                                In the

United States Court of Appeals
                 For the Seventh Circuit

No. 13-1262

JOYCE G REEN,
                                                      Plaintiff-Appellee,
                                    v.

U.S. C ASH A DVANCE ILLINOIS, LLC, and
T ITLE L OAN C OMPANY, both doing business as
The Loan Machine,
                                   Defendants-Appellants.


               Appeal from the United States District Court
          for the Northern District of Illinois, Eastern Division.
               No. 12 C 8079—Joan B. Gottschall, Judge.



          A RGUED JUNE 5, 2013—D ECIDED JULY 30, 2013




 Before EASTERBROOK, Chief                Judge,    and     BAUER    and
HAMILTON, Circuit Judges.
  E ASTERBROOK, Chief Judge. Joyce Green contends that
U.S. Cash Advance, from which she borrowed money,
misstated the loan’s annual percentage rate and so
violated the Truth in Lending Act, 15 U.S.C. §1606. The
lender asked the district judge to stay the litigation
and direct arbitration under ¶17 of the loan agreement:
2                                             No. 13-1262

    ARBITRATION: All disputes, claims or contro-
    versies between the parties of this Agreement,
    including all disputes, claims or controversies
    arising from or relating to this Agreement, no
    matter by whom or against whom, including the
    validity of this Agreement and the obligations
    and scope of the arbitration clause, shall be re-
    solved by binding arbitration by one arbitrator
    by and under the Code of Procedure of the Na-
    tional Arbitration Forum. This arbitration agree-
    ment is made pursuant to a transaction in inter-
    state commerce, and shall be governed by the
    Federal Arbitration Act at 9 U.S.C. Section 1. The
    parties agree and understand that they choose
    arbitration instead of litigation to resolve dis-
    putes. The parties understand that they have
    a right or opportunity to litigate disputes
    through a court, but that they prefer to resolve
    their disputes through arbitration, except as pro-
    vided herein. THE PARTIES WOULD HAVE
    HAD A RIGHT OR OPPORTUNITY TO
    LITIGATE DISPUTES THROUGH A COURT
    BUT HAVE AGREED TO RESOLVE DISPUTES
    THROUGH BINDING ARBITRATION, EXCEPT
    THAT THE TITLE LENDER MAY CHOOSE AT
    TITLE LENDER’S SOLE OPTION TO SEEK COL-
    LECTION OF PAYMENT(S) DUE IN COURT
    RATHER THAN THROUGH ARBITRATION.
    THE PARTIES VOLUNTARILY AND KNOW-
    INGLY WAIVE ANY RIGHT THEY HAVE TO A
    JURY TRIAL EITHER PURSUANT TO ARBITRA-
No. 13-1262                                                    3

    TION UNDER THIS CLAUSE OR PURSUANT
    TO A COURT ACTION BY TITLE LENDER. The
    parties agree and understand that all other laws
    and actions, including, but not limited to, all
    contract, tort and property disputes will be
    subject to binding arbitration in accord with this
    Agreement.
The agreement was signed on May 8, 2012. But the Na-
tional Arbitration Forum has not been accepting new
consumer cases for arbitration since July 2009, when it
settled a suit by Minnesota’s Attorney General, who
believed that the Forum was biased in merchants’ fa-
vor. The lender asked the district court to appoint a
substitute arbitrator under 9 U.S.C. §5. The judge
declined, stating that the identity of the Forum as the
arbitrator is “an integral part of the agreement”, that ¶17
is void, and that the dispute will be resolved on the
merits in court. 2013 U.S. Dist. L EXIS 11346 (N.D. Ill. Jan. 25,
2013). The lender has taken an interlocutory appeal, as
9 U.S.C. §16(a)(1)(B) permits.
  The district judge’s belief that ¶17 requires the arbitra-
tion to be conducted by the Forum departs from its lan-
guage, which says that any dispute “shall be resolved
by binding arbitration by one arbitrator by and under
the Code of Procedure of the National Arbitration Fo-
rum.” (Emphasis added.) The agreement calls for use of
the Forum’s Code of Procedure, not for the Forum itself
to conduct the proceedings. If ¶17 were designed to
require arbitration to be conducted by the Forum ex-
clusively, the reference to its Code would be surplusage;
4                                               No. 13-1262

the only reason to refer to the Code is to create the possi-
bility of arbitration outside the Forum’s auspices, but
using its rules of procedure.
   Green observes that Rule 1.A of the Code includes
this language: “This Code shall be administered only
by the National Arbitration Forum or by any entity or
individual providing administrative services by agree-
ment with the National Arbitration Forum.” Rule 48.C
qualifies this, however: “In the event a court of
competent jurisdiction shall find any portion of this
Code … to be in violation of the law or otherwise unen-
forceable, that portion shall not be effective and the
remainder of the Code shall remain effective.” Rule 48.D
continues: “If Parties are denied the opportunity to arbi-
trate a dispute, controversy or Claim before the Forum,
the Parties may seek legal and other remedies in accord
with applicable law.” One would suppose that 9 U.S.C. §5
is such an “applicable law.”
  Rule 1.A is “unenforceable” in light of the Forum’s
decision to cease conducting arbitrations. What’s more,
no author can control how or by whom a written work is
used. Copyright law allows owners to decide how to
use the texts; a declaration at the beginning of a detec-
tive novel that the reader must follow the text consecu-
tively would not prevent the reader from skipping to
the end to learn whodunit. The list of exclusive rights,
17 U.S.C. §106, does not include a right to control how
the owner of a copy uses the information it contains. Cf.
Baker v. Selden, 101 U.S. 99 (1879) (despite the author’s
prohibition, the buyer of a book may make and sell
No. 13-1262                                               5

