ATLANTIC MARINE CONSTRUCTION COMPANY v. U.S. DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS
In 2009 the U.S. Corps of Engineers contracted with Atlantic Marine Construction Company (Atlantic) to build a child development center at Fort Hood, a military base located in the western district of Texas. Atlantic then subcontracted with J-Crew Management, Inc. (J-Crew) to provide labor and materials. The subcontract agreement contained a forum selection clause stating that any dispute would be litigated in Circuit Court for the City of Norfolk, Virginia, or the U.S. District Court for the Eastern District of Virginia, Norfolk Division. Despite this clause, J-Crew brought suit against Atlantic in the U.S. District Court for the Western District of Texas for failure to pay for work J-Crew performed.
Atlantic moved to dismiss the suit under Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C. §1406, arguing that the forum selection clause required the suit to be brought in Virginia. Atlantic also moved, in the alternative, to transfer the case to the Eastern District of Virginia under 28 U.S.C. §1404(a). The district court denied Atlantic’s motions, holding that Atlantic did not show why the interest of justice or the convenience of the parties weighed in favor of Virginia. Atlantic petitioned the U.S. Court of Appeals for the Fifth Circuit for a writ of mandamus ordering the district court to dismiss the case or transfer it to Virginia. The court of appeals held that the district court did not abuse its discretion and venue was proper in the Texas court because the parties entered into and performed the agreement in that district.
Did the Supreme Court’s decision in Stewart Organization, Inc. v. Ricoh Corp. limit review of forum selection clauses to a discretionary, balancing-of-conveniences analysis under 28 U.S.C. § 1404(a)
If so, who has the burden of proof when a party seeks to enforce or avoid a forum selection clause?
ORAL ARGUMENT OF WILLIAMS S. HASTINGS ON BEHALF OF THE PETITIONER
Chief Justice John G. Roberts: We'll hear argument next this morning in Case 12-929, Atlantic Marine Construction Company vs. The United States District Court for the Western District of Texas.
William S. Hastings: Mr. Chief Justice, and may it please the Court:
Forum selection clauses have been frequently used in contracts of all types.
They should be enforced as written and the enforcement of a contractual forum selection clause should not just be left to convenience discretionary balancing tests.
Rule 12(b)(3) in Section 1406 of the United States Code provide appropriate and effective means for enforcing a contractual forum selection clause.
The language of those provisions is written broadly.
Congress used words like “ wrong ” and the rule uses the word “ improper ”, which have plain and natural meanings that are broad and are sufficient to authorize district courts to act to enforce the contractual clause.
Justice Anthony Kennedy: Is -- is it common in the treatises or in the cases to say that a forum selection clause is a venue provision?
I thought venue was something that Congress determined.
William S. Hastings: Your Honor, the cases do discuss it as a venue provision.
One example would be this Court's decision in Stewart addressed a forum selection clause in a 1404(a) transfer analysis, which is clearly a venue analysis.
In addition to that, with the 2011 amendments to the United States Code, Congress adopted a definition of venue.
It's in Section 1390.
That definition says the place of litigation.
I'm paraphrasing it, but it's -- it's a pretty straightforward definition.
The legislative history of Section 201 of that Act acknowledges that the definition was intended to make venue determinations easier and to make it clearer that parties could waive or adjust these types of provisions even by contract.
The words “ by contract ”.
Justice Samuel Alito: In the Stewart case to which you just referred, the court said,
"The parties do not dispute that the district court properly denied the motion to dismiss the case for improper venue under 1406(a). "
because Respondent apparently does business in the Northern District of Alabama, which was not the jurisdiction specified in the forum selection clause.
So what -- if we were to write an opinion in your favor, what would you suggest we say about that?
William S. Hastings: Your Honor, I believe the correct reading of that language is what the Second Circuit has said in the trade comment decision and others have written on this, that Stewart and -- and the text read by that footnote.
That's Footnote 8, I believe.
The text right there said,
"The immediate issue is how we address 1404(a). "
And the way the majority of the circuit courts have read it is the issue in Stewart, this procedural issue that we're here on today, which is simply not presented to the Court.
And so the Court could very easily write a decision that acknowledges Stewart still controls on a 1404(a) analysis, but acknowledged that, like a majority of the circuits, that Stewart simply did not have to address this problem.
Justice Samuel Alito: Well, that's -- that's true, but it means that the entire discussion in Stewart is beside the point.
The Court wrote a decision about an issue that really never should arise because the party seeking -- as you see it, the party seeking to enforce the forum selection clause should proceed under 1406.
So Stewart said, well, if -- if you proceed under the wrong provision, this is how it should come out.
It makes the whole decision essentially meaningless, doesn't it?
William S. Hastings: Justice Alito, I respectfully disagree.
And here's what the meaning of Stewart would be, as -- as we understand it.
First of all, under the facts of Stewart, the same situation would arise, of course, if a party waived their proper venue objection.
That may be a narrow line of cases, but that would still apply in a case where a party doesn't assert the contract at first.
But there's another place where Stewart would still apply: When a case is filed in the proper jurisdiction.
Here, if this lawsuit had been filed in Virginia, there would be a very limited place for exceptional circumstances for a court to look at a 1404(a) analysis and determine if public interest required something other than the contract clause.
Justice Samuel Alito: I don't see how that would -- I don't see how that would work.
You're -- this is the argument you made in your reply brief, that if this -- if the case had been filed in the jurisdiction specified in the forum selection clause, that court could nevertheless proceed under 1404(a) and transfer it back to the Western District of Texas, for example.
That's -- that's your argument, right?
William S. Hastings: In exceptional cases, Your Honor.
Justice Samuel Alito: In exceptional cases.
But 1404(a) says that it can -- a case can be transferred to a district where it might have been brought.
And your argument under 1406 is that they couldn't be brought in the Western District of Texas, that's a place where there's a wrong venue.
William S. Hastings: And, Your Honor, the language of the statutes, particularly, the language you were just referring to about “ might have been brought ”, needs to be read in context of decisions from this Court.
In Van Dusen, this Court held that that language “ might have been brought ” was a term of art.
The Court has never reached that conclusion with respect to wrong or improper.
And in Van Dusen, the Court said the “ might have been brought ” language was a term of art referring back to a congressionally chosen venue under 1391.
And so when this plays out under 1404(a), the court -- if the case is in the proper venue and we're on to the second issue of 1404(a), the proper reading of the language would allow the court in truly and exceptional circumstances to follow -- follow the language of the statute and send it to another place where Congress said the case could have been.
And, again, this is really the second issue in the case.
We would emphasize that it's truly exceptional cases where parties had contracted for a forum, they've truly resolved the conveniences among the parties among themselves.
Justice Elena Kagan: Mr. Hastings, Section 1391 says the following,
"Except as otherwise provided by law. "
--not by contract --
"by law, this section shall govern -- shall govern -- the venue of all -- all civil actions brought in district courts of the United States. "
And then it goes on to specify certain rules for where venue in a case can lie.
