## Facts

- Textile Unlimited, Inc., a California buyer of yarn, engaged in roughly ten months of dealings with A.BMH & Co., a Georgia yarn seller, involving about thirty-eight transactions.
- For each transaction, Textile sent a purchase order through a California broker listing the goods, quantity, price, and related terms; the purchase orders did not contain an arbitration provision.
- A.BMH responded with invoices and order acknowledgments that included boilerplate terms not found in Textile’s purchase orders, including:
  - A clause stating sales were conditioned on acceptance of A.BMH’s terms and that acceptance of delivery constituted acceptance of those terms.
  - A mandatory arbitration clause requiring binding arbitration in Atlanta, Georgia under AAA Commercial Rules.
  - A Georgia choice-of-law provision and a Georgia state-court venue clause for court actions to enforce the agreement.
- After prior successful performance, Textile asserted that yarn shipped by A.BMH was defective.
- A.BMH sought to compel arbitration in Atlanta based on the arbitration language in its forms.
- Textile filed suit in the Central District of California seeking to enjoin the Georgia arbitration and to pursue its contract-related claims; the district court granted a preliminary injunction halting arbitration.

## Issues

1. Whether the Federal Arbitration Act requires a suit to enjoin arbitration to be brought only in the federal district embracing the contractually specified arbitration locale.
2. Whether the district court abused its discretion in preliminarily enjoining arbitration based on a finding that the arbitration clause in the seller’s forms did not become part of the parties’ contract under California Commercial Code § 2207 (UCC § 2-207).

## Decision

- The Ninth Circuit affirmed the preliminary injunction.
- The court held the FAA’s venue language is permissive and does not restrict a suit to enjoin arbitration to the district of the agreed arbitration site.
- The court held the district court did not abuse its discretion in finding a likelihood that Textile was not bound by the arbitration clause included in A.BMH’s invoices and acknowledgments.
- The court accepted the district court’s application of California Commercial Code § 2207 to treat the arbitration clause as an additional term that did not become part of the contract absent express assent, particularly because it materially altered the bargain.

## Legal Principles

- The FAA does not create an exclusive venue rule tied to the contractually designated arbitration location; ordinary federal venue principles apply unless displaced by statute.
- Under UCC § 2-207 (as enacted in California), additional terms in a merchant-to-merchant confirmation may be excluded when they materially alter the agreement; an arbitration clause can constitute a material alteration.
- An arbitration obligation must rest on agreement; repeated receipt of invoices containing boilerplate arbitration language, without express assent to that additional term, may be insufficient to bind the buyer in a battle-of-the-forms setting.
- A preliminary injunction may issue to prevent a party from being compelled to arbitrate absent a valid agreement to arbitrate, and appellate review focuses on whether the district court abused its discretion.

## Conclusion

The Ninth Circuit upheld an order stopping arbitration, holding that the FAA does not confine venue for an anti-arbitration injunction to the arbitration locale and that, under California’s UCC § 2-207, a seller’s invoice arbitration clause may be a materially altering additional term that does not enter the contract without the buyer’s express assent.


Textile Unlimited, Inc. v. A.BMH & Co., 240 F.3d 781 (9th Cir. 2001)