forms that implement the book’s ideas); American Dental
Association v. Delta Dental Plans Association, 126 F.3d 977
(7th Cir. 1997). Patent law allows a proprietor to con-
trol how a patented article is used; with the exception of
the rights in §106, copyright law does not. The Forum
does not require buyers to sign contracts promising to
use the Code in whole, or not at all. Compare ProCD,
Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996). So the
exclusivity claim in Rule 1.A is not enforceable, and
an agreement to conduct arbitration under the Forum’s
Code, with the Forum itself on the sidelines, is valid.
Rules 48.C and 48.D say as much. All that remains is
the selection of an arbitrator, and a district court can
use §5 to make the appointment.
   Suppose this is wrong and that an arbitrator is for-
bidden to use the Forum’s Code of Procedure but
must employ different rules. Would that affect the desir-
ability of arbitration, from either a lender’s perspective
or a customer’s? If, as the district judge thought, the
designation of the Forum (or at least of its Code) is “inte-
gral” to the agreement, this implies a belief that the
customer, the lender, or both would rather litigate than
arbitrate under any other rules or in any other forum.
Does that belief have any support? When the Forum
stopped accepting arbitrations, did any merchant revise
its contracts to eliminate the arbitration clause? Has
any customer insisted on the Forum as a condition of
agreeing to arbitration? The district court did not
identify anyone, ever, for whom the answer has been “the
National Arbitration Forum or no arbitration at all.”
6                                               No. 13-1262

  Two courts of appeals have held that the identity of
the Forum as arbitrator is not “integral” to arbitration
agreements and that §5 may be used to appoint a sub-
stitute. Kahn v. Dell, Inc., 669 F.3d 350 (3d Cir. 2012);
Pendergast v. Sprint Nextel Corp., 691 F.3d 1224, 1236 n.13
(11th Cir. 2012); Brown v. ITT Consumer Financial Corp.,
211 F.3d 1217, 1222 (11th Cir. 2000). The Supreme
Court must have assumed this in CompuCredit Corp. v.
Greenwood, 132 S. Ct. 665 (2012), which held that claims
under the Credit Repair Organizations Act are arbitrable.
The agreement in that case specified use of the Forum,
see id. at 677 n.2 (Ginsburg, J., dissenting), yet the Court
saw no obstacle to enforcing the arbitration clause.
We grant that Ranzy v. Tijerina, 393 Fed. App’x 174 (5th
Cir. 2010), deems designation of the Forum “important”
to arbitration and makes an agreement unenforceable
once the Forum becomes unavailable, but Ranzy is not
precedential. The decisions of the third and eleventh
circuits, and the assumption of the Supreme Court,
deserve greater weight.
  Ranzy relied on In re Salomon Inc. Shareholders’ Derivative
Litigation, 68 F.3d 554 (2d Cir. 1995). The agreement in
that case named the New York Stock Exchange as the
exclusive forum for private dispute resolution. The Ex-
change’s rules gave it discretion whether to hear a
dispute or send the parties to court. The Exchange’s
Secretary thought that litigation would be preferable
(the dispute arose from allegations that traders had
rigged the trading price of Treasury securities), and the
Exchange’s Board agreed. After the Exchange returned
the case to court, the district judge declined to appoint
No. 13-1262                                             7

a substitute arbitrator under §5. The second circuit af-
firmed, observing among other things that the parties
had bargained not only for the Stock Exchange as the
sole private forum but also for a procedure under
which the Exchange could decide that litigation
would be preferable. To use §5 to appoint a substitute
arbitrator would be to defeat both aspects of the con-
tractual choice and override the chosen arbitrator’s deci-
sion. Paragraph 17 of the agreement between Green
and U.S. Cash Advance differs in both respects that the
second circuit thought important. It does not name
the Forum as an “exclusive” private adjudicator, and it
does not refer the dispute to a body that had, and used,
discretion to send it back to court.
  Salomon implemented the parties’ agreement that the
chosen arbitrator may rule in favor of litigation. Green
wants us to defeat her agreement with the lender—for
that agreement conclusively chooses private dispute
resolution. We are skeptical of decisions that allow a
court to declare a particular aspect of an arbitration
clause “integral” and on that account scuttle arbitra-
tion itself. Section 5 reads:
   If in the agreement provision be made for a
   method of naming or appointing an arbitrator or
   arbitrators or an umpire, such method shall be
   followed; but if no method be provided therein, or
   if a method be provided and any party thereto
   shall fail to avail himself of such method, or if
   for any other reason there shall be a lapse in the
   naming of an arbitrator or arbitrators or umpire,
   or in filling a vacancy, then upon the application
8                                                No. 13-1262

