FI L ED

U.S. COURT OF APPEAL S

EL EVENTH CI RCUI T

AUGUST 25, 2011

J OHN L EY

CL ERK [ P U B L I S H ]

I N T H E U N I T E D S T A T E S C O U R T O F A P P E A L S

F O R T H E E L E V E N T H C I R C U I T

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

N o

. 0 6

- 1 1 5 8 2

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

D

. C

. D o c k e t N o

. 0 4

- 0 2 6 0 8

- C V

- W S D

- 1

C O M M U N I T Y S T A T E B A N K

, C A S H A M E R I C A F I N A N C I A L S E R V I C E S

, I N C

. , C A S H A M E R I C A I N T E R N A T I O N A L

, I N C

. , G E O R G I A C A S H A M E R I C A

, I N C

. ,

D A N I E L R

. F E E H A N

,

P e t i t i o n e r s

- A p p e l l a n t s

,

v e r s u s

J A M E S E

. S T R O N G

,

R e s p o n d e n t

- A p p e l l e e

.

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

A p p e a l f r o m t h e U n i t e d S t a t e s D i s t r i c t C o u r t

f o r t h e N o r t h e r n D i s t r i c t o f G e o r g i a

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

( A u g u s t 2 5

, 2 0 1 1 )

B e f o r e C A R N E S a n d M A R C U S

, C i r c u i t J u d g e s

, a n d J O R D A N

, D i s t r i c t J u d g e

. *

M A R C U S

, C i r c u i t J u d g e :

Honora ble Adalbe rto J . J ordan, U nited States District J udg e for the Southern District of *

Florida , sitti ng by

desig nation.T h i s r e s i l i e n t c a s e h a s a r r i v e d b a c k i n o u r C o u r t a f t e r t h e S u p r e m e C o u r t ’ s

o p i n i o n i n V a d e n v

. D i s c o v e r B a n k

, 5 5 6 U

. S

. 4 9

, 1 2 9 S

. C t

. 1 2 6 2 ( 2 0 0 9 )

, a n d

f o l l o w i n g a d e t o u r t h r o u g h o u r e n b a n c C o u r t

. A g a i n w e a r e a s k e d t o n a v i g a t e t h e

l a b y r i n t h o f f

e d e r a l j u r i s d i c t i o n t o d e t e r m i n e w h e t h e r t h e d i s t r i c t c o u r t h a d

j u r i s d i c t i o n t o e n t e r t a i n a p e t i t i o n t o c o m p e l a r b i t r a t i o n

, p u r s u a n t t o S e c t i o n 4 o f

t h e F e d e r a l A r b i t r a t i o n A c t ( “ F A A ” )

, 9 U

. S

. C

. § 4

.

T h e c a s e a r o s e w h e n t h e R e s p o n d e n t J a m e s S t r o n g ( “ S t r o n g ” ) o b t a i n e d a

m o n t h

- l o n g $ 2 0 0 l o a n f r o m a s t o r e f

r o n t i n G e o r g i a i n 2 0 0 4

. S t r o n g l a t e r s o u g h t

r e l i e f f r o m a G e o r g i a s t a t e c o u r t

, a r g u i n g t h a t t h e l o a n w a s i l l e g a l a n d u s u r i o u s

u n d e r G e o r g i a l a w

, b e c a u s e i t c a r r i e d a f i n a n c e c h a r g e o f $ 3 6

, e q u i v a l e n t t o a n

a n n u a l p e r c e n t a g e r a t e o f 2 5 3 %

. T h e P e t i t i o n e r s i n t h i s c a s e

, C o m m u n i t y S t a t e

B a n k

, C a s h A m e r i c a F i n a n c i a l S e r v i c e s

, I n c

. , C a s h A m e r i c a I n t e r n a t i o n a l

, I n c

. ,

G e o r g i a C a s h A m e r i c a

, I n c

. , a n d D a n i e l F e e h a n

, c o u n t e r t h a t t h e l o a n w a s

p e r f e c t l y l e g a l

, b e c a u s e f

e d e r a l l a w p e r m i t s C o m m u n i t y S t a t e B a n k t o c h a r g e

i n t e r e s t r a t e s w i t h o u t r e g a r d t o G e o r g i a l a w

. T h e o n l y i s s u e o n a p p e a l i s

j u r i s d i c t i o n a l : w h e t h e r t h e f e d e r a l d i s t r i c t c o u r t h a s j u r i s d i c t i o n o v e r t h e p e t i t i o n t o

c o m p e l a r b i t r a t i o n o f S t r o n g ’ s c l a i m s

.

I n o u r f i r s t o p i n i o n i n t h i s c a s e

, w e h e l d t h a t i n o r d e r t o d e t e r m i n e w h e t h e r

t h e r e i s f e d e r a l j u r i s d i c t i o n o v e r a p e t i t i o n t o c o m p e l a r b i t r a t i o n u n d e r § 4 o f t h e

2F A A

, w e m u s t “ l o o k t h r o u g h ” t h e a r b i t r a t i o n p e t i t i o n t o t h e u n d e r l y i n g c o n t r o v e r s y

a n d a s k w h e t h e r t h e u n d e r l y i n g d i s p u t e b e t w e e n t h e p a r t i e s w o u l d h a v e a r i s e n

u n d e r f e d e r a l l a w

. C m t y

. S t a t e B a n k v

. S t r o n g ( “ S t r o n g I ” )

, 4 8 5 F

. 3 d 5 9 7

, 6 0 7

( 1 1 t h C i r

. 2 0 0 7 )

. W e c o n c l u d e d t h a t

, l o o k i n g t h r o u g h t h e § 4 a r b i t r a t i o n p e t i t i o n t o

t h e u n d e r l y i n g c o n t r o v e r s y

, i t w a s a p p a r e n t t h a t S t r o n g c o u l d h a v e f i l e d a c o e r c i v e

a c t i o n a r i s i n g u n d e r f

e d e r a l l a w

, a n d t h e r e f

o r e t h e d i s t r i c t c o u r t h a d s u b j e c t m a t t e r

j u r i s d i c t i o n o v e r t h e p e t i t i o n t o c o m p e l a r b i t r a t i o n

. I d

. a t 6 1 2

. S u b s e q u e n t l y

, t h i s

C o u r t v a c a t e d S t r o n g I t o r e v i e w t h e c a s e e n b a n c

, C m t y

. S t a t e B a n k v

. S t r o n g

, 5 0 8

F

. 3 d 5 7 6 ( 1 1 t h C i r

. 2 0 0 7 )

, b u t s t a y e d i t s e n b a n c p r o c e e d i n g s t o a w a i t t h e S u p r e m e

C o u r t ’ s d e c i s i o n i n V a d e n

, w h i c h r a i s e d a s u b s t a n t i a l l y s i m i l a r j u r i s d i c t i o n a l

q u e s t i o n

.

I n V a d e n

, t h e S u p r e m e C o u r t a d o p t e d t h e “ l o o k t h r o u g h ” a p p r o a c h f o r

d e t e r m i n i n g f

e d e r a l j u r i s d i c t i o n o v e r F A A § 4 a r b i t r a t i o n p e t i t i o n s

, h o l d i n g t h a t

“ [ a ] f e d e r a l c o u r t m a y ‘ l o o k t h r o u g h ’ a § 4 p e t i t i o n a n d o r d e r a r b i t r a t i o n i f

, ‘ s a v e

f o r [ t h e a r b i t r a t i o n ] a g r e e m e n t

, ’ t h e c o u r t w o u l d h a v e j u r i s d i c t i o n o v e r ‘ t h e

[ s u b s t a n t i v e ] c o n t r o v e r s y b e t w e e n t h e p a r t i e s

. ’ ” V a d e n

, 1 2 9 S

. C t

. a t 1 2 6 8

( q u o t i n g 9 U

. S

. C

. § 4 ) ( a l t e r a t i o n s i n V a d e n )

. I n l i g h t o f V a d e n

, t h i s C o u r t v a c a t e d

i t s e n b a n c o r d e r a n d r e m a n d e d t h e c a s e b a c k t o t h e p a n e l

. C m t y

. S t a t e B a n k v

.

S t r o n g

, 5 6 5 F

. 3 d 1 3 0 5

, 1 3 0 6 ( 1 1 t h C i r

. 2 0 0 9 )

.

3W e n o w r e v i s i t t h e s a m e q u e s t i o n w e f a c e d i n S t r o n g I

, w i t h t h e b e n e f i t o f

t h e S u p r e m e C o u r t ’ s g u i d a n c e i n V a d e n

. F o l l o w i n g V a d e n ’ s i n s t r u c t i o n t o “ l o o k

t h r o u g h ” t h e F A A § 4 p e t i t i o n t o t h e s u b s t a n t i v e c o n t r o v e r s y b e t w e e n t h e p a r t i e s

,

w e r e m a i n c o n v i n c e d t h a t S t r o n g ’ s d i s p u t e w i t h C o m m u n i t y S t a t e B a n k ( “ t h e

B a n k ” ) c o u l d h a v e a r i s e n u n d e r f e d e r a l l a w a n d

, t h e r e f

o r e

, p r o v i d e s a b a s i s f

o r

f e d e r a l j u r i s d i c t i o n o v e r t h e F A A p e t i t i o n

. W e t h e r e f o r e c o n t i n u e t o e n d o r s e t h e

p r i m a r y t h r u s t o f t h e S t r o n g I h o l d i n g w i t h r e s p e c t t o t h e B a n k

, a n d c o n c l u d e t h a t

t h e d i s t r i c t c o u r t h a s j u r i s d i c t i o n o v e r t h e B a n k ’ s § 4 p e t i t i o n

.

H o w e v e r

, w e d e p a r t f

r o m o u r r e s u l t i n S t r o n g I a s t o t h e o t h e r p e t i t i o n e r s i n

t h e c a s e

- - C a s h A m e r i c a F i n a n c i a l S e r v i c e s

, I n c

. , C a s h A m e r i c a I n t e r n a t i o n a l

,

I n c

. , G e o r g i a C a s h A m e r i c a

, I n c

. , a n d D a n i e l R

. F e e h a n ( c o l l e c t i v e l y “ C a s h

A m e r i c a ” )

. D u r i n g t h e l o n g p e n d e n c y o f t h i s a p p e a l

, t h e C a s h A m e r i c a p a r t i e s

- -

w h o w e r e d e f

e n d a n t s i n a p a r a l l e l s t a t e

- c o u r t l a w s u i t b r o u g h t b y S t r o n g

- - m o v e d

t o c o m p e l a r b i t r a t i o n o f S t r o n g ’ s c l a i m s i n s t a t e c o u r t

. Y e t

, w h e n t h e s t a t e c o u r t

o r d e r e d C a s h A m e r i c a t o p r o d u c e d i s c o v e r y o n t h e l i m i t e d i s s u e o f t h e

e n f o r c e a b i l i t y o f t h e a r b i t r a t i o n a g r e e m e n t b e t w e e n t h e p a r t i e s

, C a s h A m e r i c a

r e p e a t e d l y r e f

u s e d t o c o m p l y w i t h t h e s t a t e c o u r t ’ s o r d e r s

. U l t i m a t e l y

, t h e s t a t e

c o u r t s t r u c k C a s h A m e r i c a ’ s a r b i t r a t i o n d e f e n s e s a s a s t a t u t o r i l y a u t h o r i z e d

s a n c t i o n f

o r i t s w i l l f

u l d i s c o v e r y a b u s e s

. W e n o w c o n c l u d e t h a t t h i s s t a t e

- c o u r t

4j u d g m e n t

- - w h i c h h a s s i n c e b e e n u p h e l d o n a p p e a l a n d n o w c o n s t i t u t e s a f i n a l

j u d g m e n t f

r o m a c o u r t o f c o m p e t e n t j u r i s d i c t i o n

- - h a s p r e c l u s i v e e f f e c t

, a n d C a s h

A m e r i c a i s c o l l a t e r a l l y e s t o p p e d f r o m p e t i t i o n i n g t h e d i s t r i c t c o u r t t o d e c i d e t h e

v e r y s a m e i s s u e t h a t t h e s t a t e c o u r t h a s a l r e a d y d e c i d e d a g a i n s t i t

. W e

, t h e r e f o r e

,

a f f i r m t h e d i s t r i c t c o u r t ’ s d i s m i s s a l o f t h e F A A p e t i t i o n a s t o a l l o f t h e p e t i t i o n e r s

w h o w e r e d e f

e n d a n t s i n t h e s t a t e

- c o u r t l a w s u i t

. A c c o r d i n g l y

, w e a f f i r m i n p a r t

,

r e v e r s e i n p a r t

, a n d r e m a n d f o r f u r t h e r p r o c e e d i n g s c o n s i s t e n t w i t h t h i s o p i n i o n

.

I

.

T h e e s s e n t i a l f

a c t s a n d p r o c e d u r a l h i s t o r y a r e t h e s e

. O n F e b r u a r y 6

, 2 0 0 4

, 1

J a m e s S t r o n g t o o k o u t a “ p a y d a y l o a n ” o f $ 2 0 0 a t a s t o r e c a l l e d C a s h A m e r i c a

P a w n o f A t l a n t a # 1 5

, l o c a t e d i n C o b b C o u n t y

, G e o r g i a

. T h e s t o r e w a s o p e r a t e d b y

G e o r g i a C a s h A m e r i c a

, I n c

. , a n a f f i l i a t e o f C a s h A m e r i c a F i n a n c i a l S e r v i c e s

, I n c

.

“ ‘ P a y d a y l o a n s ’ a r e g e n e r a l l y s m a l l

- d o l l a r

, s h o r t

- t e r m

, h i g h i n t e r e s t l o a n s s e c u r e d

b y a c h e c k g i v e n t o t h e p a y d a y l e n d e r i n t h e a m o u n t o f t h e c a s h a d v a n c e p l u s

i n t e r e s t

. ” D a l e v

. C o m c a s t C o r p

. , 4 9 8 F

. 3 d 1 2 1 6

, 1 2 2 1 n

. 9 ( 1 1 t h C i r

. 2 0 0 7 )

.

B a n k s t h a t p r o v i d e p a y d a y l o a n s g e n e r a l l y p a r t n e r w i t h l o c a l i n s t i t u t i o n s t o

“ m a r k e t ” o r “ s e r v i c e ” t h e s m a l l l o a n s

.

I n e x c h a n g e f

o r t h e $ 2 0 0 l o a n

, S t r o n g s i g n e d a l o a n a g r e e m e n t

, s t y l e d a s a

A fuller e x plication of the fa cts and proc edura l history is laid out in S trong I , 485 F.3d 1

at 601-05.

5p r o m i s s o r y n o t e

, t h a t r e q u i r e d p a y m e n t o f “ t h e p r i n c i p a l s u m o f $ 2 0 0

. 0 0

, p l u s a

f i n a n c e c h a r g e i n t h e a m o u n t o f $ 3 6

. 0 0 ” b y M a r c h 3

, 2 0 0 4

. T h e f i n a n c e c h a r g e o f

$ 3 6 f o r t h e o n e m o n t h o f t h e l o a n i s e q u i v a l e n t t o a n a n n u a l p e r c e n t a g e r a t e o f

2 5 3 %

. A l t h o u g h t h e l o a n d o c u m e n t i d e n t i f i e d t h e “ L e n d e r ” a s C o m m u n i t y S t a t e

B a n k

, c h a r t e r e d i n M i l b a n k

, S o u t h D a k o t a

, a n d s t a t e d t h a t p a y m e n t s h o u l d b e

m a d e “ t o t h e o r d e r o f C O M M U N I T Y S T A T E B A N K

, ” i t p e r m i t t e d S t r o n g t o m a k e

h i s p a y m e n t i n p e r s o n t o t h e C a s h A m e r i c a P a w n o f A t l a n t a # 1 5 s t o r e i n G e o r g i a

- -

t h e s a m e p l a c e h e h a d o b t a i n e d t h e l o a n

.

I n a p r o v i s i o n u n d e r t h e h e a d i n g

, “ C a s h A m e r i c a

, ” t h e l o a n a g r e e m e n t s t a t e d

t h a t “ L e n d e r [ t h e B a n k ] h a s e n t e r e d i n t o a c o n t r a c t w i t h C a s h A m e r i c a F i n a n c i a l

S e r v i c e s

, I n c

. t o a s s i s t w i t h t h i s l o a n t r a n s a c t i o n

. N e i t h e r C a s h A m e r i c a F i n a n c i a l

S e r v i c e s

, I n c

. , n o r a n y o f i t s a f f i l i a t e s ( c o l l e c t i v e l y

, ‘ C a s h A m e r i c a ’ )

, i s o w n e d b y

,

o p e r a t e d b y

, o r a f

f i l i a t e d w i t h L e n d e r

. ” T h e l o a n a g r e e m e n t a l s o c o n t a i n e d a n

a r b i t r a t i o n c l a u s e

. S t r o n g a g r e e d t h a t “ [ a ] n y c o n t r o v e r s y o r c l a i m b e t w e e n m e a n d

t h e L e n d e r

, C a s h A m e r i c a

, o r a n y e m p l o y e e s

. . . . a r i s i n g o u t o f o r i n a n y w a y

r e l a t i n g t o t h i s N o t e a n d m y l o a n r e l a t i o n s h i p w i t h L e n d e r ( i n c l u d i n g t h i s

a r b i t r a t i o n a g r e e m e n t ) s h a l l b e s e t t l e d b y b i n d i n g a r b i t r a t i o n

. ”

O n A u g u s t 6

, 2 0 0 4

, S t r o n g f i l e d a l a w s u i t a g a i n s t G e o r g i a C a s h A m e r i c a

,

I n c

. , C a s h A m e r i c a I n t e r n a t i o n a l

, I n c

. , a n d D a n i e l F e e h a n

, t h e C E O o f b o t h

6c o m p a n i e s ( c o l l e c t i v e l y

, t h e “ C a s h A m e r i c a d e f e n d a n t s ” )

, i n t h e S t a t e C o u r t o f

C o b b C o u n t y

, i n G e o r g i a

, a l l e g i n g t h a t t h e p a y d a y l o a n s m a d e t o h i m a n d o t h e r s h e

p u r p o r t e d t o r e p r e s e n t w e r e i l l e g a l a n d u s u r i o u s u n d e r G e o r g i a l a w

. S t r o n g s o u g h t

t o c a s t h i s s u i t a s a c l a s s a c t i o n o n b e h a l f o f “ h u n d r e d s

, i f n o t t h o u s a n d s ” o f

s i m i l a r l y s i t u a t e d b o r r o w e r s

. A m o n g o t h e r c l a i m s

, S t r o n g a l l e g e d t h a t t h e C a s h

A m e r i c a d e f

e n d a n t s v i o l a t e d t h e G e o r g i a u s u r y s t a t u t e

, G a

. C o d e A n n

. § 7

- 4

- 1 e t

s e q

. , b y c h a r g i n g m o r e t h a n 1 6 % p e r a n n u m o n a l o a n o f $ 3

, 0 0 0 o r l e s s

, i d

. §

7

- 4

- 2 ( a ) ( 2 )

, o r m o r e t h a n 5 % p e r m o n t h o n a l o a n o f a n y s u m

, i d

. § 7

- 4

- 1 8

, ; t h e

2 3

G e o r g i a I n d u s t r i a l L o a n A c t

, G a

. C o d e A n n

. § 7

- 3

- 1 e t s e q

. , b y f a i l i n g t o b e

l i c e n s e d u n d e r t h e s t a t u t e

, i d

. § 7

- 3

- 8

, a n d c h a r g i n g m o r e t h a n 1 0 % p e r a n n u m 4

Geor g ia’s usury

statute provides: 2

Where the principal amount involved is $3,000.00 or less, [t he leg al rate of interest]

shall not exceed 16 perc ent per annum simple interest on any loan, advanc e, or

forbe ara nce to enfor ce the collection of any sum of money unless the loan, advanc e,

o r forbe ara

nce to enfor ce the collection of any sum of money is made pursuant t o

another law.

Ga. Code A nn. § 7-4-2( a)( 2).

Geor g ia’s usury

statute makes c harg ing a 5% per month interest rate a misdemea nor, 3

providing that “[a]ny

person, c ompany , or cor

poration who shall re serve , char g e, or ta ke for any

loan or a dvance of money . . . any rate of intere st gr eate r than 5 pe rce nt per month, either

direc tly or indirec tly , . . . by

any . . . device whatsoeve r shall be g uilty of a misdemea

nor.” G a.

Code Ann. § 7-4- 18(a)

.

The Ge org ia I ndustrial L oan Ac t’s licensing provision states that “[a]ll persons e ng ag ed 4

in the business of making loans of $3,000.00 or le ss in the State of Geor g ia, unless expressly

exempted theref

rom, shall be re quired to obtain a lice nse under this chapter.” I d. § 7-3-8.

7p l u s a n 8 % l o a n f e e o n a l o a n o f $ 3

, 0 0 0 o r l e s s

, i d

. § 7

- 3

- 1 4 ; a n d G e o r g i a ’ s 5

R a c k e t e e r I n f

l u e n c e d a n d C o r r u p t O r g a n i z a t i o n s s t a t u t e ( “ G e o r g i a R I C O ” )

, G a

.

C o d e A n n

. § 1 6

- 1 4

- 1 e t s e q

. , b y c o n d u c t i n g a n e n t e r p r i s e t h r o u g h a p a t t e r n o f

r a c k e t e e r i n g a c t i v i t y

, t o w i t

, p a y d a y l e n d i n g v i o l a t i o n s

, s e e i d

. § 1 6

- 1 4

-

3 ( 9 ) ( A ) ( x x x v i i i )

. I n a n o b v i o u s e f f o r t t o a v o i d f

e d e r a l j u r i s d i c t i o n

, S t r o n g d i d n o t 6

s u e C o m m u n i t y S t a t e B a n k

, a n d e x p r e s s l y s t a t e d i n t h e c o m p l a i n t t h a t h e a n d t h e

p u t a t i v e c l a s s m e m b e r s d i d “ n o t a s s e r t a n y c l a i m s u n d e r t h e l a w s o f t h e U n i t e d

S t a t e s

, ” d i d “ n o t a s s e r t a n y c l a i m a g a i n s t a s t a t e o r n a t i o n a l l y c h a r t e r e d b a n k

, ” a n d

d i d “ n o t s e e k r e c o v e r y

. . . i n e x c e s s o f $ 7 5

, 0 0 0

. ”

O n A u g u s t 3 1

, 2 0 0 4

, t h e C a s h A m e r i c a d e f e n d a n t s

- - t o g e t h e r w i t h

C o m m u n i t y S t a t e B a n k

- - s e r v e d a N o t i c e o f I n t e n t t o A r b i t r a t e o n S t r o n g

. C l a s s

c o u n s e l f o r S t r o n g r e

j e c t e d t h e N o t i c e

, a n d i n f o r m e d t h e B a n k a n d t h e C a s h

A m e r i c a d e f

e n d a n t s t h a t S t r o n g i n t e n d e d t o g o f o r w a r d i n s t a t e c o u r t w i t h h i s s t a t e

-

The Ge org ia I ndustrial L oan Ac t prohibits li cense es fr om char g ing inter est at a r ate that 5

“excee d[s] 10 perc ent per annum of the f

ace amount of the c ontrac t, whether repa y able in one

single pay ment or re pay able in monthly or other pe riodic installments,” id. § 7-3-14(1) ;

howeve r, it permits licensee s to charg e “[i]n additi on there to,” a loan f ee in “ an amount not

g rea ter than 8 pe rce nt of the first $600.00 of the fac e amount of the contra ct plus 4 perc ent of the

excess.” I d. § 7-3-14( 2).

