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Reversing a trial court's denial of a motion to compel arbitration, the Missouri Court of Appeals held that challenges to the underlying contract's validity, rather than to the arbitration agreement itself, were for the arbitrator to decide.
In Kirby v. Grand Crowne Travel Network, LLC, No 28091, 2007 WL 1732761 (Mo. Ct. App. June 18, 2007), Kirby sued Grand Crowne asserting that Grand Crowne persuaded Kirby to purchase a $3,389 membership through high pressure tactics, misrepresentation, and other practices prohibited by the Missouri Merchandise Practices Act (MMPA). Kirby sought to cancel the contract, recover $3,389 in actual damages, punitive damages, and attorney fees.
Grand Crowne moved to compel arbitration. The trial court denied the motion and Grand Crowne appealed.
On appeal, the Court held that the parties' dispute was subject to arbitration. Under Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006), the arbitrator must determine a contract's validity in the first instance, unless the challenge is to the arbitration agreement itself. Kirby's petition challenged the underlying contract by requesting that it be cancelled. Moreover, Kirby's petition made no mention of the arbitration agreement.
The Court rejected Kirby's argument that the MMPA renders the contract invalid and by extension the arbitration agreement as well, since the Supreme Court in Buckeye rejected the identical argument. Finally, the Court concluded that the FAA preempts the MMPA, such that the arbitrator had to decide Kirby's allegation that Grand Crowne violated the MMPA.
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