PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 21-2438
_____________
BENJAMIN ZIRPOLI, individually and on behalf of all
others similarly situated
v.
MIDLAND FUNDING, LLC; MIDLAND CREDIT
MANAGEMENT, INC.
MIDLAND FUNDING, LLC.,
Appellant
______________
On Appeal from United States District Court for the Middle
District of Pennsylvania
(D. C. No. 1-19-cv-01428)
District Court Judge: Honorable Jennifer P. Wilson
______________
Argued June 22, 2022
Before: McKEE, RESTREPO, and BIBAS, Circuit Judges
(Filed: September 1, 2022)
Kevin J. Abramowicz
Kevin W. Tucker
East End Trial Group
6901 Lynn Way
Suite 215
Pittsburgh, PA 15208
Karla Girbride [ARGUED]
Public Justice
1620 L Street, N.W.
Suite 630
Washington, DC 20036
John B. Keller
Keller Keller Beck & Ross
1035 Wayne Avenue
Chambersburg, PA 17201
Counsel for Appellee
Lauren M. Burnette [ARGUED]
Messer Strickler Burnette
12276 San Jose Boulevard
Suite 718
Jacksonville, FL 32223
Counsel for Appellant
_______________________
OPINION
_______________________
McKEE, Circuit Judge.
Arbitration is a contractual obligation. Thus, parties to
a contract may delegate questions of arbitrability to an
arbitrator. If parties clearly and unmistakably make this
choice, then district courts generally must send threshold
questions of arbitrability to arbitration to comply with the
parties’ agreement.
Here, OneMain Financial Group legally contracted with
Benjamin Zirpoli. This contract includes a clause that delegates
any question of arbitrability to arbitrators. OneMain then
assigned this contract to Midland Funding LLC. Litigation
between Midland and Zirpoli ensued, and Midland filed a
motion to compel arbitration. Zirpoli opposes that motion,
arguing that Midland cannot compel arbitration because
OneMain’s assignment to Midland is void under Pennsylvania
2
law. We must decide if the District Court erred in not granting
the motion to compel and refusing to refer the dispute to an
arbitrator. For the reasons that follow, we hold that the court
did err and that the motion to compel should have been granted.
I.
OneMain is a consumer discount company: a non-bank
finance company that makes, buys, or sells consumer loans in
amounts under $25,000 with combined fees, interest, charges,
and other amounts that aggregate in excess of 6% per year.
Zirpoli applied for and received a loan from OneMain (the
“Loan”). Under the terms of the Loan, Zirpoli was to borrow
$6,200.08 and repay at a rate of 26.91% (for a total of
$11,364.35). His Loan was issued under the Consumer
Discount Company Act (CDCA), a consumer protection
statute, which creates an exception to, and is a corollary of,
Pennsylvania’s usury law.1 The obligations of the Loan are
governed by a disclosure statement, note and security
agreement, and an arbitration agreement.
The arbitration agreement states:
You and We agree that either You or We have an
absolute right to demand that any Claim be
submitted to an arbitrator in accordance with this
Arbitration Agreement. If either You or We file
a lawsuit, counterclaim, or other action in court,
the other party has the absolute right to demand
arbitration following the filing of such action.2
The “Definitions for Arbitration Agreement” section provides:
“We” or “Us” or “Our” means the Lender under
the Note listed above, its past, present or future
respective parents, subsidiaries, affiliates,
predecessors, assignees, successors, and their
respective employees, agents, directors, and
officers. . . . “Claim” means any case,
controversy, dispute, tort, disagreement, lawsuit,
1
7 PA. STAT. AND CONS. STAT. ANN. §§ 6201–6219 (West
2022).
2
JA 82.
3
or claim now or hereafter existing between You
and Us.3
Pursuant to the terms of the agreement, a claim “includes,
without limitation, anything related to”:
The Note, this Agreement, or the enforceability,
or the arbitrability of any Claim pursuant to this
Agreement, including but not limited to the
scope of this Agreement and any defenses to
enforcement of the Note or this Agreement; . . .
[and] [a]ny federal or state statute or regulation,
or any alleged violation thereof, including
without limitation insurance, usury, and lending
laws.
Midland is a Delaware limited liability corporation. Its
sole business is purchasing defaulted consumer debt. After
Zirpoli and OneMain executed the Loan, OneMain and
Midland executed a sales agreement through which OneMain
sold several delinquent accounts to Midland; those accounts
included Zirpoli’s Loan. Midland acquired these accounts in a
sales agreement even though it did not possess a CDCA license
or request approval from the Department of Banking.4
OneMain’s records show that it had charged-off Zirpoli’s
account with an outstanding balance of $7,391.90.
After acquiring Zirpoli’s Loan from OneMain, Midland
sued Zirpoli to collect the amount Zirpoli owed on the Loan.
Zirpoli hired counsel and entered a defense, but Midland
thereafter dismissed the suit rather than litigating. Subsequent
to dismissing the litigation, Midland allegedly attempted to
collect the delinquent Loan by reporting it to various consumer
agencies, thereby negatively impacting Zirpoli’s credit.
Midland also allegedly obtained and used Zirpoli’s credit
report from various consumer reporting agencies.
3
Id.
4
The CDCA prohibits CDCA licensees from “sell[ing]
contracts to a person or corporation not holding a license . . .
without the prior written approval of the Secretary of
Banking.” 7 P.S. § 6214.I.
4
In response, Zirpoli filed this class action lawsuit in the
Middle District of Pennsylvania. He alleged that Midland’s
collection activities including the since-dismissed lawsuit and
reporting the Loan delinquency to credit agencies constituted
an unlawful attempt to collect the Loan. Zirpoli contends that
because Midland does not have a CDCA license and never
obtained nor requested approval from the Department of
Banking, Midland was not lawfully permitted to purchase the
Loan. Accordingly, he argues, Midland’s attempts to collect on
the Loan violated several consumer protection acts.
Midland responded to the suit by filing a motion to
compel arbitration and to stay the proceedings. The District
Court denied this motion without prejudice, finding that it was
not apparent from the face of the complaint that Zirpoli’s
claims were subject to a valid and enforceable arbitration
agreement and that discovery was necessary. The District
Court then ordered additional, limited discovery on the
following issues:
▪ Whether the Secretary of Banking approved the
purported transaction involving Midland
Funding, an unlicensed consumer-discount
company;
▪ Whether, in accordance with the terms of the sale
agreement, Midland Funding obtained approval
to compel arbitration with Zirpoli; and,
▪ Whether Midland Funding maintains a clear
chain of title to the loan account.5
Thereafter, the District Court found that the discovery
revealed that (1) the Pennsylvania Secretary of Banking did not
approve the assignment between OneMain and Midland, and
(2) Midland was not licensed under the CDCA during the time
period at issue in this litigation.
Midland then filed a renewed motion to compel
arbitration and to stay proceedings. It argued that it obtained
the right to enforce Zirpoli’s obligations under the Loan as part
of the purchase agreement with OneMain, including the right
to compel arbitration. Zirpoli renewed his objection to the
motion, arguing that the assignment was illegal and void and
5
JA 298–99.
5
that he was therefore not bound by the arbitration clause in the
agreement between OneMain and Midland. The District Court
denied Midland’s motion to compel. In doing so, it focused on
the validity of the assignment from OneMain and Midland and
reasoned that was the dispositive question governing
arbitrability. The District Court then denied as moot Midland’s
motion to stay. This appeal follows.
