Conexant Systems, Inc. v. Zykronix, Inc.

          Attorneys Present for Plaintiffs: Lawrence Hilton

          Attorneys Present for Defendants: Douglas Gravelle Alan Sweetbaum (By Telephone)

          Present: The Honorable CHRISTINA A. SNYDER

          PLAINTIFF’S PETITION TO COMPEL ARBITRATION (DKT. 1, FILED MARCH 25, 2016)

          CHRISTINA A. SNYDER

         I. INTRODUCTION

         On March 25, 2016, plaintiff-seller Conexant Systems, Inc. (“Conexant” or “plaintiff-seller”) filed the instant petition to compel arbitration and complaint for declaratory relief against defendant-buyer Zykronix, Inc. (“Zykronix” or “defendant-buyer”). Dkt. 1. Conexant’s petition and complaint alleges that by filing an action against Conexant in Colorado State Court, Zykronix failed to adhere to an arbitration agreement to which the parties purportedly agreed. Pl.’s Pet. Compel Arbitration & Compl. Declaratory Relief (“Pl.’s Pet.”), at ¶ 2.

         On April 12, 2016, plaintiff-seller Conexant filed a memorandum of law in support of its petition to compel arbitration. Dkt. 11 (“Memo”). On June 1, 2016, defendant-buyer Zykronix filed an opposition to plaintiff’s petition to compel arbitration. Dkt. 23 (“Opp’n”). On June 27, 2016, plaintiff filed a reply. Dkt. 30 (“Reply”). On July 11, 2016, the Court held oral argument on the instant motion. Having carefully considered the parties’ arguments, the Court finds and concludes as follows.

         II. BACKGROUND

         Plaintiff-seller Conexant is a manufacturer and distributor of computer chips and processors, and defendant-buyer Zykronix designs and manufactures electronic equipment for re-sale. Pl.’s Pet. at ¶ 7. On March 26, 2013, defendant-buyer Zykronix emailed Conexant a Purchase Order for “CODEC Chips.” Id. at ¶¶ 8-9. On April 9, 2013, Conexant responded to the Purchase Orderby sending an email from the address SAPbatch@conexant.com––an email account with which Zykronix was purportedly unfamiliar––with the subject line, “Conexant Sales Order 0000208498.” Declaration of Wilfried Streicher (“Streicher Decl.”), at ¶ 2. Attached to the email as separatement documents were (1) an Order Acknowledgment and (2) the seller’s standard terms and conditions (“Terms and Conditions”). Id. at ¶ 11; Ex. D.

         The Order Acknowledgment defines Conexant as the “Seller” and Zykronix as the “Buyer, ” and further provides as follows:

We are pleased to ACKNOWLEDGE receipt of the order(s) listed above. Seller’s acceptance of Buyer’s order is expressly made conditional on Buyer’s assent to the above information and Seller’s standard terms and conditions on the reverse side hereof.

Pl.’s Pet. at ¶ 10 (emphasis added).

         The seller’s Terms and Conditions contain the following dispute resolution provision:

DISPUTE RESOLUTION: If any claim or controversy arises . . . the controversy shall be determined by binding arbitration conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) before a single arbitrator and judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof. . . . A single arbitrator shall be selected by the parties in accordance with the AAA selection rules. The arbitration shall be held in Orange County, California, U.S.A.

Id. (emphasis in original).

         Conexant alleges that despite receiving the aforementioned email, Zykronix never “objected to, or indicated any disagreement with, the provisions of the Order Acknowledgment, including the Terms and Conditions.” Id. at ¶ 11. Consequently, Conexant shipped the CODEC Chips, and Zykronix later accepted delivery. Id.

         Over two years later, on December 18, 2015, Zykronix filed an action against Conexant in Colorado state court (“the Colorado Action”) seeking $5, 655, 000 in damages and asserting breach of contract and breach of warranty claims arising out of its purchase of allegedly defective CODEC Chips. Id. at ¶ 6. Conexant removed the Colorado Action to the United States District Court for the District of Colorado, where it is pending as Case No. 1:16-cv-00163. The district court in ...