In a contract dispute where Judge Alex Ferrer, star of the “Judge Alex” television show, refused to pay his manager certain commissions, Ferrer’s manager initiated arbitration proceedings pursuant to the arbitration clause included in their management contract. Even though the Federal Arbitration Act (FAA) requires enforcement of arbitration agreements in contracts involving interstate commerce and the Supreme Court has consistently held that the FAA preempts state laws which prohibit arbitration of certain claims, the California Court of Appeal affirmed a trial court’s injunction against the arbitration proceedings, holding that the injunction was valid under California law. Specifically, under the California Talent Agencies Act, disputes of this sort must be resolved by the state labor commissioner (subject to judicial review) and thus cannot be arbitrated in the manner agreed to by contract.
On 2/20/08, the Supreme Court disagreed. It ruled that Congress clearly indicated its intention to allow parties to move conflicts quickly and easily into arbitration, and arbitrators have the power to decide whether a contract is valid. Thus, the parties need not go through state judicial or administrative proceedings, but should go directly to arbitration, to determine the validity of the contract.