C.H.I. Inc. v. Marcus Brothers Textile, Inc.

930 F.2d 762 (1991)

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C.H.I. Inc. v. Marcus Brothers Textile, Inc.

United States Court of Appeals for the Ninth Circuit
930 F.2d 762 (1991)

Facts

C.H.I. Inc. (plaintiff), a California corporation, ordered fabric from Marcus Brothers Textile, Inc. (Marcus Brothers) (defendant). C.H.I.’s purchase orders to Marcus Brothers provided that any disputes would be governed by California law. Marcus Brothers responded with confirmation forms that stated, on their face, that they were subject to all terms and conditions on both sides of the forms. The face of each document included an arbitration provision, a provision deeming all terms accepted by the buyer and acknowledging that the form superseded the buyer’s order form, and a provision that the form would constitute the entire contract between them. On the back of the form was an arbitration clause that designated New York as the arbitration site. According to C.H.I., neither party mentioned arbitration during oral negotiations. Although C.H.I. did not deny that its president read and signed the confirmation, it claimed that it had no choice but to sign because it had made commitments to third parties and Marcus Brothers refused to ship the fabric until the contracts were signed. C.H.I. sought declaratory relief for breach of contract against Marcus Brothers in the California Superior Court. Marcus Brothers removed the action to federal district court based on diversity of citizenship and then sought dismissal for failure to arbitrate. The district court granted that motion, and C.H.I. appealed, asserting that Marcus Brothers’ form was unenforceable because C.H.I. did not knowingly consent to arbitration, because it was an adhesion contract, and because C.H.I. signed it under economic duress.

Rule of Law

Issue

Holding and Reasoning (Boochever, J.)

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