We note in passing, how ever , that althoug h the Geor g ia RI CO statute includes 6

violations of the Pay day

L ending statute, Ga. Code A nn. § 16-17-2, a s predica te “r acke teer ing

activity ,” see id. § 16-14-3(9) (A)( x x x viii), this P ay day L ending statute was not in ef fec t at the

time of Strong’ s loan on Fe bruar y 6, 2004. See 2004 Ga . L aws Ac t 440 (S.B. 157) ( eff . May 1,

2004) (c odified in rele vant par t at Ga. Code A nn. § 16-17-1, e t seq.). More over, violations of

Geor g ia’s usury

statute, Ga. Code A nn. § 7-4-1, e t seq., are not list ed as qua lify ing “ rac ketee ring

activity ” in the Ge org ia RI CO statute. See id. § 16-14-3( 9)(A)

.

8l a w

- g r o u n d e d c l a i m s

. O n S e p t e m b e r 7

, 2 0 0 4

, d e s p i t e t h e c o m p l a i n t ’ s h a v i n g

e x p r e s s l y d i s a v o w e d a n y i n t e n t i o n t o s u e t h e B a n k o r t o a s s e r t a n y f e d e r a l c l a i m s

,

t h e C a s h A m e r i c a d e f

e n d a n t s r e m o v e d S t r o n g ’ s s t a t e

- c o u r t l a w s u i t t o t h e U n i t e d

S t a t e s D i s t r i c t C o u r t f

o r t h e N o r t h e r n D i s t r i c t o f G e o r g i a

. O n t h e s a m e d a y

, t h e

C a s h A m e r i c a d e f

e n d a n t s

- - t o g e t h e r w i t h t h e B a n k a n d C a s h A m e r i c a F i n a n c i a l

S e r v i c e s

, I n c

. - - c o m m e n c e d a n i n d e p e n d e n t a c t i o n a g a i n s t S t r o n g b y f i l i n g a

V e r i f i e d P e t i t i o n t o C o m p e l A r b i t r a t i o n a n d S t a y J u d i c i a l P r o c e e d i n g s i n t h e s a m e

f e d e r a l d i s t r i c t c o u r t

, s e e k i n g t o c o m p e l a r b i t r a t i o n o f S t r o n g ’ s c l a i m s p u r s u a n t t o §

4 o f t h e F A A

. T h e P e t i t i o n e r s a r g u e d t h a t t h e d i s t r i c t c o u r t h a d j u r i s d i c t i o n t o

7

e n t e r t a i n t h e p e t i t i o n b e c a u s e S t r o n g ’ s s t a t e

- l a w u s u r y c l a i m s w e r e c o m p l e t e l y

Section 4 of the F AA per mits an “ag g rieve d” par

ty to petition a fede ral c ourt to compel 7

arbitra tion pursuant to a par ty ’s written a g ree ment:

A party ag g rieve d by the alleg ed fa i l u re

, neg lect, or ref usal of another to arbitra

te

under a written ag ree ment for arbitra tion may p et i t i o n any United States district

court which, save for such ag ree ment, would have jurisdiction under Title 28

. . . of

the subject matter of a suit arising out of the controve rsy betwee n the parties, for an

order direc ting that such arbitra tion proce ed in t h e m an n er provided for in such

ag ree ment.

. . . The court shall hear the parties, and upon being satisfied that the

making of t he agr eeme nt for a rbitration or the f

ailure to comply there with is not in

issue, the court shall make an order direc ting the parties to pr ocee d to arbitra tion in

acc ordanc e with the terms of the ag ree ment.

. . . I f the making of t h e ar b i t ration

ag ree ment or the failure

, neg lect, or ref usal to perf

orm the same be in issue, the court

shall proce ed summarily

to the trial there of.

9 U.S.C. § 4.

Section 2 of the F AA -- the Act’ s “ce nterpiec e provision,” Mitsubishi Motors C orp. v.

Soler Chry sler-Ply

mouth, I nc., 473 U.S. 614, 625 (1985) - - provides tha t cover ed ar bitration

ag ree ments are “valid, irre vocable , and enf orce able, sa ve upon such g rounds as e x ist at law or in

equity for the r evocation of any contra ct.” 9 U.S.C. § 2.

9p r e e m p t e d b y S e c t i o n 2 7 ( a ) o f t h e F e d e r a l D e p o s i t I n s u r a n c e A c t ( F D I A )

, 1 2

U

. S

. C

. § 1 8 3 1 d ( a )

. S t r o n g m o v e d t h e d i s t r i c t c o u r t t o d i s m i s s t h e a r b i t r a t i o n 8

p e t i t i o n f o r l a c k o f s u b

j e c t m a t t e r j u r i s d i c t i o n a n d t o r e m a n d t h e s t a t e

- c o u r t a c t i o n

b a c k t o s t a t e c o u r t

, s i m i l a r l y f o r l a c k o f f

e d e r a l j u r i s d i c t i o n

. O n D e c e m b e r 1 3

,

2 0 0 5

, t h e d i s t r i c t c o u r t g r a n t e d S t r o n g ’ s m o t i o n t o r e m a n d t h e s t a t e c a s e

, a g r e e i n g

w i t h S t r o n g t h a t f

e d e r a l j u r i s d i c t i o n w a s l a c k i n g

. O n F e b r u a r y 7

, 2 0 0 6

, t h e d i s t r i c t

c o u r t a l s o g r a n t e d S t r o n g ’ s m o t i o n t o d i s m i s s t h e V e r i f i e d P e t i t i o n

, r e

j e c t i n g t h e

P e t i t i o n e r s ’ a s s e r t e d b a s e s o f f e d e r a l j u r i s d i c t i o n

. T h e P e t i t i o n e r s t i m e l y a p p e a l e d

t o t h i s C o u r t t h e d i s m i s s a l o f t h e a r b i t r a t i o n p e t i t i o n

.

T h e c a s e h a s s i n c e t a k e n a c i r c u i t o u s r o u t e

. O n A p r i l 2 7

, 2 0 0 7

, a p a n e l o f

t h i s C o u r t r e v e r s e d t h e d i s t r i c t c o u r t ’ s d i s m i s s a l a n d h e l d t h a t

, l o o k i n g t h r o u g h t h e

§ 4 a r b i t r a t i o n p e t i t i o n t o t h e u n d e r l y i n g c o n t r o v e r s y

, i t w a s a p p a r e n t t h a t S t r o n g

Section 27 of the F DI A was dr afte d as Section 521 in Title V of the D epository 8

I nstitut ions Dere g ulation and Monetar y Control Act of 1980 (“ DI DA”) , Pub. L . No. 96-221, §

521, 94 Stat. 132 (1980) (c odified at 12 U.S.C. § 1831d). Section 27(a ) of the F DI A provides, in

rele vant par

t:

I n order to preve nt discrimination ag ainst State-cha rtere d insured depository

instit utions .

. . with r espec t to interest rate s, if the applicable rate presc ribed in this

subsection exceeds the rate such State bank

. . . would be permitted to char g e in the

absenc e of this subsection, such State b an k

. . . may

, notwithstanding any State

constitution or st atute which is hereby pree mpted for the pur

poses of this section, .

. . char g e on any loan .

. . interest at a rate of not more than 1 per centum i n excess

of the discount rate on ninety -day commerc ial paper in eff ect at the Fe dera l Reserve

bank

. . . or at the rate allowed by the laws of the State

. . . wher e the bank is located,

whicheve r may

be g rea ter.

12 U.S.C. § 1831d(a).

10c o u l d h a v e f i l e d a c o e r c i v e a c t i o n a r i s i n g u n d e r f e d e r a l l a w

, a n d t h e r e f

o r e t h e

d i s t r i c t c o u r t h a d f

e d e r a l j u r i s d i c t i o n o v e r t h e p e t i t i o n t o c o m p e l a r b i t r a t i o n

.

S t r o n g I

, 4 8 5 F

. 3 d a t 6 1 2

. S t r o n g p e t i t i o n e d f o r r e h e a r i n g e n b a n c

. O n S e p t e m b e r

1 0

, 2 0 0 7

, t h e f

u l l C o u r t g r a n t e d h i s p e t i t i o n

, C m t y

. S t a t e B a n k v

. S t r o n g

, 5 0 8 F

. 3 d

5 7 6

, a n d h e a r d a r g u m e n t o n F e b r u a r y 2 6

, 2 0 0 8

. H o w e v e r

, b e f o r e t h i s C o u r t c o u l d

r e n d e r i t s d e c i s i o n i n t h e e n b a n c c a s e

, t h e S u p r e m e C o u r t g r a n t e d c e r t i o r a r i i n a

c a s e r a i s i n g s i m i l a r j u r i s d i c t i o n a l i s s u e s a r i s i n g o u t o f t h e F o u r t h C i r c u i t i n

D i s c o v e r B a n k v

. V a d e n

, 3 9 6 F

. 3 d 3 6 6 ( 4 t h C i r

. 2 0 0 5 )

. S e e V a d e n v

. D i s c o v e r

B a n k

, 5 5 2 U

. S

. 1 2 5 6 ( 2 0 0 8 ) ( g r a n t i n g c e r t

. )

. W e s t a y e d f u r t h e r p r o c e e d i n g s

,

a w a i t i n g t h e S u p r e m e C o u r t ’ s d e c i s i o n

. A f t e r t h e S u p r e m e C o u r t r e n d e r e d i t s

d e c i s i o n i n V a d e n

, 1 2 9 S

. C t

. 1 2 6 2

, t h i s C o u r t v a c a t e d i t s e n b a n c o r d e r a n d

r e m a n d e d t h i s c a s e b a c k t o t h e p a n e l

. C m t y

. S t a t e B a n k v

. S t r o n g

, 5 6 5 F

. 3 d a t

1 3 0 6

.

I I

.

F o r p u r p o s e s o f t h i s o p i n i o n

, w e h a v e d i v i d e d t h e P e t i t i o n e r s i n t o t w o

d i s t i n c t g r o u p s

, b e c a u s e o u r j u d g m e n t d i f f e r s a s t o e a c h g r o u p : ( 1 ) C o m m u n i t y

S t a t e B a n k

, a n d ( 2 ) a l l C a s h A m e r i c a a f f i l i a t e s a n d t h e i r C E O

, D a n i e l F e e h a n

( c o l l e c t i v e l y

, “ C a s h A m e r i c a ” )

. I n t h i s P a r t

, w e a d d r e s s t h e i s s u e o f w h e t h e r t h e r e

i s f e d e r a l j u r i s d i c t i o n o v e r t h e B a n k ’ s p e t i t i o n t o c o m p e l a r b i t r a t i o n

, u n d e r 2 8

11U

. S

. C

. § 1 3 3 1

. A n d t h e n

, i n P a r t I I I

, w e a d d r e s s t h e p a r a l l e l q u e s t i o n o f w h e t h e r

t h e r e i s f e d e r a l j u r i s d i c t i o n o v e r C a s h A m e r i c a ’ s p e t i t i o n t o c o m p e l a r b i t r a t i o n

,

u n d e r 2 8 U

. S

. C

. § 1 3 3 1

. W e r e v i e w t h e d i s t r i c t c o u r t ’ s d e t e r m i n a t i o n o f i t s s u b j e c t

m a t t e r j u r i s d i c t i o n d e n o v o

. A s o c i a c i o n d e E m p l e a d o s d e l A r e a C a n a l e r a

( A S E D A C ) v

. P a n

. C a n a l C o m m ’ n

, 4 5 3 F

. 3 d 1 3 0 9

, 1 3 1 3 ( 1 1 t h C i r

. 2 0 0 6 )

.

A

.

T i t l e 2 8 o f t h e U n i t e d S t a t e s C o d e g r a n t s f e d e r a l d i s t r i c t c o u r t s j u r i s d i c t i o n

o v e r “ a l l c i v i l a c t i o n s a r i s i n g u n d e r t h e C o n s t i t u t i o n

, l a w s

, o r t r e a t i e s o f t h e U n i t e d

S t a t e s

. ” 2 8 U

. S

. C

. § 1 3 3 1

. T h e t e s t o r d i n a r i l y a p p l i e d f o r d e t e r m i n i n g w h e t h e r a

c l a i m a r i s e s u n d e r f

e d e r a l l a w i s w h e t h e r a f e d e r a l q u e s t i o n a p p e a r s o n t h e f a c e o f

t h e p l a i n t i f

f ’ s w e l l

- p l e a d e d c o m p l a i n t

. L o u i s v i l l e & N a s h v i l l e R

. R

. v

. M o t t l e y

,

2 1 1 U

. S

. 1 4 9

, 1 5 2 ( 1 9 0 8 )

. “ A s a g e n e r a l r u l e

, a c a s e a r i s e s u n d e r f e d e r a l l a w o n l y

i f i t i s f e d e r a l l a w t h a t c r e a t e s t h e c a u s e o f a c t i o n

. ” D i a z v

. S h e p p a r d

, 8 5 F

. 3 d

1 5 0 2

, 1 5 0 5 ( 1 1 t h C i r

. 1 9 9 6 ) ( c i t i n g F r a n c h i s e T a x B d

. v

. C o n s t r

. L a b o r e r s

V a c a t i o n T r u s t

, 4 6 3 U

. S

. 1

, 8

- 1 0 ( 1 9 8 3 ) )

.

T h e F A A p r o v i d e s t h a t w h e n o n e p a r t y t o a n a r b i t r a t i o n a g r e e m e n t i s

“ a g g r i e v e d ” b y a n o t h e r ’ s r e s i s t a n c e t o a r b i t r a t i o n

, t h e a g g r i e v e d p a r t y m a y p e t i t i o n

f o r a n o r d e r c o m p e l l i n g a r b i t r a t i o n i n “ a n y U n i t e d S t a t e s d i s t r i c t c o u r t w h i c h

, s a v e

f o r s u c h a g r e e m e n t

, w o u l d h a v e j u r i s d i c t i o n u n d e r T i t l e 2 8

. . . o f t h e s u b j e c t

12m a t t e r o f a s u i t a r i s i n g o u t o f t h e c o n t r o v e r s y b e t w e e n t h e p a r t i e s

. ” 9 U

. S

. C

. § 4

.

I t i s a l o n g

- a c c e p t e d p r i n c i p l e t h a t t h e F A A i s n o n

- j u r i s d i c t i o n a l : T h e s t a t u t e d o e s

n o t i t s e l f s u p p l y a b a s i s f o r f e d e r a l j u r i s d i c t i o n o v e r F A A p e t i t i o n s

. S e e V a d e n

,

1 2 9 S

. C t

. a t 1 2 7 1

. T h e S u p r e m e C o u r t d e s c r i b e d t h e n o n

- j u r i s d i c t i o n a l c a s t o f t h e

s t a t u t e i n V a d e n t h i s w a y : “ ‘ A s f o r j u r i s d i c t i o n o v e r c o n t r o v e r s i e s t o u c h i n g

a r b i t r a t i o n

, ’ h o w e v e r

, t h e [ F A A ] i s ‘ s o m e t h i n g o f a n a n o m a l y ’ i n t h e r e a l m o f

f e d e r a l l e g i s l a t i o n : I t ‘ b e s t o w [ s ] n o f e d e r a l j u r i s d i c t i o n b u t r a t h e r r e q u i r [ e s ] [ f o r

a c c e s s t o a f

e d e r a l f o r u m ] a n i n d e p e n d e n t j u r i s d i c t i o n a l b a s i s ’ o v e r t h e p a r t i e s ’

d i s p u t e

. ” I d

. ( q u o t i n g H a l l S t r e e t A s s o c s

. , L

. L

. C

. v

. M a t t e l

, I n c

. , 5 5 2 U

. S

. 5 7 6

,

5 8 1

- 8 2 ( 2 0 0 8 ) ) ( f

i r s t a l t e r a t i o n a d d e d

, s u b s e q u e n t a l t e r a t i o n s i n o r i g i n a l )

. T h u s

,

a l t h o u g h t h e F A A “ e n l a r g [ e s ] t h e r a n g e o f r e m e d i e s a v a i l a b l e i n t h e f e d e r a l

c o u r t s

, ” i d

. a t 1 2 8 3 ( R o b e r t s

, C

. J

. , c o n c u r r i n g i n p a r t a n d d i s s e n t i n g i n p a r t )

( q u o t a t i o n o m i t t e d )

, i t d o e s n o t s u p p l y a n i n d e p e n d e n t b a s i s f o r f e d e r a l j u r i s d i c t i o n

.

T h e r e f o r e

, t h e p a r t i e s m u s t i d e n t i f y a n i n d e p e n d e n t b a s i s f o r f e d e r a l j u r i s d i c t i o n

o v e r a p e t i t i o n t o c o m p e l a r b i t r a t i o n b r o u g h t p u r s u a n t t o t h e F A A

.

I n o u r f i r s t p a n e l o p i n i o n i n t h i s c a s e

, w e h e l d t h a t i n o r d e r t o d e t e r m i n e

w h e t h e r t h e r e i s f

e d e r a l q u e s t i o n j u r i s d i c t i o n o v e r a p e t i t i o n t o c o m p e l a r b i t r a t i o n

u n d e r § 4 o f t h e F A A

, w e m u s t “ l o o k t h r o u g h ” t h e a r b i t r a t i o n p e t i t i o n t o t h e

u n d e r l y i n g c o n t r o v e r s y a n d a s k w h e t h e r a n y o f t h e u n d e r l y i n g d i s p u t e s w o u l d h a v e

13a r i s e n u n d e r f e d e r a l l a w

. S t r o n g I

, 4 8 5 F

. 3 d a t 6 0 7

. W e t h e n a n a l o g i z e d t h e

q u e s t i o n t o t h a t o f f

e d e r a l j u r i s d i c t i o n o v e r a d e c l a r a t o r y j u d g m e n t a c t i o n

, w h i c h

h o l d s t h a t “ a f

e d e r a l d i s t r i c t c o u r t h a s s u b j e c t

- m a t t e r j u r i s d i c t i o n o v e r a d e c l a r a t o r y

j u d g m e n t a c t i o n i f

. . . [ t h e ] p l a i n t i f f ’ s w e l l

- p l e a d e d c o m p l a i n t a l l e g e s f a c t s

d e m o n s t r a t i n g t h e d e f

e n d a n t c o u l d f

i l e a [ n o n

- f

r i v o l o u s ] c o e r c i v e a c t i o n a r i s i n g

u n d e r f e d e r a l l a w

. ” I d

. a t 6 1 0 ( q u o t i n g H o u s e h o l d B a n k v

. J F S G r o u p

, 3 2 0 F

. 3 d

1 2 4 9

, 1 2 5 9 ( 1 1 t h C i r

. 2 0 0 3 ) ) ( a l t e r a t i o n s a d d e d )

. W e c o n c l u d e d t h a t

, a l t h o u g h

S t r o n g ’ s s t a t e

- c o u r t c o m p l a i n t e x p r e s s l y d i s a v o w e d a n y f e d e r a l c l a i m s

, S t r o n g ’ s

p o t e n t i a l

, n o n

- a s s e r t e d f e d e r a l c l a i m s c r e a t e d f

e d e r a l q u e s t i o n j u r i s d i c t i o n o v e r t h e

F A A p e t i t i o n

. I d

. a t 6 1 1

.

A l t h o u g h V a d e n a r o s e i n a n u n u s u a l p r o c e d u r a l p o s t u r e

, i t r a i s e d 9

s u b s t a n t i a l l y t h e s a m e j u r i s d i c t i o n a l q u e s t i o n w e f a c e d i n S t r o n g I

. T h e c a s e b e g a n

“ a s a g a r d e n

- v a r i e t y

, s t a t e

- l a w

- b a s e d c o n t r a c t a c t i o n

, ” w h e n a D i s c o v e r B a n k

a f f i l i a t e ( “ D i s c o v e r ” ) s u e d o n e o f i t s c r e d i t c a r d h o l d e r s

, V a d e n

, i n s t a t e c o u r t t o

The Court ac knowledg ed that the posture of Va den wa s “unusual,” V aden, 129 S. Ct. at 9

1274 n.13, noting that usua lly when litigation prece des the filing of a § 4 pe tition, i t is the

defe ndant of the la

wsuit that seeks to compel a rbitration and ther eby

avoid litigation. B y

contra st, in Vaden, Discove r B ank wa s “the pa rty that initiated liti g ation of the unde rly ing

dispute [and was] also the party seeking to compel ar

bitration.” I d. Discover

Ba nk’s initial

decision to litigate its disput e with Vade n without invoking the ar bitration ag ree ment may

have

influence d the Court’s re ceptivity to Discover B ank’s be lated attempt to enlist fede ral c ourt

assistance in enforc ing the arbitra tion ag ree ment. See id. at 1277 (stating that “it is hardly

fortuitous that the controve rsy in this case took the shape it did,” as Discover Ba nk itself,

“[s] eeking to collect a de bt, . . . filed an e ntirely state-law -g rounded c omplaint in st ate c ourt”

(interna l quotation marks, altera tion, and citation omitted)).

14r e c o v e r p a s t

- d u e c h a r g e s

. V a d e n

, 1 2 9 S

. C t

. a t 1 2 6 8

. I n t h e s t a t e

- c o u r t a c t i o n

,

V a d e n r a i s e d s t a t e

- l a w a f f i r m a t i v e d e f

e n s e s a n d c o u n t e r c l a i m s

, a s s e r t i n g t h a t

D i s c o v e r ’ s f

i n a n c e c h a r g e s

, i n t e r e s t

, a n d l a t e f e e s v i o l a t e d s t a t e u s u r y a n d c r e d i t

l a w s

. I d

. I n r e s p o n s e

, D i s c o v e r c o m m e n c e d a s e p a r a t e § 4 p e t i t i o n i n f e d e r a l

d i s t r i c t c o u r t t o c o m p e l a r b i t r a t i o n o f V a d e n ’ s c o u n t e r c l a i m s

- - m a r k i n g t h e f i r s t

t i m e t h a t e i t h e r p a r t y h a d i n v o k e d t h e a r b i t r a t i o n c l a u s e i n t h e i r c r e d i t c a r d

a g r e e m e n t

. I d

. a t 1 2 6 8

- 6 9

.

