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Does the FAA Preempt California's Authority to Determine the Validity of a Performer's Personal Management Contract? Jay E

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Does the FAA Preempt California's Authority to Determine the Validity of a Performer's Personal Management Contract? Jay E Marquette University Law School Marquette Law Scholarly Commons Faculty Publications Faculty Scholarship 1-1-2008 Does the FAA Preempt California's Authority to Determine the Validity of a Performer's Personal Management Contract? Jay E. Grenig Marquette University Law School, [email protected] Follow this and additional works at: http://scholarship.law.marquette.edu/facpub Part of the Law Commons Publication Information Jay E. Grenig, Does the FAA Preempt California's Authority to Determine the Validity of a Performer's Personal Management Contract?, 35 Preview U.S. Sup. Ct. Cas. 180 (2008). © 2008 American Bar Association. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. Repository Citation Grenig, Jay E., "Does the FAA Preempt California's Authority to Determine the Validity of a Performer's Personal Management Contract?" (2008). Faculty Publications. Paper 358. http://scholarship.law.marquette.edu/facpub/358 This Article is brought to you for free and open access by the Faculty Scholarship at Marquette Law Scholarly Commons. It has been accepted for inclusion in Faculty Publications by an authorized administrator of Marquette Law Scholarly Commons. For more information, please contact [email protected]. ARBITRATION Case Does the FAA Preempt California’s Case Authority to Determine the Validity of a atat aa Performer’s Personal Management Contract? by Jay E. Grenig GlanceGlance PREVIEW of United States Supreme Court Cases, pages 180–185. © 2008 American Bar Association. Ferrer, the management agreement Jay E. Grenig is a professor of law was shown to Ferrer hours before a at Marquette University Law meeting between Ferrer and several School in Milwaukee, Wisconsin. television network executives and Professor Grenig is author of producers. The agreement also enti- tled Preston to a sizable commission In this case, the Supreme Alternative Dispute Resolution, 3d edition. He can be reached at stemming from any employment Court is asked to [email protected] or Ferrer obtained as a result of the determine whether the (262) 646-3324. meeting. Although Ferrer did not Federal Arbitration Act obtain employment as a result of the meeting, he was later employed preempts the California in the television industry working Labor Commissioner’s with two of the producers he had jurisdiction to conduct an met at the meeting. administrative hearing ISSUE Does the Federal Arbitration Act The management agreement includ- and determine whether preempt the California Supreme ed a standard American Arbitration an individual has violated Court’s decision holding that the Association (AAA) provision calling the California Talent California Talent Agencies Act pre- for arbitration of disputes. The arbi- Agencies Act. cluded a manager from requiring a tration clause specifically provided performer to arbitrate a dispute that disputes about the “validity” with a performer with respect to the and “legality” of the contract would performer’s personal management be decided by arbitration. Ferrer contract? resides in Florida and tapes the Judge Alex television program in FACTS Texas. Preston had his office in California. Ferrer was in Nevada Respondent Alex Ferrer is a former when he signed the management Florida judge who is the star of agreement. Judge Alex, a syndicated television program, in which Ferrer arbitrates When Judge Alex went on the air, minor civil disputes as a form of Ferrer allegedly refused to pay entertainment. Petitioner Arnold M. Preston is an attorney who provides services as a personal manager, advising and counseling artistic per- sonnel in the motion picture and PRESTON V. FERRER television industry. He has never DOCKET NO. 06-1463 been a licensed talent agent. ARGUMENT DATE: In March 2002, Preston and Ferrer JANUARY 14, 2008 entered into a written management FROM: SUPREME COURT agreement providing for payment of OF CALIFORNIA a fee based on Ferrer’s earnings from Judge Alex. According to 180 Preston the management fee provid- labor commissioner, not the arbitra- tinguished Buckeye on the grounds ed by the management agreement. tor. The Superior Court determined that the Talent Agencies Act vests On June 4, 2005, Preston filed a that under the Talent Agencies Act, initial jurisdiction in an administra- demand for arbitration with the the labor commissioner could pro- tive agency, whereas Buckeye AAA in Los Angeles, California. ceed with the commissioner’s involved an attempt to avoid arbi- Ferrer responded on July 5, 2005, inquiry before the parties litigate or tration by filing a lawsuit in a court. by filing an action with the arbitrate their dispute. California Labor Commissioner, The California Supreme Court challenging the legality of the entire In a 2-1 decision, the California denied review on February 14, management contract under the Court of Appeal affirmed the 2007. Preston’s request for review California Talent Agencies Act. Superior Court’s decision. Ferrer v. by the U.S. Supreme Court was Among other things, Ferrer asked Preston, 145 Cal.App.4th 440 granted on September 25, 2007. 