Preston v. Ferrer
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| Ali v. Federal Bureau of Prisons | ||||||||||
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| Argued January 14, 2008 Decided February 20, 2008 |
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| When all parties to a contract agree to arbitrate their disputes, this also covers disputes which state law requires be referred to an administrative agency. | ||||||||||
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| Majority by: Ginsburg Joined by: Roberts, Stevens, Scalia, Kennedy, Souter, Breyer, Alito Dissent by: Thomas |
Preston v. Ferrer was a United States Supreme Court case, holding that the Federal Arbitration Act ("FAA") overrules state laws declaring that certain disputes must be resolved by a state administrative agency.
Alex Ferrer, who plays Judge Alex in a syndicated American courtroom television show, was notified of a demand for arbitration by Arnold Preston, a California attorney. Preston claimed Ferrer owed him fees under a "personal management" contract; in the contract, they had agreed to arbitrate disputes rather than bring them to court. Ferrer then petitioned the California Labor Commissioner, claiming the contract was invalid and unenforceable under California law, as Preston had allegedly acted as a talent agent without a license. Preston argued that he was not acting as a talent agent, and that an arbitrator, not a court, should decide whether this was the case.
Citing Southland Corp. v. Keating, the Court noted that it had ruled consistently that the FAA was "a national policy favoring arbitration" when parties contract to settle disputes in that manner, and that it "foreclose[s] state legislative attempts to undercut the enforceability of arbitration agreements." Citing two other previous Supreme Court rulings, the Court also noted that challenges to the validity of an entire contract are subject to the arbitration agreed to in the contract. Ferrer's argument was "unconvincing", the Court ruled, that state law required the exhaustion of administrative remedies before arbitration would commence.
In a 4-sentence dissent, Justice Clarence Thomas wrote, "As I have stated on many previous occasions, I believe that the Federal Arbitration Act ... does not apply to proceedings in state courts."
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