Petitioner company, an Alabama corporation, entered into a
dealership agreement to market copier products of respondent, a
nationwide manufacturer with its principal place of business in New
Jersey. The agreement contained a clause providing that any dispute
arising out of the contract could be brought only in a court
located in Manhattan, in New York City. Petitioner company (and the
individual stockholder petitioners) filed a diversity action in the
United States District Court for the Northern District of Alabama,
alleging,
inter alia, that respondent had breached the
agreement. Relying on the contractual forum-selection clause,
respondent filed a motion seeking,
inter alia, the
transfer of the case to the Southern District of New York under 28
U.S.C. § 1404(a), which provides:
"For the convenience of parties and witnesses, in the interest
of justice, a district court may transfer any civil action to any
other district or division where it might have been brought."
The court denied the motion, holding that Alabama law controlled
and that Alabama looks unfavorably upon contractual forum-selection
clauses. On interlocutory appeal, the Court of Appeals reversed and
remanded with instructions to transfer the case, holding that venue
is a matter of federal procedure and that, under the standards
articulated in the admiralty case of
The Bremen v. Zapata
Off-Shore Co., 407 U. S. 1, the
forum-selection clause was in all respects enforceable generally as
a matter of federal law.
Held:
1. When a federal law sought to be applied in a diversity action
is a congressional statute, the chief question for the district
court's determination is whether the statute is sufficiently broad
to control the issue before the court. If so, the court then must
inquire whether the statute represents a valid exercise of
Congress' authority under the Constitution. If Congress intended to
reach the issue before the court, and if it enacted its intention
into law in a manner that abides with the Constitution, that is the
end of the matter; federal courts are bound to apply laws enacted
by Congress with respect to matters over which it has legislative
power. Pp.
487 U. S.
25-27.
Page 487 U. S. 23
2. In this case, federal law, specifically § 1404(a), governs
the decision whether to give effect to the parties' forum-selection
clause and to transfer the case to a court in Manhattan. Pp.
487 U. S.
28-32.
(a) Although the Court of Appeals properly noted that the
Bremen case -- which held that federal courts sitting in
admiralty generally should enforce forum-selection clauses absent a
showing that to do so would be unreasonable and unjust, or that the
clause was invalid for such reasons as fraud or overreaching -- may
prove "instructive" in resolving the parties' dispute, the court
erred in its articulation of the relevant inquiry as being whether
the forum-selection clause in this case was unenforceable under the
Bremen standards. The first question for consideration
should have been whether § 1404(a) itself controls respondent's
request to give effect to the contractual choice of venue and to
transfer the case to a Manhattan court. Pp.
487 U. S.
28-29.
(b) Section 1404(a) is sufficiently broad to control the
forum-selection issue. The statute is intended to place discretion
in the district courts to adjudicate motions for transfer according
to an individualized, case-by-case consideration of convenience and
fairness. A motion to transfer under § 1404(a) calls on the
district court to weigh in the balance a number of case-specific
factors, and the presence of a forum-selection clause will figure
centrally in the calculus. A forum-selection clause should receive
neither dispositive consideration nor no consideration, but rather
the consideration for which Congress provided in § 1404(a). Section
1404(a) must be applied, since it represents a valid exercise of
Congress' authority under Article III as augmented by the Necessary
and Proper Clause. In this case, the District Court should
determine in the first instance the appropriate effect under
federal law of the parties' forum-selection clause on respondent's
§ 1404(a) motion. Pp.
487 U. S.
29-32.
810 F.2d 1066, affirmed and remanded.
MARSHALL, J., delivered the opinion of the Court, in which
REHNQUIST, C.J., and BRENNAN, WHITE, BLACKMUN, STEVENS, O'CONNOR,
and KENNEDY, JJ., joined. KENNEDY, J., filed a concurring opinion,
in which O'CONNOR, J., joined,
post, p.
487 U. S. 33.
SCALIA, J., filed a dissenting opinion,
post, p.
487 U. S.
33.
Page 487 U. S. 24
JUSTICE MARSHALL delivered the opinion of the Court.
