Court Opinion

ID: 2971409
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:34:40.998968+00
Date Added: 2024-06-11T08:37:26.282006
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
            Pursuant to Sixth Circuit Rule 206            2       Match-E-Be-Nash-She-Wish Band v.               No. 03-1267
   ELECTRONIC CITATION: 2004 FED App. 0300P (6th Cir.)            Kean-Argovitz Resorts, et al.
               File Name: 04a0300p.06
                                                          Before: GILMAN and COOK, Circuit Judges; CLELAND,
                                                                           District Judge.*
UNITED STATES COURT OF APPEALS
                                                                                _________________
              FOR THE SIXTH CIRCUIT
                _________________                                                    COUNSEL

MATCH -E-BE -NASH -SHE -         X                        ARGUED: Ronald S. Lederman, SULLIVAN, WARD,
WISH BAND OF                      -                       ASHER & PATTON, Southfield, Michigan, for Appellants.
                                  -                       Conly J. Schulte, MONTEAU & PEEBLES, Omaha,
POTTAWAT OMI INDIANS, a                                   Nebraska, for Appellee. ON BRIEF: Ronald S. Lederman,
                                  -   No. 03-1267
Federally Recognized Indian       -                       SULLIVAN, WARD, ASHER & PATTON, Southfield,
Tribe,                             >                      Michigan, for Appellants. Conly J. Schulte, Shilee T. Mullin,
                                  ,
            Plaintiff-Appellee, -                         MONTEAU & PEEBLES, Omaha, Nebraska, for Appellee.
                                  -                         GILMAN, J., delivered the opinion of the court, in which
           v.                     -                       COOK, J., joined. CLELAND, D. J. (pp. 13-17), delivered a
                                  -                       separate concurring opinion.
KEAN-ARGOVITZ RESORTS             -
                                  -                                             _________________
and KEAN-ARGOVITZ
                                  -
RESORTS, MICHIGAN , L.L.C.,       -                                                 OPINION
        Defendants-Appellants. -                                                _________________
                                  -
                                 N                          RONALD LEE GILMAN, Circuit Judge. In November of
       Appeal from the United States District Court       1998, the Match-E-Be-Nash-She-Wish Band of Pottawatomi
  for the Western District of Michigan at Grand Rapids.   Indians (the Tribe) entered into two agreements with Kean-
     No. 02-00194—Gordon J. Quist, District Judge.        Argovitz Resorts and Kean-Argovitz Resorts, Michigan,
                                                          L.L.C. (collectively KAR) relating to the development and
                Argued: June 15, 2004                     management of a proposed gaming facility in Michigan.
                                                          Before the agreements had been approved by the Chairman of
        Decided and Filed: September 8, 2004              the National Indian Gaming Commission (NIGC), the Tribe
                                                          unilaterally terminated its relationship with KAR. The Tribe
                                                          then filed this action in federal court, seeking both a

                                                              *
                                                               The Honorable Robert H. Cleland, United States District Judge for
                                                          the Eastern District of Michigan, sitting by designation.

                           1
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                        Kean-Argovitz Resorts, et al.                    Kean-Argovitz Resorts, et al.

declaration that the agreements are void and a permanent              enter into effect when executed and delivered by the
injunction to prevent KAR from attempting to enforce the              parties, and be enforceable between the parties regardless
arbitration clause contained in one of the agreements. KAR            of whether or not this Agreement or the Management
filed a counterclaim, seeking to compel the Tribe to submit to        Agreement is approved by the Chairperson of the NIGC.
arbitration. The district court concluded that the agreements
were void under federal law and accordingly granted                 In January of 2000, the Tribe unilaterally terminated its
summary judgment in favor of the Tribe. For the reasons set       agreements with KAR. Approximately one year later, KAR
forth below, we VACATE the judgment of the district court         submitted a demand for arbitration to the American
and REMAND the case with instructions to refer the case to        Arbitration Association and served a copy upon the Tribe.
