Long v. Holland America Line Westours, Inc.

OPINION

BRYNER, Justice.

I. INTRODUCTION

Dorice Long sued for personal injuries she sustained during a Holland America tour in Alaska. She filed the suit well within the time limits of Alaska's tort statute of limitations but beyond the limit specified by a clause in her tour contract. Honoring the contract's choice of Washington law, the superior court upheld the limitations clause and dismissed Long's suit as untimely. We reverse. Because this case raises fundamental policy issues that are materially more interesting to Alaska than Washington, Alaska law applies. Under our law, the limitations clause was unenforceable without a showing of prejudice.

II. FACTS AND PROCEEDINGS

In the spring of 1994 Dorice Long, a Florida resident, booked a tour of Alaska with Holland America Line Westours, Inc., (Holland America) through a Florida travel agent. The tour, scheduled to begin on June 1, 1994, included eleven days of land touring before Long was to board a Holland America vessel for a cruise down the Inside Passage in Southeast Alaska. Long received her tickets and other tour information a few days before her scheduled departure. The packet of information included the tour contract. The tour contract contained a choice of law provision stating that, except when maritime law applied, the contract would be construed according to Washington state law.

While touring in Kotzebue on June 10, Long fell and sustained serious injuries outside a museum operated by NANA Regional Corporation, Inc. Long was transported to Anchorage for treatment of her injuries.

Long's attorney notified Holland America in writing of a possible claim by Long against Holland America ten and one-half months after her injury. Sixteen months after her injury, Long filed a complaint against Holland America and NANA Regional Corporation, Inc., alleging negligence on the part of both defendants.

Holland America moved for summary judgment, arguing that the terms of the tour contract barred Long's claims. It noted that the tour contract set a specific limitations period, barring all claims for personal injury unless the claimant provided notice to Holland America within six months of the alleged injury and filed suit within one year after the trip was completed. Because Long had not complied with these terms, Holland America requested that the court dismiss Long's claims.

The superior court agreed with Holland America and granted summary judgment, dismissing all of Long's claims against Holland America.1 Long appeals.

III, DISCUSSION

A. Standard of Review

This court reviews appeals from summary judgment de novo.2 Summary judgment will be affirmed if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.3 Here, Long does not dispute any material facts, but challenges the superior court's ruling as a matter of law.

B. The Contractual Limitations Provision Is Not Enforceable.

Long asserts that the trial court erred when it held that the contract's limitations *432provision is governed by Washington law and is enforceable in Alaska. Long argues that Alaska's interest in having uniform statute of limitation periods is greater than Washington's interest in enforcing contractual provisions in Alaska and that the limitation provision of the contract is unenforceable under Alaska law. Holland America responds that the choice-of-law provision in the contract is enforceable and that Washington law would uphold the limitations provision. We agree with Long's conclusion.

1. Alaska law is applicable.

The first issue is whether the trial court correctly applied Washington law, as specified by the contract's choice-of-law provision. When deciding choice of law issues, we have in the past turned to the Restatement (See-ond) of Conflict of Laws (Restatement) for guidance.4 Where, as here, the parties' contract includes a choice-of-law provision, Restatement § 187 applies. Section 187 provides, in relevant part:

(1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.
(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either
(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or
(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.[5]

The point in dispute here concerns the validity of the contractual limitations provision. Since parties cannot determine contractual validity by explicit agreement,6 the superior court was correct in determining that subsection (1) does not apply; neither party contests this decision.

Similarly, subsection (2)(a) does not affect the analysis here. The superior court correctly concluded that Holland America had a substantial relationship with the state of Washington because it was headquartered there and that was the location from which the contract was issued.7 Long does not dispute this.

Therefore, under Restatement § 187(2)(b) we should apply Alaska law only if three conditions are met: (1) Alaska's law would apply under Restatement § 188 in the absence of an effective choice of law; (2) Alaska has a materially greater interest in the issue; and (8) the application of Washington law would offend a fundamental policy of Alaska. Here, all three conditions are met.