So if I'm looking at that, I'm thinking, well, those rules apply.
And they can't be reversed or countermanded or whatever by -- by contract, by parties' agreement except to the extent that the contract can figure centrally into the 1404 analysis.
But it's not appropriate in the 1406 analysis because, you know, the statute says what the statute says.
Here is venue.
William S. Hastings: And, Your Honor, the language of Section 1391, and the first part, I believe it's 1391(a) where it has the language of “ shall govern in federal courts ”, that's really no different than what this Court said in Stewart of Federal law controls venue in Federal courts.
But the issue that comes up is that venue, venue is very important.
Venue, even before the current statutes were written, was recognized as being a privilege for the litigants.
They're to protect the defendants.
And even in Neirbo in the 1939, so almost a decade before the -- some of the current statutes were written, this Court said venue was subject to disposition by the parties.
Justice Ruth Bader Ginsburg: That's only -- what that tells us is that venue is a highly waiverable thing.
You can stand on your venue right, but you don't have to.
My problem with your interpretation is you are allowing a private agreement to make a venue prescription that Congress enacted improper.
Congress said it was proper.
It may be that it should not apply in this case because the parties have consented to something else, but it's not a wrong venue.
I mean, suppose the question had never come up.
The -- there wasn't a claim that this was a wrong venue.
The -- the case could have proceeded, and it would have been a place of proper venue, right?
William S. Hastings: Your Honor, if there was no objection raised, yes.
Justice Ruth Bader Ginsburg: But it doesn't become -- it's a place of proper venue.
There may be a reason why another venue is the one that should control in this case.
But you can't make a private agreement -- can't say what Congress says is proper is improper.
William S. Hastings: And, Your Honor, in response to that, first of all, the venue rights have always been, like many Federal rights, waiverable provisions.
And when a contract--
Justice Ruth Bader Ginsburg: That doesn't mean it's improper.
It means it's waiverable.
William S. Hastings: --And, Your Honor, the language of the word “ improper ”, improper is a broad term and it has a broad meaning.
I'd like to focus on “ improper ” for just a second.
We have two different words, “ improper ” and “ wrong ”.
But “ improper ” is used in 12(b)(3).
Congress didn't -- or -- and the courts did not explain what that applies.
In practice, that word is used for many different contexts.
It's used to enforce forum selection clauses.
The majority of the circuit courts -- in fact, more circuits than have weighed in on our favor use that language to enforce foreign clauses and clauses requiring State court forums.
It's used in a very broad context in order to enforce people's contract rights.
It's even used in arbitration context.
Although the FAA gives parties the right to move under the FAA, many parties raise their complaints under the 12(b)(3) because of the procedural impact of 12(b) motions, allowing parties not to have to answer complicated Federal cases and get to proceed to arbitration more quickly.
Giving the language a plain and natural meaning allows the courts to, essentially, do justice and allow to streamline and have efficient running of cases and to enforce parties' rights in contracts.
Justice Anthony Kennedy: So what--
Justice Elena Kagan: Mr. Hastings, I wonder what you think of this analogy: Any party can waive a personal jurisdiction defense, but would you say that parties by contract can create personal jurisdiction in a court in which it otherwise doesn't exist?
William S. Hastings: Your Honor, personal jurisdiction is -- is also essentially a personal right of the defendant.
And so if the defendant is willing to consent to personal jurisdiction, as often happens in contracts--
Justice Elena Kagan: Well, as I said, anybody can waive it.
Just like anybody can waive almost everything in our -- in -- in the way the Federal rules work.
But do you think that parties can actually create personal jurisdiction where it doesn't exist by law?
William S. Hastings: --Focusing on personal jurisdiction, not subject matter jurisdiction, yes.
Because parties can consent and contract to waive the personal jurisdiction objections.
And, Your Honor, I believe that has been recognized by many of the circuit courts.
Justice Ruth Bader Ginsburg: Because consent is a basis for personal jurisdiction.
William S. Hastings: Exactly, Your Honor.
Justice Antonin Scalia: Could -- could I ask, what difference would it make to you if -- if I thought the venue here is proper, but I thought that there -- there was no cause of action in this circuit, and the case -- as one of the amicus briefs proposed.
What difference would that make to you?
William S. Hastings: --And, Justice Scalia, that would -- Professor Sach's brief certainly makes that argument.
I would begin by acknowledging that that rule would be far better than leaving this to discretionary balancing tests.
What difference it would make, it actually would be very favorable to my client because this case would have to be dismissed.
We have concerns about that rule.
That's why we didn't push that as our argument.
The circuits have a three-way split.
Justice Ruth Bader Ginsburg: Isn't that -- that's a problem with the argument.
Both 1404(a) and 1406 provide for transfer.
This Court has emphasized that it's one Federal system, and within the Federal system, the result shouldn't be dismissed, bring the case all over again, pay a new filing fee; instead of that, just transfer to the appropriate forum.
And that's what Professor Sachs's view leaves out, because the result, as you say, is -- it's only dismissal.
William S. Hastings: Justice Ginsburg, that is one of the -- one of the concerns with the rule.
But Professor Sachs' approach does, first of all, start off with a strong benefit of enforcing contracts.
It's just not as effective as 12(b)(3), because when we are dealing with what's really a venue issue--
Justice Antonin Scalia: Excuse me.
But what if there is no personal jurisdiction, okay, and the -- and the suit is dismissed because there is no personal jurisdiction.
Would a Federal court transfer it to -- to another court that has personal jurisdiction?
William S. Hastings: --Your Honor, under the current statutes I believe the court would have the discretion to transfer it based upon personal jurisdiction.
Justice Ruth Bader Ginsburg: Where -- it's -- 1404(a) and 1406 deal with venue.
They don't deal with personal jurisdiction.
William S. Hastings: Your Honor, many -- many courts have actually read 1406 to also allow for addressing personal jurisdiction.
There's a circuit split on that issue.
Justice Elena Kagan: Mr. Hastings, has 12(b)(6) ever been used to your knowledge to deal with a case in which the question is which court the plaintiff should have brought the suit in, rather than whether the plaintiff has a viable claim in any court?
William S. Hastings: Yes--
Justice Elena Kagan: Because it seems to me a bit of a category error.
The 12(b)(6) is something -- it's an on-the-merits determination about the viability of your claim.
It has res judicata effect, whereas this is not.
This is just a question of, did you bring the thing in the right place and you should be allowed to bring it someplace else.
William S. Hastings: --Justice Kagan, the First Circuit has been using the 12(b)(6) approach to address whether the case is in the right--
Justice Elena Kagan: No, I know the courts have.
I'm saying, except for this kind of case, has a court ever used 12(b)(6) to deal with a case of which court?
