Nebraska Machinery Company v. Cargotec Solutions, LLC, 2014 U.S. App. LEXIS 15198

Background

Cargotec (seller) sent two purchase orders (PO No. 1 and PO No. 2) to Nebraska Machinery Company (NMC) that referenced "Standard Kalmar terms and conditions Form F-027," which contained arbitration and indemnification clauses; NMC says it never received Form F-027.
NMC returned its own purchase orders and invoices for both transactions; NMC's forms did not include arbitration or indemnity language; Cargotec says it received only NMC's invoices and not NMC's purchase orders.
Engines were delivered and paid for; later, a third party suit (Sharron v. Containerport) prompted Cargotec to seek indemnification from NMC, which NMC refused.
Cargotec filed an arbitration demand in Kansas asserting the arbitration/indemnity clauses applied; NMC filed suit in Nebraska federal court seeking a declaration that no arbitration/indemnity obligations existed.
The magistrate judge found factual scenarios and concluded the parties did not form a contract containing the arbitration clause; the district court agreed there were no facts to try and entered judgment for NMC.
The Eighth Circuit vacated and remanded, holding factual disputes remained about which documents were exchanged and that the district court should have held a bench trial under the FAA to resolve them.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Who decides arbitrability (court or arbitrator)?	Cargotec: AAA incorporation shows clear intent to have arbitrator decide arbitrability.	NMC: Court should decide whether an arbitration agreement ever existed.	Court: Presumptively a judicial question unless parties clearly and unmistakably assign it to arbitrator; here validity of the arbitration clause itself is for the court to decide.
Whether the arbitration and indemnity provisions became part of the parties' contract	Cargotec: Its POs (with Form F-027) constituted an offer including arbitration/indemnity; acceptance by NMC (or conduct) formed a contract including those terms.	NMC: Its returned forms without those terms or a lack of mutual receipt means no arbitration/indemnity terms were incorporated.	Court: Material factual disputes exist about which documents were sent/received; cannot resolve as a matter of law on the present record.
Appropriate procedure when factual disputes exist over formation of arbitration agreement	Cargotec: District court should apply summary-judgment-type standard and, if disputes remain, proceed to a summary (bench) trial under 9 U.S.C. § 4.	NMC: Opposing party can prevent jury trial; court can resolve arbitrability on motions if record permits.	Court: Motions should have been evaluated under a summary-judgment standard; because material facts remained, the FAA required the district court to proceed summarily to trial (bench trial) to resolve formation issues.

Key Cases Cited

PCS Nitrogen Fertilizer, L.P. v. Christy Refractories, L.L.C., 225 F.3d 974 (8th Cir. 2000) (standard of review for arbitrability and treatment of factual findings)
Koch v. Compucredit Corp., 543 F.3d 460 (8th Cir. 2008) (judicial determination of arbitrability is presumptive)
AT&T Technologies, Inc. v. Communications Workers, 475 U.S. 643 (U.S. 1986) (parties may clearly and unmistakably commit arbitrability to arbitrators)
Fallo v. High‑Tech Inst., 559 F.3d 874 (8th Cir. 2009) (incorporation of AAA rules can be a clear and unmistakable delegation of arbitrability)
Tinder v. Pinkerton Security, 305 F.3d 728 (7th Cir. 2002) (FAA motions analogized to summary judgment standard when resisting arbitration)
Jenkins v. S. Farm Bureau Cas., 307 F.3d 741 (8th Cir. 2002) (competing affidavits can create genuine issues of fact)
Howard v. Ferrellgas Partners, L.P., 748 F.3d 975 (10th Cir. 2014) (where factual disputes appear, district court must proceed to trial to resolve arbitrability)
American Boat Co. v. Unknown Sunken Barge, 418 F.3d 910 (8th Cir. 2005) (presumption of delivery for reliable electronic communications)