Wednesday, April 24, 2013

In re Broadcom discusses forum selection clauses in CA5

The issue in
In re Broadcom
: Broadcom Corporation, Qualcomm Incorporated, and
Qualcomm Atheros, Inc. (petitioners) seek a writ of mandamus
ordering the U.S. District Court for the Eastern
District of Texas to dismiss this case or, in the alternative,
to transfer the case.
They lost.

Concerning the law of forum-selection clauses in CA5:

Based on the legal landscape at the time of the petition,
we would have been inclined to agree with the
petitioners. However, shortly after the petition was filed,
the Fifth Circuit expressly held that “when a forum selection
clause designates a specific federal forum,” a
motion to transfer under § 1404(a) “is the proper procedural
mechanism for enforcing the clause.”
In re Atl.
Marine Constr. Co., 701 F.3d 736, 739 (5th Cir. 2012),
cert. granted, --- S. Ct. ---, 2013 WL 1285318 (Apr. 1,
2013). In addition, the Fifth Circuit held that a district
court may place the burden on the moving party—not the
resisting party—to demonstrate that transfer to the
contracted forum is warranted. Id. at 741–42.

Of case law:

The petitioners argue that Atlantic Marine and Amplicon
conflict and that Amplicon thus governs under the
prior-panel rule. We disagree. Atlantic Marine distinguished
Amplicon on the basis that Amplicon involved a
forum-selection clause that exclusively designated a state
court forum, while the forum-selection clause at issue in
Atlantic Marine designated a federal forum. 701 F.3d at
741. Atlantic Marine explained that, when a forumselection
clause exclusively designates a state court
forum, § 1406(a) is the mechanism to enforce the clause
because a federal district court is “without power to
transfer.” 701 F.3d at 741. By contrast, the court held
that § 1404(a) applies when a forum-selection clause
designates an alternate federal forum. Id. at 739–41. We
are bound to apply Fifth Circuit precedent to this case.
Therefore, we conclude, consistent with Atlantic Marine,
that the district court did not abuse its discretion by
analyzing the forum-selection clause under § 1404(a)
rather than § 1406(a).

Atlantic Marine recognizes, however, that its holding
comports with only “a minority of the federal appellate
courts.” 701 F.3d at 739. The majority of the courts of
appeals “give effect to a forum-selection clause through a
motion to dismiss filed pursuant to Rule 12(b)(3) and
§ 1406.” Id. at 746–47 (Haynes, J., specially concurring)
(collecting cases).
The Fifth Circuit, however, does not.
We note that the Supreme Court recently granted certiorari
in Atlantic Marine. 2013 WL 1285318, at *1. While
the Supreme Court may overrule Atlantic Marine and
endorse the majority rule, we are bound by Fifth Circuit
law as it presently exists.

The outcome:

We conclude that the petitioners are not entitled to a
writ of mandamus ordering transfer to the Southern
District of New York. A forum-selection clause “should
receive neither dispositive consideration . . . nor no consideration
. . . but rather the consideration for which
Congress provided in § 1404(a).” Stewart Org., Inc. v.
Ricoh Corp., 487 U.S. 22, 31 (1988). The Fifth Circuit has
held that, in the context of a § 1404(a) motion, the district
court may place the burden on the movant to demonstrate
that the contractually-chosen forum is clearly more convenient
than the plaintiff’s chosen forum. Atl. Marine,
701 F.3d at 741–42.


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