    of either party to the controversy the court shall
    designate and appoint an arbitrator or arbitrators
    or umpire, as the case may require, who
    shall act under the said agreement with the
    same force and effect as if he or they had been
    specifically named therein; and unless other-
    wise provided in the agreement the arbitration
    shall be by a single arbitrator.
This tells us that arbitration clauses remain enforceable
if for “any” reason there is “a lapse in the naming of an
arbitrator”. When a court declares that one or another
part of an arbitration clause is “integral” and that the
clause is therefore unenforceable as a matter of federal
common law, it is effectively disagreeing with Congress,
which provided that a judge can appoint an arbitrator
when for “any” reason something has gone wrong.
Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576
(2008), tells courts not to add to, or depart from, the
standards in the Federal Arbitration Act. An “integral
part” proviso to §5 sounds like the sort of addendum
that Hall Street forbids.
  Section 2 of the Arbitration Act could provide a better
foundation for an “integral part” escape hatch. Section 2
says that arbitration agreements are enforceable “save
upon such grounds as exist at law or in equity for the
revocation of any contract.” This includes all general
principles of state law, though not any arbitration-
specific doctrines. See, e.g., Marmet Health Care Center, Inc.
v. Brown, 132 S. Ct. 1201 (2012); AT&T Mobility LLC v.
Concepcion, 131 S. Ct. 1740 (2011). So if an error—
No. 13-1262                                                 9

such as the parties’ mutual, but mistaken, belief that
the National Arbitration Forum was available—would
permit revocation of the contract under ordinary state-
law principles, the district court could declare the con-
tract as a whole unenforceable. But neither side has
asked for that relief or even contended that it would
be possible under state law. The identity of the arbitrator
is not so important that the whole contract is vitiated.
Nor does either side contend that a mutual mistake of
fact allows ¶17 to be excised as a matter of general
contract law.
  The origin of the “integral part” approach appears to
be dictum in Zechman v. Merrill Lynch, Pierce, Fenner &
Smith, Inc., 742 F. Supp. 1359 (N.D. Ill. 1990). We cannot
find an earlier use of the word “integral” in connection
with §5 of the Federal Arbitration Act. In the course
of granting an employer’s motion to arbitrate a dispute,
the district judge observed in passing that the choice of
a particular forum was not “integral” to the parties’
bargain. The opinion did not say why an affirmative
answer would matter or give any legal reason for
asking the question, though it did cite National Iranian
Oil Co. v. Ashland Oil Co., 817 F.2d 326, 328 (5th Cir. 1987),
which had asked whether a particular forum was an
“essential part of the [parties’] bargain.” The fifth
circuit did not discuss §5 (National Iranian Oil con-
cerned forum selection, not the availability of the par-
ties’ chosen arbitrator) or specify the provenance
of the “essential part” inquiry, though by citing the Re-
statement of Contracts and its doctrine of severability it
implied a source in common law. In the fashion of a
10                                                  No. 13-1262

rumor chain, later decisions picked up on and elaborated
the language of these two decisions. Today opinions
such as Kahn and Ranzy proceed as if it were an
established rule of law that §5 cannot be used to
appoint a substitute arbitrator when the contractual
designation was an “integral part” of the bargain, and
they proceed to disagree about whether a given designa-
tion is “integral.”
  As far as we can tell, no court has ever explained
what part of the text or background of the Federal Ar-
bitration Act requires, or even authorizes, such an ap-
proach. In recent years the Supreme Court has insisted
that the Act not be added to in a way that overrides
contracts to resolve disputes by arbitration. American
Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (2013),
is the most recent in this line of decisions. The Court
observed in American Express (id. at 2311–12) that adding
requirements to the Act can prevent arbitration from
being a fast and economical process. That’s true of an
“integral part” inquiry. How could a district judge tell
what is “integral” without a trial at which parties testify
about what was important to them and lawyers present
data about questions such as whether consumers or
businesses shifted from arbitration to litigation when
the Forum stopped accepting new consumer disputes
for resolution? The process would be lengthy, expen-
sive, and inconclusive to boot.
  Instead of asking whether one or another feature is
“integral,” a court could approach this from a different
direction and assume that a reference to an unavailable
No. 13-1262                                             11

means of arbitration is equivalent to leaving the issue
open. What if an arbitration clause were shorn of de-
tails? What if it did not specify how many arbitrators,
what forum, or any other administrative matters?
Suppose ¶17 read, in full: “Any disputes arising out
of this contract will be arbitrated.” Could a court then
use §5 to supply particulars? If it could, then it would
be hard to see any problem using §5 in the dispute
between Green and U.S. Cash Advance.
  The answer is yes. Section 5 applies “if no method be
provided” in the contract—that is, if the parties use the
sort of detail-free clause we have just imagined. We
held in Schulze and Burch Biscuit Co v. Tree Top, Inc., 831
F.2d 709, 715–16 (7th Cir. 1987), that a clause providing
that “all disputes under this transaction shall be
arbitrated in the usual manner” could be implemented
through judicial orders under §5 even though the
parties had not established any “usual manner.” Other
circuits likewise have used §5 to complete detail-free
arbitration clauses. See, e.g., Bethlehem Mines Corp. v.
United Mine Workers, 494 F.2d 726, 730 (3d Cir. 1974);
Deaton Truck Line, Inc. v. Local Union 612, 314 F.2d 418,
421 (5th Cir. 1962); Plumbing and Pipefitting Association
v. Bechtel Construction Co., 128 F.3d 1318, 1320–24 (9th
Cir. 1997); Blinco v. Green Tree Servicing LLC, 400 F.3d
1308, 1310–13 (11th Cir. 2005).
  Paragraph 17 makes one thing clear: These parties
selected private dispute resolution. Courts should not use
uncertainty in just how that would be accomplished
to defeat the evident choice. Section 5 allows judges to
12                                              No. 13-1262

supply details in order to make arbitration work. The
district judge must appoint an arbitrator, who will
resolve this dispute using the procedures in the National
Arbitration Forum’s Code of Procedure.
                                 V ACATED AND R EMANDED




