessel Owner’s Liability Act, 46 U. S. C. App. § 183c. We consider these arguments in turn.

IV

A

Both petitioner and respondents argue vigorously that the Court’s opinion in The Bremen governs this case, and each side purports to find ample support for its position in that opinion’s broad-ranging language. This seeming paradox derives in large part from key factual differences between this case and The Bremen, differences that preclude an automatic and simple application of The Bremen’s, general principles to the facts here.

In The Bremen, this Court addressed the enforceability of a forum-selection clause in a contract between two business corporations. An American corporation, Zapata, made a contract with Unterweser, a German corporation, for the towage of Zapata’s oceangoing drilling rig from Louisiana to a point in the Adriatic Sea off the coast of Italy. The agreement provided that any dispute arising under the contract was to be resolved in the London Court of Justice. After a storm in the Gulf of Mexico seriously damaged the rig, Zapata ordered Unterweser’s ship to tow the rig to Tampa, Fla., the nearest point of refuge. Thereafter, Zapata sued Unterweser in admiralty in federal court at Tampa. Citing the forum clause, Unterweser moved to dismiss. The District Court denied Unterweser’s motion, and the Court of Appeals for the Fifth Circuit, sitting en banc on rehearing, and by a sharply divided vote, affirmed. In re Complaint of Unterweser Reederei, GmBH, 446 F. 2d 907 (1971).

This Court vacated and remanded, stating that, in general, “a freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power, such as that involved here, should be given full effect.” 407 U. S., at 12-13 (footnote omitted). The Court further generalized that “in the light of present-day commercial realities and expanding international trade we conclude that the forum clause should control absent a strong showing that it should be set aside.” Id., at 16. The Court did not define precisely the circumstances that would make it unreasonable for a court to enforce a forum clause. Instead, the Court discussed a number of factors that made it reasonable to enforce the clause at issue in The Bremen and that, presumably, would be pertinent in any determination whether to enforce a similar clause.

In this respect, the Court noted that there was “strong evidence that the forum clause was a vital part of the agreement, and [that] it would be unrealistic to think that the parties did not conduct their negotiations, including fixing the monetary terms, with the consequences of the forum clause figuring prominently in their calculations.” Id., at 14 (footnote omitted). Further, the Court observed that it was not “dealing with an agreement between two Americans to resolve their essentially local disputes in a remote alien forum,” and that in such a case, “the serious inconvenience of the contractual forum to one or both of the parties might carry greater weight in determining the reasonableness of the forum clause.” Id., at 17. The Court stated that even where the forum clause establishes a remote forum for resolution of conflicts, “the party claiming [unfairness] should bear a heavy burden of proof.” Ibid.

In applying The Bremen, the Court of Appeals in the present litigation took note of the foregoing “reasonableness” factors and rather automatically decided that the forum-selection clause was unenforceable because, unlike the parties in The Bremen, respondents are not business persons and did not negotiate the terms of the clause with petitioner. Alternatively, the Court of Appeals ruled that the clause should not be enforced because enforcement effectively would deprive respondents of an opportunity to litigate their claim against petitioner.

The Bremen concerned a “far from routine transaction between companies of two different nations contemplating the tow of an extremely costly piece of equipment from Louisiana across the Gulf of Mexico and the Atlantic Ocean, through the Mediterranean Sea to its final destination in the Adriatic Sea.” Id., at 13. These facts suggest that, even apart from the evidence of negotiation regarding the forum clause, it was entirely reasonable for the Court in The Bremen to have expected Unterweser and Zapata to have negotiated with care in selecting a forum for the resolution of disputes arising from their special towing contract.

In contrast, respondents’ passage contract was purely routine and doubtless nearly identical to every commercial passage contract issued by petitioner and most other cruise lines. See, e. g., Hodes v. S. N. C. Achille Lauro ed Altri-Gestione, 858 F. 2d 905, 910 (CA3 1988), cert. dism’d, 490 U. S. 1001 (1989). In this context, it would be entirely unreasonable for us to assume that respondents — or any other cruise passenger — would negotiate with petitioner the terms of a forum-selection clause in an ordinary commercial cruise ticket. Common sense dictates that a ticket of this kind will be a form contract the terms of which are not subject to negotiation, and that an individual purchasing the ticket will not have bargaining parity with the cruise line. But by ignoring the crucial differences in the business contexts in which the respective contracts were executed, the Court of Appeals’ analysis seems to us to have distorted somewhat this Court’s holding in The Bremen.

In evaluating the reasonableness of the forum clause at issue in this case, we must refine the analysis of The Bremen to account for the realities of form passage contracts. As an initial matter, we do not adopt the Court of Appeals’ determination that a nonnegotiated forum-selection clause in a form ticket contract is never enforceable simply because it is not the subject of bargaining. Including a reasonable forum clause in a form contract of this kind well may be permissible for several reasons: First, a cruise line has a special interest in limiting the fora in which it potentially could be subject to suit. Because a cruise ship typically carries passengers from many locales, it is not unlikely that a mishap on a cruise could subject the cruise line to litigation in several different fora. See The Bremen, 407 U. S., at 13, and n. 15; Hodes, 858 F. 2d, at 913. Additionally, a clause establishing ex ante the forum for dispute resolution has the salutary effect of dispelling any confusion about where suits arising from the contract must be brought and defended, sparing litigants the time and expense of pretrial motions to determine the correct forum and conserving judicial resources that otherwise would be devoted to deciding those motions. See Stewart Organization, 487 U. S., at 33 (concurring opinion). Finally, it stands to reason that passengers who purchase tickets containing a forum clause like that at issue in this case benefit in the form of reduced fares reflecting the savings that the cruise line enjoys by limiting the fora in which it may be sued. Cf. Northwestern Nat. Ins. Co. v. Donovan, 916 F. 2d 372, 378 (CA7 1990).