This case presents the issue whether a federal court sitting in
diversity should apply state or federal law in adjudicating a
motion to transfer a case to a venue provided in a contractual
forum-selection clause.
I
The dispute underlying this case grew out of a dealership
agreement that obligated petitioner, an Alabama corporation, to
market copier products of respondent, a nationwide manufacturer
with its principal place of business in New Jersey. The agreement
contained a forum-selection clause providing that any dispute
arising out of the contract could be brought only in a court
located in Manhattan. [
Footnote
1] Business relations between the parties soured under
circumstances that are not relevant here. In September, 1984,
petitioner brought a complaint in the United States District Court
for the Northern District of Alabama. The core of the complaint was
an allegation that respondent had breached the dealership
agreement, but petitioner also included claims for breach of
warranty, fraud, and antitrust violations.
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,
Page 487 U. S. 25
see 28 U.S.C. § 1292(b) (1982 ed., Supp. IV), and the
Court of Appeals for the Eleventh Circuit accepted
jurisdiction.
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 at 1071. We now affirm under somewhat different
reasoning.
II
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
Page 487 U. S. 26
diversity." 779 F.2d at 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.
Page 487 U. S.
27
Co. v. Woods, supra, at
480 U. S. 7
(identifying inquiry as whether the Federal Rule "occupies [a state
rule's] field of operation").
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.
Page 487 U. S. 28
III
Applying the above analysis to this case persuades us that
federal law, specifically 28 U.S.C. § 1404, governs the parties'
venue dispute.
A
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 at 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
Page 487 U. S. 29
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 at 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.
B
Section 1404(a) provides:
"For the convenience of parties and witnesses, in the interest
of justice, a district court may transfer any civil action to any
other district or division where it might have been brought."
Under the analysis outlined above, we first consider whether
this provision is sufficiently broad to control the issue before
the court. That issue is whether to transfer the case to a court in
Manhattan in accordance with the forum-selection clause. We believe
that the statute, fairly construed, does cover the point in
dispute.
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
Page 487 U. S. 30
consideration of the parties' private expression of their venue
preferences.
Section 1404(a) may not be the only potential source of guidance
for the District Court to consult in weighing the parties' private
designation of a suitable forum. The premise of the dispute between
the parties is that Alabama law may refuse to enforce
forum-selection clauses providing for out-of-state venues as a
matter of state public policy. [
Footnote 9] If that is so, the District Court will have
either to integrate the factor of the forum-selection clause into
its weighing of considerations as prescribed by Congress, or else
to apply, as it did in this case, Alabama's categorical policy
disfavoring forum-selection clauses. Our cases make clear that, as
between these two choices in a single "field of operation,"
Burlington Northern R. Co. v. Woods, 480 U.S. at
480 U. S. 7, the
instructions of Congress are supreme.
Cf. ibid. (where
federal law's "discretionary mode of operation" conflicts with the
nondiscretionary provision of Alabama law, federal law applies in
diversity).
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
Page 487 U. S. 31
a particular case, for example, that, because of these factors a
district court acting under § 1404(a) would refuse to transfer a
case notwithstanding the counterweight of a forum-selection clause,
whereas the coordinate state rule might dictate the opposite
result. [
Footnote 10]
See 15 C. Wright, A. Miller, & E. Cooper, Federal
Practice and Procedure § 3847, p. 371 (2d ed.1986). But this
potential conflict in fact frames an additional argument for the
supremacy of federal law. Congress has directed that multiple
considerations govern transfer within the federal court system, and
a state policy focusing on a single concern or a subset of the
factors identified in § 1404(a) would defeat that command. Its
application would impoverish the flexible and multifaceted analysis
that Congress intended to govern motions to transfer within the
federal system. The forum-selection clause, which represents the
parties' agreement as to the most proper forum, should receive
neither dispositive consideration (as respondent might have it) nor
no consideration (as Alabama law might have it), but rather the
consideration for which Congress provided in § 1404(a).
Cf.
Norwood v. Kirkpatrick, 349 U. S. 29,
349 U. S. 32
(1955) (§ 1404(a) accords broad discretion to district court, and
plaintiff's choice of forum is only one relevant factor for its
consideration). This is thus not a case in which state and federal
rules "can exist side by side . . . each controlling its own
intended sphere of coverage without conflict."
