Daniel Wolf and Maia Caplan Kats v. Sprenger + Lang, PLLC

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DISTRICT OF COLUMBIA COURT OF APPEALS
Nos. 11-CV-1206 and 11-CV-1208
DANIEL WOLF and MAIA CAPLAN KATS, APPELLANTS,
v.
SPRENGER + LANG, PLLC, et al., APPELLEES.
Appeals from the Superior Court
of the District of Columbia
(CAB-1897-11 and CAB-1898-11)
(Hon. Michael L. Rankin, Trial Judge)
(Argued June 13, 2012 Decided July 11, 2013)
(Amended January 30, 2014)
William R. Stein, with whom Michael A. DeBernardis was on the brief, for
appellant Daniel Wolf.
Maia Caplan Kats, pro se, who adopted the brief of appellant Wolf by
reference.
Gerald L. Maatman, Jr. and Daniel B. Edelman, with whom Rebecca S.
Bjork and Stephen R. McAllister were on the brief, for appellees.
Before WASHINGTON, Chief Judge, GLICKMAN, Associate Judge, and REID,
Senior Judge.
REID, Senior Judge: This case concerns an arbitration in the District of
Columbia pertaining to the allocation of attorneys‟ fees awarded after a settlement
2
in a class action lawsuit that was filed and litigated in the Superior Court for the
State of California, County of Los Angeles (“California trial court”). The
arbitration involved several attorneys and law firms, most based in the District of
Columbia. After receiving the arbitrator‟s award, appellants Daniel Wolf and Maia
Caplan Kats unsuccessfully attempted to reopen the attorneys‟ fees issue in the
California trial court. When that effort failed on jurisdictional grounds, Mr. Wolf
and Ms. Caplan Kats filed a motion in the Superior Court of the District of
Columbia (“District of Columbia trial court”) to vacate the arbitration award on the
ground that the arbitrator exceeded his powers and committed misconduct by
denying them due process. Appellees Sprenger+Lang, PLLC (“S+L”) and Jane
Lang Paul Sprenger, LLC (“JLPS”) opposed the motion. Mr. Wolf and Ms.
Caplan Kats appeal the judgment of the trial court which denied their motion to
vacate the arbitral award and confirmed the award. For the reasons stated in this
opinion, we affirm the judgment of the trial court.1
1
Following the issuance of the opinion in this case in July 2013, Mr. Wolf
filed a petition for rehearing or rehearing en banc. Appellees S+L, JLPS, and
Kator, Parks & Weiser, PLLC asked the court to deny the petition for rehearing en
banc. However, S+L and JLPS were not opposed to the correction of a legal
statement concerning whether the Superior Court was obligated to consider Mr.
Wolf‟s argument that the arbitrator engaged in misconduct when the parties‟
arbitration agreement specified that the only ground on which the arbitrator‟s
decision could be challenged was that he exceeded his powers. We granted Mr.
Wolf‟s petition for rehearing and now issue a revised opinion. The revised opinion
(1) states the legal principle that private parties have no authority to limit by
(continued…)
3
FACTUAL SUMMARY
The record shows that in 1999, Mr. Wolf, then a partner at the law firm of
Hughes, Hubbard and Reed, LLP (“Hughes Hubbard”) and Ms. Caplan Kats, then
a partner at S+L, discussed and began to investigate the possibility of filing an age
discrimination lawsuit on behalf of television writers over the age of 40 years. The
discussion and investigation led to the execution of a Co-Counsel Agreement, in
June 2000 (“the agreement”). Under the agreement, S+L agreed “to associate
with” Mr. Wolf, Ms. Caplan Kats, and the law firm of Sprenger & McCreight, LC
(“S+M”) in order to represent plaintiffs in the class action. Paragraph 7 concerned
the fee and expense petition. In pertinent part, Paragraph 7 required S+L to
“submit a request for recovery of attorneys‟ fees and [e]xpenses that will include
all hours reasonably expended at reasonable hourly rates and reasonable costs
incurred by co-counsel in connection with the lawsuit for which contemporaneous
records have been submitted.” Paragraph 8 related to the allocation of recovered
fees and expenses, and mandated, in relevant part, that “[a]ny . . . re-allocation of a
(…continued)
contract the statutory grounds set forth in the federal and the District of Columbia
arbitration acts on which an arbitrator‟s decision may be vacated; (2) makes clear
that the court considered and rejected Mr. Wolf‟s contention that the arbitrator
engaged in misconduct; and (3) addresses and rejects Mr. Wolf‟s assertion that he
raised an “arbitrability” issue in his appeal.
