BDO Seidman, LLP v. SSW Holding Co., 386 S.W.3d 361

BDO appeals a Sebastian County circuit court ruling denying their amended motion to compel arbitration against SSW Holding and related entities.
SSW Holding asserted numerous claims including fraud, breach, misrepresentation, and others arising from tax-advantaged distressed-debt investments.
BDO argued two Consulting Agreements (2001 and 2003) require arbitration under AAA rules; FAA or NY law would govern enforcement.
SSW Holding argued the arbitration provisions are invalid under New York and Michigan law due to fraud and unconscionability and that some claims fall outside arbitration scope.
The circuit court held NY law governed the 2001 clause, FAA did not apply, and found procedural and substantive unconscionability; the court also addressed the 2003 clause under Michigan law; the court ultimately denied arbitration.
The court reversed and remanded, holding FAA governs arbitration enforcement for the 2001 clause and that the claims fall within the agreements’ scope, with fraud/ unconscionability defenses analyzed under applicable law.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Governing law for enforcement of the 2001 arbitration provision	BDO—FAA governs enforcement.	SSW—New York law governs, with no FAA enforcement language.	FAA governs arbitration enforcement for 2001 clause.
Are SSW Holding's claims within the arbitration provisions' scope	BDO—claims arise from DDS/services under agreements.	SSW—DDS not within scope because of investment-services caveat.	Claims fall within scope; arbitration applies.
Are defenses of unconscionability or fraud render the arbitration provisions unenforceable	BDO—fraud-in-the-inducement to arbitrate should be decided by arbitrator.	SSW—procedural and substantive unconscionability and fraud invalidate clauses.	Procedural unconscionability invalidated the 2001/2003 provisions; fraud to arbitration clause referred to arbitrator; overall reversal.
Fraud claim relating to arbitration clause itself	Fraud in inducement of arbitration clause justifies court determination.	Fraud to the contract overall should be arbitrated; arbitrator decides.	Fraud claim pertains to contract as a whole; arbitrator determines.

First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (arbitration enforcement depends on agreement to arbitrate)
Danner v. MBNA Am. Bank, N.A., 369 Ark. 435 (2007) ( FAA-based enforcement framework governs arbitrability)
MCI Telecommunications Corp. v. Exalon Indus., Inc., 138 F.3d 426 (1st Cir. 1998) (FAA applicability to arbitration contracts involving commerce)
Diamond Waterproofing Systems, Inc. v. 55 Liberty Owners Corp., 4 N.Y.3d 247 (2005) (choice-of-law language affects who decides enforcement issues)
All Metro Health Care Services, Inc. v. Edwards, 25 Misc.3d 863 (N.Y. Sup. Ct. 2009) (NY authority on enforcement language and arbitrability)
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (arbitrability questions are for the arbitrator unless the clause itself is invalid)
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (fraud in the inducement of the contract vs. arbitration clause)
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (arbitration as a matter of contract; substantive rights preserved)
Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (arbitration agreements to be enforced according to terms)