Opinion ID: 765873
Heading Depth: 2
Heading Rank: 1

Heading: Prior Business Dealings

Text: 3 Defendant-appellant Bombay Dyeing is an Indian corporation that manufactures and sells textiles throughout the world. Pursuant to Indian government regulations, all Indian textile companies, before they can export textiles, must obtain a Registration Cum Membership Certificate (RCMC) from Texprocil, an agency sponsored by the Indian government. To obtain an RCMC, a company must agree to abide by a code of conduct and to use standard contract terms prescribed by Texprocil with respect to sales to overseas buyers. Among the standard terms and conditions required to be used by the exporting companies are those providing for the arbitration of all disputes arising from such contracts in accordance with the rules of arbitration set forth by Texprocil. It is not surprising, then, that arbitration has become a standard and customary trade practice for resolving disputes arising out of Indian textile exports. 4 Bombay Dyeing has used a standard Confirmation of Cloth Sales form (the Confirmation) for all of its textile sales to overseas buyers for over twenty years. Typically, contracts for sale are consummated when Bombay Dyeing receives a purchase order from an overseas buyer and issues a Confirmation in response. The Confirmation bears the following legend: We hereby confirm having sold to you goods as detailed below on the terms and conditions as stated herein and as printed overleaf. As suggested by the legend, printed on the back of the Confirmation are twenty-two paragraphs detailing the terms and conditions of the sale. These terms and conditions have remained largely unchanged over time, though the precise wording (and, in some instances, spelling or grammar) has varied. In English, paragraph 13 of the standard Confirmation's terms and conditions provides (all errors in original): 5 All dispute and questions whatsoever which shall arise between the parties hereto out of or in connection with this contract of as to the construction of application thereof or the respective rights and obligation of the parties hereunder clause of thing herein contain or any account of valuation be made hereunder or as to any other matter in any way relating to these presents shall be referred to arbitration in accordance with rules for the time being in force as applicable to piece goods for export and which will be framed by The Cotton Textile Export Promotion Council in consultation with the Mills & Exporter Representatives selected in accordance with the provision therein. Nothing in the rules or arbitration or any implication thereof which runs counter to the terms and conditions of the contract shall be applied thereto. 1 6 Beginning sometime in the late 1980s or early 1990s, Bombay Dyeing began doing business with James Pitts, who headed the North American division of a Japanese company called Kosen, Inc. While Pitts was employed at Kosen, Bombay Dyeing negotiated more than a thousand contracts with the company. In an evidentiary hearing held by the district court, Pitts testified that, on occasion, he saw Confirmation forms Bombay Dyeing sent in response to purchase orders submitted by Kosen. 7 In late 1991, Pitts left Kosen to found and become Chief Executive Officer of Rose Hill Linen Corporation. Pitts's wife, Nancy Pitts, was the Chief Operating Officer of Rose Hill. James Pitts testified that in its five years of existence, Rose Hill negotiated hundreds of contracts with Bombay Dyeing and a company he thought was Bombay Dyeing's corporate parent, Nowrosjee Wadia & Sons Ltd. (Wadia), 2 and that he personally saw Bombay Dyeing's Confirmations during that time. Pitts also acknowledged that he had signed at least one Confirmation from Wadia. 3 8 Rose Hill subsequently filed for bankruptcy sometime in 1995. In early 1996, Pitts approached Bombay Dyeing's overseas sales agent to ascertain Bombay Dyeing's capacity for selling large quantities of textiles (250,000 to 500,000 yards) within a short time-frame to a new purchaser. Shortly thereafter, Pitts, along with plaintiffs Kenneth Lazar and Lester Gribetz, formed Chelsea Square Textiles, Inc., with substantial capital contributions from Lazar and Gribetz. 4 Although there is some dispute in the record, it appears that Nancy Pitts also worked for Chelsea as an officer manager of sorts. 9 Based on Bombay Dyeing's representations to James Pitts regarding its capacity, Chelsea in turn entered into an exclusive sales agreement with a retailer, Bed, Bath & Beyond (BB&B), under which Chelsea agreed to provide finished linen textile products, such as sheets, pillowcases and shams, to BB&B. These were to be supplied by Bombay Dyeing. The Chelsea Square plaintiffs contend that BB&B projected linen sales of between $3,500,000 to $7,000,000, stemming from the agreement. 10