03 December 2013

Law in Plain English: Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblogAtlantic Marine Construction Co. v. United States District Court for the Western District of Texas

Argument: Oct 9 2013 (Aud.)

Background: The United States Corps of Engineers contracted with Atlantic Marine Construction for construction of a child development center at Fort Hood. Atlantic entered into a Subcontract Agreement with J-Crew Management, Inc. for provision of construction labor and materials. This Subcontract Agreement included a forum-selection clause, providing that disputes "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." When a dispute arose over pay, J-Crew instead filed suit in the Western District of Texas. Generally, courts will operate on the premise that such clauses are valid contract clauses, and should be enforced. On the other hand, federal law can govern a motion to transfer a case between federal courts. Atlantic filed a motion to transfer the case, but the District Court denied it. Atlantic then appealed to the Fifth Circuit for a writ of mandamus, which was denied.

Issue: The questions before the Court are  (1) what is the standard for enforcement of clauses that designate an alternative federal forum, limiting review of such clauses to a discretionary, balancing-of-conveniences analysis; and (2) whether district courts should allocate the burdens of proof among parties seeking to enforce or to avoid a forum-selection clause.

Holding: In a unanimous decision, the Supreme Court ruled that a forum-selection clause may be enforced by a motion to transfer under §1404(a), which provides 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.” Additionally, when a defendant files a §1404(a) motion, a district court should transfer the case unless extraordinary circumstances unrelated to the convenience of the parties clearly disfavor a transfer. No such exceptional factors appeared to be present in this case. The practical impact of this decision is that the presence of a forum selection clause will require district courts to modify the way they evaluate motions to transfer venue. Rather than evaluate both the private interests of the parties and public-interest considerations, the forum-selection clause will generally control except in unusual cases.
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