Aceros Prefabricados, SA v. TradeArbed, Inc., 282 F. 3d 92 - Court of Appeals, 2nd Circuit 2002

Defendant-appellant TradeArbed, Inc. ( TA ) appeals from an order entered on March 28, 2001 in the United States District Court for the Southern District of New York (McKenna, J.) denying its motion to stay the action pending arbitration pursuant to the Federal Arbitration Act, 9 95*95 U.S.C. § 3 (the FAA ),[1] and to dismiss the action pursuant to Federal Rule of Civil Procedure 12.[2] Before the district court, TA argued that it entered into three separate contracts to sell steel to plaintiff-appellee Aceros Prefabricados, S.A. ( Aceros ) through three confirmation orders dated January 17, 2000, January 28, 2000, and March 9, 2000, each of which operated as a separate acceptance of Aceros\u27 prior offers to purchase steel. TA further claimed that Aceros bound itself to the arbitration provision that was incorporated by reference into each of the confirmation orders. The district court rejected TA\u27s argument, holding instead that (1) an earlier letter from TA to Aceros, dated January 12, 2000 (the January 12 letter ), constituted TA\u27s acceptance of Aceros\u27 offers, thereby forming a single contract on that date; and (2) the arbitration provisions were proposed additional terms that materially altered the contract and therefore that they did not become part of that contract. Aceros Prefabricados, S.A. v. TradeArbed, Inc., 2001 WL 303731, at *2 (S.D.N.Y. Mar.8, 2001) ( Aceros ). Accordingly, the court denied TA\u27s motion to stay the action pending arbitration. The court also denied TA\u27s motion for reconsideration. Aceros Prefabricados, S.A. v. TradeArbed, Inc., 2001 WL 428245, at *1 (S.D.N.Y. Apr. 26, 2001). On appeal, TA argues that the district court erred in finding that Aceros was not bound by the arbitration provisions. TA contends that this is so regardless of the date of contract formation. Specifically, TA claims that if January 12 is deemed the date of contract formation, Aceros is bound to arbitrate its disputes with TA because (1) the arbitration provisions do not materially alter the contract; and/or (2) Aceros expressly accepted the second confirmation order, thereby agreeing to modify the original contract to include arbitration. If, instead, the first of three contracts was formed by the January 17 confirmation order, TA claims that the arbitration provisions still became part of the contracts because (1) Aceros signed one order confirmation and retained the others without objection, and (2) even without Aceros\u27 express acceptance of one order confirmation, retention without protest is sufficient to bind Aceros to the arbitration provisions. As a consequence, TA requests that the district court\u27s order be reversed and the case remanded with instructions to stay the action pending arbitration