Amicus Curiae Brief — Preston v. Ferrer

Sle 357

Spe No. 06-1463

In The

Supreme Court of the United States

.

ARNOLD M. PRESTON,

Petitioner,

v.

ALEX E. FERRER,

Respondent.

°

On Writ Of Certiorari To The

California Court Of Appeal

For The Second Appellate District,

Division One

¢

BRIEF AMICUS CURIAE OF

THE WILLIAM MORRIS AGENCY

IN SUPPORT OF RESPONDENT

¢

DAVID J. BEDERMAN

Counsel of Record

1301 Clifton Road

Atlanta, Georgia 30322-2770

(404) 727-6822

JUDITH B. PROWDA

Of Counsel

15 West 75th Street

Suite 5C

New York, New York, 10023

Counsel for Amicus Curiae

——

—-

(i)

QUESTION PRESENTED FOR REVIEW

Whether California’s Talent Agencies Act, Cal.

Labor Code § 1700 et seq., is preempted by the Federal

Arbitration Act, 9 U.S.C. § 2, insofar as California’s

regulatory system is appropriately-tailored to oversee

a unique labor market and recourse to administrative

agency review, pursuant to the arbitral clause agreed

to by the parties, is not inconsistent with Congress’s

objective of promoting arbitration?

(ii)

TABLE OF CONTENTS

Page

Question Presented for Review................ (i)

Interest of Amicus Curiae ...............2005. 1

Es ohare a te oa a 7

PEI cn ca cbvecedecce¥eeeues 12

I ree oe Aa oa eres 15

A. Principles of Party Autonomy, as Effectuated

by the FAA, Dictate the Application of

Administrative Procedures under California’s

Talent Agencies Act to Disputes Arising Under

ES iw dn gh hoe ea hed ca wees ks 15

B. Recourse to State Administrative Determinations,

Anterior to Arbitration, Does Not Undermine

I ai ee re ree ete 26

C. California’s TAA Regulates a Unique Labor Market

for Entertainment and Media Talent, and

its Arbitral Provisions Should Not be

Preempted by the FAA ..................:. 34

ES Stk i RUE Se Serra Seater ew, ere 39

(iii)

TABLE OF AUTHORITIES

CASES

American Airlines, Inc. v. Wolens,

SP EE, cd cc euececencvees 27

Am. Fed. of Telev. & Radio Artists, AFL-CIO

u. Association of Talent Agents,

576 N.Y.S.2d 575 (N.Y. App. Div. 1991) 11, 36

Buchwald v. Superior Court,

254 Cal. App.2d 347,

62 Cal. Rptr. 364 (1967) .......... 14, 36, 37

Buckeye Cash Checking, Inc. v. Cardegna,

40s ee eee 13, 25, 27

Columbia Artists Management, Inc. v. United States,

381 U.S. 348 (1965) (per curiam) ......... 34

Dean Witter Reynolds Inc. v. Byrd,

GP WPA BO COED fc cholsccccccs 16, 18, 23

Doctor’s Associates, Inc. v. Casarotto,

gs 8 BS errr 12, 23

E.E.O.C. v. Waffle House, Inc.,

534 U.S. 279 (2002) ....... 13, 23, 24, 29-30

First Options of Chicago, Inc. v. Kaplan,

ee 2 ee 25

Gilmer v. Interstate/Johnson Lane Corp.,

Pe WI PEED in ccecccscccces 28, 29, 34

Green Tree Financial Corp. v. Bazzle,

ET POPC Ter Te 22, 34

Hart v. B.F. Keith Vaudeville Exchange,

262 U.S. 271 (1923),

on remand, 12 F.2d 241 (2d Cir. 1926),

cert. denied, 273 U.S. 703 (1926) ......... 34

(iv)

Mastrobuono v. Shearson Lehman Hutton, Inc.,

Ne ee gf 22

Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc.,

oe Rk ee 17, 29, 34

Prima Paint Corp. v. Flood & Conklin Mfg. Co.,

gs BY) eran 13, 16, 25

Scherk v. Alberto-Culver Co.,

SR ee 16

Shearson/American Exp., Inc. v. McMahon,

CE, ree 17, 28, 29

Southland Corp. v. Keating,

es a's vk Peale 13, 25

Styne v. Stevens,

26 Cal.4th 42,

26 P.3d 343 (2001) ........... 11, 14, 32, 37

United States v. Shubert,

kc 14, 34

Volt Information Sciences, Inc. v. Board of

Trustees of Leland Stanford Junior Univ.,

GP Ws GPRD oc ccc cecceceesn passim

Waisbren v. Peppercorn Prods., Inc.,

41 Cal. App.4th 246,

48 Cal. Rptr.2d 437 (1995) ........ 10, 31, 37

Yoo v. Robi, 126 Cal. App.4th 1089,

24 Cal. Rptr.3d 740 (2005) ........... 31, 37

STATUTES AND REGULATIONS

Federal Arbitration Act (FAA),

i i. yh 6a ke vane oo passim

SC aus cee as no wae ah dees tie Kew ee eee 18

(v)

Asis. Bev. Biat. S SB-GEMAD .. wc cece cccccecs 35

Ariz. Admin. Code R20-5-328 ................. 35

3919 Cal. Boat. GEE Gis. BORD ow wc cece cc cccsecss 8

Se es Ce. A I co 60 04K Ke Se ceeneeuna 8

1943 Cail. Stat. 1936 Ge. SBR)... occ ccc scenes 8

Cal. Civ. Proc. Code. § 1281.2(c) ............05. 17

California Talent Agencies Act (TAA),

1978 Cal. Stat. ch. 1382, amended by

1982 Cal. Stat. ch. 682,

Cal. Labor Code § 1700 et seq ....... passim

ge DF ere 8

Cae. Rae CI SPOS on wc cece cc ccnvecsss 10

o Re 3 kk Bree 10

Gol. Leber Code $1700.16 . 0... ccc csccccecs 10

Cal. Leper Code § 1700.1 ow wc cc ccc ccccsces 10

Cal. Labor Code § 1700.23 ............ 10, 25, 33

CO BR CED BD RGWEO ooo cece cc ctsvevcs 10

Cae. Lamew Come S IFGRSS onc cc ccc cdccccss 10

oo ee EE , nr 10

Cal. Labor Code § 1700.32 ...........ccc000. 10

Cal. Labor Code § 1700.33 .................. 10

Cal. Labor Code § 1700.34 .................. 10

Cs Re Ge te BD iv cocccciesdeueceus 10

oe BP gs A Serr rer 10

Cal. Labor Code § 1700.39 .................. 10

COE. RNS GIES BOG occ ccccescvcvencs 10

Cal. Labor Code § 1700.44 ............. 6, 11, 25

Cal. Labor Code § 1700.44(a) ............. 31, 32

Cal. Labor Code § 1700.44(b) ............. 10, 31

Cal. Labor Code § 1700.45 .............. passim

(vi)

Cal. Labor Code § 1700.45(c) ................ 11

Cal. Labor Code § 1700.45(d) .................. 11

Cal. Labor Code § 1700.45(3) .................. 25

Report of the California Entertainment Comm'n,

Ee 9, 30

I Es oc eu eccctocssesecs 36

La. Rev. Stat. Ann. § 23:251(B) ............... 36

N.Y. Arts & Cult. Aff. Law. § 37.071(1) ......... 36

OTHER MATERIALS

American Arbitration Association,

Commercial Arbitration Rules (July 1, 2003) ... 21

William J. Baumol & William G. Bowen, PERFORMING

ARTS: THE ECONOMIC DILEMMA Dt? «etek eius 35

William T. Bielby & Denise D. Bielby, Organizational

Mediation of Project-Based Labor Markets:

Talent Agencies and the Careers of Screenwriters,

64 AM. SOCIOLOGICAL REV. 64 (1999) .......... 35

Bye Bye Birdie (Broadway 1960) ............... 2

Richard E. Caves, GETTING OUR ACT TOGETHER:

THE ECONOMIC ORGANIZATION OF

CREATIVE INDUSTRIES (2000) ................. 35

Darlene C. Chisholm, Profit-Sharing versus Fixed-

(vil)

Payment Contracts: Evidence from the Motion

Pictures Industry, 13 J. L., ECON. &

ORGANIZATION 169 (1997) ...............-0-. 35

Susan Christopherson & Michael Storper,

The Effects of Flexible Specialization of Industrial

Politics and the Labor Market: The Motion Picture

Industry, 42 INDUSTRIAL & LABOR RELATIONS REV.