A f t e r t h e d i s t r i c t c o u r t o r d e r e d a r b i t r a t i o n

, t h e F o u r t h C i r c u i t a f f i r m e d t h e

d i s t r i c t c o u r t ’ s e x e r c i s e o f f e d e r a l q u e s t i o n j u r i s d i c t i o n o v e r D i s c o v e r ’ s § 4

p e t i t i o n

. I d

. a t 1 2 7 0

. L i k e t h i s C o u r t i n S t r o n g I

, t h e F o u r t h C i r c u i t m a j o r i t y

a d o p t e d t h e “ l o o k

- t h r o u g h ” a p p r o a c h t o d e t e r m i n i n g j u r i s d i c t i o n o v e r F A A § 4

p e t i t i o n s

- - t h a t i s

, t h a t t h e f e d e r a l c o u r t m u s t “ l o o k t h r o u g h ” t h e § 4 p e t i t i o n a n d

a s s e s s f e d e r a l q u e s t i o n j u r i s d i c t i o n o n t h e b a s i s o f t h e s u b s t a n t i v e c o n t r o v e r s y

b e t w e e n t h e p a r t i e s

. I d

. a t 1 2 6 9

. T h e F o u r t h C i r c u i t m a j o r i t y t h e n h e l d t h a t

S e c t i o n 2 7 ( a ) o f t h e F D I A c o m p l e t e l y p r e e m p t e d V a d e n ’ s c o u n t e r c l a i m s

, a n d

c o n c l u d e d t h a t t h e s e n o w

- f e d e r a l i z e d c o u n t e r c l a i m s s u p p l i e d a s u f f i c i e n t p r e d i c a t e

f o r f e d e r a l q u e s t i o n j u r i s d i c t i o n

. I d

. a t 1 2 7 0

.

O n c e r t i o r a r i r e v i e w

, t h e S u p r e m e C o u r t u n a n i m o u s l y a f f i r m e d t h e F o u r t h

C i r c u i t ’ s “ l o o k t h r o u g h ” a p p r o a c h f o r d e t e r m i n i n g f

e d e r a l j u r i s d i c t i o n o v e r F A A §

154 a r b i t r a t i o n p e t i t i o n s

, h o l d i n g t h a t “ [ a ] f e d e r a l c o u r t m a y ‘ l o o k t h r o u g h ’ a § 4

p e t i t i o n a n d o r d e r a r b i t r a t i o n i f

, ‘ s a v e f o r [ t h e a r b i t r a t i o n ] a g r e e m e n t

, ’ t h e c o u r t

w o u l d h a v e j u r i s d i c t i o n o v e r ‘ t h e [ s u b s t a n t i v e ] c o n t r o v e r s y b e t w e e n t h e p a r t i e s

. ’ ”

V a d e n

, 1 2 9 S

. C t

. a t 1 2 6 8 ( q u o t i n g 9 U

. S

. C

. § 4 ) ( a l t e r a t i o n s i n V a d e n )

. A l l

m e m b e r s o f t h e C o u r t c o n c u r r e d i n a d o p t i n g t h i s “ l o o k t h r o u g h ” a p p r o a c h

. S e e i d

.

( m a j o r i t y ) ; i d

. a t 1 2 7 9 ( R o b e r t s

, C

. J

. , c o n c u r r i n g i n p a r t a n d d i s s e n t i n g i n p a r t )

.

H o w e v e r

, t h e V a d e n m a j o r i t y o f f

i v e J u s t i c e s r e v e r s e d t h e F o u r t h C i r c u i t ’ s

a p p l i c a t i o n o f t h e “ l o o k t h r o u g h ” r u l e

. T h e m a j o r i t y c o n c l u d e d t h a t w h e n t h e

p a r t i e s ’ c o n t r o v e r s y h a s a l r e a d y b e e n “ e m b o d i e d ” i n p e n d i n g l i t i g a t i o n

, i d

. a t 1 2 7 6

n

. 1 6

, a s i t h a d b e e n i n V a d e n

, f e d e r a l j u r i s d i c t i o n o v e r t h e s u b s e q u e n t F A A p e t i t i o n

m u s t b e a s s e s s e d f

r o m t h e f a c e o f t h e p r e e x i s t i n g c o m p l a i n t

. I d

. a t 1 2 7 7

- 7 8

. I n

o t h e r w o r d s

, w h e n “ a c t u a l l i t i g a t i o n h a s [ a l r e a d y ] d e f i n e d t h e p a r t i e s ’ c o n t r o v e r s y

, ”

t h e w e l l

- p l e a d e d c o m p l a i n t r u l e m u s t b e a p p l i e d o n l y t o t h e “ c o n t r o v e r s y a s f r a m e d

b y t h e p a r t i e s ” ; i n s u c h c a s e s

, “ [ w ] h e t h e r o n e m i g h t i m a g i n e a f e d e r a l

- q u e s t i o n s u i t

i n v o l v i n g t h e p a r t i e s ’ d i s a g r e e m e n t

. . . i s b e s i d e t h e p o i n t

. ” I d

. a t 1 2 7 6

- 7 7

( e m p h a s i s a d d e d )

. A s a p p l i e d t o t h e l i t i g a t i o n i n V a d e n

, t h e C o u r t h e l d t h a t t h e

“ d i m e n s i o n s o f t h e c o n t r o v e r s y b e t w e e n t h e p a r t i e s ” w e r e d e f i n e d b y D i s c o v e r ’ s

o r i g i n a l s t a t e

- c o u r t c o m p l a i n t a g a i n s t V a d e n

. I d

. a t 1 2 6 8 ( i n t e r n a l q u o t a t i o n m a r k s

o m i t t e d )

. T h e C o u r t e x p l a i n e d t h a t

, b e c a u s e t h e “ t r i g g e r i n g p l e a ” i n V a d e n w a s

16D i s c o v e r ’ s s t a t e

- l a w s u i t f o r p a s t

- d u e c r e d i t c a r d c h a r g e s

, w h i c h i t s e l f c o n t a i n e d n o

f e d e r a l e l e m e n t

, t h e f

e d e r a l c o u r t d i d n o t h a v e f e d e r a l q u e s t i o n j u r i s d i c t i o n o v e r

D i s c o v e r ’ s s u b s e q u e n t § 4 p e t i t i o n t o c o m p e l a r b i t r a t i o n o f V a d e n ’ s c o u n t e r c l a i m s

,

a s t h e c o u n t e r c l a i m s w e r e b u t a “ s l i c e ” o f t h e p a r t i e s ’ f u l l c o n t r o v e r s y

. I d

. T h e

m a j o r i t y d i d n o t

, h o w e v e r

, a n s w e r t h e q u e s t i o n o f h o w t o d e f i n e t h e p a r t i e s ’

c o n t r o v e r s y f

o r p u r p o s e s o f d e t e r m i n i n g j u r i s d i c t i o n w h e n n o l i t i g a t i o n b e t w e e n

t h e p a r t i e s p r e c e d e s t h e f i l i n g o f t h e F A A p e t i t i o n

.

F o u r j u s t i c e s w h o d i s s e n t e d i n p a r t ( t h e V a d e n “ d i s s e n t ” ) a g r e e d t h a t

d e t e r m i n i n g f

e d e r a l q u e s t i o n j u r i s d i c t i o n r e q u i r e s a f e d e r a l c o u r t t o “ l o o k t h r o u g h ”

t h e F A A p e t i t i o n

, b u t d i s a g r e e d w i t h t h e m a j o r i t y a b o u t w h a t p r e c i s e l y a f e d e r a l

c o u r t s h o u l d t r a i n i t s a t t e n t i o n o n

, o n c e i t h a s l o o k e d t h r o u g h t h e p e t i t i o n

. S e e i d

.

a t 1 2 7 9 ( R o b e r t s

, C

. J

. , c o n c u r r i n g i n p a r t a n d d i s s e n t i n g i n p a r t ) ( “ I a g r e e w i t h t h e

C o u r t t h a t a f

e d e r a l c o u r t a s k e d t o c o m p e l a r b i t r a t i o n p u r s u a n t t o § 4 o f t h e F e d e r a l

A r b i t r a t i o n A c t s h o u l d ‘ l o o k t h r o u g h ’ t h e d i s p u t e o v e r a r b i t r a b i l i t y i n d e t e r m i n i n g

w h e t h e r i t h a s j u r i s d i c t i o n t o g r a n t t h e r e q u e s t e d r e l i e f

. B u t l o o k t h r o u g h t o

w h a t ? ” )

. T h e y c r i t i c i z e d t h e m a j o r i t y f o r i t s “ m i s t a k e n f

o c u s o n

. . . e x i s t i n g

l i t i g a t i o n

, ” i d

. a t 1 2 8 1

, n o t i n g t h a t t h e m a j o r i t y ’ s r u l e t u r n s e n t i r e l y o n t h e m e r e

“ f o r t u i t y t h a t a c o m p l a i n t h a p p e n s t o h a v e b e e n f i l e d

, ” i d

. a t 1 2 7 9

. I n s t e a d

, t h e

d i s s e n t w o u l d h a v e h e l d t h a t t h e d i s t r i c t c o u r t s h o u l d f o c u s o n t h e c o n c r e t e d i s p u t e

17t o b e a r b i t r a t e d a n d d e t e r m i n e f o r i t s e l f w h e t h e r a h y p o t h e t i c a l s u i t

- - w h e t h e r

p e n d i n g o r n o t

- - a r i s i n g o u t o f t h a t c o n t r o v e r s y w o u l d a r i s e u n d e r f e d e r a l l a w

. I d

.

a t 1 2 8 2

.

U p o n c a r e f

u l r e v i e w

, w e c o n c l u d e t h a t

, a s a p p l i e d t o C o m m u n i t y S t a t e

B a n k

, t h e e s s e n t i a l h o l d i n g o f S t r o n g I s u r v i v e s V a d e n

. T h e B a n k w a s n o t a p a r t y

t o S t r o n g ’ s s t a t e

- c o u r t l a w s u i t

. I n d e e d

, S t r o n g e x p r e s s l y d i s a v o w e d a n y c l a i m s

a g a i n s t t h e B a n k

. T h e r e f o r e

, n o p r e e x i s t i n g l i t i g a t i o n h a s y e t d e f i n e d t h e c o n t o u r s

o f t h e c o n t r o v e r s y b e t w e e n S t r o n g a n d t h e B a n k

. T h e B a n k ’ s F A A p e t i t i o n i s

, i n

o t h e r w o r d s

, w h a t w e w i l l c a l l “ f r e e s t a n d i n g ”

- - t h a t i s

, i t d o e s n o t a r i s e o u t o f

p e n d i n g l i t i g a t i o n b e t w e e n t h e p a r t i e s

. A s w e ’ v e n o t e d

, t h e V a d e n m a j o r i t y d i d n o t

a n s w e r t h e q u e s t i o n o f h o w a f e d e r a l c o u r t s h o u l d a s s e s s t h e n a t u r e o f t h e p a r t i e s ’

c o n t r o v e r s y w h e n f

a c e d w i t h a f

r e e s t a n d i n g F A A p e t i t i o n

. N o n e t h e l e s s

, w e

b e l i e v e t h e a p p r o a c h w e a d o p t m o s t f a i t h f u l l y a d h e r e s t o t h e C o u r t ’ s r e a s o n i n g i n

V a d e n

, i n s p i t e o f t h i s c a s e ’ s a d m i t t e d l y d i f f e r e n t p o s t u r e

.

A t t h e o u t s e t

, i t i s c l e a r t h a t V a d e n d i d n o t f o r e c l o s e t h e p o s s i b i l i t y o f

f r e e s t a n d i n g F A A p e t i t i o n s

. T h e C o u r t s t a t e d u n a m b i g u o u s l y :

T h e p a r t i e s ’ u n d e r l y i n g d i s p u t e m a y o r m a y n o t b e t h e s u b j e c t o f

p e n d i n g l i t i g a t i o n

. T h i s e x p l a i n s § 4 ’ s u s e o f t h e c o n d i t i o n a l “ w o u l d ”

a n d t h e i n d e f

i n i t e “ a s u i t

. ” A p a r t y o f t e n f i l e s a § 4 p e t i t i o n t o c o m p e l

a r b i t r a t i o n p r e c i s e l y b e c a u s e i t d o e s n o t w a n t t o b r i n g s u i t a n d l i t i g a t e

i n c o u r t

.

18I d

. a t 1 2 7 4 n

. 1 3 ( q u o t i n g 9 U

. S

. C

. § 4 ) ( e m p h a s i s i n o r i g i n a l ) ; s e e a l s o i d

. a t 1 2 7 6

n

. 1 6 ( “ S e c t i o n 4

, w e r e c o g n i z e

, e n a b l e s a p a r t y t o s e e k a n o r d e r c o m p e l l i n g

a r b i t r a t i o n e v e n w h e n t h e p a r t i e s ’ c o n t r o v e r s y i s n o t t h e s u b j e c t o f p e n d i n g

l i t i g a t i o n

. ” )

. I n d e e d

, t h e V a d e n C o u r t e x p r e s s l y e n d o r s e d t h e c o n t i n u i n g v i t a l i t y o f

f r e e s t a n d i n g § 4 p e t i t i o n s i n e x p l a i n i n g i t s “ l o o k t h r o u g h ” a p p r o a c h

, s a y i n g “ t h e

‘ l o o k t h r o u g h ’ a p p r o a c h p e r m i t s a § 4 p e t i t i o n e r t o a s k a f e d e r a l c o u r t t o c o m p e l

a r b i t r a t i o n w i t h o u t f

i r s t t a k i n g t h e f

o r m a l s t e p o f i n i t i a t i n g o r r e m o v i n g a f e d e r a l

q u e s t i o n s u i t

. ” I d

. a t 1 2 7 5 ( e m p h a s i s a d d e d )

. C l e a r l y

, t h e n

, V a d e n s h o u l d n o t b e 1 0

i n t e r p r e t e d t o m e a n t h a t f e d e r a l d i s t r i c t c o u r t s l a c k j u r i s d i c t i o n o v e r f r e e s t a n d i n g

F A A p e t i t i o n s

.

H o w e v e r

, i n t h e c a s e o f a f r e e s t a n d i n g § 4 p e t i t i o n

, b y d e f i n i t i o n

, t h e r e i s n o

p r e e x i s t i n g l i t i g a t i o n d e f i n i n g t h e p a r t i e s ’ c o n t r o v e r s y t o s t r u c t u r e t h e c o u r t ’ s

i n q u i r y

. T h e V a d e n m a j o r i t y ’ s j u r i s d i c t i o n a l f

o c u s o n t h e “ a c t u a l l i t i g a t i o n [ t h a t ]

h a s d e f i n e d t h e p a r t i e s ’ c o n t r o v e r s y

, ” i d

. a t 1 2 7 7

, d o e s n o t a n s w e r t h e q u e s t i o n w e

The propose d alterna tive to the “look-throug h” rule would have loc ated a fede ral 1 0

question only , if at all, in the par ties’ discre te dispute over the arbitra bility of the a sserted c laims.

See Va den, 129 S. Ct. at 1274. Bec ause suc h disputes are primarily contra ctual in nature and

would rar ely , if eve r, ra ise fede ral que stions, the Court noted that such a rule w ould preve nt a

party from enlisting the help of a fede ral c ourt in compelling arbitra tion under the he ading of

fede ral que stion jurisdi ction unless the par ty first filed or r emoved a

fede ral que stion suit to

fede ral c ourt, and only

then soug ht to compel arbitra tion. I d. at 1275. The Court c riticized this

result as “ cre at[ing] a totally artificia l disti nction based on w hether a dispute is subject to

pending fede ral litiga tion.” I d. (interna l quotation omit ted). B y contra st, the Court’s “lookthroug h” rule would “ac commodate a § 4 petitioner who c ould file a fe dera l-question suit . . . ,

but who has not done so.” I d.

19f

a c e o f h o w t o d i s c e r n j u r i s d i c t i o n w h e n n o s u c h “ a c t u a l l i t i g a t i o n ” e x i s t s

. I n d e e d

,

t h e d i s s e n t c r i t i c i z e d t h e m a j o r i t y ’ s “ m i s t a k e n f

o c u s o n

. . . e x i s t i n g l i t i g a t i o n ” f o r

t h i s v e r y r e a s o n : I t p r o v i d e s n o i n s t r u c t i o n t o a c o u r t f a c e d w i t h a f

r e e s t a n d i n g § 4

p e t i t i o n

, w h e r e n o c o m p l a i n t h a s b e e n f i l e d “ t o ‘ l o o k t h r o u g h ’ t o

. ” I d

. a t 1 2 8 1

( R o b e r t s

, C

. J

. , c o n c u r r i n g i n p a r t a n d d i s s e n t i n g i n p a r t ) ( “ I n m a n y i f n o t m o s t

c a s e s u n d e r § 4

, n o c o m p l a i n t w i l l h a v e b e e n f i l e d

. W h a t t o ‘ l o o k t h r o u g h ’ t o

t h e n ? ” ( c i t a t i o n o m i t t e d ) )

. T h e V a d e n C o u r t d i d n o t a n s w e r t h e q u e s t i o n o f w h a t a

d i s t r i c t c o u r t m u s t l o o k t h r o u g h t o w h e n t h e p a r t i e s ’ c o n t r o v e r s y h a s n o t y e t b e e n

“ e m b o d i e d

, ” i d

. a t 1 2 7 6 n

. 1 6 ( m a j o r i t y )

, i n l i t i g a t i o n

- - b e c a u s e t h a t q u e s t i o n w a s

n o t b e f o r e i t

.

N o n e t h e l e s s

, i t r e m a i n s c l e a r t h a t w e m u s t s t i l l “ l o o k t h r o u g h ” t h e p e t i t i o n t o

s o m e t h i n g

. T h e C o u r t w a s v e r y c l e a r t h a t j u r i s d i c t i o n s h o u l d b e p r e d i c a t e d o n t h e

s u b s t a n t i v e d i s p u t e b e t w e e n t h e p a r t i e s

, n o t t h e a r b i t r a b i l i t y i s s u e a c t u a l l y t o b e

d e c i d e d b y t h e d i s t r i c t c o u r t

. S e e i d

. a t 1 2 7 3 ( “ T h e t e x t o f § 4 d r i v e s o u r

c o n c l u s i o n t h a t a f

e d e r a l c o u r t s h o u l d d e t e r m i n e i t s j u r i s d i c t i o n b y ‘ l o o k i n g

t h r o u g h ’ a § 4 p e t i t i o n t o t h e p a r t i e s ’ u n d e r l y i n g s u b s t a n t i v e c o n t r o v e r s y

. ”

( e m p h a s i s a d d e d ) ) ; i d

. a t 1 2 7 4 ( r e j e c t i n g t h e a l t e r n a t i v e c o n s t r u c t i o n i n w h i c h

“ [ t ] h e r e l e v a n t ‘ c o n t r o v e r s y b e t w e e n t h e p a r t i e s ’

. . . i s s i m p l y a n d o n l y t h e p a r t i e s ’

d i s c r e t e d i s p u t e o v e r t h e a r b i t r a b i l i t y o f t h e i r c l a i m s ” )

. T h e V a d e n C o u r t t h u s

20g i v e s u s o n e p r i m a r y i n s t r u c t i o n f o r h o w t o a p p r o a c h f

r e e s t a n d i n g F A A p e t i t i o n s

.

“ W h e t h e r o r n o t t h e c o n t r o v e r s y b e t w e e n t h e p a r t i e s i s e m b o d i e d i n a n e x i s t i n g

s u i t

, t h e r e l e v a n t q u e s t i o n r e m a i n s t h e s a m e : W o u l d a f e d e r a l c o u r t h a v e

j u r i s d i c t i o n o v e r a n a c t i o n a r i s i n g o u t o f t h a t f u l l

- b o d i e d c o n t r o v e r s y ? ” I d

. a t 1 2 7 6

n

. 1 6

. I n o t h e r w o r d s

, t h e p r o p e r j u r i s d i c t i o n a l i n q u i r y i s w h e t h e r e i t h e r p a r t y t o t h e

§ 4 p e t i t i o n “ c o u l d f

i l e a f e d e r a l

- q u e s t i o n s u i t ” b a s e d o n t h e p a r t i e s ’ u n d e r l y i n g

d i s p u t e

. I d

. a t 1 2 7 5 ( e m p h a s i s i n o r i g i n a l )

.

W e

, t h e r e f

o r e

, c o n c l u d e t h a t w h e r e t h e p a r t i e s ’ c o n t r o v e r s y h a s n o t y e t b e e n

e m b o d i e d i n p r e e x i s t i n g l i t i g a t i o n

, “ [ a ] d i s t r i c t c o u r t e n t e r t a i n i n g a § 4 p e t i t i o n ”

m u s t d e c i d e f

o r i t s e l f “ w h a t ‘ a s u i t ’ a r i s i n g o u t o f t h e a l l e g e d l y a r b i t r a b l e

c o n t r o v e r s y w o u l d l o o k l i k e

. ” I d

. a t 1 2 8 2 ( R o b e r t s

, C

. J

. , c o n c u r r i n g i n p a r t a n d

d i s s e n t i n g i n p a r t ) ( q u o t i n g 9 U

. S

. C

. § 4 )

. T h a t i s

, t h e c o u r t m u s t e x a m i n e t h e

d i m e n s i o n s o f t h e “ f

u l l

- b o d i e d c o n t r o v e r s y

, ” i d

. a t 1 2 7 6 n

. 1 6 ( m a j o r i t y )

, b e t w e e n

t h e p a r t i e s

, a n d d e t e r m i n e w h e t h e r a n y h y p o t h e t i c a l c l a i m s a r i s i n g o u t o f t h a t

c o n t r o v e r s y w o u l d s u p p o r t f e d e r a l j u r i s d i c t i o n

. I f s o

, t h e n t h e d i s t r i c t c o u r t m a y

e n t e r t a i n t h e p e t i t i o n a n d

, i f w a r r a n t e d

, c o m p e l a r b i t r a t i o n o f t h e e n t i r e

c o n t r o v e r s y

. 9 U

. S

. C

. § 4 ; s e e V a d e n

, 1 2 9 S

. C t

. a t 1 2 7 5 ( “ [ S e c t i o n 4 o f t h e F A A

a l l o w s a p a r t y a c c e s s t o f e d e r a l c o u r t i f

] t h e e n t i r e

, a c t u a l ‘ c o n t r o v e r s y b e t w e e n t h e

p a r t i e s

, ’ a s t h e y h a v e f

r a m e d i t

, c o u l d b e l i t i g a t e d i n f e d e r a l c o u r t

. ” ( q u o t i n g 9

21U

. S

. C

. § 4 ) )

.

