Riegel v. Medtronic, Inc. (06-179), Rowe v. New Hampshire Motor Transport Ass'n (06-457), Preston v. Ferrer (06-1463), LaRue v. DeWolff, Boberg & Associates (06-856), Danforth v. Minnesota (06-8273) and order list.
Greetings, Court fans!
In what will not come as a shock to anyone who has followed the Court's recent arbitration jurisprudence, the Court held in Preston v. Ferrer (06-1463) that the Federal Arbitration Act ("FAA") supersedes state laws that lodge primary jurisdiction in a state regulatory entity. California's Talent Agencies Act ("TAA"), which requires talent agents to be licensed and invalidates any contract entered into by an unlicensed agent, vests exclusive jurisdiction in the California Labor Commission to resolve disputes under the Act. Preston, a lawyer that provided services to Alex Ferrer (better known as "Judge Alex") brought an arbitration against the good Judge for monies allegedly owned under their contract, which contained a broad arbitration clause. Preston claimed the contract was for personal management services (not covered by the TAA), while Ferrer claimed it was a talent contract and unenforceable since Preston was not licensed under the TAA. Ferrer convinced a California court to stay arbitration in favor of a proceeding before the California Labor Commission, but the high Court disagreed in an 8-1 decision led by Justice Ginsburg. The FAA, it held, created a national policy favoring arbitration. While it does not preempt substantive state law (including the requirements of the TAA), it dictates "who decides" those controversies. Where a contract contains a broad arbitration clause, challenges to the validity of the contract as a whole (as opposed to the arbitration clause itself) are for the arbitrator to decide regardless of state laws to the contrary. And there is no basis to differentiate between state laws that attempt to vest exclusive jurisdiction in a state court and those that attempt to vest jurisdiction in a state agency – the FAA supersedes both. So, Judge Alex can still argue that his contract with Preston is void and unenforceable under the TAA . . . but he'll have to do so before an essentially unreviewable arbitrator (irony anyone?).