Dt cLo.elsckeu dk ghedekadceeeeed an 35

Michael Cieply, Tilting Hollywood's Balance of Power

to Talent Agency Clients, N.Y. TIMES, March 19,

DM cc unlcsecdahs wekadseeseneandes 35

E. Farnsworth, FARNSWORTH ON

RE arr ERNE ae 27

Alan Paul & Archie Kleingartner, Flexible Production

and the Tranformation of Industrial Relations

in the Motion Picture and Television Industry,

47 INDUSTRIAL & LABOR RELATIONS REV.

EE sone deeee vada etakenkn ekkes 35

Pierre-Michel Menger, Artistic Labor Markets

and Careers, 25 ANN. REV. SOCIOLOGY

RE ST PC -RSOe at oe ee 35

Frank Rose, THE AGENCY: WILLIAM MORRIS AND

THE HIDDEN HISTORY OF SHOW BUSINESS (1995)... 2

BRIEF AMICUS CURIAE

OF THE WILLIAM MORRIS AGENCY

The William Morris Agency submits this brief as

amicus curiae on behalf of respondent Alex E. Ferrer.’

INTEREST OF AMICUS CURIAE

1. Founded in 1898, the William Morris Agency

(WMA) is the largest and most diversified talent and

literary agency in the world, with principal offices in

New York, Beverly Hills, Nashville, London, Miami

Beach and Shanghai. The Agency represents clients in

all segments of the entertainment industry, including

motion pictures, television, music and personal

appearances, Broadway theatre and theatrical touring,

book publishing, commercial endorsements, sports

marketing, corporate consulting, digital media, and

video games.

' Pursuant to S.Ct. R. 37.3(a), all parties have consented

to the filing of the brief. Letters evidencing such consent

have been filed with the Clerk of the Court.

Pursuant to Rule 37.6, Amicus Curiae affirms that no

counsel for any party authored this brief in whole or in part,

and no counsel] or party made a monetary contribution

intended to fund the preparation or submission of this brief.

No person other than Amicus Curiae, or its counsel, made a

monetary contribution to its preparation or submission.

Amicus Curiae’s relationship with Respondent, and

the underlying transactions in this case, are fully disclosed

in the following section.

In 1898, a young German Jewish immigrant

posted a cross-hatch trademark above his door in New

York City — four X’s, representing a W superimposed on

an M — and went into business as “William Morris,

Vaudeville Agent.” During an illustrious history that

spans three centuries, immortalized in print and on

stage,’ the William Morris Agency played an integral

role in shaping the face of entertainment. By the time

WMA formally incorporated in New York State on

January 31, 1918, Morris was joined by son William,

Jr., and by Abe Lastfogel as directors of the company.

As silent film grew into an exciting new form of

entertainment, Morris was quick to encourage his

performing clients to experiment in the new medium

while the competition held fast to vaudeville. Stars

such as Al Jolson, the Marx Brothers, Mae West and

Charlie Chaplin helped forge the Agency’s dominance

in both New York and Hollywood. The momentum

continued to build during the 1920's. Clients included

such luminaries as George Jessel. The nascent

medium of radio provided yet another frontier to

explore. By 1930, after some 32 years at the helm,

Morris passed leadership of the agency to his son and

Abe Lastfogel. With Morris, Jr. heading the new office

in Los Angeles and Mr. Lastfogel running the operation

in New York City, the Agency featured an impressive

? See, e.g., Frank Rose, THE AGENCY: WILLIAM MoRRIS

AND THE HIDDEN HISTORY OF SHOW BUSINESS (1995); Bye

Bye Birdie (Broadway 1960) (book by Michael Stewart)

(Albert Peterson, talent agent for Conrad Birdie, appears to

have an affiliation with a thinly-disguised WMA).

2

roster of clients, including such superstars as Jimmy

Cagney, Louis Armstrong and Will Rogers. WMA

attained further industry dominance with the

December 1949 acquisition of the Berg-Allenberg

Agency. New clients included Frank Capra, Clark

Gable and Judy Garland, joining a roster that already

included Sammy Davis, Jr., Milton Berle and Rita

Hayworth.

With the arrival of television, the 1940's also

presented yet another entertainment frontier to

conquer. Some worried about television's impact on the

health of the film industry, but WMA recognized a new

business paradigm that would eventually make it

possible to package stars, producers, writers and show

concepts for sale to corporate sponsors, which controlled

television’s early days. The following decades brought

unimagined success to scores of WMA clients, including

Steve McQueen, Frank Sinatra, Andy Griffith, Marilyn

Monroe, Elvis Presley, Katharine Hepburn, Jack

Lemmon, Walter Matthau, Kim Novak, Dick Van Dyke

and Bill Cosby.

By 1965, WMA’s Music Department had emerged

as an industry powerhouse, representing, among

others, the Rolling Stones, the Byrds, the Beach Boys

and Sonny & Cher. Less than 10 years later, in 1973,

the Agency’s newly established Nashville office

provided another significant boost to the operations of

William Morris, extending the Agency's reach into

country music and beyond. During the 1980's, the

Agency continued to expand in other ways, acquiring

the Jim Halsey Company, adding performers such as

The Oak Ridge Boys, Waylon Jennings and Tammy

Wynette.

The early 1990's also brought great success to

WMaA’s Literary Department, which announced the

largest book-to-screen deal ever inked when it sold the

television rights for “Scarlett,” the sequel to Margaret

Mitchell’s GONE WITH THE WIND. WMA later broke

new ground with the creation of the Corporate

Advisory/New Media Department, which evolved into

William Morris Consulting (WMC). WMC now

operates in a broad spectrum of industry segments,

including telecommunications, technology, lodging,

gaming, publishing, retail, and consumer products.

The William Morris Agency is committed to

being a world-class corporate citizen. We believe that

the success of our clients and, ultimately, ofour Agency

is inextricably tied to our role as a socially-responsible

company. Since the 1940's, WMA has taken an

industry-leading role as a civic-minded organization.

Then, as now, our company understands charitable

engagement is a critical aspect of our legacy. This

conviction has led to the formation of the Lastfogel

Foundation of the William Morris Agency, which

encourages young people and their families to

participate in arts, education, health and the

environmental programs dedicated to the communities

where we live and work.

2. The William Morris Agency has a tangential

involvement in the transaction that underlies this case.

As noted above, WMA “packages” the different

elements and constituents for successful television

programming and content: actors, directors, producers,

writers, and show concepts. Not limited to traditional

4

network boundaries, agents in WMA’s television

division actively pursue opportunities for their clients

covering all commercial, broadcast networks, cable,

first-run syndication and international broadcast

systems, and spanning an array of programming

formats. Today, many television packages represented

by the William Morris Agency currently occupy key

time slots on television schedules.

Judge Alex, starring the respondent here, Judge

Alex E. Ferrer, and syndicated nationwide by

Twentieth Century Fox was packaged by the William

Morris Agency. WMA receives a “series packaging fee”

for this television program, consisting of 5% of gross

receipts, which is the standard commission on first run

syndication. Judge Alex Ferrer was never a William

Morris client, and WMA receives no commission on the

salary paid to Judge Ferrer.

