U.S. Supreme Court Issues Arbitrability Opinion

Today was a busy day at the U.S. Supreme Court; five opinions were handed down. Others have commented about them all. One of the opinions, however, discusses Federal Arbitration Act (“FAA”) preemption of state administrative proceedings and as such is something we need to mention.

The case, Preston vs. Ferrer (link is to .pdf file), involves a dispute between noted television jurist Judge Alex and an attorney who may or may not have been his “talent agent”. Indeed, the substantive question underlying the entire dispute was whether or not Mr. Preston was a talent agent, as that term is used by California’s Talent Agencies Act (which we decline to refer to as TAA, since around here that acronym means Texas Arbitration Act). In short, Preston performed certain services for Judge Alex pursuant to a contract, which contained an arbitration clause. Preston claimed Judge Alex owed him fees under the contract and initiated an arbitration proceeding seeking the fees.

In response, Judge Alex argued that Preston had served as a talent agent pursuant to the CTAA, but that he was not licensed as such as required by The Act. That being the case, Judge Alex argued that the contract, including the arbitration clause, was void. Furthermore, he argued that since the CTAA gives the California Labor Commissioner exclusive jurisdiction to determine whether or not someone is a talent agent, the arbitration ought to be stayed pending that determination.

In the meantime, the Supreme Court handed down its Buckeye Check Cashing opinion, which more or less eviscerated Judge Alex’s contention that a contract’s voidness allows him to avoid arbitration. Judge Alex, undeterred by this development, argues that a mandatory state administrative proceeding is not addressed by Buckeye. According to Judge Alex, since California has an administrative proceeding which must be followed prior to Judge Alex’s ability to proceed with litigation, that administrative remedy must be exhausted before arbitration can commence.

The Supreme Court disagrees. According to this morning’s opinion, the parties’ agreement to arbitrate triggers the FAA, which in turn preempts the CTAA. It is up to the arbitrator, not the Labor Commissioner or the courts, to determine whether or not Mr. Preston was a talent agent, and therefore whether or not his contract with Judge Alex is void.

Justice Thomas, as usual, dissented, writing again that he does not feel the FAA ought to pre-empt state-court proceedings.

All of this, of course, is made more interesting by the fact that these TV judge shows are all just arbitrations. I wonder if any litigation has arisen out of Judge Alex’s arbitration clause? Perhaps the folks at the Florida Arbitration Blog know.

Preston v. Ferrer, 552 U.S. ___ (2008) (Cause No. 06-1463)

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