The first condition is that Alaska's law would apply in the absence of an effective choice of law. It would. Under Restatement § 188, and in the absence of an effective choice of law by the parties, we must apply the principles of Restatement § 6 to *433determine which state has the most significant relationship.8 In doing so, we must consider the relevant policies of Alaska and Washington, giving special deliberation to the following:

(a) the place of contracting,
(b) the place of negotiation of the contract,
(c) the place of performance, [and]
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(e) the domicil, residence, nationality, place of incorporation and place of business of the parties.[9]

The place of performance has "so close a relationship to the transaction and the parties that it will often be the state of the applicable laws";10 in this case, the place of performance is Alaska. The place of negotiation has little impact where, as here, the parties conduct negotiations from separate states by mail and telephone.11 Similarly, the place of contract has little impact on the events at hand. Subsection (e), however, carries greater weight than either subsection (a) or (b). Nonetheless, we feel that the parties' domicile, residence, place of incorporation, or place of business, as listed in subsection (e), deserves less consideration than the place of contract performance.12

Because statutes of limitations are procedural, Alaska law, as law of the forum, governs in the absence of an effective choice of law.13 Additionally, there is a presumption that the "law of the state where the [person-all injury occurred" governs in the absence of an effective choice of law.14

The second requirement is that Alaska have a materially greater interest in the issue than Washington. Alaska has three interests that are materially greater than Washington's: (1) establishing uniform filing deadlines; (2) ensuring that fair compensation is available for personal injuries occurring in Alaska; and (8) deterring negligent future conduct in the state.

Alaska has an undeniably strong interest in establishing uniform filing deadlines.15 Uniform deadlines promote predictability for plaintiffs, defendants, and other interested parties alike."16 Equally strong is Alaska's interest in providing victims of negligence who sustain personal injuries within the state access to a legal system that affords them a fair opportunity to seek redress from the negligent party."17 So too is Alaska's interest in promoting public safety by deterring future negligent conduct within the state.18 In *434contrast, the State of Washington's only interest in the issue at hand is in protecting resident corporations' contract rights relating to torts that they commit in other states. While this interest is certainly not insubstantial, we find it decidedly weaker than Alaska's interests. We hold, then, that Alaska's interests are materially greater than Washington's.19

The choice of law in this case thus turns on whether the third condition of Restatement § 187(2)(b) is met-whether enforcing Washington law would offend a fundamental policy of the State of Alaska. In our view, enfore-ing Washington law would 'offend the fundamental policies underlying the three Alaska interests that we have just identified as being materially greater than Washington's interest in the issue at hand-enforcing uniform standards for commencing litigation in Alaska's courts, ensuring Alaska personal injury victims reasonable access to the Alaska legal system, and promoting public safety.

Uniform application of our statutes of limitations involves fundamental policy concerns.20 Statutes of limitations serve dual policies: to protect against prejudice from stale claims 21 and to ensure an adequate opportunity for filing a claim prior to the statutory bar.22 For cases involving personal injury, the legislature struck a balance between these competing policies by adopting a two-year statute of limitations.23 Sinee contract provisions altering this statutory period necessarily run the risk of unbalancing the legislature's carefully measured policy choice, upholding such provisions through an uneritical application of another state's contract law would violate public policy.24

In analogous settings, we have recognized the need to preserve the policy balance of our time bar statutes against unlimited contractual revision. For example, in Johnson v. City of Fairbanks we invalidated a municipal ordinance that established a four month notice-of-claim requirement for tort suits, holding that it violated the "statewide legislative policy" of providing uniform limitation periods.25 And in Alaska Emergy Authority v. Fairmont Insurance Co., we held that a filing limit imposed in an insurance policy was unenforceable absent an affirmative showing of prejudice to the insurer.26 The reasoning of these cases encompasses the present cireumstances.27

Different, but similarly fundamental, policies underlie Alaska's laws governing compensation for personal injury. Our tort system serves multiple purposes. It strives to ensure fair compensation for victims of negligently inflicted harm.28 It seeks to treat all *435responsible parties fairly by allocating damages in proportion to each party's fault.29 And more generally, it promotes the safety and welfare of all Alaskans by deterring negligent conduct and minimizing social costs of negligence such as unpaid medical expenses, lost wages, and diminished productivity.30 Hence, a contractual provision that alters the effect of the tort statute of limitations between contracting parties presents a matter of fundamental concern. Moreover, such a provision may have significant and far-reaching impacts beyond its effect on the rights and interests of contracting parties. To the extent that Washington contract law would routinely allow contracting parties to alter their own rights and interests and the rights and interests of non-contracting parties in matters concerning compensation for personal injuries that occur in Alaska, enforcing that law would subvert the basic purpose of Alaska's system of negligence laws.31

For example, in adopting a comprehensive regime of comparative negligence as part of Alaska's 1997 tort reform legislation, the Alaska Legislature explained that

it is the intent of this legislature as a matter of public policy to
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(9) ensure that in actions involving the fault of more than one person, the fault of each claimant, defendant, ... or other person responsible for the damages and available ab a litigant be determined and awards be allocated in accordance with the fault of each.[32]

As this statement exemplifies, Alaska's standard of pure comparative negligence embodies a fundamental public policy choice made by the legislature.33 A rule that mechanistically upheld all contract provisions shortening the tort statute of limitations would offend this policy by subjecting various claims arising from the same negligent act, and various involved parties, to differing time limits.

