The U.S. Supreme Court today ruled in favor of Kirkland & Ellis LLP client Buckeye Check Cashing Co. in a case regarding the enforceability of an arbitration clause under the Federal Arbitration Act. The respondents in that case sought to avoid their agreement to arbitrate their disputes with Buckeye, the petitioner, by claiming that the underlying contracts containing arbitration clauses (but not the arbitration clauses themselves) were void for illegality. The Florida Supreme Court accepted that position, holding as a matter of state law that an arbitration provision in an allegedly illegal contract cannot be enforced.
Buckeye then retained Kirkland to pursue review of that decision in the U.S. Supreme Court. Kirkland was successful in persuading the U.S. Supreme Court to grant certiorari, and oral arguments took place in November 2005. Kirkland argued that the Federal Arbitration Act creates a federal rule of severability that distinguishes between challenges to an arbitration agreement and challenges to the parties’ underlying contract. In other words, a court’s role is limited to determining whether the parties assented to arbitration; if so, everything else (including the legality of the underlying contract) must be decided by the arbitrator.
Three months after oral arguments, the Supreme Court agreed with Kirkland's arguments and ruled in favor of Buckeye. The vote was 7-1, with all Justices joining the opinion authored by Justice Scalia, except for Justice Clarence Thomas, who reiterated his view that the Federal Arbitration Act does not apply at all in state courts.
The Kirkland team was led by Christopher Landau, a partner in the firm’s Washington, D.C. office, and the head of the firm's appellate practice.
Kirkland & Ellis LLP is a 1,100-attorney law firm representing global clients in complex litigation, dispute resolution and arbitration, intellectual property and technology, restructuring, corporate and tax matters. The Firm has offices in Washington, D.C., Chicago, London, Los Angeles, Munich, New York and San Francisco.