Source: http://www.chanrobles.com/usa/us_supremecourt/487/22/case.php
Timestamp: 2018-12-13 23:23:03
Document Index: 123589982

Matched Legal Cases: ['§ 1404', '§ 1406', '§ 1404', '§ 1404', '§ 1404', '§ 1404', '§ 1404', '§ 1404', '§ 1404', '§ 1404', '§ 1404', '§ 1404', '§ 1404', '§ 1404', '§ 1404', '§ 1404', '§ 3848', '§ 1404', '§ 1404', '§ 1404', '§ 1404', '§ 1404', '§ 1404']

Relying on the contractual forum-selection clause, respondent moved the District Court either to transfer the case to the Southern District of New York under 28 U.S.C. § 1404(a) or to dismiss the case for improper venue under 28 U.S.C. § 1406. The District Court denied the motion. Civ. Action No. 84-AR-2460-S (Jan. 29, 1985). It reasoned that the transfer motion was controlled by Alabama law, and that Alabama looks unfavorably upon contractual forum-selection clauses. The court certified its ruling for interlocutory appeal, chanroblesvirtualawlibrary
On appeal, a divided panel of the Eleventh Circuit reversed the District Court. The panel concluded that questions of venue in diversity actions are governed by federal law, and that the parties' forum-selection clause was enforceable as a matter of federal law. 779 F.2d 643 (1986). The panel therefore reversed the order of the District Court and remanded with instructions to transfer the case to a Manhattan court. After petitioner successfully moved for rehearing en banc, 785 F.2d 896 (1986), the full Court of Appeals proceeded to adopt the result, and much of the reasoning, of the panel opinion. 810 F.2d 1066 (1987). [Footnote 2] The en banc court, citing Congress' enactment or approval of several rules to govern venue determinations in diversity actions, first determined that "[v]enue is a matter of federal procedure." Id. at 1068. The Court of Appeals then applied the standards articulated in the admiralty case of The Bremen v. Zapata Off-Shore Co., 407 U. S. 1 (1972), to conclude that "the choice of forum clause in this contract is in all respects enforceable generally as a matter of federal law. . . ." 810 F.2d 1071. We now affirm under somewhat different reasoning.
Both the panel opinion and the opinion of the full Court of Appeals referred to the difficulties that often attend "the sticky question of which law, state or federal, will govern various aspects of the decisions of federal courts sitting in chanroblesvirtualawlibrary
diversity." 779 F.2d 645. A district court's decision whether to apply a federal statute such as § 1404(a) in a diversity action, [Footnote 3] however, involves a considerably less intricate analysis than that which governs the "relatively unguided Erie choice." Hanna v. Plumer, 380 U. S. 460, 380 U. S. 471 (1965) (referring to Erie R. Co. v. Tompkins, 304 U. S. 64 (1938)). Our cases indicate that, when the federal law sought to be applied is a congressional statute, the first and chief question for the district court's determination is whether the statute is "sufficiently broad to control the issue before the Court." Walker v. Armco Steel Corp., 446 U. S. 740, 446 U. S. 749-750 (1980); Burlington Northern R. Co. v. Woods, 480 U. S. 1, 480 U. S. 4-5 (1987). This question involves a straightforward exercise in statutory interpretation to determine if the statute covers the point in dispute. See Walker v. Armco Steel Corp., supra, at 446 U. S. 750, and n. 9. [Footnote 4] See also Burlington Northern R. chanroblesvirtualawlibrary
If the district court determines that a federal statute covers the point in dispute, it proceeds to inquire whether the statute represents a valid exercise of Congress' authority under the Constitution. See Hanna v. Plumer, supra, at 380 U.S. 471471 (citing Erie R. Co. v. Tompkins, supra, at 304 U. S. 77-79). [Footnote 5] If Congress intended to reach the issue before the district court, and if it enacted its intention into law in a manner that abides with the Constitution, that is the end of the matter; "[f]ederal courts are bound to apply rules enacted by Congress with respect to matters . . . over which it has legislative power." Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U. S. 395, 388 U. S. 406 (1967); cf. Hanna v. Plumer, supra, at 380 U. S. 471 ("When a situation is covered by one of the Federal Rules . . . the court has been instructed to apply the Federal Rule, and can refuse to do so only if the Advisory Committee, this Court, and Congress erred in their prima facie judgment that the Rule in question transgresses neither the terms of the Enabling Act nor constitutional restrictions"). [Footnote 6] Thus, a district court, sitting in diversity, must apply a federal statute that controls the issue before the court and that represents a valid exercise of Congress' constitutional powers. chanroblesvirtualawlibrary
At the outset we underscore a methodological difference in our approach to the question from that taken by the Court of Appeals. The en banc court determined that federal law controlled the issue based on a survey of different statutes and judicial decisions that, together, revealed a significant federal interest in questions of venue in general, and in choice-of-forum clauses in particular. The Court of Appeals then proceeded to apply the standards announced in our opinion in The Bremen v. Zapata Off-Shore Co., 407 U. S. 1 (1972), [Footnote 7] to determine that the forum-selection clause in this case was enforceable. But the immediate issue before the District Court was whether to grant respondent's motion to transfer the action under § 1404(a), [Footnote 8] and, as Judge Tjoflat properly noted in his special concurrence below, the immediate issue before the Court of Appeals was whether the District Court's denial of the § 1404(a) motion constituted an abuse of discretion. Although we agree with the Court of Appeals that the Bremen case may prove "instructive" in resolving the parties' dispute, 810 F.2d 1069; but cf. Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U. S. 630, 451 U. S. 641-642 (1981) (federal common law developed under admiralty jurisdiction not freely transferable to diversity setting), we disagree with the chanroblesvirtualawlibrary
court's articulation of the relevant inquiry as "whether the forum selection clause in this case is unenforceable under the standards set forth in The Bremen." 810 F.2d 1069. Rather, the first question for consideration should have been whether § 1404(a) itself controls respondent's request to give effect to the parties' contractual choice of venue and transfer this case to a Manhattan court. For the reasons that follow, we hold that it does.
