CLE 123 inc.

Supreme Court Argument - Buckeye Check Cashing v. Cardegna (Federal Arbitration Act)

This CLE lecture brought to you by CLE123,Inc. and Oyez.org consists of oral argument before the United States Supreme Court in Buckeye Check Cashing v. Cardegna.  The issue before the court is the validity of a particular conract under the Federal Arbitration Act.  

Facts of the Case

John Cardegna signed a contract for a loan from Buckeye Check Cashing. The contract contained a clause in which Cardegna agreed to resolve any controversies over the loan through arbitration. Cardegna later sued Buckeye, claiming that the conditions for the loan stipulated by the contract were illegal. Buckeye filed a motion in Florida district court to have the case resolved by arbitration, as required by the contract. Cardegna countered that the contract as a whole was illegal and that the arbitration clause was therefore not enforceable. The court agreed and ruled for Cardegna.

On appeal, the state appeals court reversed, holding that the Federal Arbirtration Act, as interpreted by the U.S. Supreme Court, allows arbitration clauses to be enforced even if they are part of otherwise invalid contracts. The appeals court relied on the U.S. Supreme Court's decision in Prima Paint Corporation v. Flood & Conklin Manufacturing Company. The Florida Supreme Court disagreed with the appeals court's use of Prima Paint, however, because the contract in that case had been merely voidable, while the contract in Cardegna's case was actually illegal. The Florida Supreme Court therefore reversed, ruling in favor of Cardegna.

Question

Under the Federal Arbitration Act, may a party avoid arbitration by arguing that the contract in which the arbitration clause is contained is illegal?

About the Lecturer

Mr. Jeffrey B. Gold Esq.

Jeffrey B. Gold is a partner in the Law Firm of Gold, Stewart, Kravatz, Benes & Stone LLP in Westbury, NY.

Mr. Gold's practice consists of insurance coverage, personal injury and commercial litigation.  He can be reached at (516) 512-6333 or at jgold@goldstewart.com.

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