Atlantic Marine Constr. Co. v. United States Dist. Court for Western Dist. of Tex.
Atlantic Marine Constr. Co. v. United States Dist. Court for Western Dist. of Tex.
Opinion
*52
The question in this case concerns the procedure that is available for a defendant in a civil case who seeks to enforce a forum-selection clause. We reject petitioner's argument that such a clause may be enforced by a motion to dismiss under
I
Petitioner Atlantic Marine Construction Co., a Virginia corporation with its principal place of business in Virginia,
*53
entered into a contract with the United States Army Corps of Engineers to construct a child-development center at Fort Hood in the Western District of Texas. Atlantic Marine then entered into a subcontract with respondent J-Crew Management, Inc., a Texas corporation, for work on the project. This subcontract included a forum-selection clause, which stated that all disputes between the parties " 'shall be litigated in the Circuit Court for the City of Norfolk, Virginia, or the United States District Court for the Eastern District of Virginia, Norfolk Division.' "
In re Atlantic Marine Constr. Co.,
The District Court denied both motions. It first concluded that § 1404(a) is the exclusive mechanism for enforcing a forum-selection clause that points to another federal forum. The District Court then held that Atlantic Marine bore the burden of establishing that a transfer would be appropriate under § 1404(a) and that the court would "consider a nonexhaustive and nonexclusive list of public and private interest factors," of which the "forum-selection clause [was] only one such factor."
United States ex rel. J-Crew Management, Inc. v. Atlantic Marine Constr. Co.,
Atlantic Marine petitioned the Court of Appeals for a writ of mandamus directing the District Court to dismiss the case under § 1406(a) or to transfer the case to the Eastern District of Virginia under § 1404(a). The Court of Appeals denied Atlantic Marine's petition because Atlantic Marine had not established a " 'clear and indisputable' " right to relief.
Id
., at 738; see
Cheney v. United States Dist. Court for D.C.,
II
Atlantic Marine contends that a party may enforce a forum-selection clause by seeking dismissal of the suit under § 1406(a) and Rule 12(b)(3). We disagree. Section 1406(a) and Rule 12(b)(3) allow dismissal only when venue is "wrong" or "improper." Whether venue is "wrong" or "improper" depends exclusively on whether the court in which the case was brought satisfies the requirements of federal venue laws, and those provisions say nothing about a forum-selection clause.
A
Section 1406(a) provides that "[t]he district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." Rule 12(b)(3) states that a party may move to dismiss a case for "improper venue." These provisions therefore authorize dismissal only when venue is "wrong" or "improper" in the forum in which it was brought.
This question-whether venue is "wrong" or "improper"-is generally governed by
Petitioner's contrary view improperly conflates the special statutory term "venue" and the word "forum." It is certainly true that, in some contexts, the word "venue" is used synonymously with the term "forum," but § 1391 makes clear that venue in "all civil actions" must be determined in accordance with the criteria outlined in that section. That language cannot reasonably be read to allow judicial consideration of other, extrastatutory limitations on the forum in which a case may be brought.
*578
The structure of the federal venue provisions confirms that they alone define whether venue exists in a given forum. In particular, the venue statutes reflect Congress' intent that venue should always lie in
some
federal court whenever federal courts have personal jurisdiction over the defendant. The first two paragraphs of § 1391(b) define the preferred judicial districts for venue in a typical case, but the third paragraph provides a fallback option: If no other venue is
*57
proper, then venue will lie in "
any judicial district
in which any defendant is subject to the court's personal jurisdiction" (emphasis added). The statute thereby ensures that so long as a federal court has personal jurisdiction over the defendant, venue will always lie somewhere. As we have previously noted, "Congress does not in general intend to create venue gaps, which take away with one hand what Congress has given by way of jurisdictional grant with the other."
Smith v. United States,
The conclusion that venue is proper so long as the requirements of § 1391(b) are met, irrespective of any forum-selection clause, also follows from our prior decisions construing the federal venue statutes. In
Van Dusen v. Barrack,
*58
As we noted in
Van Dusen
, § 1406(a)"shares the same statutory context" as § 1404(a) and "contain[s] a similar phrase."
