United States Court of Appeals,

                             Fifth Circuit.

                              No. 95-50286.

   INTERNATIONAL SOFTWARE SYSTEMS, INC., Plaintiff-Appellant,

                                      v.

 AMPLICON, INC., doing business as Amplicon Financial, Defendant-
Appellee.

                             March 7, 1996.

Appeal from the United States District Court for the Western
District of Texas.

Before REAVLEY, HIGGINBOTHAM and BARKSDALE, Circuit Judges.

     REAVLEY, Circuit Judge:

     By   what    criteria   should   a    federal   court,   acting   under

diversity jurisdiction, decide a motion to dismiss on grounds of a

forum selection clause?      The district court employed the Bremen1

analysis, and we affirm.

     International Software Systems, Inc. (ISSI) originally sued

Amplicon, Inc. in Texas state court, claiming that certain lease

agreements with Amplicon had been fraudulently induced, and seeking

damages or in the alternative rescission of the leases.           The case

was removed to federal court based on diversity jurisdiction.

Amplicon filed a motion to dismiss the case on grounds of improper

venue, relying on a forum selection clause found in the lease

agreements.      The clause states that "[t]he lessee agrees that all

litigation arising out of this lease or any breach thereof shall be


     1
      M/S Bremen v. Zapata Off-Shore Co., 

, 

, 

(1972).

                                      1
filed and conducted in the California Superior Court for the County

of Orange, unless the Lessor or its assignee selects an alternative

venue of litigation."

     The district court dismissed the case based on this forum

selection clause alone, noting that the claims arose out of the

written contract and that the forum selection clause is "reasonable

and unfortunately necessary in a commercial world where litigation

is the norm."

                              DISCUSSION

     Amplicon made no claim of lack of personal jurisdiction.   Its

only objection to venue in the Texas federal court was based on the

forum selection clause.2    Furthermore, Amplicon did not move, even

in the alternative, to transfer the case to another district court.

In light of this posture of the case, our analysis centers on two

questions.    The first is whether a district court may dismiss (as

opposed to transfer) a case based solely on a forum selection

clause, where personal jurisdiction exists and venue is otherwise

proper.    Second, if dismissal is allowed in such a case, what test

or standards should the court employ in deciding the motion to

dismiss.

A. May the Court Dismiss?

         In M/S Bremen v. Zapata Off-Shore Co., 

, 

, 

(1972), the Court held that in admiralty cases


     2
      Under 28 U.S.C. § 1391(a) and (c), venue in a diversity
suit lies against a corporate defendant in any district where the
corporation "resides," and a corporation is deemed to reside in
any district in which it is subject to personal jurisdiction.

                                  2
forum selection clauses "are prima facie valid and should be

enforced unless enforcement is shown by the resisting party to be

"unreasonable' under the circumstances," and that courts should

enforce such clauses unless the resisting party "could clearly show

that enforcement would be unreasonable and unjust, or that the

clause was invalid for such reasons as fraud or overreaching."              

, 1916.             We have applied Bremen to

transfer motions in nonadmiralty cases.          E.g., Seattle-First Nat'l

Bank v. Manges, 

, 799 (5th Cir.1990);            In re Fireman's

Fund Ins. Cos., 

, 95 (5th Cir.1979).            The district court

applied the Bremen case here.

      We see no justification for regarding the scope of 28 U.S.C.

§ 1406(a)3 as to dismissal any narrower than § 1404(a)4 as to

transfer.       This court has upheld dismissal of a suit as an

appropriate means of enforcing a forum selection clause under

Bremen.      Zapata Marine Serv. v. O/Y Finnlines, Ltd., 

(5th Cir.1978).        In another admiralty case the Supreme Court

implicitly approved of dismissal of a case as a means of enforcing

a forum selection clause. In Carnival Cruise Lines, Inc. v. Shute,

,   

,   

  (1991),   two


      3
      Section 1406(a) provides that "[t]he district court of a
district in which is filed a case laying venue in the wrong
division or district shall dismiss, or if it be in the interest
of justice, transfer such case to any district or division in
which it could have been brought."
      4
      Section 1404(a) provides that "[f]or the convenience of
parties and witnesses, in the interest of justice, a district
court may transfer any civil action to any other district or
division where it might have been brought."

                                       3
passengers on a cruise brought a negligence action against the

cruise operator.     The plaintiffs sued in their home state of

Washington.   The defendant moved for summary judgment, claiming

that the forum selection clause on the cruise tickets required suit

to be brought in Florida, and alternatively that the Washington

court lacked personal jurisdiction over defendant.      

111 S.Ct. at 1524.     The district court granted summary judgment

based on the personal jurisdiction argument.      

of

appeals reversed, holding that personal jurisdiction existed, and

that the forum selection clause should not be enforced.        

111 S.Ct. at 1524-25. The Supreme Court reversed the court

of appeals without reaching the personal jurisdiction issue, in

effect reinstating the dismissal of the suit based on the forum

selection clause.    

, 1529.

B. Determining the Dismissal Motion

        We return to the question of whether the Bremen test or

something different should be applied in a diversity case upon a

motion to dismiss.    In Stewart Org., Inc. v. Ricoh Corp., 

, 

, 

(1988), an action filed in

federal court under diversity jurisdiction, the defendant moved to

dismiss or transfer venue based on a forum selection clause.      The

Court held that federal rather than state law governed this issue,

and that under federal law the decision whether to transfer venue

is governed by 28 U.S.C. § 1404(a).     

