February 03, 2014
On December 3, 2013, the Supreme Court issued its decision in Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas. This case involves a forum selection clause, which is contractual language specifying the judicial forum for resolution of any litigation that may arise regarding the contract in question. The question before the Supreme Court was twofold: (1) Does the Court's earlier decision in Stewart Organization, Inc. v. Ricoh Corp. require federal courts to enforce forum selection clauses strictly, or are such clauses subject to a discretionary balancing-of-conveniences analysis; and (2) how should courts allocate the burden of proof between parties seeking to enforce or avoid the clause?
The Supreme Court unanimously reversed the judgment of the US Court of Appeals for the Fifth Circuit, which had effectively declined to enforce the forum selection clause. In a decision delivered by Justice Alito, the Court held that a forum-selection clause may be enforced by a motion to transfer venue under 28 U.S.C. § 1404(a). When a defendant files such a motion, the Court declared, the lower courts should transfer the case unless extraordinary circumstances unrelated to the convenience of the parties clearly disfavor a transfer. The burden is on the party acting contrary to the selection clause to show that the public interest overwhelmingly disfavors a transfer. The Court remanded the case for the Fifth Circuit to consider that issue in the context of this case.
To discuss the case, we have Stephen Sachs, who is an Assistant Professor of Law at Duke University School of Law. It should be noted that Professor Sachs submitted an amicus brief in support of neither party.