arbitration.                                                      The Tribe refused to submit to arbitration on the ground that
                                                                  the entire Development Agreement, and therefore the
                    I. BACKGROUND                                 arbitration clause, is void under the Indian Gaming
                                                                  Regulatory Act of 1988 (IGRA), 25 U.S.C. §§ 2701-21,
A. Factual background                                             because the Agreement was never approved by the Chairman
                                                                  of NIGC. IGRA and its related regulations provide that any
  The Tribe is a federally recognized Indian tribe located in     Indian gaming management contract, or any agreement
the Western District of Michigan. It does not presently           collateral to a management contract, is void until approved by
occupy any land as part of a reservation. According to KAR,       the Chairman of NIGC. See 25 U.S.C. § 2711(a)(1) and (3);
the Tribe did not become federally recognized until August of     25 C.F.R. § 533.7.
1999.
                                                                  B. Procedural background
  In November of 1998, the Tribe and KAR entered into both
a Management Agreement and a Development Agreement                  In March of 2002, the Tribe filed this action in the district
relating to a proposed gaming facility that was to be located     court, seeking a declaratory judgment and injunctive relief.
on tribal lands in Michigan. Under the Development                KAR filed a counterclaim to require the Tribe to submit to
Agreement, KAR was obligated to make monthly advances to          arbitration. Both parties filed motions for summary
the Tribe and agreed to loan it as much as $100,000,000 for       judgment. The district court granted the Tribe’s motion and
the project. KAR advanced approximately $1,000,000 to the         denied KAR’s. This timely appeal by KAR followed.
Tribe between November of 1998 and January of 2000.
                                                                                          II. ANALYSIS
   The Development Agreement contains an arbitration clause,
which states that “[t]he parties agree that binding arbitration   A. Standard of review
. . . shall be the remedy for all disputes, controversies and
claims . . . arising out of any of these agreements.” Another       The Development Agreement in the present case involves
relevant provision of the Agreement states that                   interstate commerce and therefore falls within the ambit of the
                                                                  Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-14. “This court
  [t]his is intended to be a legally enforceable agreement,       reviews de novo a district court’s ruling on whether to compel
  independent of the Management Agreement, which shall            arbitration pursuant to the FAA.” Burden v. Check Into Cash,
No. 03-1267       Match-E-Be-Nash-She-Wish Band v.             5   6      Match-E-Be-Nash-She-Wish Band v.            No. 03-1267
                        Kean-Argovitz Resorts, et al.                     Kean-Argovitz Resorts, et al.

267 F.3d 483, 485 (6th Cir. 2001). “Under the FAA, a district            [I]f the claim is fraud in the inducement of the
court’s consideration of a motion to compel arbitration is               arbitration clause itself—an issue which goes to the
limited to determining whether the parties entered into a valid          ‘making’ of the agreement to arbitrate—the federal
agreement to arbitrate, and does not reach the merits of the             court may proceed to adjudicate it. But the statutory
parties’ claims.” Id.                                                    language [of the FAA] does not permit the federal
                                                                         court to consider claims of fraud in the inducement
B. Enforceability of the arbitration provision                           of the contract generally.
  In Great Earth Companies, Inc. v. Simons, 288 F.3d 878               Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388
(6th Cir. 2002), this court explained the application of Section       U.S. 395, 403-04, 87 S. Ct. 1801, 18 L. Ed. 2d 1270
4 of the FAA, 9 U.S.C. § 4, as follows:                                (1967). Once the district court determines that a valid
                                                                       agreement to arbitrate exists, challenges to other distinct
  Section 4 of the FAA sets forth the procedure to be                  parts of the contract are to be resolved by the arbitrator.
  followed by the district court when presented with a                 Id.
  petition to compel arbitration. That section provides, in
  relevant part, that                                              Great Earth Companies, 288 F.3d at 888-90.
