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Enforcing Forum- Selection Clauses

By J.T. Westermeier
May 02, 2014

Forum-selection clauses are commonly used in agreements for e-commerce websites. These clauses represent a very important risk management provision. See, e.g., Stomp, Inc. v. Neat O LLC, 61 F. Supp. 2d 1074, 1080-81 (C.D. Cal. 1999) (court recommending a forum-selection clause in e-commerce applications). On Dec. 3, 2013, in a 9-0 decision written by Justice Alito, the U.S. Supreme Court rendered a very significant ruling in Atlantic Marine Constructions Co., Inc. v. United States District Court for the Western District of Texas, 134 S. Ct. 568 (2013), relating to the proper procedures for enforcing forum-selection clauses. In this article, we will discuss these procedures.

The Atlantic Marine Forum-Selection Clause

Atlantic Marine Construction Co. is a Virginia corporation that had entered into a subcontract with J. Crew Management, Inc., a Texas corporation. The subcontract concerned work on a construction project at Ft. Hood, Texas and the contract included a forum-selection clause requiring that all disputes between the parties would be litigated in Virginia. However, when a dispute arose J. Crew Management filed an action in the Western District of Texas rather than in Virginia. Atlantic Marine moved to dismiss J. Crew Management's lawsuit on the grounds that the forum-selection clause rendered venue “wrong” under 28 U.S.C. '1406(a) and “improper” under Section 12(b)(3) of the Federal Rules of Civil Procedure (FRCP). Alternatively, Atlantic Marine moved to transfer the lawsuit to the U.S. District Court for the Eastern District of Virginia under 28 U.S.C. '1404(a).

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