In his negotiations with Judge Ferrer, leading to

the conclusion of the Personal Management Agreement

(PMA) between Arnold Preston and Judge Ferrer of

March 6, 2002, Preston represented himself as a

licensed talent agent with WMA. See J.A. 8 (in fax

cover letter from Ferrer to Preston, Preston is

addressed at the William Morris Agency); J.A. 21 (4 5)

(in fact, Preston was an assistant-trainee at WMA, not

a licensed talent agent). Mr. Preston was never

promoted from his trainee status, and subsequently

was dismis sed from employment with the William

Morris Agency.

3. As one of the world’s leading talent agencies,

the William Morris Agency has an obvious — and

substantial — interest in the proper regulation of the

5

provision of consulting services to all sorts of talent,

working in all aspects of the media and entertainment

sectors. The statutory scheme at issue in this case,

California’s Talent Agencies Act, Cal. Labor Code §

1700 et seq. (hereinafter “TAA,” or “the Act”), is one

such approach to ensure the proper licensure and

regulation of talent agencies, and to prevent

unscrupulous agents from taking advantage of

inexperienced, unwitting or vulnerable individuals who

seek access to the challenging and demanding

entertainment world. Particularly significant, in this

regulatory respect, are the modalities of dispute

settlement when issues arise — as they inevitably do —

in the relationships between artists, their agents and

managers, and media enterprises.

California Labor Code §§ 1700.44 & 1700.45,

attempts to find an equilibrium between party

autonomy in the conclusion of talent contracts and the

necessity of government regulation over this service

sector. The carefully-wrought statutory scheme

protects party autonomy, evidenced by the provision of

ADR mechanisms (including arbitration), but also

fulfills the need for neutral administrative

determinations of the qualifications of talent agents,

the propriety of their form contracts, and best practices

in the industry. The William Morris Agency endorsed

the enactment ofrules for theatrical and motion picture

agents (as well as artists’. managers) through

Califernia’s Employment Agencies Act in 1937, and

supported the TAA when it was adopted in its present

form’ by the California legislature in 1978. WMA

continues to support the TAA’s operation — as through

the licensure, oversight, and adjudicative decisions of

California’s Labor Commissioner — to this very day.

Even more particularly, WMA submits that the

TAA’s provisions for the allowance of stays of

arbitration (when the parties select such a dispute

settlement mechanism), see Cal. Labor Code § 1700.45,

as threshold questions of the Act’s applicability are

administratively determined, is entirely consistent

with Congress’s well-stated policy goal, under the

Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., of

promoting arbitration and the effective enforcement of

arbitral agreements. Far from reflecting some sort of

hostility to alternative dispute resolution, California’s

TAA strikes the right balance between the exercise of

a state’s legitimate police powers in regulating a

service industry (including the manner in which that

sector resolves disputes with its constituents), and the

need for quick and final resolutions of disputes through

arbitration.

STATEMENT

Petitioner and his amici have forcefully criticized

California’s Talent Agencies Act (TAA), Cal. Labor

Code § 1700 et seq., as somehow subversive of federal

objectives of uniformity in the regulation of commerce

and the promotion of arbitration, with nary an

appreciation for the legislative history of this

enactment and the important public policies underlying

this statute. Any consideration by this Court of

whether the TAA is preempted by the Federal

Arbitration Act, should at least take passing notice of

the regulatory system established by California for the

licensure, oversight, and disciplining of talent agents.

In 1913, California legislated an Employment

Agencies Act (EAA), which, in recognition of the state’s

infant entertainment industry, covered “theatrical

employment agencies,” including “circuses, vaudeville,

theatrical and other entertainers, exhibitors, and

performers.” 1913 Cal. Stat. 515 (ch. 282). A 1937

enactment added the category of “motion picture

employment agencies,” 1937 Cal. Stat. 230 (ch. 90), and

a 1943 amendment augmented the statute to cover

“artist managers,” defined as persons who “engaged in

the occupation of advising, counseling, or directing

artists on the development of their professional careers

and who procures, offers, or promises employments or

engagements of an artist. ...” 1943 Cal. Stat. 1326 (ch.

329). Even when the EAA was repealed in 1967, artist

managers (under the Artists Managers Act) remained

under the jurisdiction ofthe state Department of Labor.

In 1978, the California legislature adopted the

Talent Agencies Act in its current form. See 1978 Cal.

Stat. ch. 1382, currently codified at Cal. Labor Code §

1700 et seq. What had previously been known as “artist

managers’ were denominated as “talent agents” in the

TAA. See Cal. Labor Code § 1700.4 (amended in 1982,

1982 Cal. Stat. ch. 682, to exclude application to those

who advise recording artists) In 1982, a

comprehensive review of the TAA was conducted by a

specially-constituted Entertainment Commission,

which consisted of representatives from the artist

community (Ed Asner, John Forsythe, and Cicely

Tyson), the talent agency constituency (Jeffrey Berg,

Roger Davis, and Richard Rosenberg), and personal

managers (Bob Finkelstein, Patricia McQueeny, and

Larry Thompson), under the chairmanship of the State

Labor Commissioner. See Report of the California

Entertainment Commission, May 23, 1985 (transmitted

Dec. 2, 1985), Cal. Doc. E2035 R4 1985, at 3-4.

One major issue considered by the

Entertainment Commission was whether criminal

penalties should be prescribed for those who engaged in

the procurement of employment for artists, without

being properly licensed under the TAA. The

Commission rejected this proposal, and concluded that

existing civil remedies . . . to anyone who

has been injured by the Act, are sufficient

to serve the purpose of deterring violation

of the Act and punishing breaches... .

Perhaps the most effective weapon for

ensuring compliance with the Act is the

power of the Labor Commissioner, at a

hearing on a Petition to Determine

Controversy, to find that a personal

manager or anyone has acted as an

unlicensed talent agent and, having so

found, declare the contract void trom

inception and order the restitution to the

artist of all fees paid by the artist and the

forfeiture of all expenses advanced to the

artist.

Id. at 26-27. This compromise — foregoing criminal

sanctions against unlicensed talent agents in favor of

administrative recourse with the state Labor

9

Commissioner — is reflected in the TAA itself. See Cal.

Labor Code § 1700.44(b).

The TAA provides a comprehensive and strict

regulatory regime for talent agents, in order to ensure

the welfare of the artists they represent. See Waisbren

v. Peppercorn Productions, Inc., 41 Cal. App.4th 246,

254, 48 Cal. Rptr.2d 437 (1995). As a condition for

licensure, applicant talent agents are subject to

background checks and fingerprinting. See Cal. Labor

Code §§ 1700.6 & 1700.7. Agents must also post a

surety bond in the amount of $50,000 in order to satisfy

any obligations to their clients. See id. § 1700.15.

Moneys held by an agent for a client-artist must be in

trust. Id. § 1700.25. Under the Act, the Labor

Commissioner must approve all form contracts between

agents and artists, id. § 1700.23, agents must file their

fee schedules with the Commission, id. § 1700.24, and

must maintain records for inspection by the

Commission. See id. § 1700.27.

The TAA has substantive provisions which

prohibit an agent from issuing false, fraudulent or

misleading information or advertisements, id. §

1700.32, employing clients in unsafe places, id. §

1700.33, accepting registration or referral fees, or

engaging in fee-splitting with employers. See id. §§

1700.39 & 1700.40. The Act is especially stringent as

concerns the relationship between talent agents and

artists who are minors. See id. §§ 1700.34, 1700.36 &

1700.37. In the event of agent misconduct, the Labor

Commissioner may suspend or revoke that agent’s or

agency’s license. See id. § 1700.21.

The TAA also recognizes an additional overlay of

10

control of the talent agent profession: by “bona fide

labor union[s] regulating the relations of its members

to a talent agency.” Id. § 1700.45(b). Such franchise

arrangements have been recognized in other

jurisdictions. See, e.g., Am. Fed. of Telev. & Radio

Artists, AFL-CIO v. Association of Talent Agents, 576

N.Y.S.2d 575, 576 (N.Y. App. Div. 1991).