Our holding also finds support in
Stewart,
The question whether venue in the original court was "wrong" under § 1406(a) was not before the Court, but we
*59
wrote in a footnote that "[t]he parties do not dispute that the District Court properly denied the motion to dismiss the case for improper venue under
B
Although a forum-selection clause does not render venue in a court "wrong" or "improper" within the meaning of § 1406(a) or Rule 12(b)(3), the clause may be enforced through a motion to transfer under § 1404(a). That provision states that "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented." Unlike § 1406(a), § 1404(a) does not condition transfer on the initial forum's being "wrong." And it permits transfer to any district where venue is also proper ( i.e., "where [the case] might have been brought") or to any other district to which the parties have agreed by contract or stipulation.
Section 1404(a) therefore provides a mechanism for enforcement of forum-selection clauses that point to a particular federal district. And for the reasons we address in Part III,
infra,
a proper application of § 1404(a) requires that a
*60
forum-selection clause be "given controlling weight in all but the most exceptional cases."
Stewart, supra, at 33,
Atlantic Marine argues that § 1404(a) is not a suitable mechanism to enforce forum-selection clauses because that provision cannot provide for transfer when a forum-selection clause specifies a state or foreign tribunal, see Brief for Petitioner 18-19, and we agree with Atlantic Marine that the Court of Appeals failed to provide a sound answer to this problem. The
*580
Court of Appeals opined that a forum-selection clause pointing to a nonfederal forum should be enforced through Rule 12(b)(3), which permits a party to move for dismissal of a case based on "improper venue."
Instead, the appropriate way to enforce a forum-selection clause pointing to a state or foreign forum is through the doctrine of
forum non conveniens
. Section 1404(a) is merely a codification of the doctrine of
forum non conveniens
for the subset of cases in which the transferee forum is within the federal court system; in such cases, Congress has replaced the traditional remedy of outright dismissal with transfer. See
Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp.,
C
An amicus before the Court argues that a defendant in a breach-of-contract action should be able to obtain dismissal under Rule 12(b)(6) if the plaintiff files suit in a district other than the one specified in a valid forum-selection clause. See Brief for Stephen E. Sachs as Amicus Curiae . Petitioner, however, did not file a motion under Rule 12(b)(6), and the parties did not brief the Rule's application to this case at any stage of this litigation. We therefore will not consider it. Even if a defendant could use Rule 12(b)(6) to enforce a forum-selection clause, that would not change our conclusions that § 1406(a) and Rule 12(b)(3) are not proper mechanisms to enforce a forum-selection clause and that § 1404(a) and the forum non conveniens doctrine provide appropriate enforcement mechanisms. 4
*581 III
*62 Although the Court of Appeals correctly identified § 1404(a) as the appropriate provision to enforce the forum-selection clause in this case, the Court of Appeals erred in failing to make the adjustments required in a § 1404(a) analysis when the transfer motion is premised on a forum-selection clause. When the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause. 5 Only under extraordinary circumstances unrelated to the convenience of the parties should a § 1404(a) motion be denied. And no such exceptional factors appear to be present in this case.
A
In the typical case not involving a forum-selection clause, a district court considering a § 1404(a) motion (or a forum non conveniens motion) must evaluate both the convenience of the parties and various public-interest considerations. 6 Ordinarily, the district court would weigh the relevant factors *63 and decide whether, on balance, a transfer would serve "the convenience of parties and witnesses" and otherwise promote "the interest of justice." § 1404(a).
The calculus changes, however, when the parties' contract contains a valid forum-selection clause, which "represents the parties' agreement as to the most proper forum."
Stewart,
First, the plaintiff's choice of forum merits no weight. Rather, as the party defying the forum-selection clause, the plaintiff bears the burden of establishing that transfer to the forum for which the parties bargained is unwarranted. Because plaintiffs are ordinarily allowed to select whatever forum they consider most advantageous (consistent with jurisdictional and venue limitations), we have termed their selection the "plaintiff's venue privilege."
*582
Van Dusen,
Second, a court evaluating a defendant's § 1404(a) motion to transfer based on a forum-selection clause should not consider arguments about the parties' private interests. When parties agree to a forum-selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the litigation. A court accordingly must deem the private-interest factors to weigh entirely in favor of the preselected forum. As we have explained in a different but " 'instructive' " context,
Stewart, supra, at 28,
As a consequence, a district court may consider arguments about public-interest factors only. See n. 6,
supra
. Because those factors will rarely defeat a transfer motion, the practical result is that forum-selection clauses should control except in unusual cases. Although it is "conceivable in a particular case" that the district court "would refuse to transfer a case notwithstanding the counterweight of a forum-selection clause,"
Stewart,
Third, when a party bound by a forum-selection clause flouts its contractual obligation and files suit in a different forum, a § 1404(a) transfer of venue will not carry with it the original venue's choice-of-law rules-a factor that in some circumstances may affect public-interest considerations. See
Piper Aircraft Co. v
.
Reyno,
When parties have contracted in advance to litigate disputes in a particular forum, courts should not unnecessarily disrupt the parties' settled expectations. A forum-selection clause, after all, may have figured centrally in the parties' negotiations and may have affected how they set monetary and other contractual terms; it may, in fact, have been a critical factor in their agreement to do business together in the first place. In all but the most unusual cases, therefore, "the interest of justice" is served by holding parties to their bargain.
B
*67 The District Court's application of § 1404(a) in this case did not comport with these principles. The District Court improperly placed the burden on Atlantic Marine to prove that transfer to the parties' contractually preselected forum was appropriate. As the party acting in violation of the forum-selection clause, J-Crew must bear the burden of showing that public-interest factors overwhelmingly disfavor a transfer.
The District Court also erred in giving weight to arguments about the parties' private interests, given that all private interests,
*584
as expressed in the forum-selection clause, weigh in favor of the transfer. The District Court stated that the private-interest factors "militat[e] against a transfer to Virginia" because "compulsory process will not be available for the majority of J-Crew's witnesses" and there will be "significant expense for those willing witnesses."
The District Court also held that the public-interest factors weighed in favor of keeping the case in Texas because Texas contract law is more familiar to federal judges in Texas than to their federal colleagues in Virginia. That ruling, however, rested in part on the District Court's belief that the federal court sitting in Virginia would have been required to apply Texas' choice-of-law rules, which in this case pointed to Texas contract law. See
* * *
We reverse the judgment of the Court of Appeals for the Fifth Circuit. Although no public-interest factors that might support the denial of Atlantic Marine's motion to transfer are apparent on the record before us, we remand the case for the courts below to decide that question.
It is so ordered.
Venue was otherwise proper in the Western District of Texas because the subcontract at issue in the suit was entered into and was to be performed in that district. See
United States ex rel. J-Crew Management, Inc. v. Atlantic Marine Constr. Co.,
Section 1391 governs "venue generally," that is, in cases where a more specific venue provision does not apply. Cf., e.g ., § 1400 (identifying proper venue for copyright and patent suits).
Other provisions of § 1391 define the requirements for proper venue in particular circumstances.
We observe, moreover, that a motion under Rule 12(b)(6), unlike a motion under § 1404(a) or the forum non conveniens doctrine, may lead to a jury trial on venue if issues of material fact relating to the validity of the forum-selection clause arise. Even if Professor Sachs is ultimately correct, therefore, defendants would have sensible reasons to invoke § 1404(a) or the forum non conveniens doctrine in addition to Rule 12(b)(6).
Our analysis presupposes a contractually valid forum-selection clause.
Factors relating to the parties' private interests include "relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive."
Piper Aircraft Co. v. Reyno,
We note that this "privilege" exists within the confines of statutory limitations, and "[i]n most instances, the purpose of statutorily specified venue is to protect the
defendant
against the risk that a plaintiff will select an unfair or inconvenient place of trial."
Leroy v. Great Western United Corp.,
For the reasons detailed above, see Part II-B,
supra,
the same standards should apply to motions to dismiss for
forum non conveniens
in cases involving valid forum-selection clauses pointing to state or foreign forums. We have noted in contexts unrelated to forum-selection clauses that a defendant "invoking
forum non conveniens
ordinarily bears a heavy burden in opposing the plaintiff's chosen forum."
Sinochem Int'l Co. v
.
Malaysia Int'l Shipping Co.,
Reference
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- ATLANTIC MARINE CONSTRUCTION COMPANY, INC., Petitioner v. UNITED STATES DISTRICT COURT FOR the WESTERN DISTRICT OF TEXAS Et Al.
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