  H AMILTON, Circuit Judge, dissenting. Despite the surface
simplicity of its logic, the majority has actually made
an extraordinary effort to rescue the payday lender-
defendant from its own folly, or perhaps its own fraud.
Because the district court correctly denied the motion
to compel arbitration, I respectfully dissent.
  Arbitration is at bottom a matter of contract. E.g., Ameri-
can Express Co. v. Italian Colors Restaurant, 133 S. Ct.
2304, 2309 (2013); Rent-A-Center, West, Inc. v. Jackson, 561
U.S. ___, ___, 130 S. Ct. 2772, 2776 (2010). The Supreme
Court has instructed that “the FAA’s proarbitration
policy does not operate without regard to the wishes of
the contracting parties.” Mastrobuono v. Shearson Lehman
Hutton, Inc., 514 U.S. 52, 57 (1995). Yet the majority has
deconstructed and rebuilt the parties’ contract and now
imposes on plaintiff Green a requirement to arbitrate
that bears little resemblance in substance to the
underlying contract the parties actually signed. Along the
No. 13-1262                                                  13

way, the majority even instructs district judges to fill in
all the missing terms when a contract says merely:
“Any disputes arising out of this contract will be arbi-
trated.” Slip op. at 11. That is akin to enforcing a contract
to sell “some quantity” of “some goods” at “some price.”
  The majority’s reasoning departs from the con-
tractual foundation of arbitration. It puts courts in the
business of crafting new arbitration agreements for
parties who failed to come to terms regarding the
most basic elements of an enforceable arbitration agree-
ment. Section 5 of the Federal Arbitration Act need
not and should not be read to authorize such a
wholesale re-write of the parties’ contract. It certainly
should not be read to rescue an arbitration clause on
behalf of the clause’s author when the author knew or
should have known that its designated arbitrator was
unavailable. We should instead follow the reasoning
and holding of the Second Circuit in In re Salomon Inc.
Shareholders’ Derivative Litigation, 68 F.3d 554 (2d Cir. 1995),
and leave the parties to the court system when their
arbitration agreement fails as utterly as this one does.
  To explain these conclusions, Part I reviews the
unusual facts underlying this appeal, which appear to be
unprecedented in federal appellate cases on section 5.
Part II turns to the majority’s principal theory and
explains how that theory strays so far from the terms of
the parties’ arbitration agreement and from the existing
appellate case law. Part III explains the principal flaws
in the majority’s broad dictum for salvaging impossibly
vague arbitration agreements.
14                                              No. 13-1262

I. The Unprecedented Facts
  The chronology of this case provides a strong basis
for plaintiff Green’s allegations that the parties’ arbitra-
tion clause was itself a form of consumer deception
and oppression. In 2009, the Minnesota Attorney
General sued the National Arbitration Forum for
consumer fraud by, among other things, systematically
using arbitrators who were biased in favor of
businesses in disputes with their consumers. See In re
National Arbitration Forum Trade Practices Litig., 704
F. Supp. 2d 832, 835–36 (D. Minn. 2010) (denying motion
to dismiss in multidistrict litigation alleging consumer
fraud and racketeering by National Arbitration Forum,
and describing settlement of Minnesota state case). The
Forum retreated less than a week later by settling the
suit and announcing that it would no longer accept
new consumer cases for arbitration.1
  Nearly three years later, on May 8, 2012, Green signed
her payday loan with defendant U.S. Cash Advance,
providing for arbitration “by and under the Code of



1
  The district court opinion in the MDL case provides a good
deal of helpful background information on the Forum,
including the results of Congressional hearings, described as
“rather shocking” by Judge Magnuson. 704 F. Supp. 2d at 835.
Before the 2009 settlement, the Forum had built a substantial
reputation as a pro-business arbitration forum. See Robert
Berner and Brian Grow, Banks v. Consumers (Guess Who Wins),
Businessweek, June 4, 2008, www.businessweek.com/stories/
2008-06-04/banks-vs-dot-consumers-guess-who-wins (last
visited July 25, 2013).
No. 13-1262                                                15

Procedure of the National Arbitration Forum.” When
U.S. Cash Advance was still providing for arbitration
by the Forum in 2012, was it being negligent
or deliberately deceptive? Under the majority’s deci-
sion, that question will not be answered in this law-
suit. Perhaps it might be answered in the arbitration
the majority orders, if Green and her lawyers can
afford to go forward at all.
  The payday loan agreement that Green signed was
certainly a contract of adhesion. Green had no bargaining
power over its terms, including the arbitration clause.
The idea that she actually agreed, in a subjective sense,
to any arbitration clause at all therefore requires
some rather heroic assumptions. Under the FAA, though,
we must indulge the legal fiction and assume that she
read, understood, and embraced defendant’s carefully
drafted arbitration clause. Even with that assump-
tion—especially with that assumption—we should
affirm the district court’s denial of arbitration.


