Litigation

Express Scripts May be Short-Lived in Light of Recent Supreme Court Decision

By H. William Allen et al.

Thanks to Mac Golden for pointing us to Preston v. Ferrer, 552 U.S. __ (2008), which probably invalidates the Eighth Circuit's recent decision, Express Scripts v. Aegon Direct Marketing Services, Inc., (previously posted 2/20/08).

Ferrer is television's Judge Alex; Preston is an attorney who provided professional services to Ferrer. Their contract had an arbitration provision that incorporated the rules of the American Arbitration Association (AAA). California has a law called the California Talent Agencies Act (TAA) that gives the California Labor Commissioner jurisdiction over disputes against talent agents. When the parties had a dispute over fees, Preston initiated arbitration, while Ferrer petitioned the labor commissioner. The trial court and state appellate court both held the labor commissioner had exclusive jurisdiction.

The Supreme Court reversed, holding that when parties agree to arbitrate, the Federal Arbitration Act supersedes state laws granting primary jurisdiction to an administrative or judicial forum. Part of the Court's reasoning was the contract's incorporation of AAA rules, which let the arbitrator determine arbitrability. Note this argument was untimely brought up in Express Scripts, so the Eighth Circuit did not address it. When this issue comes before the Eighth Circuit again, it will likely find that the arbitrator determines arbitrability when the contract incorporates the AAA rules.

Full post as published by Arkansas Business Litigation Blog on February 29, 2008 (boomark / email).