The U.S. Supreme Court ruled that when parties agree to arbitrate all questions arising under a contract, the Federal Arbitration Act (“FAA”) supersedes state laws that refer certain state-law controversies to a judicial forum or administrative agency. This case arose out of a contract dispute between a former Florida trial court judge (currently appearing as “Judge Alex” on Fox television) and his attorney regarding the payment of certain fees. The Petitioner sought to arbitrate the dispute. In response, the Respondent, Ferrer, petitioned the California Labor Commissioner for a determination that the contract was invalid because if violated a California state law known as the Talent Agencies Act (“TAA”). Ferrer also filed a state court action seeking a stay of the arbitration proceeding. The lower courts held that the statutes vested exclusive jurisdiction of the dispute with the Labor Commissioner.
The Supreme Court reversed that decision. The Court stated that “the dispositive issue… is not whether the FAA violates the TAA wholesale. The FAA plainly has no such destructive aim or effect. Instead, the question is simply who decides whether Preston [violated the TAA].” The Court concluded that because the contract contained an arbitration provision, the FAA superseded California state law, lodging jurisdiction elsewhere. blank”>Preston v. Ferrer, No. 06-1463, 552 U.S. _ (Feb. 20, 2008).
This post written by Lynn Hawkins.