We also do not accept the Court of Appeals’ “independent justification” for its conclusion that The Bremen dictates that the clause should not be enforced because “[tjhere is evidence in the record to indicate that the Shutes are physically and financially incapable of pursuing this litigation in Florida.” 897 F. 2d, at 389. We do not defer to the Court of Appeals’ findings of fact. In dismissing the case for lack of personal jurisdiction over petitioner, the District Court made no finding regarding the physical and financial impediments to the Shutes’ pursuing their case in Florida. The Court of Appeals’ conclusory reference to the record provides no basis for this Court to validate the finding of inconvenience. Furthermore, the Court of Appeals did not place in proper context this Court’s statement in The Bremen that “the serious inconvenience of the contractual forum to one or both of the parties might carry greater weight in determining the reasonableness of the forum clause.” 407 U. S., at 17. The Court made this statement in evaluating a hypothetical “agreement between two Americans to resolve their essentially local disputes in a remote alien forum.” Ibid. In the present case, Florida is not a “remote alien forum,” nor — given the fact that Mrs. Shute’s accident occurred off the coast of Mexico— is this dispute an essentially local one inherently more suited to resolution in the State of Washington than in Florida. In light of these distinctions, and because respondents do not claim lack of notice of the forum clause, we conclude that they have not satisfied the “heavy burden of proof,” ibid., required to set aside the clause on grounds of inconvenience.

It bears emphasis that forum-selection clauses contained in form passage contracts are subject to judicial scrutiny for fundamental fairness. In this case, there is no indication that petitioner set Florida as the forum in which disputes were to be resolved as a means of discouraging cruise passengers from pursuing legitimate claims. Any suggestion of such a bad-faith motive is belied by two facts: Petitioner has its principal place of business in Florida, and many of its cruises depart from and return to Florida ports. Similarly, there is no evidence that petitioner obtained respondents’ accession to the forum clause by fraud or overreaching. Finally, respondents have conceded that they were given notice of the forum provision and, therefore, presumably retained the option of rejecting the contract with impunity. In the case before us, therefore, we conclude that the Court of Appeals erred in refusing to enforce the forum-selection clause.

B

Respondents also contend that the forum-selection clause at issue violates 46 U. S. C. App. § 183c. That statute, enacted in 1936, see ch. 521, 49 Stat. 1480, provides:

“It shall be unlawful for the . . . owner of any vessel transporting passengers between ports of the United States or between any such port and a foreign port to insert in any rule, regulation, contract, or agreement any provision or limitation (1) purporting, in the event of loss of life or bodily injury arising from the negligence or fault of such owner or his servants, to relieve such owner . . . from liability, or from liability beyond any stipulated amount, for such loss or injury, or (2) purporting in such event to lessen, weaken, or avoid the right of any claimant to a trial by court of competent jurisdiction on the question of liability for such loss or injury, or the measure of damages therefor. All such provisions or limitations contained in any such rule, regulation, contract, or agreement are hereby declared to be against public policy and shall be null and void and of no effect.”

By its plain language, the forum-selection clause before us does not take away respondents’ right to “a trial by [a] court of competent jurisdiction” and thereby contravene the explicit proscription of §183c. Instead, the clause states specifically that actions arising out of the passage contract shall be brought “if at all,” in a court “located in the State of Florida,” which, plainly, is a “court of competent jurisdiction” within the meaning of the statute.

Respondents appear to acknowledge this by asserting that although the forum clause does not directly prevent the determination of claims against the cruise line, it causes plaintiffs unreasonable hardship in asserting their rights and therefore violates Congress’ intended goal in enacting § 183c. Significantly, however, respondents cite no authority for their contention that Congress’ intent in enacting § 183c was to avoid having a plaintiff travel to a distant forum in order to litigate. The legislative history of §183c suggests instead that this provision was enacted in response to passenger-ticket conditions purporting to limit the shipowner’s liability for negligence or to remove the issue of liability from the scrutiny of any court by means of a clause providing that “the question of liability and the measure of damages shall be determined by arbitration.” See S. Rep. No. 2061, 74th Cong., 2d Sess., 6 (1936); H. R. Rep. No. 2517, 74th Cong., 2d Sess., 6 (1936). See also Safety of Life and Property at Sea: Hearings before the House Committee on Merchant Marine and Fisheries, 74th Cong., 2d Sess., pt. 4, pp. 20, 36-37, 57, 109-110, 119 (1936). There was no prohibition of a forum-selection clause. Because the clause before us allows for judicial resolution of claims against petitioner and does not purport to limit petitioner’s liability for negligence, it does not violate § 183c.

V

The judgment of the Court of Appeals is reversed.

It is so ordered.

Justice Stevens,

with whom Justice Marshall joins, dissenting.

The Court prefaces its legal analysis with a factual statement that implies that a purchaser of a Carnival Cruise Lines passenger ticket is fully and fairly notified about the existence of the choice of forum clause in the fine print on the back of the ticket. See ante, at 587-588. Even if this implication were accurate, I would disagree with the Court’s analysis. But, given the Court’s preface, I begin my dissent by noting that only the most meticulous passenger is likely to become aware of the forum-selection provision. I have therefore appended to this opinion a facsimile of the relevant text, using the type size that actually appears in the ticket itself. A careful reader will find the forum-selection clause in the 8th of the 25 numbered paragraphs.

Of course, many passengers, like the respondents in this case, see ante, at 587, will not have an opportunity to read paragraph 8 until they have actually purchased their tickets. By this point, the passengers will already have accepted the condition set forth in paragraph 16(a), which provides that “[t]he Carrier shall not be liable to make any refund to passengers in respect of. . . tickets wholly or partly not used by a passenger.” Not knowing whether or not that provision is legally enforceable, I assume that the average passenger would accept the risk of having to file suit in Florida in the event of an injury, rather than canceling — without a refund— a planned vacation at the last minute. The fact that the cruise line can reduce its litigation costs, and therefore its liability insurance premiums, by forcing this choice on its passengers does not, in my opinion, suffice to render the provision reasonable. Cf. Steven v. Fidelity & Casualty Co. of New York, 58 Cal. 2d 862, 883, 377 P. 2d 284, 298 (1962) (refusing to enforce limitation on liability in insurance policy because insured “must purchase the policy before he even knows its provisions”).

