Wage Law

When parties agree to arbitrate all questions arising under a contract, the Federal Arbitration Act ("FAA"), 9 U. S. C. § 1 et seq., supersedes state laws lodging primary jurisdiction in another forum, whether judicial or administrative, including, in the case of Preston v. Ferrer (2008) __ U.S. __, proceedings before the California Labor Commissioner, for a determination that a contract is invalid and unenforceable under California’s Talent Agencies Act. The U.S. Supreme Court opinion, issued this morning, reverses the earlier state court opinion in Preston v. Ferrer (2006) 145 Cal.App.4th 440.

Disputing fees claimed by Arnold Preston, an attorney, Alex Ferrer, a judge, had petitioned the Labor Commissioner for a determination that the contract was invalid under the Talent Agencies Act because Preston had acted as a talent agent without the required license. Preston demanded arbitration. The Labor Commissioner denied Ferrer’s motion to stay the arbitration, so Ferrer filed suit in state court seeking to enjoin arbitration, while Preston moved to compel arbitration. The Superior Court denied Preston’s motion and enjoined him from proceeding before the arbitrator unless and until the Labor Commissioner determined she lacked jurisdiction over the dispute.

While the appeal was pending, the U.S. Supreme Court decided Buckeye Check Cashing, Inc. v. Cardegna (2006) 546 U.S. 440, 446, holding that that challenges to the validity of a contract requiring arbitration of disputes ordinarily “should ... be considered by an arbitrator, not a court.” Nonetheless, the California Court of Appeals upheld the trial court's decision, concluding that the Talent Agencies Act vested the Labor Commissioner with exclusive original jurisdiction over the dispute. The court distinguished Buckeye Check Cashing on the ground that it did not involve a dispute where state law required the parties to first to exhaust any administrative remedies and found the case inapposite because it had not addressed whether the FAA “preempts application of the exhaustion doctrine.”

The Supreme Court disagreed. You can download the full opinion here. The talent in this case is "Judge Alex", Alex E. Ferrer.