Source: https://supreme.justia.com/cases/federal/us/552/346/opinion.html
Timestamp: 2017-02-28 01:23:12
Document Index: 698160252

Matched Legal Cases: ['§1700', '§2', '§2', '§2', '§1700', '§1700', '§1700', '§1700', '§1700', '§1700', '§1281', '§1700', '§904', '§1257']

Preston v. Ferrer (Opinion by Justice Ginsburg) :: 552 U.S. 346 (2008) :: Justia U.S. Supreme Court Center Log In
This case concerns a contract between respondent Alex E. Ferrer, a former Florida trial court judge who currently appears as “Judge Alex” on a Fox television network program, and petitioner Arnold M. Preston, a California attorney who renders services to persons in the entertainment industry. Seeking fees allegedly due under the contract, Preston invoked the parties’ agreement to arbitrate “any dispute … relating to the terms of [the contract] or the breach, validity, or legality thereof … in accordance with the rules [of the American Arbitration Association].” App. 18.
Preston’s demand for arbitration, made in June 2005, was countered a month later by Ferrer’s petition to the California Labor Commissioner charging that the contract was invalid and unenforceable under the California Talent Agencies Act (TAA), Cal. Lab. Code Ann. §1700 et seq. (West 2003 and Supp. 2008). Ferrer asserted that Preston acted as a talent agent without the license required by the TAA, and that Preston’s unlicensed status rendered the entire contract void.[Footnote 1]
The California Supreme Court denied Preston’s petition for review. No. S149190 (Feb. 14, 2007), 2007 Cal. LEXIS 1539, App. A to Pet. for Cert. 1a. We granted certiorari to determine whether the FAA overrides a state law vesting initial adjudicatory authority in an administrative agency. 551 U. S. ___ (2007).
Because the contract between Ferrer and Preston provides that “any dispute … relating to the … validity, or legality” of the agreement “shall be submitted to arbitration,” App. 18, Preston urges that Ferrer must litigate “his TAA defense in the arbitral forum,” Reply Brief 31. Ferrer insists, however, that the “personal manager” or “talent agent” inquiry falls, under California law, within the exclusive original jurisdiction of the Labor Commissioner, and that the FAA does not displace the Commissioner’s primary jurisdiction. Brief for Respondent 14, 30, 40–44.
The dispositive issue, then, contrary to Ferrer’s suggestion, is not whether the FAA preempts the TAA wholesale. See id., at 44–48. The FAA plainly has no such destructive aim or effect. Instead, the question is simply who decides whether Preston acted as personal manager or as talent agent.
“A written provision in any … contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction … shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U. S. C. §2.
Section 2 “declare[s] a national policy favoring arbitration” of claims that parties contract to settle in that manner. Southland Corp., 465 U. S., at 10. That national policy, we held in Southland, “appli[es] in state as well as federal courts” and “foreclose[s] state legislative attempts to undercut the enforceability of arbitration agreements.” Id., at 16. The FAA’s displacement of conflicting state law is “now well-established,” Allied-Bruce Terminix Cos. v. Dobson, 513 U. S. 265, 272 (1995), and has been repeatedly reaffirmed, see, e.g., Buckeye, 546 U. S., at 445–446; Doctor’s Associates, Inc. v. Casarotto, 517 U. S. 681, 684–685 (1996); Perry v. Thomas, 482 U. S. 483, 489 (1987).[Footnote 2]
The litigation in Prima Paint originated in federal court, but the same rule, we held in Buckeye, applies in state court. 546 U. S., at 447–448. The plaintiffs in Buckeye alleged that the contracts they signed, which contained arbitration clauses, were illegal under state law and void ab initio. Id., at 443. Relying on Southland, we held that the plaintiffs’ challenge was within the province of the arbitrator to decide. See 546 U. S., at 446.
