High Court's Clear and Loud Voice on Forum-Selection Clauses: Enforce Them

by Snell & Wilmer

Last Tuesday, the U.S. Supreme Court unanimously held, in Atlantic Marine Construction Co. v. United States Dist. Ct., et al., No.-12-929 (December 3, 2013), that district courts must give valid forum-selection clauses “controlling weight in all but the most exceptional cases.” The opinion is a victory for the principle that otherwise valid contractual provisions, even as to forum, should be rigorously enforced.

Ordinarily, when considering a motion to transfer under § 1404(a), a district court will weigh several relevant factors and determine whether the transfer would serve “the convenience of the parties and witnesses” and promote the “interest of justice.” Private factors include the plaintiff’s choice of forum; the defendant’s preferred forum; the existence of a forum-selection clause; where the claim arose; the convenience of the parties; the convenience of the witnesses, but only if the witnesses may be unavailable for trial in one of the fora; and the location of books and records, again, only if they may not be available in one of the fora. Public interest factors include: the enforceability of the judgment; practical considerations that could make the trial easier, quicker or less expensive; court congestion; the public policies of the fora; and the trial judge’s familiarity with the state law. District courts are given wide latitude in weighing the private and public factors. Atlantic Marine changes the calculus and imposes three overriding rules on district courts when a valid forum-selection clause exists, which “represents the parties’ agreement as to the most proper forum.”

First, “the plaintiff’s choice of forum merits no weight,” meaning that where a plaintiff agrees in a contract to sue in a specified forum, plaintiff’s later decision to ignore her earlier contractual choice and sue in a different forum will be disregarded. “[W]hen a plaintiff agrees by contract to bring suit only in a specified forum for other binding promises by the defendant—the plaintiff has effectively exercised its ‘venue privilege’ before a dispute arises.”

Second, a district court should not consider any of the parties’ private interest factor arguments. “When parties agree to a forum-selection clause, they waive the right to challenge the preselected forum as inconvenient for themselves or their witnesses, or for their pursuit of the litigation.” Essentially, the Court has reiterated that a valid contract between parties is deemed the final expression of their intent as to the subject matter of the contract and should be respected. The Court’s holding in points one and two also supports the enforcement of common forum-selection clauses where one party specifically waives any objection to a choice of forum made by the other party to a contract. Where a forum-selection clause exists “a district court may consider arguments about public interest factors only …. Because those factors will rarely defeat a transfer motion, the practical result is that forum-selection clauses should control except in unusual cases.” The Court stressed that “such cases will not be common … in all but the most unusual cases.” The Court’s language is restrictive even as to public interest/public policy factors where a forum-selection clause exists between parties.

The Court’s third, and equally significant point, instructs district courts as to which State’s choice-of-law jurisprudence it must consider when weighing public interest factors where a valid forum-selection clause exists. “When a party bound by a forum-selection clause flouts its contractual obligation and files suit in a different forum, §1404(a) transfer of venue will not carry with it the original venue’s choice-of-law rules—a factor that in some circumstances may affect public interest considerations.” Since a forum-selection clause under Atlantic Marine now limits a district court to only public interest considerations, a State’s choice-of-law jurisprudence could have a significant effect on how a district court might rule. Ordinarily, a federal court sitting in diversity will follow the choice-of-law rules in the state in which it sits, including when it considers a §1440(a) motion to transfer. The Court pronounced an exception to that general rule in Van Dusen v. Barrack, 376 U.S. 612 (1964) when it held that for §1440(a) transfers, the state law applicable to the original court would also apply in the transferee court. The Court in Atlantic Marine explained the exception was deemed necessary to prevent “defendants, properly subjected to suit in the transferor State from invoking §1440(a) to gain the benefits of the laws of another jurisdiction ….” This policy, which motivated the Court to create the exception in Van Dusen to the general choice-of-law rules governing §1440(a) transfers, has now motivated the Court to hold that where a defendant’s §1440(a) motion is premised on the enforcement of a valid forum-selection clause, “the law of the court in which the plaintiff inappropriately sued should not follow the case to the forum contractually selected by the parties …. §1440(a) should not create or multiply opportunities for forum shopping.” In Van Dusen, the Court was concerned that a defendant could defeat state-law advantages gained by a plaintiff’s exercise of her privilege to select the venue of her choice. In Atlantic Marine, the Court found that where a plaintiff has contractually “chosen” the forum to litigate, one “who files suit in violation of a forum-selection clause enjoys no such privilege with respect to its [second] choice of forum, and therefore it is entitled to no concomitant state-law advantages.” Doing otherwise would, as the Court correctly found, “encourage gamesmanship.”

In summary, Atlantic Marine holds that §1440(a)’s “interest of justice” standard is best met by holding contracting parties to their bargain where they have agreed to a forum to litigate disputes. It streamlines the §1440(a) analysis for district courts where a valid forum-selection clause exists and arguably limits a district court’s discretion to rule in contravention to a forum-selection clause to the “unusual cases” which “will not be common.” The opinion should curtail forum shopping via §1440(a) motions to transfer. Finally, Atlantic Marine provides firm guidance to the circuit courts of appeal, particularly the Third, Sixth and Fifth Circuits which have given less deference to forum-selection clauses in the past.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Snell & Wilmer | Attorney Advertising

Written by:

Snell & Wilmer

Snell & Wilmer on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.