Section 1404(a) is intended to place discretion in the district court to adjudicate motions for transfer according to an "individualized, case-by-case consideration of convenience and fairness." Van Dusen v. Barrack, 376 U. S. 612, 376 U. S. 622 (1964). A motion to transfer under § 1404(a) thus calls on the district court to weigh in the balance a number of case-specific factors. The presence of a forum-selection clause such as the parties entered into in this case will be a significant factor that figures centrally in the district court's calculus. In its resolution of the § 1404(a) motion in this case, for example, the District Court will be called on to address such issues as the convenience of a Manhattan forum, given the parties' expressed preference for that venue, and the fairness of transfer in light of the forum-selection clause and the parties' relative bargaining power. The flexible and individualized analysis Congress prescribed in § 1404(a) thus encompasses chanroblesvirtualawlibrary
It is true that § 1404(a) and Alabama's putative policy regarding forum-selection clauses are not perfectly coextensive. Section 1404(a) directs a district court to take account of factors other than those that bear solely on the parties' private ordering of their affairs. The district court also must weigh in the balance the convenience of the witnesses and those public interest factors of systemic integrity and fairness that, in addition to private concerns, come under the heading of "the interest of justice." It is conceivable in chanroblesvirtualawlibrary
Because § 1404(a) controls the issue before the District Court, it must be applied if it represents a valid exercise of chanroblesvirtualawlibrary
Judge Tjoflat, in a special concurrence joined by two other judges, argued that the District Court should have taken account of, and ultimately should have enforced, the forum-selection clause in its evaluation of the factors of justice and convenience that govern the transfer of cases under 28 U.S.C. § 1404(a). 810 F.2d 1071-1076. There also was a dissenting opinion by five members of the Eleventh Circuit, who argued that state law should govern the dispute, and warned that the application of federal law would encourage forum shopping and improperly undermine Alabama policy. Id. at 1076-1077.
In its application of the standards set forth in The Bremen to this case, the Court of Appeals concluded that the Alabama policy against the enforcement of forum-selection clauses is intended to apply only to protect the jurisdiction of the state courts of Alabama, and therefore would not come into play in this case, in which case this dispute might be much ado about nothing. See 810 F.2d 1069-1070. Our determination that § 1404(a) governs the parties' dispute notwithstanding any contrary Alabama policy makes it unnecessary to address the contours of state law. See n 4, supra.
