Buckeye Check Cashing Inc. v. Cardegna
Cardegna sued Buckeye Cashing for issuing illegal loans. The contract between Cardegna and Buckeye contained an arbitration clause. Upon being sued, Buckeye filed a motion to compel arbitration. Cardegna responded by arguing that the contract containing the arbitration clause was illegal, therefore the arbitration clause contained within was illegal too. The district court agreed with Cardegna and denied Buckeye’s motion to compel arbitration. The appeals court reversed the district court, holding that the Federal Arbitration Act, as interpreted by the Supreme Court of the United States, allows valid arbitration clauses to be severed from invalid contracts and enforced. The case relied on for this rule was Prima Paint Corp. v Flood & Conklin Manufacturing Co. The Florida Supreme Court later distinguished Prima Paint from the facts in Cardegna because the underlying contract in Prima Paint was only voidable, whereas the contract in Cardegna, if truly illegal, would be completely null and void under Florida law. Because of this distinction, the Florida Supreme Court did not apply Prima Paint and reversed the appeals court, holding that the possible illegality of Cardegna’s contract with Buckeye must be resolved in a Florida court of law, not by an arbitrator.
Question Presented:
Whether the Florida Supreme Court erred by holding, consistent with the Alabama Supreme Court but in direct conflict with six federal courts of appeals,
that the Federal Arbitration Act allows a party to avoid arbitration by claiming that the underlying contract containing an arbitration clause (but not the arbitration clause itself) is void for
illegality.