II. The Majority’s Holdings
  A. The Details of the Parties’ Agreement to Arbitrate
  The Supreme Court has said repeatedly that we
must “ ‘rigorously enforce’ arbitration agreements ac-
cording to their terms.” American Express, 133 S. Ct. at 2309,
quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213,
221 (1985), including terms that specify who will do
the arbitrating and according to which rules, American
Express, 133 S. Ct. at 2309. Putting aside the issue of
16                                              No. 13-1262

U.S. Cash Advance’s folly (or worse) in providing for
arbitration by the Forum, let’s look at what these par-
ties’ agreement actually meant. Our task is to deter-
mine (or construct) the parties’ mutual intention for
what would happen to their arbitration agreement
if the Forum was not available to do the arbitration—
which it was not at the time of the parties’ agreement.
  The key phrase in the arbitration clause says that dis-
putes “shall be resolved by binding arbitration by one
arbitrator by and under the Code of Procedure of the
National Arbitration Forum.” I agree with the district
court that the phrase is a little clumsy, but it is clear
enough. Breaking the phrase down, there are four key
elements. First, use binding arbitration. Second,
use one arbitrator. Third, the arbitration will be done
“by … the National Arbitration Forum.” Fourth, the ar-
bitration will be done “under the Code of Procedure
of the National Arbitration Forum.” There is no indica-
tion that anyone other than the Forum was satisfactory
to the parties.
  The majority strains the contractual language badly
by concluding that the reference to the Forum’s Code
would be “surplusage” if the parties meant for arbitra-
tion before the Forum to be exclusive, and that “the
only reason to refer to the Code is to create the possi-
bility of arbitration outside the Forum’s auspices, but
using its rules of procedure.” Slip op. at 3–4. The supposed
intent is just speculation, and the majority’s reading
is highly improbable. The natural reading of the rather
simple phrase “by and under the Code of Procedure of
No. 13-1262                                              17

the National Arbitration Forum” is that the arbitration
will be conducted both by the Forum and according to
its rules. The reference to the Forum’s Code of
Procedure is there to communicate clearly and remove
room for argument, not to allow for the possibility that
the Forum might not be available. (Any competent
drafter acting in good faith who even considered the
possibility the majority embraces surely would have
figured out that the Forum was already not available.)
  Apart from the majority’s effort to avoid the natural
effect of the parties’ contractual language, the exclusivity
of the Forum is also found in the requirement of arbitra-
tion “under the Code of Procedure of the National Ar-
bitration Forum,” which effectively incorporated the
Code into the parties’ agreement. The Code shows in
two places the parties’ intent to have only the Forum
handle any arbitration.
  First, Rule 1(A) states, “This Code shall be ad-
ministered only by the National Arbitration Forum or
by any entity or individual providing administrative
services by agreement with the National Arbitration
Forum.” We are supposed to enforce the contract
according to its terms. The terms of the parties’ contract
require application of the Forum Code. The Forum Code
requires that it be administered only by the Forum.
The majority’s decision here nullifies that requirement
and effectively nullifies the parties’ choice.
  To avoid this simple logic, the majority uses a feint
towards copyright law, which has nothing at all to do
with this dispute, to declare Rule 1(A) “unenforceable.”
18                                             No. 13-1262

Slip op. at 4–5. If any branch of intellectual property law
is relevant to Rule 1(A), it is trademark law. The Forum’s
Rule 1(A), providing that only the Forum and its
affiliates can use its Code of Procedure, is designed to
protect the Forum’s brand and reputation. The majority
is correct that the Forum cannot prevent others from
reading or even using its Code of Procedure, with or
without adaptations. Copyright law would not help it.
But Rule 1(A) was not an empty gesture. The Forum
could rely on trademark law to try, at least, to prevent
competitors from holding themselves out as substitutes
for the Forum itself.
  That reading also fits better with the reputation the
Forum had built for itself by the time it withdrew from
consumer arbitration. The value of its brand lay not
in the details of the Code of Procedure but in the
strongly pro-business reputation it had built with the
many businesses it persuaded to write their form
contracts to provide for arbitration of consumer
disputes with the Forum. Substitutes would have
diluted what was then the valuable reputation of the
Forum’s brand of consumer dispute resolution.
  Second, the Forum’s Code also says that if the Forum
will not conduct the arbitration itself for some reason,
the parties are left to their “legal and other remedies.”
Rule 48(D) provides:
     The Director or Arbitrator may decline the use of
     arbitration for any dispute, controversy, Claim,
     Response or Request that is not a proper or
     legal subject matter for arbitration or where
     the agreement of the Parties has substantially
No. 13-1262                                             19

   modified a material portion of the Code. If
   Parties are denied the opportunity to arbitrate a
   dispute, controversy or Claim before the Forum,
   the Parties may seek legal and other remedies
   in accord with applicable law.
In other words, the terms of the Forum’s Code, chosen
by these parties, repeat that the Code provides for ar-
bitration by the Forum or by nobody. Since the Forum
made itself unavailable, that should mean arbitration
by nobody. The district court properly denied the
motion to compel arbitration.
  To avoid Rules 1(A) and 48(D), the majority turns to
Rule 48(C), which provides a general severability clause:
“In the event a court of competent jurisdiction shall
find any portion of this Code … to be in violation of
the law or otherwise unenforceable, that portion shall
not be effective and the remainder of the Code shall
remain effective.” The majority first explicitly severs
the provision in Rule 1(A) that Forum arbitration is
arbitration by the Forum, and then severs Rule 48(D),
which would send disappointed seekers of arbitration
back to the courts. This methodology puts the court in
the uncomfortable position of picking and choosing
terms that promote arbitration and erasing the ones
that do not.
  There is in fact no reason to use the severability clause
to nullify the important terms providing that Forum
arbitration can be provided only under the Forum’s
own auspices, with its cohort of trusted arbitrators, or
not at all. Given the choice between enforcing Rules 1(A)
and 48(D) and not enforcing them, the issue is not the
20                                             No. 13-1262

legality of the provisions under copyright law, as the
majority seems to think, but the parties’ intentions.
Rules 1(A) and 48(D) are both perfectly enforceable
between these parties. If courts are in the business of re-
specting the parties’ agreements, we should enforce
them by affirming the parties’ choice of rules, which
here required arbitration by the Forum and only
the Forum.


