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Supreme Court of the United States
November 29, 2005, Argued ; February 21, 2006, Decided
[*442] [***1041] [**1207] JUSTICE SCALIA delivered the opinion of the Court.
We decide whether a court or an arbitrator should consider the claim that a contract containing an arbitration provision is void for illegality.
Respondents John Cardegna and Donna Reuter entered into various deferred-payment transactions with petitioner Buckeye Check Cashing (Buckeye), [****4] in which they received cash in exchange for a personal check in the amount of the cash plus a finance charge. For each separate transaction they signed a "Deferred Deposit and Disclosure Agreement" (Agreement), which included the following arbitration provisions:
[***1042] "1. Arbitration Disclosure By signing this Agreement, you agree that if a dispute of any kind arises out of this Agreement or your application therefore or any instrument relating thereto, then either you or we or third-parties involved can choose to have that dispute resolved by binding arbitration as set forth in Paragraph 2 below . . . .
"2. Arbitration Provisions Any claim, dispute, or controversy . . . arising from or relating to this Agreement . . . or the validity, enforceability, or scope of this Arbitration Provision or the entire Agreement (collectively 'Claim'), shall be resolved, upon the election of you or us or said third-parties, by binding arbitration . . . . This arbitration Agreement is made pursuant to a transaction involving interstate commerce, and shall be governed [*443] by the Federal Arbitration Act ('FAA'), 9 U.S.C. Sections 1-16. The arbitrator shall apply applicable substantive [****5] law constraint [sic] with the FAA and applicable statutes of limitations and shall honor claims of privilege recognized by law . . . ." App. 36, 38, 40, 42.
Respondents brought this putative class action in Florida state court, alleging that Buckeye charged usurious interest rates and that the Agreement violated various Florida lending and consumer-protection laws, rendering it criminal on its face. Buckeye moved to compel arbitration. The trial court denied the motion, holding that a court rather than an arbitrator should resolve a claim that a contract is illegal and void ab initio. The District Court of Appeal of Florida for the Fourth District reversed, holding that because respondents did not challenge the arbitration provision itself, but instead claimed that the entire contract was void, the agreement to arbitrate was enforceable, and the question of the contract's legality should go to the arbitrator.
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546 U.S. 440 *; 126 S. Ct. 1204 **; 163 L. Ed. 2d 1038 ***; 2006 U.S. LEXIS 1814 ****; 74 U.S.L.W. 4126; 152 Lab. Cas. (CCH) P10,636; 2006 AMC 512; 19 Fla. L. Weekly Fed. S 94
BUCKEYE CHECK CASHING, INC., PETITIONER v. JOHN CARDEGNA ET AL.
Prior History: [****1] ON WRIT OF CERTIORARI TO THE SUPREME COURT OF FLORIDA.
Cardegna v. Buckeye Check Cashing, Inc., 894 So. 2d 860, 2005 Fla. LEXIS 51 (Fla., 2005)
Disposition: Reversed and remanded.
arbitration, void, arbitration provision, arbitration agreement, state court, state law, federal court, challenges, voidable, contracts
Business & Corporate Compliance, Arbitration, Federal Arbitration Act, Arbitration Agreements, Contracts Law, Contract Conditions & Provisions, Arbitration Clauses, Contracts Law, Affirmative Defenses, Fraud & Misrepresentation, General Overview, Defenses, Illegal Bargains, Public Policy Violations, Contract Formation, Severability Clauses, Contract Interpretation, Severability, Orders to Compel Arbitration, Scope