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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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AFFILIATED FM INSURANCE CO. ,
Plaintiff ,
- against -
BRIDGE TERMINAL TRANSPORT
SERVICES, INC .,
Defendant . :
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14 Civ. 6938
OPINION
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Before the court is a motion to compel arbitration in a contract
dispute. The dispute concerns allegations by plaintiff Affiliated FM
Insurance Company (“Affiliated FM”) that defendant Mae rsk Trucking
Holdings, Inc., f/k/a Bridge Terminal Transport, Inc. (“BTT”) failed to
meet its obligations as carrier of certain shipments. BTT argues that
Affiliated FM must submit its claims to binding arbitration. Affiliated FM
opposes, and makes a cro ss motion to strike BTT’s affirmative defense
that the claims in this case are subject to binding arbitration.
BTT’s motion to compel arbitration is granted. Affiliated FM’s
cross -motion to strike is denied.
The Complaint and the Present Motion
During February and April of 2013, BTT agreed to transport
certain containers of children’s clothing from Huntsville, Alabama to Fort Case 1:14-cv-06938-RWS Document 28 Filed 02/18/15 Page 1 of 8
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Payne, Alabama. In this capacity BTT was a motor carrier for Affiliated
FM’s subrogor, The Children’s Place Services Company, LLC (“TCP”).
Unfortunately, when the containers arrived at their destination, the seals
on the containers had been broken and their contents mostly pilfered.
The complaint, dated August 26, 2014, alleges that BTT (1) failed
to perform its contractual o bligations, (2) acted negligently or recklessly,
(3) and breached its bailment duties, all resulting in a loss of $300,000.
On October 30, 2014, BTT requested in writing that Affiliated FM
submit its claims to binding arbitration. Affiliated FM refused. BTT filed
the present motion to compel arbitration on November 13, 2014. BTT
seeks an order (1) compelling Affiliated FM to submit its claims to
arbitration, (2) appointing an arbitrator, and (3) staying this action
pending arbitration.
The Arbitration Pr ovision
Prior to the pilfered shipments, TCP contracted with BTT for at
least ten other shipments. These were received between October 2, 2012
and June 24, 2013. Upon delivery of these shipments, TCP received
delivery receipts from BTT. Each delivery receipt contained the following
language:
BTT’s services are subject to the terms, conditions and
limitations of liability stated in BTT’s Rules Tariff that are
available upon request from BTT, or at http://bttinc.com.
BTT produces copies of these rece ipts as an attachment to an affidavit in
support of this motion. Case 1:14-cv-06938-RWS Document 28 Filed 02/18/15 Page 2 of 8
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BTT also produces a copy of the Rules Tariff referenced in those
receipts. BTT avows that this Rules Tariff was available on its website
from October 2012 to June 2013. The Rules Tariff c ontains the following
provision:
Arbitration Any and all disputes not resolved between
Bridge Terminal Transport, Inc. and Customer will be
resolved at binding arbitration, before a recognized
arbitration board to be jointly selected by Customer and the
Bridge Terminal Transport, Inc. The arbitration shall be
held within thirty (30) days of notification from Customer to
the Bridge Terminal Transport, Inc. of the need for
arbitration. The arbitration will be conducted in a location
mutually agreed to by th e Bridge Terminal Transport, Inc.
and Customer. Each party will bear its own costs of the
arbitration and costs of arbitration board will be equally
split.
Discussion
The Federal Arbitration Act provides that, if an agreement to
arbitrate applies to a dispute, a court “shall on application of one of the
parties stay the trial of the action until such arbitration has been had in
accordance with the terms of the agreement.” 9 U.S.C. § 3. If a party to
such an agreement refuses to arbitrate, the court is to order arbitration.
Id. at § 4. And where the arbitration agreement does not provide a
method of selecting an arbitrator, the court is to appoint one. Id. at § 5.
Further, it is well established that the Federal Arbitration Act strongly
encourages a rbitration and that agreements to arbitrate must be
interpreted liberally, in favor of arbitration. See Moses H. Cone Memorial
Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24 (1983).
Case 1:14-cv-06938-RWS Document 28 Filed 02/18/15 Page 3 of 8
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Whether the Parties Agreed to Arbitrate
A threshold question in this dispute is whether the parties entered
into an agreement to arbitrate. Affiliated FM contends that the
arbitration provision in BTT’s Rules Tariff is not part of a contract
between the parties for two principal reasons. First, the delivery receipts
referencing the Rules Tariff were only given to TCP on receipt of
shipments, not before the shipments. Second, even if the receipts were
part of a contract, they did not successfully incorporate the Rules Tariff
into the contract by reference. BTT replie s that the delivery receipts
comprise part of a contract because they were issued as part of a course
of dealings between BTT and TCP, and that the receipts properly
incorporated the Rules Tariff.
As a matter of state contract law, terms repeatedly inclu ded in
written confirmations between two parties can become part of
subsequent contracts between the same parties. See Aceros
Prefabricados, S.A. v. TradeArbed, Inc. , 282 F.3d 92, 101. See also
Pervel Indus. v. T M Wallcovering, Inc. , 871 F.2d 7 -8 (2d Ci r. 1989). The
latter opinion states that “[where] a manufacturer has a well -established
custom of sending purchase order confirmations containing an
arbitration clause, a buyer who has made numerous purchases over a
period of time, receiving in each insta nce a standard confirmation form
which it either signed and returned or retained without objection, is
bound by the arbitration provision.” Here, TCP assented to as many as Case 1:14-cv-06938-RWS Document 28 Filed 02/18/15 Page 4 of 8
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ten delivery receipts prior to the disputed shipment. TCP was surely
aware that t he receipts contained such terms. The language in those
receipts undoubtedly became part of a contract between BTT and TCP
through a course of dealings.