Even if passengers received prominent notice of the forum-selection clause before they committed the cost of the cruise, I would remain persuaded that the clause was unenforceable under traditional principles of federal admiralty law and is “null and void” under the terms of Limitation of Vessel Owner’s Liability Act, ch. 521, 49 Stat. 1480, 46 U. S. C. App. §183c, which was enacted in 1936 to invalidate expressly stipulations limiting shipowners’ liability for negligence.

Exculpatory clauses in passenger tickets have been around for a long time. These clauses are typically the product of disparate bargaining power between the carrier and the passenger, and they undermine the strong public interest in deterring negligent conduct. For these reasons, courts long before the turn of the century consistently held such clauses unenforceable under federal admiralty law. Thus, in a case involving a ticket provision purporting to limit the shipowner’s liability for the negligent handling of baggage, this Court wrote:

“It is settled in the courts of the United States that exemptions limiting carriers from responsibility for the negligence of themselves or their servants are both unjust and unreasonable, and will be deemed as wanting in the element of voluntary assent; and, besides, that such conditions are in conflict with public policy. This doctrine was announced so long ago, and has been so frequently reiterated, that it is elementary. We content ourselves with referring to the cases of the Baltimore & Ohio &c. Railway v. Voigt, 176 U. S. 498, 505, 507, and Knott v. Botany Mills, 179 U. S. 69, 71, where the previously adjudged cases are referred to and the principles by them expounded are restated.” The Kensington, 183 U. S. 263, 268 (1902).

Clauses limiting a carrier’s liability or weakening the passenger’s right to recover for the negligence of the carrier’s employees come in a variety of forms. Complete exemptions from liability for negligence or limitations on the amount of the potential damage recovery, requirements that notice of claims be filed within an unreasonably short period of time, provisions mandating a choice of law that is favorable to the defendant in negligence cases, and forum-selection clauses are all similarly designed to put a thumb on the carrier’s side of the scale of justice.

Forum-selection clauses in passenger tickets involve the intersection of two strands of traditional contract law that qualify the general rule that courts will enforce the terms of a contract as written. Pursuant to the first strand, courts traditionally have reviewed with heightened scrutiny the terms of contracts of adhesion, form contracts offered on a take-or-leave basis by a party with stronger bargaining power to a party with weaker power. Some commentators have questioned whether contracts of adhesion can justifiably be enforced at all under traditional contract theory because the adhering party generally enters into them without manifesting knowing and voluntary consent to all their terms. See, e. g., Rakoff, Contracts of Adhesion: An Essay in Reconstruction, 96 Harv. L. Rev. 1173, 1179-1180 (1983); Slawson, Mass Contracts: Lawful Fraud in California, 48 S. Cal. L. Rev. 1, 12-13 (1974); K. Llewellyn, The Common Law Tradition 370-371 (1960).

The common law, recognizing that standardized form contracts account for a significant portion of all commercial agreements, has taken a less extreme position and instead subjects terms in contracts of adhesion to scrutiny for reasonableness. Judge J. Skelly Wright set out the state of the law succinctly in Williams v. Walker-Thomas Furniture Co., 121 U. S. App. D. C. 315, 319-320, 350 F. 2d 445, 449-450 (1965) (footnotes omitted):

“Ordinarily, one who signs an agreement without full knowledge of its terms might be held to assume the risk that he has entered a one-sided bargain. But when a party of little bargaining power, and hence little real choice, signs a commercially unreasonable contract with little or no knowledge of its terms, it is hardly likely that his consent, or even an objective manifestation of his consent, was ever given to all of the terms. In such a case the usual rule that the terms of the agreement are not to be questioned should be abandoned and the court should consider whether the terms of the contract are so unfair that enforcement should be withheld.”

See also Steven, 58 Cal. 2d, at 879-883, 377 P. 2d, at 295-297; Henningsen v. Bloomfield Motors, Inc., 32 N. J. 358, 161 A. 2d 69 (1960).

The second doctrinal principle implicated by forum-selection clauses is the traditional rule that “contractual provisions, which seek to limit the place or court in which an action may ... be brought, are invalid as contrary to public policy.” See Dougherty, Validity of Contractual Provision Limiting Place or Court in Which Action May Be Brought, 31 A. L. R. 4th 404, 409, §3 (1984). See also Home Insurance Co. v. Morse, 20 Wall. 445, 451 (1874). Although adherence to this general rule has declined in recent years, particularly following our decision in The Bremen v. Zapata Off-Shore Co., 407 U. S. 1 (1972), 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. See 31 A. L. R. 4th, at 409-438 (citing cases). A forum-selection clause in a standardized passenger ticket would clearly have been unenforceable under the common law before our decision in The Bremen, see 407 U. S., at 9, and n. 10, and, in my opinion, remains unenforceable under the prevailing rule today.

The Bremen, which the Court effectively treats as controlling this case, had nothing to say about stipulations printed on the back of passenger tickets. That case involved the enforceability of a forum-selection clause in a freely negotiated international agreement between two large corporations providing for the towage of a vessel from the Gulf of Mexico to the Adriatic Sea. The Court recognized that such towage agreements had generally been held unenforceable in American courts, but held that the doctrine of those cases did not extend to commercial arrangements between parties with equal bargaining power.

The federal statute that should control the disposition of the case before us today was enacted in 1936 when the general rule denying enforcement of forum-selection clauses was indisputably widely accepted. The principal subject of the statute concerned the limitation of shipowner liability, but as the following excerpt from the House Report explains, the section that is relevant to this case was added as a direct response to shipowners’ ticketing practices.