William S. Hastings: --Outside of the forum selection clause context--
Justice Elena Kagan: Or to deal with anything that's not an on-the-merits determination that precludes a case in any court?
William S. Hastings: --And, Your Honor, I'm not aware of a court doing it outside of the context of the forum selection clause issue, as the First Circuit--
Justice Stephen G. Breyer: I have one question here.
It seems -- because I start out for reasons I won't go into thinking, well, perhaps it doesn't matter, frankly; you can get to the same result under any one of these three approaches.
But then one thing Professor Sachs says does bother me, that if we take your approach then how do we deal with the problem of removal?
I mean, you can only remove a case to a court which is in the district where the person -- the plaintiff filed.
Now, if there is a forum selection clause, the defendant seems to me to be stuck, because he can't go to a -- he can't go to a -- to another.
He can't go to another court.
He can't go to the court within the district because of the forum selection clause, and he can't go into another court because of 1441(a).
So that argues to me that we ought to either take the 1404 approach or we ought to take Professor Sachs' approach, unless you have an answer to that.
William S. Hastings: --Justice Breyer, I do have an answer to the removal issue.
And the answer starts in Section 1390(c).
And in 1390(c), Congress said--
Chief Justice John G. Roberts: Where can -- where can I find that?
William S. Hastings: --Chief Justice Roberts, it's 28 U.S. Code 1390(c).
Chief Justice John G. Roberts: It's not conveniently set forth in any of the papers, right?
William S. Hastings: No, Your Honor, it's not.
I did not know that this issue was going to come up.
Chief Justice John G. Roberts: Fair enough.
William S. Hastings: With respect to 1390(c), Congress said--
Justice Anthony Kennedy: --1390(c)?
William S. Hastings: --Yes, sir.
Yes, Your Honor.
Congress said that these rules, with the exception of the transfer rules, do not apply in removal cases.
Congress has answered the question.
Removal procedure is governed by the statutes on removal, and yes, if you are in State court, there is one court you can remove to.
This rule and this issue doesn't change that.
But if you -- if this case had been filed in Texas State court, for example, and was removed to the Western District, 1390(c) still says that the transfer rules -- it doesn't say 1404(a); it says the transfer rules, which would also pick up 1406 -- could still apply to reallocate the venue for the lawsuit if there was a contract clause or if it was--
Justice Stephen G. Breyer: You didn't really explain -- I'm sorry.
I'll read it more carefully later.
But how -- it says you have to -- you have to remove to the court or the district or division where the place of action is pending.
So if it's filed in State court in Texas you have to remove to the Texas Federal court.
Now, how do we get -- and you can't go to the Texas Federal court, according to you, because of the contract.
Now, how -- now, you explain how -- how this provision over 1390(c) gets around that?
William S. Hastings: --And, Justice Breyer, I would respectfully disagree about whether you can get to the Texas court.
Justice Stephen G. Breyer: Well, you -- in other words, you can remove to the Texas court even though it says you can remove -- you can remove to the district court despite the contract.
William S. Hastings: Yes, Justice Breyer, because--
Justice Stephen G. Breyer: Despite the contract.
William S. Hastings: --Because of the specific Federal statutes allowing for removal.
They tell specifically where the removal must go.
And so we're not suggesting that the court would have to--
Justice Stephen G. Breyer: So what the court should say in Texas is: We have a contract which says you have to go to Virginia, but because of 1390(a) we forget about the contract and we remove it here.
William S. Hastings: --That's no--
Justice Stephen G. Breyer: That's what you're saying Texas should say.
William S. Hastings: --No, Your Honor.
Justice Stephen G. Breyer: No?
William S. Hastings: What I'm saying if the State district -- if the parties were in the State district court and remove it to the Federal district court, under the statutes, under 1390 -- well, first of all, that was -- that's what the removal statutes require.
Justice Stephen G. Breyer: Yes.
William S. Hastings: 1390(c), which say the transfer rules still apply.
The Texas district court, if we had our contract, should have said: Now that you've removed this to Federal court, we must transfer this case to Virginia because the transfer rules still apply.
Justice Stephen G. Breyer: Now, what about -- suppose the plaintiff says: Please dismiss this immediately because of 1406, or, you know, because 1406 says you have to dismiss it; venue isn't proper here.
William S. Hastings: And, Your Honor, under that circumstance, if it was a contract requiring a State court forum -- I think that's what I understand the question to be.
Justice Stephen G. Breyer: No.
The contract says you go to Virginia.
William S. Hastings: Okay.
Justice Stephen G. Breyer: They filed it in Texas State court.
You tried to remove it to Texas Federal court.
William S. Hastings: And, Your Honor--
Justice Stephen G. Breyer: And they say: I'm very sorry.
The contract that he loves says we can't remove it to Texas Federal court.
William S. Hastings: --And, Your Honor, the contract would not prevent the removal, but once the case was removed the contract would control where the case -- where the case would be allocated.
Justice Anthony Kennedy: Can I ask--
Justice Samuel Alito: May I ask about -- just go ahead.
Justice Anthony Kennedy: --May I?
In a forum non conveniens motion, they say: Oh, the witnesses are some places, what is the statutory and/or Federal Rules of Civil Procedure basis for forum non conveniens?
William S. Hastings: Justice Kennedy, that's an excellent question because the courts, when they usually rule on forum non conveniens, do not specify that.
There's not a Federal--
Justice Anthony Kennedy: You just cite Gulf Oil, and that's it?
William S. Hastings: --In many times, yes.
But a lot of times parties do go ahead and cite 12(b)(3).
That's often done by parties in litigation.
Justice Ruth Bader Ginsburg: That's if it's -- if it's a State forum or foreign forum, but 1404(a) is a codification of the forum non conveniens doctrine?
William S. Hastings: For the Federal courts, yes, Your Honor.
Justice Samuel Alito: Can I ask you this about the Professor Sachs' argument?
Doesn't it lead to the consequence -- doesn't it show that -- wouldn't it mean that Justice Scalia's dissent was correct in Stewart and the majority was wrong in Stewart?
Because if this is -- if this is contractual -- suppose Ricoh in that case had moved -- had adopted -- had taken the approach that Professor Sachs has recommended and moved for summary judgment, 12(b)(6) or summary judgment; that would be a contract issue.
It would be governed by Alabama law.
Alabama law says the forum selection clause is no good.
William S. Hastings: And, Justice Alito, we do think there is some tension between Professor Sachs' position and the Stewart decision, because if Professor Sachs is correct and the First Circuit's correct, there really would be no room for a 1404 balancing issue.
The issue, I believe, that you are asking about--
Justice Antonin Scalia: But why is that?
Why wouldn't 1404(a) continue to apply?
William S. Hastings: --Justice Scalia, if the contract -- if the contract elevated this to an issue on the merits, is essentially what 12(b)(6) does, then it becomes an issue not just about venue; it becomes an issue about merits.
