Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas
Issues
- Can forum-selection clauses render statutorily proper venue improper?
- How much weight should courts give forum-selection clauses under 28 U.S.C. § 1404(a)?
Petitioner, Atlantic, and Respondent, J-Crew, entered into a contract that included a forum-selection clause limiting venue to two courts in Virginia, including a federal court. Contrary to that provision, J-Crew filed suit in the Western District of Texas alleging breach of contract for nonpayment for contracted services. Atlantic asks the Supreme Court to reverse the lower courts and transfer the case to the venue specified by the contract. Atlantic argues that a valid forum-selection clause renders improper any venue not specified in the contract. In opposition, J-Crew contends that proper venue is defined by statute and that a forum-selection clause does not render improper a statutorily permissible forum. This case will resolve the circuit split regarding the enforceability of forum-selection clauses. Specifically, the Supreme Court will determine whether a § 1404(a) transfer is appropriate when a lawsuit is filed in violation of a valid forum-selection clause. This implicates the ability of private parties to contract around federal statutes, raising questions about the limits on the freedom of contract, the ability of plaintiffs to forum-shop, and the capacity for parties to secure a favorable choice-of-law by filing their case first.
Questions as Framed for the Court by the Parties
Following the Court's decision in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), the majority of federal circuit courts hold that a valid forum-selection clause renders venue “improper” in a forum other than the one designated by contract. In those circuits, forum-selection clauses are routinely enforced through motions to dismiss or transfer venue under Fed. R. Civ. P. 12(b)(3) and 28 U.S.C. § 1406. The Third, Fifth, and Sixth Circuits, however, follow a contrary rule. This Petition presents the following issues for review:
- Did the Court’s decision in Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22 (1988), change the standard for enforcement of clauses that designate an alternative federal forum, limiting review of such clauses to a discretionary, balancing-of-conveniences analysis under 28 U.S.C. § 1404(a)?
- If so, how should district courts allocate the burdens of proof among parties seeking to enforce or to avoid a forum-selection clause?
Facts
In April 2009, Atlantic Marine Construction Company (“Atlantic”) entered into a construction contract with the Army Corps of Engineers to build a child development center at Fort Hood, Texas. See In re Atl. Constr. Co., 701 F.3d 736, 737 (5th Cir.
Edited by
The authors would like to thank Professor Kevin Clermont of Cornell Law School for his insight into the issues in this case.
- Maxwell J. Wright, Enforcing Forum Selection Clauses: An Examination of the Current Disarray of Federal Forum-Selection Clause Jurisprudence and a Proposal for Judicial Reform, 44 Loy. L.A. L. Rev. 1625 (2011).