Stewart Org., Inc. v. Ricoh Corp.

487 U.S. 22, 108 S. Ct. 2239 (1988)

 

RULE:

28 U.S.C.S. § 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. 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 is a significant factor that figures centrally in the district court's calculus.

FACTS:

An Alabama corporation entered into a dealership agreement to market the copier products of 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 New York City. The company (and the individual stockholder petitioners), filed a diversity action in the District Court of Alabama, alleging, the manufacturer had breached the agreement. Relying on the contractual forum-selection clause,the manufacturer filed a motion seeking the transfer of the case to the Southern District of New York. The district court denied the manufacturer's motion reasoning that state law controlled the motion and that state law disfavored contractual forum-selection clauses. On appeal, the Court of Appeals for the Eleventh Circuit reversed and remanded with instructions that the case be transferred. The intermediate appellate court held that the choice of forum clause in the contract was enforceable as a matter of federal law. The case was elevated to the Supreme Court of the United States on certiorari.

ISSUE:

Should the case be transferred to New York?

ANSWER:

Yes

CONCLUSION:

The Court stated that the relevant inquiry was whether § 1404(a) controlled the nationwide manufacturer's request to give effect to the forum-selection clause and transfer the case. In answering that inquiry, the Court held that § 1404(a) governed the parties' venue dispute. The case was remanded so that the district court could determine the appropriate effect under federal law of the parties' forum-selection clause on the motion to transfer.

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