BUCKEYE CHECK CASHING, INC. v. CARDEGNA et al.

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440 OCTOBER TERM, 2005
Syllabus
BUCKEYE CHECK CASHING, INC. v. CARDEGNA
et al.
certiorari to the supreme court of florida
No. 04–1264. Argued November 29, 2005—Decided February 21, 2006
For each deferred-payment transaction respondents entered into with
Buckeye Check Cashing, they signed an Agreement containing provi
sions that required binding arbitration to resolve disputes arising out of
the Agreement. Respondents sued in Florida state court, alleging that
Buckeye charged usurious interest rates and that the Agreement vio
lated various Florida laws, rendering it criminal on its face. 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 is
illegal and void ab initio. A state appellate court reversed, but was in
turn reversed by the Florida Supreme Court, which reasoned that en
forcing an arbitration agreement in a contract challenged as unlawful
would violate state public policy and contract law.
Held: Regardless of whether it is brought in federal or state court, a chal
lenge to the validity of a contract as a whole, and not specifically to the
arbitration clause within it, must go to the arbitrator, not the court.
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U. S. 395, and
Southland Corp. v. Keating, 465 U. S. 1, answer the question presented
here by establishing three propositions. First, as a matter of substan
tive federal arbitration law, an arbitration provision is severable from
the remainder of the contract. See Prima Paint, 388 U. S., at 400, 402–
404. Second, 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. See id., at 403–404. Third, this arbitration law applies in
state as well as federal courts. See Southland, supra, at 12. The crux
of respondents’ claim is that the Agreement as a whole (including its
arbitration provision) is rendered invalid by the usurious finance charge.
Because this challenges the Agreement, and not specifically its arbitra
tion provisions, the latter are enforceable apart from the remainder of
the contract, and the challenge should be considered by an arbitrator,
not a court. The Florida Supreme Court erred in declining to apply
Prima Paint’s severability rule, and respondents’ assertion that that
rule does not apply in state court runs contrary to Prima Paint and
Southland. Pp. 443–449.
894 So. 2d 860, reversed and remanded.

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441 Cite as: 546 U. S. 440 (2006)
Syllabus
Scalia, J., delivered the opinion of the Court, in which Roberts, C. J.,
and Stevens, Kennedy, Souter, Ginsburg, and Breyer, JJ., joined.
Thomas, J., filed a dissenting opinion, post, p. 449. Alito, J., took no part
in the consideration or decision of the case.
Chr istopher Landau argued the cause for petitioner.
With him on the briefs were Amy L. Brown and Pierre H.
Bergeron.
F. Paul Bland, Jr., argued the cause for respondents.
With him on the brief were Michael J. Quirk, Arthur H.
Bryant, E. Clayton Yates, Christopher C. Casper, and Rich
ard A. Fisher.*
*Briefs of amici curiae urging reversal were filed for the Chamber of
Commerce of the United States of America et al. by Seth P. Waxman,
Christopher R. Lipsett, Eric J. Mogilnicki, Robin S. Conrad, and Amar
D. Sarwal; for the Community Financial Services Association of America
by James T. McIntyre; for the Florida Bankers Association et al. by Erik
S. Jaffe; and for the Financial Service Centers of America, Inc., et al. by
Gerald Goldman and Robert E. Rochford.
Briefs of amici curiae urging affirmance were filed for the State of
Florida et al. by Charles J. Crist, Jr., Attorney General of Florida, Christo
pher M. Kise, Solicitor General, and Erick M. Figlio, Deputy Solicitor
General, by Roberto J. Sa´ nchez Ramos, Secretary of Justice of Puerto
Rico, and by the Attorneys General for their respective jurisdictions as
follows: David W. Ma´ rquez of Alaska, Terry Goddard of Arizona, Mike
Beebe of Arkansas, Bill Lockyer of California, John Suthers of Colorado,
Richard Blumenthal of Connecticut, M. Jane Brady of Delaware, Robert
Spagnoletti of the District of Columbia, Thurbert E. Baker of Georgia,
Mark J. Bennett of Hawaii, Lawrence Wasden of Idaho, Lisa Madigan of
Illinois, Steve Carter of Indiana, Tom Miller of Iowa, Gregory D. Stumbo
of Kentucky, Steve Rowe of Maine, J. Joseph Curran, Jr., of Maryland,
Tom Reilly of Massachusetts, Mike Hatch of Minnesota, Jim Hood of Mis
sissippi, Jeremiah W. (Jay) Nixon of Missouri, Mike McGrath of Montana,
Brian Sandoval of Nevada, Kelly Ayotte of New Hampshire, Patricia
Madrid of New Mexico, Eliot Spitzer of New York, Roy Cooper of North
Carolina, Wayne Stenehjem of North Dakota, Jim Petro of Ohio, Hardy
Myers of Oregon, Tom Corbett of Pennsylvania, Patrick Lynch of Rhode
Island, Larry Long of South Dakota, Paul Summers of Tennessee, Greg
Abbott of Texas, Mark L. Shurtleff of Utah, Rob McKenna of Washington,
Darrell V. McGraw, Jr., of West Virginia, Peggy A. Lautenschlager of
Wisconsin, and Patrick J. Crank of Wyoming; for AARP by Deborah