And so a venue allocation provision wouldn't change the fact that if the case was in the wrong forum--
Justice Antonin Scalia: If -- but it depends upon -- upon the defendant.
If he chooses to go the 1404(a) route, he could go that way, couldn't he?
William S. Hastings: --Well, Your Honor--
Justice Antonin Scalia: He wouldn't have to move under 12(b)(6), would he?
William S. Hastings: --He wouldn't have to move under 12(b)(6), but--
Justice Antonin Scalia: So it -- so it wouldn't necessarily overrule Stewart.
William S. Hastings: --But there's a potential problem here, and this is one of the practical issues with Professor Sachs' issue -- approach.
If it's an issue on the merits, it doesn't have to be raised right at the beginning of the case.
A party could certainly move to transfer and do a lot of other things, but they could raise that issue as a defense on the merits of the lawsuit and have it resolved at trial after the entire proceeding had proceeded in a forum other than where the contract was required.
Justice Ruth Bader Ginsburg: I don't follow that.
If it's an affirmative defense, you have to raise it or you lose it.
You can't hold back an affirmative defense, and in the middle of the trial say: Oh, there's an affirmative defense here.
(8)(c) requires you to state it.
William S. Hastings: And, Justice Ginsburg, it would certainly have to be pleaded.
And certainly there is opportunity -- you know, leave is freely granted in cases unless, you know, other circumstances arise.
It's possible to plead it down the line.
But most importantly, it's when do you get a ruling on that issue?
And that's the problem.
Justice Stephen G. Breyer: Well, what is the problem with this?
You admit that if he goes to Virginia -- well, he files his suit in Virginia.
Then he says, judge, everything's in Texas, please remove under 1404(a), you know, go -- send it down to Texas.
And you agree that -- that in an unusual case you say, because you give a lot of weight to the contract, he could win and go to Texas, right?
William S. Hastings: That's our position, yes.
Justice Stephen G. Breyer: That's your position, fine.
If that's your position, what conceivable difference does it make if he goes to Texas in the first place and then you say remove it to Virginia?
I mean, it should work out the same way.
It should work out that the balancing under 1404, you know, it gives you the -- the factors should be the same, shouldn't they?
William S. Hastings: Your Honor, the way this would work out is if -- focusing on the 1404(a) issue, the real issue gets down to where does the lawsuit need to be filed, what rules are going to be in place, and if a party can just file in Texas because they want -- they want to try to move it there for convenience, they can just file in Texas, what they're doing is they're requiring a party who just wants to live--
Justice Stephen G. Breyer: It's a terrible thing.
You have to say 1404(a), and the other case he has to say 1404(a) and it -- I mean, maybe it makes some tremendous practical difference.
But if it makes not much difference, I have three routes that seem to me all should work out the same way, and in favor of their route is the absolute language that Justice Kagan pointed out before, plus the footnote.
So I'm thinking, hey, this doesn't make -- it's important to have a rule.
It's important to have one clear approach.
But as between the three, it shouldn't matter, and they should all reach the same conclusions.
So let's go with the language of Stewart.
What about -- now, what's the answer to that?
William S. Hastings: --Justice Breyer, first of all, I would agree with you that under this case, all three routes should have lead -- led to the exact same conclusion.
That's -- that is correct under this case, but that may not be in all cases.
Why it matters is that parties should be forced to honor their contracts.
And so if a party honors its contract and there's a very high standard, such as the exceptional circumstances standard for receiving a transfer, their -- parties who are following their contract, it's unlikely you're going to have much litigation over transfers.
Whereas if a party can say I can try my shot at a home court forum, file in violation of the contract and then make the other party raise this issue and have to litigate venue, we're going to have a tremendous litigation about venue.
That's the problem.
Justice Sonia Sotomayor: The law travels with -- the law of the transferring State travels to the transferred State.
So they've undone -- they're taking Texas law, if you go under 1404, to Virginia.
William S. Hastings: And that would be a problem in many cases, Your Honor.
Justice Sonia Sotomayor: And that would defeat the purpose of the venue selection to start with.
That's part of your argument?
Justice Ruth Bader Ginsburg: That would be taken care of simply by saying Van Dusen v. Barrack does not apply when a party is acting in violation of a contractual provision.
Van Dusen against Barrack was intended to give the plaintiff plaintiff's choice of initial forum.
If plaintiff chooses a forum in violation of the contract, there's no reason why Van Dusen should apply.
William S. Hastings: And, Justice Ginsburg, that -- that points out that if the Court were to not just strictly enforce the contracts, it raises many new issues that this Court has not yet had to address.
I's like to reserve my time.
Chief Justice John G. Roberts: Thank you, counsel.
ORAL ARGUMENT OF WILLIAM R. ALLENSWORTH ON BEHALF OF THE RESPONDENT
William R. Allensworth: Mr. Chief Justice, may it please the Court:
We brought this $160,000 construction case in the Western District of Texas, which is where we performed our work, where the project's located, where all the witnesses reside, and where virtually all of the evidence is located.
Justice Elena Kagan: But, Mr. Allensworth, where you agreed not to bring it.
William R. Allensworth: Yes.
Justice Elena Kagan: So I'm going back to what Justice Breyer says.
Let's suppose you're right about 1404, and I think you have some pretty good arguments.
1404, it seems to me, shouldn't affect this case in the sense that you should have -- this was a negotiated contract.
You got something for the fact that you accepted inconvenience when you brought a suit.
And under 1404, the court is perfectly entitled -- the court has to take that into account, that this was a negotiated contract, that you accepted in convenience, and that you got something for your -- for your acceptance of inconvenience.
You have to live with your contract.
William R. Allensworth: No, Your Honor.
We have a contract, and we are having to live with it in the sense that we're up here now 15 months after the district court ruled that we were supposed to -- we should -- 15 months after the district court denied the motion to transfer.
What we -- and we did nego -- and those are indeed the terms of our contract.
However, the -- we felt that any court following Stewart and 1404 would weigh the interests of justice in the decision whether to grant the transfer or not, and indeed, that's exactly what the district court found.
Justice Samuel Alito: Well, the interests -- the interests of justice that the district court weighed almost all boiled down to the interests of your client.
The inconvenience of witnesses.
Well, Atlantic Marine, to the extent we're talking about their witnesses, they're not concerned about the inconvenience of having their witnesses go to -- to Norfolk.
But your witnesses -- the other witnesses are your witnesses.
So that's a factor that goes to your convenience.
Compulsory process to produce witnesses, same thing.
So what were the public interests that -- what were the interests that were weighed here that are not the interests of J. Crew?
William R. Allensworth: If I might, Your Honor, first off, the district court didn't give any shrift to our witness.
He was concerned with the nonparty witnesses who were not a party to this--
Justice Samuel Alito: Well, if they're not your witnesses, then they're -- they're Atlantic Marine's witnesses.
