Stewart Organization, Inc. v. Ricoh Corp.

Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22 (1988), is a United States Supreme Court case in which the Court further refined the test for determining whether federal courts sitting in diversity must apply state law as opposed to federal law under the Erie doctrine.[1] The question in Stewart was whether the federal venue transfer statute, 28 U.S.C. § 1404(a),[2] occupied the field or whether Alabama law's unfavorable stance towards forum-selection clauses should instead be applied. The Court held that the federal statute governed the District Court's decision whether to give effect to the forum-selection clause.

Stewart Organization, Inc. v. Ricoh Corp.
Argued February 29, 1988
Decided June 20, 1988
Full case nameStewart Organization, Inc., et al. v. Ricoh Corp., et al.
Citations487 U.S. 22 (more)
108 S. Ct. 2239; 101 L. Ed. 2d 22; 1988 U.S. LEXIS 2791
Case history
Prior779 F.2d 643 (11th Cir. 1985); vacated on rehearing en banc, 810 F.2d 1066 (11th Cir. 1987); cert. granted, 484 U.S. 894 (1987).
Holding
Federal law governed the District Court's decision whether to grant motion to transfer case to venue provided in contractual forum-selection clause.
Court membership
Chief Justice
William Rehnquist
Associate Justices
William J. Brennan Jr. · Byron White
Thurgood Marshall · Harry Blackmun
John P. Stevens · Sandra Day O'Connor
Antonin Scalia · Anthony Kennedy
Case opinions
MajorityMarshall, joined by Rehnquist, Brennan, White, Blackmun, Stevens, O'Connor, Kennedy
ConcurrenceKennedy, joined by O'Connor
DissentScalia
Laws applied
28 U.S.C. § 1404

Background

Stewart Organization, Inc. brought a suit against Ricoh Corp. arising out of a dealership agreement which obligated Stewart to market Ricoh's copiers. The agreement included a forum-selection clause specifying that suits were to be brought in Manhattan. When Stewart filed suit in Alabama, Ricoh moved to transfer the case to Manhattan pursuant to the forum-selection clause. However, the Alabama District Court denied the motion because Alabama law "looks unfavorably upon contractual forum selection clauses." However, the court certified an interlocutory appeal, which the Eleventh Circuit accepted. The Eleventh Circuit narrowly reversed the District Court.[3]

Opinion of the Court

The Supreme Court remanded the case, holding that the federal venue transfer statute, 28 U.S.C. § 1404(a), governed the District Court's interpretation of forum-selection clauses. In particular, the considerations of convenience to the parties and the fairness of the transfer in light of the parties relative bargaining power (when drafting the forum-selection clause) mandated by federal law collided with the Alabama policy categorically disfavoring forum-selection clauses, and that in the "single field of operation... the instructions of Congress are supreme."

Scalia's dissent

Justice Scalia dissented from the majority opinion, arguing that there was no direct collision between § 1404(a) and Alabama's law, and that therefore the appropriate inquiry is whether the Rules of Decision Act, 28 U.S.C. § 1652,[4] mandated the use of state law. Applying the RDA analysis from Hanna v. Plumer (1965), Scalia argued that state law governed the question because venue selection would encourage forum shopping, and that the choice of venue was highly outcome determinative because "[i]t 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."

References
  1. Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22 (1988).
  2. 28 U.S.C. § 1404(a).
  3. Stewart Organization, Inc. v. Ricoh Corp., 779 F.2d 643 (11th Cir. 1985); vacated on rehearing en banc, 810 F.2d 1066 (11th Cir. 1987).
  4. 28 U.S.C. § 1652.
This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.