Buckeye largely, if not entirely, resolves the dispute before us. The contract between Preston and Ferrer clearly “evidenc[ed] a transaction involving commerce,” 9 U. S. C. §2, and Ferrer has never disputed that the written arbitration provision in the contract falls within the purview of §2. Moreover, Ferrer sought invalidation of the contract as a whole. In the proceedings below, he made no discrete challenge to the validity of the arbitration clause. See 145 Cal. App. 4th, at 449, 51 Cal. Rptr. 3d, at 635 (Vogel, J., dissenting).[Footnote 3] Ferrer thus urged the Labor Commissioner and California courts to override the contract’s arbitration clause on a ground that Buckeye requires the arbitrator to decide in the first instance.
The TAA regulates talent agents and talent agency agreements. “Talent agency” is defined, with exceptions not relevant here, as “a person or corporation who engages in the occupation of procuring, offering, promising, or attempting to procure employment or engagements for an artist or artists.” Cal. Lab. Code Ann. §1700.4(a) (West 2003). The definition “does not cover other services for which artists often contract, such as personal and career management (i.e., advice, direction, coordination, and oversight with respect to an artist’s career or personal or financial affairs).” Styne v. Stevens, 26 Cal. 4th 42, 51, 26 P. 3d 343, 349 (2001) (emphasis deleted). The TAA requires talent agents to procure a license from the Labor Commissioner. §1700.5. “In furtherance of the [TAA’s] protective aims, an unlicensed person’s contract with an artist to provide the services of a talent agency is illegal and void.” Id., at 51, 26 P. 3d, at 349.[Footnote 4]
“In cases of controversy arising under this chapter, the parties involved shall refer the matters in dispute to the Labor Commissioner, who shall hear and determine the same, subject to an appeal within 10 days after determination, to the superior court where the same shall be heard de novo.”
Procedural prescriptions of the TAA thus conflict with the FAA’s dispute resolution regime in two basic respects: First, the TAA, in §1700.44(a), grants the Labor Commissioner exclusive jurisdiction to decide an issue that the parties agreed to arbitrate, see Buckeye, 546 U. S., at 446; second, the TAA, in §1700.45, imposes prerequisites to enforcement of an arbitration agreement that are not applicable to contracts generally, see Doctor’s Associates, Inc., 517 U. S., at 687.
Ferrer contends that the TAA is nevertheless compatible with the FAA because §1700.44(a) merely postpones arbitration until after the Labor Commissioner has exercised her primary jurisdiction. Brief for Respondent 14, 40. The party that loses before the Labor Commissioner may file for de novo review in Superior Court. See §1700.44(a). At that point, Ferrer asserts, either party could move to compel arbitration under Cal. Civ. Proc. Code Ann. §1281.2 (West 2007), and thereby obtain an arbitrator’s determination prior to judicial review. See Brief for Respondent 13.
That is not the position Ferrer took in the California courts. In his complaint, he urged the Superior Court to declare that “the [c]ontract, including in particular the issue of the validity of the [c]ontract, is not subject to arbitration,” and he sought an injunction stopping arbitration “unless and until, if ever, the Labor Commissioner determines that he/she has no jurisdiction over the parties’ dispute.” App. 29 (emphasis added). Ferrer also told the Superior Court: “[I]f … the Commissioner rules that the [c]ontract is void, Preston may appeal that ruling and have a hearing de novo before this Court.” Appellant’s App. in No. B188997 (Cal. App.), p. 157, n. 1 (emphasis added).
contract of which an arbitration clause forms a part.” AAA, Commercial Arbitration Rules ¶R–7(b) (2007), online at http://www.adr.org/sp.asp?id=22440 (as visited Feb. 15, 2008, and in Clerk of Court’s case file). The incorporation of the AAA rules, and in particular Rule 7(b), weighs against inferring from the choice-of-law clause an understanding shared by Ferrer and Preston that their disputes would be heard, in the first instance, by the Labor Commissioner. Following the guide Mastrobuono provides, the “best way to harmonize” the parties’ adoption of the AAA rules and their selection of California law is to read the latter to encompass prescriptions governing the substantive rights and obligations of the parties, but not the State’s “special rules limiting the authority of arbitrators.” 514 U. S., at 63–64.
