In the case of Stewart Organization, Inc. v. Ricoh Corp., the U.S Supreme Court was tasked with determining whether federal or state law should apply when deciding on a contractual forum-selection clause in diversity cases. The dispute arose from a contract between Stewart Organization (a photocopier dealer) and Ricoh Corporation (the manufacturer), which included a clause stating that any litigation would be conducted in New York courts. However, when disagreements emerged, Stewart filed suit in Alabama instead of New York as stipulated by their agreement. The Supreme Court ruled 6-3 that federal law applies to such decisions under Section 1404(a) of Title 28 - an act allowing for change of venue for convenience purposes - rather than relying solely on state laws regarding contracts and their enforcement. This decision upheld the validity of forum-selection clauses within contracts under federal law while also acknowledging that other factors could influence where litigation takes place.

In the dissenting opinion for Stewart Organization, Inc. v. Ricoh Corp., Justice Scalia argued that federal courts should not apply a federal common law rule favoring enforcement of forum-selection clauses in diversity cases, but rather should apply state law under the Erie doctrine. He contended that the majority's decision to uphold such clauses based on federal policy considerations was inconsistent with principles of federalism and judicial restraint. Furthermore, he disagreed with their interpretation of §1404(a), asserting it does not create a general interest in enforcing contractual choice-of-forum provisions but merely provides for transfer between proper venues when convenient or in interests of justice. Thus, he believed this case did not present an issue appropriate for resolution by reference to federal common law.