The next question is whether the language in the receipts
successfully incorporated BTT’s Rules Tari ff and its arbitration provision
into the agreement. Two conditions must be satisfied to incorporate a
document into an agreement by reference. First, the document must be
specifically referenced and identified beyond reasonable doubt in the
agreement, a nd second, it must be clear that the parties had knowledge
of and assented to the incorporated terms. Ryan, Beck & Co., LLC. V.
Fakih , 268 F. Supp. 2d 210, 223 (E.D.N.Y. 2003). Here, the delivery
receipts could hardly have been clearer that receipt of ea ch shipment
constituted assent to a separate, specifically -identified document: BTT’s
Rules Tariff. The document was identified beyond doubt, and the parties
knowingly assented.
Affiliated FM is, furthermore, wrong to suggest that there are
special hurd les in incorporating arbitration agreements into contracts by
reference. It is well established in this Circuit that arbitration
agreements may be incorporated into contracts by reference. See
Thomson -CSF, S.A. b. Am. Arbitration Ass’n , 64 F.3d 773, 775 -777 (2d
Cir. 1995); Progressive Casualty Ins. Co. v. C.A. Reaseguradora Nacional
De Venezuela , 992 F.2d 42, 46 (2d Cir. 1992). Any stricter state law Case 1:14-cv-06938-RWS Document 28 Filed 02/18/15 Page 5 of 8
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doctrine specifically impeding the incorporation of arbitration agreements
would be preempted by the Fede ral Arbitration Act. See AT&T Mobility
LLC v. Concepcion , 131 S. Ct. 1740, 1747 (2011). And in any case, BTT
and TCP are sophisticated merchants who knew the prevalence of
arbitration agreements in the shipping industry.
Affiliated FM also argues that f urther fact discovery is needed
concerning whether the Rules Tariff produced by BTT is an authentic
document that was actually available at the time of the shipments in this
case. But BTT has already produced the Rules Tariff in two declarations,
affirmin g under penalty of perjury that it is a true copy of the document
available on BTT’s website from October 2012 to June 2013. The court
finds additional discovery unnecessary.
The court finds that the parties in this case were subject to the
arbitration provision in BTT’s Rules Tariff and that the claims must be
submitted to binding arbitration.
Enforceability of the Arbitration Agreement
Affiliated FM argues that, even if it is bound by the arbitration
provision in BTT’s Rules Tariff, the provision ha s several deficiencies that
make it unenforceable here. These arguments are without merit.
First, Affiliated FM argues that the arbitration clause permits only
TCP, not BTT, to demand arbitration. This argument rests upon a
sentence in the arbitration pr ovision which reads: “The arbitration shall
be held within thirty (30) days of notification from Customer to the Case 1:14-cv-06938-RWS Document 28 Filed 02/18/15 Page 6 of 8
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Bridge Terminal Transport, Inc. of the need for arbitration.” Other
language in the arbitration provision, however, makes it plain that
arbitr ation is not solely to be initiated by the customer. Indeed, the first
sentence of the provision provides: “Any and all disputes not resolved
between Bridge Terminal Transport, Inc. and Customer will be resolved
at binding arbitration.” “Any and all disp utes” can hardly mean that only
the customer has a right to initiation arbitration. Affiliated FM’s
interpretation is therefore implausible.
Second, Affiliated FM argues that the arbitration provision is
unenforceable because it is too vague. Specificall y, the provision does
not set forth certain details such as the number of arbitrators, their
qualifications, the scope of their authority, and what law or rules will
govern.
However, Affiliated FM points to no legal authority supporting the
contention th at this lack of specificity renders the agreement
unenforceable. The agreement states: “Any and all disputes not resolved
between Bridge Terminal Transport, Inc. and Customer will be resolved
at binding arbitration, before a recognized arbitration board t o be jointly
selected by Customer and the Bridge Terminal Transport, Inc.” It
specifies further that the location of the arbitration shall be mutually
agreed and the costs shall be split. The court finds that this is sufficient,
and that further issues c an be resolved by the arbitrator.
Case 1:14-cv-06938-RWS Document 28 Filed 02/18/15 Page 7 of 8
Appointment o(Arbitrator
BTI moves the court to appoint an arbitrator, observing that the
Federal Arbitration Act requires a court to appoint an arbitrator where no
method appointment of an arbitrator is provided in an arbitration
agreement. However, court appointment is unnecessary at this time
because the arbitration agreement provides that the arbitration shall
occur before "a recognized arbitration board to be jointly selected by
Customer and the Bridge Terminal Transport, Inc." In light of this
provision, the parties should commence such joint selection.
Conclusion
Defendant BTI's motion to compel arbitration and stay the action
pending arbitration is granted. The court declines to appoint an
arbitrator because the parties have not yet attempted to jointly select one
in accordance with the terms of the arbitration agreement. Plaintiff
Affiliated FM's cross-motion to strike BTI's third affirmative defense is
denied. This resolves the motion listed as number 13 in this case, 14-
CV-6938.
Dated: New York, New York
February 18, 2015
Thomas P. Griesa
U.S.D.J. Case 1:14-cv-06938-RWS Document 28 Filed 02/18/15 Page 8 of 8