Atlantic Marine Construction Co. v. United States District Court
Defendant entered a contract with the US Army Corps of Engineers to construct a child-development center at Fort Hood in the Western District of Texas. Defendant then subcontracted some of this work to plaintiff. This subcontract included a forum-selection clause which stated that all disputes between the parties "shall be litigated in the Circuit Court of the City of Norfolk, Virginia, or the United States District Court of the Eastern District of Virginia, Norfolk Division." When a dispute arose, plaintiff sued defendant in the Western District of Texas, invoked that court's diversity clause. Defendant moved to dismiss, arguing that the forum-selection clause rendered venue in the Western District of Texas "wrong" and "improper." Plaintiff moved to transfer the case to Virgina, which defendant opposed.
The District Court denied both motions, which the Court of Appeals for the Fifth Circuit affirmed.
What procedure is available for a defendant in a civil case who seeks to enforce a forum-selection clause?
A party may enforce a forum-selection clause by seeking dismissal of the suit under §1406(a) and Rule 12(b)(3).
Forum and venue and not the same things.
The Court of Appeals should have transferred the case though.
Court of Appeals for the Fifth Circuit reversed. Remanded to decide if public-interest factors support the denial of defendant's motion to transfer.
Section 1406(a) and Rule 12(b)(3) only allow dismissal when the 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 provision say nothing about a forum-selection clause.
Section 1404(a) provides transfer to any agreed valid venue for a forum-selection clause, regardless of if the original venue is "wrong" or "improper."
Transfers to state or foreign forum is through the doctrine of forum non conveniens.
A district court should ordinarily transfer the case to the forum specified in a valid forum-selection clause in all by extraordinary circumstances unrelated to the convenience of the parties.