“During the course of the hearings on the bill (H. R. 9969) there was also brought to the attention of the committee a practice of providing on the reverse side of steamship tickets that in the event of damage or injury caused by the negligence or fault of the owner or his servants, the liability of the owner shall be limited to a stipulated amount, in some cases $5,000, and in others substantially lower amounts, or that in such event the question of liability and the measure of damages shall be determined by arbitration. The amendment to chapter 6 of title 48 of the Revised Statutes proposed to be made by section 2 of the committee amendment is intended to, and in the opinion of the committee will, put a stop to all such practices and practices of a like character.” H. R. Rep. No. 2517, 74th Cong., 2d Sess., 6-7 (1936) (emphasis added); see also S. Rep. No. 2061, 74th Cong., 2d Sess., 6-7 (1936).

The intent to “put a stop to all such practices and practices of a like character” was effectuated in the second clause of the statute. It reads:

“It shall be unlawful for the manager, agent, master, or owner of any vessel transporting passengers between ports of the United States or between any such port and a foreign port to insert in any rule, regulation, contract, or agreement any provision or limitation (1) purporting, in the event of loss of life or bodily injury arising from the negligence or fault of such owner or his servants, to relieve such owner, master, or agent from liability, or from liability beyond any stipulated amount, for such loss or injury, or (2) purporting in such event to lessen, weaken, or avoid the right of any claimant to a trial by court of competent jurisdiction on the question of liability for such loss or injury, or the measure of damages therefor. All such provisions or limitations contained in any such rule, regulation, contract, or agreement are declared to be against public policy and shall be null and void and of no effect.” 46 U. S. C. App. § 183c (emphasis added).

The stipulation in the ticket that Carnival Cruise sold to respondents certainly lessens or weakens their ability to recover for the slip and fall incident that occurred off the west coast of Mexico during the cruise that originated and terminated in Los Angeles, California. It is safe to assume that the witnesses — whether other passengers or members of the crew — can be assembled with less expense and inconvenience at a west coast forum than in a Florida court several thousand miles from the scene of the accident.

A liberal reading of the 1936 statute is supported by both its remedial purpose and by the legislative history’s general condemnation of “all such practices.” Although the statute does not specifically mention forum-selection clauses, its language is broad enough to encompass them. The absence of a specific reference is adequately explained by the fact that such clauses were already unenforceable under common law and would not often have been used by carriers, which were relying on stipulations that purported to exonerate them from liability entirely. Cf. Moskal v. United States, 498 U. S. 103, 110-113 (1990).

The Courts of Appeals, construing an analogous provision of the Carriage of Goods by Sea Act, 46 U. S. C. App. § 1300 et seq., have unanimously held invalid as limitations on liability forum-selection clauses requiring suit in foreign jurisdictions. See, e. g., Hughes Drilling Fluids v. M/V Luo Fu Shan, 852 F. 2d 840 (CA5 1988), cert. denied, 489 U. S. 1033 (1989); Union Ins. Soc. of Canton, Ltd. v. S. S. Elikon, 642 F. 2d 721, 724-725 (CA4 1981); Indussa Corp. v. S. S. Ranborg, 377 F. 2d 200, 203-204 (CA2 1967). Commentators have also endorsed this view. See, e. g., G. Gilmore & C. Black, The Law of Admiralty 145, and n. 23 (2d ed. 1975); Mendelsohn, Liberalism, Choice of Forum Clauses and the Hague Rules, 2 J. of Maritime Law & Comm. 661, 663-666 (1971). The forum-selection clause here does not mandate suit in a foreign jurisdiction, and therefore arguably might have less of an impact on a plaintiff’s ability to recover. See Fireman’s Fund American Ins. Cos. v. Puerto Rican Forwarding Co., 492 F. 2d 1294 (CA1 1974). However, the plaintiffs in this case are not large corporations but individuals, and the added burden on them of conducting a trial at the opposite end of the country is likely proportional to the additional cost to a large corporation of conducting a trial overseas.

Under these circumstances, the general prohibition against stipulations purporting “to lessen, weaken, or avoid” the passenger’s right to a trial certainly should be construed to apply to the manifestly unreasonable stipulation in these passengers’ tickets. Even without the benefit of the statute, I would continue to apply the general rule that prevailed prior to our decision in The Bremen to forum-selection clauses in passenger tickets.

I respectfully dissent.

      The Court of Appeals had filed an earlier opinion also reversing the District Court and ruling that the District Court had personal jurisdiction over the cruise line and that the forum-selection clause in the tickets was unreasonable and was not to be enforced. 863 F. 2d 1437 (CA9 1988). That opinion, however, was withdrawn when the court certified to the Supreme Court of Washington the question whether the Washington long-arm statute, Wash. Rev. Code §4.28.185 (1988), conferred personal jurisdiction over Carnival Cruise Lines for the claim asserted by the Shutes. See 872 F. 2d 930 (1989). The Washington Supreme Court answered the certified question in the affirmative on the ground that the Shutes’ claim “arose from” petitioner’s advertisement in Washington and the promotion of its cruises there. 113 Wash. 2d 763, 783 P. 2d 78 (1989). The Court of Appeals then “refiled” its opinion “as modified herein.” See 897 F. 2d, at 380, n. 1.

       See 46 U. S. C. App. §183c:
      “It shall be unlawful for the . . . owner of any vessel transporting passengers between ports of the United States or between any such port and a foreign port to insert in any rule, regulation, contract, or agreement any provision or limitation (1) purporting, in the event of loss of life or bodily injury arising from the negligence or fault of such owner or his servants, to relieve such owner . . . from.liability, or from liability beyond any stipulated amount, for such loss or injury . . . .”

