Preston v. Ferrer

Facts of the Case

Respondent Alex E. Ferrer, a former Florida trial court judge who was currently on television as “Judge Alex,” and petitioner Arnold Preston, a California attorney rendering services to persons in the entertainment industry, entered into a contract, which required arbitration of any dispute relating to the contract’s terms or the breach, validity, or legality thereof in accordance with the American Arbitration Association rules. Seeking fees allegedly due under the contract, petitioner Preston invoked the parties’ agreement to arbitrate. Respondent Ferrer filed suit in state court seeking to enjoin arbitration, and Preston moved to compel arbitration. The 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. The Court of Appeal of California held that the state labor agency had the exclusive jurisdiction over the dispute. Petitioner Preston appealed.

Question

Must a contract dispute to go arbitration pursuant to the document’s arbitration clause when an administrative agency has exclusive jurisdiction over the disputed issue?

CONCLUSION

The Court disagreed with the California Labor Commissioner’s assessment and allowed the arbitration to continue. Justice Ruth Bader Ginsburg, writing for an 8-1 majority, stated that the California law granting exclusive jurisdiction to the Labor Commission was superseded by the Federal Arbitration Act because the parties to this case had agreed to arbitrate any contractual disputes. Therefore, it was the function of an arbitrator, not the Labor Commission, to determine the legality of the management contract. Justice Clarence Thomas issued the sole dissent.

Case Information

  • Citation: 552 US 346 (2008)
  • Granted: Sep 25, 2007
  • Argued: Jan 14, 2008
  • Decided Feb 20, 2008