For these reasons, we conclude that contractual provisions like the one at issue here involve matters of fundamental policy that demand serutiny under Alaska law.

2. The contractual Emitations period is not enforceable in Alaska.

The next issue, then, is whether the tour contract's contractual limitations clause is enforceable under Alaska law. In our view, public policy bars enforcement of the clause at issue here because Holland America has failed to allege or show that enforcement of the clause is necessary to avoid prejudice.

As already mentioned, this court has addressed clauses setting time limits on the commencement of suit in the context of insurance policies. In those cases, we noted that the purpose of such clauses is "to avoid prejudice, specifically, to avoid the extra danger of fraud and mistake associated with stale claims."34 But we also observed that it would be inequitable to enforce these clauses unless prejudice could be demonstrated.35 Because the relative bargaining powers of the contracting parties disproportionately favored the insurers, we reasoned that contractual limitations clauses should only be enforced to "advance[ ] the purpose for which they were included in the policy."36

In our view, the rationale that we adopted in these insurance cases applies with equal force in the present contractual setting. It is undisputed that Holland America possessed *436disproportionate bargaining power in setting the terms of the tour contract.37 Long could not have negotiated for different terms. Furthermore, the purpose of the shortened limitation clause is identical to the purpose of the clauses at issue in our insurance cases-to avoid the prejudice of stale claims.

Here, Holland America neither showed nor alleged any prejudice. In fact, Holland America had immediate notice of Long's injury. Long's attorney gave the company formal notice of her claim within eleven months of the injury and filed suit well before the usual two-year statute of limitations expired. Given the lack of prejudice, enforcement of the truncated limitations period would amount to little more than a windfall for Holland America. -

Moreover, the record establishes that Holland America imposed the disputed clause in an unusually one-sided manner. Even under industry-friendly standards that federal courts have developed for tour contract cases falling within their jurisdiction, contract provisions dictating choice of law or shortening deadlines for filing will not be enforced unless the tour company makes a reasonable effort to warn passengers of the restrictions.38 This "reasonable communicativeness" test entails a two-pronged analysis that delves, first, into the facial clarity of the ticket contract and, second, into the cireum-stances surrounding the individual passen-get's possession and familiarity with the ticket.39

Under this test, the court determines enforceability on a case-by-case basis: "Differing circumstances may render the same ticket binding on one passenger in one case, yet invalid as against another passenger in another case."40 Hence, a case is always subject to circumstantial serutiny for signs of unfairness, overreaching, or fraud.41

Looking beyond the face of the tour vouchers in the present case, there are indications of contractual overreaching by Holland America.42 The record establishes that Holland America and its agents made no effort to inform Long of the contractual limitation until the company sent Long her tour vouchers. She received the vouchers just days before she was scheduled to embark on her journey, and after she had already paid for the tour. Yet the terms of Long's tour contract-conspicuously printed in the vouchers-expressly stated that it was too late for her to cancel the tour and ask for a full refund, "regardless of the reason for cancellation."43 Thus, if Long found the newly announced contractual language unsaccepta-ble, she could reasonably have believed that she had no recourse-that the contract left her no realistic choice but to travel on Holland *437America’s unilaterally dictated, last-minute terms.44

Addressing an almost identical situation presented to the United States Supreme Court in Carnival Cruise Lines v. Shute, Justice Stevens persuasively reasoned that a tour company’s last-minute disclosure of a ehoice-of-forum clause rendered the clause fundamentally unfair:

Of course, many passengers, like the respondents in this case, ... will not have an opportunity to read paragraph 8 [the disputed clause] 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 eanceling-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.[45]

Given that Holland America confronted Long with a similar last-minute disclosure—a fact that Holland America attempts to sidestep but has never denied—the record establishes that the company breached its duty to treat Long fairly, thereby vitiating the tour contract’s filing deadline.

IV. CONCLUSION

Because the record fails to establish prejudice to Holland America, we hold that it was error to grant summary judgment by enforcing the contractual limitations clause.46 We therefore REVERSE the superior court’s judgment dismissing Long’s complaint against Holland America.

. The court also granted Holland America's motion to enter final judgment under Alaska Civil Rules 54(b) and 58.

