On December 3, 2013, in Atlantic Marine Construction Co. v. U.S. District Court for the Western District of Texas, 134 S.Ct. 568 (2013) (No. 12-929), the U.S. Supreme Court clarified the proper procedure to enforce an agreement’s forum-selection clause. In this case, Atlantic Marine had subcontracted with J-Crew Management, Inc. (“J-Crew”) for a construction project in Fort Hood, Texas. The subcontract included a forum-selection clause, designating Virginia for all disputes between the parties. J-Crew, however, sued Atlantic Marine in the Western District of Texas, claiming it was owed payments under the subcontract. Atlantic Marine moved to dismiss or transfer the suit with two alternative arguments based on the subcontract’s forum-selection clause. First, on the grounds that venue was “improper” under Federal Rule of Civil Procedure 12(b)(3) because the forum-selection clause rendered Texas the wrong venue under 28 U.S.C. § 1406. Alternatively, Atlantic Marine moved under 28 U.S.C. § 1404(a) to transfer the case to the Eastern District of Virginia. The district court denied the motions, concluding that the proper mechanism to enforce the forum-selection clause was the § 1404(a) motion. The district court evaluated the § 1404(a) motion using the usual balance-of-interests analysis, and held that Atlantic Marine failed to carry its burden of showing the transfer “would be in the interest of justice or increase the convenience to the parties and their witnesses.” Id., slip op. at 3. The Fifth Circuit affirmed.
In a unanimous opinion, the Supreme Court reversed the lower courts. The Court recognized 28 U.S.C. § 1404(a) as the exclusive mechanism to enforce contractual forum-selection clauses. Furthermore, district courts “should ordinarily transfer the case to the forum specified in that clause,”, a §1404(a) motion to enforce a forum-selection clause should be denied “only under extraordinary circumstances unrelated to the convenience of the parties.” Id., slip op. at 11. The Court explained that district courts deciding a § 1404(a) motion to enforce a forum-selection clause must adjust their usual §1404(a) analysis in three ways: (1) “a plaintiff’s choice of forum merits no weight”; (2) the court should not “consider arguments about the parties’ private interests”; and (3) the original venue’s choice-of-law rules should not apply in the transferee court. Id., slip op. at 13–15. In this decision, the Supreme Court gives great deference to parties’ contractual choice, thereby emphasizing the importance of forum-selection clauses in contract negotiations.