Thursday, February 21, 2008
Supreme Court Rules Arbitrator Must Hear ‘Judge Alex’ Dispute
By Kenneth Ofgang, Staff Writer
An arbtration clause in a contract involving commerce takes precedence over a state law requiring that disputes be heard by an administrative agency, the U.S. Supreme Court ruled yesterday.
In an 8-1 decision, with Justice Clarence Thomas the lone dissenter, the high court overturned a ruling by Div. One of this district’s Court of Appeal. The state panel, in a split decision, had sided with Alex E. Ferrer, televison’s “Judge Alex,” who is fighting claims that he owes 12 percent of his earnings from the show to a lawyer he describes as an unlicensed talent agent.
Ferrer is a former Circuit Court judge in Miami-Dade County, Fla., who now arbitrates legal disputes on his syndicated television show. In 2002, he signed a management contract with Arnold M. Preston, an attorney who renders services for motion picture and television artists.
The contract contained a clause providing that the parties would arbitrate any attack on the “validity or legality” of the contract. In 2005 Preston initiated an arbitration against Ferrer, seeking unpaid fees.
Ferrer in turn filed suit seeking a declaration that the validity of the contract was not subject to arbitration, and moved to stay the arbitration, while Preston moved to compel arbitration. Ferrer contended that Preston was an unlicensed talent agent, and therefore their agreement was void, and that Preston was barred from recovering any compensation pursuant to it, as set forth in California’s Talent Agencies Act.
Preston claimed he was acting as a personal manager, not as a talent agent, and that the authority to decide the issue rested in the arbitrator under the Federal Arbitration Act, rather than with the Labor Commissioner under the state statute.
Los Angeles Superior Court Judge Haley J. Fromholz, who has since retired, sided with Ferrer, and the Court of Appeal agreed. Los Angeles Superior Court Judge Frank Jackson, sitting on assignment, and Justice Robert Mallano were in the majority, with Justice Miriam Vogel dissenting.
But Justice Ruth Bader Ginsburg, writing for the high court, said Preston’s position was correct.
“When parties agree to arbitrate all questions arising under a contract, state laws lodging primary jurisdiction in another forum, whether judicial or administrative, the FAA supersedes state laws,” she said.
Ginsburg rejected Ferrer’s argument, raised for the first time in the Supreme Court, that the state and federal statutes are compatible because arbitration can take place after the commissioner rules and prior to a de novo trial in the superior court, which the Talent Agencies Act provides for.
“Arbitration, if it ever occurred following the Labor Commissioner’s decision, would likely be long delayed,” contrary to congressional intent that arbitration proceed quickly, the justice said.
Thomas, in a brief dissent, reiterated his long-held view that the FAA does not apply to disputes that may be litigated in state courts.
Joseph D. Schleimer of Schleimer & Freundlich in Beverly Hills argued before the Supreme Court, as he did in the Court of Appeal. G. Eric Brunstad Jr. of Hartford, Ct. argued for Ferrer in the Supreme Court, after Kirsten E. Miller of Mitchell Silberberg & Knupp in Los Angeles argued in the Court of Appeal.
Amicus briefs were filed by the Pacific Legal Foundation, Chamber of Commerce of the United States of America, and other business groups supporting Preston and by the Screen Actors Guild supporting Ferrer.
The case is Preston v. Ferrer, 06-1463.
Copyright 2008, Metropolitan News Company