Footnote 1 The TAA uses the term “talent agency” to describe both corporations and individual talent agents. We use the terms “talent agent” and “talent agency” interchangeably.
Footnote 2 Although Ferrer urges us to overrule Southland, he relies on the same arguments we considered and rejected in Allied-Bruce Terminix Cos. v. Dobson, 513 U. S. 265 (1995). Compare Brief for Respondent 55–59, with Brief for Attorney General of Alabama et al. as Amici Curiae in Allied-Bruce Terminix Cos. v. Dobson, O. T. 1993, No. 93–1001, pp. 11–19. Adhering to precedent, we do not take up Ferrer’s invitation to overrule Southland.
Footnote 3 Ferrer’s petition to the Labor Commissioner sought a declaration that the contract “is void under the [TAA].” App. 23. His complaint in Superior Court seeking to enjoin arbitration asserted: “[T]he [c]ontract is void by reason of [Preston’s] attempt to procure employment for [Ferrer] in violation of the [TAA],” and “the [c]ontract’s arbitration clause does not vest authority in an arbitrator to determine whether the contract is void.” Id., at 27. His brief in the appeals court stated: “Ferrer does not contend that the arbitration clause in the [c]ontract was procured by fraud. Ferrer contends that Preston unlawfully acted as an unlicensed talent agent and hence cannot enforce the [c]ontract.” Brief for Respondent in No. B188997, p. 18.
Footnote 4 Courts “may void the entire contract” where talent agency services regulated by the TAA are “inseparable from [unregulated] managerial services.” Marathon Entertainment, Inc. v. Blasi, No. S145428, 2008 WL 216532, *13 (Cal., Jan. 28, 2008). If the contractual terms are severable, however, “an isolated instance” of unlicensed conduct “does not automatically bar recovery for services that could lawfully be provided without a license.” Ibid.
Footnote 5 To appeal the Labor Commissioner’s decision, an aggrieved party must post a bond of at least $1,000 and up to twice the amount of any judgment approved by the Commissioner. §1700.44(a).
Footnote 6 From Superior Court an appeal lies in the Court of Appeal. Cal. Civ. Proc. Ann. §904.1(a) (West 2007); Cal. Rule of Court 8.100(a) (Appellate Rules) (West 2007 rev. ed.). Thereafter, the losing party may seek review in the California Supreme Court, Rule 8.500(a)(1) (Appellate Rules), perhaps followed by a petition for a writ of certiorari in this Court, 28 U. S. C. §1257. Ferrer has not identified a single case holding that California law permits interruption of this chain of appeals to allow the arbitrator to review the Labor Commissioner’s decision. See Tr. of Oral Arg. 35.
Footnote 7 Enforcement of the parties’ arbitration agreement in this case does not displace any independent authority the Labor Commissioner may have to investigate and rectify violations of the TAA. See Brief for Respondent 47 (“[T]he Commissioner has independent investigatory authority and may receive information concerning alleged violations of the TAA from any source.” (citation omitted)). See also Tr. of Oral Arg. 13–14.
Footnote 8 The question in Mastrobuono was whether the arbitrator could award punitive damages. See Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U. S. 52, 53–54 (1995). New York law prohibited arbitrators, but not courts, from awarding such damages. Id., at 55. The NASD rules, in contrast, authorized “damages and other relief,” which, according to a NASD arbitration manual, included punitive damages. Id., at 61 (internal quotation marks omitted). Relying on Volt, respondents argued that the choice-of-law clause incorporated into the parties’ arbitration agreement New York’s ban on arbitral awards of punitive damages. Opposing that argument, petitioners successfully urged that the agreement to arbitrate in accordance with the NASD rules controlled.