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Supreme Court Update

Published by on February 20, 2008

As noted throughout the blogosphere (here, here, and here for example), the U.S. Supreme Court decided several employment-related cases today and agreed to hear several more earlier in the week (see here).  This term promises to be heavy on employment law decisions. In Preston v. Ferrer (copy on SCOTUS Blog here), the Court held that the Federal […]

As noted throughout the blogosphere (here, here, and here for example), the U.S. Supreme Court decided several employment-related cases today and agreed to hear several more earlier in the week (see here).  This term promises to be heavy on employment law decisions.

In Preston v. Ferrer (copy on SCOTUS Blog here), the Court held that the Federal Arbitration Act (“FAA”) preempts a California statute requiring exhaustion of administrative remedies.  The case is getting some press because Judge Alex, a daytime television judge, was a party.

The Supreme Court held that when parties agree to arbitrate all questions arising under a contract, state laws lodging primary jurisdiction in another forum, whether judicial or administrative, are superseded by the FAA.  Judge Alex’s attorney filed a demand for arbitration seeking his fees from work performed as the Judge’s agent.  Judge Alex countered by filing a claim with the California Labor Commission under the California Talent Agencies Act claiming that his attorney lacked the proper license and that the contract was therefore void.  The matter went into litigation and the California courts refused to send the entire matter to arbitration.  The Supreme Court reversed, concluding that the parties had agreed to arbitrate all matters relating to the contract.

In LaRue v. DeWolff, Boberg & Associates, Inc. (copy on SCOTUS Blog here), the Court held that a private participant in an ERISA plan can bring an action for breach of fiduciary duty.  Workplace Prof Blog has some details here.  Keep an eye on the Boston ERISA Law Blog for more commentary on this decision.  Once the dust settles on this case, we may start seeing more of these claims.  If the stock market undergoes a significant “correction,” many 401(k) plan participants may seek relief against the plan administrator if it failed to follow their investment instructions, which is what happened in LaRue.

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