T h e s t a t u t o r y l a n g u a g e s u p p o r t s s u c h a n a p p r o a c h

, b y e x p r e s s l y d i r e c t i n g a

c o u r t t o i m a g i n e w h e t h e r i t h y p o t h e t i c a l l y “ w o u l d h a v e j u r i s d i c t i o n ” o v e r “ a s u i t

a r i s i n g o u t o f t h e c o n t r o v e r s y b e t w e e n t h e p a r t i e s

. ” 9 U

. S

. C

. § 4 ( e m p h a s e s

a d d e d )

. T h e s u b

j u n c t i v e m o o d o v e r t l y i n v i t e s t h e c o n s i d e r a t i o n o f h y p o t h e t i c a l

s u i t s

, a n d t h e i n d e f

i n i t e a r t i c l e “ a ” s u g g e s t s t h e c o u r t m a y c o n s i d e r a n y p o s s i b l e

s u i t t h a t t h e f

a c t u a l c o n t r o v e r s y c o u l d p r e c i p i t a t e

. W h i l e t h e V a d e n C o u r t r e j e c t e d

s u c h h y p o t h e s i z i n g w h e r e “ a c t u a l l i t i g a t i o n ” i s a v a i l a b l e t o f o c u s t h e c o u r t ’ s

i n q u i r y

, “ [ t ] h e r e i s n o h e l p i n g ” i t w h e n n o s u c h p r e e x i s t i n g l i t i g a t i o n e x i s t s

.

V a d e n

, 1 2 9 S

. C t

. a t 1 2 8 2 ( R o b e r t s

, C

. J

. , c o n c u r r i n g i n p a r t a n d d i s s e n t i n g i n p a r t ) ;

s e e i d

. a t 1 2 7 7 ( m a

j o r i t y ) ( “ [ S e c t i o n ] 4 d o e s n o t i n v i t e f e d e r a l c o u r t s t o d r e a m u p

c o u n t e r f a c t u a l s w h e n a c t u a l l i t i g a t i o n h a s d e f i n e d t h e p a r t i e s ’ c o n t r o v e r s y

. ”

( e m p h a s i s a d d e d ) )

. N o n e t h e l e s s

, w e h e e d t h e V a d e n m a j o r i t y ’ s i n s t r u c t i o n n o t t o

“ s l i c e

, ” i d

. a t 1 2 6 8

, 1 2 7 7

, u p t h e c o n t r o v e r s y a n d p r e d i c a t e j u r i s d i c t i o n o n

“ l u r k [ i n g ] ” f

e d e r a l q u e s t i o n s t h a t c o u l d o n l y a r i s e b y w a y o f a n a c t u a l o r

a n t i c i p a t e d d e f

e n s e

, i d

. a t 1 2 7 8 ; r a t h e r

, w e l o o k o n l y t o p o t e n t i a l c l a i m s b e t w e e n

t h e p a r t i e s t h a t c o u l d b e s t a t e d o n t h e f a c e o f a w e l l

- p l e a d e d c o m p l a i n t

.

B

.

A l t h o u g h t h e V a d e n m a j o r i t y h a d n o o c c a s i o n t o r e a c h t h e i s s u e

, C h i e f

22J u s t i c e R o b e r t s

, w h o s e o p i n i o n c o m m a n d e d f o u r v o t e s

, p r o v i d e d s o m e c l u e s a s t o

h o w a f e d e r a l c o u r t s h o u l d c o n f r o n t a f r e e s t a n d i n g F A A p e t i t i o n

. A s a s t a r t

, a

f e d e r a l c o u r t s h o u l d f

o c u s o n “ t h e s p e c i f

i c c o n t r o v e r s y

- - t h e c o n c r e t e d i s p u t e t h a t

o n e p a r t y h a s ‘ f

a i l [ e d ]

, n e g l e c t [ e d ]

, o r r e f u s [ e d ] ’ t o a r b i t r a t e

- - a n d d e t e r m i n e

w h e t h e r t h a t c o n t r o v e r s y w o u l d g i v e r i s e t o a s u i t u n d e r f e d e r a l l a w

. ” I d

. a t 1 2 8 2

( R o b e r t s

, C

. J

. , c o n c u r r i n g i n p a r t a n d d i s s e n t i n g i n p a r t ) ( q u o t i n g 9 U

. S

. C

. § 4 )

.

A f t e r a l l

, F A A § 4 i s o n l y t r i g g e r e d w h e n o n e p a r t y h a s e x p r e s s e d a “ r e f u s a l ” t o

a r b i t r a t e

, a n d t h e o t h e r p a r t y h a s b e e n t h e r e b y “ a g g r i e v e d

. ” S e e 9 U

. S

. C

. § 4

. T h i s

r e f u s a l w i l l u n d o u b t e d l y b e d o c u m e n t e d i n s o m e w a y ( f o r e x a m p l e

, b y a l e t t e r )

.

E x a m i n i n g t h e s e p r e

- l i t i g a t i o n o r e x t r a

- l e g a l c o m m u n i c a t i o n s b e t w e e n t h e p a r t i e s

c a n p r o v i d e i n s i g h t i n t o t h e f a c t u a l n a t u r e o f t h e d i s p u t e

. I n a d d i t i o n

, t h e F A A

p e t i t i o n e r ’ s d e s c r i p t i o n o f t h e u n d e r l y i n g d i s p u t e i n t h e § 4 p e t i t i o n i t s e l f c a n

p r o v i d e s o m e ( a l t h o u g h n o t c o n c l u s i v e ) e v i d e n c e o f t h e c o n t o u r s o f t h e d i s p u t e

. 1 1

T h u s

, a l t h o u g h t h e c o u r t ’ s t a s k n e c e s s a r i l y r e q u i r e s s o m e h y p o t h e s i z i n g

, t h e

i n q u i r y i s n o t t h e r e b y u t t e r l y “ f r e e

- f o r m ” o r r e a d i l y m a n i p u l a b l e b y t h e p a r t i e s

.

I n this reg ard, w e par

t with the Vaden dissent, whic h appar ently would acc ept the § 4 1 1

petitioner’s stateme nt of the controve rsy as dispositive. See Vade n, 129 S. Ct . at 1282 (Rober ts,

C.J ., concur

ring in part and dissenting in part) ( advocating that the c ourt “[l] ook to the

controve rsy

the § 4 petitioner see ks to arbitrate [] as set for th in the § 4 petition” (emphasis

added) ). I nstead, we heed the Vade n majority ’s command to examine the “w hole controve rsy

betwee n the par

ties -- not just a piece broken of f fr om that controver sy ,” and to e nsure that

“[a]rtful dodge s by

a § 4 petitioner” not blinker the cour t from assessing

“the f ull flavor of the

parties’ entire dispute.” I d. at 1276 (majority ).

23V a d e n

, 1 2 9 S

. C t

. a t 1 2 8 2 ( R o b e r t s

, C

. J

. , c o n c u r r i n g i n p a r t a n d d i s s e n t i n g i n p a r t )

.

A s C h i e f J u s t i c e R o b e r t s e x p l a i n e d

, “ t h e e x e r c i s e i s c l o s e l y a n a l o g o u s t o t h e

j u r i s d i c t i o n a l a n a l y s i s i n a t y p i c a l d e c l a r a t o r y j u d g m e n t a c t i o n

, ” w h i c h r e q u i r e s a

c o u r t t o i m a g i n e f

o r i t s e l f w h i c h c o e r c i v e c l a i m s t h e p a r t i e s ’ d i s p u t e c o u l d

h y p o t h e t i c a l l y s u p p o r t

, i n o r d e r t o d e t e r m i n e w h e t h e r a h y p o t h e t i c a l c o e r c i v e

l a w s u i t b r o u g h t b y t h e d e c l a r a t o r y j u d g m e n t d e f e n d a n t w o u l d p r e s e n t a f e d e r a l

q u e s t i o n o n t h e f

a c e o f i t s w e l l

- p l e a d e d c o m p l a i n t

. I d

. ( c i t i n g F r a n c h i s e T a x B d

. ,

4 6 3 U

. S

. a t 1 9 )

.

I n s h o r t

, t h e a p p r o p r i a t e w a y t o d e t e r m i n e j u r i s d i c t i o n o v e r t h e i n s t a n t F A A

p e t i t i o n a s t o C o m m u n i t y S t a t e B a n k r e m a i n s

, i n i t s e s s e n c e

, t h e s a m e o n e t h i s

C o u r t a d o p t e d i n S t r o n g I

. W e m u s t d i s c e r n t h e n a t u r e o f t h e p a r t i e s ’ “ w h o l e

c o n t r o v e r s y

, ” i d

. a t 1 2 7 6 ( m a j o r i t y )

, o n t h e b a s i s o f t h e i r v a r i o u s r e p r e s e n t a t i o n s t o

t h e c o u r t

, a n d t h e n d e t e r m i n e w h e t h e r “ a s u i t ” a r i s i n g o u t o f t h e u n d e r l y i n g d i s p u t e

“ w o u l d ” s u p p o r t f

e d e r a l j u r i s d i c t i o n

, 9 U

. S

. C

. § 4

. S e e S t r o n g I

, 4 8 5 F

. 3 d a t 6 0 6

( “ W e t h e r e f

o r e l o o k t o p e t i t i o n e r s ’ o w n s t a t e m e n t o f t h e d i s p u t e o r d i s p u t e s t h e y

w i s h t o a r b i t r a t e

, a n d i n t h i s

, t h e y a r e n o t l i m i t e d t o s e e k i n g c o m p e l l e d a r b i t r a t i o n

o f c l a i m s t h a t h a v e b e e n b r o u g h t a g a i n s t t h e m i n c o u r t

. ” ) ; c f

. i d

. a t 6 0 7 ( “ [ W ] e

m u s t ‘ l o o k t h r o u g h ’ t h e p e t i t i o n t o c o m p e l a r b i t r a t i o n a n d

. . . a s k : I f p e t i t i o n e r s

h a d b r o u g h t t h i s d i s p u t e i n f e d e r a l d i s t r i c t c o u r t

. . . , w o u l d i t h a v e a r i s e n u n d e r

24f

e d e r a l l a w ? ” )

.

T o u n d e r s t a n d t h e “ f

u l l f l a v o r ” o f t h e p a r t i e s ’ u n d e r l y i n g d i s p u t e i n t h i s c a s e

,

s e e V a d e n

, 1 2 9 S

. C t

. a t 1 2 7 6

, w e e x a m i n e t h e B a n k ’ s a l l e g a t i o n s i n i t s F A A

p e t i t i o n

, a s w e l l a s t h e e x h i b i t s a t t a c h e d t h e r e t o

, w h i c h i n t h i s c a s e i n c l u d e S t r o n g ’ s

s t a t e

- c o u r t c o m p l a i n t a n d t h e c o r r e s p o n d e n c e b e t w e e n t h e p a r t i e s r e g a r d i n g

a r b i t r a t i o n

. T h e B a n k ’ s F A A p e t i t i o n c h a r a c t e r i z e s t h e u n d e r l y i n g d i s p u t e a s b e i n g

“ w h e t h e r a l o a n m a d e t o R e s p o n d e n t i s g o v e r n e d b y S e c t i o n 2 7 o f t h e F e d e r a l

D e p o s i t I n s u r a n c e A c t

, . . . a s o p p o s e d t o s t a t e l a w

. ” T h e p e t i t i o n s t a t e s t h a t “ [ t ] h e

l e g a l t h e o r y o f t h e S t a t e A c t i o n i s t h a t t h e L o a n s a r e m a d e n o t b y t h e B a n k b u t

r a t h e r b y a C a s h A m e r i c a P e t i t i o n e r

, a s t h e d e f a c t o l e n d e r

. ” T h e P e t i t i o n e r s s e e k

a n o r d e r d i r e c t i n g t h a t “ t h e d i s p u t e s r a i s e d i n t h e S t a t e C o m p l a i n t a n d t h e

a d d i t i o n a l d i s p u t e s d e s c r i b e d h e r e i n b e d e t e r m i n e d b y b i n d i n g i n d i v i d u a l

a r b i t r a t i o n i n a c c o r d a n c e w i t h t h e A r b i t r a t i o n P r o v i s i o n

. ” T h e P e t i t i o n e r s n o t e t h a t

“ [ i ] n t h e a r b i t r a t i o n d e m a n d e d b y t h i s P e t i t i o n

, P e t i t i o n e r s w i l l s e e k a d e c l a r a t i o n

t h a t t h e i n t e r e s t o n R e s p o n d e n t ’ s L o a n i s g o v e r n e d b y S e c t i o n 2 7 a n d t h a t t h e L o a n

i s l a w f u l

. ”

T h e e x h i b i t s t o t h e p e t i t i o n p r o v i d e a d d i t i o n a l i n s i g h t i n t o t h e “ f u l l f l a v o r ” o f

t h e u n d e r l y i n g d i s p u t e b e t w e e n t h e p a r t i e s

. S e e V a d e n

, 1 2 9 S

. C t

. a t 1 2 7 6

. I n

25S t r o n g ’ s s t a t e

- c o u r t c o m p l a i n t f i l e d a g a i n s t t h e C a s h A m e r i c a d e f e n d a n t s

, S t r o n g

1 2

d e s c r i b e d t h e u n d e r l y i n g d i s p u t e a s o n e o f “ s u b t e r f u g e

, ” i n w h i c h t h e o u t

- o f

- s t a t e

b a n k c l a i m e d i m m u n i t y f r o m u s u r y l a w s a s t h e p u r p o r t e d m a k e r o f t h e l o a n

, “ [ y ] e t

,

i n r e a l i t y

, t h e o u t

- o f

- s t a t e b a n k h a [ d ] l i t t l e i n v o l v e m e n t o t h e r t h a n l e n d i n g i t s n a m e

t o t h e t r a n s a c t i o n

. ” S t r o n g

, t h e r e f o r e

, c l a i m e d t h e C a s h A m e r i c a d e f e n d a n t s w e r e

“ t h e d e f a c t o l e n d e r s

, ” d e s p i t e w h a t t h e l o a n d o c u m e n t s s h o w e d

. S t r o n g r e p e a t e d l y

d e c l a r e d t h a t i t w a s t h e C a s h A m e r i c a d e f e n d a n t s w h o “ m a d e ” o r “ e x t e n d e d ” t h e

l o a n s t o h i m a n d t h e c l a s s m e m b e r s

, a n d “ c h a r g e d ” h i m i n t e r e s t

. H e a l l e g e d t h a t 1 3

i n s o d o i n g

, t h e C a s h A m e r i c a d e f e n d a n t s v i o l a t e d

, i n t e r a l i a

, G e o r g i a u s u r y

s t a t u t e s

, t h e G e o r g i a I n d u s t r i a l L o a n A c t

, a n d G e o r g i a R I C O

.

Be cause the B ank wa s not a party to Strong’s state -cour

t liti g ation, we do not “look 1 2

throug h” the pe tition t o Strong’ s state-c ourt complaint exclusively , as Va den would re quire for

the Cash Amer ica de fenda nts. Howeve r, bec ause the Ba nk char acte rizes its own controversy by

expli citly ref ere ncing Strong’ s complaint in its FAA petition, and, notably , attache s the

complaint as an e x hibit to i ts petition as demonstrative evidenc e of the parties’ underly ing

dispute, it is appropriate f or us to consider it insofar as it helps us discern the nature of the

dispute betwee n Strong a nd the B ank.

Thus, in para g raph 58, Strong said, “De fenda nts [ Cash Americ a] made loans to 1 3

Plaintiff and other similarly situated . . . without being licensed . . . a s require d by [Georg ia

law]”; in parag raph 61, “ [a] ll loans by Def endants we re ma de in violation of the Ge org ia

I ndustrial L oan Ac t”; in para g raph 62, “ [a] ll loans made by Def endants a re null and void” ; and

in para g raph 69, “ Def

endants violated the duty

owed to Plaintiff and the Class whe n they made

loans of $3,000 or le ss [ at usurious rate s].” (Compl. ¶¶ 58, 61, 62, 69 (emphase s added) ). I n

para g raph 89, Strong alleg ed that “D efe ndants conspire d to illega lly extend loans to Georg ians

char g ing a

nnual intere st rates in excess of that a llowed by law.” ( I d. ¶ 89 (e mphases adde d)). I n

para g raph 47, Strong descr ibed one of the common questions of fa ct as “ [w] hether Def endants

char g ed more than 10% pe r annum simple intere st on loans of $3,000 or less in violation of

[Georg ia law]”; and in par ag raph 82, Strong alleg ed that “D efe ndants cha rg ed Plaintiff and the

Class an amount in excess of 10% of the fac e amount of the chec k.” (I d. ¶¶ 47, 82 ( emphase s

added) ).

26F i n a l l y

, t h e c o r r e s p o n d e n c e e v i d e n c i n g S t r o n g ’ s “ r e f u s a l ” t o s u b m i t t h e

d i s p u t e t o a r b i t r a t i o n

, s e e 9 U

. S

. C

. § 4

, w h i c h w a s a l s o a t t a c h e d t o t h e B a n k ’ s F A A

p e t i t i o n

, f

u r t h e r i l l u m i n a t e s t h e d i s p u t e b e t w e e n t h e p a r t i e s

. I n a l e t t e r t o S t r o n g ’ s

c o u n s e l

, c o u n s e l f

o r t h e B a n k c h a r a c t e r i z e d t h e d i s p u t e t h i s w a y : “ I n t h e [ s t a t e

c o u r t ] L a w s u i t [ ]

, y o u a l l e g e t h a t y o u r l o a n [ ] d a t e d

. . . F e b r u a r y 6

, 2 0 0 4 ( t h e

“ L o a n [ ] ” )

, m a d e i n t h e n a m e o f C o m m u n i t y S t a t e B a n k ( t h e “ B a n k ” )

, [ w a s ]

a c t u a l l y m a d e b y o t h e r p a r t i e s a n d t h a t

, a c c o r d i n g l y

, t h e L o a n [ ] v i o l a t e [ d ] G e o r g i a

u s u r y l a w s a n d [ i s ] o t h e r w i s e u n l a w f u l

. I t i s t h e p o s i t i o n o f t h e L a w s u i t

D e f e n d a n t s a n d t h e B a n k

. . . t h a t t h e L o a n [ ] [ w a s ] m a d e b y t h e B a n k a n d t h a t t h e

l e g a l i t y o f t h e i n t e r e s t c h a r g e s o n t h e L o a n [ ] i s a c c o r d i n g l y g o v e r n e d b y S e c t i o n

2 7 ( a ) o f t h e F e d e r a l D e p o s i t I n s u r a n c e A c t

. . . . ” S t r o n g ’ s c o u n s e l r e s p o n d e d

,

“ P l a i n t i f f [ ] b e l i e v e [ s ] t h a t t h e p a y d a y l o a n c o n t r a c t [ ] e n t e r e d i n t o b e t w e e n

P l a i n t i f f [ ] a n d y o u r c l i e n t [ C a s h A m e r i c a ] [ i s ] u n c o n s c i o n a b l e a n d u n e n f o r c e a b l e

.

A c c o r d i n g l y

, w e p l a n t o m o v e f o r w a r d w i t h o u r l a w s u i t

. . . . ”

C

.

H a v i n g p r o b e d t h e f

a c t u a l b a s i s o f t h e u n d e r l y i n g c o n t r o v e r s y b e t w e e n t h e

p a r t i e s

, w e n o w e x p l o r e t h e p o t e n t i a l l a w s u i t s t h a t c o u l d a r i s e b e t w e e n t h e p a r t i e s

f r o m t h i s c o n t r o v e r s y

. I n s o h y p o t h e s i z i n g

, w e c a n o n l y c o n s i d e r w e l l

- p l e d

, n o n

27f

r i v o l o u s p o t e n t i a l s u i t s

. S t e e l C o

. v

. C i t i z e n s f o r a B e t t e r E n v ’ t

, 5 2 3 U

. S

. 8 3

, 8 9 1 4

( 1 9 9 8 ) ( s t a t i n g t h a t f

e d e r a l s u b

j e c t m a t t e r j u r i s d i c t i o n m a y n o t b e p r e m i s e d o n a

“ w h o l l y i n s u b s t a n t i a l a n d f r i v o l o u s ” c l a i m ( q u o t i n g B e l l v

. H o o d

, 3 2 7 U

. S

. 6 7 8

,

6 8 2

- 8 3 ( 1 9 4 6 ) ) ) ; C a t e r p i l l a r

, I n c

. v

. W i l l i a m s

, 4 8 2 U

. S

. 3 8 6

, 3 9 2 ( 1 9 8 7 ) ( “ [ T ] h e

w e l l

- p l e a d e d c o m p l a i n t r u l e

. . . p r o v i d e s t h a t f e d e r a l j u r i s d i c t i o n e x i s t s o n l y w h e n

a f e d e r a l q u e s t i o n i s p r e s e n t e d o n t h e f a c e o f t h e p l a i n t i f

f ’ s p r o p e r l y p l e a d e d

c o m p l a i n t

. ” ( e m p h a s i s a d d e d ) ( i n t e r n a l q u o t a t i o n m a r k s o m i t t e d ) )

. A n t i c i p a t e d

f e d e r a l d e f

e n s e s a r e i r r e l e v a n t

. S e e V a d e n

, 1 2 9 S

. C t

. a t 1 2 7 2 ( “ F e d e r a l

j u r i s d i c t i o n c a n n o t b e p r e d i c a t e d o n a n a c t u a l o r a n t i c i p a t e d d e f e n s e

. ” ( c i t i n g

M o t t l e y

, 2 1 1 U

. S

. a t 1 5 2 ) )

. M o r e o v e r

, i n c o n d u c t i n g t h i s i n q u i r y

, w e m a y o n l y

c o n s i d e r p o t e n t i a l c l a i m s b e t w e e n S t r o n g a n d t h e B a n k ; j u r i s d i c t i o n o v e r t h e

B a n k ’ s p e t i t i o n m a y n o t b e f o u n d e d o n p o t e n t i a l c l a i m s t h a t e x i s t o n l y b e t w e e n

S t r o n g a n d C a s h A m e r i c a

.

W e c a n d i s c e r n a t l e a s t o n e p o t e n t i a l b a s i s f o r f e d e r a l j u r i s d i c t i o n o v e r t h e

B a n k ’ s F A A p e t i t i o n

. T h e d i s p u t e b e t w e e n S t r o n g a n d t h e B a n k c o u l d s u p p o r t a

p o t e n t i a l F e d e r a l R a c k e t e e r I n f l u e n c e d a n d C o r r u p t O r g a n i z a t i o n s ( “ F e d e r a l

We consider only

potential coer cive a ctions here . We have no oc casion to consider 1 4

hy pothetical dec lara tory

judgme nt actions, bec ause the jurisdictional analy sis reg arding a

potential decla

ratory judgme nt suit by

the B ank is simply

the mirror imag e of the jurisdictional

analy sis reg arding potential coer cive suits by Strong. See Household B ank, 320 F .3d at 1251

(holding that jurisdiction over a de clar atory judgme nt action depe nds on whether the dec lara tory

judgme nt defe ndant could file a non-fr ivolous coerc ive claim ag ainst the dec lara tory judgme nt

plaintiff ar ising unde r fe dera l law).