    [a] party aggrieved by the . . . refusal of another to           Relying on Great Earth Companies and Prima Paint, KAR
    arbitrate under a written agreement for arbitration            contends that “Plaintiff never contested the validity of the
    may petition any United States district court . . . for        arbitration provision itself; the Tribe instead contested the
    an order directing that such arbitration proceed in            validity of the Development Agreement in its entirety. . . .
    the manner provided for in such agreement. . . . The           Applying controlling Supreme Court and Sixth Circuit
    court shall hear the parties, and upon being satisfied         authority, it was within the exclusive authority of the
    that the making of the agreement for arbitration or            arbitrator to resolve this issue.” The district court disagreed,
    the failure to comply therewith is not in issue, the           holding that the arbitration clause is unenforceable because
    court shall make an order directing the parties to             the Development Agreement is void under IGRA.
    proceed to arbitration in accordance with the terms
    of the agreement. . . . If the making of the                      We have found no federal case that has squarely addressed
    arbitration agreement . . . be in issue, the court shall       whether a court must enforce an arbitration clause that is part
    proceed summarily to the trial thereof. . . .                  of an agreement subject to IGRA that has not been approved
                                                                   by the Chairman of the NIGC. This court addressed an
                       *       *       *                           analogous set of facts, however, in Burden v. Check Into Cash
                                                                   of Kentucky, L.L.C., 267 F.3d 483 (6th Cir. 2001), where the
    The Supreme Court has explained that in deciding               plaintiffs claimed that Check Into Cash, a check-cashing
  whether a valid agreement to arbitrate exists, district          company, had violated both federal and Kentucky law by
  courts may consider only claims concerning the validity          lending money to hundreds of Kentucky consumers at
  of the arbitration clause itself, as opposed to challenges       usurious interest rates. Id. at 485-87. Check Into Cash
  to the validity of the contract as a whole:                      requested that the district court compel arbitration based upon
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                        Kean-Argovitz Resorts, et al.                      Kean-Argovitz Resorts, et al.

an arbitration clause contained in the loan agreements. Id. at          The operative facts in the present case are quite similar to
486-87. In response, the plaintiffs alleged that the arbitration     those in Burden. In both cases, the parties seeking to avoid
clause was unenforceable because the loan agreements were            arbitration contend that the arbitration clause is unenforceable
void ab initio. Check Into Cash was not licensed by the state,       because the agreement as a whole is void pursuant to a
contrary to Kentucky statutes that require finance companies         statute. As in Burden, the Tribe does not deny that it entered
to obtain a license from the state and declare that any loan         into the agreement in question. Nor does it claim that the
made by an unlicensed company is void. See Ky. Rev. Stat.            agreement was executed by someone who lacked signatory
§§ 288.420, 288.991(1).                                              power. Because the material facts of these cases are legally
                                                                     indistinguishable, Burden compels us to conclude that the
   The district court in Burden concluded that the plaintiffs’       Tribe’s allegation that the Development Agreement is void
allegation—that the loan agreements containing the                   under federal law “challenge[s] the substance, rather than the
arbitration clause were void ab initio—must be determined by         existence,” of the Development Agreement. The district court
a court rather than an arbitrator. 267 F.3d at 487. This court       therefore should have granted KAR’s motion to compel
vacated the judgment of the district court, reasoning as             arbitration.
follows:
                                                                        Our conclusion is consistent with the case of Bruce H. Lien
  Plaintiffs’ allegations primarily concern the substance of         v. Sokaogon Gaming Enterprise Corp. v. Tushie-Montgomery
  the loan agreements, which Plaintiffs then argue are               Assoc. Inc., 86 F.3d 656 (7th Cir. 1996), where the Seventh
  “void” under [Kentucky law]. However, . . . Plaintiffs[’]          Circuit considered whether a tribe’s agreement to an
  allegations . . . do not concern their failure to assent to        arbitration clause contained in a management contract
  the loan agreements, and do not concern signatory power.           constituted a waiver of sovereign immunity. In Sokaogon
  Accordingly, because Plaintiffs’ allegations . . . challenge       Gaming, the tribe contended that the entire contract, which
  the substance, rather than the existence, of the loan              was executed prior to the effective date of IGRA, was illegal
  agreements, we vacate the district court’s [decision that          because it had not been approved by the Bureau of Indian
  those allegations must be decided by the court rather than         Affairs (BIA) as required by pre-IGRA law. Id. at 658.
