DAI and Lombardi unsuccessfully argued that § 27-5-114(4) was preempted by § 2 of the Federal Arbitration Act (FAA), which declares written provisions for arbitration "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." In arguing for preemption, DAI and Lombardi dominantly relied on Southland Corp. v. Keating, 465 U.S. 1, and Perry v. Thomas, 482 U.S. 483, in which this Court established that "state law . . . is applicable if that law arose to govern issues concerning the validity, revocability, and enforceability of contracts generally," but not if the state-law principle "takes its meaning precisely from the fact that a contract to arbitrate is at issue." Id., at 493, n. 9 (emphasis added).
9 U.S.C. § 2 (emphasis added). Reasoning that the Act "declares that state law may be applied ` if that law arose to govern issues concerning the validity, revocability, and enforceability of contracts generally,'" the Court held that "generally applicable contract defenses, such as fraud, duress or unconscionability, may be applied to invalidate arbitration agreements without contravening" the FAA, but that state laws applicable only to arbitration provisions may not. 517 U.S. at 686-87, 116 S.Ct. 1652 (quoting Perry v. Thomas, 482 U.S. 483, 492 n. 9 (1987)) (other citations omitted). Because the Montana statute at issue imposed on arbitration agreements a special requirement "not applicable to contracts generally," it was preempted by the FAA.
. . . Perry v. Thomas, 482 U.S. 483, 492 n. 9, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987) (citations omitted). In Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996), the Court noted that generally applicable contract defenses under state law, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening section 2 of the FAA. Accord Orkin Exterminating Co. v. Petsch, 872 So.2d 259, 264 (Fla. 2d DCA), review denied, 884 So.2d 23 (Fla. 2004); Powertel, Inc. v. Bexley, 743 So.2d 570, 573-74 (Fla. 1st DCA 1999).
We agree. Carter cannot be reconciled with Perry v. Thomas, 482 U.S. 483, 96 L. Ed. 2d 426, 107 S. Ct. 2520 (1987), in which the United States Supreme Court held that the FAA preempts state statutes that require "that litigants be provided a judicial forum for resolving *** disputes." Perry, 482 U.S. at 491, 96 L. Ed. 2d at 436, 107 S. Ct. at 2526.
We agree. Carter cannot be reconciled with Perry v. Thomas, 482 U.S. 483, 96 L. Ed. 2d 426, 107 S. Ct. 2520 (1987), in which the United States Supreme Court held that the FAA preempts state statutes that require "that litigants be provided a judicial forum for resolving * * * disputes." Perry, 482 U.S. at 491, 96 L. Ed. 2d at 436, 107 S. Ct. at 2526.
The doctrine of unconscionability cannot be used, however, in a way that discriminates against arbitration agreements. In Perry v. Thomas (1987),482 U.S. 483, 107 S.Ct. 2520, 96 L.Ed.2d 426 ( Perry ), for example, the court held that section 229, which provides in pertinent part that “[a]ctions to enforce the provisions of this article for the collection of due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate,” was preempted by the FAA in all cases in which the FAA applies. The court concluded that the requirement under section 229 “that litigants be provided a judicial forum for resolving wage disputes” stood in direct conflict with the FAA. ( Perry, supra, at p. 491, 107 S.Ct. 2520.)
State law may also be preempted "when it actually conflicts with federal law." Schneidewind, 108 S.Ct. at 1150; see also Perry v. Thomas, 482 U.S. 483, 491, 107 S.Ct. 2520, 2526, 96 L.Ed.2d 426 (1987). In this respect, substance takes precedence over form; a direct, facial contradiction between state and federal law is not necessary to catalyze an "actual conflict" within the doctrinal parameters of the Supremacy Clause.
In Perry v. Thomas , for example, the Supreme Court held that Section 2 of the FAA preempted a California statute that allowed actions for the collection of wages to be maintained even in the face of a private arbitration agreement. See 482 U.S. 483, 484, 490–91, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987). And in Doctor's Associates, Inc. v. Casarotto , the Court held that Section 2 preempted a Montana statute that imposed special notice requirements "specifically and solely" on "contracts ‘subject to arbitration.’ "
This saving clause permits agreements to arbitrate to be invalidated by "generally applicable contract defenses, such as fraud, duress, or unconscionability," but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue. Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996) ; see also Perry v. Thomas, 482 U.S. 483, 492–493, n. 9, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987). The question in this case is whether § 2 preempts California's rule classifying most collective-arbitration waivers in consumer contracts as unconscionable.
To determine whether the parties have agreed to arbitrate, we apply "ordinary state-law principles that govern the formation of contracts." First Options, 514 U.S. at 944, 115 S.Ct. at 1924; Perry v. Thomas, 482 U.S. 483, 492 n. 9, 107 S.Ct. 2520, 2527 n. 9, 96 L.Ed.2d 426 (1987); see Deutz AG, 270 F.3d at 154-55 (explaining that principles of First Options apply in international as well as domestic arbitration context). These principles must govern contracts generally; a state-law principle that takes its meaning from the fact that an agreement to arbitrate is at issue does not comport with section 2 of the FAA and therefore is preempted. Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 686-88, 116 S.Ct. 1652, 1655-56, 134 L.Ed.2d 902 (1996) (citing Perry, 482 U.S. at 492 n. 9, 107 S.Ct. at 2527 n. 9); Gay v. CreditInform, 511 F.3d 369, 394 (3d Cir. 2007).