In the provisions under dispute in this case, Cal.

Labor Code §§ 1700.44 & 1700.45, controversies

between agents and artists are to be submitted to the

state Labor Commission. The California Supreme

Court has construed this provision to mean that the

Labor Commissioner has plenary authority even in

disputes where a violation of the TAA is raised as a

defense. See Styne v. Stevens, 26 Cal.4th 42, 26 P.3d

343 (2001).

In a carefully-crafted provision, the California

legislature allowed for arbitration of disputes between

artists and agents, Cal. Labor Code § 1700.45, provided

that certain requisites were satisfied, including that

the Labor Commissioner have reasonable notice of the

arbitral hearings and the opportunity to attend, id. §§

1700.45(c) & (d), and that the arbitral proceedings be

conducted pursuant to California’s Code of Civil

-Procedure. Section 1700.45 also provides that

fijf there is an arbitration provision in a

contract, the contract need not provide

that the talent agency agrees to refer any

controversy between the applicant and

the talent agency regarding the terms of

the contract to the Labor Commissioner

for adjustment, and Section 1700.44 shall

}]

not apply to controversies pertaining to

the contract.

Id. § 1700.45 ( 3).

SUMMARY OF ARGUMENT

A. The law selected by the parties to the

underlying contract (the Personal Management

Agreement (PMA)) in this case was California law, and

California law was expressly applied to the conduct of

any arbitral proceedings. J.A. 17-18. Under this

Court’s holding in Volt Information Sciences, Inc. v.

Board of Trustees of Leland Stanford Junior Univ., 489

U.S. 468, 478-79 (1989), party autonomy is to be

judicially respected, and if the parties have selected a

lex arbitrii that allows for stays of arbitration for

parallel state judicial or administrative proceedings, no

preemptive radiation under the Federal! Arbitration Act

(FAA) incapacitates such a result. See id. at 474-75,

477, 479. So long as the application of state law does

not actually frustrate an ultimate recourse to

arbitration, see Doctor’s Associates, Inc. v. Casarotto,

517 U.S. 681, 688 (1996), anterior state administrative

proceedings are permissible.

Such is the case here. California’s Talent

Agencies Act (TAA) affirmatively allows the arbitration

of agent-artist disputes, see Cal. Labor Code § 1700.45,

and provides for an administrative procedure prior to

arbitration, “even if the result is that arbitration is

stayed where the [Federal Arbitration] Act would

otherwise permit it to go forward.” Volt, 489 U.S. at

479. California’s Labor Commissioner can make a

12

non-preclusive ruling that the regulatory interests of

the State have been satisfied. The arbitrator in this

case, in any event, has indicated that such a

determination would be helpful in the disposition of the

matter. J.A. 38.

In Buckeye Check Cashing, Inc. v. Cardegna, 546

U.S. 440 (2006), and predecessor cases, the Court held

that “unless the challenge is to the arbitration clause

itself, the issue of the contract’s validity is considered

by the arbitrator in the first instance.” Id. at 445-46

(citing Prima Paint Corp. v. Flood & Conklin Mfg. Co.,

388 U.S. 395, 403-04 (1967); and Southland Corp. v.

Keating, 465 U.S. 1, 10 (1984)). The PMA’s arbitration

provision merged any challenge of the arbitral clause

with a dispute regarding the contract as a whole,

including the propriety of its formation.

B. There is no inconsistency between the FAA's

goal of effectuating contracts that include arbitration

as the means of dispute settlement, and allowing

certain administrative determinations to also take

place. This is particularly so when those

administrative proceedings occur prior to the

conclusion of the arbitral process and the

administrative determinations are non-preclusive in

effect. To hold in favor of Petitioner here “would

undermine the detailed enforcement scheme created by

[California in the TAA and] the substantive statutory

prerogative of the [Labor Commissioner] to enforce

those claims for whatever relief and in whatever forum

the [Labor Commissioner] sees fit[,] simply to give

greater effect to an agreement between private parties”

to arbitrate. E.E.O.C. v.Waffle House, Inc., 534 U.S.

13

279, 296 & n.10 (2002).

California’s TAA shows a high degree of gracious

solicitude to arbitral proceedings. If the parties in an

agent-artist relationship wish to employ arbitral

mechanisms to resolve their dispute, they need do

nothing more than allow the Labor Commissioner to

make a threshold determination under the TAA and

then give the Commissioner the opportunity to

participate in the arbitral proceedings. Indeed, if the

requisites of Cal. Labor Code § 1700.45 are fully

satisfied, and the proper notice is made pursuant to the

contract, the parties can fully waive recourse to the

Labor Commissioner.

C. This Court should appreciate the unique

nature of the labor market for entertainment and

media talent, especially in the context of weighing the

application of a federal statutory scheme and its

preemptive effect. See, e.g., United States v. Shubert,

348 U.S. 222 (1955). Markets in creative talent present

unique regulatory challenges, and many states (not just

California) have legislated in this field.

California courts, in construing the TAA, have

elucidated the significant public policy rationale behind

the dispute settlement provisions of the Act and have

roundly condemned the tactics of certain agents or

representatives who would seek to deny the Act’s

protections to their artist-clients. See Styne v. Stevens,

26 Cal.4th 42, 51, 26 P.3d 343, 349 (2001); Buchwald v.

Superior Court, 254 Cal. App.2d 347, 355, 62 Cal. Rptr.

364 (1967). Petitioner's attempts to circumvent the

TAA, through his audacious interpretation of his own

ambiguously-drawn arbitration clause in the PMA,

14

should be unavailing.

California’s Labor Commissioner — under the

TAA as part of the applicable law selected by the

contract and its arbitration provision — should be able

to make an administrative determination as to

Petitioner’s licensure status and any potential effects it

may have on the formation of the contract. No

principled pursuit of congressional policy of promoting

arbitration, nor any ground for preemption by the

Federal Arbitration Act, counsels a different result in

this case.

ARGUMENT

A careful review of the parties’ agreed-to

arbitration clause, in light of the policy objectives and

remedial structure of California’s Talent Agencies Act

(TAA), should lead this Court to conclude that resort to

administrative determinations, prior to (and not

preclusive of) arbitration, does not offend Congress’s

policy of promoting the effective enforcement of arbitral

agreements under the Federal Arbitration Act (FAA).

A. Principles of Party Autonomy, as

Effectuated by the FAA, Dictate the

Application of Administrative Procedures

under California’s Talent Agencies Act to

Disputes Arising Under this Contract.

1. An essential policy objective of the FAA, as

legislated by Congress, is to effectively enforce freely-

bargained-for contracts between private parties that

select arbitration as the method for resolving disputes

15

under those agreements. See Volt Information

Sciences, Inc. v. Board of Trustees of Leland Stanford

Junior Univ., 489 U.S. 468, 478-79 (1989) (“The FAA

was designed ‘to overrule the judiciary’s long-standing

refusal to enforce agreements to arbitrate,’ Dean Witter

Reynolds Inc. v. Byrd, 470 U.S. [213], at 219-220

[(1985)], and to place such agreements ‘ “upon the same

footing as other contracts,” ’ Scherk v. Alberto-Culver

Co., 417 U.S. [506], at 511 [(1974)] (quoting H.R.Rep.

No. 96, 68th Cong., Ist Sess., 1, 2 (1924)).”); Prima

Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395,

404 n.12 (1967) (FAA was designed “to make

arbitration agreements as enforceable as other

contracts, but not more so.”).

In Mitsubishi Motors Corp. vv. Soler

Chrysler-Plymouth, Inc., 473 U.S. 614 (1985), the Court

observed that “[h]aving made the bargain to arbitrate,

the party should be held to it unless Congress itself has

evinced an intention to preclude a waiver of judicial

remedies for the statutory rights at issue.” Id. at 628;

see also Shearson/American Exp., Inc. v. McMahon,

482 U.S. 220, 242 (1987) (“Accordingly, the McMahons,

‘having made the bargain to arbitrate,’ will be held to

their bargain. Their RICO claim is arbitrable under

the terms of the Arbitration Act.”).

