Atlantic Marine Three Years On—The Survival of Rule 12(b)(6) in Enforcing Forum-Selection Clauses

By: Andrew G. Lizotte

November 3, 2016

Almost three years ago now, the Supreme Court decided Atlantic Marine Construction Company v. U.S. District Court for the Western District of Texas, 134 S. Ct. 568 (2013) and instructed both courts and litigants on the correct procedural and analytical framework for enforcing a contractual forum-selection clause. The Court held that: (1) the party trying to enforce the clause should move to transfer the action to the appropriate district under 28 U.S.C. § 1404(a) or—if the clause specifies a state or foreign tribunal—to dismiss the case under the doctrine of forum non conveniens; (2) courts should allow such motions unless compelling public-interest factors demand otherwise; and (3) upon transfer, the law of the transferee venue will control (an exception to the rule that, after a transfer under § 1404(a), the law of the transferring court still applies, which rule is itself an exception to the Erie and Klaxon doctrines).

The Court thus implicitly clarified its earlier position in Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 29-31 (1988), where it had suggested that, for district courts sitting in diversity (as opposed to in admiralty as in The Bremen v. Zapata Off–Shore Co., 407 U.S. 1 (1972)), a contractual forum selection clause, though “significant,” should not receive “dispositive consideration” over other factors that include “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.’” Since Atlantic Marine, the governing standard has more clearly tracked Justice Kennedy’s concurring opinion from Stewart (which incorporated the reasoning of The Bremen) that “a valid forum-selection clause [should be] given controlling weight in all but the most exceptional cases.” 487 U.S. at 33 (Kennedy, J., concurring). Atlantic Marine thus teaches that, irrespective of whether the agreement at issue involves international or domestic trade, the parties’ “private concerns” are fully addressed by a valid forum-selection clause.

Notably, however, there was no question in Atlantic Marine as to the validity of the forum selection clause; the Court assumed that the forum-selection clause was both valid and enforceable, and expressly refused to resolve a split among the circuits as to “whether a defendant in a breach-of-contract action could obtain dismissal under Rule 12(b)(6) if the plaintiff files suit in a district other than the one specified in a forum-selection clause.” See Atl. Marine, 134 S. Ct. at 574.

This matters because jurisdictions that previously had rejected Rule 12(b)(6) as a mechanism for confronting forum selection clauses did so on the ground that the standards for determining a clause’s enforceability are fact-intensive, meaning that “the pleadings are not accepted as true, as would be required under a Rule 12(b)(6) analysis.” Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996) (emphasis added) (citing The Bremen v. Zapata Off–Shore Co., 407 U.S. 1 (1972), among other cases); see also Sucampo Pharm., Inc. v. Astellas Pharma, Inc., 471 F.3d 544, 549 (4th Cir. 2006). Atlantic Marine thus appeared to leave in place the status quo both for how courts assess a forum selection clause’s validity, and what presumptions they should apply in doing so.

And since Atlantic Marine, the First Circuit has made its view clear that a Rule 12(b)(6) motion grounded solely on a forum-selection clause remains a perfectly appropriate mechanism for enforcing the relevant provision (Claudio-De Leon v. Sistema Universitario Ana G. Mendez, 775 F.3d 41, 46 (1st Cir. 2014)), while other Circuits have acknowledged either the continuing viability of that approach (see Smith v. Aegon Companies Pension Plan, 769 F.3d 922 (6th Cir. 2014) (affirming dismissal based on venue selection clause in ERISA plan where plan moved to dismiss under Rule 12(b)(6)), or the tension created by the Supreme Court’s decision not to reach the issue. In re Union Elec. Co., 787 F.3d 903, 906 (8th Cir. 2015). The Fifth Circuit, meanwhile, has described the First Circuit’s continued reliance on Rule 12(b)(6) as simply inconsistent with Atlantic Marine. Weber v. PACT XPP Techs., AG, 811 F.3d 758, 767 (5th Cir. 2016) (“the First Circuit continues to use its pre-Atlantic Marine Rule 12(b)(6) method of FSC enforcement instead of the Supreme Court’s recommended FNC approach.”). Other jurisdictions have yet to address the issue.

Even in Atlantic Marine’s wake, therefore, litigants on both sides of a forum-selection issue should carefully consider jurisdictional implications when framing their pleadings. Plaintiffs filing in the First Circuit confronting a contract that calls for another forum should marshal and plead in their Complaint any available facts that could defeat the clause’s validity, because whatever happens, any attempt to enforce it will be treated as a 12(b)(6) motion. Defendants in jurisdictions where the 12(b)(6) issue remains unresolved (and therefore may still be an option) should consider the potential strategic benefits of moving to dismiss (e.g. does the plaintiff have a limitations issue?) or if invoking § 1404(a) offers a more straightforward path to obtaining their desired result. Parties on both sides should consider any relevant differences in the governing standard of review. See Weber, supra. (rejecting First Circuit’s de novo review). In any event, the parties should be prepared to litigate elsewhere; Atlantic Marine left no doubt that federal courts—whether sitting in diversity or otherwise—will deny motions to transfer or dismiss based on forum selection clauses “[o]nly under extraordinary circumstances unrelated to the convenience of the parties. . . .” Atl. Marine, 134 S. Ct. at 581.