## Facts

- Stewart Organization, Inc., an Alabama corporation, entered a dealership agreement to market Ricoh copier products.
- The agreement contained a forum-selection clause requiring contract disputes to be brought only in a court located in Manhattan, New York City.
- Stewart nonetheless filed a diversity action in the U.S. District Court for the Northern District of Alabama alleging breach of the dealership agreement and related claims.
- Ricoh moved to transfer the case to the Southern District of New York under 28 U.S.C. § 1404(a), or alternatively to dismiss for improper venue under 28 U.S.C. § 1406.
- The district court denied transfer, treating Alabama law (hostile to forum-selection clauses) as controlling and certifying the order for interlocutory appeal.
- The Eleventh Circuit reversed and directed transfer, reasoning that federal law governs venue transfer and that the forum-selection clause should be enforced within that framework.

## Issues

1. In a diversity action, whether a motion to transfer venue based on a contractual forum-selection clause is governed by federal law under 28 U.S.C. § 1404(a) or by state law disfavoring such clauses.
2. Whether § 1404(a) is sufficiently broad to control the treatment and weight of a forum-selection clause in deciding a transfer motion.

## Decision

- The Supreme Court affirmed the judgment directing that the transfer question be governed by federal law under § 1404(a).
- The Court held that § 1404(a) is sufficiently broad to control the transfer inquiry and that a forum-selection clause is a significant factor in the statutory analysis.
- The Court ruled that the district court erred by treating Alabama’s policy against forum-selection clauses as controlling in the § 1404(a) decision.
- The case was remanded for the district court to exercise discretion under § 1404(a), giving appropriate weight to the forum-selection clause rather than applying a categorical state rule.

## Legal Principles

- When a federal statute is invoked in a diversity case, the threshold question is whether the statute is sufficiently broad to control the issue; if so, and if constitutional, the federal statute governs.
- Section 1404(a) supplies the governing standard for federal venue transfers in diversity cases and calls for an individualized assessment of convenience and the interest of justice.
- A contractual forum-selection clause is neither dispositive nor irrelevant under § 1404(a); it should be weighed as an important consideration within the transfer calculus.
- A state policy that categorically disfavors forum-selection clauses cannot displace the federal transfer framework where § 1404(a) applies.

## Conclusion

The Court held that federal transfer law under 28 U.S.C. § 1404(a) governs how federal courts evaluate forum-selection clauses in diversity cases, requiring a discretionary balancing in which the clause is given substantial weight notwithstanding contrary state policy.


Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (1988)