28R I C O ” ) c l a i m a g a i n s t t h e B a n k

, t h a t w o u l d b e b o t h w e l l p l e d a n d n o n

- f r i v o l o u s

,

a n d w h i c h w o u l d s t a t e a f e d e r a l i s s u e o n i t s f

a c e

. F e d e r a l R I C O p r o h i b i t s

c o n d u c t i n g t h e a f

f a i r s o f a n e n t e r p r i s e a f

f e c t i n g i n t e r s t a t e c o m m e r c e t h r o u g h t h e

c o l l e c t i o n o f a n “ u n l a w f u l d e b t

, ” t h a t i s

, c h a r g i n g a u s u r i o u s r a t e t h a t i s m o r e t h a n

t w i c e t h e e n f

o r c e a b l e r a t e u n d e r e i t h e r s t a t e o r f e d e r a l l a w

, o r c o n s p i r i n g t o d o t h e

s a m e

. 1 8 U

. S

. C

. § § 1 9 6 1

- 1 9 6 2

. 1 5

I f t h e B a n k w e r e t h e t r u e l e n d e r o f S t r o n g ’ s l o a n

, i t c o u l d n o t b e l i a b l e f o r

v i o l a t i n g F e d e r a l R I C O t h r o u g h t h e c o l l e c t i o n o f a n “ u n l a w f u l d e b t

. ” A s a n F D I C

i n s u r e d

, s t a t e

- c h a r t e r e d b a n k

, t h e B a n k i s n o t s u b j e c t t o G e o r g i a ’ s u s u r y l a w s ;

i n s t e a d

, i t i s a u t h o r i z e d u n d e r S e c t i o n 2 7 ( a ) o f t h e F D I A t o e x p o r t i t s h o m e

- s t a t e

u s u r y l a w s

. S e e 1 2 U

. S

. C

. 1 8 3 1 d ( a ) ( a l l o w i n g s t a t e

- c h a r t e r e d

, F D I C

- i n s u r e d b a n k s

t o c h a r g e “ i n t e r e s t

. . . a t t h e r a t e a l l o w e d b y t h e l a w s o f t h e S t a t e

. . . w h e r e t h e

b a n k i s l o c a t e d

, ” “ n o t w i t h s t a n d i n g a n y S t a t e c o n s t i t u t i o n o r s t a t u t e w h i c h i s h e r e b y

p r e e m p t e d f

o r t h e p u r p o s e s o f t h i s s e c t i o n ” )

. T h e B a n k i s c h a r t e r e d i n S o u t h

Fe dera l RI CO prohibits, int er a lia, investing in, a cquiringan intere st in, or conducting 1 5

the af fairs of an ente rprise e ng ag ed in or a ffe cting interstate c ommerce , throug h the “c ollection

of an unla wful debt.” 18 U.S.C. § 1962(a)-( c). Sec tion 1962(d) prohibits conspirac y to commit

the same. I d. § 1962(d). Sec tion 1961(6) def ines an “ unlawful de bt” as “ a debt ( A) . . . whic h is

unenfor cea

ble under State or F eder al law in whole or in part as to princ ipal or intere st beca use of

the laws re lating to usury , and (B ) which w as incurr ed in conne ction with . . . the business of

lending money

or a thing of value at a r ate usurious unde r State or F eder al law, whe re the

usurious rate is a t least twice the enfor cea ble ra te.” I d. § 1961(6). Sec tion 1961(4) def ines an

“ente rprise” as including “any individual, partnership, c orpora tion, association, or other le g al

entity , and any

union or g roup of individuals associa ted in fac t although not a leg al entity .” I d. §

1961(4).

29D a k o t a

, w h i c h p l a c e s n o l i m i t a t i o n o n i n t e r e s t r a t e s

. S e e S

. D

. C o d i f i e d L a w s §

5 4

- 3

- 1

. 1 ( i m p o s i n g “ n o m a x i m u m i n t e r e s t r a t e

. . . o r u s u r y r a t e r e s t r i c t i o n ” u n d e r

s t a t e l a w )

. T h e r e f

o r e

, i f t h e B a n k w e r e t h e t r u e l e n d e r o f t h e l o a n u n d e r f e d e r a l

l a w

, t h e r e w o u l d b e n o R I C O v i o l a t i o n

, b e c a u s e t h e r e w o u l d b e n o p r e d i c a t e

o f f e n s e o f c o l l e c t i n g a n “ u n l a w f u l d e b t

. ”

H o w e v e r

, S t r o n g c o u l d p o t e n t i a l l y a s s e r t ( a n d h a s i n f a c t a l l e g e d f

a c t s

s u p p o r t i n g ) a n o n

- f

r i v o l o u s F e d e r a l R I C O c l a i m a g a i n s t t h e B a n k u n d e r a t h e o r y o f

c o n s p i r a c y

. S e e 1 8 U

. S

. C

. § 1 9 6 2 ( d )

. T o d o s o

, S t r o n g w o u l d h a v e t o p l e a d f a c t s

d e m o n s t r a t i n g t h a t t h e B a n k w a s n o t t h e a c t u a l l e n d e r ( o t h e r w i s e

, t h e p r e d i c a t e

u s u r y v i o l a t i o n w o u l d b e l a c k i n g )

, y e t t h e B a n k c o n s p i r e d w i t h C a s h A m e r i c a t o

f a c i l i t a t e C a s h A m e r i c a ’ s m a k i n g o f u s u r i o u s l o a n s

. B e c a u s e t h i s c a u s e o f a c t i o n i s

a c r e a t u r e o f f

e d e r a l l a w

, s u c h a c l a i m w o u l d c l e a r l y s t a t e a f e d e r a l q u e s t i o n o n t h e

f a c e o f t h e w e l l

- p l e a d e d c o m p l a i n t

.

G i v e n t h e n a t u r e o f t h e p a r t i e s ’ d i s p u t e

, s u c h a F e d e r a l R I C O c o n s p i r a c y

c l a i m w o u l d b e w e l l p l e d a n d n o n

- f r i v o l o u s

, e v e n i f n o t i n t h e e n d m e r i t o r i o u s

.

M e m b e r s o f t h i s C o u r t h a v e a l r e a d y r e c o g n i z e d t h a t S e c t i o n 2 7 ( a ) ’ s p r o t e c t i o n s

e x t e n d t o a s t a t e b a n k o n l y i n s o f a r a s i t i s t h e t r u e l e n d e r u n d e r f e d e r a l l a w

. A s

J u d g e C a r n e s h a s o b s e r v e d :

[ S e c t i o n 2 7 ( a ) p r e e m p t i o n ] d o e s n o t m e a n t h a t a n y t r a n s a c t i o n w h e r e

a n o u t

- o f

- s t a t e b a n k a s s o c i a t e s w i t h a n o n

- b a n k a g e n t i n G e o r g i a i s

30p r o t e c t e d

, e v e n i f t h e r e l a t i o n s h i p i s c l e a r l y a s h a m

. I f

, u n d e r f e d e r a l

l a w

, a t r a n s a c t i o n i s n o t a c t u a l l y a l o a n f r o m a n o u t

- o f

- s t a t e b a n k

w i t h i n t h e m e a n i n g o f § 2 7 ( a )

, t h e n t h e b a n k d o e s n o t h a v e t h e r i g h t t o

e x p o r t i t s c h a r t e r s t a t e ’ s i n t e r e s t r a t e u n d e r § 2 7 ( a )

.

B a n k W e s t

, I n c

. v

. B a k e r

, 4 1 1 F

. 3 d 1 2 8 9

, 1 3 1 9 ( 1 1 t h C i r

. 2 0 0 5 ) ( C a r n e s

, J

. ,

d i s s e n t i n g )

, m a

j o r i t y o p i n i o n v a c a t e d f o r m o o t n e s s

, 4 4 6 F

. 3 d 1 3 5 8 ( 1 1 t h C i r

.

2 0 0 6 )

. T h e B a n k W e s t m a j o r i t y l i k e w i s e a g r e e d t h a t S e c t i o n 2 7 ( a ) ’ s p r o t e c t i o n o f

o u t

- o f

- s t a t e b a n k s i s n o t a b s o l u t e

, a n d e v e n w e n t f u r t h e r t o h o l d i n t h e c o n t e x t o f

t h e s t a t e p a y d a y l e n d i n g s t a t u t e t h a t a l t h o u g h s t a t e b a n k s w e r e e x e m p t f r o m d i r e c t

v i o l a t i o n s o f t h e s t a t u t e

, t h e y c o u l d b e l i a b l e u n d e r t h e “ a i d [ i n g ] o r a b e t [ i n g ] ”

p r o v i s i o n o f t h e s t a t u t e

, c o n s i s t e n t l y w i t h S e c t i o n 2 7 ( a ) o f t h e F D I A

. S e e

B a n k W e s t

, 4 1 1 F

. 3 d a t 1 3 0 8 ( “ [ W ] e c o n c l u d e t h a t

. . . S e c t i o n 2 7 ( a ) d o e s n o t

p r e e m p t s t a t e l e g i s l a t i o n i m p o s i n g p e n a l t i e s o n

. . . o u t

- o f

- s t a t e b a n k s w h o a i d a n d

a b e t [ d i r e c t ] v i o l a t i o n s [ o f t h e p a y d a y l e n d i n g s t a t u t e ]

. ” )

, v a c a t e d f o r m o o t n e s s

,

4 4 6 F

. 3 d 1 3 5 8

. W e a g r e e w i t h t h e v i e w t h a t S e c t i o n 2 7 ( a ) d o e s n o t p r o v i d e

i m m u n i t y t o a s t a t e b a n k f o r u s u r y

- r e l a t e d o f

f e n s e s i f i t i s n o t t h e t r u e l e n d e r o f t h e

l o a n u n d e r f

e d e r a l l a w

.

B r i n g i n g t h i s c o n s p i r a c y c l a i m w o u l d r e q u i r e c a r e f u l p l e a d i n g b y S t r o n g t o

n a v i g a t e t h i s n a r r o w l e g a l p a t h

. H e w o u l d h a v e t o a l l e g e

, o n t h e o n e h a n d

, t h a t t h e

B a n k w a s n o t t h e t r u e l e n d e r o f t h e l o a n

, a n d y e t

, o n t h e o t h e r h a n d

, t h a t t h e B a n k

w a s s u f f i c i e n t l y c o m p l i c i t i n t h e i l l e g a l a c t s o t h a t i t c o u l d b e d e e m e d a c o n s p i r a t o r

31( e

. g

. , b y k n o w i n g l y a n d w i l l f u l l y l e n d i n g i t s n a m e t o t h e s h a m o p e r a t i o n )

.

N o n e t h e l e s s

, S t r o n g h a s a l l e g e d f a c t s t h a t r e n d e r t h i s c l a i m p l a u s i b l e a n d n o n

f r i v o l o u s

. I n S t r o n g ’ s s t a t e

- c o u r t c o m p l a i n t

, S t r o n g r e f e r r e d t o t h e B a n k ’ s

r e l a t i o n s h i p w i t h C a s h A m e r i c a a s a “ s u b t e r f u g e

, ” a n d a l l e g e d t h a t t h e B a n k “ h a s

l i t t l e i n v o l v e m e n t o t h e r t h a n l e n d i n g i t s n a m e t o t h e t r a n s a c t i o n

. ” H e c a l l e d C a s h

A m e r i c a “ t h e d e f

a c t o l e n d e r s

, ” a n d r e p e a t e d l y a l l e g e d t h a t i t w a s t h e C a s h

A m e r i c a d e f

e n d a n t s t h a t “ m a d e ” o r “ e x t e n d e d ” t h e l o a n t o h i m

. I f S t r o n g c o u l d

s u b s t a n t i a t e t h e s e c l a i m s i n h i s l a w s u i t

, h e c o u l d p o t e n t i a l l y p r e v a i l o n a F e d e r a l

R I C O c l a i m a g a i n s t t h e B a n k

. I n s h o r t

, t h e c l a i m w o u l d n o t b e f r i v o l o u s

.

B e c a u s e w e f

i n d t h a t S t r o n g ’ s p o t e n t i a l F e d e r a l R I C O c l a i m a g a i n s t t h e

B a n k p r o v i d e s a b a s i s f o r j u r i s d i c t i o n o v e r t h e B a n k ’ s F A A p e t i t i o n

, w e d e c l i n e t o

r e a c h t h e q u e s t i o n o f w h e t h e r S e c t i o n 2 7 ( a ) o f t h e F D I A c o m p l e t e l y p r e e m p t s

s t a t e

- l a w u s u r y c l a i m s a g a i n s t s t a t e

- c h a r t e r e d b a n k s

. C f

. B e n e f i c i a l N a t ’ l B a n k v

.

A n d e r s o n

, 5 3 9 U

. S

. 1

, 9

- 1 0 ( 2 0 0 3 ) ( h o l d i n g t h a t t h e N a t i o n a l B a n k A c t

, 1 2 U

. S

. C

.

§ § 8 5

, 8 6

, c o m p l e t e l y p r e e m p t s s t a t e

- l a w u s u r y c l a i m s a g a i n s t n a t i o n a l b a n k s )

. 1 6

Complete pree mption is a ra re doc trine that entire ly

transfor ms a state-la

w claim into a 1 6

fede ral c laim, reg ardle ss of how the plaintiff f rame d the leg al issue in his complaint. Blab T.V

. of Mobile, I nc. v. Comcast Cable Commc’ns, I nc., 182 F .3d 851, 854-55 (11th Cir. 1999); see

also U.S. Const. art. VI , cl. 2. Under complete pr eemption, “the pr e-e mptive force of a [fede ral]

statute is so ex traordina

ry ,” Cater pillar, 482 U.S. at 393 (interna l quotation marks omitted), that

the “f eder al statute wholly

displaces the sta

te-lawcause of ac tion.” Be nefic ial, 539 U.S. at 8.

Thus, “any

complaint raising claims in that are a is nec essar ily fede ral in cha

rac ter.” Cotton v.

Mass. Mut. L ife I ns. Co., 402 F.3d 1267, 1281 (11th Cir. 2005). Complete pre emption cre ates

fede ral subjec t-matter jurisdiction over completely

pree mpted state-law

claims, allowing for

32T h e S u p r e m e C o u r t

, t o o

, h a s d e c l i n e d t o a n s w e r t h i s q u e s t i o n

. S e e V a d e n

, 1 2 9 S

.

C t

. a t 1 2 6 9 n

. 4

.

I n s u m

, i n l o o k i n g t h r o u g h t h e B a n k ’ s F A A p e t i t i o n

, w e s e e a p o t e n t i a l

c o e r c i v e c l a i m b e t w e e n S t r o n g a n d t h e B a n k t h a t w o u l d b e b o t h w e l l p l e d a n d n o n

f r i v o l o u s

, a n d w h i c h w o u l d s t a t e a f e d e r a l i s s u e o n i t s f

a c e

- - n a m e l y

, a F e d e r a l

R I C O c o n s p i r a c y c l a i m

. U n d e r t h e l o o k

- t h r o u g h r u l e

, t h i s h y p o t h e t i c a l c o e r c i v e

c l a i m i n t u r n s u p p l i e s a b a s i s f o r f e d e r a l j u r i s d i c t i o n o v e r t h e B a n k ’ s F A A p e t i t i o n

.

T h e r e f o r e

, w i t h r e s p e c t t o t h e B a n k

, w e r e v e r s e t h e d i s t r i c t c o u r t ’ s d i s m i s s a l o f t h e

F A A p e t i t i o n a n d a g a i n h o l d t o t h e c o n t r a r y

, a s w e d i d i n S t r o n g I

, 4 8 5 F

. 3 d a t 6 0 0

,

t h a t t h e d i s t r i c t c o u r t h a s s u b j e c t m a t t e r j u r i s d i c t i o n o v e r t h e B a n k ’ s p e t i t i o n t o

c o m p e l a r b i t r a t i o n u n d e r t h e F A A

. A c c o r d i n g l y

, w e r e m a n d t o t h e d i s t r i c t c o u r t

w i t h i n s t r u c t i o n s t o d e t e r m i n e i n t h e f i r s t i n s t a n c e w h e t h e r t o c o m p e l a r b i t r a t i o n

p u r s u a n t t o t h e F A A

, 9 U

. S

. C

. § 4

.

I I I

.

remova l to feder al cour

t.

Complete pree mption is distinct from “ordinar y ” or “ defe nsive” pre emption. Ordinary

pree mption si mply

allows a de fenda

nt to defea t a plaintiff’s state -law c laim on the merits by

asser ting the supr emac y

of fe dera l law as a

n aff irmative def

ense. See Bla

b T.V., 182 F .3d at

855. By contra st to complete pree mption, “defe nsive pree mption does not furnish fede ral

subject-matter

jurisdiction under 28 U.S.C. § 1331.” B utero v. Roy al Mac cabe es L ife I ns. Co.,

174 F.3d 1207, 1212 ( 11th Cir. 1999); see also Cater pillar, 482 U.S. at 393 (“[I ]t is now settled

law that a c ase ma

y not be re moved to fede ral c ourt on the basis of a fede ral de fense , including

the def ense of pre- emption, even if the defe nse is anticipated in the pla intiff’s complaint, and

even if both parties conc ede tha t the fede ral de fense is the only question truly

at issue.”)

.

33W e n o w t u r n t o t h e C a s h A m e r i c a p e t i t i o n e r s

. B e c a u s e t h e C a s h A m e r i c a

p e t i t i o n e r s w e r e n a m e d a s d e f e n d a n t s i n S t r o n g ’ s s t a t e

- c o u r t l a w s u i t

, w e w o u l d b e

c o n s t r a i n e d b y t h e h o l d i n g i n V a d e n t o “ l o o k t h r o u g h ” e x c l u s i v e l y t o S t r o n g ’ s

s t a t e

- c o u r t c o m p l a i n t t o d e t e r m i n e w h e t h e r t h e r e w a s f e d e r a l j u r i s d i c t i o n o v e r C a s h

A m e r i c a ’ s F A A p e t i t i o n

. H o w e v e r

, w e n e e d n o t p u r s u e t h i s i n q u i r y b e c a u s e w e

c o n c l u d e t h a t C a s h A m e r i c a ’ s p e t i t i o n t o c o m p e l a r b i t r a t i o n m u s t b e d i s m i s s e d

b a s e d o n t h e p r e c l u s i v e e f f e c t o f a p r i o r s t a t e

- c o u r t j u d g m e n t

. 1 7

Strong twic e ra ised the state- court judg ment as an a lternative ba sis on which to affir m 1 7

the district court’s or der dismissing the F AA petition in this case. (See Sugg estion of Mootness

by Appellee (“Strong ’s Mootness Br .”), f iled Oct. 17, 2005; Appellee ’s Supplemental B rief

Reg arding the I mpact of V aden v. D iscover B ank (“ Strong’ s Vade n Br .”), f iled J une 22, 2009, at

12.) Strong said that “[Cash America ’s] abilit y to compel ar

bitration in a state or f

eder al forum

ag ainst [S trong ] has been mooted by the State Court’s orde r striking this defense .” (Strong ’s

Mootness Br . at 3.) Althoug h Strong f ailed to use the w ords “r es judicata ” or “ collater al

estoppel,” w e nonethe less find that Strong ha s sufficiently raised the issue of pre clusion such

that this Court m ay

addre ss it. W e note in passing that the Supreme Court of G eorg ia has

simil arly found that a pa

rty sufficie ntly

raised a prec lusion defense even w ithout specifically

articula ting it as e ither re s judicata or c ollatera l estoppel. See B oozer v. Hig don, 313 S.E.2d

100, 102 & n.1 ( Ga. 1984) (holding that a “pr obate c ourt order was suff icient evidenc e to

support Boozer’ s defe nse, whe n construed a s a plea of collate ral e stoppel,” eve n though

“B oozer’s def

ensive plea ding did not spec ifically enumer ate e ither re s judicata or c ollatera l

estoppel as its g rounds, but mere ly stated that ‘the ma tter [has been] formally adjudicate d in the

Probate Court of Cobb County . . . ’”) . And indeed, e ven if the pa rties had not ra ised the issue,

this Court m ay

consider the prec lusive eff ect of a prior judg ment sua sponte. See A m. Furniture

Co. v. I nt’l Acc ommodations S upply , 721 F.2d 478, 482 ( 5th Cir. Unit A Mar. 1981) (“ We are

cog nizant that res judicata, a s such, has not bee n specia lly pled. I n the posture of

this case,

howeve r, whe re a ll of the rele vant fa cts are contained in the r ecor d befor e us and a ll are

uncontrove rted, we may

not ignor e their le g al ef

fec t, nor may

we de cline to consider

the

application of c ontrolling rule s of law to dispositive fac ts, simpl y beca use neither

party has see n

fit to invit e our a

ttention to the issue by

technica lly

corr ect a nd exact pleading s. We do so sua

sponte.” (c itation omit ted)); c f. B onner v. City of Prichar d, 661 F.2d 1206, 1209 ( 11th Cir. 1981)

(en ba nc) ( adopting as binding prec edent a ll former F ifth Circuit decisions handed dow n befor e

the close of

business on September 30, 1981) ; cf. a lso Arizona v. California, 530 U.S. 392, 412

(2000) ( “[I ]f a court is on notice that it has pre viously decide d the issue pre sented, the c ourt may

dismiss the ac tion sua sponte, even thoug h the def ense ha s not been ra ised. This result is fully

34A

.

W h i l e t h e i n s t a n t F A A p e t i t i o n w a s p e n d i n g i n f e d e r a l c o u r t

, t h e C a s h

A m e r i c a d e f

e n d a n t s m o v e d t o s t a y t h e s t a t e

- c o u r t p r o c e e d i n g s a n d c o m p e l

a r b i t r a t i o n o f S t r o n g ’ s c l a i m s ( a f t e r a n u n s u c c e s s f

u l r e m o v a l t o f

e d e r a l c o u r t a n d

s u b s e q u e n t r e m a n d f

o r l a c k o f j u r i s d i c t i o n )

. O n A p r i l 1 8

, 2 0 0 6

, t h e s t a t e t r i a l c o u r t

o r d e r e d t h e p a r t i e s t o c o n d u c t l i m i t e d d i s c o v e r y o n t h e i s s u e o f t h e e n f o r c e a b i l i t y

o f t h e a r b i t r a t i o n a g r e e m e n t

- - i n p a r t i c u l a r

, t h e f a c t u a l i s s u e s r e l a t i n g t o t h e

p o t e n t i a l d e f

e n s e s o f “ f

r a u d i n t h e f

a c t u m ” a n d p r o c e d u r a l u n c o n s c i o n a b i l i t y

. S e e

G a

. C a s h A m

. , I n c

. v

. S t r o n g

, 6 4 9 S

. E

. 2 d 5 4 8

, 5 5 1

, 5 5 3 ( G a

. C t

. A p p

. 2 0 0 7 )

. T h e

C a s h A m e r i c a d e f

e n d a n t s d i d n o t a t t e m p t t o a p p e a l t h i s o r d e r

. I d

. a t 5 5 1

- 5 2

.

