Buckeye Check Cashing, Inc. v. Cardegna Case Brief

Facts of the Case

“Respondents John Cardegna and Donna Reuter entered into various deferred-payment transactions with petitioner Buckeye Check Cashing, Inc. (“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 an arbitration provision. Respondents filed a class action lawsuit against Buckeye in Florida state court alleging that Buckeye made illegal usurious loans disguised as check cashing transactions in violation of various Florida Statutes, rendering the contract void. In response, Buckeye filed a motion to compel arbitration and to stay proceedings, pursuant to the arbitration provision. The trial court denied Buckeye’s motion to compel arbitration, holding that a court rather than an arbitrator should resolve a claim that a contract was illegal and void ab initio. On Buckeye’s appeal, the appellate court reversed, holding that respondents’ challenge to the validity of the contract had to be resolved by an arbitrator, not a trial court. The matter came up for review in the state supreme court, which reversed the appellate court, holding that enforcing an arbitration agreement in a contract challenged as unlawful would violate state public policy and contract law. Buckeye was granted a writ of certiorari.”

Question

Can a court, in the context of a summary judgment request, award summary judgment in a libel action if the moving party had no evidence that a reasonable jury might disbelieve its opponent’s claim?

CONCLUSION

“No. The 7-1 majority (Justice Samuel Alito not participating) ruled that challenges to the legality of a contract as a whole must be argued before the arbitrator rather than a court. The opinion by Justice Antonin Scalia explained that “unless the challenge is to the arbitration clause itself, the issue of the contract’s validity is considered by the arbitrator in the first instance.” The Court held that the Florida Supreme Court had been wrong to rely on a distinction between void and merely voidable contracts, because the word “contract” in the Federal Arbitration Act includes contracts later found to be void. Justice Clarence Thomas dissented due to his long-held view that the FAA does not apply in state courts.”

Case Information

Citation: 546 US 440 (2006)
Granted: Jun 20, 2005
Argued: Nov 29, 2005
Decided: Feb 21, 2006
Case Brief: 2006