During the first three months of 2008, the U.S. Supreme Court issued two decisions concerning the Federal Arbitration Act. On February 20, 2008 in Preston v. Ferrer, the Court held that the FAA supersedes state statutory provisions that refer disputes regarding the validity of contracts containing arbitration clauses initially to an administrative agency. In Preston, television’s “Judge Alex” Ferrer sought to invalidate, under the California Talent Agencies Act, an entertainment management agreement containing an arbitration clause. The CTAA vests primary jurisdiction over talent agency disputes with the state labor commissioner, and creates procedural prerequisites to the enforcement of an arbitration agreement. The California courts ruled that the dispute should go initially before the labor commissioner, and enjoined Judge Alex’s adversary from proceeding with arbitration. The Supreme Court reversed, holding that the FAA preempted the California statute’s procedural prescriptions. Following its decision in Buckeye Check Cashing, Inc. v. Conklin (2006), the Court also held that questions concerning the validity of a contract in its entirety must be resolved in the first instance by the arbitrator, not the administrative agency.
In Hall Street Associates, L.L.C. v. Mattel, Inc. on March 25, 2008, the Court ruled that if judicial review of an arbitration award is sought under the FAA, the parties may not contractually expand the grounds listed in the FAA for confirming, vacating, or modifying an arbitration award. In the Court’s view, exclusivity of the statutory grounds for review is needed to maintain arbitration’s “essential virtue of resolving disputes straightaway.” However, the Court noted that its ruling is limited to judicial review sought pursuant to the FAA, and stated that it was deciding nothing about “other possible avenues” for judicial enforcement of arbitration awards, such as state statutes or common law.