Walker v. Armco
Steel Corp., 446 U.S. at
446 U. S.
752.
Because § 1404(a) controls the issue before the District Court,
it must be applied if it represents a valid exercise of
Page 487 U. S. 32
Congress' authority under the Constitution. The constitutional
authority of Congress to enact § 1404(a) is not subject to serious
question. As the Court made plain in
Hanna,
"the constitutional provision for a federal court system . . .
carries with it congressional power to make rules governing the
practice and pleading in those courts, which in turn includes a
power to regulate matters which, though falling within the
uncertain area between substance and procedure, are rationally
capable of classification as either."
380 U.S. at
380 U. S. 472.
See also id. at
380 U. S. 473
("
Erie and its offspring cast no doubt on the
long-recognized power of Congress to prescribe housekeeping rules
for federal courts"). Section 1404(a) is doubtless capable of
classification as a procedural rule, and indeed, we have so
classified it in holding that a transfer pursuant to § 1404(a) does
not carry with it a change in the applicable law.
See Van Dusen
v. Barrack, supra, at
376 U. S. 636-637 ("[B]oth the history and purposes of §
1404(a) indicate that it should be regarded as a federal judicial
housekeeping measure"). It therefore falls comfortably within
Congress' powers under Article III as augmented by the Necessary
and Proper Clause.
See Burlington Northern R. Co. v. Woods,
supra, at
480 U. S. 5, n.
3.
We hold that federal law, specifically 28 U.S.C. § 1404(a),
governs the District Court's decision whether to give effect to the
parties' forum-selection clause and transfer this case to a court
in Manhattan. [
Footnote 11]
We therefore affirm the Eleventh Circuit order reversing the
District Court's application of Alabama law. The case is remanded
so that the District Court may determine in the first instance the
appropriate effect under federal law of the parties'
forum-selection clause on respondent's § 1404(a) motion.
It is so ordered.
Page 487 U. S. 33
[
Footnote 1]
Specifically, the forum-selection clause read,
"Dealer and Ricoh agree that any appropriate state or federal
district court located in the Borough of Manhattan, New York City,
New York, shall have exclusive jurisdiction over any case or
controversy arising under or in connection with this Agreement and
shall be a proper forum in which to adjudicate such case or
controversy."
App. 38-39.
[
Footnote 2]
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 at
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.
[
Footnote 3]
Respondent points out that jurisdiction in this case was alleged
to rest both on the existence of an antitrust claim,
see
28 U.S.C. § 1337, and diversity of citizenship,
see 28
U.S.C. § 1332. Respondent does not suggest how the presence of a
federal claim should affect the District Court's analysis of
applicable law. The Court of Appeals plurality likewise did not
address this issue, and indeed characterized this case simply as a
diversity breach of contract action.
See 810 F.2d 1066,
1067, 1068 (1987). Our conclusion that federal law governs transfer
of this case,
see 487 U. S.
infra, makes this issue academic for purposes of this
case, because the presence of a federal question could cut only in
favor of the application of federal law. We therefore are not
called on to decide, nor do we decide, whether the existence of
federal question as well as diversity jurisdiction necessarily
alters a district court's analysis of applicable law.
[
Footnote 4]
Our cases at times have referred to the question at this stage
of the analysis as an inquiry into whether there is a "direct
collision" between state and federal law.
See, e.g., Walker v.
Armco Steel Corp., 446 U.S. at
446 U. S. 749;
Hanna v. Plumer, 380 U. S. 460,
380 U. S. 472
(1965). Logic indicates, however, and a careful reading of the
relevant passages confirms, that this language is not meant to
mandate that federal law and state law be perfectly coextensive and
equally applicable to the issue at hand; rather, the "direct
collision" language, at least where the applicability of a federal
statute is at issue, expresses the requirement that the federal
statute be sufficiently broad to cover the point in dispute.
See Hanna v. Plumer, supra, at
380 U. S. 470.
It would make no sense for the supremacy of federal law to wane
precisely because there is no state law directly on point.