  the arbitrator].                                                   Before reaching the merits of the dispute, the court noted that
                                                                     “[a]lthough the arbitration clause is contained in a contract
Id. at 490. The case was then remanded for the district court        that the tribe contends is illegal, the tribe rightly does not
to consider several of the plaintiffs’ remaining arguments           argue that the illegality of the contract infects the arbitration
against the enforceability of the arbitration clause. Id. at 493     clause.” Id. at 659. This comment supports KAR’s position
(“[W]e vacate the district court’s order and remand for further      in the present case, despite the fact that it was not further
consideration of Defendants’ motion to compel arbitration in         developed because the parties, as the court conceded, did not
light of Plaintiffs’ allegations that the arbitration agreements     raise the issue. Id.; see also Iowa Mgmt. & Consultants, Inc.
are unenforceable on grounds that the agreements would               v. Sac & Fox Tribe, 656 N.W.2d 167, 172 n.1 (Iowa 2003)
impose burdensome costs, deny statutory rights, and                  (characterizing the statement in Sokaogon Gaming as a
constitute an uninformed waiver of jury trial rights.”).             suggestion rather than a holding).
No. 03-1267       Match-E-Be-Nash-She-Wish Band v.              9   10   Match-E-Be-Nash-She-Wish Band v.            No. 03-1267
                        Kean-Argovitz Resorts, et al.                    Kean-Argovitz Resorts, et al.

   We are cognizant of the fact that the Iowa Supreme Court         to act on behalf of the tribes. The Eighth Circuit stated that
reached a contrary result in Sac & Fox Tribe, holding that “if      “[t]his challenge to the document itself therefore calls into
the entire [management] agreement is invalid under federal          question all provisions contained therein (including
law [because of a lack of NIGC approval], this would also           provisions relating to arbitration, sovereign immunity, and
invalidate the provision in the agreement for arbitration of        federal district court jurisdiction).” Id. at 1417. Three
disputes.” 656 N.W.2d at 171. But the Iowa court’s entire           Affiliated Tribes is clearly distinguishable from the present
analysis of the issue consisted of the following statement in       case, however, because in that case the tribe argued that the
a footnote:                                                         contract was invalid because of a lack of signatory power. In
                                                                    that regard Three Affiliated Tribes is consistent with Burden,
  We note that the federal court in Sokaogon Gaming, 86             where this court recognized that an allegation of a lack of
  F.3d at 661, suggests that, under the holding of Prima            signatory power constitutes a challenge to the very existence
  Paint Corp. v. Flood & Conklin Manufacturing Co., 388             of the contract, which under Prima Paint must be resolved by
  U.S. 395, 87 S. Ct. 1801, 18 L. Ed. 2d 1270 (1967), a                the court rather than an arbitrator. 267 F.3d at 489-90. Here,
  finding of invalidity as to the main contract will not            by contrast, there is no question regarding the proper
  necessarily invalidate the arbitration clause. We do not          execution of the Development Agreement.