 B. FAA Section 5 and Relevant Case Law
  The majority builds upon the foundation of section 5
of the FAA to order the district court to appoint an ar-
bitrator to whom the parties never agreed, and to do
so without any instructions on how to make an appro-
priate selection. This part of the majority’s opinion not
only chooses the wrong side in a circuit split, but also
uses reasoning that no other circuit has adopted to go
farther to rescue a more deeply flawed arbitration agree-
ment than any other circuit has.
  Section 5 provides, with added numbering of the
key conditional phrases:
     [1] If in the agreement provision be made for a
     method of naming or appointing an arbitrator or
     arbitrators or an umpire, such method shall be
     followed; but [2] if no method be provided
     therein, or [3] if a method be provided and any
     party thereto shall fail to avail himself of such
     method, or [4] if for any other reason there shall
     be a lapse in the naming of an arbitrator or ar-
     bitrators or umpire, or in filling a vacancy, then
No. 13-1262                                              21

    upon the application of either party to the con-
    troversy the court shall designate and appoint
    an arbitrator or arbitrators or umpire, as the
    case may require, who shall act under the said
    agreement with the same force and effect as if he
    or they had been specifically named therein; and
    unless otherwise provided in the agreement the
    arbitration shall be by a single arbitrator.
9 U.S.C.A. § 5. To parse the possibilities, the first condi-
tional phrase does not apply here because the agree-
ment provided a method for naming an arbitrator, but
it cannot be followed because of the Forum’s with-
drawal from consumer arbitration. The second phrase
does not apply because a selection method was pro-
vided. The third phrase—“if a method be provided
and any party thereto shall fail to avail himself of
such method”—also does not apply. A method was
provided, but no party failed to avail itself or herself
of the method. The fourth phrase is the residual possi-
bility: “if for any other reason there shall be a lapse in
the naming of an arbitrator . . . .”
  I agree with the majority that we must assume that
the parties’ arbitration agreement was drafted against
the background of the FAA, which we should also
deem incorporated into the agreement. Whether section 5
authorizes the majority’s approach depends on what
counts as a lapse. That issue has divided a few circuits,
but no circuit has gone as far as the majority goes here,
finding a correctable lapse where a drafter has at least
negligently named an arbitration forum that was never
available.
22                                               No. 13-1262

  The majority and the cases it relies upon disagree
with the Second Circuit’s decision in In re Salomon Inc.
Shareholders’ Derivative Litigation, 68 F.3d 554 (2d Cir.
1995), a shareholder derivative action on behalf of
the corporation against several senior executives. Each
executive had signed an agreement to arbitrate any em-
ployment dispute under the rules of the New York
Stock Exchange. The district court ordered arbitration
before the NYSE, but the NYSE eventually decided to
exercise its discretion to decline to hear the arbitration.
The executives then asked the district court to use
section 5 to designate a new arbitrator.
  The district court denied the request, and the Second
Circuit affirmed. In logic that fits this case to a T, the
Second Circuit explained:
     [U]nder the arbitration agreements, all disputes
     were to be arbitrated by the NYSE and only the
     NYSE, “in accordance with the [NYSE] Constitu-
     tion and rules.” The NYSE Constitution clearly
     permits the NYSE to refuse the use of its facilities
     for the arbitration of any particular dispute. NYSE
     Const. Art. XI, § 3. When the NYSE so refuses,
     there is no further promise to arbitrate in
     another forum.
Salomon, 68 F.3d at 557. The Second Circuit rejected the
use of section 5 to fix a supposed “lapse in the naming
of the arbitrator.” The court read the term as meaning
a lapse in time in naming an arbitrator or filling a
vacancy on a panel of arbitrators, or some other
mechanical breakdown in selecting an arbitrator, and
No. 13-1262                                                23

not as a means “to circumvent the parties’ designation
of an exclusive arbitral forum.” Id. at 560–61.
  The majority tries to distinguish this case from
Salomon on two grounds. Neither stands up to scrutiny.
First, the majority says that the agreements in Salomon
provided for arbitration exclusively before the NYSE
and that the parties’ choice here was not exclusive. In
fact, the arbitration agreements in both cases did not
use the word “exclusive” to designate the chosen
forum, but that was the meaning of both. That was how
the Second Circuit interpreted the agreements in
Salomon. See 68 F.3d at 558 (texts of agreements). That is
also the effect of both the contractual language and
the Forum’s Rule 1(A), as discussed above. Second, the
majority says that in Salomon, the parties agreed that
their chosen forum could decline to hear the arbitration
and decide that litigation was preferable. See 68 F.3d
at 557–58. But the same is true here. The Forum’s
Rule 48(D) says that the Forum “may decline the use
of arbitration for any dispute … that is not a proper or
legal subject matter for arbitration,” in which case the
parties are left to their “legal and other remedies.” More-
over, the Second Circuit squarely rejected the solu-
tion adopted by the majority here: arbitration according
to the chosen rules but before an arbitrator other than the
one chosen by the parties. Id. at 558. Salomon is sound,
cannot be distinguished, and calls for affirmance.2



2
  In Ranzy v Tijerina, 393 Fed. Appx. 174 (5th Cir. 2010), the
Fifth Circuit applied Salomon to a case much like this one,
                                                (continued...)
24                                                 No. 13-1262

  On the other side, the majority’s best case is the
majority opinion in Khan v. Dell, Inc., 669 F.3d 350 (3d
Cir. 2012), which also involved a consumer contract
designating the National Arbitration Forum as the ar-
bitrator. Khan is not persuasive on its own terms, and it
is easily distinguishable in any event. Khan was wrong
because it found ambiguity as to whether the key
contract phrase designated the Forum as the exclusive
arbitrator. The contract said that disputes “SHALL BE
RESOLVED EXCLUSIVELY AND FINALLY BY ARBITRA-
TION ADMINISTERED BY THE NATIONAL ARBITRA-
TION FORUM (NAF) under its Code of Procedure then
in effect . . . .” The majority’s theory was that “EXCLU-
SIVELY” could be read to modify only “BINDING ARBI-
TRATION” rather than also applying to “ADMINISTERED
BY THE NATIONAL ARBITRATION FORUM,” and that
the ambiguity should be construed in favor of arbitra-
tion. The dissent showed persuasively that the


2
   (...continued)
a payday loan dispute where the contract provided for arbitra-
tion before the Forum. The Ranzy panel read contractual
language designating the Forum as being exclusive, so it
affirmed the district court’s decision not to apply section 5
to pick a new arbitrator for the parties. The Ranzy decision
was not designated as precedential, but it is persuasive, as is
the district court’s opinion in the case, Ranzy v. Extra Cash of
Texas, Inc., 2010 WL 936471 (S.D. Tex. March 11, 2010). If
anything, the non-precedential designation of Ranzy should
be read as a sign of how straightforward this problem
really should be, without resorting to the extraordinary mea-
sures our majority uses to save U.S. Cash Advance from itself.
No. 13-1262                                             25

majority’s strained reading was not plausible. Khan, 669
F.3d at 358 (Sloviter, J., dissenting). The dissent also
pointed out that, given the Forum’s unique history and
pro-business bias, it was not at all clear that a truly
neutral arbitrator would ever have been an acceptable
alternative for the business that drafted the contract.
  But even if Khan were correct on its own terms, it
should not extend to the facts of this case. In Khan, the
parties entered into their contract for Forum arbitra-
tion back in 2004, when the Forum was actually avail-
able. See 669 F.3d at 351. The majority here breaks
new ground by extending section 5 to rescue an arbitra-
tion agreement signed after the Forum had already with-
drawn from consumer arbitration. While the Khan
panel was willing to go a long way to save Dell’s ability
to force arbitration, it did not give any signs that it
would have been willing to extend its reasoning to the
folly or worse that we see here from U.S. Cash Advance.
The arbitration agreement here was a nullity from the
very beginning. And by naming the Forum as the ar-
bitrator, U.S. Cash Advance built into the parties’ sup-
posedly contractual method for dispute resolution all
of the extra costs and delays it has imposed on Green
in this very litigation.
  The other cases the majority cites for support add little
to Khan. In Reddam v. KPMG, LLP, 457 F.3d 1054 (9th
Cir. 2010), overruled on other grounds by Atlantic
National Trust LLC v. Mt. Hawley Ins. Co., 621 F.3d 931,
940 (9th Cir. 2010), the parties provided for arbitration
under NASD rules but did not actually designate the
26                                                No. 13-1262

NASD as the arbitrator. When the Reddam case was pre-
sented to the NASD, it declined to arbitrate because
no party to the dispute was actually a member of the
NASD. There was no indication in the Ninth Circuit’s
opinion that the parties had ever intended the NASD to
be the exclusive forum for arbitration, so the court
ordered the use of FAA section 5. Our case is readily
distinguishable because of the exclusive designation in
the Forum rules, as well as the timing issue that
makes this case unique among the circuit cases.
  The Eleventh Circuit’s decision in Brown v. ITT
Consumer Financial Corp., 211 F.3d 1217 (11th Cir. 2000),
also involved a designation of a perhaps different “Na-
tional Arbitration Forum” to arbitrate employment dis-
putes. The designated “National Arbitration Forum” in
that case had apparently dissolved and thus was not
available. There was no indication of exclusivity in
the designation, and of course there was also no issue
of timing that we have here.
  Thus we should follow Salomon and affirm. The
majority errs by choosing instead the less persuasive
side of a circuit split and then taking the logic of that
weaker side even farther than any circuit court has gone
to date, rescuing an arbitration agreement that was
fatally flawed from the very beginning.3


3
   The majority makes perhaps its longest stretch in claiming
its decision is consistent with an implicit assumption in the
Supreme Court’s decision in CompuCredit Corp. v. Greenwood,
                                                 (continued...)
No. 13-1262                                                27

III. The Majority’s Broad Dictum
  The majority concludes with a broad and mistaken
dictum. The introduction to the dictum is the majority’s
criticism of the non-statutory “integral” test for deciding
when to exercise section 5 power, which was used in
the very cases the majority relies upon, such as Khan
and Reddam. I agree, by the way, with the majority’s
criticism of that non-statutory test. The sounder method
is simply to examine the relevant texts to determine
whether the contractual selection of an arbitrator
was exclusive or not. Here it was. See Forum Rule 1(A).
But the majority then offers its new solution by
supposing that a contract said merely: “Any disputes
arising out of this contract will be arbitrated.” Would
that be enough to invoke section 5 to have a district
court fill in all the additional details? The majority says
yes, but has no direct case support for that answer.



3
  (...continued)
132 S. Ct. 665 (2012). The Court ordered arbitration of the
parties’ dispute. The opinion said nothing about the fact that
the parties’ contract provided for arbitration by the Forum,
which had withdrawn from consumer arbitration by the time
of the decision ordering arbitration. See slip op. at 6. The
potential application of FAA section 5 was not any part of the
question presented to the Court in CompuCredit. The only
mention of the issue came in note 3 to respondents’ brief,
which advised that the lower courts had not had to decide
any section 5 issue. The Supreme Court’s silence concerning
an issue not presented to it is a very thin reed for the
majority here.
28                                              No. 13-1262

The limited language of section 5 and the contract-
based logic of the Supreme Court’s interpretation of the
FAA point toward no.
  Before looking at the case law, consider the many
terms that are material in even a basic arbitration agree-
ment. How many arbitrators will there be? Who will
they be? How will they be chosen? What qualifications
will they have? How will they be paid, how much, and
who will pay them? What procedures will be used?
How much discovery will each party be able to inflict on
the other? Can the arbitrator try to subpoena witnesses?
Will collective actions or class arbitration be allowed?
Will any rules of evidence be used? The list could go on.
I recognize that parties can and do save time in
negotiating contracts by choosing the package deals
offered by well-established arbitration services. But if
arbitration is supposed to be a matter of contract, how
on earth is a court supposed to answer these material
questions as a matter of contract law if the parties say
merely “arbitrate?”
  The best support for the majority’s dictum is Schulze
and Burch Biscuit Co. v. Tree Top, Inc., 831 F.2d 709, 715-16
(7th Cir. 1987), in which we enforced a clause providing
only that “all disputes under this transaction shall be
arbitrated in the usual manner.” Noting that the
contract was a sale of goods between merchants, 831
F.2d at 716, we affirmed an order directing arbitration
before the American Arbitration Association and
according to its rules. At the time, the AAA and its pro-
cedures were the most common and familiar for
No. 13-1262                                                29

arbitration in commercial disputes between merchants.
But there was no indication that we would have been
willing to extend that logic to fill in all the arbitration
blanks in consumer contracts, where there is no reason
to expect consumers to be familiar with arbitration or
any customary terms or procedures.
  The other cases cited by the majority on this point
involved stand-offs in the selection procedures for an
arbitrator, which are the target of section 5, see Bethlehem
Mines Corp. v. United Mine Workers of America, 494 F.2d 726,
730 (3d Cir. 1974); Deaton Truck Line Inc. v. Local Union 612,
314 F.2d 418, 421, 423 (5th Cir. 1962), and/or labor arbitra-
tion between unions and management where there was a
course of dealing to guide the courts in filling in the
details, see Plumbing and Pipefitting Ass’n v. Bechtel Con-
struction Co., 128 F.3d 1318, 1320–24 (9th Cir. 1997). These
cases are not instructive for consumer arbitrations.
  We should not read section 5 of the FAA to allow or
require courts to decide all of the basic questions about
arbitration. The designation of an arbitration forum
“has wide-ranging substantive implications that may
affect, inter alia, the arbitrator-selection process, the law,
procedures, and rules that govern the arbitration, the
enforcement of the arbitral award, and the cost of the
arbitration.” Grant v. Magnolia Manor-Greenwood, Inc.,
678 S.E.2d 435, 439 (S.C. 2009) (affirming denial of
section 5 motion where designated forum had with-
drawn from arbitrating the parties’ type of dispute),
quoting Singleton v. Grade A Market, Inc., 607 F. Supp. 2d
333, 340 (D. Conn. 2009). The majority decision here
30                                               No. 13-1262

treats the parties as if they were indifferent to who
would arbitrate their disputes, so long as the arbitrator
uses the Forum’s Code of Procedure. (That view is not
realistic, though I agree with the majority’s decision
not to endorse the pro-business bias that probably moti-
vated U.S. Cash Advance’s preference for the Forum.)
We should read section 5 as the Second Circuit did in
Salomon and should affirm the district court’s order
denying the defendant’s motion to compel arbitration.


IV. Conclusion
  Since the case is going back to the district court, it is
worth pointing out just how much freedom the
majority’s approach leaves the district judge in
appointing an arbitrator. The Forum’s Code of Procedure
includes some elementary requirements for neutrality,
see Rules 21 and 23, but as discussed in oral argument,
the judge will have wide discretion. The judge could
select an arbitrator, for example, who is familiar with
the practices of the payday loan industry. The judge
could also select an arbitrator who is open to considering
the use of claimant classes in arbitrations, perhaps on
the theory that a consumer who would not voluntarily
waive her rights under the Truth in Lending Act probably
should not be deemed to have implicitly waived her
right to the only procedure that could effectively enforce
those rights. See generally Oxford Health Plans LLC v.
Sutter, 133 S. Ct. 2064 (2013) (upholding class-based arbitral
award where arbitrator found that contract authorized
use of claimant class); Southern Comm. Svcs., Inc. v.
Thomas, ___ F.3d ___, 2013 WL 3481467 (11th Cir. July 12,
No. 13-1262                                          31

2013) (same). And the results of arbitration, of course,
are subject to only the lightest judicial review.
Having forced the case out of the federal courts and
into arbitration, U.S. Cash Advance will have to live
with its choice.




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