       See 46 U. S. C. App. § 183b(a):
      “It shall be unlawful for the manager, agent, master, or owner of any sea-going vessel (other than tugs, barges, fishing vessels and their tenders) transporting passengers or merchandise or property from or between ports of the United States and foreign ports to provide by rule, contract, regulation, or otherwise a shorter period for giving notice of, or filing claims for loss of life or bodily injury, than six months, and for the institution of suits on such claims, than one year, such period for institution of suits to be computed from the day when the death or injury occurred.” See also 49 U. S. C. § 11707(e) (“A carrier or freight forwarder may not provide by rule, contract, or otherwise, a period of less than 9 months for filing a claim against it under this section and a period of less than 2 years for bringing a civil action against it under this section”).

       See, e. g., The Kensington, 183 U. S. 263, 269 (1902) (refusing to enforce clause requiring that all disputes under contract for passage be governed by Belgian law because such law would have favored the shipowner in violation of United States public policy).

       All these clauses will provide passengers who purchase tickets containing them with a “benefit in the form of reduced fares reflecting the savings that the cruise line enjoys by limiting [its exposure to liability].” See ante, at 594. Under the Court’s reasoning, ail these clauses, including a complete waiver of liability, would be enforceable, a result at odds with longstanding jurisprudence.

       “In [Carbon Black Export, Inc. v. The Monrosa, 254 F. 2d 297 (CA5 1958), cert. dism’d, 359 U. S. 180 (1959),] the Court of Appeals had held a forum-selection clause unenforceable, reiterating the traditional view of many American courts that ‘agreements in advance of controversy whose object is to oust the jurisdiction of the courts are contrary to public policy and will not be enforced.’ 254 F. 2d, at 300-301.” The Bremen v. Zapata Off-Shore Co., 407 U. S. 1, 6 (1972).

       The Court does not make clear whether the result in this case would also apply if the clause required Carnival passengers to sue in Panama, the country in which Carnival is incorporated.


source: Caselaw Access Project

author: Justice Stevens

license: Public Domain

text:
    AMERICAN HOSPITAL ASSOCIATION v. NATIONAL LABOR RELATIONS BOARD et al.
    No. 90-97.
    Argued February 25, 1991
    Decided April 23, 1991

      Stevens, J., delivered the opinion for a unanimous Court.

      James D. Holzhauer argued the cause for petitioner. With him on the briefs were Kenneth S. Geller, Arthur R. Miller, and Rhonda A. Rhodes.

      Deputy Solicitor General Shapiro argued the cause for respondents. With him on the brief for respondent National Labor Relations Board were Solicitor General Starr, Stephen L. Nightingale, Robert E. Allen, Norton J. Come, and Linda Sher. Woody N. Peterson, David Silberman, Laurence Gold, Helen Morgan, Richard Griffin, Michael Fanning, Miriam Gafni, James Grady, Jonathan Hiatt, Richard Kirschner,

      Bruce Miller, Patrick Scanlon, and George Murphy filed a brief for respondents American Nurses Association et al.

      Briefs of amici curiae urging reversal were filed for the Fairfax Hospital System, the Maryland Hospital Association, Inc., and the Virginia Hospital Association by John G. Kruchko and Paul M. Lusky; for the California Association of Hospitals and Health Systems et al. by Robert M. Stone and Dana D. Howells; for the Greater Cincinnati Hospital Council by Laivrence J. Barty and Frank H. Stewait; for the Hospital Association of Pennsylvania et al. by John E. Lyncheski and Michael J. Reilly; for the Society for Human Resource Management by Glen D. Nager; for the Missouri Hospital Association by E. J. Holland, Jr.; for St. Francis Hospital, Inc., of Memphis by Jeff Weintraub; and for William Beaumont Hospital et al. by Theodore R. Oppenvall.

        Laivrence Rosenziveig filed a brief for the Union of American Physicians and Dentists as amicus curiae urging affirmance.

   Justice Stevens

delivered the opinion of the Court.

For the first time since the National Labor Relations Board (Board or NLRB) was established in 1935, the Board has promulgated a substantive rule defining the employee units appropriate for collective bargaining in a particular line of commerce. The rule is applicable to acute care hospitals and provides, with three exceptions, that eight, and only eight, units shall be appropriate in any such hospital. The three exceptions are for cases that present extraordinary circumstances, cases in which nonconforming units already exist, and cases in which labor organizations seek to combine two or more of the eight specified units. The extraordinary circumstances exception applies automatically to hospitals in which the eight-unit rule will produce a unit of five or fewer employees. See 29 CFR § 103.30 (1990).

Petitioner, American Hospital Association, brought this action challenging the facial validity of the rule on three grounds: First, petitioner argues that § 9(b) of the National Labor Relations Act (NLRA or Act) requires the Board to make a separate bargaining unit determination “in each case” and therefore prohibits the Board from using general rules to define bargaining units; second, petitioner contends that the rule that the Board has formulated violates a congressional admonition to the Board to avoid the undue proliferation of bargaining units in the health care industry; and, finally, petitioner maintains that the rule is arbitrary and capricious.

The United States District Court for the Northern District of Illinois agreed with petitioner’s second argument and enjoined enforcement of the rule. 718 F. Supp. 704 (1989). The Court of Appeals found no merit in any of the three arguments and reversed. 899 F. 2d 651 (CA7 1990). Because of the importance of the case, we granted certiorari, 498 U. S. 894 (1990). We now affirm.

I

Petitioner’s first argument is a general challenge to the Board’s rulemaking authority in connection with bargaining unit determinations based on the terms of the NLRA, 49 Stat. 449, 29 U. S. C. §151 et seq., as originally enacted in 1935. In § 1 of the NLRA Congress made the legislative finding that the “inequality of bargaining power” between unorganized employees and corporate employers had adversely affected commerce and declared it to be the policy of the United States to mitigate or eliminate those adverse effects “by encouraging the practice and procedure of collective bargaining and by protecting the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection.” 29 U. S. C. § 151. The central purpose of the Act was to protect and facilitate employees’ opportunity to organize unions to represent them in collective-bargaining negotiations.