4
fee award . . . shall be based on each firm‟s percentage of the total lodestar fees in
the litigation (reasonable hours worked times reasonable hourly rates) and any . . .
re-allocation of an [e]xpense award shall be based on each firm‟s percentage of
total [e]xpenses advanced in the litigation.” Paragraph 11 of the agreement
required “[a]ny dispute between the parties” to be resolved through arbitration, and
that paragraph also limited the grounds on which an arbitrator‟s decision could be
appealed: “The parties agree that no appeal of the decision of the arbitrator shall
be taken unless the arbitrator has clearly exceeded the scope of his or her authority
under this agreement.” In Paragraph 10, the parties designated “the laws and Rules
of Professional Conduct of the District of Columbia” as the governing law for the
agreement.
Subsequently, due to changes in law firm affiliation,2 S+L, KPW, AFL and
2
Mr. Wolf, Ms. Caplan Kats, and Steven Sprenger affiliated with different
firms after executing the agreement. When Hughes Hubbard decided not to
participate in the writers‟ age discrimination class action, Mr. Wolf entered into an
August 2000, independent contractor agreement with S+L reaffirming the
applicability of the Co-Counsel Agreement to Mr. Wolf and determining the basis
for his compensation. Mr. Wolf signed an employment agreement with S+L on
May 1, 2001; he became a partner and his employment agreement provided for his
compensation and other matters. Earlier, in mid to late 2000, Ms. Caplan Kats
joined Kator, Parks & Weiser, PLLC (“KPW”) as a partner, and Steven Sprenger
became a partner at S+L after S+M dissolved. In addition, the AARP Foundation
Litigation (“AFL”) became part of the litigation team for the class action age
discrimination litigation.
5
the local California law firm of Schwartz, Steinsapir, Dohrmann & Sommers
(“SSDS”) executed an Amended and Restated Co-Counsel Agreement on
November 1, 2001 (“the amended agreement”). Paragraph 2 stated that the
amended agreement “d[id] not . . . alter the terms of the agreement[] between S&L
and Wolf . . . , nor the terms of the agreement between S&L and Caplan in
connection with her departure from S&L, except to the extent, if any, expressly set
forth” in the amended agreement. Under Paragraph 3, S+L had responsibility for
common expenses such as court reporter fees and transcript costs, travel, and
lodging. Paragraph 7 established the litigation Steering Committee, with Paul
Sprenger as Chair; the Steering Committee also included Mr. Wolf, Ms. Caplan
Kats, and Steven Sprenger.
Paragraphs 15 and 16 of the amended agreement were virtually identical to
Paragraphs 7 and 8 of the June 2000 agreement. In part, Paragraph 15 required
S+L to “submit a request for recovery of attorneys‟ fees and costs that will include
all hours reasonably expended at reasonable hourly rates and reasonable costs
incurred by the [law] [f]irms for which contemporaneous records have been
submitted.” Paragraph 16 further required that fees and expenses awarded by the
court be combined and firms “reimburse[d] . . . for all costs incurred,” and that the
remaining “balance” be “allocate[d]” to each firm “in proportion to their
6
reasonable hours worked times reasonable hourly rates (lodestar fees).” Paragraph
19, like the comparable paragraph of the June 2000 agreement, designated “the
laws and Rules of Professional Conduct of the District of Columbia” as the
governing law. The arbitration provision of the amended agreement, Paragraph 22,
was identical to Paragraph 11 of the June 2000 agreement. Paragraph 21
constituted a new provision: “No modification, termination or attempted waiver of
this agreement shall be valid unless in writing, signed by the party against whom
such modification, termination or waiver is sought to be enforced.”
