Stewart Organization v. Ricoh Corporation

Brief Fact Summary.

Plaintiff sued Defendant for breach of contract in Alabama, despite a forum selection clause in their business agreement that said lawsuits would be brought in Manhattan. The Defendant moved to transfer the case to New York, under 28 U.S.C. § 1404(a), to enforce the forum-selection clause.

Synopsis of Rule of Law.

A federal court ruling over a case under diversity jurisdiction must apply federal statutes that control the issue and represent a valid exercise of Congress’ constitutional powers.

Facts.

A marketing company (Plaintiff) entered a business agreement with a manufacturing company (Defendant). The agreement included a forum-selection clause mandating any disputes be resolved in a Manhattan court. Plaintiff brought a lawsuit against Defendant for breach of the agreement, warranty, fraud, and antitrust violations in the District Court for the Northern District of Alabama. The Defendant moved to transfer the case to New York, under 28 U.S.C. § 1404(a), to enforce the forum-selection clause.

Issue.

In a case brought into federal court under diversity jurisdiction, should the court rely on a federal statute to determine a motion to transfer?

Held.

Yes, federal statute 28 U.S.C. § 1404(a) governs the motion to transfer. The decision of the Eleventh Circuit Court of Appeals is affirmed.

Dissent.

Justice Scalia

Justice Scalia argues that the question the Court should have considered was whether or not state or federal law governed the validity of the forum selection clause. He argues that state law was controlling.

Discussion.

The Court reasons that 28 U.S.C. § 1404(a) is a valid exercise of Congress’ power to govern a motion for transfer. Though a forum selection clause will not be determinative under § 1404(a) analysis, it is a factor the court should consider.