[
Footnote 5]
Hanna v. Plumer, supra, identifies an additional
inquiry where the applicability of a Federal Rule of Civil
Procedure is in question. Federal Rules must be measured against
the statutory requirement of the Rules Enabling Act that they not
"abridge, enlarge or modify any substantive right. . . ." 28 U.S.C.
§ 2072.
[
Footnote 6]
If no federal statute or Rule covers the point in dispute, the
district court then proceeds to evaluate whether application of
federal judge-made law would disserve the so-called "twin aims of
the
Erie rule: discouragement of forum-shopping and
avoidance of inequitable administration of the laws."
Hanna v.
Plumer, supra, at
380 U. S. 468.
If application of federal judge-made law would disserve these two
policies, the district court should apply state law.
See Walker
v. Armco Steel Corp., supra, at
446 U. S.
752-753.
[
Footnote 7]
In
The Bremen, this Court held that federal courts,
sitting in admiralty, generally should enforce forum-selection
clauses absent a showing that to do so "would be unreasonable and
unjust, or that the clause was invalid for such reasons as fraud or
overreaching." 407 U.S. at
407 U. S. 15.
[
Footnote 8]
The 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.
See 28 U.S.C. § 1391(c)
(venue proper in judicial district in which corporation is doing
business).
[
Footnote 9]
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 at 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.
[
Footnote 10]
The dissent does not dispute this point, but rather argues that,
if the forum-selection clause would be unenforceable under state
law, then the clause cannot be accorded any weight by a federal
court.
See post at
487 U. S. 35.
Not the least of the problems with the dissent's analysis is that
it makes the applicability of a federal statute depend on the
content of state law.
See n 4,
supra. If a State cannot preempt a district
court's consideration of a forum-selection clause by holding that
the clause is automatically enforceable, it makes no sense for it
to be able to do so by holding the clause automatically void.
[
Footnote 11]
Because a validly enacted Act of Congress controls the issue in
dispute, we have no occasion to evaluate the impact of application
of federal judge-made law on the "twin aims" that animate the
Erie doctrine.
JUSTICE KENNEDY, with whom JUSTICE O'CONNOR joins,
concurring.
I concur in full. I write separately only to observe that
enforcement of valid forum-selection clauses, bargained for by the
parties, protects their legitimate expectations and furthers vital
interests of the justice system. Although our opinion in
The
Bremen v. Zapata Off-Shore Co., 407 U. S.
1,
407 U. S. 10
(1972), involved a Federal District Court sitting in admiralty, its
reasoning applies with much force to federal courts sitting in
diversity. The justifications we noted in
The Bremen to
counter the historical disfavor forum-selection clauses had
received in American courts,
id. at
407 U. S. 9,
should be understood to guide the District Court's analysis under §
1404(a).
The federal judicial system has a strong interest in the correct
resolution of these questions, not only to spare litigants
unnecessary costs but also to relieve courts of time-consuming
pretrial motions. Courts should announce and encourage rules that
support private parties who negotiate such clauses. Though state
policies should be weighed in the balance, the authority and
prerogative of the federal courts to determine the issue, as
Congress has directed by § 1404(a), should be exercised so that a
valid forum-selection clause is given controlling weight in all but
the most exceptional cases.
See The Bremen, supra, at
407 U. S. 10.
JUSTICE SCALIA, dissenting.
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.
Page 487 U. S. 34
I
When a litigant asserts that state law conflicts with a federal
procedural statute or formal Rule of Procedure, a court's first
task is to determine whether the disputed point in question in fact
falls within the scope of the federal statute or Rule. In this
case, the Court must determine whether the scope of § 1404(a) is
sufficiently broad to cause a direct collision with state law or
implicitly to control the issue before the Court,
i.e.,
validity between the parties of the forum-selection clause, thereby
leaving no room for the operation of state law.
See Burlington
Northern R. Co. v. Woods, 480 U. S. 1,
480 U. S. 4-5
(1987). I conclude that it is not.
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
Page 487 U. S. 35
facts were concerning, among other things, the bargaining power
of the parties and the presence or absence of overreaching at the
time the contract was made.
