Citation
Atlantic Marine Construction Co., Inc. v. United States District Court for the Western District of Texas, 571 U.S. 49 (2013)
Court
Supreme Court of the United States
Decided On
December 3, 2013
Petitioner Atlantic Marine Construction Co., Inc. sought review from the Supreme Court of the United States after both the District Court and the Court of Appeals for the Fifth Circuit denied motions to either dismiss or transfer a civil case based on a forum-selection clause in a construction subcontract. The Supreme Court granted certiorari to resolve the issue regarding proper enforcement of a forum-selection clause in federal court.
Brief Fact Summary
In Atlantic Marine Construction Co., Inc. v. United States District Court for the Western District of Texas, a subcontractor filed suit in the Western District of Texas against a general contractor over a payment dispute. However, their contract included a forum-selection clause requiring litigation to occur in Norfolk, Virginia—either in the state court or in the United States District Court for the Eastern District of Virginia.
The general contractor moved to dismiss or transfer the case to the designated forum under federal statutes, but the District Court denied both motions. The Court of Appeals also refused to issue a writ of mandamus. The matter was escalated to the Supreme Court for resolution.
Facts of Atlantic Marine Construction Co., Inc. v. United States District Court for the Western District of Texas
Atlantic Marine Construction Co., Inc., a corporate citizen of Virginia, entered into a contract with the federal government to construct a child development center at Fort Hood, Texas. To carry out the project, Atlantic Marine hired a Texas-based subcontractor, entering into a formal subcontract agreement.
That subcontract included a forum-selection clause, clearly stating that any litigation arising under the agreement must be brought in either a state court located in Norfolk, Virginia, or in the United States District Court for the Eastern District of Virginia.
Despite the contractual agreement, a dispute arose over payment obligations, and the Texas subcontractor filed a lawsuit in the United States District Court for the Western District of Texas, invoking the court’s diversity jurisdiction. Atlantic Marine responded by filing two alternative motions:
- A motion to dismiss under 28 U.S.C. § 1406(a) and Federal Rule of Civil Procedure 12(b)(3) on the grounds that the venue was “wrong” or “improper” due to the forum-selection clause.
- A motion to transfer under 28 U.S.C. § 1404(a), requesting that the case be moved to the Eastern District of Virginia, as specified in the agreement.
The District Court denied both motions, choosing not to enforce the forum-selection clause. On appeal, the Fifth Circuit Court of Appeals declined to issue a writ of mandamus directing the district court to reverse its decision. Atlantic Marine then petitioned the Supreme Court of the United States, which granted certiorari to resolve the proper mechanism and standard for enforcing a forum-selection clause in federal court.
Issue
Whether a case filed in a federal venue other than the one designated in a valid forum-selection clause should be transferred to the contractually agreed forum, absent extraordinary circumstances unrelated to the convenience of the parties.
Rule of Law
When parties have entered into a valid forum-selection clause designating a federal venue, the appropriate way to enforce that clause is through a motion to transfer under 28 U.S.C. § 1404(a). The clause should be honored, and the case transferred, unless extraordinary circumstances unrelated to the convenience of the parties clearly disfavor a transfer.
Opinion of the Court
Justice Samuel Alito delivered the unanimous opinion of the Court. The Supreme Court held that § 1404(a) is the proper mechanism to enforce forum-selection clauses in cases where the chosen forum is another federal district court.
The Court emphasized that forum-selection clauses represent the parties’ expectations and should generally be enforced. According to the opinion, when a party files suit in a forum other than the one specified in the contract, the case should be transferred under § 1404(a) unless the opposing party can demonstrate extraordinary circumstances that make transfer inappropriate.
Importantly, the Court clarified that:
- A forum-selection clause does not render the venue “wrong” or “improper” for purposes of § 1406(a) or Rule 12(b)(3).
- Instead, § 1404(a) provides the proper vehicle to request transfer when the selected venue is within the federal system.
- Courts evaluating a motion to transfer must give controlling weight to the forum-selection clause, and must not consider the plaintiff’s choice of forum or the parties’ private interests.
- The burden of proof in such cases falls on the party opposing the transfer.
The opinion further explained that when a forum-selection clause points to a non-federal forum, the common-law doctrine of forum non conveniens is still available as a mechanism to dismiss or transfer the case. While codified in part by § 1404(a) for federal courts, the same balancing factors can be applied for state court transfers under the common law.
Atlantic Marine Construction Co., Inc. v. United States District Court for the Western District of Texas Judgment
Yes, when parties have entered into a valid forum-selection clause designating a federal venue, the case should be transferred to the designated court unless extraordinary circumstances unrelated to the convenience of the parties exist.
Conclusion
The decision in Atlantic Marine Construction Co., Inc. v. United States District Court for the Western District of Texas reaffirmed the enforceability of forum-selection clauses within the federal court system. By clarifying that § 1404(a) is the exclusive method to enforce such clauses when the chosen forum is another federal court, the Supreme Court provided consistency and predictability for contractual parties.
The Court’s unanimous ruling signaled that parties should expect their contractual forum-selection agreements to be honored, and courts should transfer cases to the agreed forum absent extraordinary circumstances. This case serves as a vital precedent in the realm of federal venue law and contract enforcement.