Textile Unlimited, Inc. v. A..BMH and Company, Inc.

Over a period of ten months, Textile Unlimited, Inc. (Textile) (plaintiff) purchased yarn on thirty-eight separate occasions from A..BMH and Company, Inc. (BMH) (defendant). Each time, Textile sent a purchase order to a broker containing the date, item number, item description, quantity ordered, and price. BMH always responded with an invoice, followed by shipment of the yarn and an order acknowledgement. The order acknowledgement always contained additional terms not included in Textile’s purchase orders. These terms provided that any disputes would be resolved by arbitration in Atlanta, Georgia, under the Commercial Arbitration Rules of the American Arbitration Association. The arbitration was to be governed by Georgia law, and any court action was to be brought solely within the Superior Court of Fulton County, Georgia. BMH also included a provision in the fine print stating that Textile was “deemed to have accepted these terms in full” if Textile did not respond within 24 hours. Textile did not respond within 24 hours of receiving any of BMH’s order acknowledgements. In September 1998, Textile refused to pay for a shipment of yarn from BMH because the yarn was defective. BMH submitted the dispute to arbitration in Georgia. Textile objected to the arbitration on the ground that the BMH’s arbitration clause was not part of the contract between Textile and BMH. Textile filed an action in the United States District Court for the Central District of California to enjoin the arbitration. The district court held for Textile and preliminarily enjoined the pending arbitration. BMH appealed.