Preston v. Ferrer
The respondent Ferrer (“who appears on the TV as ‘Judge Alex’”) and the appellant Preston (“an entertainment industry attorney”), entered into a contract that in case of any dispute relating to contractual agreements, such as breach, legality or validity, method of resolution will be arbitration in accordance with the rules of American arbitration association (AAA). To gain the fees due under the contract, Preston allegedly invoked this provision. Ferrer went to California labor commissioner and filed a suit that Preston worked fraudulently and does not eve possess the required license, thus the contract stands invalid under the California talent agency act (TAA). The labor commissioner hearing officer “denied Ferrer’s motion to stay the arbitration”, Ferrer went to state court and filed a suit for enjoining arbitration and Preston moved for compelling arbitration.
“The court denied Preston’s motion and enjoined him from proceeding before the arbitrator unless the labor commissioner determined”, she lacked jurisdiction over the dispute. The court in the case of Buckeye check cashing inc v. Cardegna, 546 U.S., 440, 446, that challenges the validity of a contract requiring arbitration in ordinary disputes, held that, ‘it should be considered by an arbitrator and not a court.’ Considering the above judgment, the court of California came to a decision that “TAA vested power with the labor commissioner of the original jurisdiction over the dispute, and that Buckeye was inapposite because it did not involve an administrative agency with exclusive jurisdiction over the disputed issue”.”
Held – when parties come to an agreement that arbitration will be the chosen method for dispute resolution arising under the contract act, then the FAA supersedes all state laws of administrative or judicial nature.