Case 8: Preston v. Ferrer, 552 U.S. 346 (U.S. Sup. Ct. 2008).

Alex Ferrer, a former judge who appeared as Judge Alex on a television program, entered into a contract with Arnold Preston, a California attorney who rendered services to persons in the entertainment industry. Seeking fees allegedly due under the contract, Preston invoked the clause setting forth 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]. Ferrer countered Preston's demand for arbitration by filing, with the California Labor Commissioner, a petition in which he contended that the contract was unenforceable under the California Talent Agencies Act (CTAA) because Preston supposedly acted as a talent agent without the license required by the CTAA. In addition, Ferrer sued Preston in a California court, seeking a declaration that the dispute between the parties regarding the contract and its validity was not subject to arbitration. Ferrer also sought an injunction restraining Preston from proceeding before the arbitrator unless and until the Labor Commissioner concluded that she did not have authority to rule on the parties' dispute. Preston responded by moving to compel arbitration, in reliance on the Federal Arbitration Act. The California court denied Preston's motion to compel arbitration and issued the injunction sought by Ferrer.

True/False Questions (with short explanations)

a) Both Preston and Ferrer are entitled to discovery in their AAA arbitration proceeding.
b) Both Preston and Ferrer can pursue a class action arbitration under the terms of their arbitration agreement.
c) The federal district court cannot order the parties to go to arbitration if the cost of proceeding with the arbitration and employing expert witnesses to prove Prestons claim for fees due under his agreement with Ferrer was prohibitive and exceeded the maximum recovery available.
d) The California court should be reversed. The Federal Arbitration Act preempts both Ferrers request for injunctive relief filed in a California court and Ferrers petition filed with the California Labor Commissioner under the California Talent Agencies Act.
e) Preston can seek to vacate the arbitrators award in the federal district court in California under the Federal Arbitration Act, if Preston is not satisfied with the amount of the arbitrators award in his claim against Ferrer.