Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas

(1) Whether a forum-selection clause designating an alternative federal forum is enforceable under Stewart Organization, Inc. v. Ricoh Corp., limited to review under a discretionary balancing-of-conveniences analysis under 28 U.S.C. § 1404(a) and (2) Whether district courts should allocate the burden of proof between parties seeking to enforce or avoid forum-selection clauses.

Petitioner entered into a building contract. Subsequently, Petitioner entered a subcontract agreement for construction. The subcontractor claimed petitioner failed to pay for work performed. Petitioner's contract with the subcontractor contained a mandatory forum-selection clause under which all disputes were required to be heard in the Circuit Court for the City of Norfolk, Virginia. Ignoring the forum-selection clause, the subcontractor filed suit against Petitioner in the Austin Division of the Western District of Texas. Petitioner moved to dismiss the subcontractors complaint in violation of the forum-selection clause under Fed. R. Civ. P. 12(b)(3) and 12(b)(6). The district court denied enforcement of the forum-selection clause. The district court also placed the burden on Petitioner to show whether transfer under 28 U.S.C. § 1404(a) was appropriate.

Petitioner filed a writ of mandamus to the United States Court of Appeals for the Fifth Circuit. Federal circuit courts are split on the issue of enforcement of forum-selection clauses. The Fifth Circuit adopted the minority approach, which provides that “when a forum-selection clause designates a specific federal forum or allows the parties to select the federal courts of a different forum, a motion to transfer under § 1404(a) is the proper procedural mechanism for enforcing the clause.” Relying on Stewart Organization, Inc. v. Ricoh Corp., the Fifth Circuit found that the district court did not abuse its discretion by placing "the burden on the movant” to show that a transfer was appropriate. As such, with the burden on Petitioner, the court found that the district court did not abuse its discretion when balancing the relevant factors. The court denied Petitioner's writ of mandamus and the Supreme Court granted certiorari.