Court Opinion

ID: 9601285
Source: CourtListenerOpinion
Date Created: 2023-08-22 01:41:00.312409+00
Date Added: 2024-06-11T10:22:04.229948
License: Public Domain

KAREN NELSON MOORE, Circuit Judge,
concurring.
I concur with the per curiam opinion but write separately to set forth my view of the Supreme Court and Sixth Circuit precedent concerning the two procedural mechanisms that may be used to enforce a valid forum-selection clause: (1) a motion to dismiss under Fed.R.Civ.P. 12(b)(6), and (2) a motion to transfer pursuant to 28 U.S.C. § 1404(a). When a party seeks to enforce a forum-selection clause through a properly brought motion to dismiss, the district court may enforce the forum-selection clause through dismissal. See Security Watch, Inc. v. Sentinel Sys., Inc., 176 F.3d 369, 371, 374-76 (6th Cir.1999) (affirming the district court’s dismissal pursuant to an unspecified subsection of Federal Rule of Civil Procedure 12(b) to enforce a forum-selection clause). However, when a party seeks to enforce a forum-selection clause by moving to transfer venue, § 1404(a)’s balancing test controls and the forum-selection clause is considered as one factor in the overall balance. See Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 28-32, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988); Kerobo v. Sw. Clean Fuels, Corp., 285 F.3d 531, 538-39 (6th Cir.2002).
In Ricoh, the Supreme Court held that a federal court should apply § 1404(a) to evaluate a party’s motion to enforce a forum-selection clause by requesting transfer of the action to another federal district permitted under the clause. 487 U.S. at 28-32, 108 S.Ct. 2239. The plaintiffs in Ricoh brought suit in the Northern District of Alabama on a contract containing a forum-selection clause specifying that any dispute arising out of the contract must be brought in a court in Manhattan. The defendants then moved either to transfer the ease to the U.S. District Court for the Southern District of New York under § 1404(a) or to dismiss for improper venue under 28 U.S.C. § 1406. The district court denied the motion, and the only issue *370raised on appeal was whether § 1404(a) governed the parties’ venue dispute. Id. at 24-25, 28, 108 S.Ct. 2239.1 In holding that § 1404(a) governs a party’s request to enforce a forum-selection clause by transfer to another federal district, the Supreme Court instructed district courts to weigh forum-selection clauses within the “flexible and individualized analysis Congress prescribed in § 1404(a).” Id. at 29, 108 S.Ct. 2239. The Court stated that the presence of a forum-selection clause “will be a significant factor that figures centrally in the district court’s calculus.” Id. However, a forum-selection clause is not dispositive and must be weighed against other factors in the § 1404(a) balancing test:
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.”
Id. at 30. The Court also noted that the district court should consider the “convenience of a [proposed transferee] 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.” Id. at 29,108 S.Ct. 2239.
In Kerobo, we applied Ricoh to a case “that in all material respects” was “indistinguishable from Ricoh.” 285 F.3d at 533. The plaintiffs in Kerobo brought suit in Michigan state court alleging various claims arising out of a franchise agreement, which contained a forum-selection clause providing that any suit must be brought in Orange County, California. Id. at 532-33. The defendants removed the case to federal district court in Michigan, and then moved either to (1) dismiss the suit for improper venue pursuant to Fed. R.Civ.P. 12(b)(3) because the forum-selection clause established venue in California, or (2) transfer the case to the U.S. District Court for the Southern District of California under § 1404(a). Id. at 533. Relying on M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), the district court found that the forum-selection clause was reasonable and granted the defendants’ motion to dismiss pursuant to Rule 12(b)(3). Kerobo, 285 F.3d at 533. On appeal, we reversed the dismissal and remanded with instructions for the district court to consider whether transfer was appropriate under § 1404(a).