See ante at
487 U. S. 28,
and n. 7,
487 U. S.
29.
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.
*
Page 487 U. S. 36
Second, § 1404(a) was enacted against the background that issues
of contract, including a contract's validity, are nearly always
governed by state law. It is simply contrary to the practice of our
system that such an issue should be wrenched from state control in
absence of a clear conflict with federal law or explicit statutory
provision. It is particularly instructive in this regard to compare
§ 1404(a) with another provision, enacted by the same Congress a
year earlier, that
did preempt state contract law, and in
precisely the same field of agreement regarding forum selection.
Section 2 of the Federal Arbitration Act, 9 U.S.C. § 2,
provides:
"A written provision in . . . a contract evidencing a
transaction involving commerce to settle by arbitration a
controversy thereafter arising out of such contract or transaction,
or the refusal to perform the whole or any part thereof, or an
agreement in writing to submit to arbitration an existing
controversy arising out of such a contract, transaction, or
refusal, shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any
contract."
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
Page 487 U. S. 37
of state contract law on the subject and § 1404(a) could not be
more stark. Section 1404(a) is simply a venue provision that
nowhere mentions contracts or agreements, much less that the
validity of certain contracts or agreements will be matters of
federal law. It is difficult to believe that state contract law was
meant to be preempted by this provision that we have said "should
be regarded as a federal judicial housekeeping measure,"
Van
Dusen v. Barrack, 376 U. S. 612,
376 U. S.
636-637 (1964), that we have said did not change "the
relevant factors" which federal courts used to consider under the
doctrine of
forum non conveniens, Norwood v.
Kirkpatrick, 349 U. S. 29,
349 U. S. 32
(1955), and that we have held can be applied retroactively because
it is procedural,
Ex parte Collett, 337 U. S.
55,
337 U. S. 71
(1949). It seems to me the generality of its language -- "[f]or the
convenience of parties and witnesses, in the interest of justice"
-- is plainly insufficient to work the great change in law asserted
here.
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
Page 487 U. S. 38
issue, a broad reading that would create significant
disuniformity between state and federal courts should be avoided if
the text permits.
See, e.g., Walker v. Armco Steel Corp.,
446 U. S. 740,
446 U. S.
750-751 (1980);
Cohen v. Beneficial Industrial Loan
Corp., 337 U. S. 541,
337 U. S. 556
(1949);
Palmer v. Hoffman, 318 U.
S. 109,
318 U. S. 117
(1943);
cf. P. Bator, D. Meltzer, P. Mistakin, & D.
Shapiro, Hart and Wechsler's The Federal Courts and the Federal
System 828 (3d ed.1988) ("The Supreme Court has continued since
Hanna to interpret the federal rules to avoid conflict
with important state regulatory policies"). As I have shown, the
interpretation given § 1404(a) by the Court today is neither the
plain nor the more natural meaning; at best, § 1404(a) is
ambiguous. I would therefore construe it to avoid the significant
encouragement to forum shopping that will inevitably be provided by
the interpretation the Court adopts today.
II
Since no federal statute or Rule of Procedure governs the
validity of a forum-selection clause, the remaining issue is
whether federal courts may fashion a judge-made rule to govern the
question. If they may not, the Rules of Decision Act, 28 U.S.C. §
1652, mandates use of state law.
See Erie, supra, at
304 U. S. 72-73;
Hanna v. Plumer, 380 U. S. 460,
380 U. S.
471-472 (1965) (if federal courts lack authority to
fashion a rule, "state law must govern because there can be no
other law");
DelCostello v. Teamsters, 462 U.
S. 151,
462 U. S. 174,
n. 1 (1983) (O'CONNOR, J., dissenting) (Rules of Decision Act
"simply requires application of state law unless federal law
applies");
see also id. at
462 U. S. 159,
n. 13.
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
Page 487 U. S. 39
fact that petitioner here brought an antitrust claim,
ante at
487 U. S. 24,
does not empower the federal courts to make common law on the
question of the validity of the forum-selection clause.
