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Copyright (c) 2009 South Carolina Law Review
South Carolina Law Review

Case Summary: In re Cotton Yarn Antitrust Litigation

Summer, 2009


60 S.C. L. Rev. 1177


Christopher M. Huber


In In re Cotton Yarn Antitrust Litigation, 1 the United States Court of Appeals for the Fourth Circuit held that arbitration is a usage of the trade in the textile industry and that consequently it is automatically included in parties' oral purchase agreements. 2 The court also concluded that the Supreme Court's decision in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 3 which held that antitrust claims arising out of international transactions are subject to arbitration, 4 is applicable to domestic antitrust claims. 5 The sharply divided three-judge panel 6 further determined that the arbitration clause at issue in Cotton Yarn was enforceable even though it prevented the plaintiff purchasers from suing multiple manufacturers in a single proceeding and provided a one year limitations period for bringing claims. 7

Purchasers of cotton and poly-cotton yarn brought a multistate class action suit against a group of North Carolina yarn manufacturers, alleging that the manufacturers violated the Sherman Act by engaging in a price-fixing conspiracy. 8 The manufacturers, Avondale, Inc. and Avondale Mills, Inc. (collectively, Avondale) and Frontier Spinning Mills, Inc. (Frontier), moved to dismiss the suit as to certain plaintiffs arguing that the plaintiffs were bound by arbitration provisions broad enough to include their antitrust claims. 9 The district court denied the motion, holding that some of the purchase contracts with Frontier did not include binding arbitration provisions 10 because the parties formed the contracts orally over the phone and the arbitration provisions were not ...
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