W h e n t h e d e f

e n d a n t s f a i l e d t o p r o d u c e a n y o f S t r o n g ’ s r e q u e s t e d d i s c o v e r y

, S t r o n g

m o v e d t o c o m p e l

. I d

. a t 5 5 2

. O n J u l y 1 7

, 2 0 0 6

, a f t e r a h e a r i n g o n S t r o n g ’ s

consistent with the policies underly ing r es judicata : it is not based solely on the def

endant’ s

interest in avoiding the burde ns of twice de fending a suit, but is also based on the avoida nce of

unnece ssary

judicial waste.” (quoting United States v. Sioux Nation, 448 U.S. 371, 432 (1980)

(Rehnquist, J ., dissenting) ).

Moreove r, “[Cash Americ a] can c laim no surprise or pr ejudice” by our addr essing

collater al estoppel he re. A m. Furniture Co., 721 F.2d at 482. Cash Ame rica specific ally

trea ted

Strong’ s mootness arg ument as one of claim or issue pre clusion. (See Petitioners’ Response to

the Sugg estion of Mootness by Appellee J ames E. Strong (“Petitioners’ Mootne ss Resp.”), filed

Nov. 3, 2006, at 3-4.) And Cash Amer ica wa s g iven “a chanc e to ar g ue . . . why

the impositi on

of an e stoppel would be inappropr iate.” B londer-T ong ue L abs., I nc. v. Univ. F ound., 402 U.S.

313, 350 (1971). I n particula r, Cash Amer ica a

rg ued estoppe l would be inappropr iate bec ause

the state-c ourt order

reg arding sanctions was ne ither “on the merits” nor f inal. (Petitioners’

Mootness Resp. at 3.) We addr ess these a rg uments below and c onclude ne ither is persua sive. I n

the end, the dispositive fa cts here are “uncontr overte d,” and “ we may not ignor e their le g al

eff ect.” Am. Fur

niture Co., 721 F.2d a

t 482.

35m o t i o n

, t h e t r i a l c o u r t f o u n d t h a t t h e d e f

e n d a n t s h a d f

l o u t e d i t s d i s c o v e r y o r d e r

,

a n d “ d e l i b e r a t e l y c h o s e t o n o t e v e n r e v i e w t h e d o c u m e n t s o r p r o d u c e a p r i v i l e g e

l o g ” t o s u b s t a n t i a t e t h e i r b l a n k e t o b j e c t i o n s

. I d

. a t 5 5 2 ( q u o t i n g t r i a l c o u r t ’ s J u l y

1 7

, 2 0 0 6 o r d e r )

. N o r h a d t h e d e f e n d a n t s r e q u e s t e d a p r o t e c t i v e o r d e r f o r t h o s e

d o c u m e n t s t h e y a s s e r t e d w e r e p r o t e c t e d f r o m d i s c l o s u r e

. I d

. T h e s t a t e c o u r t a g a i n

o r d e r e d t h e d e f

e n d a n t s t o c o m p l y w i t h t h e p l a i n t i f f ’ s d i s c o v e r y r e q u e s t s

. I d

. a t

5 5 3

.

O n O c t o b e r 1 1

, 2 0 0 6

, a f t e r y e t a n o t h e r h e a r i n g

, t h e s t a t e c o u r t r u l e d t h a t t h e

d e f e n d a n t s h a d “ d e l i b e r a t e l y a n d w i l l f u l l y f a i l e d a n d r e f

u s e d t o p r o d u c e t h e

d o c u m e n t s w h i c h w e r e t h e s u b j e c t o f t h e A p r i l 1 8 a n d J u l y 1 7 o r d e r s

. ” I d

. a t 5 5 6

( q u o t i n g t r i a l c o u r t ’ s O c t o b e r 1 1

, 2 0 0 6 o r d e r )

. T h e t r i a l c o u r t h e l d t h e d e f e n d a n t s

i n c o n t e m p t

, a n d

, a s a s a n c t i o n

, s t r u c k t h e d e f e n d a n t s ’ a r b i t r a t i o n d e f

e n s e s

,

p u r s u a n t t o G e o r g i a C o d e S e c t i o n 9

- 1 1

- 3 7 ( b ) ( 2 )

. I d

. a t 5 5 3

. T h e C o u r t o f 1 8

Section 9-11-37( b)(2) of the Of ficial Code of

Geor g ia Annotated pr ovides: 1 8

I f a p arty

. . . fails t o obey an order to provide or permit discovery

, . . . the court i n

which the action is pending may make such order s in reg ard to the failure as are just

and, among others, the f

ollowing:

(A ) An order that the matters reg arding which the order was made o r an y

other desig nated fac ts shall be taken to be established for the purposes of the

action in ac corda

nce w ith the claim of the pa rty obtaining the order ;

(B ) An order ref

using to allow t h e d i s obedient party to support or oppose

desig nated claims or defe nses, or pro h i b iting him from introducing

desig nated matter s in evidence ;

(C) An order striking out p leading s or parts there of, or stay ing further

proce eding s until the order is obey ed, or dismiss ing the action or proce eding

or any part there of, or rende ring a judgme nt by defa ult ag ainst the

36A p p e a l s o f G e o r g i a a f f i r m e d t h e j u d g m e n t o n J u l y 6

, 2 0 0 7

. I d

. a t 5 5 6

. T h e 1 9

S u p r e m e C o u r t o f G e o r g i a d e n i e d c e r t i o r a r i o n S e p t e m b e r 2 4

, 2 0 0 7

. I d

. a t 5 4 8

.

W h e n w e r e n d e r e d o u r d e c i s i o n i n S t r o n g I

, t h e s t a t e

- c o u r t s a n c t i o n h a d n o t

y e t b e e n u p h e l d o n a p p e a l a n d t h u s d i d n o t y e t c o n s t i t u t e a f i n a l j u d g m e n t f

o r

p u r p o s e s o f c l a i m o r i s s u e p r e c l u s i o n

. S e e S t r o n g I

, 4 8 5 F

. 3 d a t 6 1 3 n

. 2 1

.

H o w e v e r

, n o w t h a t t h e s a n c t i o n r e p r e s e n t s a f i n a l j u d g m e n t f

r o m a c o u r t o f

c o m p e t e n t j u r i s d i c t i o n

, t h e d o c t r i n e o f c o l l a t e r a l e s t o p p e l p r e v e n t s C a s h A m e r i c a

f r o m r e l i t i g a t i n g t h o s e i s s u e s h e r e

.

B

.

disobedient party ;

(D) I n lieu of any of the fore g oing order s, or i n ad d i t i o n there to, an order

trea ting a s a conte mpt of court the f ailure to obe y

any order s . . . .

The Court of Appe als of Ge org ia per mits i nterlocutory

appea ls when: 1 9

(1) The issue to be dec ided appe ars to be dispositive of the c ase; or

(2) The order appea

rs err oneous and will probably cause a substantial err or at trial

or will adver sely aff

ect the rig hts of the appea ling party until entry of final judgme nt

in which ca se the a

ppeal will be e x pedited; or

(3) The establishment of pre cede nt is desirable.

Ga. Ct. App. R. 30. To appe al, the losing party must first seek a c ertificate of immediate r eview

from the tria l court: “[I ]n any appea l under this chapte r whe re the order , decision, or judg ment is

not final, it shall be nece ssary that the trial judg e ce rtify within ten day s of entry

there of that the

order , decision, or judg ment is of such importance to the case that an immediate r eview should

be had.” Ga. Code A nn. § 5-7-2; see also id.. § 5-6-34(b) (“Where the trial judg e in re ndering an

order , decision, or judg ment, not otherwise subjec t to direct appe al . . . ce rtifies within ten day s

of entry there of that the orde r, dec ision, or judgment is of suc h importance to the case that

immediate re view should be ha d, the Supreme Court or the Court of Appea ls may there upon, in

their re spective discr etions, permit an appe al to be take n from the or der, de cision, or judg ment if

application is made the reto within ten day s after such ce rtificate is gr anted.” ).

37T h e g e n e r a l p r i n c i p l e o f r e s j u d i c a t a p r e v e n t s t h e r e l i t i g a t i o n o f i s s u e s a n d

c l a i m s a l r e a d y d e c i d e d b y a c o m p e t e n t c o u r t

. “ O n c e a p a r t y h a s f o u g h t o u t a

m a t t e r i n l i t i g a t i o n w i t h t h e o t h e r p a r t y

, h e c a n n o t l a t e r r e n e w t h a t d u e l

. ” C o m m ’ r

o f I n t e r n a l R e v e n u e v

. S u n n e n

, 3 3 3 U

. S

. 5 9 1

, 5 9 8 ( 1 9 4 8 )

. R e s j u d i c a t a c o m e s i n

t w o f o r m s : c l a i m p r e c l u s i o n ( t r a d i t i o n a l “ r e s j u d i c a t a ” ) a n d i s s u e p r e c l u s i o n ( a l s o

k n o w n a s “ c o l l a t e r a l e s t o p p e l ” )

. S e e i d

. a t 5 9 7

- 9 8

.

I n c o n s i d e r i n g w h e t h e r t o g i v e p r e c l u s i v e e f f e c t t o s t a t e

- c o u r t j u d g m e n t s

u n d e r r e s j u d i c a t a o r c o l l a t e r a l e s t o p p e l

, t h e f e d e r a l c o u r t m u s t a p p l y t h e r e n d e r i n g

s t a t e ’ s l a w o f p r e c l u s i o n

. S e e K i z z i r e v

. B a p t i s t H e a l t h S y s

. , I n c

. , 4 4 1 F

. 3 d 1 3 0 6

,

1 3 0 8 ( 1 1 t h C i r

. 2 0 0 6 ) ( r e s j u d i c a t a ) ; A g r i p o s t

, I n c

. v

. M i a m i

- D a d e C n t y

. , e x r e l

.

M a n a g e r

, 1 9 5 F

. 3 d 1 2 2 5

, 1 2 2 9 n

. 7 ( 1 1 t h C i r

. 1 9 9 9 ) ( c o l l a t e r a l e s t o p p e l ) ; s e e a l s o

2 8 U

. S

. C

. § 1 7 3 8

. T h u s

, i n t h i s c a s e

, w e a r e o b l i g e d t o a p p l y G e o r g i a p r e c l u s i o n

l a w

.

W h i l e c l a i m p r e c l u s i o n b a r s “ r e p e t i t i o u s s u i t s i n v o l v i n g t h e s a m e c a u s e o f

a c t i o n

, ” S u n n e n

, 3 3 3 U

. S

. a t 5 9 7 ( e m p h a s i s a d d e d ) ; a c c o r d C r o m w e l l v

. C n t y

. o f

S a c

, 9 4 U

. S

. 3 5 1

, 3 5 2 ( 1 8 7 6 )

, i s s u e p r e c l u s i o n p r e c l u d e s t h e r e

- a d j u d i c a t i o n o f t h e

s a m e i s s u e

, w h e r e t h e i s s u e w a s a c t u a l l y l i t i g a t e d a n d d e c i d e d i n t h e p r e v i o u s

a d j u d i c a t i o n

, e v e n i f i t a r i s e s i n t h e c o n t e x t o f a d i f f e r e n t c a u s e o f a c t i o n

, K a r a n

,

I n c

. v

. A u t o

- O w n e r s I n s

. C o

. , 6 2 9 S

. E

. 2 d 2 6 0

, 2 6 2 ( G a

. 2 0 0 6 ) ; W a l d r o u p v

.

38G r e e n e C n t y

. H o s p

. A u t h

. , 4 6 3 S

. E

. 2 d 5

, 7 ( G a

. 1 9 9 5 ) ; D e p ’ t o f H u m a n R e s

. v

.

F l e e m a n

, 4 3 9 S

. E

. 2 d 4 7 4

, 4 7 5 ( G a

. 1 9 9 4 )

. B e c a u s e t h e i n s t a n t F A A p e t i t i o n a n d

t h e s t a t e

- c o u r t l i t i g a t i o n a s a w h o l e d o n o t s h a r e i d e n t i c a l c a u s e s o f a c t i o n

, w h i c h i s

r e q u i r e d f

o r t h e a p p l i c a t i o n o f c l a i m p r e c l u s i o n

, M o r r i s o n v

. M o r r i s o n

, 6 6 3 S

. E

. 2 d

7 1 4

, 7 1 8 ( G a

. 2 0 0 8 )

, w e t r e a t t h e i n s t a n t p r e c l u s i o n q u e s t i o n a s o n e o f c o l l a t e r a l

e s t o p p e l

.

A l t h o u g h G e o r g i a l a w h a s n o t s e t t l e d o n a c a n o n i c a l l i s t o f e l e m e n t s t o

e s t a b l i s h c o l l a t e r a l e s t o p p e l

, G e o r g i a c a s e l a w c a n b e d i s t i l l e d i n t o t h e f o l l o w i n g

f o r m u l a t i o n : A p a r t y s e e k i n g t o a s s e r t c o l l a t e r a l e s t o p p e l u n d e r G e o r g i a l a w m u s t

d e m o n s t r a t e t h a t ( 1 ) a n i d e n t i c a l i s s u e

, ( 2 ) b e t w e e n i d e n t i c a l p a r t i e s

, ( 3 ) w a s

a c t u a l l y l i t i g a t e d a n d ( 4 ) n e c e s s a r i l y d e c i d e d

, ( 5 ) o n t h e m e r i t s

, ( 6 ) i n a f i n a l

j u d g m e n t

, ( 7 ) b y a c o u r t o f c o m p e t e n t j u r i s d i c t i o n

. S e e B o d y o f C h r i s t

O v e r c o m i n g C h u r c h o f G o d

, I n c

. v

. B r i n s o n

, 6 9 6 S

. E

. 2 d 6 6 7

, 6 6 9 ( G a

. 2 0 1 0 )

( r e q u i r i n g f

o r c o l l a t e r a l e s t o p p e l t h a t “ i s s u e

. . . h a d b e e n r e s o l v e d o n t h e m e r i t s i n

p r i o r l i t i g a t i o n

, ” “ i d e n t i t y o f t h e p a r t i e s o r t h e i r p r i v i e s b e t w e e n t h e t w o a c t i o n s

, ”

a n d t h a t “ p r e v i o u s l i t i g a t i o n w a s d e c i d e d b y a c o u r t o f c o m p e t e n t j u r i s d i c t i o n ” ) ;

K a r a n

, 6 2 9 S

. E

. 2 d a t 2 6 2

- 6 3 ( “ [ C ] o l l a t e r a l e s t o p p e l p r e c l u d e s t h e r e

- a d j u d i c a t i o n

o f a n i s s u e t h a t h a s p r e v i o u s l y b e e n l i t i g a t e d a n d a d j u d i c a t e d o n t h e m e r i t s i n

a n o t h e r a c t i o n b e t w e e n t h e s a m e p a r t i e s o r t h e i r p r i v i e s

. . . [ w h e r e ] t h o s e i s s u e s

. . .

39a c t u a l l y w e r e l i t i g a t e d a n d d e c i d e d i n t h e p r e v i o u s a c t i o n

, o r

. . . n e c e s s a r i l y h a d t o

b e d e c i d e d i n o r d e r f

o r t h e p r e v i o u s j u d g m e n t t o h a v e b e e n r e n d e r e d

. ” ( q u o t i n g

W a l d r o u p

, 4 6 3 S

. E

. 2 d a t 7 ) ; I n r e T

. M

. G

. , 5 7 0 S

. E

. 2 d 3 2 7

, 3 2 9 ( G a

. 2 0 0 2 )

( r e q u i r i n g f

o r c o l l a t e r a l e s t o p p e l “ i d e n t i t y o f t h e p a r t i e s

. . . i n b o t h a c t i o n s ” a n d

t h a t s a m e i s s u e “ a c t u a l l y [ w a s ] l i t i g a t e d a n d d e c i d e d i n t h e p r e v i o u s a c t i o n ” o r

“ n e c e s s a r i l y h a d t o b e d e c i d e d i n o r d e r f o r t h e p r e v i o u s j u d g m e n t t o h a v e b e e n

r e n d e r e d ” ) ( c i t i n g W a l d r o u p

, 4 6 3 S

. E

. 2 d a t 7 ) ; K e n t v

. K e n t

, 4 5 2 S

. E

. 2 d 7 6 4

, 7 6 6

( G a

. 1 9 9 5 ) ( “ [ C ] o l l a t e r a l e s t o p p e l a p p l i e s w h e r e a n i s s u e o f f a c t o r l a w i s a c t u a l l y

l i t i g a t e d a n d d e t e r m i n e d b y a v a l i d j u d g m e n t

, a n d t h e d e t e r m i n a t i o n i s e s s e n t i a l t o

t h e j u d g m e n t

. ” )

. T h u s

, a s a g e n e r a l p r i n c i p l e

, i s s u e p r e c l u s i o n r e q u i r e s t h e s a m e 2 0

e l e m e n t s a s c l a i m p r e c l u s i o n

, e x c e p t t h a t i n s t e a d o f r e q u i r i n g a n i d e n t i c a l c a u s e 2 1

Although this Court rec ited a slig htly differ ent formulation of the requisite collate ral 2 0

estoppel ele ments in Pl eming v. Universa l-Rundle Corp., 142 F.3d 1354, 1359 ( 11th Cir. 1998)

(citing I .A. Durbin, I nc. v. Jeffer son Nat’l B ank, 793 F .2d 1541, 1549 (11th Cir. 1986)) (not

requiring identity

of par ties), the Court appe are d to draw those e lements from fe dera l common

law ra ther than G eorg ia law, a nd acknow ledg ed in a f

ootnote that “the pa

rties and the district

court ha ve fa iled to addre ss whether fede ral or sta te principles of collater al estoppel a

pply to this

question.” Pleming, 142 F .3d at 1359 n.6. The c ourt did not reac h the question of which la w to

apply , beca

use both Geor g ia and f

eder al law r equire d “the a ctual litiga tion of the issue in

question in the prior proc eeding ,” which w as dispositive of the issue in the ca se. I d. The c ourt

cited to Waldroup, 463 S.E.2d at 7, as re prese nting the G eorg ia law of collater al estoppel.

Waldroup supports the formulation we ha ve laid out in the text above, requiring identity of

parties. Of

course , it would make no diffe renc e in this case, be cause there is identity of par ties.

Under Geor g ia law, a

case is barre d by

claim pre clusion if the following elements a re 2 1

met: “(1) ide ntity

of the c ause of

action, (2) identity

of the pa rties or their pr ivies, . . . (3)

previous adjudica

tion on the merits by

a cour t of compete nt jurisdiction”; (4) embodied in a f inal

judgme nt. Kara

n

, 629 S.E.2d at 262; see also Ga . Code Ann. § 9-12- 40.

40o f a c t i o n

, i t r e q u i r e s o n l y a n i d e n t i c a l i s s u e b e t w e e n t h e t w o c a s e s

, w h e r e t h e i s s u e

w a s a c t u a l l y l i t i g a t e d a n d d e c i d e d i n t h e p r e v i o u s a d j u d i c a t i o n

. S e e W a l d r o u p

, 4 6 3

S

. E

. 2 d a t 7 ( “ [ U ] n l i k e r e s j u d i c a t a

, c o l l a t e r a l e s t o p p e l d o e s n o t r e q u i r e i d e n t i t y o f

t h e c l a i m

- - s o l o n g a s t h e i s s u e w a s d e t e r m i n e d i n t h e p r e v i o u s a c t i o n a n d t h e r e i s

i d e n t i t y o f t h e p a r t i e s

, t h a t i s s u e m a y n o t b e r e

- l i t i g a t e d

, e v e n a s p a r t o f a d i f f e r e n t

c l a i m

. ” )

.

C

.

W e c o n c l u d e t h a t G e o r g i a ’ s l a w o f c o l l a t e r a l e s t o p p e l b a r s t h e d i s t r i c t c o u r t

f r o m g r a n t i n g t h e r e l i e f r e q u e s t e d b y C a s h A m e r i c a ’ s F A A p e t i t i o n i n t h e i n s t a n t

c a s e

. W e c o n s i d e r e a c h o f t h e n e c e s s a r y e l e m e n t s o f c o l l a t e r a l e s t o p p e l i n t u r n

.

1

. C o m p e t e n t J u r i s d i c t i o n

T h e p a r t i e s d o n o t d i s p u t e t h a t t h e r e n d e r i n g c o u r t

- - t h e S t a t e C o u r t o f C o b b

C o u n t y

- - h a d j u r i s d i c t i o n o v e r b o t h t h e p a r t i e s a n d t h e s u b j e c t m a t t e r o f t h e

c o n t r o v e r s y

. T h e c a s e w a s p r o p e r l y b e f o r e t h e s t a t e c o u r t a f

t e r h a v i n g b e e n 2 2

r e m a n d e d f

r o m t h e f e d e r a l c o u r t f

o r l a c k o f f

e d e r a l j u r i s d i c t i o n

.

2

. F i n a l J u d g m e n t

“ I t i s t h e g e n e r a l r u l e t h a t a j u d g m e n t s o u g h t t o b e u s e d a s a b a s i s f o r t h e

Whil e Ge org ia county

state cour

ts, as opposed to superior c ourts, are courts of limited 2 2

jurisdiction, their jurisdiction ex tends to “[t] he trial of c ivil actions without reg ard to the a mount

in controver sy , except those ac tions in which ex clusive jurisdiction is vested in the superior

courts.” G a. Code Ann. § 15- 7-4(a )(2)

.