So why should that be -- why should the inconvenience of Atlantic Marine's witnesses be a factor that weighs against Atlantic Marine's position that the case should be tried in Norfolk?
William R. Allensworth: --They were neither Atlantic Marine's witnesses nor our witnesses.
They were nonparty witnesses, and the issue that Judge Higginbotham addressed in the Fifth Circuit--
Justice Antonin Scalia: Just volunteer witnesses?
Are they just going to walk in the courtroom and say I'd -- I'd would like to testify?
William R. Allensworth: --Exactly.
Justice Antonin Scalia: Surely, they're one side's or the other's, aren't they?
William R. Allensworth: Your Honor--
Justice Antonin Scalia: What kind of -- what kind of proceedings do they have there?
William R. Allensworth: --Your Honor, our point is that if it's in Texas, they can get in their pickup and drive to the courthouse and testify.
And if this case is moved to Virginia, those witnesses essentially are unavailable to us.
Justice Samuel Alito: Who -- who is going to call these witnesses, you or Atlantic Marine?
William R. Allensworth: We'd be the ones calling them.
Justice Samuel Alito: You do, so they're your witnesses.
The fact that they don't work for you is -- is immaterial here.
So let's say they're out of the picture.
Now, what else -- what's left?
What other public interests are involved?
William R. Allensworth: The law of Texas, which we think applies to this case, with which the district court--
Justice Samuel Alito: Is -- Texas contract law is so arcane that the judges in the Eastern District of Virginia can't figure it out?
Is that right?
William R. Allensworth: --I wouldn't suggest that, Your Honor.
Justice Samuel Alito: Oh, okay.
Justice Stephen G. Breyer: All right.
So why -- why then couldn't you go to Virginia with all these factors?
I mean, maybe the jury has to take 42 visits to the bottom of an oil well shaft.
I don't know.
I mean, there could be something that would weigh in your favor.
I don't know the case.
So why not go to Virginia and then file a 1404 motion?
And it should reach the same result, whether you -- you go to Texas and ask to stay there or whether you go to Virginia under 1404(a) -- you win this case, let's say -- or whether you go to Virginia.
It should get to the same place, shouldn't it?
William R. Allensworth: Your Honor, in some ways that's exactly what we're worried about.
The same place is 15 months after the court's ruled on the transfer motion.
Justice Stephen G. Breyer: So it's actually your expense because you would have to go to Virginia and you would have to file the motion.
Maybe you can do it by mail or you'd have to -- but I don't know.
William R. Allensworth: We filed a motion.
If we filed -- if we filed this lawsuit in Virginia and filed it simultaneously with a 1404 motion--
Justice Stephen G. Breyer: Yes.
William R. Allensworth: --by their lights--
Justice Stephen G. Breyer: Yes.
William R. Allensworth: --the court, as I think one of the Justices pointed out, couldn't transfer it back to Texas anyway because by their lights, venue is improper anywhere expect Virginia.
Justice Stephen G. Breyer: No, no.
They are not saying -- they said that you could make the 1404 motion in Virginia, and they think it would only be granted in an exceptional case, but that's their opinion in that, and so it should come to the same conclusion.
They aren't barring you from that on their view.
But my thought is that if all these come to the same result in the end and you just need one ruling, we have something pointing on their side -- your side, which is the Stewart footnote and the language of the -- you know, the absolute language of the venue statutes, and you have something pointing in their side, which is, if we count by numbers, five circuits are in their favor and only three in yours.
William R. Allensworth: If there wasn't -- if there hadn't been a forum selection clause in the contract and we'd filed suit in Texas, it's inconceivable that they could -- they could have successfully moved the case to Virginia.
The only thing going in favor of this case going to Virginia is that forum selection clause.
Chief Justice John G. Roberts: Well, that's kind of a big thing, isn't it?
I mean, that's what the whole--
William R. Allensworth: It's a significant factor.
Chief Justice John G. Roberts: It's a significant factor.
And -- and the problem, the difference, all things don't lead to the same place.
1404 says to the district court: Look at a hodge-podge of things, including the interest of justice, and -- and figure it out and, you know, maybe they will give the contract some weight or maybe they won't, and if they do, it's not clear how you weigh the contract against the interest of justice.
It gives a broad discretion.
It says they may transfer.
1406 is an entirely different animal.
It says you shall dismiss or -- or transfer.
It's sort of a -- you know, you have the safety valve to transfer.
And I don't know why you -- you so cavalierly dismiss: Oh, it's in the contract, of course, but we've got more witnesses.
William R. Allensworth: It is in the -- Your Honor, it is in the contract.
Because it's in the contract, we didn't get the deference that otherwise plaintiff would get on selection of venue.
Chief Justice John G. Roberts: Well, that couldn't have come as a surprise.
William R. Allensworth: --No, sir.
And we haven't -- we haven't attacked the clause on Bremen standards.
We haven't claimed it was induced by fraud or that it was overreaching.
We accept that.
The question that we've got is whether the -- whether the Federal judiciary has to accept that contract clause as guiding their decision--
Justice Elena Kagan: Well, it does in this way.
Justice Samuel Alito: Well, if 1404 -- if the court--
Justice Elena Kagan: It does in this way.
1404, as Justice Ginsburg said, is a codification of forum non conveniens law, which is a balancing of private and public interests.
It seems to me what Justice Alito said was absolutely right.
You have given up the ability to claim private interests here by virtue of your choice to sign that contract.
The only thing that could weigh in the balance against that is if there is some -- something that has nothing to do with your convenience but is instead a feature of -- of -- something about why it's important to the judicial system, to the public interest, about keeping the trial in one place.
And as Justice Alito suggested, you have not been able to point to anything, nor would there be anything to point to, in most cases involving forum selection clauses.
William R. Allensworth: --In most cases there wouldn't be, and that's why in most cases the clauses are enforced, and that's why I don't think you have seen one of these for 25 years.
The reason that we've got -- that we think our case is somewhat unique is that it involves a construction project in the district in which we filed suit.
All of the witnesses are there.
Virtually all of the physical evidence is there.
It's subject, if we stay in Texas, to Texas law.
And for those reasons, if the case is going to get sent to Virginia, the systemic integrity of the system I think is put in play.
Chief Justice John G. Roberts: No.
But the reason for these clauses -- the enforceability of these clauses is critically important to a lot of modern commerce.
If you -- I don't know what the details are here, but a lot of times your company -- and they are doing business now all across the country, and you say: I don't want to do business all across the country if I'm going to get dragged into different courts who knows where with different -- where the juries are different.
I want to do business around the country so long as, if I am going to be sued, it's right here.
So I'm only going to do business with people who are willing to say: If I have a problem, I will sue you right here.
That's -- that's critically important to modern -- modern commerce.
