Buckeye Check Cashing, Inc. v. Cardegna
The Court ruled that when someone claims an entire contract is illegal or void, it's the arbitrator — not a judge — who decides that question, so long as the challenge isn't aimed specifically at the arbitration clause itself.
The decision applies this rule in both state and federal courts, reinforcing that arbitration clauses are treated as separate from the rest of a contract and reaffirming a strong nationwide policy favoring arbitration over lawsuits.
“We reaffirm today that, regardless of whether the challenge is brought in federal or state court, a challenge to the validity of the contract as a whole, and not specifically to the arbitration clause, must go to the arbitrator.”
The Court's core holding on who decides challenges to an entire contract's validity.
How it got here: A Florida trial court refused to compel arbitration; an appeals court reversed; the Florida Supreme Court reinstated the trial court's ruling, and the check-cashing company sought review.
The Case in Depth
What happened
Two Florida customers used a check-cashing company's "deferred deposit" service, getting cash upfront in exchange for a personal check plus a finance charge. Each signed an agreement requiring arbitration of disputes. The customers later sued in state court, claiming the finance charges were usurious and that the whole agreement was illegal and criminal under Florida law.
The question before the Court
If someone challenges a whole contract as illegal, does a judge decide that, or must the case go to arbitration under the contract's own arbitration clause?
Why it matters
Businesses that put arbitration clauses in consumer contracts — payday loans, check-cashing agreements, and similar deals — can rely on arbitrators, not courts, to decide claims that the whole contract is illegal or predatory. Consumers challenging such contracts as unlawful will generally have to raise that argument in arbitration rather than in a lawsuit.
What changes now
The case goes back to Florida courts, but under the rule that the arbitrator — not a judge — must decide whether the check-cashing agreement as a whole, including its finance charges, was illegal or void. This is a final decision on the legal question presented, though the underlying dispute about the finance charges still needs to be resolved in arbitration.
What this does not decide
The Court noted its ruling doesn't address a different question: whether the parties ever actually agreed to a contract in the first place, such as disputes over forged signatures, lack of authority to sign, or mental incapacity to agree. Those issues remain for courts to decide, not arbitrators.
Concurrences and dissents
Dissent — Justice Thomas
“Thus, in state-court proceedings, the FAA cannot be the basis for displacing a state law that prohibits enforcement of an arbitration clause contained in a contract that is unenforceable under state law.”Thomas's dissenting view that the federal arbitration law doesn't govern state courts at all.
Justice Thomas restated his long-held view that the Federal Arbitration Act simply does not apply to state court proceedings at all. Because he believes the FAA cannot displace state law in state courts, he would have left the Florida Supreme Court's ruling — that the arbitration clause was unenforceable under state law — undisturbed.
How the Court got there
The legal reasoning, step by step
- The Court relied on two of its own precedents to resolve who decides a challenge to a contract's validity: an arbitrator or a judge. Under the severability principle from a 1967 case, an arbitration clause is treated as a separate, standalone agreement from the rest of the contract it's part of.
- Because the arbitration clause is severable, a challenge aimed at the contract as a whole — rather than specifically at the arbitration clause itself — goes to the arbitrator first, not a judge, since the arbitration clause's own validity isn't in question.
- A separate precedent held that this federal arbitration framework is 'substantive law' that binds state courts too, not just federal ones, so states cannot carve out exceptions based on their own public policy or contract rules.
- The Court rejected the idea that the void-versus-voidable distinction under state law changes this analysis, noting its earlier severability precedent never turned on whether the contract was void or merely voidable.
- The Court also rejected the argument that the word 'contract' in the arbitration statute excludes agreements later found void, reasoning that the statute's own language about revoking 'any contract' necessarily includes contracts that turn out to be void.
- Applying these rules, since the customers' claim attacked the finance charges and the agreement as a whole rather than the arbitration clause specifically, the validity question had to go to an arbitrator rather than a Florida court.
Doctrinal impact
Cases affected by this decision
Reaffirms Prima Paint Corp. v. Flood & Conklin Mfg. Co. (388 U. S. 395)
The Court leaned on this 1967 case's severability rule as still-good law and applied it to the facts here.
Reaffirms Southland Corp. v. Keating (465 U. S. 1)
The Court relied on this case's holding that federal arbitration law binds state courts, not just federal ones.