41a p p l i c a t i o n o f t h e d o c t r i n e o f r e s j u d i c a t a ( o r c o l l a t e r a l e s t o p p e l ) m u s t b e a f i n a l

j u d g m e n t

. ” C S

- L a k e v i e w A t G w i n n e t t

, I n c

. v

. R e t a i l D e v

. P a r t n e r s

, 6 0 2 S

. E

. 2 d

1 4 0

, 1 4 2 ( G a

. C t

. A p p

. 2 0 0 4 ) ( q u o t a t i o n o m i t t e d ) ; R e s t a t e m e n t ( S e c o n d ) o f 2 3

J u d g m e n t s § 1 3 ( 1 9 8 2 ) ( “ R e s t a t e m e n t o f J u d g m e n t s ” ) ( “ T h e r u l e s o f r e s j u d i c a t a

a r e a p p l i c a b l e o n l y w h e n a f i n a l j u d g m e n t i s r e n d e r e d

. ” )

. I n g e n e r a l

, “ u n d e r

G e o r g i a l a w f

i n a l i t y f o r p r e c l u s i o n p u r p o s e s m a y

. . . b e m e a s u r e d b y t h e s a m e

s t a n d a r d a s f

i n a l i t y f o r a p p e a l a b i l i t y p u r p o s e s

. ” L o p s v

. L o p s

, 1 4 0 F

. 3 d 9 2 7

, 9 3 8

( 1 1 t h C i r

. 1 9 9 8 ) ; a c c o r d C u l w e l l v

. L o m a s & N e t t l e t o n C o

. , 2 4 8 S

. E

. 2 d 6 4 1

, 6 4 2

( G a

. 1 9 7 8 ) ( e q u a t i n g a p p e a l a b i l i t y a n d e x p i r a t i o n o f a p p e a l p e r i o d w i t h p r e c l u s i v e

e f f e c t )

. T h e c o u r t s o f G e o r g i a a n d o u r o w n b i n d i n g p r e c e d e n t i n t e r p r e t i n g G e o r g i a

l a w h a v e c l a r i f

i e d t h a t w h e n a t r i a l j u d g e c e r t i f i e s a n i n t e r l o c u t o r y o r d e r f o r

i m m e d i a t e a p p e a l

, t h e o r d e r b e c o m e s f i n a l f o r p u r p o s e s o f b o t h a p p e a l a b i l i t y a n d

p r e c l u s i o n

. S e e C u l w e l l

, 2 4 8 S

. E

. 2 d a t 6 4 2 ( h o l d i n g t h a t “ [ i ] f t h e t r i a l c o u r t d o e s

c e r t i f y t h a t t h e j u d g m e n t i s f

i n a l a n d r i p e f

o r r e v i e w u n d e r C o d e A n n

. §

8 1 A

- 1 5 4 ( b ) [ n o w § 9

- 1 1

- 5 4 ( b ) ]

, t h e t i m e f o r a p p e a l b e g i n s t o r u n

, ” c r e a t i n g “ r e s 2 4

“Abse nt a dec ision by

the hig hest state cour

t or persua sive indication that it would 2 3

decide the issue diffe rently , fede ral c ourts follow dec isions of intermediate a ppellate c ourts in

apply ing sta te law.” Galindo v. ARIMut. I ns. Co., 203 F.3d 771, 775 (11th Cir. 2000).

Section 9-11-54( b) provides: 2 4

When more than one claim for relief is prese nted in an action, whet her as a claim,

counter claim, cross-c laim, or third-par ty claim, or when multipl e parties are

involved, the court may d i rect the entry of a final judgme nt as to one or more but

42j u d i c a t a e f f e c t ” ) ; W a l k e r v

. R o b i n s o n

, 2 0 7 S

. E

. 2 d 6

, 7 ( G a

. 1 9 7 4 ) ( h o l d i n g t h a t f o r

o r d e r t o b e a p p e a l a b l e

, i t m u s t e i t h e r r e s o l v e a l l c l a i m s o r e l s e b e a c c o m p a n i e d b y

t r i a l c o u r t c e r t i f

i c a t e o f a p p e a l ) ; s e e a l s o G r e s h a m P a r k C m t y

. O r g

. v

. H o w e l l

, 6 5 2

F

. 2 d 1 2 2 7

, 1 2 4 2 n

. 4 3 ( 5 t h C i r

. U n i t B A u g

. 1 9 8 1 ) ( e x p l a i n i n g t h a t “ f i n a l

j u d g m e n t s ” f

o r p u r p o s e s o f r e s j u d i c a t a i n c l u d e “ t h o s e i n w h i c h t h e a c t i o n i s n o

l o n g e r p e n d i n g ” a n d “ t h o s e m a d e f i n a l t h r o u g h t h e a p p r o p r i a t e c e r t i f i c a t i o n [ b y t h e

t r i a l c o u r t ] u n d e r G a

. C o d e § 8 1 A

- 1 5 4 ( b ) [ n o w § 9

- 1 1

- 5 4 ( b ) ] ” )

, o v e r r u l e d o n o t h e r

g r o u n d s

, W o o d v

. O r a n g e C n t y

. , 7 1 5 F

. 2 d 1 5 4 3

, 1 5 4 6 ( 1 1 t h C i r

. 1 9 8 3 )

.

C a s h A m e r i c a c o r r e c t l y a r g u e d i n i t s b r i e f i n g t o t h i s C o u r t t h a t “ o n l y a f i n a l

j u d g m e n t h a s p r e c l u s i v e e f f e c t a n d a j u d g m e n t t h a t i s s u b j e c t t o a p p e l l a t e r e v i e w o r

i s b e i n g a p p e a l e d i s n o t a f i n a l j u d g m e n t

. ” ( P e t i t i o n e r s ’ M o o t n e s s R e s p

. a t 4

. ) I t i s

t r u e t h a t t h e p r e c l u s i v e e f f e c t o f a j u d g m e n t i s s u s p e n d e d w h i l e t h e o r d e r i s o n

a p p e a l

. S e e G a

. C o d e A n n

. § 9

- 1 2

- 1 9

. C a s h A m e r i c a s p e c i f i c a l l y i n f o r m e d t h i s

C o u r t b e f

o r e o u r d e c i s i o n i n S t r o n g I t h a t i t “ i n t e n d [ e d ] t o a p p e a l t h e [ s t a t e c o u r t ’ s ]

few er than all of the claims or parties only upon an express deter mination that there

is no just re ason for delay and upon an express direc tion f or the entry of judgme nt.

I n the absence of such deter mination and direc tion, any order or other form of

decision, howeve r desig nated, which adjudicate s few er t h an all the claims or the

rig hts a nd liabiliti es of few er than all the par ties shall not terminate the a ction as to

any of the claims or parties, and the order or other form of d ec i s ion is subject to

revision at any time befor e the entry of judgme nt adjudicating all the claims and the

rig hts and liabiliti es of a ll the parties.

Ga. Code A nn. § 9-11-54( b) (e mphasis added)

.

43O r d e r

. ” ( I d

. ) A c c o r d i n g l y

, i n S t r o n g I

, w e d i d n o t h o l d t h a t t h e s t a t e

- c o u r t

s a n c t i o n p r e c l u d e d C a s h A m e r i c a f r o m p u r s u i n g i t s F A A p e t i t i o n

. S e e S t r o n g I

,

4 8 5 F

. 3 d a t 6 1 3 n

. 2 1

. H o w e v e r

, a j u d g m e n t b e c o m e s f i n a l f o r a l l p u r p o s e s u p o n

t h e c o n c l u s i o n o f t h e a p p e a l s p r o c e s s

. G a

. C o d e A n n

. § 9

- 1 1

- 6 0 ( h ) ( “ [ A ] n y r u l i n g

b y t h e S u p r e m e C o u r t o r t h e C o u r t o f A p p e a l s i n a c a s e s h a l l b e b i n d i n g i n a l l

s u b s e q u e n t p r o c e e d i n g s i n t h a t c a s e

. . . . ” ) ; c f

. C S

- L a k e v i e w

, 6 0 2 S

. E

. 2 d a t 1 4 2

.

T h e C a s h A m e r i c a d e f

e n d a n t s s u c c e s s f

u l l y s o u g h t a n i n t e r l o c u t o r y a p p e a l f r o m t h e

s t a t e c o u r t ’ s o r d e r s t r i k i n g t h e i r a r b i t r a t i o n d e f e n s e

, a n d t h e s t a t e

- c o u r t j u d g m e n t

w a s a f f i r m e d b y t h e C o u r t o f A p p e a l s o f G e o r g i a

. S e e G a

. C a s h A m

. , 6 4 9 S

. E

. 2 d

a t 5 5 0

, 5 5 6

. T h e S u p r e m e C o u r t o f G e o r g i a d e n i e d c e r t i o r a r i

. I d

. a t 5 4 8

. T h e

j u d g m e n t i s n o w f

i n a l f o r a l l p r e c l u s i v e p u r p o s e s

.

3

. I d e n t i c a l P a r t i e s

S t r o n g n a m e d t h r e e C a s h A m e r i c a p a r t i e s

- - C a s h A m e r i c a I n t e r n a t i o n a l

,

I n c

. , G e o r g i a C a s h A m e r i c a

, I n c

. , a n d D a n i e l R

. F r e e h a n

, t h e C E O o f b o t h

c o m p a n i e s

- - a s d e f

e n d a n t s i n h i s s t a t e

- c o u r t c o m p l a i n t

. T h e s t a t e c o u r t ’ s s a n c t i o n

w a s i m p o s e d a s t o a l l d e f e n d a n t s j o i n t l y i n t h a t l i t i g a t i o n

. S e e G a

. C a s h A m

. , 6 4 9

S

. E

. 2 d a t 5 5 1

, 5 5 3

. T h e v e r y s a m e C a s h A m e r i c a d e f e n d a n t s b r o u g h t t h e i n s t a n t

F A A p e t i t i o n

. T h e y n a m e d S t r o n g a s t h e R e s p o n d e n t i n t h i s p e t i t i o n

. T h u s

, a s

2 5

There is also a new Ca sh America petitioner that wa s not specifica lly named a s a 2 5

defe ndant in the state-c ourt litigation, ca lled Cash Americ a F inancial Ser vices, I nc. Howe ver, it

44b e t w e e n S t r o n g a n d t h e C a s h A m e r i c a d e f e n d a n t s

, t h e r e i s i d e n t i t y o f p a r t i e s i n

b o t h t h e s t a t e

- c o u r t c a s e a n d t h e i n s t a n t F A A p e t i t i o n

. 2 6

4

. I d e n t i c a l I s s u e

T h e i s s u e p r e s e n t e d t o t h e f e d e r a l d i s t r i c t c o u r t i n t h e i n s t a n t F A A p e t i t i o n i s

t h e i d e n t i c a l i s s u e t h a t w a s a l r e a d y d e c i d e d b y t h e s t a t e c o u r t : w h e t h e r S t r o n g ’ s

c l a i m s t h a t t h e c o n d i t i o n s o f h i s l o a n v i o l a t e d s t a t e l a w a r e s u b j e c t t o b i n d i n g

a r b i t r a t i o n

. T h i s i s t h e t h r e s h o l d i s s u e b o t h f o r a f e d e r a l c o u r t t o g r a n t r e l i e f t o

C a s h A m e r i c a u n d e r S e c t i o n 4 o f t h e F A A

, a n d f o r a s t a t e c o u r t t o a d

j u d i c a t e t h e

m e r i t s o f C a s h A m e r i c a ’ s a s s e r t e d a r b i t r a t i o n d e f e n s e i n t h e s t a t e

- c o u r t l i t i g a t i o n

.

B o t h t h e s t a t e a n d f

e d e r a l c o u r t s w o u l d d e c i d e t h e i s s u e u n d e r i d e n t i c a l

g o v e r n i n g l a w

. T h e s u b s t a n t i v e p r o v i s i o n s o f t h e F A A

- - f o u n d i n § 2

, t h e A c t ’ s

“ c e n t e r p i e c e p r o v i s i o n

, ” V a d e n

, 1 2 9 S

. C t

. a t 1 2 7 4 ( q u o t i n g M i t s u b i s h i

, 4 7 3 U

. S

.

a t 6 2 5 )

- - a r e “ e q u a l l y b i n d i n g o n s t a t e a n d f e d e r a l c o u r t s

. ” I d

. a t 1 2 7 1 ( c i t i n g

appea rs that Cash Amer ica F inancial Ser vices, I nc. is either the pare nt corporation or an af filiate

of Ge org ia Cash Amer ica, I nc. I ndeed, Ca sh America

Financ ial Service s, I nc. expressly ref err ed

to itself as a de fenda

nt in St rong ’s state-c ourt litigation, stating in the FAA petition that

“Petitioners . . . Cash Amer ica F inancial Ser vices, I nc. (“ Cash Americ a”) . . . bring this Verified

Petition . . . t o stay

a cour t proce eding . . . initiated by Respondent ag ainst Cash America

[Financial Servic es, I nc.].” I n other wor ds, Cash America Financ ial Service s, I nc. has itself

conce ded that it is an identical pa rty in both lawsuits.

The Cash Ame rica

defe ndants are bound by

the prior judg ment even thoug h they 2 6

broug ht the instant petition t og ether with Comm unity

State Ba nk, which wa s not a party in the

state-c ourt litigation. See Cride r v. Ha rris, 189 S.E. 519, 520 (Ga . 1937) (holding that prior

judgme nt was re s judicata a s to plaintiffs who wer e par ties to first action, notwithstanding tha t

new pa rty in second a ction was not bound by judgme nt).

45S o u t h l a n d C o r p

. v

. K e a t i n g

, 4 6 5 U

. S

. 1

, 1 2 ( 1 9 8 4 ) )

. B o t h s t a t e a n d f e d e r a l c o u r t s

m u s t c o m p e l a r b i t r a t i o n i f t h e s u b s t a n t i v e p r o v i s i o n s o f S e c t i o n 2 a r e s a t i s f i e d ; t h a t

i s

, b o t h c o u r t s m u s t f

i n d t h e a r b i t r a t i o n a g r e e m e n t “ v a l i d

, i r r e v o c a b l e

, a n d

e n f o r c e a b l e

, ” u n l e s s t h e c o u r t f i n d s “ s u c h g r o u n d s a s e x i s t a t l a w o r i n e q u i t y f o r

t h e r e v o c a t i o n o f a n y c o n t r a c t

. ” 9 U

. S

. C

. § 2

. 2 7

I n b o t h s t a t e a n d f

e d e r a l c o u r t

, S t r o n g a l l e g e d d e f e c t s i n t h e “ m a k i n g o f t h e

a r b i t r a t i o n a g r e e m e n t

, ” 9 U

. S

. C

. § 4

- - n a m e l y f r a u d i n t h e f

a c t u m a n d p r o c e d u r a l

u n c o n s c i o n a b i l i t y

, e i t h e r o f w h i c h w o u l d c o n s t i t u t e “ g r o u n d s [ t h a t ] e x i s t a t l a w o r

i n e q u i t y f

o r t h e r e v o c a t i o n o f a n y c o n t r a c t

. ” 9 U

. S

. C

. § 2

. S u c h c o n t r a c t u a l 2 8

d e f e c t s w o u l d e q u a l l y u n d e r m i n e C a s h A m e r i c a ’ s s t a t e

- c o u r t a r b i t r a t i o n d e f e n s e

The full text of Section 2 provides: 2 7

A written provision in any maritime transac tion or a contra ct evidenc ing a

transac tion involving commerc e to settle by arbitra tion a controve rsy there afte r

arising out of such contra ct or transac tion, or the ref usal to perf

orm the whole or any

part there of, or an ag ree ment in writing to submit to arbitra tio n an exis ting

controve rsy arising out of such a contra ct, transac tion, or re fu s al, shall be valid,

irrevoc able, and enfor cea

ble, save upon such g rounds as exis t at law or in equity for

the re vocation of a

ny contra ct.

9 U.S.C. § 2.

The a bility of such c ontrac tual defe cts to invalidate ar bitration ag ree ments is not 2 8

aff ecte d by the Supreme Court’s de cision in AT&T Mobilit y L L C v. Concepcion, 563 U.S. --,

131 S. Ct . 1740 (2011), whic h prese rved “ g ener ally applicable contra ct def

enses, suc h as fr aud,

duress, or unc onscionability ,” so long as the de fense s do not “apply only to arbitration or . . .

derive their mea

ning f rom the fa ct that an a g ree ment to arbitrate is at issue.” I d. at 1746

(quotation omitted); see a lso id. at 1753 (Thomas, J ., concur ring ) (a cknowledg ing a

rbitration

ag ree ments may

be invalidated by

“cha lleng es [to] the forma tion of the arbitra tion ag ree ment,

such as . . . f

raud or duress” ).

46a n d i t s c l a i m f o r § 4 r e l i e f

. B e c a u s e t h e F A A p e t i t i o n i n t h i s c a s e w a s s t a l l e d o n

f e d e r a l j u r i s d i c t i o n g r o u n d s

, t h e s t a t e c o u r t r e a c h e d t h e i s s u e o f t h e a r b i t r a t i o n

a g r e e m e n t ’ s e n f

o r c e a b i l i t y f

i r s t

. T h i s i s s u e i s i d e n t i c a l t o t h e o n e t h a t t h e f e d e r a l

d i s t r i c t c o u r t f

a c e s i n a d

j u d i c a t i n g C a s h A m e r i c a ’ s § 4 p e t i t i o n

.

5

. A c t u a l l y L i t i g a t e d

T o s u p p o r t c o l l a t e r a l e s t o p p e l

, t h e i s s u e m u s t h a v e b e e n “ a c t u a l l y

. . .

l i t i g a t e d ” i n t h e p r e v i o u s l i t i g a t i o n

. K a r a n

, 6 2 9 S

. E

. 2 d a t 2 6 2

- 6 3 ( q u o t i n g

W a l d r o u p

, 4 6 3 S

. E

. 2 d a t 7 )

. A n i s s u e i s c o n s i d e r e d “ a c t u a l l y l i t i g a t e d ” w h e n t h e

“ i s s u e i s p r o p e r l y r a i s e d

, b y t h e p l e a d i n g s o r o t h e r w i s e

, a n d i s s u b m i t t e d f o r

d e t e r m i n a t i o n

, a n d i s d e t e r m i n e d

. ” R e s t a t e m e n t o f J u d g m e n t s § 2 7

, c m t

. d

.

R e q u i r i n g t h a t i s s u e s b e “ a c t u a l l y l i t i g a t e d ” e n s u r e s t h a t c o l l a t e r a l e s t o p p e l

p r e c l u d e s o n l y t h o s e i s s u e s t h a t w e r e c o n t e s t e d b y t h e p a r t i e s

. S e e C l e l a n d v

.

G w i n n e t t C n t y

. , 4 8 7 S

. E

. 2 d 4 3 4

, 4 3 6 ( G a

. C t

. A p p

. 1 9 9 7 ) ( h o l d i n g t h a t w h e r e o n e

p a r t y ’ s i n t e r p r e t a t i o n w a s a c c e p t e d w i t h o u t c o n t e s t b y b o t h t h e o t h e r p a r t y a n d t h e

c o u r t

, “ i t w a s n o t ‘ a c t u a l l y l i t i g a t e d ’ ” a n d t h u s c o u l d n o t s u p p o r t c o l l a t e r a l e s t o p p e l

i n s u b s e q u e n t l i t i g a t i o n )

.

T h e s t a t e

- c o u r t l i t i g a n t s u n q u e s t i o n a b l y “ a c t u a l l y l i t i g a t e d ” t h e i s s u e o f

w h e t h e r S t r o n g ’ s s t a t e

- c o u r t c l a i m s w e r e s u b j e c t t o b i n d i n g a r b i t r a t i o n

. T h e C a s h

A m e r i c a d e f

e n d a n t s c l e a r l y r a i s e d t h e i s s u e i n t h e p l e a d i n g s b y a s s e r t i n g t h e

47e x i s t e n c e o f t h e a r b i t r a t i o n a g r e e m e n t i n s u p p o r t o f t h e i r “ f i r s t

, s i x t h a n d s e v e n t h

d e f e n s e s ” i n t h e i r A n s w e r t o S t r o n g ’ s c o m p l a i n t

. S e e O r d e r a t 5

- 6

, S t r o n g v

. G a

.

C a s h A m

. , I n c

. , N o

. 2 0 0 4 A

- 7 1 0 4

- 6 ( G a

. C o b b C n t y

. O c t

. 1 1

, 2 0 0 6 )

. A d d i t i o n a l l y

,

t h e d e f e n d a n t s r a i s e d t h e i s s u e b y w a y o f m o t i o n

, i n m o v i n g t o s t a y t h e

p r o c e e d i n g s a n d c o m p e l a r b i t r a t i o n

, p u r s u a n t t o t h e a r b i t r a t i o n a g r e e m e n t

. S e e G a

.

C a s h A m

. , 6 4 9 S

. E

. 2 d a t 5 5 1

. F u r t h e r

, t h e i s s u e w a s c o n t e s t e d

, i n t h a t S t r o n g

d i s p u t e d t h e a g r e e m e n t ’ s e n f o r c e a b i l i t y o n t h e g r o u n d s o f p r o c e d u r a l

u n c o n s c i o n a b i l i t y a n d f r a u d i n t h e f

a c t u m

. I d

. ; s e e C l e l a n d

, 4 8 7 S

. E

. 2 d a t 4 3 6

( i s s u e s a r e “ a c t u a l l y l i t i g a t e d ” i f t h e y a r e “ c o n t e s t e d ” b y t h e p a r t i e s )

. T h e s t a t e

c o u r t p r o v i d e d t h e d e f

e n d a n t s w i t h a n o p p o r t u n i t y t o s u b s t a n t i a t e t h e i r a r b i t r a t i o n

d e f e n s e a n d o v e r c o m e S t r o n g ’ s o b j e c t i o n s t o t h e a r b i t r a t i o n a g r e e m e n t ’ s

e n f o r c e a b i l i t y b y o r d e r i n g d i s c o v e r y o n t h e i s s u e

. F i n a l l y

, t h e s t a t e c o u r t d e c i d e d

t h e i s s u e a g a i n s t t h e d e f e n d a n t s b y s t r i k i n g t h e i r a r b i t r a t i o n d e f e n s e s b a s e d o n a

f i n d i n g t h a t t h e d e f

e n d a n t s “ d e l i b e r a t e l y a n d w i l l f u l l y f a i l e d a n d r e f

u s e d ” t o f

o l l o w

t h e c o u r t ’ s o r d e r s t o t a k e d i s c o v e r y o n t h e i s s u e

. G a

. C a s h A m

. , 6 4 9 S

. E

. 2 d a t 5 5 3 ;

s e e a l s o G a

. C o d e A n n

. § 9

- 1 1

- 3 7 ( b ) ( 2 )

. T h e r e i s n o q u e s t i o n t h a t t h e

e n f o r c e a b i l i t y o f t h e a r b i t r a t i o n a g r e e m e n t w a s r a i s e d a n d c o n t e s t e d

, w h i c h i s a l l

t h a t i s r e q u i r e d b y t h e “ a c t u a l l y l i t i g a t e d ” r e q u i r e m e n t

.