A key corollary to this principle of party

autonomy under the FAA is that if the parties, by

virtue of their contract, have selected an applicable law

that includes procedures for the interaction of arbitral,

administrative and judicial mechanisms for dispute

settlement, these state-law procedures should be

respected. This was confirmed by this Court in Volt,

16

where at issue was a construction contract that

included an arbitration provision, but which also

selected California law as the applicable law of the

contract. See 489 U.S. at 470. Volt petitioned a

California trial court to compe] arbitration; Stanford

sought a stay of arbitration pursuant to Cal. Civ. Proc.

Code Ann. § 1281.2(c) (West 1982) (still in force), which

permitted “a court to stay arbitration pending

resolution of related litigation between a party to the

arbitration agreement and third parties not bound by

it, where ‘there is a possibility of conflicting rulings on

a common issue of law or fact’.” Id. at 471.

Volt resisted the application of a stay, under

California procedural law, as being preempted under

the FAA. The Court rejected this challenge,

“conclud[ing] that even if §§ 3 and 4 of the FAA are

fully applicable in state-court proceedings, they do not

prevent application of Cal. Civ. Proc. Code Ann. §

1281.2(c) to stay arbitration where, as here, the parties

have agreed to arbitrate in accordance with California

law.” Id. at 477. The Court elaborated on this holding

by noting that

it does not follow that the FAA prevents

the enforcement of agreements to

arbitrate under different rules than those

set forth in the Act itself. Indeed, such a

result would be quite inimical to the

FAA’s primary purpose of ensuring that

private agreements to arbitrate are

enforced according to their terms.

Arbitration under the Act is a matter of

consent, not coercion, and parties are

17

generally free to structure their

arbitration agreements as they see fit.

Just as they may limit by contract the

issues which they will arbitrate . . . so too

may they specify by contract the rules

under which that arbitration will be

conducted. Where, as here, the parties

have agreed to abide by state rules of

arbitration, enforcing those rules

according to the terms of the agreement is

fully consistent with the goals of the FAA,

even if the result is that arbitration is

stayed where the Act would otherwise

permit it to go forward. By permitting the

courts to “rigorously enforce” such

agreements according to their terms, we

give effect to the contractual rights and

expectations of the parties, without doing

violence to the policies behind by the

FAA.

Id. at 479 (quoting Dean Witter Reynolds, Inc. v. Byrd,

470 U.S. 213, 221 (1985)). Finally, this Court

concluded that the FAA did not preempt the California

statute because “the FAA does not confer a right to

compel arbitration of any dispute at any time; it confers

only the right to obtain an order directing that

‘arbitration proceed in the manner provided for in [the

parties] agreement’.” 489 U.S. at 474-75 (quoting 9

U.S.C. § 4).

18

2. A careful review® of the choice-of-law and

arbitration provisions in the Personal Management

Agreement (PMA) between Preston and Ferrer of

March 6, 2002, J.A. 8, 17-18 (YJ 12 & 13), indicates

that the parties intended that California’s procedural

law be applied to any arbitration between the parties.

Paragraph 12 of the PMA provides in pertinent part

that “[t]his agreement shall be governed by the laws of

the state of California, applicable to agreements wholly

entered into and performed herein.” J.A. 17.

Paragraph 13 of the PMA (denominated “Arbitration”)

reads in full as follows:

In the event of any action, suit or

proceeding arising from or based upon

this Agreement brought by either party

hereto against each other, the prevailing

party shall be entitled to recover from the

other attorneys[] fees in connection

therewith in addition to the costs of such

action, suit or proceeding. In the event of

any dispute under or relating to the terms

of this agreement, or the breach, validity,

> This Court has been hitherto hindered in making such

an examination. Preston’s Petition studiously avoided

quoting the arbitration clause in full, detracting from its

plain meaning. See Pet. 3 (citing Pet. App. 6a) (referencing

the California Court of Appeal decision, which referred to

the provision as a “standerd American Arbitration

Association (AAA) arbitration clause.” See 145 Cal. App.4th

at 443). Likewise, Preston's brief fails to quote the provision

fully. See Pet. Br. 3.

19

or legality thereof, it is agreed that the

same shall be submitted to arbitration to

the American Arbitration Association in

the city of Los Angeles, California, and in

accordance with the rules promulgated by

the said association, and judgment upon

the award rendered by the arbitrator(s),

may be entered into any court having

jurisdiction thereof. Nothing in this

agreement shall be construed to require

any act contrary to any law or regulation

of any guild or union. If there is any

conflict between this agreement and any

present or future law, the latter shall

prevail, but in such an event, the

provisions of such agreement shall be

curtailed only to the extent necessary to

bring it within the requirements of said

law, rule or regulation.

J.A. 17-18 (§ 13).

Despite Petitioner’s assertion, see Pet. 3; Pet. Br.

3, and the conclusory statement of the California Court

of Appeal, see 145 Cal. App.4th at 443, it is by no

means clear that this is, in its entirety, a “standard

American Arbitration Association (AAA) arbitration

clause.” See id. At least for commercial disputes

arising under a contract concluded by the parties, the

AAA recommended the following arbitration clause:

Any controversy or claim arising out of or

relating to this contract, or the breach

thereof, shall be settled by arbitration

administered by the American Arbitration

®

20

Association under its Commercial

Arbitration Rules, and judgment on the

award rendered by the arbitrator(s) may

be entered in any court having

jurisdiction thereof.

Commercial Arbitration Rules and Mediation

Procedures (Including Procedures for Large, Complex

Commercial Disputes), Amended and Effective July 1,

2003, http://www.adr.org/sp.asp?id=26396#stan (last

visited Dec. 5, 2007). The “standard” AAA arbitration

clause thus covered “any controversy or claim” arising

out of a contract, “or the breach thereof.” Id. The PMA

proposed by Preston, and signed by Ferrer, covered,

instead, “any dispute under or relating to the terms of

this agreement, or the breach, validity, or legality

thereof....” J.A. 18.

The additional coverage of the arbitral clause in

the PMA must, however, be read in light of the

particular choice-of-law provision embedded into the

arbitral clause:

If there is any conflict between this

agreement and any present or future law,

the latter shall prevail, but in such an

event, the provisions of such agreement

shall be curtailed only to the extent

necessary to bring it within the

requirements of said law, rule or

regulation.

J.A. 18. This choice-of-law provision speaks specifically

to the procedural] and substantive law for the

arbitration. After all, the PMA already had provided a

21

general choice-of-law determination. See J.A. 17 (4 12)

(“[t}his agreement shall be governed by the laws of the

state of California, applicable to agreements wholly

entered into and performed herein.”).

3. The parties’ designation of California law as

the applicable law governing any dispute settlement

procedure (including recourse to arbitration), has two

broad consequences for the outcome of this case,

necessitating the affirmance of the decision below.

a. The first, as already suggested, is that

because “where, as here, the parties have agreed to

arbitrate in accordance with California law,” Volt

Information Sciences, 489 U.S. at 477, the FAA does

not preempt the terms of California’s Talent Agencies

Act, insofar as Cal. Labor Code § 1700.45 provides for

an administrative procedure anterior to arbitration,

“even if the result is that arbitration is stayed where

the [Federal Arbitration] Act would otherwise permit it

to go forward.” Id. at 479.

