Forum-selection clause doesn’t confer venue under § 1391

Although a government contractor agreed that any legal action would be brought “in a court of competent jurisdiction in Virginia,” that clause, by itself, did not establish that venue was proper in this court under 28 U.S.C. § 1391. As such, the suit was transferred to the Eastern District of Virginia.

Background

In December 2016, Technology Revelations Inc., or TechRev, entered a subcontract with Northrup Grumman Systems Corporation to provide staffing support on a government project located in Melbourne, Florida. In 2020, Peraton Inc. took over Northrup’s interest in the contract through acquisition. TechRev sued Northrup and Peraton alleging one count of breach of contract due to the removal of TechRev staff from the project. The case is before the court on defendants’ motion to dismiss for improper venue or, in the alternative, to transfer venue and for failure to state a claim.

Venue

At the hearing, TechRev conceded that venue is not statutorily proper in the Western District of Virginia; for venue purposes, defendants are properly viewed to reside in the Eastern District of Virginia. Nonetheless, TechRev argues that the defendants waived any objection to venue by agreeing to the forum-selection clause, which provides for venue in Virginia generally.

The subcontract states, “Any legal action shall be brought in a court of competent jurisdiction in Virginia.” And in another clause it states, “Any litigation shall be brought and jurisdiction and venue shall be proper only in a state or federal district court in the Commonwealth of Virginia.” Thus, the pertinent question in this case is whether a forum selection clause can provide a substitute for the requirements of 28 U.S.C. 1391.

TechRev’s argument that defendants waived objections to venue through the forum-selection clause is misplaced. Undoubtedly, venue is a privilege that a party may waive. But in both cases cited by TechRev, the party objecting to venue had expressly consented to venue or waived any objection. There is no explicit consent to venue or waiver to objections to venue in the forum-selection clauses at issue in this case.

The Supreme Court’s decision in Atlantic Marine Construction Co. Inc. v. United States District Court for the Western District of Texas, 571 U.S. 49 (2013), makes clear that “[w]hether the parties entered into a contract containing a forum-selection clause has no bearing on whether a case falls into one of the categories of cases listed in § 1391(b).” TechRev “conflates the relevance of a forum-selection clause to Section 1391(b) … with the relevance of a forum-selection clause to Section 1404(a).”

If this court applied TechRev’s argument that a valid forum-selection clause, without consent or waiver to venue, obviates the requirements of section 1391, it would be allowing “precisely what Atlantic Marine prohibits.” Instead, in accordance with Atlantic Marine, the court finds that a forum-selection clause, absent consent or waiver, does not independently establish venue. Thus, as conceded by TechRev, venue is improper in the Western District of Virginia.

Next steps

Given the court’s finding that venue is improper in this district, the court must decide whether to dismiss this matter or to transfer to the proper venue. The court finds that it is more efficient to transfer this case to the appropriate venue. This matter has been pending for a year, and there would be no prejudice to either party in ordering a transfer. Therefore, in the interests of justice, the court will transfer this matter to the Eastern District of Virginia.

Defendants’ motion to transfer granted.

Technology Revelations Inc. v. Peraton Inc., Case No. 7:21-cv-00518, Sept. 30, 2022. WDVA at Roanoke (Dillon). VLW 022-3-453. 7 pp.