128 for a declaration that the manage- (2006). Relying on California Labor S.Ct. 31 (2007). ment agreement was void, and for Code § 1700.44(a), the court held an order staying the arbitration. the labor commissioner had exclu- CASE ANALYSIS sive jurisdiction to hear disputes Arbitration is a method of dispute Under the Talent Agencies Act, any- under the Talent Agencies Act. resolution in which the parties sub- one who procures or attempts to Acknowledging that the parties’ con- mit a dispute to an impartial person procure employment for an artist in tract included a standard AAA arbi- selected by the parties. The arbitra- the television, stage, or motion pic- tration clause, including a stipula- tion procedure is generally less for- ture industry is a “talent agency” tion that the parties are to arbitrate mal than a judicial trial. The arbi- and must be licensed by the any attack on the “validity or trator’s decision is final and binding California labor commissioner. legality” of the contract, the court on the parties. Ferrer claims that Preston is not a said that California Labor Code licensed talent agent and, moreover, § 1700.44(a) nonetheless vests Traditionally, courts refused to that the contract Preston presented exclusive original jurisdiction in the enforce agreements to arbitrate. to Ferrer had not been approved by labor commissioner to resolve issues The Federal Arbitration Act of 1925 the labor commissioner as required arising under the act. (FAA) changed that common-law by the Talent Agencies Act. rule and made a written agreement The dissenting opinion contended to arbitrate specifically enforceable The labor commissioner’s hearing that the Federal Arbitration Act and in the federal courts—if the agree- officer determined that the Ferrer Buckeye Check Cashing, Inc. v. ment is connected with a maritime petition asserted a “colorable basis Cardegna, 546 U.S. 440 (2006), transaction or evidences a transac- for exercise of the Labor preempted the majority decision, tion involving foreign or interstate Commissioner’s jurisdiction.” stating: commerce. According to the However, the hearing officer also Supreme Court, in enacting the determined she lacked the authority Because it is undisputed (correct- FAA, Congress intended to create a to stay the arbitration. ly) that the contract before us is new body of federal substantive law governed by the FAA … it follows affecting the validity and interpreta- The arbitrator set a hearing on the necessarily that the arbitrator tion of arbitration agreements and merits for January 26, 2006. On and not the court must deter- to exercise as much of its constitu- November 2, 2005, Ferrer filed suit mine the gateway issues. My tional power under the Commerce in the Los Angeles Superior Court, colleagues’ contrary conclusion Clause as it could in order to make seeking an injunction against the —based on the fact that the the FAA as widely effective as possi- arbitration. Preston responded by Buckeye court did not consider ble. See Southland Corp. v. filing a Motion to Compel whether the issue should go Keating, 465 U.S. 1 (1984). The Arbitration in the Superior Court. first to a state administrative FAA applies in state courts as well On December 7, 2005, the Superior agency—ignores Buckeye’s hold- as in federal courts. Court denied Preston’s Motion to ing that its rules trump conflict- Compel Arbitration, issued the ing state procedures. The Supreme Court has determined injunction against the arbitration, that in enacting the FAA, Congress and ordered that the legality of the The majority of the Court of Appeal declared a national policy favoring entire contract under the Talent did not dispute the applicability of arbitration and withdrawing the Agencies Act be decided by the the Federal Arbitration Act, but dis- (Continued on Page 182) American Bar Association 181 power of the states to require a judi- arbitration clause is valid and commissioner’s review is informal, cial forum for the resolution of applicable, the parties may proceed expeditious, and subject to com- claims that the contracting parties to arbitration if either is dissatisfied plete de novo review, Ferrer says it have agreed to resolve by arbitra- with the commissioner’s determina- does not tie the hands of the arbi- tion. Doctor’s Associates, Inc. v. tion. If so, Ferrer says an arbitrator, trator, who is left, as between the Casarotto, 517 U.S. 681, 687 rather than a court, will resolve the parties, to fashion the ultimate rem- (1996). According to the Supreme controversy. edy. At the same time, as between Court, there is a strong federal poli- the parties and the state of cy favoring arbitration of statutory It is Preston’s position that the fact California, Ferrer contends the claims.
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