  believe that the Prima Paint decision supports that result
  in the present case. If the agreement was a management               The other federal case relied on by the Tribe is the Ninth
  contract, all provisions thereof, including the arbitration       Circuit’s decision in AK Management Co. v. San Manuel
  clause, required NIGC approval pursuant to 25 U.S.C.              Band of Mission Indians, 789 F.2d 785 (9th Cir. 1986), which
  § 2711.                                                           considered the enforceability of a pre-IGRA management
                                                                    contract that had not been approved by the BIA. Like IGRA,
Sac & Fox Tribe, 656 N.W.2d at 172 n.1.                             the relevant statute at that time provided that management
                                                                    contracts that had not received BIA approval were “null and
  With all due respect, we do not believe that the Iowa             void.” Id. at 786 n.1. The Ninth Circuit held that the district
Supreme Court persuasively distinguished Prima Paint. We            court had properly dismissed the complaint because “the
are bound, moreover, by our own decision in Burden                  waiver of sovereign immunity is clearly part of the
regardless of the contrary decision in Sac & Fox Tribe. See         Agreement, and is not operable except as part of that
Rule 206(c) of the Sixth Circuit Rules (“Reported panel             Agreement. Since the entire contract is inoperable without
opinions are binding on subsequent panels. Thus, no                 BIA approval, the waiver is inoperable and, therefore, the
subsequent panel overrules a published opinion of a previous        tribe remains immune from suit.” Id. at 789. The Ninth
panel. Court en banc consideration is required to overrule a        Circuit explained its reasoning as follows:
published opinion of the court.”).
                                                                      [The statute] explicitly provides that a contract is “null
  Nor are we persuaded by the two federal cases relied on by          and void” without written approval from the BIA.
the Tribe. One is Bruce H. Lien Co. v. Three Affiliated               Therefore it is logical to conclude that an agreement
Tribes, 93 F.3d 1412 (8th Cir. 1996), where the tribes                without BIA approval must be null and void in its
contended that a purported management contract was invalid            entirety. No part of it may be enforced or relied upon
because the contract was signed by a person without authority         unless and until BIA approval is given. BIA approval is
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                        Kean-Argovitz Resorts, et al.                   Kean-Argovitz Resorts, et al.

  an absolute prerequisite to the enforceability of the            delivered by the parties, and be enforceable between the
  contract. To give piecemeal effect to a contract as urged        parties regardless of whether or not this Agreement or the
  by AK, would hobble the statute. The plain words of              Management Agreement is approved by the Chairperson of
  [the statute] simply render this contract void in the            the NIGC.”
  absence of BIA approval. Since it is void, it cannot be
  relied upon to give rise to any obligation by the                  Under these circumstances, the Tribe cannot attack the
  Band. . . .                                                      validity of the arbitration clause simply by claiming that the
                                                                   entire agreement is too ephemeral to deserve recognition.
Id. (emphasis in original).                                        Both Prima Paint and Burden therefore require that the
                                                                   Agreement’s enforceability be determined in the first instance
  But AK Management is distinguishable from the present            by an arbitrator.
case because the management contract at issue there did not
contain an arbitration clause. Where a contract contains an                           III. CONCLUSION
arbitration clause, and the parties do not challenge either the
existence of the contract or the making of the clause, the           For all of the reasons set forth above, we VACATE the
controlling precedent of both the Supreme Court and this           judgment of the district court and REMAND the case with
court require that the validity of the contract be first           instructions to refer the case to arbitration.
determined by an arbitrator rather than by a district court.
Prima Paint, 388 U.S. at 403 (a “federal court [must] order
arbitration to proceed once it is satisfied that the making of
the agreement for arbitration or the failure to comply (with
the arbitration agreement) is not in issue”) (quotation marks
omitted); Burden, 267 F.3d at 490 (stating that arbitration is
appropriate where the claim challenges the substance of the
contract rather than its existence).
  We recognize that remanding this case so that it can be sent
to arbitration might seem like an inefficient result. IGRA,
after all, provides that any management contract or collateral
agreement not approved by the Chairman of the NIGC is
void. But the Tribe does not challenge either the making of
the arbitration clause or the existence of the contract.
Evidence of the parties’ intent to enter into a binding
agreement, moreover, is supplied by the fact that KAR has
advanced nearly $1,000,000 to the Tribe under the
Development Agreement and by the clause in the Agreement
that states that “[t]his is intended to be a legally enforceable
agreement . . . which shall enter into effect when executed and
No. 03-1267       Match-E-Be-Nash-She-Wish Band v.           13    14       Match-E-Be-Nash-She-Wish Band v.                  No. 03-1267
                        Kean-Argovitz Resorts, et al.                       Kean-Argovitz Resorts, et al.