About three months after executing the amended agreement, the parties
lodged twenty-three separate class action age discrimination complaints (involving
hundreds of plaintiffs) against multiple defendants (networks and studios), in the
California trial court. Thereafter, the parties engaged in protracted litigation, and
in three years of mediation with mediators Hunter R. Hughes, Linda Singer and
Judge Anthony Mohr. The California trial court orally approved the settlement of
19 cases on May 14, 2010 (“the Writers Litigation”).
Around February and March 2010, the parties approved a
mediation/arbitration agreement (“med/arb agreement”) regarding their fees and
expenses. They selected as mediator Mr. Hughes of Rogers & Hardin LLP, who
7
helped to negotiate the underlying settlement of plaintiffs‟ claims. The “non-
binding mediation . . . concern[ed] all disputes, claims, or demands arising out of
or related to the allocation among counsel of any fee and expense award arising out
of the settlement of the „Writers Litigation.‟” The arbitration provision specified
that “in the event that in the opinion of the [m]ediator the parties do not reach a
settlement of all material issues in dispute, then all such unresolved issues shall be
decided by the binding, nonappealable decision of the [m]ediator acting as an
[a]rbitrator.” Under the med/arb agreement, the mediator had “complete authority
over all procedural matters.”
The California trial court‟s January 6, 2009, and June 9, 2010, written
approval of the settlements of the underlying litigation, meant that the parties had
to turn their attention to filing an attorneys‟ fee petition prior to the mediator‟s
issuance of his first order regarding procedural rules and other matters governing
the proposed attorneys‟ fees arbitration. Even before the California trial court‟s
settlement approvals, however, email traffic between the parties revealed a
difference of opinion about billing rates for the purpose of allocation of fees.
Around late October 2009, three attorneys sent a six-page memorandum to Paul
Sprenger detailing “serious” issues regarding the allocation of fees. They
concluded by declaring: “We will need to reach an agreement that these issues
8
will be preserved without prejudice to any party pending the outcome of the
motion for preliminary approval, motion for attorneys‟ fees, and any
mediation/arbitration of the fee issues.” They added that in the event of non-
resolution of these issues, they “will have to be raised with [the California trial]
[c]ourt, which is something none of us would prefer to do.”
Mr. Sprenger responded in an email, dated February 3, 2010, expressing the
hope that discussion would resolve some of the fee issues. He continued: “In the
event some differences remain after fully exploring resolution, I have had
indications from everyone that mediation is the first alternative choice [a]nd that
[Mr.] Hughes should be retained for that purpose.” Paul Sprenger noted that he
had “spoken to [Mr. Hughes] and he is willing to mediate any differences.”3
3
In the ensuing weeks, and as the April 5, 2010, date for the required filing
of the fee petition in the California trial court grew closer, the parties‟ email traffic
about fee issues did not subside. Paul Sprenger‟s email of March 19, 2010, to the
parties, with a copy to Mr. Hughes, recognized their disagreement about
“numbers.” He endeavored to “assure everyone it will not prejudice anyone but
rather [the fee petition would] be a straight forward request for the one-third
contingency agreed upon by the named plaintiffs [in the settlement].” He “d[id]
not expect the fee differences or [the] mediation to be mentioned.” Three days
later, with a copy to Mr. Hughes, Paul Sprenger again “assure[d] [the parties that]
the [fee] request will not undercut or impact on mediation or arbitration but rather
will justify an award to class counsel of a 1/3 fee and costs overall to be allocated
pursuant to the co-counsel agreement and without individual amounts awarded to
individual firm or lawyers.” Furthermore, “the trustees [of funds awarded and paid
over for fees and costs] will account to all counsel based on any allocation
(continued…)
9
Mediation was scheduled to start on March 11, 2010. In anticipation of that
event, Mr. Hughes sent an email to all parties on February 17, 2010. He
acknowledged “conversations or email exchanges with” Paul and Steven Sprenger,
Ms. Lang, Mr. Wolf, and Ms. Caplan Kats “in an effort to begin to understand the
nature and scope of the issues to be resolved.” These exchanges prompted him to
say that “the gap between the parties appears to be substantial and, based on [his]
prior experiences, lawyers are often unwilling voluntarily to agree to a resolution
of fee matters of this magnitude.” Therefore, he “agreed with the suggestion that if
this matter does not get settled by the end of the session on the 12th, then [he
would] convert the mediation to a binding arbitration and decide any issue that
remains open at that time.”
