February 24, 2020

February 24, 2020

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Ninth Circuit Binds Plaintiff to Arbitration Clause It Never Received, Finding Clause Was “Readily Available” and Incorporated by Reference Into Purchase Order

The Ninth Circuit affirmed an order granting a motion to compel arbitration and to dismiss, finding that a purchase order issued by the plaintiff to purchase goods from the defendant incorporated a binding arbitration clause encompassing the parties’ dispute. The arbitration clause was contained in terms and conditions expressly incorporated by reference into the defendant’s initial quotation. The plaintiff argued that it never received the terms and conditions — only the quotation — and thus that it could not have agreed to arbitrate. The Ninth Circuit disagreed, finding that the arbitration clause became part of the contract because the terms and conditions were “readily available” to the plaintiff, and the plaintiff therefore “acquiesced” to the arbitration provision by failing to reject it upon issuing its purchase order. The court also rejected the plaintiff’s argument that the arbitration clause was unconscionable, finding that the parties were both business entities with equal bargaining power and that they negotiated their agreement for months. The plaintiff’s final argument that the defendant waived its right to arbitrate was similarly rejected. The court held that the plaintiff failed to carry its “heavy burden” of showing that the defendant acted inconsistently with a known right to compel arbitration and that the plaintiff was prejudiced as a result.

Cunico Corp. v. Custom Alloy Corp., No. 18-55047, 2019 WL 2895148 (9th Cir. July 3, 2019).

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About this Author

Alex Silverman, Insurance lawyer, Carlton Fields

Alex Silverman represents U.S. and international insurers and reinsurers in complex commercial litigation and arbitration, including complex insurance coverage disputes and reinsurance matters. He regularly litigates and counsels insurers in connection with multimillion-dollar first-party and third-party claims in state and federal courts across the country, and has also litigated large-scale commercial health care and insurance fraud actions on behalf of insurers, including False Claims Act and RICO actions. 

In addition, Alex has experience representing corporations in shareholder...