This case involves a dispute between Ferrer, a former judge who now works on the television show Judge Alex, and Preson, an entertainment lawyer. Ferrer entered into a management contract with Preston. The contract contained an arbitration clause that required the parties to resolve any disputes over the contract through arbitration instead of using the court system. Preston started arbitration proceedings against Ferrer for his alleged failure to pay Preston fees based on Ferrer’s earnings from Judge Alex. In turn, Ferrer filed a complaint with the California Labor Commissioner alleging that the management contract was invalid because Preston was not a licensed talent agent. Under the California Talent Agencies Act (TAA), a person cannot engage in the work of a talent agent without first being licensed by the Labor Commissioner. Ferrer then filed a complaint in the Los Angeles Superior Court asking the court to stop the arbitration proceedings while the Labor Commissioner determined whether or not the contract was valid. He claimed that the question of the validity of a contract should not itself be subject to arbitration, even if the questionable contract contained an arbitration clause. The superior court granted Ferrer’s request to stop the arbitration proceedings while the Labor Commissioner determined whether the contract was valid or not.
On appeal, the California Court of Appeal affirmed the lower court’s decision. It held that the TAA requires the Labor Commissioner to decide whether management contracts made with unlicensed talent agents are valid. Preston argued that the Federal Arbitration Act and the Supreme Court’s decision in Buckeye Check Cashing, Inc. v. Cardegna required that, as between an arbitrator and a court, the arbitrator should resolve disputes concerning the validity of contracts. The Court of Appeal distinguished the present case from Buckeye, because this case involved not a regular court, but an administrative agency given the specific authority to decide this type of dispute.
Whether the Federal Arbitration Act and Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 126 S.Ct. 1204 (2006) preempt the holding in this case, voiding an interstate arbitration agreement under the California Talent Agencies Act?