Parnell v. Cashcall, Inc., 14–12082.

Citation804 F.3d 1142
Decision Date28 October 2015
Docket NumberNo. 14–12082.,14–12082.
PartiesJoshua PARNELL, Plaintiff–Appellee, v. CASHCALL, INC., Defendant–Appellant, Western Sky Financial, LLC, Martin A. (“Butch”) Webb, Defendants.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

James Warren Hurt, Jr., Hurt Stolz & Cromwell, LLC, Athens, GA, Christopher Neil Armor, Armor Law, LLC, Atlanta, GA, for PlaintiffAppellee.

Barry Levenstam, Daniel T. Fenske, Jenner & Block, LLP, Chicago, IL, Neil M. Barofsky, Brian J. Fischer, Katya Jestin, Jenner & Block, LLP, New York, N.Y., Nancy H. Baughan, William James Holley, II, Erin McGarry Moore, Parker Hudson Rainer & Dobbs, LLP, Atlanta, GA, for DefendantAppellant.

Appeal from the United States District Court for the Northern District of Georgia.

Before WILSON and MARTIN, Circuit Judges, and HODGES,* District Judge.


WILSON, Circuit Judge:

This case requires us to determine whether a plaintiff properly challenges an arbitration agreement's validity when he does not specifically challenge the delegation provision contained therein. The Supreme Court has explained that where an arbitration agreement contains a delegation provision—committing to the arbitrator the threshold determination of whether the agreement to arbitrate is enforceable—the courts only retain jurisdiction to review a challenge to that specific provision. Rent–A–Center, West, Inc. v. Jackson, 561 U.S. 63, 72, 130 S.Ct. 2772, 2779, 177 L.Ed.2d 403 (2010). Absent such a challenge, the Federal Arbitration Act (FAA) requires that we treat a delegation provision as valid and permit the parties to proceed to arbitration. Id. at 71–72, 130 S.Ct. at 2779 ; see 9 U.S.C. § 2. We hold that when a plaintiff seeks to challenge an arbitration agreement containing a delegation provision, he or she must challenge the delegation provision directly.

The district court erred in neglecting to recognize the delegation provision in the agreement in this case. Accordingly, we reverse and remand.


Upon completing his service in the United States Army and experiencing less-than-ideal financial circumstances, PlaintiffAppellee Joshua Parnell responded to a television advertisement for short-term loans. Parnell, situated in Georgia, logged onto his computer and applied for a loan from Western Sky Financial, LLC (Western Sky), a South Dakota limited liability company with its principal place of business in Timber Lake, South Dakota. Just ten minutes after Parnell submitted his online loan application, a Western Sky employee called Parnell to inform him that he had been approved for a $1000 loan and relevant paperwork would be emailed to him shortly. The email Parnell received contained a document titled “Western Sky Consumer Loan Agreement” (Loan Agreement), which stated the terms of the contract between the parties. The Loan Agreement's Truth in Lending Act Disclosure Statement made plain the 232.99% annual percentage rate and finance charge of $3,905.56. In total, after making twenty-five scheduled repayments on the $1,000 loan, Parnell would pay $4,905.56.

Most importantly, the Loan Agreement contained an agreement to arbitrate any potential disputes between the parties. This provision stated in relevant part:

PLEASE READ THIS PROVISION OF THE AGREEMENT CAREFULLY. Unless you exercise your right to opt-out of arbitration in the manner described below, any dispute you have with Western Sky or anyone else under this loan agreement will be resolved by binding arbitration. Arbitration replaces the right to go to court, including the right to have a jury, to engage in discovery (except as may be provided in the arbitration rules), and to participate in a class action or similar proceeding. In Arbitration, a dispute is resolved by an arbitrator instead of a judge or jury. Arbitration procedures are simpler and more limited than court procedures. Any Arbitration will be limited to the dispute between yourself and the holder of the Note and will not be part of a class-wide or consolidated arbitration proceeding.
Agreement to Arbitrate. You agree that any Dispute, except as provided below, will be resolved by Arbitration, which shall be conducted by the Cheyenne River Sioux Tribal Nation by an authorized representative in accordance with its consumer dispute rules and the terms of this Agreement.
Arbitration Defined. Arbitration is a means of having an independent third party resolve a Dispute. A “Dispute” is any controversy or claim between you and Western Sky or the holder or servicer of the Note. The term Dispute is to be given its broadest possible meaning and includes, without limitation, all claims or demands (whether past, present, or future, including events that occurred prior to the opening of this Account), based on any legal or equitable theory (tort, contract, or otherwise), and regardless of the type of relief sought (i.e. money, injunctive relief, or declaratory relief). A Dispute includes, by way of example and without limitation, any claim based upon marketing or solicitations to obtain the loan and the handling or servicing of my account whether such Dispute is based on a tribal, federal or state constitution, statute, ordinance, regulation, or common law, and including any issue concerning the validity, enforceability, or scope of this loan or the Arbitration agreement....

Parnell digitally signed the Loan Agreement and, seventy-two hours later, Western Sky directly deposited $1,000 in Parnell's bank account. Prior to the due date of his first repayment, Parnell received notification that DefendantAppellant CashCall, Inc. (CashCall) had taken over his loan and he should make all his payments to CashCall, not Western Sky.

