Joyce Green v. U.S. Cash Advance Illinois
724 F.3d 787
| 7th Cir. | 2013Background
- Green signed a payday loan on May 8, 2012 providing for arbitration by the National Arbitration Forum (Forum) under its Code of Procedure.
- The Forum stopped accepting new consumer arbitrations in July 2009 after a state attorney general suit alleging bias in favor of merchants.
- District court denied appointing a substitute arbitrator under 9 U.S.C. § 5, finding the Forum’s identity integral to the agreement and § 1117 void.
- Lender appealed interlocutorily under 9 U.S.C. § 16(a)(1)(B).
- Majority held the agreement permits arbitration under the Forum’s Code and § 5 can supply an arbitrator, despite Forum unavailability.
- Dissent argued § 5 cannot salvage a flawed arbitration clause and urged affirmance of the district court’s denial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can §5 appoint a substitute arbitrator when the designated forum is unavailable? | Green argues §5 should supply an arbitrator despite Forum unavailability. | U.S. Cash Advance contends the Forum designation is integral and cannot be bypassed. | No; district court should deny arbitration and proceed in court. |
| Is the Forum the exclusive arbitrator under the contract, making §5 inapplicable? | Agreement states arbitration by and under the Forum’s Code, implying exclusivity. | Forum unavailability does not render the clause unenforceable; §5 can fill the gap. | The clause is exclusive to the Forum; §5 cannot be used to appoint an alternate arbitrator. |
| Does Rule 1(A) and related Forum rules mandate arbitration solely by the Forum when available? | Rules show Forum-only administration; consequences of unavailability should be resolved under §5. | Rule 1(A) is unenforceable if the Forum is unavailable, allowing §5 relief. | Rules 1(A) and 48(D) remain enforceable to require Forum arbitration; §5 cannot override exclusivity. |
Key Cases Cited
- Khan v. Dell, Inc., 669 F.3d 350 (3d Cir.2012) (discussed forum exclusivity and §5 applicability)
- In re Salomon Inc. Shareholders’ Derivative Litigation, 68 F.3d 554 (2d Cir.1995) (limits §5 to fill only mechanical lapses, not exclusive forums)
- Salomon, 68 F.3d 554 (2d Cir.1995) (arbitration deemed exclusive; §5 not to supply alternate forum)
- Schulze and Burch Biscuit Co. v. Tree Top, Inc., 831 F.2d 709 (7th Cir.1987) (detail-free arbitration clause could be enforced via §5)
- Reddam v. KPMG, LLP, 457 F.3d 1054 (9th Cir.2006) ( NASD designation ambiguity; §5 not always applicable)
- Brown v. ITT Consumer Financial Corp., 211 F.3d 1217 (11th Cir.2000) (discusses availability of designated forum)