In Atlantic Marine Construction Co. v. US District Court for the Western District of Texas, the US Supreme Court held that a forum selection clause may be enforced by a motion to transfer under 28 U.S.C. § 1404(a), not by a motion to dismiss under 28 U.S.C. § 1406(a) or FRCP 12(b)(3) (No. 12-0929, (U.S. Dec. 3, 2013)). When a defendant files a Section 1404(a) motion, a district court should transfer the case unless extraordinary circumstances unrelated to the convenience of the parties clearly disfavor a transfer.

Petitioner Atlantic Marine Construction Co., a Virginia corporation, entered into a subcontract with respondent J-Crew Management, Inc., a Texas corporation, for work on a construction project. The agreement included a forum selection clause, which stated that disputes between the parties would be litigated in Virginia. However, when a dispute arose, J-Crew filed suit in the US District Court for the Western District of Texas. In response to J-Crew's complaint, Atlantic Marine made two motions:

The district court denied both motions. The district court held that Section 1404(a) is the exclusive mechanism for enforcing a forum selection clause that points to another federal forum and that Atlantic Marine bore the burden of establishing that a transfer would be appropriate under Section 1404(a). The court then considered a list of non-exhaustive public and private interest factors, of which the forum selection clause was only one such factor. After balancing these factors, the district court held that transfer would not be in the interest of justice and would not increase the convenience to the parties.

Atlantic Marine then petitioned the US Court of Appeals for the Fifth Circuit for a writ of mandamus directing the district court to dismiss or transfer the case. The Fifth Circuit agreed with the district court that Section 1404(a) is the exclusive mechanism for enforcing a forum selection clause that points to another federal forum. The court stated, however, that if a forum selection clause points to a non-federal forum, dismissal under FRCP 12(b)(3) would be the correct mechanism to enforce the clause because Section 1404(a) only permits transfer to another federal court. The Fifth Circuit then concluded that the district court did not abuse its discretion in refusing to transfer the case after conducting a balance-of-interest analysis required by Section 1404(a). The Supreme Court granted certiorari.

The Supreme Court held that a forum selection clause may be enforced by a transfer motion under Section 1404(a) rather than a motion to dismiss under Section 1406(a) or FRCP 12(b)(3). The court held that whether venue is proper depends exclusively on whether the court in which the case was brought satisfies the requirements of federal venue laws. Venue is generally governed by 28 U.S.C. § 1391, which defines three categories of proper venue. When venue is challenged, the district court must determine whether the case falls within one of the three categories set out in Section 1391(b). If a case meets the criteria of that section, venue is proper and the defendant can only make a Section 1404(a) motion for transfer to another proper venue. If a case does not fall into one of Section 1391(b)'s categories, venue is improper and the case must be dismissed or transferred under Section 1406(a) or FRCP 12(b)(3). Whether the parties' contract contains a forum selection clause has no bearing on whether a case falls into one of the specified categories.

The Supreme Court further held that when the parties have agreed to a contractually valid forum selection clause, a district court should transfer the case to the forum specified in that clause, unless extraordinary circumstances unrelated to the convenience of the parties clearly disfavor a transfer. Specifically, the court held that the presence of a valid forum selection clause requires district courts to adjust the usual Section 1404(a) analysis in three ways:

The Supreme Court held that the district court's application of Section 1404(a) did not comport with these principles, and therefore reversed and remanded the case. The court also noted that Section 1404(a) only governs transfer within the federal court system. When a forum selection clause points to a state or foreign forum, the clause may be enforced through the doctrine of forum non conveniens, not through FRCP 12(b)(3) as was suggested by the Fifth Circuit.