6

. N e c e s s a r i l y D e c i d e d

48T h e “ n e c e s s a r i l y d e c i d e d ” p r o n g o f t h e c o l l a t e r a l e s t o p p e l t e s t e n s u r e s t h e

p r i o r c o u r t a c t u a l l y r u l e d o n t h e i s s u e a t h a n d

. T h e i s s u e m u s t h a v e b e e n s q u a r e l y

a d d r e s s e d

, o r “ d i r e c t l y d e c i d e d

, ” i n t h e f o r m e r s u i t b e f

o r e i t c a n b e h e l d a s

c o n c l u s i v e f

o r s u b s e q u e n t l i t i g a t i o n

. T o o t l e v

. P l a y e r

, 1 6 9 S

. E

. 2 d 3 4 0

, 3 4 1 ( G a

.

1 9 6 9 ) ( q u o t i n g B r o w n v

. B r o w n

, 9 1 S

. E

. 2 d 4 9 5

, 4 9 7 ( G a

. 1 9 5 6 ) )

. “ [ I ] t i s o f t h e

e s s e n c e o f e s t o p p e l b y j u d g m e n t t h a t i t i s c e r t a i n t h a t t h e p r e c i s e f a c t w a s

d e t e r m i n e d b y t h e f

o r m e r j u d g m e n t

. ” D e S o l l a r v

. H a n s c o m e

, 1 5 8 U

. S

. 2 1 6

, 2 2 1

( 1 8 9 5 )

.

T h e e s s e n t i a l r o l e o f t h i s “ n e c e s s a r i l y d e c i d e d ” r e q u i r e m e n t i s t h a t i t

p r e v e n t s j u d g m e n t s t h a t r e s t o n a m b i g u o u s g r o u n d s f r o m h a v i n g i s s u e p r e c l u s i v e

e f f e c t

. T h u s

, w h e r e t w o o r m o r e p o s s i b l e g r o u n d s w o u l d t h e o r e t i c a l l y s u p p o r t a

j u d g m e n t

, a n d b o t h w e r e a c t u a l l y l i t i g a t e d

, a n d t h e c o u r t d o e s n o t c l e a r l y s t a t e o n

w h i c h g r o u n d i t s j u d g m e n t r e s t s

, t h e j u d g m e n t c a n n o t h a v e i s s u e p r e c l u s i v e e f f e c t

a s t o e i t h e r i s s u e

, f

o r n e i t h e r i s d e f

i n i t i v e l y t h e g r o u n d o f t h e j u d g m e n t

. S e e

R e s t a t e m e n t o f J u d g m e n t s § 2 7

, c m t

. i ( “ I f a j u d g m e n t o f a c o u r t o f f i r s t i n s t a n c e i s

b a s e d o n d e t e r m i n a t i o n s o f t w o i s s u e s

, e i t h e r o f w h i c h s t a n d i n g i n d e p e n d e n t l y

w o u l d b e s u f

f i c i e n t t o s u p p o r t t h e r e s u l t

, t h e j u d g m e n t i s n o t c o n c l u s i v e w i t h

r e s p e c t t o e i t h e r i s s u e s t a n d i n g a l o n e

. ” ) ; s e e a l s o C a l l a w a y v

. I r v i n

, 5 1 S

. E

. 4 7 7

,

4 8 0 ( G a

. 1 9 0 5 ) ( “ T h u s

, w h e r e s e v e r a l d e f e n s e s a r e p l e a d e d

, a n d t h e j u d g m e n t d o e s

49n o t s h o w u p o n w h i c h i s s u e t h e d e c i s i o n w a s r e n d e r e d

, t h e r e i s n o e s t o p p e l

. ” )

. B y 2 9

c o n t r a s t

, a n i s s u e i s “ n e c e s s a r i l y d e c i d e d ” w h e n t h e p r i o r c o u r t i n f a c t “ r e s o l v e d ”

i t

. L i n d s e y v

. S t a t e

, 6 5 1 S

. E

. 2 d 6 6

, 7 1 ( G a

. 2 0 0 7 ) ( q u o t a t i o n o m i t t e d )

.

T h i s c a s e e a s i l y s a t i s f

i e s t h e “ n e c e s s a r i l y d e c i d e d ” p r o n g

. T h e s t a t e c o u r t ’ s

o r d e r w a s u n a m b i g u o u s

, a n d a d d r e s s e d o n l y o n e i s s u e : w h e t h e r S t r o n g ’ s s t a t e

c o u r t c l a i m s w e r e s u b

j e c t t o b i n d i n g a r b i t r a t i o n

. I t s q u a r e l y r e s o l v e d t h i s i s s u e

a g a i n s t t h e C a s h A m e r i c a d e f e n d a n t s

. T h i s i s n o t a c a s e i n w h i c h a c o u r t i s s u e d a n

a m b i g u o u s d i s m i s s a l o r d e r w i t h o u t s t a t i n g i t s g r o u n d s o r r e a s o n i n g

. O n l y o n e

i s s u e w a s b e f

o r e t h e c o u r t

, a n d o n l y o n e i s s u e w a s d e c i d e d

.

W h i l e t h e s t a t e c o u r t d i d n o t d e c i d e t h e i s s u e o f w h e t h e r t h e a r b i t r a t i o n

See also Exhibit ors Poster Exch., I nc. v. Na t’l Scree n Serv. Corp., 421 F .2d 1313, 1319 2 9

(5th Cir. 1970) (“ I f a c laim require s elements 1, 2 and 3 f or re cover

y , summary

judgme nt is

proper if 2 is missi ng . But this would not give to a summary judgme nt based ther eon a pe rpetua l

cloak to for

bid inquiry

into 1 or 3, or both. This would distort the wholesome policy behind

collater al estoppel.” ); Gunnin v. Carlile, 25 S.E.2d 652, 653-54 (Ga . 1943) (holding that wher e

defe ndant answe red suit by both asserting title to land and deny ing a lleg ations as to timber

remova l, ge nera l verdict in def endant’ s favor

did not carr

y prec lusive eff

ect a s to issue of

defe ndant’s title to land, for it “doe s not appea r that the issue a s to tit le was ne cessa rily or

actua lly deter mined, and it was incumbe nt upon her to re move the unce rtainty and to show that

this iss ue wa s actua lly

deter mined in her fa

vor, bef ore she would be entitled to a ve rdict in the

instant case upon the theory of re s adjudicata

[si c] or estoppel”) ; Sumner v. Sumner, 197 S.E.

833, 834 (Ga . 1938) (sy llabus by the cour t) (“[T]here is an e stoppel by judgme nt only

as to such

matters within the scope of the pre vious pleading s as nec essar ily had to be a djudicated in orde r

for the pr evious judg ment to be re ndere d, or as to such ma tters within the scope of the pleading s

as mig ht or might not have been a djudicated, but which a re shown by

aliunde proof

to have be en

actua lly litigated a

nd deter mined.”); Hudg ins v. Baw tinhimer, 395 S.E.2d 909, 911 (Ga. Ct. App.

1990) (holding that court orde r dismissing petition for involuntary commitment without

specify ing r eason doe s not carr

y prec lusive eff

ect on issue of

whether commitment process wa s

defe ctive, as c ourt might ha ve found tha t dismi ssal was wa rra nted for othe r re asons, including

finding that involuntary

trea tment was not nee ded).

50a g r e e m e n t w o u l d h a v e b e e n e n f o r c e a b l e i n t h e c o u n t e r f a c t u a l w o r l d i n w h i c h t h e

d e f e n d a n t s d i d n o t c o m m i t d i s c o v e r y a b u s e s

, t h a t i s s u e d i d n o t n e e d t o b e d e c i d e d

,

b e c a u s e i t w a s i r r e l e v a n t

. T h e d e f e n d a n t s d i d c o m m i t d i s c o v e r y a b u s e s

. T h u s

, t h e

o n l y i s s u e t o b e d e c i d e d w a s w h e t h e r t h e a g r e e m e n t w a s e n f o r c e a b l e i n s p i t e o f t h e

d i s c o v e r y a b u s e s

. T h i s i s s u e t h e c o u r t e x p l i c i t l y a n d n e c e s s a r i l y d e c i d e d

.

7

. O n t h e M e r i t s

I t i s n o t e n t i r e l y c l e a r w h e t h e r G e o r g i a l a w r e q u i r e s a n “ o n t h e m e r i t s ”

i n q u i r y f o r p u r p o s e s o f c o l l a t e r a l e s t o p p e l

. N o n e t h e l e s s

, b e c a u s e t h e l a w i s 3 0

u n c l e a r

, a n d b e c a u s e t h e P e t i t i o n e r s o p p o s e d S t r o n g ’ s c o l l a t e r a l e s t o p p e l c l a i m

The ter m “on the mer its” sometimes appea rs in Geor g ia ca se law a s a collate ral 3 0

estoppel re quirement. E.g ., Body of Christ, 696 S.E.2d at 669 (requiring for c ollatera l estoppel

that “issue . . . had be en re solved on the merits in prior litiga tion”); Waldroup, 463 S.E.2d at 7

(“Collater al estoppel pre cludes the r e-a djudication of an issue tha t has previously been litig ated

and adjudicated on the mer its in another ac tion between the same pa rties or their pr ivies.”);

Powell v. Powell, 37 S.E.2d 191, 194 (Ga. 1946) (“ Under both [ res judica ta and c ollatera l

estoppel], in order for

the forme r dec ision to be conclusive, it must have bee n based, not mer ely

on purely technica l gr ounds, but at least in part on the me rits where under the pleading s they

wer e or c ould have be en involved.” ( quoting Sumner, 197 S.E. at 834) (alter ation added) ). Other

times it does not. E.g., Ke nt, 452 S.E.2d at 766 (“[C] ollatera l estoppel applies whe re a n issue of

fac t or law is ac tually

litigated a

nd deter mined by a valid judg ment, and the de termination is

essential to the judg ment.” (e mphasis omitt ed)) . There is also evidence that Geor g ia cour ts view

the “a ctually

litigated” and “ne cessa

rily decide d” re quirements of c ollatera l estoppel as alr eady

encompa ssing a

n espec ially

stringe nt “on the mer its” require ment. See, e.g ., Piedmont C otton

Mills, I nc. v. Woelper, 498 S.E.2d 255, 256 (G a. 1998) ( contra sting c laim prec lusion, which

require s that “merits we re or could have been de termined,” with collatera l estoppel, which

“applies only

to matters which we re dire ctly decide d in the former

action”) ; Waldroup, 463

S.E.2d at 8 (holding tha t prior judg ment did not collatera lly estop plaintiff’s subseque nt lawsuit

beca use, “[w]hil e [the previous] ruling wa s on the merits,” the r eleva nt issue was not “a ctually

litigated a nd decide d” in the first a ction); see g ener ally I n re G raha

m, 191 B.R. 489, 494-95

(B ankr. N .D. Ga. 1996) (stating that Geor g ia’s “a ctually . . . litigated a

nd deter mined”

require ment “implicit[ ly ]” encompasse s an “on the merits” inquiry ).

51s p e c i f

i c a l l y o n t h e b a s i s o f t h e “ o n t h e m e r i t s ” r e q u i r e m e n t

, w e w i l l a d d r e s s t h i s

r e q u i r e m e n t o u t o f a n a b u n d a n c e o f c a u t i o n a n d t r e a t i t a s a p r e r e q u i s i t e t o t h e

o p e r a t i o n o f c o l l a t e r a l e s t o p p e l

. C a s h A m e r i c a a r g u e d i n i t s b r i e f i n g t o t h i s C o u r t

t h a t t h e s t a t e

- c o u r t o r d e r “ i s n o t a f i n a l m e r i t s d e c i s i o n o n t h e e n f o r c e a b i l i t y o f t h e

a r b i t r a t i o n a g r e e m e n t

, [ s i c ] i n s t e a d i t o n l y s t r i k e s t h e d e f e n s e o f a r b i t r a t i o n

. ”

( P e t i t i o n e r s ’ M o o t n e s s R e s p

. a t 3

. ) T h u s

, C a s h A m e r i c a a s s e r t s

, t h e s t a t e

- c o u r t

o r d e r “ d o e s n o t p r e c l u d e a n o t h e r c o u r t f r o m c o n s i d e r i n g t h e m e r i t s o f t h e

a r b i t r a t i o n i s s u e o n t h e b a s i s o f e i t h e r r e s j u d i c a t a o r c o l l a t e r a l e s t o p p e l b e c a u s e i t

d i d n o t r e a c h t h e m e r i t s o f t h e a r b i t r a b i l i t y i s s u e

. ” ( I d

. ) W e a r e u n p e r s u a d e d

.

T h e G e o r g i a c a s e s a r e c l e a r t h a t c o u r t o r d e r s d i s m i s s i n g c l a i m s o r s t r i k i n g

p l e a d i n g s a s a s a n c t i o n f o r w i l l f u l d i s c o v e r y v i o l a t i o n s f u n c t i o n a s a n a d

j u d i c a t i o n

o n t h e m e r i t s a n d c a r r y r e s j u d i c a t a e f f e c t

. S e e B r a n t l e y v

. S p a r k s

, 3 0 6 S

. E

. 2 d 3 3 7

,

3 3 8 ( G a

. C t

. A p p

. 1 9 8 3 ) ( s a n c t i o n o f d i s m i s s a l a f t e r f i n d i n g o f w i l l f

u l v i o l a t i o n o f

d i s c o v e r y o r d e r o p e r a t e s a s a n a d j u d i c a t i o n o n t h e m e r i t s ) ; M o r t o n v

. R e t a i l C r e d i t

C o

. , 1 9 6 S

. E

. 2 d 9 0 2

, 9 0 2

- 0 3 ( G a

. C t

. A p p

. 1 9 7 3 ) ( h o l d i n g t h a t w h e r e d i s c o v e r y

v i o l a t i o n w a s w i l l f

u l

, s t a t u t o r y s a n c t i o n s o f d i s m i s s a l

, d e f a u l t

, o r s t r i k i n g o f

p l e a d i n g s o p e r a t e a s a d

j u d i c a t i o n o n t h e m e r i t s a n d c a r r y r e s j u d i c a t a e f f e c t ) ; c f

.

S e m t e k I n t ’ l I n c

. v

. L o c k h e e d M a r t i n C o r p

. , 5 3 1 U

. S

. 4 9 7

, 5 0 9 ( 2 0 0 1 ) ( s t a t i n g i n

d i c t a t h a t “ d i s m i s s a l s f

o r w i l l f u l v i o l a t i o n o f d i s c o v e r y o r d e r s ” s h o u l d b e a c c o r d e d

52“ c l a i m

- p r e c l u s i v e e f f e c t ” t o p r e s e r v e t h e r e n d e r i n g c o u r t ’ s “ i n t e r e s t i n t h e i n t e g r i t y

o f [ i t s ] o w n p r o c e s s e s ” )

.

G e o r g i a c a s e l a w h a s e x p l a i n e d t h a t t h e o n

- t h e

- m e r i t s r e q u i r e m e n t c a n b e

s a t i s f i e d e v e n i f t h e c o u r t d o e s n o t p a s s d i r e c t l y o n t h e s u b s t a n c e o f t h e c l a i m :

[ A ] n a d j u d i c a t i o n o n t h e m e r i t s d o e s n o t r e q u i r e t h a t t h e l i t i g a t i o n

s h o u l d b e d e t e r m i n e d o n t h e m e r i t s

, i n t h e m o r a l o r a b s t r a c t s e n s e o f

t h e s e w o r d s

. I t i s s u f

f i c i e n t t h a t t h e s t a t u s o f t h e a c t i o n w a s s u c h t h a t

t h e p a r t i e s m i g h t h a v e h a d t h e i r s u i t t h u s d i s p o s e d o f

, i f t h e y h a d

p r o p e r l y p r e s e n t e d a n d m a n a g e d t h e i r r e s p e c t i v e c a s e s

. T h u s

, i t i s

o n l y w h e r e t h e m e r i t s w e r e n o t a n d c o u l d n o t h a v e b e e n d e t e r m i n e d

u n d e r a p r o p e r p r e s e n t a t i o n a n d m a n a g e m e n t o f t h e c a s e t h a t r e s

j u d i c a t a i s n o t a v i a b l e d e f e n s e

. I f

, p u r s u a n t t o a n a p p r o p r i a t e

h a n d l i n g o f t h e c a s e

, t h e m e r i t s w e r e o r c o u l d h a v e b e e n d e t e r m i n e d

,

t h e n t h e d e f

e n s e i s v a l i d

.

S m i t h v

. A i r T o u c h C e l l u l a r o f G a

. , I n c

. , 5 3 4 S

. E

. 2 d 8 3 2

, 8 3 6 ( G a

. C t

. A p p

. 2 0 0 0 )

( q u o t i n g P i e d m o n t C o t t o n

, 4 9 8 S

. E

. 2 d a t 2 5 6 )

. T h u s

, i t i s c l e a r t h a t e v e n i f “ o n 3 1

The Sec ond Restatement of Judgments ha s simil arly explained that the term “on the 3 1

merits” does not ne cessa

rily mean that the c ourt has eva luated the substanc e of the claim,

beca use “[i] ncre asing ly , . . . by statute, rule, or

court de cision, judgme nts not passing dire ctly on

the substance of the c laim have c ome to opera te as a bar.” Restatement of Judgments § 19, c mt.

a. The authors explained the re asons for this deve lopment this way :

[C ]o n s id e r ations [of fairne ss and repose ] may impose [preclusive eff ect] even though

the substantive issues have not been tried, espec ially if the plaintiff has failed to avail

himself of op p o rt u n i ties to pursue his reme dies in the first proce eding

, or has

delibera tely

flouted orde rs of the c ourt.

The g ener al rule stated in thi s S ection require s that err ors underly ing a

judgme nt be corr ecte d on appea l or other available proce eding s to modify the

judgme nt or t o set it aside, and not made the basis for a second action on the s ame

claim.

I d.

53t h e m e r i t s ” a d j u d i c a t i o n i s a p r e r e q u i s i t e t o c o l l a t e r a l e s t o p p e l

, s u c h a r e q u i r e m e n t

i s s a t i s f i e d b y t h e s t a t e

- c o u r t o r d e r i n t h i s c a s e

. T h e s t a t e c o u r t s t r u c k t h e C a s h

A m e r i c a d e f

e n d a n t s ’ a r b i t r a t i o n d e f

e n s e s a s a s t a t u t o r i l y a u t h o r i z e d s a n c t i o n f o r

r e p e a t e d a n d f

l a g r a n t d i s c o v e r y v i o l a t i o n s

. T h e c o u r t s p e c i f i c a l l y f o u n d t h e

v i o l a t i o n s t o b e “ d e l i b e r a t e [ ] a n d w i l l f u l [ ]

. ” A n d t h e c o u r t d i d n o t s p e c i f y t h a t i t s

a d j u d i c a t i o n w a s n o t o n t h e m e r i t s

. S e e G a

. C o d e A n n

. § 9

- 1 1

- 4 1 ( b )

- ( c ) ( d i s m i s s a l

o f a c o u n t e r c l a i m o p e r a t e s a s a n a d j u d i c a t i o n o n t h e m e r i t s u n l e s s c o u r t i n i t s o r d e r

s p e c i f i e s o t h e r w i s e )

. W e r e t h e d i s t r i c t c o u r t t o o r d e r a r b i t r a t i o n i n t h i s c a s e i n s p i t e

o f t h e s t a t e

- c o u r t o r d e r

, i t w o u l d r e n d e r u t t e r l y n u g a t o r y t h e s t a t e c o u r t ’ s s a n c t i o n

- - a s a n c t i o n t h a t w a s u p h e l d o n a p p e a l a n d t h a t t h e c o u r t w a s e n t i t l e d b y l a w t o

i m p o s e

. S e e G a

. C o d e A n n

. § 9

- 1 1

- 3 7 ( b ) ( 2 )

.

I n s u m

, b e c a u s e C a s h A m e r i c a ’ s a r b i t r a t i o n d e f e n s e s w e r e s t r u c k b y t h e

G e o r g i a s t a t e c o u r t a s a s t a t u t o r i l y a u t h o r i z e d s a n c t i o n f o r t h e i r w i l l f

u l a n d

d e l i b e r a t e d i s c o v e r y a b u s e s

, C a s h A m e r i c a m a y n o t r e l i t i g a t e t h e i s s u e o f t h e

a r b i t r a t i o n c l a u s e ’ s e n f

o r c e a b i l i t y i n f

e d e r a l c o u r t

. 3 2

We acknowle dg e that this resolution cre ates a n anomalous re sult, insofar as the sa me 3 2

common nucleus of ope rative f act may be the subjec t of two separ ate pr ocee dings in two

separ ate f ora - - a state -cour

t lawsuit in Cobb C ounty , Geor g ia and a n arbitra tion procee ding in

Atlanta, Ge org ia. Howe ver, this re sult follows directly from the Supre me Court’s admonition

that judicial conce rns about “e conomy and ef ficienc y ” do not trump the importance of re solution

in the proper

forum. De an Witter Rey nolds, I nc. v. B y

rd, 470 U.S. 213, 217 (1985) ( quotation

omitted). As the Court has said, “[t]he Arbitration Act re quires district cour ts to compel

arbitra tion of pendent a

rbitrable c laims when one of the par ties files a motion to compel, eve n

wher e the r esult would be the possibly ineffic ient maintenanc e of se para te proc eeding s in

54I V

.

F o r t h e f o r e g o i n g r e a s o n s

, w e A F F I R M t h e d i s t r i c t c o u r t ’ s d i s m i s s a l o f t h e

F A A p e t i t i o n

, o n t h e a l t e r n a t i v e g r o u n d o f i s s u e p r e c l u s i o n

, a s t o C a s h A m e r i c a

F i n a n c i a l S e r v i c e s

, I n c

. , C a s h A m e r i c a I n t e r n a t i o n a l

, I n c

. , G e o r g i a C a s h A m e r i c a

,

I n c

. , a n d D a n i e l R

. F e e h a n

. H o w e v e r

, w e V A C A T E t h e o r d e r o f d i s m i s s a l a s t o

C o m m u n i t y S t a t e B a n k

, a n d R E M A N D t o t h e d i s t r i c t c o u r t t o c o n s i d e r i n t h e f i r s t

i n s t a n c e t h e m e r i t s o f t h e B a n k ’ s p e t i t i o n t o c o m p e l a r b i t r a t i o n

.

A F F I R M E D I N P A R T

, V A C A T E D I N P A R T

, A N D R E M A N D E D

.

differ ent forums.” I d. And a pa nel of this Circuit has since e x plained that “[t]he corollary is that

a cour t cannot shoehor

n pendent non- arbitra

ble claims into arbitra tion based on ‘its own views

of ec onomy

and ef ficienc y .’” Thoma s v. Carnival Corp., 573 F .3d 1113, 1120 (11th Cir. 2009)

(quoting Dea

n Wit ter, 470 U.S. at 217) ( emphasis in orig inal).

55