Fourth Circuit: Motion To Dismiss Based On Forum-Selection Clause Must Be Brought Under Rule 12(b)(3)
The Fourth Circuit today addressed a significant issue of first impression: When a motion to dismiss is filed on the basis of a forum-selection clause, should be motion be treated as a Rule 12(b)(1) motion (subject matter jurisdiction), a Rule 12(b)(3) motion (improper venue), or a Rule 12(b)(6) motion (merits-based determination)? The Court's answer: 12(b)(3). The case is Sucampo Pharmaceuticals, Inc. v. Astellas Pharma, Inc.
This ruling is important. Had the Court held that a forum-selection clause implicates subject matter jurisdiction (Rule 12(b)(1)), the clause couldn't be waived, could be made at any time in the litigation (including for the first time on appeal), and could be raised sua sponte by a court. Had the Court held that a forum-selection clause implicates the merits (Rule 12(b)(6)), the motion to dismiss would have to be based only on the pleadings, which would have to be taken as true (in favor of the plaintiff); and a defendant could raise the clause at any time before an disposition on the merits, not necessarily at the outset of litigation, because a 12(b)(6) motion may be made at any time before an adjudication on the merits.
By holding that a motion to dismiss based on a forum-selection clause is Rule 12(b)(3) motion to dismiss for improper venue, the Fourth Circuit avoided those consequences. As a result of its 12(b)(3) holding, there are two things to keep in mind, both of which the Court highlighted:
1. Unlike a 12(b)(1) or 12(b)(6) motion, a defendant waives the forum-selection clause if it's not raised in the defendant's first responsive pleading.
2. Unlike a 12(b)(6) motion, the district court is free to consider evidence outside the pleadings.
Bottom line: if you're sued and have a forum-selection clause, be sure to raise it in your first responsive pleading. Otherwise it's waived.
This ruling is important. Had the Court held that a forum-selection clause implicates subject matter jurisdiction (Rule 12(b)(1)), the clause couldn't be waived, could be made at any time in the litigation (including for the first time on appeal), and could be raised sua sponte by a court. Had the Court held that a forum-selection clause implicates the merits (Rule 12(b)(6)), the motion to dismiss would have to be based only on the pleadings, which would have to be taken as true (in favor of the plaintiff); and a defendant could raise the clause at any time before an disposition on the merits, not necessarily at the outset of litigation, because a 12(b)(6) motion may be made at any time before an adjudication on the merits.
By holding that a motion to dismiss based on a forum-selection clause is Rule 12(b)(3) motion to dismiss for improper venue, the Fourth Circuit avoided those consequences. As a result of its 12(b)(3) holding, there are two things to keep in mind, both of which the Court highlighted:
1. Unlike a 12(b)(1) or 12(b)(6) motion, a defendant waives the forum-selection clause if it's not raised in the defendant's first responsive pleading.
2. Unlike a 12(b)(6) motion, the district court is free to consider evidence outside the pleadings.
Bottom line: if you're sued and have a forum-selection clause, be sure to raise it in your first responsive pleading. Otherwise it's waived.
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