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442 BUCKEYE CHECK CASHING, INC. v. CARDEGNA
Opinion of the Court
Justice Scalia delivered the opinion of the Court.
We decide whether a court or an arbitrator should consider
the claim that a contract containing an arbitration provision
is void for illegality.
I
Respondents John Cardegna and Donna Reuter entered
into various deferred-payment transactions with petitioner
Buckeye Check Cashing (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 the following arbitration
provisions:
“1. Arbitration Disclosure By signing this Agree
ment, you agree that i[f] a dispute of any kind arises out
of this Agreement or your application therefore or any
instrument relating thereto, th[e]n either you or we or
third-parties involved can choose to have that dispute
resolved by binding arbitration as set forth in Paragraph
2 below . . . .
“2. Arbitration Provisions Any claim, dispute, or
controversy . . . arising from or relating to this Agree
ment . . . or the validity, enforceability, or scope of this
Arbitration Provision or the entire Agreement (collec
tively ‘Claim’), shall be resolved, upon the election of you
or us or said third-parties, by binding arbitration . . . .
This arbitration Agreement is made pursuant to a trans
action involving interstate commerce, and shall be gov-
Zuckerman and Michael Schuster; for Law Professors by Richard M.
Alderman, Brian H. Bix, Robert W. Gordon, Jeffrey W. Stempel, and
Katherine V. W. Stone; for the National Association of Consumer Advo
cates et al. by Amanda Quester; for the University of Wisconsin Law
Professors by David S. Schwartz and Joel Rogers; and for Samuel Glazer
by Kenneth D. Schwartz.
A brief of amicus curiae was filed for Theis Research, Inc., by Paul
R. Johnson.

