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

United States Court of Appeals for the Ninth Circuit · 2001 · Contracts

240 F.3d 781 (9th Cir. 2001)

Updated July 26, 2026

ContractsArbitrationBattle of the FormsVenuePreliminary InjunctionsFAA § 428 U.S.C. § 1391injunction against arbitration

Facts

Over about ten months, Textile sent purchase orders for yarn and A..BMH responded with invoices and acknowledgments containing additional terms not in Textile's orders, including arbitration in Atlanta, Georgia and exclusive venue in Fulton County, Georgia. Textile did not expressly assent to those added terms, but later accepted delivery of yarn and then refused to pay for one shipment, claiming it was defective. A..BMH commenced arbitration in Atlanta, and Textile filed suit in federal court in California to enjoin arbitration on the ground that no arbitration agreement existed. Textile had objected to arbitrability and reserved its jurisdictional challenge rather than litigating the merits in arbitration.

Issue

Whether the FAA required Textile's action to enjoin arbitration to be brought in the contractually designated arbitration locale in Georgia, and whether the parties' exchange of forms created a contract containing A..BMH's arbitration clause. Also, whether Textile waived its objection to arbitration by not objecting within the AAA time limit.

Rule

FAA § 4 permits a petition to compel arbitration to be filed in any federal district court that would otherwise have jurisdiction under Title 28, and it limits only where the arbitration compelled by that petition may occur; it does not require an action to enjoin arbitration to be filed in the contractually designated arbitration district. Under California Commercial Code § 2207, an acceptance expressly conditioned on assent to additional terms operates as a counteroffer, and absent the offeror's specific and unequivocal assent no contract is formed under § 2207(1); if the parties' conduct nevertheless forms a contract under § 2207(3), disputed additional terms drop out and only agreed terms plus U.C.C. gap-fillers remain. A party who never agreed to arbitrate does not waive its objection to arbitration merely by failing to comply with arbitral objection deadlines while contesting arbitrability only.

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Crescent Outfitters, a Nevada retailer with its principal place of business in Las Vegas, bought fabric from Blue Mesa Mills, a North Carolina wholesaler. Blue Mesa began arbitration in Charlotte under a clause printed on its forms, and Crescent filed a federal action in Nevada seeking to enjoin the arbitration on the ground that no arbitration agreement was ever formed; Blue Mesa is subject to personal jurisdiction in Nevada.

Assuming ordinary federal venue requirements are satisfied in Nevada, which is the best answer regarding venue?

Explanation. The majority held that FAA § 4 is narrowly directed to petitions to compel arbitration and does not require a suit to enjoin arbitration to be filed in the district designated as the arbitration locale. For an injunction action disputing whether an arbitration agreement exists, general venue law governs if otherwise satisfied. The opinion also rejected reading § 4's location language as a venue command for all arbitration-related suits.