We first held that Rule 12(b)(3) is not a proper procedural mechanism for enforcing a forum-selection clause, at least in cases removed from state to federal court. See id. at 534-36. We observed that under the federal removal statute, 28 U.S.C. § 1441(a), venue for an action removed from the state court was proper in the U.S. District Court for the Eastern District of Michigan. Id. at 535. Consequently, the forum-selection clause could not render statutory venue “improper.” Id. Further, we observed that the Supreme Court in Ricoh “footnoted with apparent approval the parties’ agreement that the district court had properly denied the motion to dismiss for improper venue because the case had been filed in the venue prescribed by 28 U.S.C. § 1391, the statute governing venue for cases filed di*371rectly in federal court.” Id. at 536 (citing Ricoh, 487 U.S. at 28 n. 8, 108 S.Ct. 2239). We concluded that this provided a “clear signal that if venue is proper under the statute, a motion to transfer for improper venue will not lie.” Id. Having rejected dismissal under Rule 12(b)(3) as improper, we were left, like the Supreme Court in Ricoh, with the motion to transfer under § 1404(a). Id. at 536-39. Concluding that the case was indistinguishable from Ricoh, we held that “Ricoh entirely governs the case before us here and compels the conclusion that § 1404(a) governs the parties’ venue dispute.” Id. at 539.
Ricoh and Kerdbo thus indicate that, when a party seeks to enforce a forum-selection clause by moving to transfer venue, § 1404(a)’s balancing test controls the district court’s decision whether to give effect to the forum-selection clause (assuming, of course, that venue is proper in the place of filing and that the forum-selection clause allows suit in another federal forum).
On the other hand, when a party seeks to enforce a forum-selection clause via a properly brought motion to dismiss, the distinct court may enforce the forum-selection clause by dismissing the action. See Security Watch, 176 F.3d at 374-76.2 In Security Watch, the plaintiff brought suit in the U.S. District Court for the Western District of Tennessee alleging breach of contract and other claims. Id. at 370. The contracts at issue contained both a forum-selection clause, providing that any action must be brought in state or federal court in Virginia, and an alternative-dispute-resolution (“ADR”) clause. Id. The defendants moved to dismiss pursuant to Rule 12(b) of the Federal Rules of Civil Procedure (without naming a specific subsection). The district court granted the motion on the grounds that both the forum-selection clause and the ADR clause precluded litigation of the action in Tennessee. Id. On appeal, we affirmed the district court’s dismissal of the action on the basis of the forum-selection clause. Id. at 374-76. In contrast to Ricoh and Kerdbo, neither party in Security Watch moved for transfer under § 1404(a) or otherwise raised § 1404(a) before the district court.
Accordingly, it is my view that the two lines of cases described above provide alternative procedural mechanisms for enforcing a valid forum-selection clause. Whether a district court should consider a forum-selection clause as one factor within § 1404(a)’s balancing test, or instead consider it standing alone (in determining whether to dismiss the case); depends on whether the parties have invoked the clause in a motion to transfer venue under § 1404(a) or in a motion to dismiss under Fed.R.Civ.P. 12(b)(6). See 14D Weight, Miller & Cooper, supra, § 3803.1 (“The better view, followed by the First, Second, and Third Circuits is that a forum selection clause does not render venue improper in an otherwise proper forum and that a valid clause should be enforced by either a Section 1404(a) transfer or a Rule 12(b)(6) motion to dismiss for failure to state a claim.”). Because the defendant has not yet moved to enforce the forum-selection clause via either of these mechanisms, I agree that the case should be remanded so that the district court may rule on a properly brought motion.

. The Court noted with apparent approval that ''[t]he parties do not dispute that the District Court properly denied the motion to dismiss the case for improper venue under 28 U.S.C. § 1406(a) because respondent apparently does business in the Northern District of Alabama.” Id. at 28 n. 8, 108 S.Ct. 2239 (citing 28 U.S.C. § 1391(c)).

. Of course, if transfer is not possible because a valid forum-selection clause mandates venue in state court or a foreign jurisdiction, § 1404(a) does not apply. See 14D Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 3803.1 (2008).