108 S.Ct. at

2243.   The Court instructed that under this statute the court must

make an "individualized, case-by-case consideration of convenience


                                  4
and fairness."     

108 S.Ct. at 2244 (citation omitted).

It should "weigh in the balance a number of case-specific factors,"

of which the forum selection clause is "a significant factor that

figures centrally in the district court's calculus."                   

should also consider "the convenience of the witnesses and

those public-interest factors of systemic integrity and fairness

under the heading of "the interest of justice.' "              

been described     as    a    response   to   "lower    courts'   overly     broad

application   of   The       Bremen   result[ing]      in   overenforcement    of

forum-selection clauses."         Leandra Lederman, Note, Viva Zapata!:

Toward a Rational System of Forum-Selection Clause Enforcement in

Diversity Cases, 66 N.Y.U.L.REV. 422, 447 (1991).5

     Although we would prefer to apply the same Stewart balancing

in diversity cases to motions to dismiss and motions to transfer,

the other federal courts have decided otherwise and continue to

apply Bremen to motions to dismiss based on a forum selection

clause.   In Jones v. Weibrecht, 

(2d Cir.1990), the

court reasoned that ("[t]here is no basis ... to import the

discretionary federal standard of section 1404(a) discussed in

Stewart to the instant cases.            A motion to transfer an action to

another federal district pursuant to section 1404(a) calls for an

"individualized, case-by-case consideration of convenience and

fairness.'    The same broad-based balancing is not appropriate

where, as here, a party seeks to have an action dismissed or

     5
      If this explains the Court's different treatment in
Stewart, we might expect in a proper case for Bremen to be
modified to match Stewart.

                                         5
remanded to state court, rather than transferred, on the basis of

a forum selection clause that purports to preclude litigation from

a venue other than a specific state court.")        (citations omitted).

    In Manetti-Farrow, Inc. v. Gucci America, Inc., 

, 512 n. 2 (9th Cir.1988) the court explained that ("[o]ur

case involves a motion to dismiss, rather than to transfer venue,

and because there is no federal rule directly on point the Stewart

analysis is inapplicable.").      

n. 2    The Second and Ninth

Circuits hold that Bremen applies to such motions to dismiss.

;       

.          The

Fourth Circuit has looked to state law to determine the motion to

dismiss. Nutter v. Rents, Inc., 

, at **5-7 (4th Cir.

Oct. 1, 1991).    The First and Third Circuit have ruled that they

need not reach the issue of whether state or federal law should

govern   the   motion   to   dismiss,   since   under   either   Bremen    or

applicable state law the result is the same.        Lambert v. Kysar, 

, 1116-22 (1st Cir.1993);        Instrumentation Assocs., Inc.

v. Madsen Elecs. (Canada) Ltd., 

, 6-8 (3d Cir.1988);

Crescent Int'l, Inc. v. Avatar Communities, Inc., 

, 945

(3d Cir.1988).    Still other courts have suggested that a motion to

dismiss is not an appropriate means of enforcing a forum selection

clause, and that instead the motion should be treated as a motion

to transfer.   Haskel v. FPR Registry, Inc., 

, 915-16

(E.D.N.Y.1994); National Micrographics Sys., Inc. v. Canon U.S.A.,

Inc., 

, 679 (D.N.J.1993);            Page Constr. Co. v.

Perini Constr., 

, 10-11 (D.R.I.1989).         However, these


                                    6
cases, unlike our own, did not involve a forum selection clause

that limited the agreed venue to a state court.

     We choose to join the other courts rather than to make a

circuit split and further complicate this area of the law.

C. Arguments For Reversal

        ISSI urges this court to decide venue in its favor and

sustain venue in the Western District of Texas, but we reject its

arguments.     It contends that this case does not really arise out of

the contract since it is not suing for breach of contract.                     We

agree   with   the   district   court       that   even   though   ISSI   is   not

technically suing for breach of contract, the entire controversy

centers around which party's interpretation of the contract is the

correct one, and whether ISSI was fraudulently induced to enter

into the contract.

        ISSI then argues that it is a small company with only twenty

employees and no business ties to California.                  This is not a

persuasive argument for several reasons.             First, despite its size,

ISSI appears to be a fairly sophisticated business with experience

in negotiating complex government and private contracts.                  Second,

it is disingenuous to argue that ISSI has no ties to California,

since in this very case it did business with Amplicon, makes

payments to Amplicon in California, agreed in writing that the

leases shall be governed by California law, and agreed to return

the equipment in issue to California upon the termination of the

lease, if it chose not to purchase the equipment.                  Third, while

litigation in California may be inconvenient for ISSI, Amplicon


                                        7
points out that it would be equally inconvenient for Amplicon to

have to litigate in Texas.    Fourth, a forum selection clause was

upheld in Carnival Cruise Lines even where the plaintiffs were

individuals.     ISSI's   David   versus   Goliath   argument   is   not

persuasive.

     ISSI also argues that the forum selection clause here is

different from those enforced in other cases, since it applied only

to ISSI;   Amplicon was not bound to litigate the agreement only in

California.    We fail to see how this distinction matters.      There

was still a meeting of the minds that ISSI should have to sue in

California.

     AFFIRMED.




                                   8