After sending his final payment to CashCall, Parnell filed suit in state court, alleging that CashCall and Western Sky's business practices exploit tribal sovereign immunity and illicitly avoid federal and state regulations, including the Georgia Payday Lending Act, O.C.G.A. § 16–17–2. CashCall removed the case to federal court and moved to compel arbitration. The district court denied the motion after determining that (i) Parnell articulated a challenge to the arbitration provision in the parties' contract and (ii) the arbitration provision was unconscionable. CashCall now appeals.


We have jurisdiction under 9 U.S.C. § 16. We review de novo the district court's denial of a motion to compel arbitration.” Jenkins v. First Am. Cash Advance of Ga., LLC, 400 F.3d 868, 873 (11th Cir.2005).


The district court erred in holding that Parnell properly challenged the Loan Agreement. We hold that the Loan Agreement contains a delegation provision and, though Parnell challenged the validity of the arbitration provision, he did not articulate a challenge to the delegation provision specifically. Therefore, the FAA requires that we treat the delegation provision as valid, enforce the terms of the Loan Agreement, and leave to the arbitrator the determination of whether the Loan Agreement's arbitration provision is enforceable.


The FAA places arbitration agreements on equal footing with all other contracts and sets forth a clear presumption—“a national policy”—in favor of arbitration. Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204, 1207, 163 L.Ed.2d 1038 (2006) ; accord AT & T Mobility LLC v. Concepcion, 563 U.S. 333, 337–39, 131 S.Ct. 1740, 1745, 179 L.Ed.2d 742 (2011) ; Rent–A–Center, 561 U.S. at 67, 130 S.Ct. at 2776 ; Inetianbor v. CashCall, Inc., 768 F.3d 1346, 1349 (11th Cir.2014). The FAA governs the Loan Agreement because the parties conducted their business across state lines. See 9 U.S.C. § 2. From the State of Georgia, Parnell used the Internet to contact and then contract with Western Sky and CashCall, which are South Dakota and California corporations, respectively. Neither party disputes that Western Sky and CashCall are engaged in interstate commerce.

Section 2 of the FAA requires the courts to enforce an arbitration provision within a contract unless “such grounds exist at law or in equity for the revocation of any contract.” Arbitration provisions will be upheld as valid unless defeated by fraud, duress, unconscionability, or another “generally applicable contract defense.” Rent–A–Center, 561 U.S. at 67–68, 130 S.Ct. at 2776. Further, § 4 of the FAA permits one party to seek the assistance of the district court when the other party refuses to proceed with arbitration, and requires the court to “make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.” 9 U.S.C. § 4.

Importantly, parties may agree to commit even threshold determinations to an arbitrator, such as whether an arbitration agreement is enforceable. The Supreme Court has upheld these so-called “delegation provisions” as valid, Rent–A–Center, 561 U.S. at 68–70, 130 S.Ct. at 2777–78, and explained that they are severable from the underlying agreement to arbitrate, Buckeye, 546 U.S. at 445, 126 S.Ct. at 1209. When an arbitration agreement contains a delegation provision and the plaintiff raises a challenge to the contract as a whole, the federal courts may not review his claim because it has been committed to the power of the arbitrator. Instead, the plaintiff must “challenge[ ] the delegation provision specifically. Rent–A–Center, 561 U.S. at 72, 130 S.Ct. at 2779 (emphasis added). In sum, absent a challenge to the delegation provision itself, the federal courts must treat the delegation provision “as valid under § 2, and must enforce it under §§ 3 and 4, leaving any challenge to the validity of the Agreement as a whole for the arbitrator.” Id.


When federal courts interpret arbitration agreements, state contract law governs and directs the courts' analyses of whether the parties committed an issue to arbitration. See First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 1924, 131 L.Ed.2d 985 (1995) ; Paladino v. Avnet Computer Techs., Inc., 134 F.3d 1054,...

To continue reading

Request your trial
95 cases
  • Larsen v. Citibank FSB, s. 15-10779 10-12957.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • 26 Septiembre 2017 governed by the FAA because the loan agreement was executed via interstate commerce. See 9 U.S.C. § 2 ; Parnell v. CashCall, Inc. , 804 F.3d 1142, 1146 (11th Cir. 2015). "The FAA places arbitration agreements on equal footing with all other contracts and sets forth a clear presumption—‘a......
  • JPay, Inc. v. Kobel, 17-13611
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • 19 Septiembre 2018
    ...Kobel and Houston's motion to compel arbitration, and remand for proceedings consistent with this opinion. See Parnell v. CashCall, Inc., 804 F.3d 1142, 1149 (11th Cir. 2015). The parties agreed, and we are required to give meaning to their agreement and to enforce their will. Thus, an arbi......
  • Belnap v. Iasis Healthcare, 15-4010
    • United States
    • United States Courts of Appeals. United States Court of Appeals (10th Circuit)
    • 5 Enero 2017
    ...Circuits, see supra notes 12–13, the Eleventh Circuit has reached this conclusion many times. See, e.g. , Parnell v. Cash C all, Inc. , 804 F.3d 1142, 1146 (11th Cir. 2015) ("We hold that the Loan Agreement contains a delegation provision and, though Parnell challenged the validity of the a......
  • Mitchell v. Wells Fargo Bank, Case 2:16–cv–00966–CW–DBP
    • United States
    • United States District Courts. 10th Circuit. United States District Court of Utah
    • 29 Noviembre 2017 Wells Fargo's current delegation language satisfies the clear and unmistakable intent standard. E.g. , Parnell v. CashCall, Inc. , 804 F.3d 1142, 1148 (11th Cir. 2015) (finding clear and unmistakable intent to delegate where the language "commits all ‘Disputes’ to arbitration and express......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT