April 1, 2013
Today the Supreme Court granted certiorari in one case of interest to the business community:
Forum-Selection Clauses—Transfer of Venue
Under the federal venue statutes, if a case is filed in the wrong venue, the district court must dismiss it or transfer it to a proper venue. 28 U.S.C. § 1406(a). If the case is filed in a proper venue, the court may transfer it to another proper venue “[f]or the convenience of the parties and witnesses, in the interest of justice.” 28 U.S.C. § 1404(a). Today, the Supreme Court granted a writ of certiorari in Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas, No. 12-929, to address which of these statutes applies when a party files a lawsuit in a venue other than the one specified in a forum-selection clause. The petition also raises the question of which party has the burden to prove that § 1404(a) applies.
Atlantic Marine Construction entered into a contract with J-Crew Management for construction labor and materials. Their contract provided that disputes would be resolved in the state or federal court in Norfolk, Virginia. J-Crew subsequently filed suit in Texas, however, alleging that Atlantic Marine had failed to pay it for construction work. In light of the contract’s forum-selection clause, Atlantic Marine sought to dismiss or transfer under § 1406(a), or else to transfer under § 1404(a). The district court denied the transfer motion, rejecting the argument that the forum-selection clause made venue in Texas improper, and refusing to grant a discretionary transfer under § 1404(a) on the ground that other public and private interests weighed against transfer to Virginia.
Atlantic Marine sought a writ of mandamus from the Fifth Circuit, which denied the writ in a divided opinion. The majority agreed with several circuits that have interpreted Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22 (1988), as implicitly holding that a forum-selection clause should be treated solely as a factor favoring transfer (and not as dispositive) under § 1404(a), and that it is irrelevant under § 1406(a). The majority then concluded that the district court did not clearly abuse its discretion in weighing public and private interests under § 1404(a).
The dissenter noted that the Supreme Court had previously held that forum-selection clauses are enforceable unless unreasonable or unjust (see The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972)), and that the Supreme Court’s decision in Stewart did not hold that a forum-selection clause may be enforced only through a motion to transfer under § 1404(a). Because J-Crew and Atlantic contracted to limit the scope of permissible forums to the federal and state courts in Virginia, the dissenter would have held that the Western District of Texas was the wrong venue and that the district court was therefore required to dismiss or transfer the case under § 1406.
Atlantic Marine is significant for the business community because its resolution will clarify the extent to which businesses can obtain predictability and stability about where they will face future litigation by including forum-selection clauses in their contracts.
Absent extensions, amicus briefs in support of the petitioner will be due on May 23, 2013, and amicus briefs in support of the respondent will be due on June 24, 2013. Any questions about this case should be directed to Michele Odorizzi (+1 312 701 7309) in our Chicago office.
Today, the Supreme Court also granted the petitions for certiorari, and vacated and remanded the decisions for further consideration in light of Comcast Corp. v. Behrend, No. 12-322, in two cases, Whirlpool Corp. v. Glazer, No. 12-322, and RBS Citizens, N.A. v. Ross, No. 12-165. Mayer Brown represents the petitioner in No. 12-322. Any questions about these cases should be directed to Tim Bishop (+1 312 701 7829) or Jeff Sarles (+1 312 701 7819) in our Chicago office.
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