This Court has consistently construed its

decision in Volt as preserving the autonomy of contract

parties to select dispute settlement mechanisms which

mix arbitral, administrative and judicial features. See

Green Tree Financial Corp. v. Bazzle, 539 U.S. 444,

452-53 (2003) (“Rather the relevant question here is

what kind of arbitration proceeding the parties agreed

to. That question does not concern a state statute or

judicial procedures, cf. Volt Information Sciences, Inc.

v. Board of Trustees of Leland Stanford Junior Univ.,

489 U.S. 468, 474-476 (1989). It concerns contract

interpretation and arbitration procedures.”);

Mastrobuono v. Shearson Lehman Hutton, Inc., 514

22

U.S. 52, 57 (1995) (“We have previously held that the

FAA’s proarbitration policy does not operate without

regard to the wishes of the contracting parties.”) (citing

Volt).

As this Court made clear in E.E.0.C. vu. Waffle

House, Inc., 534 U.S. 279 (2002), “[w]hile ambiguities

in the language of the agreement should be resolved in

favor of arbitration, Volt, 489 U.S., at 476, we do not

override the clear intent of the parties, or reach a result

inconsistent with the plain text of the contract, simply

because the policy favoring arbitration is implicated.”

Id. at 293; see id. at 293 n.9 (“We concluded [in Volt]

that the FAA did not pre-empt the California statute

because ‘the FAA does not confer a right to compel

arbitration of any dispute at any time; it confers only

the right to obtain an order directing that “arbitration

proceed in the manner provided for in [the parties’]

agreement”.” (quoting Volt, 489 U.S. at 474-475

(quoting 9 U.S.C. § 4)).

Party autonomy in these situations can be

preserved, and state procedural law can be applied to

stay an arbitration, so long as the application of state

law does not actually frustrate an ultimate recourse to

arbitration. See Doctor’s Associates, Inc. v. Casarotto,

517 U.S. 681, 688 (1996) (“The state rule examined in

Volt determined only the efficient order of proceedings;

it did not affect the enforceability of the arbitration

agreement itself.”); Byrd, 470 U.S. at 219 (rejecting

“the suggestion that overriding goal of the [FAA] was to

promote the expeditions resolution of claims,” allowing

for stays of arbitral proceedings).

That is precisely the situation here. The

23

application of California’s TAA, Cal. Labor Code §

1700.45, merely stays the arbitral proceedings, in order

for the state Labor Commissioner to make a non-

preclusive ruling that the regulatory interests of the

State (including a determination of whether Preston is

actually a properly-licensed talent agent) have been

satisfied. Needless to say, this determination would be

quite helpful in the disposition of the matter, as,

indeed, the arbitrator indicated here. See J.A. 38 (4

5(ii)) (“the results of the Labor Commissioner hearing

could also inform the Arbitrator as to the remedy or

relief that would be just and equitable under the

circumstances of this case.”).

Under the terms of the contract agreed to by

Preston and Ferrer,‘ California’s procedural law,

including TAA section 1790.45, can be applied to stay

the arbitration. Such an application of state procedural

law is not preempted by the Federal Arbitration Act, as

per this Court’s decision in Volt.

b. The structure and intent of the party’s

agreement to arbitrate also counsels an affirmance of

* Significantly, the PMA’s arbitration clause did not

contain a provision opting-out of Labor Commission

determinations of disputes, as required by Cal. Labor Code

§§ 1700.23 & 1700.45(3) (“If there is an arbitration provision

in a contract, the contract need not provide that the talent

agency agrees to refer any controversy between the

applicant and the talent agency regarding the terms of the

contract to the Labor Commissioner fo: adjustment, and

Section 1700.44 shall not apply to controversies pertaining

to the contract.”).

24

the decision below in light of this Court’s ruling in

Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440

(2006), and predecessor cases. In Buckeye, the Court

held that “unless the challenge is to the arbitration

clause itself, the issue of the contract’s validity is

considered by the arbitrator in the first instance.” Id.

at 445-46 (citing Prima Paint Corp. v. Flood & Conklin

Mfg. Co., 388 U.S. 395, 403-04 (1967); and Southland

Corp. v. Keating, 465 U.S. 1, 10 (1984)); see also First

Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943

(1995).

Petitioner has made much of the assertion that

Ferrer has never challenged the validity of the

arbitration clause itself. See Pet. Br. 6, 11. And,

indeed, the court below suggested that the thrust of

Ferrer’s position was that the PMA was void ab initio

because Preston was not a licensed talent agent under

the TAA. See Pet. App. 3a-10a; 145 Cal. App.4th at

444. Ferrer’s position, taken before the California

Superior Court, and as reflected in his complaint for

declaratory and injunctive relief, was rather more

nuanced. See J.A. 27 (4 5) (“Plaintiff contends that (a)

the Contract is void by reason of Defendant’s attempt

to procure employment for Plaintiff in violation of [the

TAA], [and] (b) the Contract’s arbitration clause does

not vest authority in an arbitrator to determine

whether the contract is void... .”).

The peculiar structure of the PMA’s arbitration

clause — as drafted by Preston and dispatched to Ferrer

for his emendations and approval (see J.A. 8) —

essentially merges any challenge of the arbitral clause

with a dispute regarding the contract as a whole,

25

including the propriety of its formation. After all, the

arbitral clause specifically references the application of

California law in this respect. J.A. 18 (4 13) (“If there

is any conflict between this agreement {to arbitrate’]

and any present or future law, the latter shall prevail,

but in such an event, the provisions of such agreement

shall be curtailed only to the extent necessary to bring

it within the requirements of said law, rule or

regulation.”).

However the application of the California law

selected by the parties is viewed ~ whether as

governing the procedure of the dispute settlement

mechanisms (including the possibility of a stay of

arbitration) or as a substantive provision determining

the manner of challenging the PMA’s formation as a

contract — the identical result is reached here. The

parties have agreed to the application of the Talent

Agencies Act, and under either the Volt precedent or

the Prima Paint-Southland-Buckeye line of decisions,

there is no preemption by the Federal Arbitration Act.

B. Recourse to State Administrative

Determinations, Anterior to Arbitration,

Does Not Undermine the FAA.

Petitioner and his amici have sought to frame

this case as whether this Court’s ruling in Buckeye

* This interlineation is perfectly appropriate since the

previous sentence reads, in pertinent part, “it is agreed that

the same [the dispute] shall be submitted to arbitration. . .

.” J.A. 18 (emphasis added).

26

Check Cashing, Inc. v. Cardegna, 546 U.S. 400 (2006),

ought to be extended to situations where state law

provides for an administrative procedure before

arbitration. As suggested by the previous discussion,

based on the peculiarities of the arbitration agreement

between Preston and Ferrer, it appears that the parties

actually consented to the involvement of California’s

Labor Commissioner, under the TAA, to make a

determination of certain threshold issues under the Act.

Chief among these was whether Preston was a duly-

licensed talent agent, and, if not, whether the PMA

(including its arbitration clause) was void ab initio. To

the extent that the PMA — which was, after all, drafted

by Preston — merged the threshold validity of the

contract with the agreement to arbitrate, Petitioner

should hardly be seen as now complaining of the

involvement of the California Labor Commissioner in

making a determination in a procedure that is required

under the applicable law expressly selected by contract.

See American Airlines, Inc. v. Wolens, 513 U.S. 219, 248

(1995) (O'Connor, J., concurring in part) (“If the court

finds the language to be ambiguous, it might invoke the

familiar rule that the contract should be construed

against its drafter, and thus that respondents should

receive the benefit of the doubt.”) (quoting 2 E.

Farnsworth, FARNSWORTH ON CONTRACTS § 7.11, at

265-68 (1990)).

_ But, even putting aside the particular bargain

made by the parties here, it is not inconsistent with the

goal of the FAA in effectuating contracts that include

arbitration as the means of dispute settlement, to allow

certain administrative determinations to also take

place. This is especially so when those administrative

27

proceedings occur prior to the conclusion of the arbitral

process and the administrative determinations are non-

preclusive in effect.

Amicus is mindful that this Court has, in other

contexts, indicated that recourse to an administrative

procedure does not necessarily preclude arbitration. See

Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20,

28-29 (1991);' Shearson/American Express, Inc. v.