And the idea, well, you're going to let a court say, well, but there are a few more witnesses here, you know, it's convenient to them and all that, that -- that seems to be throwing a significant wrench into the process.
William R. Allensworth: Your Honor, I -- I don't view it as a wrench, as opposed to an opportunity or mandate from Congress to the -- to the Federal courts to exercise some discretion in deciding whether to enforce these clauses or not.
Stewart v. Ricoh--
Justice Sonia Sotomayor: But your -- your adversary is not taking that discretion away.
It's saying -- your adversary I understand is conceding that Virginia has the ability to apply 1404 in it's judgment, but you should honor the contract.
I have one fundamental problem which is slightly different.
Under Bremen and Carnival, if the forum selected was arbitration or a State court, then the court has no 1404 power.
It must transfer to those venues.
If we accept 1404 as applying, then we're disfavoring commercial parties from picking Federal courts because they're going to have to accept that a non-selected venue will have the power to make the decision whether to transfer or not.
That seems to me to invite -- there may be people who think that's a good thing, get cases out of the Federal court even if they are international commercial cases.
But isn't that what you are inviting?
William R. Allensworth: --Your Honor, I would say that's a possibility.
I would say that on the other hand, that the arbitration example that you brought up, that is governed by a separate statute anyway.
So the -- the Federal Arbitration Act is going to govern whether that--
Justice Sonia Sotomayor: Well--
William R. Allensworth: --whether the arbitration clause ought to be enforced or not.
Justice Ruth Bader Ginsburg: The -- the clause here allows suits in -- in State or Federal court.
Suppose the clause -- the forum selection clause just said
"all disputes shall be litigated in the Circuit Court for the City of Norfolk. "
It doesn't say anything about the Eastern District of Virginia.
What would be the result then?
William R. Allensworth: The Court would have to dismiss our case.
Justice Ruth Bader Ginsburg: And equally--
William R. Allensworth: Because he couldn't -- he couldn't transfer it to -- he can't force that into a Virginia circuit.
Justice Ruth Bader Ginsburg: --And the same thing if -- if the choice was of an arbitral forum, then you recognize in those two cases the result would have to be dismissal?
William R. Allensworth: Yes, Your Honor.
Justice Samuel Alito: --And what would be the authority for dismissing the case if it had specified the State court?
William R. Allensworth: I think it would be the same one as in Bremen, which didn't -- in The Bremen, which didn't mention court--
Justice Elena Kagan: No.
Bremen is an admiralty case.
Why won't it just be a forum non conveniens?
William R. Allensworth: --It -- it would be, and -- I've forgotten which Justice raised the question about this.
1404(a) is a codification of forum non conveniens.
In the absence of that, the case would just be dismissed.
Justice Elena Kagan: Yes.
I mean, 1404, it says that if it's says -- if the contract clause specifies a Federal court, it's a 1404 motion.
If it specifies a State court, it's a forum non conveniens motion.
William R. Allensworth: With the same result.
I would say the same result.
Dismissal would be--
Justice Stephen G. Breyer: That argues, then, it might be slightly against you.
William R. Allensworth: --I'm sorry?
Justice Stephen G. Breyer: The -- if in fact you specify a State court, if in fact you specify a foreign court, if in fact you specify arbitration, you agree in those instances you are going to use forum non conveniens or you are going to use 1406.
But you are saying where you specify a court in a different State, namely a Federal court in a different State, there you use 1404.
Justice Elena Kagan: Well, it's not 1406.
It's just forum non conveniens, which is--
Justice Stephen G. Breyer: Yes, it was forum non conveniens.
Oh, you use forum non conveniens in all three?
You don't use -- I mean, they specify a State court?
William R. Allensworth: Because the 1406 wouldn't apply because the -- because--
Justice Stephen G. Breyer: They say venue is a State court--
William R. Allensworth: --Yes, sir.
Justice Stephen G. Breyer: --use forum non conveniens in all those?
Use forum non conveniens in all those, but you use 1404 if they specify another Federal court.
That's what -- that's what -- that's what you're--
Justice Sonia Sotomayor: --You use 12(b)(3), not 1404.
Justice Stephen G. Breyer: --All right.
Justice Sonia Sotomayor: In those other cases you--
Justice Stephen G. Breyer: You use 12(b)(3), okay.
Justice Sonia Sotomayor: --you use 12(b)(3).
William R. Allensworth: Yes.
Justice Stephen G. Breyer: But my point is you're using something else, so they would say, well, let's have it the same -- you know -- okay.
I see the answer.
William R. Allensworth: Justice Breyer--
Justice Stephen G. Breyer: Forget it.
William R. Allensworth: --No, but that raises a larger question, and if I could -- if I could venture just a second -- and that's the systemic integrity of the -- of the system.
If you are going to transfer a case to -- within the system to another Federal court that's going to have to hear the case, one like this one where he is likely going to have to hear it without witnesses or certainly without live witnesses, and to render a judgment based on facts that were developed 1,500 miles away on a project that is that far away, that does implicate, I think, the integrity of the system and that ultimately a Federal judge is the one that's going to have to write and take it up in judgment if I can't scare up the witnesses to be in Virginia.
Justice Antonin Scalia: Don't -- don't put me in the group that thinks you can use forum non conveniens.
When -- when you have a forum selection clause for a State court and suit is brought -- attempted to be brought in a Federal court -- I mean, if it's in the Federal court, that is the most convenient court -- I mean, let's say it's in -- in a different State where all the witnesses are.
I think it's very strange to say that, because there is a contract provision requiring it to be brought in a State court, this court is an inconvenient court.
I -- do you know that the doctrine of forum non conveniens has ever been used that way?
William R. Allensworth: No, sir.
No, Your Honor, I don't.
And to confess I haven't thought through the -- the question that you just said.
Justice Stephen G. Breyer: Do you know the answer, this is another -- I keep thinking they should all come to the same conclusion.
But, then, what about this point Justice Sotomayor raised.
Suppose you sue in Texas.
You know, you get there, but the contract, let's say, was a different contract from yours, but it just was made in Nevada.
Everything about this concerns Nevada.
Are they really going to use Texas law to interpret the contract rather than Nevada's?
I would have thought that the choice of law question is a different question, and where you sue should be irrelevant to the choice of law question except insofar -- I don't know.
Maybe you looked--
William R. Allensworth: Van Dusen said that the law moves with the -- with the--
Justice Ruth Bader Ginsburg: Only because the Plaintiff -- the Plaintiff's choice of forum was to be respected.
But if the Plaintiff chooses a forum in violation of the contract, the whole rationale of that case falls.
William R. Allensworth: --Your Honor--
Justice Ruth Bader Ginsburg: It was to honor the Plaintiff's choice of forum.
Well, the contract says the Plaintiff doesn't have a choice.
William R. Allensworth: --Your Honor, the contract that Judge Higginbotham pointed out doesn't have a selection of law -- law clause.
