U.S. Supremes: Arbitrate Claims Under Labor Commissioner's Jurisdiction

The California Labor Commissioner has primary jurisdiction over disputes under California's Talent Agencies Act. (Lab. Code section 1700 et seq.). But some television star named "Judge Alex" (not the Chief Judge of the Ninth Circuit) Ferrer, and his entertainment lawyer, Preston, agreed in their contract to arbitrate any disputes between them. When Preston attempted to collect fees he alleged were due him, the Labor Commissioner took the claim and refused to stay it pending arbitration.

Judge Alex sought an order compelling arbitration, which was denied. The California Court of Appeal held that Federal Arbitration Act did not trump the Labor Commissioner's jurisdiction, because the FAA does not apply to administrative agency jurisdiction.

The U.S. Supreme Court disagreed, and held that an arbitrator gets to decide whether Preston's agreement with Ferrer was enforceable under the Talent Agencies Act. In so holding, the Court clarified that when a party challenges an entire contract is unenforceable, not just the arbitration clause, the arbitrator decides that issue, even if the alternative forum is an administrative agency under state law.

The case is Preston v. Ferrer. The opinion is here.