McMahon, 482 U.S. 220, 231 (1987). Both Gilmer and

McMahon involved federal administrative schemes, the

Age Discrimination in Employment Act (ADEA) and the

Securities Exchange Act, respectively. In Gilmer, the

Court acknowledged that administrative proceedings

through the EEOC, under the ADEA, can occur in

tandem with arbitration of employment disputes. See

500 U.S. at 28 (“An individual ADEA claimant subject

to an arbitration agreement will still be free to file a

charge with the EEOC, even though the claimant is not

able to institute a private judicial action.”). Likewise, in

McMahon, this Court’s concern was whether arbitration

would diminish the effectiveness of section 10(b) claims

under the Securities Exchange Act, and concluded it

would not. See 482 U.S. at 232-33.

In its discussion in Gilmer, this Court generally

considered the potential interplay of arbitral and

administrative mechanisms:

The Sherman Act, the Securities Exchange

Act of 1934, RICO, and the Securities Act

of 1933 all are designed to advance

important public policies, but, as noted

above, claims under those statutes are

appropriate for arbitration. “[S]o long as

28

the prospective litigant effectively may

vindicate {his or her] statutory cause of

action in the arbitral forum, the statute

will continue to serve both its remedial

and deterrent function.”

500 U.S. at 28 (quoting Mitsubishi, 473 U.S. at 637).

This holding was further clarified in this Court’s

decision in Waffle House, where it was argued that an

arbitral agreement between two private parties

precluded an administrative agency (in that instance,

the EEOC) from seeking victim-specific relief on behalf

of an aggrieved employee. See 534 U_S. at 290-96. The

Court rejected this proposition and concluded that

pursuant to Title VII and the ADA,

whenever the EEOC chooses from among

the many charges filed each year to bring

an enforcement action in a particular case,

the agency may be seeking to vindicate a

public interest, not simply provide

make-whole relief for the employee, even

when it pursues entirely victim-specific

relief. To hold otherwise would undermine

the detailed enforcement scheme created

by Congress simply to give greater effect to

an agreement between private parties that

does not even contemplate the EEOC’s

statutory function.

We have held that federal] statutory

claims may be the subject of arbitration

agreements that are enforceable pursuant

to the FAA because the agreement only

determines the choice of forum. .. . To the

29

extent the Court of Appeals construed an

employee's agreement to submit his claims

to an arbitral forum as a waiver of the

substantive statutory prerogative of the

EEOC to enforce those claims for whatever

relief and in whatever forum the EEOC

sees fit, the court obscured this crucial

distinction and ran afoul of our precedent.

Id. at 296 & n.10 (citations omitted).

The combined teaching of these precedents, as

relevant to this case, is that arbitral and administrative

mechanisms can co-exist under a state statutory scheme

without running afoul of FAA preemption. This is

particularly so where, as here (but unlike in Waffle

House), the parties did appear, in the PMA, to

“contemplate the [California Labor Commissioner’s]

statutory function.” 534 U.S. at 296. Even more

importantly, administrative determinations under the

TAA neither preclude subsequent arbitral proceedings

(although they may stay them), and any determinations

made by the Labor Commissioner are not necessarily

binding on the arbitrator.

Moreover, it is important to emphasize, as noted

above, supra at 8-10, that California’s TAA was

expressly designed to create a system of regulatory

control over talent agents (and their relations with

artist-clients) that would substitute for the imposition

of criminal penalties for an individual acting as a talent

agent without a license. See Report of the California

Entertainment Commission, May 23, 1985 (transmitted

Dec. 2, 1985), Cal. Doc. E2035 R4 1985, at 26-27

(“existing civil remedies . . . to anyone who has been

30

injured by the Act, are sufficient to serve the purpose of

deterring violation of the Act and punishing breaches. .

.. “); see also Cal. Labor Code § 1790.44(b); Yoo v. Robi,

126 Cal. App.4th 1089, 1104, 24 Cal. Rptr.3d 740, 750

(2005); Waisbren, 41 Cal. App.4th at 262, 48 Cal. Rptr.

at 437. To hold in favor of Petitioner here “would

undermine the detailed enforcement scheme created by

{California in the TAA and] the substantive statutory

prerogative of the [Labor Commissioner] to enforce those

claims for whatever relief and in whatever forum the

[Labor Commissioner] sees fit[,] simply to give greater

effect to an agreement between private parties” to

arbitrate. Waffle House, 534 U.S. at 296 & n.10.

Petitioners and his amicis arguments

mischaracterize the nature of administrative

proceedings under the TAA, and should be unavailing.

It is true that a determination made by the Labor

Commissioner unde r the TAA is subject to judicial

review de novo. See Cal. Labor Code § 1700.44(a).

Ironically enough, this provision was included for the

protection of talent agents (putative or real), such as

Preston, in the event the Labor Commissioner entered

a determination that was unfavorable to their interests.

See id. (providing for the posting of an appeal bond “not

exceeding twice the amount of the judgment,” on the

assumption that judgments would be rendered against

talent agents in favor of client-artists). But such

judicial review, even assuming it is initiated by either of

the parties here, would not necessarily be preclusive on

the decision of the arbitrator.

Likewise, there is no suggestion that the TAA has

been construed as erecting an impermissible

31

impediment or bar to arbitration in cases such as this.

Insofar as the TAA establishes an exhaustion of

administrative remedies requirement, such is equally

applied to judicial and arbitral proceedings. The

California Supreme Court made clear in Styne uv.

Stevens, 26 Cal.4th 42, 26 P.3d 343 (2001), that a

pending case in state superior court must be stayed in

favor of Labor Commissioner determinations under the

TAA, even if a TAA violation is raised as a defense in

the judicial proceeding. See id. at 54-55, 26 P.3d at 351-

52. There is no intelligible reason that a different result

should apply in an instance where the parties have

selected arbitration as the means of dispute settlement.

In short, far from exhibiting some hostility or

animus to arbitration in disputes between artists and

their agents, the TAA shows a high degree of deference

to arbitral proceedings. The provisions of Cal. Labor

Code § 1700.45 are by no means difficult to satisfy if the

parties wish to employ arbitral mechanisms to resolve

their dispute. Assuming there is even a “controversy”

under the Act to resolve, see id. § 1700.44(a), the Act’s

provisions demand nothing more than allowing the

Labor Commissioner to make a non-preclusive finding

under the TAA, and then giving the Commissioner the

opportunity to participate in the arbitral proceedings.

Indeed, if the requisites of section 1700.45 are fully

satisfied, and the proper notice made under the contract

is made, the parties can fully waive recourse to the

Labor Commissioner. See id. (“If there is an arbitration

provision in a contract, the contract need not provide

that the talent agency agrees to refer any controversy

between the applicant and the talent agency regarding

the terms of the contract to the Labor Commissioner for

32

adjustment, and Section 1700.44 shall not apply to

controversies pertaining to the contract.”).

The hard truth of this case is that Mr. Preston

drew-up the PMA in a form that had never been

approved by the Labor Commissioner, under Cal. Labor

Code § 1700.23. He had the opportunity to draft an

arbitration clause that, at once, fully complied with

section 1700.45 and clearly expressed the intent of the

parties to waive recourse to the Labor Commissioner.

Instead, he drafted a clause that incorporated sub

silentio the TAA as part of the law governing the

arbitral procedure, hoping this would satisfy the

reasonable, opt-out and notice requirements of section

1700.45. This “constructive ambiguity” — if that is what

itcan charitably be described as — should not redound to

Preston’s benefit here. That Preston seeks to avoid a

potential administrative determination by the Labor

Commissioner that he was not a licensed talent agent

under the TAA, and thus that the opt-put provisions for

arbitration under section 1700.45 could never apply,

may be deeply embarrassing to him. That Preston

might be hung figuratively on the petard of his own

defective drafting in the PMA should be of no moment to

this Court. In any event, the operation of the TAA in

this fashion hardly rises to the level of an impediment

to a federal policy favoring the preemptive effect of the

FAA in this case.

