Buckeye Check Cashing, Inc. v. Cardegna, No. 04-1264

CourtUnited States Supreme Court
Writing for the CourtSCALIA
Citation126 S.Ct. 1204,546 US 440
PartiesBUCKEYE CHECK CASHING, INC., PETITIONER v. JOHN CARDEGNA ET AL
Docket NumberNo. 04-1264
Decision Date21 February 2006

546 U.S. 440

126 S. Ct. 1204

BUCKEYE CHECK CASHING, INC., PETITIONER
v.

JOHN CARDEGNA ET AL.

No. 04-1264

SUPREME COURT OF THE UNITED STATES

November 29, 2005, Argued

February 21, 2006, Decided


SCALIA, J., delivered the opinion of the Court, in which ROBERTS, C. J., and STEVENS, KENNEDY, SOUTER, GINSBURG, and BREYER, JJ., joined. THOMAS, J., filed a dissenting opinion, post, p. 449. ALITO, J., took no part in the consideration or decision of the case.

SCALIA

OPINION

[546 U.S.442] [126 S. Ct.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.

I

Respondents John Cardegna and Donna Reuter entered into various deferred-payment transactions with petitioner Buckeye Check Cashing (Buckeye), 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:

“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 [546 U.S.443] by the Federal Arbitration Act ('FAA'), 9 U.S.C. Sections 1-16. The arbitrator shall apply applicable substantive 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.

Respondents appealed, and the Florida Supreme Court reversed, reasoning that to enforce an agreement to arbitrate in a contract challenged as unlawful "'could breathe life into a contract that not only violates state law, but also is criminal in nature . . . .'" 894 So. 2d 860, 862 (2005) (quoting Party Yards, Inc. v. Templeton, 751 So. 2d 121, 123 (Fla. App. 2000)). We granted certiorari. 545 U.S. 1127, 125 S. Ct. 2937, 162 L. Ed. 2d 864 (2005).

II

A

To overcome judicial resistance to arbitration, Congress enacted the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16. Section 2 embodies the national policy favoring arbitration and places arbitration agreements on equal footing with all other contracts:

[126 S. Ct.1208] "A written provision in . . . a contract . . . to settle by arbitration a controversy thereafter arising out of such [546 U.S.444] contract . . . or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract."

Challenges to the validity of arbitration agreements "upon such grounds as exist at law or in equity for the revocation of any contract" can be divided into two types. One type challenges specifically the validity of [126 S. Ct.*1043] the agreement to arbitrate. See, e.g., Southland Corp. v. Keating, 465 U.S. 1, 4-5, 104 S. Ct. 852, 79 L. Ed. 2d 1 (1984) (challenging the agreement to arbitrate as void under California law insofar as it purported to cover claims brought under the state Franchise Investment Law). The other challenges the contract as a whole, either on a ground that directly affects the entire agreement (e.g., the agreement was fraudulently induced), or on the ground that the illegality of one of the contract's provisions renders the whole contract invalid. 1 Respondents' claim is of this second type. The crux of the complaint is that the contract as a whole (including its arbitration provision) is rendered invalid by the usurious finance charge.

In Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S. Ct. 1801, 18 L. Ed. 2d 1270 (1967), we addressed the question of who -- court or arbitrator -- decides these two types of challenges. The issue in the case was "whether a claim of fraud in the inducement of the entire contract is to be resolved by the federal [546 U.S.445] court, or whether the matter is to be referred to the arbitrators." Id., at 402, 87 S. Ct. 1801, 18 L. Ed. 2d 1270. Guided by § 4 of the FAA, 2 we held that "if the claim is fraud in the inducement of the arbitration clause itself -- an issue which goes to the making of the agreement to arbitrate -- the federal court may proceed to adjudicate it. But the statutory language does not permit the federal court to consider claims of fraud in the inducement of the contract generally." Id., at 403-404, 87 S. Ct. 1801, 18 L. Ed. 2d 1270 (internal quotation marks and footnote omitted). We rejected the view that the question of "severability" was one of state law, so that if state law held the arbitration provision not to be severable a challenge to the contract as a whole would be decided by the court. See id., at 400, 402-403, 87 S. Ct. 1801, 18 L. Ed. 2d 1270 .

Subsequently, in Southland Corp., we held that the FAA "created a body of [126 S. Ct.1209] federal substantive law,"...

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816 practice notes
  • RDP Techs., Inc. v. Cambi As, Civil Action No. 10–1951 (JDB).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • August 2, 2011
    ...139] to the validity of a contract on grounds that it is void and revocable. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006). While the former category concerns nonarbitral questions about whether an arbitration agreement was “ever conclude......
  • Parrish v. Valero Retail Holdings, Inc., No. CIV 10-0398 JB/LFG
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • July 15, 2010
    ...Congress enacted the FAA to counteract judicial hostility to arbitration. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006). It was also to put contracts with arbitration clauses on the same footing with other contracts. See Rent-A-Cente......
  • Hebei Hengbo New Materials Tech. Co. v. Apple, Inc., Case No. 18-CV-00468-LHK
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • September 26, 2018
    ...Mfg. Co. , 388 U.S. 395, 406, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), and Buckeye Check Cashing, Inc. v. Cardegna , 546 U.S. 440, 445–46, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006), do not justify Hengbo's inconsistent acts. See MTC at 12. In Prima Paint Corp. , the United States Supreme Court ......
  • Rent-A-Center, West, Inc. v. Jackson, No. 09-497.
    • United States
    • United States Supreme Court
    • April 26, 2010
    ...was for 130 S.Ct. 2776 the arbitrator, App. to Pet. for Cert. 4a (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444-445, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006)). The court noted that even if it were to examine the merits of Jackson's unconscionability claims, it would have ......
  • Request a trial to view additional results
825 cases
  • RDP Techs., Inc. v. Cambi As, Civil Action No. 10–1951 (JDB).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • August 2, 2011
    ...139] to the validity of a contract on grounds that it is void and revocable. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006). While the former category concerns nonarbitral questions about whether an arbitration agreement was “ever conclude......
  • Parrish v. Valero Retail Holdings, Inc., No. CIV 10-0398 JB/LFG
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • July 15, 2010
    ...Congress enacted the FAA to counteract judicial hostility to arbitration. See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006). It was also to put contracts with arbitration clauses on the same footing with other contracts. See Rent-A-Cente......
  • Hebei Hengbo New Materials Tech. Co. v. Apple, Inc., Case No. 18-CV-00468-LHK
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • September 26, 2018
    ...Mfg. Co. , 388 U.S. 395, 406, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), and Buckeye Check Cashing, Inc. v. Cardegna , 546 U.S. 440, 445–46, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006), do not justify Hengbo's inconsistent acts. See MTC at 12. In Prima Paint Corp. , the United States Supreme Court ......
  • Rent-A-Center, West, Inc. v. Jackson, No. 09-497.
    • United States
    • United States Supreme Court
    • April 26, 2010
    ...was for 130 S.Ct. 2776 the arbitrator, App. to Pet. for Cert. 4a (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444-445, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006)). The court noted that even if it were to examine the merits of Jackson's unconscionability claims, it would have ......
  • Request a trial to view additional results
1 firm's commentaries
  • International Arbitration Comparative Guide
    • United States
    • Mondaq United States
    • November 10, 2022
    ...bear on the agreement to arbitrate and must therefore be adjudicated by the arbitrator at first instance (Buckeye Check Cashing v Cardegna, 546 US 440, 449 3.3 Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties? The FAA does not ......

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