II.6
We are once again confronted with the “mind-bending
issue” of arbitration about arbitration.7 Not too long ago, we
answered the question of “[w]ho decides—a court or an
arbitrator—whether an agreement exists, when the putative
agreement includes an arbitration provision empowering an
arbitrator to decide whether an agreement exists.”8 We held
that “questions about the ‘making of the agreement to arbitrate’
are for the courts to decide unless the parties have clearly and
unmistakably referred those issues to arbitration in a written
contract whose formation is not in issue.”9 We are confronted
with the question of whether a challenge to the legality of an
assignment of a loan that is subject to an agreement to arbitrate
challenges the very formation of the arbitration agreement. We
hold that it does not. Accordingly, the District Court erred in
6
The District Court had subject matter jurisdiction pursuant
to 28 U.S.C. § 1332. We review the denial of a motion to
compel arbitration de novo. Harper v. Amazon.com Services,
Inc., 124 F.4th 287, 292 n.3 (3d Cir. 2021). Because
Midland’s renewed motion came after the parties had
completed a period of discovery on the arbitration issue, we
apply the same standard of review district courts use when
resolving motions for summary judgment. See Guidotti v.
Legal Helpers Debt Resol., LLC, 716 F.3d 764, 776 (3d Cir.
2013). We thus give the benefit of all reasonable doubts and
inferences to the party opposing arbitration. Griswold v.
Coventry First LLC, 762 F.3d 264, 270 (3d Cir. 2014).
7
David Horton, Arbitration About Arbitration, 70 STAN. L.
REV. 363, 370 (2018).
8
MZM Constr. Co., Inc. v. New Jersey Bldg. Labs. Statewide
Benefit Funds, 974 F.3d 386, 392 (3d Cir. 2020).
9
Id.
6
finding that it had the authority to adjudicate this question of
arbitrability.
A. Section 4 of the Federal Arbitration Act
Zirpoli argues that the District Court did not have
jurisdiction to resolve Midland’s motion to compel in the first
place because it is not a “party” under § 4 of the Federal
Arbitration Act.10 We must address this jurisdictional
argument before reaching the question of arbitrability.
Section 4 provides:
A party aggrieved by the alleged failure,
neglect, or refusal of another to arbitrate under a
written agreement for arbitration may petition
any United States district court which, save for
such agreement, would have jurisdiction …
[over] the subject matter of a suit arising out of
the controversy between the parties, for an order
directing that such arbitration proceed in the
manner provided for in such agreement.11
Zirpoli claims that to be a party under this section, Midland
must actually be a party to an arbitration agreement.12 He
reasons that Midland is not a party to the arbitration agreement
because the assignment from OneMain was invalid, and thus,
according to Zirpoli, Midland could not petition the court to
compel arbitration.13
The argument does have facial appeal; however, we are
not persuaded. The most natural reading of “party” in § 4 is
that it refers to a party to a litigation. The Supreme Court has
read “parties” in § 3 of the Act to mean “litigants.”14 And we
presume that Congress uses words consistently throughout a
10
Appellee Br. at 36–37.
11
9 U.S.C. § 4.
12
Appellee Br. at 36.
13
Id.
14
Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 632 (2009)
(“[A] litigant who was not a party to the relevant arbitration
agreement may invoke § 3 if the relevant state contract law
allows him to enforce the agreement.”).
7
statute.15 That suggests that “party” means “litigant” in both §§
3 and 4.
Though context can rebut this presumption, we find that
the context of § 4 here actually confirms that “party” means
“party to litigation.”16 “Party” or “parties” is used eight times
in § 4.17 Even Zirpoli admits that many of these uses refer most
naturally to litigants.18 Accordingly, we conclude that “parties”
in § 4 refers to litigants. Therefore, the District Court had
jurisdiction to hear Midland’s motion to compel arbitration.
B. Arbitrability
Accordingly, we must resolve the “threshold
arbitrability question”—who decides whether the parties must
arbitrate: the arbitrator or the court—before a question of
arbitrability can be decided.19 In other words, courts must
figure out whether the parties should arbitrate the question of
15
Antonin Scalia & Bryan Garner, Reading Law: The
Interpretation of Legal Texts 170 (2012).
16
Id. at 170–71; see also Frank H. Easterbrook, The Absence
of Method in Statutory Interpretation, 84 CHI. L. REV. 81, 83
(2017) (noting that “every canon implicitly begins or ends
with the statement ‘unless the context indicates otherwise’”).
17
Zirpoli also points out that § 4 allows a “party aggrieved by
the alleged failure . . . of another to arbitrate . . . [to] petition”
the court to compel arbitration. Appellee Br. at 27. Zirpoli
argues that “party” cannot be referencing a litigant as how
could a “party” be a litigant before he has petitioned the court
in the first place. Id. at 27. This argument falls short as it is
not unheard of to refer to “litigants” as “parties” before a case
is filed. See, e.g., Fed. R. Civ. P. 4(a)(1)(A).
18
Appellee Br. at 29 n.14. For example, after a party moves the
court to compel arbitration, “[t]he court shall hear the parties[]
and . . . shall make an order directing the parties to proceed to
arbitration.” 9 U.S.C. § 4 (emphasis added). Typically, we
speak of courts hearing and ordering litigants, not parties to
contracts.
19
Mabe v. OptumRX, -- F.4th --, No. 21-2192, 2022 WL
3094577, at *9 (3d Cir. 2022) (citing Henry Schein, Inc. v.
Archer & White Sales, Inc., 139 S. Ct. 524, 527 (2019)).
8
whether the parties agreed to arbitrate the dispute. Here, the
District Court found that it must answer that question. Midland
argues that the arbitrator should have decided this question.
Although Congress has “expressed a strong federal
policy in favor of resolving disputes through arbitration,”20 it
does not follow that Congress intended parties to arbitrate
disputes even in the absence of any agreement to arbitrate;
arbitration remains a creature of contract.21 The policy favoring
arbitration is not intended to force arbitration where the parties
to a contract did not agree to it.22 Rather, it is merely intended
to ensure that courts honor and enforce contractual
undertakings to entrust agreed upon questions to arbitrators
rather than to courts.23 By expressly “plac[ing] arbitration
agreements on equal footing with all other contracts,” the
Federal Arbitration Act merely “requir[es] courts to ‘enforce
such agreements according to their terms.’”24 A court can
compel a party to arbitrate only if the party agreed to
arbitration. A party agrees to arbitrate if (1) “there is a valid
agreement to arbitrate between the parties and, if so, (2) . . . the
merits-based dispute in question falls within the scope of that
valid agreement.”25
However, these seemingly clear waters can become
very murky when parties agree to delegate questions of
arbitrability to arbitrators and a dispute thereafter arises about
the legality or enforceability of the contract. Resolving such
20
Flintkote Co. v. Aviva PLC, 769 F.3d 215, 219 (3d Cir.
2014) (quoting Century Indem. Co. v. Certain Underwriters
at Lloyd’s, London, 584 F.3d 513, 522 (3d Cir. 2009)).
21
Id. at 220 (quoting Bel-Rey Co., Inc. v. Chemrite (Pty) Ltd.
181 F.3d 435, 444 (3d Cir. 1999)).
22
See MZM, 974 F.3d at 401.
23
See id. at 397.
24
Singh v. Uber Techs. Inc., 939 F.3d 210, 214–15 (3d Cir.
2019) (alteration omitted) (quoting MacDonald v. CashCall,
Inc., 883 F.3d 220, 226 (3d Cir. 2018)). See 9 U.S.C. §§ 2, 4.
25
Flintkote, 769 F.3d at 220 (quoting Century Indem. Co.,
584 F.3d at 527).
9
questions of arbitrability involves an analysis that is nearly
identical to the two aforementioned steps.
The first step now targets the delegation clause: Is there
a valid agreement to delegate questions of arbitrability between
the parties? The Dissent would end the inquiry here,
concluding that one does not.26 But it would do so by
answering the very question needed to determine the merits:
whether the assignment from OneMain to Midland was valid.27
If we were to answer that question at this point of the analysis,
we risk pushing up against Supreme Court precedent that
prohibits us from “deny[ing] effect to an arbitration provision
in a contract that the court [may] later finds to be perfectly
enforceable.”28
Zirpoli does not dispute that he signed an agreement in
which he agreed to arbitrate claims not only with OneMain but
also with OneMain’s “past, present or future respective . . .
assignees.”29 Midland is an assignee. Perhaps the assignment
will later be invalidated as there is indeed a question as to the
validity of the assignment, but not as to whether the agreement
itself is valid. Accordingly, there exists here a valid agreement.
One that Zirpoli signed, binding him to arbitrate claims with
OneMain and its future assignee—Midland.
Applying the Dissent’s reasoning would also render the
threshold question of arbitrability meaningless. If we were to
apply the Dissent’s reasoning and decide whether the
assignment was valid in performing the first step of the inquiry,
we would also be reaching the merits of the motion. In
answering the merits, the Dissent happens to find the
assignment invalid: “A valid assignment required one of two
things. Either Midland needed a Pennsylvania license to hold
this type of loan. Or the companies needed the Pennsylvania
Secretary of Banking’s blessing. [Midland] had neither.”30
This conclusion conveniently hides the fact that prematurely
26
Dissent at 1.
27
Id. at 2.
28
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440,
448–49 (2006)
29
JA 82.
30
Dissent at 2.
10
answering this question makes asking the “who decides”
question pointless. Either we decide the assignment is invalid
and deny the motion. Or we decide the assignment is valid and
send the arbitrability question of whether the assignment is
valid to an arbitrator to decide—even though we already
decided it. This would be nothing more than performative, not
to mention antithetical to the FAA’s purpose of unwanted
judicial interference.
Moreover, even if we were to reach the merits here, this
issue would still need to be sent to an arbitrator because the
assignment was valid. The Dissent is correct that, under the
CDCA, a valid assignment would require either “a
Pennsylvania license to hold this type of loan” or “the
Pennsylvania Secretary of Banking’s blessing.”31 But this
assignment falls outside of the CDCA’s purview as it is a
charged-off loan—i.e., no longer performing as a loan.
Midland’s purchase of a charged-off loan does not constitute
extending loans or negotiating credit as the CDCA would
prohibit. Both the language of the CDCA32 and an amicus
curiae letter filed by the Pennsylvania Secretary of Banking in
a case recently before this court bolster this conclusion.33
Accordingly, for all the reasons described above, we find that
the first inquiry is satisfied as a valid agreement to delegate
questions of arbitrability between the parties exists.
The analysis is also slightly different at the second step
of the inquiry. There, the parties’ intent to delegate arbitrability
questions must be “clear and unmistakable.”34 Just as an
arbitration agreement is “‘severable’ and independently
enforceable from the rest of the contract in which it is
31
Id.
32
7 PA. STAT. AND CONS. STAT. ANN. §§ 6201–6219 (West
2022) (“[N]o person shall engage or continue to engage . . . in
the business of negotiating or making loans or advances or
money on credit . . . .” (emphasis added)).
33
Amicus Curiae Letter, Lutz v. Portfolio Recovery Assoc.,
No. 21-1656 (3d Cir. Feb. 15, 2022) (similarly concluding
that the purchase of a charged off credit card loan did not
require a CDCA license).
34
Henry Schein, 139 S. Ct. at 531.
11
contained,”35 a clause delegating a question to an arbitrator
may also be severable from the arbitration agreement.36
Under this doctrine of severability, when an arbitration
agreement contains a delegation clause, a challenge to
arbitrability must be “directed at the delegation [clause]
specifically to invoke a court’s power to intervene.”37
However, that is not true if a party challenges the very
formation of the arbitration agreement.38 Courts have the
authority to adjudicate formation challenges—even if there is
a delegation clause—unless the parties have clearly and
unmistakably referred formation issues to arbitration in a
written contract whose formation is not in issue.39 We have
distinguished formation challenges in this context from
validity or enforceability challenges; the latter must go to the
arbitrator unless directed specifically at the delegation clause.40
A validity or enforceability challenge is “either on a ground
that directly affects the entire agreement (e.g., the agreement
was fraudulently induced) or on the ground that the illegality
of one of the contract’s provisions renders the whole contract
invalid.”41
Zirpoli cites MZM Construction Co. v. New Jersey Bldg.
Funds to claim that its challenge of the assignment constitutes
a challenge to the arbitration agreement’s formation (i.e., no
contract between Zirpoli and Midland was ever made).42 But
Zirpoli does not dispute that he entered into a valid arbitration
agreement with OneMain. Nor does he dispute that OneMain
assigned that agreement to Midland. His challenge to
Midland’s motion to compel arbitration instead targets the
validity of the assignment from OneMain to Midland under the
35
MZM, 974 F.3d at 397 (citing Sandvik AB v. Advent Int’l
Corp., 220 F.3d 99, 105 (3d Cir. 2000)).
36
Id. (quoting Sandvik, 220 F.3d at 105).
37
Id. at 399 (citing Rent-A-Center, West, Inc. v. Jackson, 561
U.S. 63, 71 (2010)).
38
Id. at 402.
39
Id.
40
Id. at 397.
41
Mabe, -- F.4th --, 2022 WL 3094577, at *9 (quotations
omitted) (quoting Buckeye, 546 U.S. at 444).
42
Appellee Br. at 41.
12
CDCA; Midland is not a party to the arbitration agreement.
Under the terms of that contract only an assignee can collect
on the Loan and force arbitration. Accordingly, determining
whether Midland is a valid assignee goes directly to whether it
can enforce arbitration as the agreement provides, not whether
the agreement exists; it clearly does exist and Zirpoli does not
argue to the contrary.
As Midland explained at argument, the District Court
reasoned that the “legality of the assignment issue” disposed of
the question of arbitrability.43 This reasoning is contrary to the
Supreme Court’s instruction in Buckeye Check Cashing, Inc. v.
Cardegna. To ensure that courts do not “deny effect to an
arbitration provision in a contract that the court later finds to
be perfectly enforceable,” Buckeye “permits a court to enforce
an arbitration agreement in a contract that the arbitrator later
finds to be void.”44 Moreover, the enforceability of the
delegation clause is not determined by the potential invalidity
of the arbitration agreement.45
Midland’s status as a contractual party to the arbitration
agreement does not go to the enforceability of the delegation
clause, because of the severability doctrine. Accordingly, if the
parties to the Loan agreement clearly and unmistakably
intended to delegate the issue of enforceability of the contract
(or any other issue) to an arbitrator, the challenge to the
enforceability of the arbitration agreement must be decided by
the arbitrator, not by a court. To conclude otherwise would
render delegation clauses that explicitly extend to assignees
meaningless; a party trying to avoid arbitrating the question of
arbitrability could simply call into question the validity of the
assignment. As explained above, this could deny effect to a
delegation clause in a contract that the court later finds to be
perfectly enforceable. This type of judicial interference is
exactly what Congress sought to prevent in enacting the FAA.
We are thus compelled to interpret a challenge to an
assignment as one of contract enforceability, not formation. As
the Supreme Court explained in Buckeye, “a challenge to the
validity of the contract as a whole, and not specifically to the
43
Transcript of Oral Argument at 15.
44
Buckeye, 546 U.S. at 448–49.
45
See id. at 448.
13
arbitration clause, must go to the arbitrator.”46 We realize that
this rule may seem counterintuitive as it means that a court
must defer to an arbitrator even where the agreement
containing the arbitration clause is, itself, void or illegal.
However, the Supreme Court has clearly rejected that
argument, reasoning that the ultimate illegality of a contract
does not automatically negate the parties’ agreement that an
arbitrator should resolve disputes arising from the contract.47
Accordingly, we must only determine if the parties to
the Loan clearly and unmistakably expressed an agreement to
arbitrate the issue of arbitrability. A plain reading of the text of
the arbitration agreement shows that they did. The arbitration
agreement provides that “any Claim . . . shall be resolved by
binding arbitration.”48 Among other things, a claim “includes,
without limitation, anything related to . . . the arbitrability of
any Claim pursuant to th[e] Agreement, including but not
limited to the scope of this Agreement and any defenses to
enforcement of the Note or this Agreement.”49 A claim also
includes “anything related to . . . any alleged violation [of a
state statute], including without limitation . . . usury . . . laws.”
Read together, the arbitration agreement provides that an
arbitrator shall resolve the arbitrability of defenses to
enforcement, including alleged violations of state usury laws.
III.
For the foregoing reasons, we will vacate the order of
the District Court and remand with instructions that the Court
grant the motion to stay and refer the matter to arbitration.
46
Id. at 449.
47
Id. at 447–49.
48
JA 82.
49
Id. (emphasis added).
14
BIBAS, Circuit Judge, concurring in part and dissenting in
part.
I agree with my colleagues’ reasoning in Part II.A that the
District Court had jurisdiction under § 4 of the Federal Arbitra-
tion Act. But because Midland had no valid agreement to arbi-
trate with Zirpoli, I would affirm.
As my colleagues recognize, a court has jurisdiction under
§ 4 to resolve an arbitration motion made by a party to a
lawsuit. Maj. Op. 8. But in deciding the merits of that motion,
the analysis differs. To decide whether a contractual party
must arbitrate, we “first consider … whether there is a valid
agreement to arbitrate between the parties.” Flintkote Co. v.
Aviva PLC, 769 F.3d 215, 220 (3d Cir. 2014) (internal quota-
tion marks omitted). Flintkote does not ask whether there was
an arbitration agreement with just anyone. It asks whether there
was an agreement between the party seeking to compel arbitra-
tion and the party opposing it. Id. at 217, 222 (holding that even
though others had agreed to arbitrate, the party against whom
arbitration was sought had not). After all, “[i]f a party has not
agreed to arbitrate, the courts have no authority to mandate that
he do so.” Id. at 220 (internal quotation marks omitted).
My colleagues quote Flintkote but miss its meaning. Maj.
Op. 9. They say only that “the very formation of the arbitration
agreement” between Zirpoli and OneMain was never “in issue”
and stop there. Maj. Op. 12 (emphasis omitted). So they dis-
miss Zirpoli’s challenge as a dispute about enforceability and
say the agreement entrusts such disputes to the arbitrator. Id.
But Zirpoli never disputed the enforceability of his agreement
with OneMain. Rather, he insists that he never had an
agreement with Midland. And it is Midland, not OneMain, that
seeks to compel arbitration here.
Zirpoli is right. He never signed an arbitration agreement
with Midland. And while Midland claims that it is the assignee
of Zirpoli’s agreement with OneMain, that assignment was in-
valid. A valid assignment required one of two things. Either
Midland needed a Pennsylvania license to hold this type of
loan. See 7 Pa. Stat. & Cons. Stat. Ann. §§ 6203.A, 6208; 41
Pa. Stat. & Cons. Stat. Ann. § 201(a). Or the companies needed
the Pennsylvania Secretary of Banking’s blessing. 7 Pa. Stat.
& Cons. Stat. Ann. § 6214.I. They had neither. Only OneMain
had the necessary license. And the Secretary never approved
the assignment. So OneMain’s assignment to Midland was in-
valid. Thus, Midland has no arbitration agreement with Zirpoli
and no contractual right to force him out of court.
Today’s holding confuses how we analyze the formation of
arbitration agreements. Courts cannot start by asking, “Was an
agreement formed?” Rather, they must ask, “Was an agree-
ment formed between these parties?” Because the majority
does not, I respectfully dissent in part.
2