33

C. California’s TAA Regulates a Unique Labor

Market for Entertainment and Media

Talent, and its Arbitral Provisions Should

Not be Preempted by the FAA.

Amicus is mindful that this Court has hitherto

indicated that the vindication of significant social

policies, whether in federal or state law or actuated by

judicial or administrative review, is not a ground to

avoid the FAA’s preemptive effect or to invalidate the

use of arbitration in resolving disputes. See Green Tree,

531 U.S. at 90 (“These cases demonstrate that even

claims arising under a statute designed to further

important social policies may be arbitrated because “so

long as the prospective litigant effectively may vindicate

[his or her] statutory cause of action in the arbitral

forum,” the statute serves its functions.”) (quoting

Gilmer, 500 U.S. at 28 (quoting Mitsubishi, 473 U.S. at

637))).

Nevertheless, it may be helpful for this Court to

fully appreciate the unique nature of the labor market

for entertainment and talent media, especially in the

context ofv ~ ghing the application ofa federal statutory

scheme and its preemptive effect. See, e.g., Columbia

Artists Management, Inc. v. United States, 381 U.S. 348

(1965) (per curiam) (booking and managing of concert

artists); United States v. Shubert, 348 U.S. 222 (1955);

Hart v. B. F. Keith Vaudeville Exchange, 262 U.S. 271

(1923), on remand, 12 F.2d 341 (2d Cir. 1926), cert.

denied, 273 U.S. 703 (1926) (application of the Sherman

Act to vaudeville and theatrical productions).

It has been well-documented in economic,

sociological, and industrial relations literature that

34

markets in creative talent present unique regulatory

challenges. See William J. Baumol & William G.

Bowen, PERFORMING ARTS: THE ECONOMIC DILEMMA

(1966); Richard E. Caves, GETTING OUR ACT TOGETHER:

THE ECONOMIC ORGANIZATION OF CREATIVE INDUSTRIES

(2000); Pierre-Michel Menger, Artistic Labor Markets

and Careers, 25 ANN. REV. SOCIOLOGY 541 (1999). This

has been particularly observed in the motion picture

and television production industries. See Darlene C.

Chisholm, Profit-Sharing versus Fixed-Payment

Contracts: Evidence from the Motion Pictures Industry,

13 J. L., ECON. & ORGANIZATION 169 (1997); Alan Paul

& Archie Kleingartner, Flexible Production and the

Tranformation of Industrial Relations in the Motion

Picture and Television Industry, 47 INDUSTRIAL& LABOR

RELATIONS REV. 663 (1994); Susan Christop*erson &

Michael] Storper, The Effects of Flexible Specialization of

Industrial Politics and the Labor Market: The Motion

Picture Industry, 42 id. 331 (1989). Talent agents and

artist managers are key players in the process of

connecting artists with content producers. See Michael

Cieply, Tilting Hollywood’s Balarice of Power to Talent

Agency Clients, N.Y. TIMES, March 19, 2007, at Cl;

William T. Bielby & Denise D. Bielby, Organizational

Mediation of Project-Based Labor Markets: Talent

Agencies and the Careers of Screenwriters, 64 AM.

SOCIOLOGICAL REV. 64 (1999).

It is for these reasons that the profession of talent

agents and the practice of procuring employment for

artist-clients have been subject to regulation in many

states, and not just California. See, e.g., Ariz. Rev. Stat.

§ 23-521(A) (2007); Ariz. Admin. Code R20-5-328 (2007)

35

(subjecting talent agents, within certain definitions, to

regulation as an employment agency); Fla. Stat. Ann. §

468.415 (2007) (sexual misconduct in the operation of a

talent agency); La. Rev. Stat. Ann. § 23:251(B) (2007)

(employment of minors by talent agencies); N.Y. Arts &

Cult. Aff. Law § 37.07(1) (McKinney 2007) (advertising

limits for talent agents and artist managers). Where

talent agent regulation through arbitral processes has

been an issue, it has been ruled that the arbitrability of

such disputes must be decided by courts in light of the

parties’ agreement and the context of state law. See

Am. Fed. of Telev. & Radio Artists, AFL-CIO uv.

Association of Talent Agents, 576 N.Y.S.2d 575, 576

(N.Y. App. Div. 1991).

California courts, in construing the TAA, have

elucidated the significant public policy rationale behind

the dispute settlement provisions of the Act and have

roundly condemned the tactics of certain agents or

representatives who would seek to deny the Act’s

protections to their artist-chents. In Buchwald uv.

Superior Court, 254 Cal. App.2d 347, 62 Cal. Rptr. 364

(1967), a case decided under the old Artist Managers

Act, but with substantially the same operative

provisions as the TAA, the court held that the statute

applied to a contract even if its terms appeared to

disclaim that services for the procurement of creative

employment were being provided. See id. at 355, 62 Cal.

Rptr. at 370 (“Clearly the Act may not be circumvented

by allowing the language of the written contract to

control [otherwise] [t]he form of the transaction, rather

than its substance would control.”).

As another California court has held:

36

[t]he rationale for denying a personal

manager recovery even for activities which

were entirely legal is based on the public

policy of the Act to deter personal

managers from engaging in illegal

activities. Knowing they will receive no

help from the courts in recovering for their

legal activities, managers are less likely to

enter into illegal arrangements. In

Waisbren, the court observed one reason

the Legislature did not enact criminal

penalties for violation of the Act was

“because ‘the most effective weapon for

assuring compliance with the Act is the

power... to declare any contract entered

into between the parties void from the

inception.’ ”

Yoo, 126 Cal. App.4th at 1103-04, 24 Cal. Rptr.3d at

749-50 (quoting Waisbren, 41 Cal. App.4th at 262

(quoting from the 1985 California Entertainment

Commission report)). This policy rationale and remedial

structure of the TAA has been confirmed by the

California Supreme Court. See Styne, 26 Cal.4th at 51,

26 P.3d at 349 (“In furtherance of the Act’s protective

aims, an unlicensed person’s contract with an artist to

provide the services of a talent agent is illegal and

void.”) (citing Waisbren and Buchwald).

Petitioner’s attempts to “circumvent” the TAA,

Buchwald, 254 Cal. App.2d 347, 62 Cal. Rptr. 364,

through his creative interpretation of his own

ambiguously-drawn arbitration clause in the PMA,

should be unavailing. If, in fact, he was unlicensed as

37

a talent agent at the time of the execution of the PMA,

its terms (including the arbitration clause) are void ab

initio.

Obviously, the arbitrator is free to reach

whatever conclusions he can on this point. Preston is

not at liberty, however, to circumvent the authority of

California’s Labor Commissioner — under the TAA as

part of the applicable law selected by the contract and

its arbitration provision — to make an administrative

determination as to Preston’s licensure stuus and any

potential effects it may have on the formation of the

contract. And, indeed, the arbitrator has expressed his

interest in such a determination. See J.A. 38 (4 5(ii))

(“the results of the Labor Commissioner hearing could

also inform the Arbitrator as to the remedy or relief that

would be just and equitable under the circumstances of

this case.”). No principled pursuit of Congress's policy

of promoting arbitration, nor any ground for preemption

by the Federal Arbitration Act, counsels a different

result in this case.

38

CONCLUSION

The decision of the California court of appeal

should be affirmed.

Respectfully submitted,

DAVID J. BEDERMAN

Counsel of Record®

1301 Clifton Road

Atlanta, Georgia 30322-2770

(404) 727-6822

JUDITH B. PROWDA

Of Counsel

15 West 75th Street

Suite 5C

New York, New York 10023

Counsel for Amicus Curiae

December 7, 2007

6 Counsel of Record acknowledges the assistance of Mark

D. Richardson, Emory Law School class of 2009.

39