Enforcement of Forum-Selection Clauses in Federal Court After Atlantic Marine

Fordham Law Review, Apr 2014

Forum-selection clauses are important agreements that limit exposure to risk of litigation in an undesired locale. The enforcement of forum-selection clauses in the U.S. federal court system was not always certain, but today, such agreements are broadly considered enforceable. Courts, however, are split as to whether such clauses are governed by state or federal law and as to the proper procedural mechanism for enforcement. Recently, in Atlantic Marine Construction Co. v. U.S. District Court, the U.S. Supreme Court made strides toward resolving these disagreements among lower courts. This Note explores the history of enforcement of forum-selection clauses in federal court and articulates the legal complexities that remain in the wake of Atlantic Marine. It argues that Atlantic Marine implicitly resolved the choice-of-law split in favor of applying state substantive law to determine a forum clause’s validity and federal procedural law to determine its enforceability. To effectuate this implicit resolution, this Note proposes that courts engage in a two-step analysis in evaluating motions to enforce forum-selection clauses and that litigants bring such motions under Federal Rules of Civil Procedure 12(b)(6), 12(c), or 56.

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Enforcement of Forum-Selection Clauses in Federal Court After Atlantic Marine

Atlantic Marine Matthew J. Sorensen 0 1 Recommended Citation 0 Fordham University School of Law 1 Matthew J. Sorensen, Enforcement of Forum-Selection Clauses in Federal Court After Atlantic Marine , 82 Follow this and additional works at; https; //ir; lawnet; fordham; edu/flr - TABLE OF CONTENTS INTRODUCTION........................................................................................ 2523  2014] INTRODUCTION A large internet service provider makes the search records of more than 650,000 customers available for public download.1 These records are subsequently distributed widely throughout the internet.2 They reveal highly sensitive personal information, including the customers’ struggles with sexuality, alcohol addiction, mental illness, physical abuse, domestic violence, incest, adultery, and rape.3 The records also “contain[] addresses, phone numbers, credit card numbers, social security numbers, passwords and other personal information.”4 In response to this information breach, two customers, suing as “Doe” plaintiffs to protect their anonymity, bring a class action against the internet service provider in California federal court seeking relief for all customers under a federal privacy statute and various California consumer protection laws.5 The defendant, seeking to enforce a forum-selection clause found in its standard customer agreement, brings a motion to dismiss for improper venue pursuant to Federal Rule of Civil Procedure 12(b)( 3 ).6 If the motion is successful, the plaintiffs will be compelled to bring their lawsuit in Virginia state court “where a class action remedy would be unavailable to them”7 and could be forced to bring their claims pursuant to Virginia law, which “provides significantly less consumer protection to its citizens than California law.”8 This Note assesses the substantive law governing the validity and enforceability of forum-selection clauses9 and procedural mechanisms for enforcing such clauses in federal court. The U.S. Supreme Court, in Atlantic Marine Construction Co. v. U.S. District Court,10 recently resolved a circuit split on the use of 28 U.S.C. §§ 1404 and 1406, relating to “Change of Venue” and “Cure or waiver of defects” in venue, respectively, and Rule 12(b)( 3 ), relating to the enforcement of forum-selection clauses. Missing from the narrow debate before the Court in Atlantic Marine, however, was discussion of a broader circuit split concerning the validity and enforcement of forum-selection clauses.11 Prior to Atlantic Marine, there was no meaningful consensus among the circuits concerning the standard for determining the validity and enforceability of forum-selection clauses or the proper procedural mechanisms for enforcement.12 While Atlantic Marine has provided some clarification, the remaining multifaceted circuit splits implicate longstanding federalism concerns,13 threaten to confuse litigators and courts, and jeopardize parties’ substantial litigation and contractual rights in federal court.14 Part I of this Note begins with an overview of the importance of forumselection clauses to contracting parties. These provisions assist parties in allocating the risk of litigating in a given jurisdiction before contractual disputes arise and thus increase predictability and efficient resolution of such disputes.15 The overview also explores the difference between socalled “mandatory” and “permissive” forum-selection clauses,16 how they interact with choice-of-law agreements, and how federal courts interpret the scope and meaning of such provisions.17 Part I includes a discussion of the Supreme Court’s forum-selection clause jurisprudence. This discussion begins with the Court’s historic refusal to give effect to forum-selection clauses, traces how that refusal was grounded in the “ouster doctrine,”18 and examines its subsequent abandonment by the Supreme Court in The Bremen v. Zapata Off-Shore Co.19 Part I.B discusses the Court’s holdings in The Bremen, Stewart Organization, Inc. v. Ricoh Corp.,20 and Carnival Cruise Lines, Inc. v. Shute,21 which led to widespread disagreements among lower 2014] federal courts concerning the enforcement of forum-selection clauses.22 It concludes with a discussion of Atlantic Marine,23 which resolved some— but far from all—of these disagreements and altered the standard of enforcement of forum clauses through the federal common law24 doctrine of forum non conveniens and § 1404(a).25 Part II explains the disagreements that remain among lower courts concerning the enforcement of forum-selection clauses. First, it discusses the split among federal courts concerning the application of federal or state law to determine the validity and enforceability of forum-selection clauses.26 Part II concludes by discussing the viability of enforcing forumselection clauses via Federal Rules of Civil Procedure 12(b)( 6 ), 12(c), and 5627 and explores the implications of this approach alongside Atlantic Marine’s newly a (...truncated)


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Matthew J. Sorensen. Enforcement of Forum-Selection Clauses in Federal Court After Atlantic Marine, Fordham Law Review, 2014, pp. 2521, Volume 82, Issue 5,