. See Christensen v. NCH Corp., 956 P.2d 468, 474 (Alaska 1998).

. Seeid.; Alaska R.Civ.P. 56(c).

. See, e.g., Palmer G. Lewis, Co. v. ARCO Chem. Co., 904 P.2d 1221, 1227 & n. 14 (Alaska 1995) (applying Restatement § 188 to determine applicable law where parties' contract did not contain choice-of-law provision); Ehredt v. DeHavilland Aircraft Co. of Canada, 705 P.2d 446, 453 (Alaska 1985) (applying Restatement to determine which law governs measure of damages in wrongful death suit when representative of deceased resided out of state).

. Restatement (Second) of Conflict of Laws § 187 (1971).

. See id. cmt. d (stating that parties cannot resolve questions involving capacity, formalities, and substantial validity by agreement); cf. General Ins. Co. of Am. v. Interstate Serv. Co., 118 Md.App. 126, 701 A.2d 1213, 1219 (1997) (analyzing validity of contractual limitations provision under Restatement § 187(2)).

. See Restatement § 187 cmt. f (reasonable basis for a choice of law exists "where one of the parties is domiciled or has his principal place of business" in chosen state).

. See Restatement § 188(2). Restatement § 6(2) provides that when there is no statutory directive, the factors to be considered in determining choice of law include:

(a) the needs of the interstate and international systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular field of law,
(f) certainty, predictability and uniformity of result, and
(g) ease in the determination and application of the law to be applied.

. Id. at§ 188(2) & emt. e.

. Id. at § 188 cmt. e.

. See id.

. See infra note 19 and accompanying text.

. See Marine Constr. & Design Co. v. Vessel Tim, 434 P.2d 683, 686 (Alaska 1967).

. Restatement § 146.

. See Nolan v. Sea Airmotive, Inc., 627 P.2d 1035, 1045 (Alaska 1981) ("Setting appropriate statutes of limitation is indeed a function within the legislature's purview, as such statutes represent judgments on questions of public policy."); see also Industrial Indem. Ins. Co. v. United States, 757 F.2d 982, 986, 988 (9th Cir.1985).

. See Marks v. State, 496 P.2d 66, 68 n. 4 (Alaska 1972) (commenting that uniform statutes of limitations provide predictability in legal proceedings).

. Cf. Kooly v. State, 958 P.2d 1106, 1108 (Alaska 1998). As the Alaska Legislature recently stated, it is the public policy of Alaska to protect "Alaskans' rights to reasonable, but not excessive, compensation for tortious injuries caused by others." See also ch. 26, § 1, SLA 1997.

. As a New Jersey court recently explained:

The policy of deterrence is based on the thesis that exacting compensation from a wrongdoer will deter his or her future misconduct, and is ordinarily associated with the sovereignty in which the past misconduct took place and in *434which future misconduct may occur. The state in which the accident occurred has an interest in maintaining safety and deterring such conduct. |

Erny v. Russo, 333 N.J.Super. 88, 754 A.2d 606, 612 (2000) (citation omitted); cf. Sturm, Ruger & Co. v. Day, 594 P.2d 38, 47 (Alaska 1979) (noting that punitive damages available in products liability serve deterrence function) modified, 615 P.2d 621 (Alaska 1980), overruled, Dura Corp. v. Harned, 703 P.2d 396 (Alaska 1985).

. See Industrial Indem. Ins. Co., 757 F.2d at 987.

. See Nolan, 627 P.2d at 1045.

. See West v. Buchanan, 981 P.2d 1065, 1068 (Alaska 1999) (citing Pedersen v. Zielski, 822 P.2d 903, 907 (Alaska 1991)).

. See Johnson v. City of Fairbanks, 583 P.2d 181, 186-87 (Alaska 1978).

. See AS 09.10.070.

. We have stated: "We look upon the defense of statute of limitations with disfavor and will strain neither the law nor the facts in its aid." Fred Meyer of Alaska, Inc. v. Adams, 963 P.2d 1025, 1027 n. 6 (Alaska 1998) (citing Tipton v. ARCO Alaska, Inc., 922 P.2d 910, 912-13 (Alaska 1996) and Lee Houston & Assocs., Ltd. v. Racine, 806 P.2d 848, 854-55 (Alaska 1991)).

. 583 P.2d at 187.

. 845 P.2d 420, 423 (Alaska 1993).

