Originally From World Arbitration and Mediation Review (WAMR)

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FAA Preemption, Separability, and Buckeye Check Cashing
by Christopher R. Drahozal*
WAMR Editor, U.S. Arbitration Law
For the second time in recent years, the U.S. Supreme Court has granted certiorari in a case presenting an important issue of arbitration law but with a complicating twist—that the case under review was decided by a state court. In 2003, the Court granted certiorari in Green Tree Financial Corp. v. Bazzle1 to resolve the following question: “Whether the Federal Arbitration Act, 9 U.S.C. §§ 1-16, prohibits class-action procedures from being superimposed onto an arbitration agreement that does not provide for class-action arbitration.”2 Because the case came from the South Carolina state Supreme Court, however, the issue actually was more complex: to what extent, if at all, does the Federal Arbitration Act (FAA) regulate when state courts can order arbitration on a classwide basis? In the end, the Court in Bazzle issued four separate opinions with no clear majority,3 and with Justice Thomas in dissent reiterating his view that the FAA does not apply in state court at all.4
So too this term—the Court has granted certiorari in Buckeye Check Cashing, Inc. v. Cardegna,5 in which the question presented is whether the arbitrator or a court decides a claim that the underlying contract (the contract containing the arbitration clause) is void for illegality.6 Or, stated otherwise, how does the separability doctrine recognized in Prima Paint Corp. v. Flood & Conklin Mfg. Co.7 apply to claims that the underlying contract is illegal?8 Like Bazzle, Buckeye comes from a state court (the Florida state Supreme Court), so that the same complication is present: to what extent does the FAA preempt the state rule on separability in state court. Thus, if Justice Thomas continues to adhere to the view that the FAA does not apply in state court, he may not reach the central issue of the case. Other Justices may answer the question differently for state courts than for federal courts. As a result, the Court either may not