Buckeye Check Cashing, Inc.v. Cardegna

546 U.S. 440 (2006)

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Nature of the Case

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Facts

Cardegna and Donna Reuter (Ps) entered into various deferred-payment transactions with Buckeye (D). They received cash in exchange for a personal check in the amount of the cash plus a finance charge. 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 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 . . . .' Ps this putative class alleging that D charged usurious interest rates and that the Agreement violated various Florida lending and consumer-protection laws, rendering it criminal on its face. D moved to compel arbitration. The trial court denied the motion; a court rather than an arbitrator should resolve a claim that a contract is illegal and void ab initio. Court of Appeal reversed, holding that because Ps 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. The Florida Supreme Court reversed; 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 . . . .'' The Supreme Court granted certiorari.