Supreme Court Docket Report - April 1, 2013

Keywords: Forum-Selection Clauses, Transfer of Venue, federal venue statutes, Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas

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...