The parties received two emails in April 2010, (April 7 and 9) on which Mr.
Hughes was not copied. In the first, Mr. Lieder of S+L noted specific deficiencies
in the declarations and sought to clarify what each party needed to put in his or her
(…continued)
agreement or final arbitration decision.” The parties (copy to Mr. Hughes)
received yet another email from Paul Sprenger on March 25, 2010. He asked that
they “not calculate [their own] or anyone‟s lodestar.” He stressed that he did not
“want to calculate any percentage lodestar allocations or even multiply hours x
rates to derive a lodestar,” and that his “justification plan [for fees and costs]
include[d] the use of median rates and total time by lawyers and legal assistants to
reach a total over $25 million.”
10
declaration in support of the fee petition. He asserted that the filers “will plug in
the rates you [the parties] tell us in our compilation of all firms‟ rates,” and that “if
the rate you [the parties] wish to use for this purpose is different than the rate you
are using for purposes of allocation among co-counsel, don‟t worry.” The parties
should not worry because Mr. Lieder “believe[d] that everybody has agreed not to
use any rates requested in this fee application in the intra-counsel disputes over
fees.” In the second email, Paul Sprenger voiced a “need to see” the amended
declarations “as [Mr. Lieder and Mr. Wolf] suggest[ed] they be filed.” He
expressed “no doubt that any mention of differences about fee entitlement in [the
fee petition] papers going to defendants will result in the court deciding the fee
issue,” but that the parties “agreed that [Mr. Hughes] would decide those issues.”
Paul and Steven Sprenger filed the twenty-page fee and expense petition in
the California trial court on April 14, 2010, with supporting declarations from Mr.
Wolf, Ms. Caplan Kats and others. The petition stated that “[e]ach declarant . . .
has verified the hourly rates for all of the timekeepers in each firm or entity.” The
fee petition also justified the request for attorneys‟ fees under both the percentage
of benefits and lodestar methodologies. In addition, it included the range of rates
for partners or owners, associates, paralegals and legal assistants, and law clerks,
and after “[s]umming the products of the hours times the rate for each timekeeper,”
11
the petition stated and justified “a total lodestar of about $41,170,000.”
Following review of the fee and expense petition, the supporting
declarations, and the responses of class counsel to the defendants‟ objections, and
after applying both the percentage of benefits and lodestar methodologies, the
California trial court determined that a one-third award of the settlement fund (with
allocable interest) was fair, reasonable, and fully justified. The court concluded
that by the time class counsel had completed all of the litigation work, the one-
third award “will likely be only about 50% of their lodestar fees.”
Sometime after the June 14, 2010, fee and expense petition approval by the
California trial court, the parties again focused on the arbitration proceeding. The
arbitrator issued an order on June 18, 2010, regarding procedural rules and
preliminary matters. The order stated, in part, that “[t]he arbitral law shall be the
Federal Arbitration Act.” This order was followed by a preliminary telephonic
hearing on July 13, 2010; the arbitrator issued a July 16, 2010, written report on
the hearing. According to that report, the arbitration proceeding concerning the
parties‟ claims was divided into two stages. Stage One claims focused on “the
percentage allocation of Plaintiffs‟ fee arising out of the settlement of the „Writers‟
Litigation‟” – involving S+L, KPW/Caplan Kats, Mr. Wolf, JLPS and SSDS (with
12
a stipulation of the parties pertaining to the allocation to AARP and Mr. Edelman).