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443 Cite as: 546 U. S. 440 (2006)
Opinion of the Court
erned by the Federal Arbitration Act (‘FAA’), 9 U. S. C.
Sections 1–16. The arbitrator shall apply applicable
substantive law constraint [sic] with the FAA and appli
cable statu[t]es of limitations and shall honor claims of
privilege recognized by law . . . .” App. 36, 38, 40, 42.
Respondents brought this putative class action in Florida
state court, alleging that Buckeye charged usurious interest
rates and that the Agreement violated various Florida lend
ing and consumer-protection laws, rendering it criminal on
its face. Buckeye moved to compel arbitration. The trial
court denied the motion, holding that a court rather than an
arbitrator should resolve a claim that a contract is illegal and
void ab initio. The District Court of Appeal of Florida for
the Fourth District reversed, holding that because respond
ents did not challenge the arbitration provision itself, but
instead claimed that the entire contract was void, the agree
ment to arbitrate was enforceable, and the question of the
contract’s legality should go to the arbitrator.
Respondents appealed, and the Florida Supreme Court re
versed, reasoning that to enforce an agreement to arbitrate
in a contract challenged as unlawful “ ‘could breathe life into
a contract that not only violates state law, but also is crimi
nal in nature . . . .’ ” 894 So. 2d 860, 862 (2005) (quoting
Party Yards, Inc. v. Templeton, 751 So. 2d 121, 123 (Fla. App.
2000)). We granted certiorari. 545 U. S. 1127 (2005).
II
A
To overcome judicial resistance to arbitration, Congress
enacted the Federal Arbitration Act (FAA), 9 U. S. C. §§ 1–
16. Section 2 embodies the national policy favoring arbitra
tion and places arbitration agreements on equal footing with
all other contracts:
“A written provision in . . . a contract . . . to settle by
arbitration a controversy thereafter arising out of such

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444 BUCKEYE CHECK CASHING, INC. v. CARDEGNA
Opinion of the Court
contract . . . or an agreement in writing to submit to
arbitration an existing controversy arising out of such a
contract . . . shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for
the revocation of any contract.”
Challenges to the validity of arbitration agreements “upon
such grounds as exist at law or in equity for the revocation
of any contract” can be divided into two types. One type
challenges specifically the validity of the agreement to arbi
trate. See, e. g., Southland Corp. v. Keating, 465 U. S. 1, 4–5
(1984) (challenging the agreement to arbitrate as void under
California law insofar as it purported to cover claims brought
under the state Franchise Investment Law). The other
challenges the contract as a whole, either on a ground that
directly affects the entire agreement (e. g., the agreement
was fraudulently induced), or on the ground that the illegal
ity of one of the contract’s provisions renders the whole con
tract invalid.1 Respondents’ claim is of this second type.
The crux of the complaint is that the contract as a whole
(including its arbitration provision) is rendered invalid by
the usurious finance charge.
In Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388
U. S. 395 (1967), we addressed the question of who—court
or arbitrator—decides these two types of challenges. The
issue in the case was “whether a claim of fraud in the induce
ment of the entire contract is to be resolved by the federal
1 The issue of the contract’s validity is different from the issue whether
any agreement between the alleged obligor and obligee was ever con
cluded. Our opinion today addresses only the former, and does not speak
to the issue decided in the cases cited by respondents (and by the Florida
Supreme Court), which hold that it is for courts to decide whether the
alleged obligor ever signed the contract, Chastain v. Robinson-Humphrey
Co., 957 F. 2d 851 (CA11 1992), whether the signor lacked authority to
commit the alleged principal, Sandvik AB v. Advent Int’l Corp., 220 F. 3d
99 (CA3 2000); Sphere Drake Ins. Ltd. v. All American Ins. Co., 256 F. 3d
587 (CA7 2001), and whether the signor lacked the mental capacity to
assent, Spahr v. Secco, 330 F. 3d 1266 (CA10 2003).