They put -- it's got every other dispute resolution clause that could be in there to make it difficult for us to get this case to a Court, but it doesn't have a -- it doesn't have a choice of law provision in it.
Justice Ruth Bader Ginsburg: That the only reason that Van Dusen came out the way it did was -- I think it was that Justice Black said the Plaintiff's choice of forum merits respect.
It doesn't merit respect when the Plaintiff has agreed that the suit will go forward someplace else.
William R. Allensworth: I don't recall.
Justice Sonia Sotomayor: In other words, that issue has not been decided by them.
Justice Samuel Alito: If 1404 is the correct procedural route, why shouldn't the rule be something like this: Where there is a forum selection clause, the burden is on -- the burden of trying to establish venue in some other jurisdiction is on the party opposing the forum selection clause, not the party that's invoking the forum selection clause.
And the only factors that can be considered against the forum selection clause to -- to result in an exceptional case where that wouldn't be honored are factors that have nothing to do with the convenience of the -- of the party that doesn't want it tried in -- in the selected forum or with the likelihood of success of the party that doesn't want it tried in the sel -- in the jurisdiction specified in the forum selection clause.
So in your case, if there had been a hurricane that wiped out the courts of the Eastern District of Virginia for some period of time so no cases could be tried, or there was an incredible back load of cases there that would prevent the case from being tried, maybe that would be -- those would be something that might amount to an exceptional circumstance, but everything else is off the board.
What's wrong with that?
William R. Allensworth: First off, on the validity of the clause, we acknowledge we'd have the burden.
We were trying to avoid this clause on the ground, on whatever grounds, on any Bremen grounds or we got cheated into it or anything like that.
We'd have the burden on that.
We didn't try to carry that burden.
We're not attacking the clause.
They have the burden on the main case -- on the transfer itself.
Justice Samuel Alito: Well, why should that -- why should that be, where there's a forum selection clause?
William R. Allensworth: I don't think that it's even a matter really so much of burden as it is of weight.
And you all already have spoken on that where you said that it's -- that clause is to get significant -- significant weight.
It ought to be central to the analysis, but it's not dispositive.
And our -- our contention was that the clause was not dispositive, but that every -- every factor that possibly could go -- militate against transferring this case to Virginia existed, and that's why the court, giving appropriate deference to the clause, to that clause, hearing what the evidence was and deciding as you--
Justice Antonin Scalia: It should have been a Virginia court to make that decision instead of your friendly, down home Texas court.
And that's -- you know, that was why the forum selection clause was put in there.
It doesn't seem to me such a stretch as you think it is to say that the venue is improper when you have agreed that venue would not lie in this Court.
William R. Allensworth: --We can't confer venue.
We can -- we can waive venue, but we can't make improper venue--
Justice Antonin Scalia: So the -- the question is: Is it improper when it's been waived?
Is it improper for a court to acknowledge venue when the party has -- has said I -- I cannot -- I cannot bring my suit in this court.
I don't think it's a terrible stretch to -- to call that improper venue.
However theoretical it may be, venue is -- is decided by -- by statute, of course it is.
But people may waive it, and when people have waived it, I don't know that there's a great interest in -- in saying that, nonetheless, the venue remains proper.
It seems to me you've given it away and it ought to be -- it ought to be the -- the court where the parties agree that suit would lie that would decide these -- these change-of-venue questions.
The provision need not be absolutely dispositive, but to the extent it isn't, that is a call that -- that ought to be made by the jurisdiction that the parties agreed to.
The whole litigation ought to begin there.
They shouldn't have to litigate this change of venue provision in a court where the parties agreed they would not appear.
It seems to me terribly unfair.
William R. Allensworth: --There's a couple of factors on that, Your Honor.
First off, the rule that I think my colleagues here are calling for effectively emasculates 1404 and takes the Federal judiciary out of it.
The question -- and I follow your question about the propriety of the venue.
Justice Antonin Scalia: Why is that?
Why is that?
Why can't the Court, where you agreed to be sued, apply 1404?
William R. Allensworth: Another reason for that is that our contract has a one-way arbitration clause in it which they -- which the Petitioner claims not to have waived.
If this case is decided -- it goes to Virginia -- if we filed the case in Virginia and they immediately demanded arbitration, the case would be arbitrated.
But under the FAA, it would be sent to an -- it'd be -- the court in Virginia would appoint an arbitrator in -- presumably in Virginia.
And under the FAA, we don't even necessarily even have the right to take depositions to provide -- to move to get the evidence before the court even in deposition form.
We'd rather have the case decided in Texas on $160,000 case, and I know that's a pittance.
Justice Sonia Sotomayor: Excuse me.
Are you saying that by filing in Texas, you're not going to arbitration?
William R. Allensworth: No.
If we go to arbitration, we go to arbitration in Texas.
We don't have any complaint about that.
What we don't want to do is go to arbitration in Virginia, which it has not had -- and in this contract, for everything it's got in it, it doesn't have a clause that says that arbitration would be conducted in -- there's not a choice of forum clause for the arbitration.
There is for litigation, but not for arbitration.
Justice Sonia Sotomayor: So what's more favorable about Texas other than your convenience?
What's more favorable about arbitration in Texas other than your convenience?
William R. Allensworth: That's my--
Justice Sonia Sotomayor: That's the only thing.
It's convenient for you to be in Texas.
William R. Allensworth: --It's convenient for us.
The arbitrator can drive out to the project and draw his own conclusions about what -- about how the thing is built.
He can talk to the witnesses who are within his subpoena power or the subpoena power of our District Court in Texas to show up.
Justice Stephen G. Breyer: --Are -- are you finished?
I'd just like, if you'd want, to give you a chance to take what I've -- I think Professor Sachs says, look, there is a way which you can both follow the statutes literally and say, well, venue is here, and also get the place to the right forum respecting the contract.
Just say it is an affirmative defense, which Justice Ginsburg says the First Circuits follow this approach.
You put it in the complaint.
The answer, and once it's in the answer, the judge can put it front and center.
Indeed, in case he forgets to do that, the defendant will remind him and say you've got to get it to the right court and let's decide this affirmative defense thing first.
And -- and now we're back in the same place.
What do you think of that?
William R. Allensworth: I think that that's going to unnecessarily complicate this.
It gets in -- it raises some difficult to hearing questions about which -- difficult hearing questions which the Court, I think, successfully avoided in -- with its decision in Stewart.
I don't think that -- that 12(b) motions are particularly appropriate places to decide these contract issues.
And it eliminates the 1404 gatekeeper role that the district court otherwise could be providing and was providing.
Justice Elena Kagan: --Professor Sachs says that in the case of any disputed facts on a 12(b)(6), you would have to have a trial.
Do you agree with that?
