Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006)

In Buckeye Check Cashing, Inc. v. Cardegna, the underlying dispute arose from a series of deferred-payment transactions between respondents John Cardegna and Donna Reuter and petitioner Buckeye Check Cashing. The respondents entered into agreements with Buckeye, receiving cash in exchange for personal checks that included a finance charge. Each transaction was governed by a "Deferred Deposit and Disclosure Agreement," which contained arbitration provisions stipulating that any disputes arising from the agreement could be resolved through binding arbitration. The procedural history began when Cardegna and Reuter filed a putative class action in Florida state court, alleging that Buckeye charged usurious interest rates and that the agreements violated Florida lending and consumer-protection laws, rendering them illegal. Buckeye moved to compel arbitration based on the agreements, but the trial court denied the motion, asserting that a court should determine the legality of the contract rather than an arbitrator. The District Court of Appeal of Florida reversed this decision, stating that since the respondents did not challenge the arbitration provision itself, the arbitration agreement was enforceable, and the legality of the contract should be decided by the arbitrator. However, the Florida Supreme Court later reversed this ruling, arguing that enforcing the arbitration agreement could validate a contract that violated state law and was criminal in nature. The case was subsequently brought before the U.S. Supreme Court on a writ of certiorari. The relevant background context includes the enactment of the Federal Arbitration Act (FAA), which establishes a national policy favoring arbitration and aims to ensure that arbitration agreements are treated equally to other contracts. This case highlights the tension between state law regarding the legality of contracts and the federal policy promoting arbitration, particularly in instances where the legality of the contract itself is in question. The Supreme Court's decision would ultimately address whether the determination of a contract's legality should be made by a court or an arbitrator when an arbitration provision is present.

Whether a court or an arbitrator should consider the claim that a contract containing an arbitration provision is void for illegality.

The judgment of the Florida Supreme Court is reversed, and the case is remanded for further proceedings consistent with the opinion.