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Opinion of the Court
court, or whether the matter is to be referred to the arbitra
tors.” Id., at 402. Guided by § 4 of the FAA,2 we held that
“if the claim is fraud in the inducement of the arbitration
clause itself—an issue which goes to the making of the agree
ment to arbitrate—the federal court may proceed to adjudi
cate it. But the statutory language does not permit the fed
eral court to consider claims of fraud in the inducement of
the contract generally.” Id., at 403–404 (internal quotation
marks and footnote omitted). We rejected the view that the
question of “severability” was one of state law, so that if
state law held the arbitration provision not to be severable
a challenge to the contract as a whole would be decided by
the court. See id., at 400, 402–403.
Subsequently, in Southland Corp., we held that the FAA
“create[d] a body of federal substantive law,” which was “ap
plicable in state and federal courts.” 465 U. S., at 12 (inter
nal quotation marks omitted). We rejected the view that
state law could bar enforcement of § 2, even in the context
of state-law claims brought in state court. See id., at 10–14;
see also Allied-Bruce Terminix Cos. v. Dobson, 513 U. S. 265,
270–273 (1995).
B
Prima Paint and Southland answer the question pre
sented here by establishing three propositions. First, as a
matter of substantive federal arbitration law, an arbitration
provision is severable from the remainder of the contract.
Second, unless the challenge is to the arbitration clause it
2 In pertinent part, § 4 reads:
“A party aggrieved by the alleged failure, neglect, or refusal of another
to arbitrate under a written agreement for arbitration may petition any
United States district court [with jurisdiction] . . . for an order direct
ing that such arbitration proceed in a manner provided for in such
agreement . . . . [U]pon being satisfied that the making of the agreement
for arbitration or the failure to comply therewith is not in issue, the court
shall make an order directing the parties to proceed to arbitration in ac
cordance with the terms of the agreement . . . .”

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Opinion of the Court
self, the issue of the contract’s validity is considered by the
arbitrator in the first instance. Third, this arbitration law
applies in state as well as federal courts. The parties have
not requested, and we do not undertake, reconsideration of
those holdings. Applying them to this case, we conclude
that because respondents challenge the Agreement, but not
specifically its arbitration provisions, those provisions are
enforceable apart from the remainder of the contract. The
challenge should therefore be considered by an arbitrator,
not a court.
In declining to apply Prima Paint’s rule of severability,
the Florida Supreme Court relied on the distinction between
void and voidable contracts. “Florida public policy and con
tract law,” it concluded, permit “no severable, or salvageable,
parts of a contract found illegal and void under Florida law.”
894 So. 2d, at 864. Prima Paint makes this conclusion ir
relevant. That case rejected application of state severabil
ity rules to the arbitration agreement without discussing
whether the challenge at issue would have rendered the con
tract void or voidable. See 388 U. S., at 400–404. Indeed,
the opinion expressly disclaimed any need to decide what
state-law remedy was available, id., at 400, n. 3 (though Jus
tice Black’s dissent asserted that state law rendered the con
tract void, id., at 407). Likewise in Southland, which arose
in state court, we did not ask whether the several challenges
made there—fraud, misrepresentation, breach of contract,
breach of fiduciary duty, and violation of the California Fran
chise Investment Law—would render the contract void or
voidable. We simply rejected the proposition that the en
forceability of the arbitration agreement turned on the state
legislature’s judgment concerning the forum for enforcement
of the state-law cause of action. See 465 U. S., at 10. So
also here, we cannot accept the Florida Supreme Court’s
conclusion that enforceability of the arbitration agreement
should turn on “Florida public policy and contract law,” 894
So. 2d, at 864.

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Opinion of the Court
C
Respondents assert that Prima Paint’s rule of severabil
ity does not apply in state court. They argue that Prima
Paint interpreted only §§ 3 and 4—two of the FAA’s pro
cedural provisions, which appear to apply by their terms
only in federal court—but not § 2, the only provision that we
have applied in state court. This does not accurately de
scribe Prima Paint. Although § 4, in particular, had much
to do with Prima Paint’s understanding of the rule of sever
ability, see 388 U. S., at 403–404, this rule ultimately arises
out of § 2, the FAA’s substantive command that arbitration
agreements be treated like all other contracts. The rule of
severability establishes how this equal-footing guarantee for
“a written [arbitration] provision” is to be implemented.
Respondents’ reading of Prima Paint as establishing noth
ing more than a federal-court rule of procedure also runs
contrary to Southland’s understanding of that case. One of
the bases for Southland’s application of § 2 in state court
was precisely Prima Paint’s “reli[ance] for [its] holding on
Congress’ broad power to fashion substantive rules under
the Commerce Clause.” 465 U. S., at 11; see also Prima
Paint, supra, at 407 (Black, J., dissenting) (“[t]he Court here
holds that the [FAA], as a matter of federal substantive
law . . . ” (emphasis added)). Southland itself refused to
“believe Congress intended to limit the Arbitration Act to
disputes subject only to federal-court jurisdiction.” 465
U. S., at 15.
Respondents point to the language of § 2, which renders
“valid, irrevocable, and enforceable” “a written provision in”
or “an agreement in writing to submit to arbitration an ex
isting controversy arising out of ” a “contract.” Since, re
spondents argue, the only arbitration agreements to which
§ 2 applies are those involving a “contract,” and since an
agreement void ab initio under state law is not a “contract,”
there is no “written provision” in or “controversy arising out
of ” a “contract,” to which § 2 can apply. This argument ech

