Atlantic Marine Construction Co., Inc. v. U.S. District Court for the Western District of Texas

Brief Fact Summary.

A subcontractor sued Petitioner, a contractor, in federal district court in Texas. Based on a forum selection clause in its contract with the subcontractor that designated Virginia state court as the forum for disputes under the parties’ contract, Petitioner moved for dismissal or, alternatively, for transfer of the suit.  The district court denied both motions. The Court of Appeals denied Petitioner’s petition for a writ of mandamus directing the district court to dismiss or transfer the suit. The Supreme Court granted certiorari.

Synopsis of Rule of Law.

As long as the requirements of 28 USC 1391 are met, venue is proper regardless of any forum selection clause. A forum selection clause may be enforced, however, through a motion to transfer under 28 USC 1404(a) or application of the forum non conveniens doctrine.

Facts.

Petitioner, a contractor, was sued by a subcontractor in federal district court in Texas. The parties’ subcontract contained a forum selection clause designating Virginia state court as the forum for litigation of disputes between the parties. Petitioner moved for dismissal or transfer of the lawsuit based on the forum selection clause because (1) the forum selection clause rendered venue in Texas federal court wrong under 28 USC 1406(a) and (2) improper under Federal Rule of Civil Procedure 12(b)(3). Alternatively, Petitioner sought to transfer the case to federal court in Virginia under 28 USC 1404(a). The district court denied Petitioner’s motions, and the Court of Appeals denied Petitioner’s petition for a writ of mandamus directing the district court to dismiss or transfer the suit. The Supreme Court granted certiorari.

Issue.

Did the Court of Appeals correctly determine that the district court had not abused its discretion in refusing to transfer the case, despite the valid forum selection clause, after conducting its balancing of the interests analysis?

Held.

No. The Court of Appeals judgment was reversed because that court incorrectly determined that the district court had not abused its discretion in refusing to transfer the case, despite the valid forum selection clause, after conducting its balancing of the interests analysis.

Discussion.

A forum selection clause does not render venue in a forum in which venue is otherwise proper “wrong” or “improper” within the meaning of 28 USC 1406(a) or Federal Rule of Civil Procedure 12(b)(3). Transfer under 28 USC 1404(a) (which allows transfer to a district where venue is also proper or any district that the parties have agreed to) or, in the case of a forum selection clause pointing to a state or foreign forum, the doctrine of forum non conveniens, may be used to enforce a forum selection clause.