Sections 3, 4, and 5 of the Act created the Board and generally described its powers. §§ 153-155. Section 6 granted the Board the “authority from time to time to make, amend, and rescind . . . such rules and regulations as may be necessary to carry out the provisions” of the Act. § 156. This grant was unquestionably sufficient to authorize the rule at issue in this case unless limited by some other provision in the Act.

Petitioner argues that § 9(b) provides such a limitation because this section requires the Board to determine the appropriate bargaining unit “in each case.” § 159(b). We are not persuaded. Petitioner would have us put more weight on these three words than they can reasonably carry.

Section 9(a) of the Act provides that the representative “designated or selected for the purposes of collective bargaining by the majority of the employees in a unit appropriate for such purposes” shall be the exclusive bargaining representative for all the employees in that unit. § 159(a). This section, read in light of the policy of the Act, implies that the initiative in selecting an appropriate unit resides with the employees. Moreover, the language suggests that employees may seek to organize “a unit” that is “appropriate” — not necessarily the single most appropriate unit. See, e. g., Trustees of Masonic Hall and Asylum Fund v. NLRB, 699 F. 2d 626, 634 (CA2 1983); State Farm Mutual Automobile Ins. Co. v. NLRB, 411 F. 2d 356, 358 (CA7) (en banc), cert. denied, 396 U. S. 832 (1969); Friendly Ice Cream Corp. v. NLRB, 705 F. 2d 570, 574 (CA1 1983); Local 627, Int’l Union of Operating Engineers v. NLRB, 194 U. S. App. D. C. 37, 41, 595 F. 2d 844, 848 (1979); NLRB v. Western & Southern Life Ins. Co., 391 F. 2d 119, 123 (CA3), cert. denied, 393 U. S. 978 (1968). Thus, one union might seek to represent all of the employees in a particular plant, those in a particular craft, or perhaps just a portion thereof.

Given the obvious potential for disagreement concerning the appropriateness of the unit selected by the union seeking recognition by the employer — disagreements that might involve rival unions claiming jurisdiction over contested segments of the work force as well as disagreements between management and labor — § 9(b) authorizes the Board to decide whether the designated unit is appropriate. See Hearings on S. 1958 before the Senate Committee on Education and Labor, p. 82 (1935) (hereinafter Hearings), 1 Legislative History of the National Labor Relations Act 1935, p. 1458 (hereinafter Legislative History) (testimony of Francis Biddle, Chairman of Board); H. R. Rep. No. 972, 74th Cong., 1st Sess., 20 (1935), 2 Legislative History 2976. Section 9(b) provides:

“The Board shall decide in each case whether, in order to insure to employees the full benefit of their right to self-organization and to collective bargaining, and otherwise to effectuate the policies of this Act, the unit appropriate for the purposes of collective bargaining shall be the employer unit, craft unit, plant unit, or subdivision thereof.” (Emphasis added.)

Petitioner reads the emphasized phrase as a limitation on the Board’s rulemaking powers. Although the contours of the restriction that petitioner ascribes to the phrase are murky, petitioner’s reading of the language would prevent the Board from imposing any industry-wide rule delineating the appropriate bargaining units. We believe petitioner’s reading is inconsistent with the natural meaning of the language read in the context of the statute as a whole.

The more natural reading of these three words is simply to indicate that whenever there is a disagreement about the appropriateness of a unit, the Board shall resolve the dispute. Under this reading, the words “in each case” are synonymous with “whenever necessary” or “in any case in which there is a dispute.” Congress chose not to enact a general rule that would require plant unions, craft unions, or industry-wide unions for every employer in every line of commerce, but also chose not to leave the decision up to employees or employers alone. Instead, the decision “in each case” in which a dispute arises is to be made by the Board.

In resolving such a dispute, the Board’s decision is presumably to be guided not simply by the basic policy of the Act but also by the rules that the Board develops to circumscribe and to guide its discretion either in the process of case-by-case adjudication or by the exercise of its rulemaking authority. The requirement that the Board exercise its discretion in every disputed case cannot fairly or logically be read to command the Board to exercise standardless discretion in each case. As a noted scholar on administrative law has observed: “[T]he mandate to decide ‘in each case’ does not prevent the Board from supplanting the original discretionary chaos with some degree of order, and the principal instruments for regularizing the system of deciding ‘in each case’ are classifications, rules, principles, and precedents. Sensible men could not refuse to use such instruments and a sensible Congress would not expect them to.” K. Davis, Administrative Law Text, § 6.04, p. 145 (3d ed. 1972).

This reading of the “in each case” requirement comports with our past interpretations of similar provisions in other regulatory statutes. See United States v. Storer Broadcasting Co., 351 U. S. 192, 205 (1956); FPC v. Texaco, Inc., 377 U. S. 33, 41-44 (1964); Heckler v. Campbell, 461 U. S. 458, 467 (1983). These decisions confirm that, even if a statutory scheme requires individualized determinations, the decision-maker has the authority to rely on rulemaking to resolve certain issues of general applicability unless Congress clearly expresses an intent to withhold that authority.

Even petitioner acknowledges that “the Board could adopt rules establishing general principles to guide the required case-by-case bargaining unit determinations.” Brief for Petitioner 19. Petitioner further acknowledges that the Board has created many such rules in the half-century during which it has adjudicated bargaining unit disputes. Reply Brief for Petitioner 8-11. Petitioner contends, however, that a rule delineating the appropriate bargaining unit for an entire industry is qualitatively different from these prior rules, which at most established rebuttable presumptions that certain units would be considered appropriate in certain circumstances.

We simply cannot find in the three words “in each case” any basis for the fine distinction that petitioner would have us draw. Contrary to petitioner’s contention, the Board’s rule is not an irrebuttable presumption; instead, it contains an exception for “extraordinary circumstances.” Even if the rule did establish an irrebuttable presumption, it would not differ significantly from the prior rules adopted by the Board. As with its prior rules, the Board must still apply the rule “in each case.” For example, the Board must decide in each case, among a host of other issues, whether a given facility is properly classified as an acute care hospital and whether particular employees are properly placed in particular units.

