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Legal Memorandum: Forum Selection Clause

Issue: Whether a forum selection clause should be treated as dispositive.

Area of Law: Litigation & Procedure
Keywords: Forum selection clause; Dispositive; Motion to change venue
Jurisdiction: Federal, Minnesota, South Carolina
Cited Cases: 262 F. Supp. 2d 1004; 759 F. Supp. 1397; 330 F.3d 1062; 189 F. Supp. 2d 290; 487 U.S. 22
Cited Statutes: Section 1404(a)
Date: 11/01/2010

In Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 23 (1988), the United States Supreme Court considered whether, in a § 1404(a) motion to change venue, a forum selection clause should be treated as dispositive.  487 U.S. at 29.  The Court held that a forum selection clause is but one factor to be considered.  Section 1404(a) directs a district court to take into account other factors as well, including the convenience of the witnesses and public-interest factors of systemic integrity and fairness.  Id. at 29-30. 

In Nelson v. Master Lease Corp., 759 F. Supp. 1397, 1401 (D. Minn. 1991), the Minnesota Federal District Court further explained that a forum selection clause is not a substantial element in analyzing the interest-of-justice factor at all, but rather relates to the convenience of the parties.  “The existence of a forum selection clause cannot preclude the district court’s inquiry into the public policy ramifications of transfer decisions.”  Nelson, 759 F. Supp. at 1400 (quoting Red Bull Assocs. v. Best Western Int’l, Inc., 862 F.2d 963, 967 (2d Cir. 1988)).    

Accordingly, the existence of a forum selection clause naming Minnesota was not outcome determinative in the Dutt case.  Indeed, the Dutt court noted that although the forum selection clause in the Equipment Finance Agreement was entitled to “some weight in the analysis,” because the clause was permissive rather than mandatory, it was entitled only to a “little weight.” Lyon Fin. Servs., Inc. v. […]

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