                   ___________________                             plaintiffs in Burden and the Indian Tribe in this case, which
                                                                   allege that the entire contract is void under state or federal
                     CONCURRENCE                                   law, do not amount to void ab initio allegations.
                   ___________________
                                                                     The analysis in Burden, in my view, is incomplete and
  CLELAND, District Judge, CONCURRING. I am                        seems to be at odds with the conclusion ultimately reached in
compelled to agree that this case cannot legitimately be           that case. First, the court extensively discussed why it
distinguished from Burden v. Check Into Cash of Kentucky,          thought that the void/voidable distinction mattered for the
L.L.C., 267 F.3d 483 (6th Cir. 2001), and I note that the          severance doctrine, and stated that it tended to agree with
majority’s decision is written clearly and concisely to that       other circuits that have found that Prima Paint does not apply
end. I write separately only because I believe Burden defined      to allegations of nonexistent (i.e., void) contracts.1 It stated:
“void” too narrowly and consequently left a gap in the
discourse concerning the void/voidable distinction for               The void/voidable distinction is relevant for Prima Paint
purposes of the severance doctrine.                                  analysis because a void contract, unlike a voidable
                                                                     contract, was never a contract at all. Thus, a valid
  The plaintiffs in Burden challenged a contract where a state       arbitration agreement "cannot arise out of a broader
statute pronounced loan agreements made by unlicensed                contract if no broader contract ever existed." Sandvik,
lenders to be “void.” Similarly, our instant case involves a 220 F.3d at 108. Accordingly, Prima Paint "presumes an
challenge to a contract where a federal statute requires the         underlying, existent, agreement." Id. at 106.
Chairman of the National Indian Gaming Commission’s
signature on casino management agreements and in its               Burden, 267 F.3d at 488 (citing Sandvik AB v. Advent Int’l
absence holds any such contract “void.”                            Corp., 220 F.3d 99, 107 (3d Cir. 2000)). After discussing this
                                                                   circuit’s precedent, the court stated that it was inclined to
   In Burden, the court suggested that void, or void ab initio,    follow the reasoning of several sister circuits that have held
agreements should not be subject to the severance doctrine.        that Prima Paint does not apply to allegations of a
Burden, 267 F.3d at 488-89. In other words, if an entire           nonexistent (void) contract. Id. at 489 (“Indeed, if anything,
contract were deemed void, or void ab initio, the arbitration
clause could not be enforced and the district court could
                                                                        1
adjudicate the underlying claims.           Burden, however,             Under Prim a Paint, a court, rather than an arbitrator, can decide a
concluded that a voidness challenge to a contract based upon       claim o f fraud in the inducement, but only if the claim of fraud concerns
statutory authority (as in this case) should not be construed as   the inducement of the arbitration clause itself, not the inducement of the
                                                                   contract as a whole. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388
a void ab initio allegation. Rather, Burden held a void ab         U.S. 395, 403 -04 (1967). T he Court in Prima Paint found that arbitration
initio challenge requires more than an allegation of a statutory   clauses were "separable" from the contracts in which they were included,
violation. Id. at 490. According to Burden, void ab initio         and that "a broad arbitration clause will be held to encompass arbitration
allegations, for purposes of the severance doctrine, must be       of the claim that the contract itself was induced from fraud." Id. at 402.
based upon one of only two challenges: (1) allegations of a        "If the arbitration clause is not at issue, then the arbitrator will decide
                                                                   challenges to the contract containing the arbitration clause." C.B.S.
failure to assent to the contract, and (2) challenges to           Employees Fed. Credit Union v. Donaldson, Lufkin & Jenrette Sec. Co rp.,
signatory power. Accordingly, the challenge raised by the          912 F.2d 1563, 15 67 (6th Cir. 1990).
