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Supreme Court rules in forum selection clause case

The US Supreme Court [official website] ruled [opinion, PDF] Tuesday that a forum-selection clause may be enforced by a motion to transfer under 28 USC § 1404 but may not be enforced by a motion to dismiss under 28 USC § 1406(a) or Rule 12(b)(3) [text] of the Federal Rules of Civil Procedure. The unanimous opinion in Atlantic Marine Construction Co. v. US District Court for the Western District of Texas [SCOTUSblog backgrounder] was delivered by Justice Samuel Alito. The case involved Atlantic Marine Construction Co., a Virginia corporation, which entered a contract with J-Crew Management, Inc., a Texas corporation, for work on a construction project at Fort Hood Texas. The contract contained a forum-selection clause, requiring that all disputes between the parties would be litigated in Virginia. J-Crew filed suit in the Western District of Texas. The court found that the district court had inappropriately applied § 1404(a) by placing the burden of proof upon Atlantic Marine to show that transfer to the forum selected within the contract was appropriate, instead of requiring J-Crew, which violated the contractual forum selection clause, to show that public-interest factors "overwhelmingly disfavored a transfer." The case has been remanded to decide whether any public-interest factors support Atlantic Marine's denial of transfer, however Alito states that "no public-interest factors that might support the denial of Atlantic Marine's motion to transfer are apparent on the record before us."

The ruling reverses the judgment [text] of the US Court of Appeals for the Fifth Circuit. The court granted certiorari in the case in April and heard oral arguments [JURIST reports] in October.

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