Our understanding that the ordinary meaning of the statutory language cannot support petitioner’s construction is reinforced by the structure and the policy of the NLRA. As a matter of statutory drafting, if Congress had intended to curtail in a particular area the broad rulemaking authority granted in § 6, we would have expected it to do so in language expressly describing an exception from that section or at least referring specifically to the section. And, in regard to the Act’s underlying policy, the goal of facilitating the organization and recognition of unions is certainly served by rules that define in advance the portions of the work force in which organizing efforts may properly be conducted.

The sparse legislative history of the provision affords petitioner no assistance. That, history reveals that the phrase was one of a group of “small amendments” suggested by the Secretary of Labor “for the sake of clarity.” See Senate Committee on Education and Labor, Memorandum Comparing S. 2926 and S. 1958, 74th Cong., 1st Sess., 9 (Comm. Print 1935), 1 Legislative History 1332, Hearings, 1442,1445; Hearings on H. R. 6288 before the House Committee on Labor, 74th Cong., 1st Sess., 283-284 (1935), 2 Legislative History 2757-2758. If this amendment had been intended to place the important limitation on the scope of the Board’s rulemaking powers that petitioner suggests, we would expect to find some expression of that intent in the legislative history. Cf. Harrison v. PPG Industries, Inc., 446 U. S. 578, 600-601 (1980) (Rehnquist, J., dissenting).

The only other relevant legislative history adds nothing to the meaning conveyed by the text that was enacted. Petitioner relies on a comment in the House Committee on Labor Report that the matter of the appropriate unit “is obviously one for determination in each individual case, and the only possible workable arrangement is to authorize the impartial government agency, the Board, to make that determination.” H. R. Rep. No. 972, 74th Cong., 1st Sess., 20 (1935), 2 Legislative History 2976. This comment, however, simply restates our reading of the statute as requiring that the Board decide the appropriate unit in every case in which there is a dispute. The Report nowhere suggests that the Board cannot adopt generally applicable rules to guide its “determination in each individual case.”

In sum, we believe that the meaning of §9(b)’s mandate that the Board decide the appropriate bargaining unit “in each case” is clear and contrary to the meaning advanced by petitioner. Even if we could find any ambiguity in § 9(b) after employing the traditional tools of statutory construction, we would still defer to the Board’s reasonable interpretation of the statutory text. Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842-843 (1984). We thus conclude that § 9(b) does not limit the Board’s rulemaking authority under § 6.

I — I I — I

Consideration of petitioner’s second argument requires a brief historical review of the application of federal labor law to acute care hospitals. Hospitals were “employers” under the terms of the NLRA as enacted in 1935, but in 1947 Congress excepted not-for-profit hospitals from the coverage of the Act. See 29 U. S. C. § 152(2) (1970 ed.) (repealed, 1974). In 1960, the Board decided that proprietary hospitals should also be excepted, see Flatbush General Hospital, 126 N. L. R. B. 144, 145, but this position was reversed in 1967, see Butte Medical Properties, 168 N. L. R. B. 266, 268.

In 1973, Congress addressed the issue and considered bills that would have extended the Act’s coverage to all private health care institutions, including not-for-profit hospitals. The proposed legislation was highly controversial, largely because of the concern that labor unrest in the health care industry might be especially harmful to the public. Moreover, the fact that so many specialists are employed in the industry created the potential for a large number of bargaining units, in each of which separate union representation might multiply management’s burden in negotiation and might also increase the risk of strikes. Motivated by these concerns, Senator Taft introduced a bill that would have repealed the exemption for hospitals, but also would have placed a limit of five on the number of bargaining units in nonprofit health care institutions. S. 2292, 93d Cong., 1st Sess. (1973). Senator Taft’s bill did not pass.

In the second session of the same Congress, however, the National Labor Relations Act Amendments of 1974 were enacted. See 88 Stat. 395. These amendments subjected all acute care hospitals to the coverage of the Act but made no change in the Board’s authority to determine the appropriate bargaining unit in each case. See ibid. Both the House and the Senate Committee Reports on the legislation contained this statement:

“EFFECT ON EXISTING LAW
“Bargaining Units
“Due consideration should be given by the Board to preventing proliferation of bargaining units in the health care industry. In this connection, the Committee notes with approval the recent Board decisions in Four Seasons Nursing Center, 208 NLRB No. 50, 85 LRRM 1093 (1974), and Woodland Park Hospital, 205 NLRB No. 144, 84 LRRM 1075 (1973), as well as the trend toward broader units enunciated in Extendicare of West Virginia, 203 NLRB No. 170, 83 LRRM 1242 (1973).
See S. Rep. No. 93-766, p. 5 (1974); H. R. Rep. No. 93-1051, pp. 6-7 (1974).

Petitioner does not — and obviously could not — contend that this statement in the Committee Reports has the force of law, for the Constitution is quite explicit about the procedure that Congress must follow in legislating. Nor, in view of the fact that Congress refused to enact the Taft bill that would have placed a limit of five on the number of hospital bargaining units, does petitioner argue that eight units necessarily constitute proliferation. Rather, petitioner’s primary argument is that the admonition, when coupled with the rejection of a general rule imposing a five-unit limit, evinces Congress’ intent to emphasize the importance of the “in each case” requirement in § 9(b).

We find this argument no more persuasive than petitioner’s reliance on § 9(b) itself. Assuming that the admonition was designed to emphasize the requirement that the Board determine the appropriate bargaining unit in each case, we have already explained that the Board’s rule does not contravene this mandate. See Part I, supra.