See
Campbell v. Haverhill, 155 U. S. 610,
155 U. S. 616
(1895) (Rules of Decision Act "itself neither contains nor suggests
. . . a distinction" between federal question cases and diversity
cases);
DelCostello, supra, at
462 U. S. 173,
n. 1 (STEVENS, J., dissenting) (same);
cf. Texas Industries,
Inc. v. Radcliff Materials, Inc., 451 U.
S. 630 (1981). The federal courts do have authority,
however, to make procedural rules that govern the practice before
them.
See 28 U.S.C. § 2071 (federal courts may make rules
"for the conduct of their business"); Fed.Rule Civ.Proc. 83
(districts courts have authority to "regulate their practice");
see generally Sibbach v. Wilson & Co., 312 U. S.
1,
319 U. S. 9-10
(1941).
In deciding what is substantive and what procedural for these
purposes, we have adhered to a functional test based on the "twin
aims of the
Erie rule: discouragement of forum-shopping
and avoidance of inequitable administration of the laws."
Hanna, supra, at
380 U. S. 468;
see also ante at
487 U. S. 27, n.
6;
Walker v. Armco Steel Corp., supra, at
446 U. S. 747.
Moreover, although in reviewing the validity of a federal
procedural statute or Rule of Procedure we inquire only whether
Congress or the rulemakers have trespassed beyond the wide latitude
given them to determine that a matter is procedural,
see
Burlington Northern R. Co. v. Woods, 480 U.S. at
480 U. S. 5;
Hanna, supra, at
380 U. S.
471-474, in reviewing the lower courts' application of
the twin-aims test, we apply our own judgment as a matter of
law.
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
Page 487 U. S. 40
convenient forum. Transfer to such a less desirable forum is,
therefore, of sufficient import that plaintiffs will base their
decisions on the likelihood of that eventuality when they are
choosing whether to sue in state or federal court. With respect to
forum-selection clauses, in a State with law unfavorable to
validity, plaintiffs who seek to avoid the effect of a clause will
be encouraged to sue in state court, and nonresident defendants
will be encouraged to shop for more favorable law by removing to
federal court. In the reverse situation -- where a State has law
favorable to enforcing such clauses -- plaintiffs will be
encouraged to sue in federal court. This significant encouragement
to forum-shopping is alone sufficient to warrant application of
state law.
Cf. Walker v. Armco Steel Corp., supra, at
446 U. S. 753
(failure to meet one part of the twin-aims test suffices to warrant
application of state law).
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);
Bernhardt
v. Polygraphic Co. of America, 350 U.S.
Page 487 U. S. 41
198,
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.
For the reasons stated, I respectfully dissent.
* Contrary to the opinion of the Court, there is nothing unusual
about having "the applicability of a federal statute depend on the
content of state law."
Ante at
487 U. S. 31, n.
10. We have recognized that precisely this is required when the
application of the federal statute depends, as here, on resolution
of an underlying issue that is fundamentally one of state law.
See Commissioner v. Estate of Bosch, 387 U.
S. 456,
387 U. S. 457,
387 U. S.
464-465 (1967);
cf. Budinich v. Becton Dickinson
& Co., 486 U. S. 196,
486 U. S. 199
(1988) (dictum). Nor is the approach I believe is required
undermined by the fact that there would still be some situations
where the state law rule on the validity of a forum-selection
clause would not be dispositive of the issue of transfer between
federal courts. When state law would hold a forum-selection clause
invalid, the federal court could nonetheless order transfer to
another federal court under § 1404(a), but it could do so only if
such transfer was warranted without regard to the forum-selection
clause. This is not at all remarkable, since whether to transfer a
case from one federal district court to another for reasons other
than the contractual agreement of the parties is plainly made a
matter of federal law by § 1404(a). When, on the other hand, state
law would hold a forum-selection clause valid, I agree with JUSTICE
KENNEDY's concurrence that, under § 1404(a), such a valid
forum-selection clause is to be "given controlling weight in all
but the most exceptional cases."
Ante at
487 U. S. 33.
And even in those exceptional cases where a forum-selection clause
is valid under state law but transfer is unwarranted because of
some factor other than the convenience of the parties, the district
court should give effect to state contract law by dismissing the
suit.