. And notably, at least one other court applying Restatement § 187(b)(2) has specifically ruled that a forum state's interest in enforcing uniform filing deadlines overrides a contractual choice-of-law clause that would apply another state's shorter deadlines. See Industrial Indem. Ins. Co., 757 F.2d at 987-88.

. In Kooly v. State, we observed that the objec-live of our negligence law is to provide "a means whereby a person may recover for losses caused by a danger which another's unreasonable behavior created." 958 P.2d 1106, 1108 (Alaska 1998) (quoting Schumacher v. City & Borough of Yakutat, 946 P.2d 1255, 1257 (Alaska 1997) (footnotes omitted)).

. See infra notes 32 & 33 and accompanying text.

. See supra notes 17 & 18 and accompanying text.

. Compare, eg., AS 45.45.900 (providing that indemnification clauses concerning construction contracts which protect the promisee from liability for damage caused by the promisee's negligence are against Alaska's public policy).

. Ch. 26, § 1, SLA 1997.

. Sce AS 09.17.080; Alaska Gen. Alarm, Inc. v. Grinnell, 1 P.3d 98, 104-05 (Alaska 2000).

. Estes v. Alaska Ins. Guar. Ass'n, 774 P.2d 1315, 1318 (Alaska 1989) (citing Fireman's Fund Ins. Co. v. Sand Lake Lounge, Inc., 514 P.2d 223, 226 (Alaska 1973)).

. See Alaska Energy Auth. v. Fairmont Ins. Co., 845 P.2d 420, 422 (Alaska 1993); Estes, 774 P.2d at 1318.

. Estes, 774 P.2d at 1318.

. Holland America disputes that the tour contract was an "adhesion contract," but not that it dictated the terms of the contract and possessed disproportionate bargaining power.

. See Lousararian v. Royal Caribbean Corp., 951 F.2d 7, 8 (1st Cir.1991).

. See id. at 8-9.

. Id. at 9 (quoting Shankles v. Costa Armatori, S.P.A., 722 F.2d 861, 863-64 (1st Cir.1983)).

. See Dempsey v. Norwegian Cruise Line, 972 F.2d 998, 999 (9th Cir.1992); cf. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991) ("It bears emphasis that forum-selection clauses contained in form passage contracts are subject to judicial scrutiny for fundamental fairness.").

. Because the trial court decided this case on summary judgment, we construe the record in the light most favorable to Long.

. The tour vouchers provided, in relevant part:

Cancellations Policy: Holland America's Cancellations Policy for the cruise or tour you have selected is specified in the applicable Holland America brochure. In most cases, this policy permits a full refund of amounts received by Holland America ... if written cancellation is received by Holland America at least 76 days prior to the date on which you are to commence travel.... Note that certain voyages require that written cancellation be received more than 76 days prior to travel commencement. Partial refunds may be available for later cancellations. No refunds are made in the case of cancellations received less than a certain number of days prior to travel commencement. The applicable brochure specifies the exact cancellation deadlines and refund amounts. Cancellation fees apply regardless of the reason for cancellation, including medical and family matters.

(Emphasis added.)

. We do not suggest that this is the only possible interpretation of the tour contract’s refund provisions. A notice printed on the first page of the contract stated:

If any term or condition of this contract ... is unacceptable to you, this contract ... will be cancelled and the "refund amount” paid to you (without deducting cancellation fees) but only if this contract is surrendered to HALW for cancellation within 10 days after receipt of this contract by you or your travel agent (whichever occurs first), but in any event prior to commencing your cruise or cruisetour.

In contrast to the contract's Cancellations Policy, this notice seems to provide for a full refund under certain circumstances. And the notice's language could arguably be construed to override the Cancellations Policy's potentially conflicting provisions. But the possibility of interpreting the contract in a way that would harmonize this internal tension is irrelevant for present purposes. The important point here is that a traveler in Long's position—one who receives the contract at the last minute and has no clear indication of how these potentially conflicting provisions would ultimately be reconciled—could reasonably conclude that a full refund might be denied, or at least that the risk of denial was too great to make cancellation a realistic option.

. 499 U.S. at 597-98, 111 S.Ct. 1522 (Stevens, J., dissenting). Notably, the majority opinion of the Court in Carnival Cruise Lines avoided this issue, electing instead to rely on the respondents' concession that they received sufficient notice of the forum selection clause before entering the contract for passage. See id. at 590, 111 S.Ct. 1522.

. Because this case arises on summary judgment, our ruling is necessarily based on the evidentiary record that existed when the superior court entered its order. Our holding does not preclude the superior court, in its discretion, from allowing Holland America to present further evidence on the issue of prejudice.