Nationally, there has long been a circuit split regarding the federal courts' analysis of forum selection clauses. As previously discussed, the federal courts in Massachusetts have generally been unwilling to enforce a forum selection clause appearing in a contract if enforcement of the clause would be unreasonable, unjust, or contrary to the public policy of the forum in which the lawsuit is brought. If a court strikes down a forum selection clause as unenforceable, the plaintiff is free to litigate its case in any proper court having jurisdiction over the parties and the subject matter of the case. Now, based upon a decision from the United States Supreme Court, the circumstances that will justify a federal court's refusal to enforce a forum selection clause will be few and far between, so long as the parties have previously agreed to litigate their disputes in a specific court pursuant to a valid contract.
In Atlantic Marine Construction Company, Inc. v. U.S. District Court for the Western District of Texas, the Supreme Court examined a forum selection clause contained in a construction contract between a contractor and its subcontractor. The parties' contract contained a forum selection clause in which the parties agreed that all disputes between them would be resolved in the state or federal court in Norfolk, Virginia, where the contractor firm was based. However, when the contractor failed to pay the subcontractor for work performed, it sued the contractor for breach of contract in a federal court in Texas, where the construction work occurred. The contractor asked the Texas federal district court to enforce the parties' forum selection clause and either dismiss the case or transfer it to the district court in Virginia. The Texas district court refused to do so, and that decision was upheld on appeal to the Fifth Circuit.
Generally, when a defendant seeks to transfer a case from one federal court to another for forum reasons, the governing statute is 28 U.S.C. 1404(a), which permits a court to transfer the action to another federal forum for the convenience of the parties. In determining whether a transfer should occur, the district court considered both the private interests of the parties as well as public interest considerations relative to the location of the litigation. For example, because the dispute arose from work completed in Texas, and many witnesses and most evidence would be located in Texas, Texas may be a more desirable forum for convenience purposes.
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