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                        Kean-Argovitz Resorts, et al.                       Kean-Argovitz Resorts, et al.

we are inclined to find that Prima Paint supports, rather than     (perhaps unintentionally) determined that only those
prohibits, excluding nonexistent contracts from the                challenges that met the narrow void ab initio definition set
severability doctrine, because an allegation of a void contract    forth therein could be adjudicated by the court. I can find no
raises exactly the same question as an allegation of a             principled distinction between contracts void and contracts
fraudulently induced arbitration agreement: whether the            void ab initio.2 The Burden court, therefore, essentially
arbitrator has any power at all.”). The court approvingly          rewrote the definition of void. According to Burden, a void,
quoted the Seventh Circuit’s common sense approach: “No            or nonexistent contract entails only those agreements where
contract, no power.” Id. (citing Sphere Drake Ins. Ltd. v. All     one party lacked assent or where the signatory power is
Am. Ins. Co., 256 F.3d 587, 591 (7th Cir. 2001)).                  challenged. This too-narrow definition of void (or void ab
                                                                   initio, it makes no difference), runs contrary to the clear-
   But then, despite its apparent endorsement of the               headed and, in my view, correct obiter dicta earlier in Burden
void/voidable distinction, the Burden court took a sharp turn,     discussing the unenforceable nature of void contracts,
leaving that distinction by the wayside, and went on to            including the arbitration provisions contained in such
conclude without any substantial explanation that the              contracts. Id. at 488-89.
void/voidable principles just discussed did not apply to the
contract at issue simply because it had been challenged as            Void and void ab initio agreements, as opposed to voidable
void under a state statute. The court cited a Ninth Circuit case   agreements, are agreements that never existed. Confining
and discussed its general illustrations of agreements that         void (or void ab initio) contracts to a narrow set of
Circuit had found to be void ab initio. The Burden court           circumstances, as the court did in Burden, abrogates long-
concluded that void ab initio challenges must involve              standing principles defining void contracts and holds as of no
allegations of either a failure to assent or an absence of         effect any legislature’s decision to deem certain agreements
signatory power. Id. at 490 (discussing Three Valleys Mun.         void when they fail to comply with statutory requirements,
Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136 (9th Cir.          such as those found in the Indian Gaming Regulatory Act. In
1991)). The Burden court found that the challenge presented        this case, it allows a portion of a nonexistent contract to be
to the contract’s existence did not constitute a void ab initio    animated and enforced in direct contravention of an entirely
challenge (as that concept was, in Burden, now defined). To        clear federal statute.
the Burden court, it followed directly from that conclusion
that the contract must be subject to the severability doctrine.      The Federal Arbitration Act’s policy favoring arbitration
                                                                   cannot compel an agreement to arbitrate where no contract
  Unfortunately, the Burden court said only what the               exists. A void contract is simply nonexistent and a provision
challenge was not, and not what it was. It was not either of       of a contract that does not exist should not be separately
the two varieties of “void ab initio” illustrated in Three         enforceable. This includes an arbitration clause. Mitsubishi
Valleys; it was, however, a challenge based precisely upon         Motors Corp. v. Soler Chrysler Plymouth, Inc., 473 U.S. 614,
something else entirely: statutory voidness. The question not      625 (1985) ("[L]iberal federal policy favoring arbitration
addressed was whether an arbitration clause in a statutorily
void contract must be enforced; it was as though there existed
an underlying assumption that a claim of statutory voidness             2
                                                                         A review of written decisions across all federal courts shows that
was per se illegitimate. The Burden court therefore implicitly     courts consistently use the terms interchangeab ly.
No. 03-1267       Match-E-Be-Nash-She-Wish Band v.           17
                        Kean-Argovitz Resorts, et al.

agreements . . . is at bottom a policy guaranteeing the
enforcement of private contractual arrangements.") (citation
and quotation omitted).
  Constrained as we are by the Burden court’s narrow
definition of void, which I believe should be reexamined at
some point by this Circuit, I concur in the majority’s decision.