Petitioner also suggests that the admonition “is an authoritative statement of what Congress intended when it extended the Act’s coverage to include nonproprietary hospitals.” Brief for Petitioner 30. Even if we accepted this suggestion, we read the admonition as an expression by the Committees of their desire that the Board give “due consideration” to the special problems that “proliferation” might create in acute care hospitals. Examining the record of the Board’s rulemaking proceeding, we find that it gave extensive consideration to this very issue. See App. 20, 78-84, 114, 122, 131, 140, 158-159, 191-194, 246-254.

In any event, we think that the admonition in the Committee Reports is best understood as a form of notice to the Board that if it did not give appropriate consideration to the problem of proliferation in this industry, Congress might respond with a legislative remedy. So read, the remedy for noncompliance with the admonition is in the hands of the body that issued it. Cf. Public Employees Retirement System of Ohio v. Betts, 492 U. S. 158, 168 (1989) (legislative history that cannot be tied to the enactment of specific statutory language ordinarily carries little weight injudicial interpretation of the statute). If Congress believes that the Board has not given “due consideration” to the issue, Congress may fashion an appropriate response.

III

Petitioners final argument is that the rule is arbitrary and capricious because “it ignores critical differences among the more than 4,000 acute-care hospitals in the United States, including differences in size, location, operations, and workforce organization.” Brief for Petitioner 39. Petitioner supports this argument by noting that in at least one earlier unit determination, the Board had commented that the diverse character of the health care industry precluded generalizations about the appropriateness of any particular bargaining unit. See St. Francis Hospital, 271 N. L. R. B. 948, 953, n. 39 (1984), remanded sub nom. Electrical Workers v. NLRB, 259 U. S. App. D. C. 168, 814 F. 2d 697 (1987).

The Board responds to this argument by relying on the extensive record developed during the rulemaking proceedings, as well as its experience in the adjudication of health care cases during the 13-year period between the enactment of the health care amendments and its notice of proposed rule-making. Based on that experience, the Board formed the “considered judgment” that “acute care hospitals do not differ in substantial, significant ways relating to the appropriateness of units.” App. 188-189. Moreover, the Board argues, the exception for “extraordinary circumstances” is adequate to take care of the unusual case in which a particular application of the rule might be arbitrary.

We do not believe that the challenged rule is inconsistent with the Board’s earlier comment on diversity in the health care industry. The comment related to the entire industry whereas the rule does not apply to many facilities, such as nursing homes, blood banks, and outpatient clinics. See St. Francis, 271 N. L. R. B., at 953, n. 39. Moreover, the Board’s earlier discussion “anticipate^] that after records have been developed and a number of cases decided from these records, certain recurring factual patterns will emerge and illustrate which units are typically appropriate.” See ibid.

Given the extensive notice and comment rulemaking conducted by the Board, its careful analysis of the comments that it received, and its well-reasoned justification for the new rule, we would not be troubled even if there were inconsistencies between the current rule and prior NLRB pronouncements. The statutory authorization “from time to time to make, amend, and rescind” rules and regulations expressly contemplates the possibility that the Board will reshape its policies on the basis of more information and experience in the administration of the Act. See 29 U. S. C. § 156. The question whether the Board has changed its view about certain issues or certain industries does not undermine the validity of a rule that is based on substantial evidence and supported by a “reasoned analysis.” See Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U. S. 29, 42, 67 (1983).

The Board’s conclusion that, absent extraordinary circumstances, “acute care hospitals do not differ in substantial, significant ways relating to the appropriateness of units,” App. 189, was based on a “reasoned analysis” of an extensive record. See 463 U. S., at 57. The Board explained that diversity among hospitals had not previously affected the results of bargaining unit determinations and that diversification did not make rulemaking inappropriate. See App. 55-59. The Board justified its selection of the individual bargaining units by detailing the factors that supported generalizations as to the appropriateness of those units. See, e. g., id., at 93-94, 97, 98, 101, 118-120, 123-129, 133-140.

The fact that petitioner can point to a hypothetical case in which the rule might lead to an arbitrary result does not render the rule “arbitrary or capricious.” This case is a challenge to the validity of the entire rule in all its applications. We consider it likely that presented with the case of an acute care hospital to which its application would be arbitrary, the Board would conclude that “extraordinary circumstances” justified a departure from the rule. See 29 CFR §§ 103.30(a), (b) (1990). Even assuming, however, that the Board might decline to do so, we cannot conclude the the entire rule is invalid on its face. See Illinois Commerce Commission v. Interstate Commerce Commission, 249 U. S. App. D. C. 389, 393-394, 776 F. 2d 355, 359-360 (1985) (Scalia, J.); Aberdeen & Rockfish R. Co. v. United States, 682 F. 2d 1092, 1105 (CA5 1982); cf. FDIC v. Mallen, 486 U. S. 230, 247 (1988) (“A statute such as this is not to be held unconstitutional simply because it may be applied in an arbitrary or unfair way in some hypothetical case not before the Court”).

In this opinion, we have deliberately avoided any extended comment on the wisdom of the rule, the propriety of the specific unit determinations, or the importance of avoiding work stoppages in acute care hospitals. We have pretermitted such discussion not because these matters are unimportant but because they primarily concern the Board’s exercise of its authority rather than the limited scope of our review of the legal arguments presented by petitioner. Because we find no merit in any of these legal arguments, the judgment of the Court of Appeals is affirmed.

It is so ordered.

      “*By our reference to Extendicare, we do not necessarily approve all of the holdings of that decision.”

       We further note that the Board’s rule is fully consistent with the two NLRB case holdings expressly approved by the admonition. In one of those cases, the Board refused to approve a bargaining unit composed of only x-ray technicians and instead ruled that all technical workers should be grouped together. See Woodland Park Hospital, Inc., 205 N. L. R. B. 888-889 (1973). In the other case, the Board refused to permit a unit of only two employees. See Four Seasons Nursing Center of Joliet, 208 N. L. R. B. 403 (1974). The current rule authorizes a single unit for all technical workers and prohibits units of fewer than five employees. See 29 CFR § 103.30(a) (1990).