William R. Allensworth: Yes, Your Honor, and I think that he under -- underestimates the ability for resolute counsel to raise undisputed facts that would otherwise prevent the summary judgment practice that he suggested--
Chief Justice John G. Roberts: Well, what facts are -- what facts are -- in the normal case, what facts are going to be pertinent?
I mean, you've got the contract there.
I mean, I suppose you can always say, we entered under duress and all that, but that wouldn't seem to me to be typical in the normal commercial case in which these provisions are critically important.
What facts are going to be there.
William R. Allensworth: --I think there might be a question of materiality.
There might be a question--
Chief Justice John G. Roberts: But what type -- what type of materiality?
William R. Allensworth: --How material that clause was to the parties' contract or whether you were going to try to have severability and focus exclusively on that clause.
Chief Justice John G. Roberts: Well, the venue provision -- I mean, if they go to the trouble of putting a venue selection -- forum selection provision in, I would say it seems pretty material.
William R. Allensworth: It might or might not, depending on whichever state law applies to -- and what -- because that would be under state law to decide on the materiality, what the effect of the prior breach is.
We -- this case has been cast in Manatee in terms about our breach of the contract by failing to file suit in Virginia.
The only written -- the only handwritten clause in this entire contract, which is in the appendix, I think, at Page 16, is the one that says what the price is.
What brings us here to the federal system is not for a declaratory relief or to make new law on venue; it's to collect $160,000.
That clause, I think, ultimately would be weighed -- may be weighed depending on the Court, if it -- if the case was being decided on purely--
Justice Sonia Sotomayor: So they would be -- the only people collecting that $160,000 are going to be the lawyers.
William R. Allensworth: --I -- I wish.
Justice Sonia Sotomayor: You took a contingency case in a contract matter?
William R. Allensworth: And the other thing, as Professor Sachs points out--
Justice Antonin Scalia: I wish.
William R. Allensworth: --The -- as he points out, and Justice Haynes -- Judge Haynes did in the Fifth Circuit, whether they can file suit for us for breach of contract and the expense that we put them to.
Yes, I think -- I think they probably could.
We at least get $160,000 head start on that, and they can bring that as an offset to our claim if they want to.
We disagree with the question of whether it would cost them any more to litigate in Texas than it would in Virginia anyway.
They're going to have to hire a law firm.
If we litigate in Virginia, they are going to have to send a lot of -- batch of lawyers back to Texas to defend the depositions that we'd ask to be taken there.
I don't know that this case costs any more to be litigated in Texas where the witnesses are available and where they might not have to be deposed than in Virginia where they have to -- where they have to ship them across the country.
If there is no further questions, thank you, Your Honor.
Chief Justice John G. Roberts: Thank you, counsel.
Mr. Hastings, you have four minutes left.
REBUTTAL ARGUMENT OF WILLIAM S. HASTINGS ON BEHALF OF THE PETITIONER
William S. Hastings: Thank you, Mr. Chief Justice.
I have just a few brief comments.
First, the parties bargained for the right result, and they bargained and reached a contract that should settle the issue of conveniens and where this case should be litigated.
Stewart has an important observation that I think needs to be emphasized.
Even under a 1404(a) analysis, the majority in Stewart said The Bremen is still instructive.
And if it's instructive on anything, on any rules enforcing a contract, it should be instructive at this level.
The burden should be on the party trying to get out from their contract.
The Fifth Circuit misallocated the burden.
The burden should also be a high one.
It really should require exceptional circumstances or perhaps even more, and it should not be a case where a party can avoid its contract based upon inconveniences that were foreseeable at the time of contracting.
For example, the fact that J-Crew hired Texans to work on its project.
It knew what the project was about and what it would need to do, and it should not be able to rely upon hiring Texans to change the deal it negotiated with my client.
There needs to be a clear rule that allows the courts to hopefully answer the questions about contracts and venue so we all can stop litigating these issues and know the right answers and avoid inundating the courts with motions to transfer for parties wanting to renegotiate contracts.
Since the Third Circuit and Sixth Circuit and now the Fifth Circuit have adopted the minority position, there has been a proliferation of litigation when a contract already answered the question.
We cited many cases in our cert petition in a footnote, and I know there's been many more since then.
And those are the ones that you can find published.
That doesn't even mention the ones that are unpublished.
And so a clear rule needs to be in place to avoid these problems.
Justice Kagan, you raised the issue of forum non conveniens as perhaps the answer as to what would happen for a state or foreign contract clause.
I wanted to briefly touch on that because I don't believe that's the right answer.
The Bremen looked at a case that came up as a forum non conveniens case and said, we are not going to use the forum non conveniens test for enforcing a contract requiring litigation in an international forum.
They resoundingly rejected the forum non conveniens approach, and I believe the circuit courts have read Bremen as rejecting that approach.
If that were going to be the approach to answer the problem created by the Fifth Circuit for foreign and state courts, what we would end up with is a new common law approach, whether called forum non conveniens or called something else, that looks like nothing like forum non conveniens and probably a whole new line of litigation over how that's--
Justice Elena Kagan: I think you mistook my point at least.
Maybe I didn't express it clearly.
Bremen comes up on a forum non conveniens motion, and the Court says, yes, the contract controls, quite properly so.
So, you know, the fact that it comes up on a forum non conveniens motion has nothing to do with the question of whether the contract controls where, if it negotiated for a certain set of things and there is no exceptional public interest otherwise.
William S. Hastings: --And, Justice Kagan, following Bremen, the lower courts have recognized that what essentially Bremen is doing is saying forum non conveniens is not the right approach, and so instead of a common law vehicle to answer this issue, we submit that the right answer is right there in the rules already.
It's 12(b)(3) is the best answer.
Section 1406 allows the Court also to address this issue.
Honestly, Section -- Rule 12(b)(6) in Professor Sach's approach is much better than leaving these issues to balancing tests.
Justice Elena Kagan: Can I ask you one last question about 12(b)(6)?
William S. Hastings: Yes, Your Honor.
Justice Elena Kagan: Which is, you know, when 1404 is -- suppose a state which does not recognize these clauses, 1404 trumps that according to Stewart.
But if you were under 12(b)(6), you would have to go to what Justice Scalia does in the Stewart dissent.
I think you would have to go to a twin aims of Erie analysis.
And in that circumstance, it seems to me that the state law would come out the victor; isn't that right?
William S. Hastings: Justice Kagan, the only way I know how to answer that question is I do not know how the Professor Sachs approach can actually be reconciled with Stewart.
There is significant tensions in how that plays out as an issue that I do not know how it plays out, but I suspect it would result in lots of litigation--
Justice Sonia Sotomayor: If it's under 12(b)(3) then Stewart stays, and it's Federal law that controls and a judge decides, right?
William S. Hastings: --Yes, Your Honor, and that's why we are asking this Court to follow the majority approach on this issue.
Chief Justice John G. Roberts: Thank you, counsel.
The case is submitted.