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448 BUCKEYE CHECK CASHING, INC. v. CARDEGNA
Opinion of the Court
oes Justice Black’s dissent in Prima Paint: “Sections 2 and
3 of the Act assume the existence of a valid contract. They
merely provide for enforcement where such a valid contract
exists.” 388 U. S., at 412–413. We do not read “contract”
so narrowly. The word appears four times in § 2. Its last
appearance is in the final clause, which allows a challenge to
an arbitration provision “upon such grounds as exist at law
or in equity for the revocation of any contract.” (Emphasis
added.) There can be no doubt that “contract” as used this
last time must include contracts that later prove to be void.
Otherwise, the grounds for revocation would be limited to
those that rendered a contract voidable—which would mean
(implausibly) that an arbitration agreement could be chal
lenged as voidable but not as void. Because the sentence’s
final use of “contract” so obviously includes putative con
tracts, we will not read the same word earlier in the same
sentence to have a more narrow meaning.3 We note that
neither Prima Paint nor Southland lends support to re
spondents’ reading; as we have discussed, neither case
turned on whether the challenge at issue would render the
contract voidable or void.
* * *
It is true, as respondents assert, that the Prima Paint
rule permits a court to enforce an arbitration agreement in
a contract that the arbitrator later finds to be void. But it
is equally true that respondents’ approach permits a court
to deny effect to an arbitration provision in a contract that
3 Our more natural reading is confirmed by the use of the word “con
tract” elsewhere in the United States Code to refer to putative agree
ments, regardless of whether they are legal. For instance, the Sherman
Act, ch. 647, 26 Stat. 209, as amended, states that “[e]very contract,
combination . . . , or conspiracy, in restraint of trade [is] hereby declared
to be illegal.” 15 U. S. C. § 1. Under respondents’ reading of “contract,”
a bewildering circularity would result: A contract illegal because it was in
restraint of trade would not be a “contract” at all, and thus the statutory
prohibition would not apply.

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449 Cite as: 546 U. S. 440 (2006)
Thomas, J., dissenting
the court later finds to be perfectly enforceable. Prima
Paint resolved this conundrum—and resolved it in favor of
the separate enforceability of arbitration provisions. We re
affirm 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 arbitra
tion clause, must go to the arbitrator.
The judgment of the Florida Supreme Court is reversed,
and the case is remanded for further proceedings not incon
sistent with this opinion.
It is so ordered.
Justice Alito took no part in the consideration or deci
sion of this case.
Justice Thomas, dissenting.
I remain of the view that the Federal Arbitration Act
(FAA), 9 U. S. C. § 1 et seq., does not apply to proceedings in
state courts. See Allied-Bruce Terminix Cos. v. Dobson,
513 U. S. 265, 285–297 (1995) (dissenting opinion); Doctor’s
Associates, Inc. v. Casarotto, 517 U. S. 681, 689 (1996) (same);
Green Tree Financial Corp. v. Bazzle, 539 U. S. 444, 460
(2003) (same). 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. Accordingly, I would
leave undisturbed the judgment of the Florida Supreme
Court.