I agree with the opinion of the Court that the initial question before us is whether the validity between the parties of a contractual forum-selection clause falls within the scope of 28 U.S.C. § 1404(a). See ante at 487 U. S. 26-27, 487 U. S. 29. I cannot agree, however, that the answer to that question is yes. Nor do I believe that the federal courts can, consistent with the twin aims test of Erie R. Co. v. Tompkins, 304 U. S. 64 (1938), fashion a judge-made rule to govern this issue of contract validity. chanroblesvirtualawlibrary
Although the language of § 1404(a) provides no clear answer, in my view it does provide direction. The provision vests the district courts with authority to transfer a civil action to another district "[f]or the convenience of parties and witnesses, in the interest of justice." This language looks to the present and the future. As the specific reference to convenience of parties and witnesses suggests, it requires consideration of what is likely to be just in the future, when the case is tried, in light of things as they now stand. Accordingly, the courts in applying § 1404(a) have examined a variety of factors, each of which pertains to facts that currently exist or will exist: e.g., the forum actually chosen by the plaintiff, the current convenience of the parties and witnesses, the current location of pertinent books and records, similar litigation pending elsewhere, current docket conditions, and familiarity of the potential courts with governing state law. See 15 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure §§ 3848-3849, 3851, 3853-3854 (2d ed.1986). In holding that the validity between the parties of a forum-selection clause falls within the scope of § 1404(a), the Court inevitably imports, in my view without adequate textual foundation, a new retrospective element into the court's deliberations, requiring examination of what the chanroblesvirtualawlibrary
The Court largely attempts to avoid acknowledging the novel scope it gives to § 1404(a) by casting the issue as how much weight a district court should give a forum-selection clause as against other factors when it makes its determination under § 1404(a). I agree that, if the weight-among-factors issue were before us, it would be governed by § 1404(a). That is because, while the parties may decide who between them should bear any inconvenience, only a court can decide how much weight should be given under § 1404(a) to the factor of the parties' convenience, as against other relevant factors such as the convenience of witnesses. But the Court's description of the issue begs the question: what law governs whether the forum-selection clause is a valid or invalid allocation of any inconvenience between the parties. If it is invalid, i.e., should be voided, between the parties, it cannot be entitled to any weight in the § 1404(a) determination. Since, under Alabama law, the forum-selection clause should be voided, see Redwing Carriers, Inc. v. Foster, 382 So.2d 554, 556 (Ala.1980), in this case the question of what weight should be given the forum-selection clause can be reached only if, as a preliminary matter, federal law controls the issue of the validity of the clause between the parties. * chanroblesvirtualawlibrary
We have said that an arbitration clause is a "kind of forum-selection clause," Scherk v. Alberto-Culver Co., 417 U. S. 506, 417 U. S. 519 (1974), and the contrast between this explicit preemption chanroblesvirtualawlibrary
Third, it has been common ground in this Court since Erie, 304 U.S. at 304 U. S. 74-77, that, when a federal procedural statute or Rule of Procedure is not on point, substantial uniformity of predictable outcome between federal and state courts in adjudicating claims should be striven for. See also Klaxon Co. v. Stentor Electric Mfg. Co., 313 U. S. 487, 313 U. S. 496 (1941). This rests upon a perception of the constitutional and congressional plan underlying the creation of diversity and pendent jurisdiction in the lower federal courts, which should quite obviously be carried forward into our interpretation of ambiguous statutes relating to the exercise of that jurisdiction. We should assume, in other words, when it is fair to do so, that Congress is just as concerned as we have been to avoid significant differences between state and federal courts in adjudicating claims. Cf. Southland Corp. v. Keating, 465 U. S. 1, 465 U. S. 15 (1984) (interpreting Federal Arbitration Act to apply to claims brought in state courts in order to discourage forum shopping). Thus, in deciding whether a federal procedural statute or Rule of Procedure encompasses a particular chanroblesvirtualawlibrary
In general, while interpreting and applying substantive law is the essence of the "judicial Power" created under Article III of the Constitution, that power does not encompass the making of substantive law. Cf. Erie, supra, at 403 U. S. 78-79. Whatever the scope of the federal courts' authority to create federal common law in other areas, it is plain that the mere chanroblesvirtualawlibrary
Under the twin-aims test, I believe state law controls the question of the validity of a forum-selection clause between the parties. The Eleventh Circuit's rule clearly encourages forum shopping. Venue is often a vitally important matter, as is shown by the frequency with which parties contractually provide for and litigate the issue. Suit might well not be pursued, or might not be as successful, in a significantly less chanroblesvirtualawlibrary
I believe creating a judge-made rule fails the second part of the twin-aims test as well, producing inequitable administration of the laws. The best explanation of what constitutes inequitable administration of the laws is that found in Erie itself: allowing an unfair discrimination between noncitizens and citizens of the forum state. 304 U.S. at 304 U. S. 74-75; see also Hanna, 380 U.S. at 380 U. S. 468, n. 9. Whether discrimination is unfair in this context largely turns on how important is the matter in question. See id. at 380 U. S. 467-468, and n. 9. The decision of an important legal issue should not turn on the accident of diversity of citizenship, see, e.g., Walker, 446 U.S. at 446 U. S. 753, or the presence of a federal question unrelated to that issue. It is difficult to imagine an issue of more importance, other than one that goes to the very merits of the lawsuit, than the validity of a contractual forum-selection provision. Certainly, the Erie doctrine has previously been held to require the application of state law on subjects of similar or obviously lesser importance. See, e.g., Walker, supra, (whether filing of complaint or service tolls statute of limitations); 350 U. S. 202-204 (1956) (arbitrability); Cohen v. Beneficial Industrial Loan Corp.,@ 337 U.S. at 337 U. S. 555-556 (indemnity bond for litigation expenses). Nor can or should courts ignore that issues of contract validity are traditionally matters governed by state law.