Facts
- Dywidag Systems International USA, Inc. (Dywidag) agreed to purchase wire strand from Insteel Wire Products Company (Insteel) through a series of transactions.
- The parties’ dealings involved purchase orders and other communications; at least some agreements were formed before Insteel issued its written “Sales Order Acknowledgment.”
- After orders were placed (and, in some instances, after shipment/acceptance), Insteel sent Sales Order Acknowledgments that included preprinted standard terms.
- Insteel’s standard terms contained a forum-selection clause requiring that any dispute be litigated exclusively in North Carolina state court.
- A dispute arose over Dywidag’s alleged breach (including nonpayment), and Insteel sued Dywidag in North Carolina state court.
- Dywidag removed the case to the United States District Court for the Middle District of North Carolina based on diversity jurisdiction.
- Insteel moved to remand, arguing the forum-selection clause was part of the parties’ contract and barred removal.
- The motion to remand was referred to a magistrate judge, who recommended granting remand; Dywidag objected, and the district judge conducted de novo review.
- Dywidag also moved to dismiss or stay based on related proceedings, and Insteel requested oral argument on remand.
Issues
- Whether the forum-selection clause printed in Insteel’s Sales Order Acknowledgments became part of the parties’ contracts under U.C.C. § 2-207.
- If the forum-selection clause was not a binding contract term, whether Dywidag’s removal based on diversity jurisdiction was proper (and remand should be denied).
- Whether the action should be dismissed or stayed in light of related litigation/proceedings.
Decision
- The court held that the forum-selection clause in Insteel’s Sales Order Acknowledgments did not become a term of the parties’ agreements under U.C.C. § 2-207.
- The court denied Insteel’s motion to remand and denied Insteel’s request for oral argument.
- The court denied Dywidag’s motion to dismiss or stay without prejudice and permitted Dywidag to refile after the remand issue was resolved.
Legal Principles
- Under U.C.C. § 2-207, when merchants exchange forms, additional terms in an acknowledgment or confirmation do not automatically bind the other party if the contract was formed earlier or if the added term would materially change the deal without clear agreement.
- Determining when and how the parties formed a contract (e.g., oral/letter agreement, purchase order and acceptance, shipment and acceptance) controls whether a later acknowledgment is part of contract formation or merely a proposal to add terms.
- Boilerplate forum-selection language added in a seller’s acknowledgment is commonly treated as an additional term; without proof that the buyer agreed to it as part of the bargain, the clause will not be enforced as a contract term.
- A party’s statutory right to remove a case to federal court is not waived unless a valid contractual forum-selection clause (or similar agreement) clearly restricts the forum; if the clause never became part of the contract, removal remains available.
Conclusion
The district court kept the case in federal court after concluding that Insteel’s forum-selection clause, printed in later Sales Order Acknowledgments, was not incorporated into the parties’ contracts under U.C.C. § 2-207; remand (and oral argument) was denied, and Dywidag’s dismissal/stay request was denied without prejudice to renewal.