Paragraph 2 (b) of the July 16 report stated: “The Parties stipulate, and the
Arbitrator finds, that the claims in Stage One [described in the report] are
arbitrable.” Paragraph 2 (d), which related to Stage Two claims, provided: “The
determination of individual counsel‟s allocations, specifically among S+L and
[Mr.] Wolf; and S+L and [Ms.] Lang and [Mr.] Sprenger; and KPW and [Ms.]
Caplan, is reserved for Stage Two, it being understood that the [a]rbitrator has
made no findings at this time regarding the arbitrability of, and/or jurisdiction over,
the claims reserved for Stage Two.” Paragraph 3 of the report concerned the
arbitral law; the parties stipulated that both the FAA and the law of the District of
Columbia “shall govern the arbitral issues.”
In September, 2010, the arbitrator sent two written questions to the parties
relative to the construction and meaning of Paragraph 15 of the amended
agreement (concerning the submission of the attorney fee petition to the California
trial court, and including the language, “all hours reasonably expended at
reasonable hourly rates and reasonable costs incurred”); and Paragraph 16 of the
amended agreement (pertaining to the method for allocating the attorneys‟ fees and
costs award among co-counsel, and defining the lodestar as “reasonable hours
worked times reasonable hourly rates”). The key question posed by the arbitrator
13
stated: “Does any Party contend that the language referencing reasonable hourly
rates and reasonable hours expended in Paragraph 15 has a different meaning than
that comparable language in Paragraph 16. If so, state the basis for any such
contention.”
The parties‟ responses to the arbitrator reflected varying views relating to the
allocation of the fee award. Mr. Wolf stated, in part: “[T]he parties all agreed that
the filing of the fee petition in this case would be without prejudice to the rights of
any party to challenge the reasonability [sic] of the hours and rates that had been
submitted by any party.” SSDS maintained that “the failure of a party to object to
another party‟s fee submission under Paragraph 15 has no estoppel effect”; in
support of that statement, SSDS quoted one of the emails from Paul Sprenger. Ms.
Caplan Kats asserted that “to the extent one were to argue that the fee petition
binds any subsequent determination under Paragraph 16 [of the amended
agreement], it does not,” because “it cannot be that the Sprenger Parties prevailed
upon the non-Sprenger Parties to defer until arbitration any examination of
unreasonableness, only to argue that such deferral bars determination here [in the
arbitration proceeding].” JLPS took the position that “[n]othing in [Paragraph] 16
precludes an Arbitrator from adjusting rates either upward or downward in
determining the attorney‟s „reasonable hourly rate.‟” S+L agreed, stating “the
14
Arbitrator may enhance the rates of one or more co-counsel under [Paragraph] 16
even if it was not done or sought under [Paragraph] 15.”
Following discovery and filing of declarations, briefs, and other pleadings in
the arbitration proceeding, the arbitrator issued his Stage One Allocation Order on
December 13, 2010. In that order he examined and rejected, as inconsistent with
the agreement and the amended agreement, the parties‟ argument that they had
agreed that the filing of the fee petition in the California trial court would have no
effect on the allocation of the fee award.
At the outset the arbitrator stated that “the award is a function of the
governing law to the evidence of record”; and that the award “was not based upon
general equity principles, pragmatic or other such factors that might play a role in
the mediation of a dispute.” (Emphasis in original). He declared that Paragraphs
15 and 16 of the amended agreement “can only reasonably be construed to mean
that the lodestar fee amounts submitted to the [California trial c]ourt by each of the
[f]irms in the fee petition in accordance with Paragraph 15 must be construed to be
coextensive with, that is, be the same as, the lodestar fee amount of each [f]irm that
is to be used to make the proportional allocation of the fee award under Paragraph
16.” That is, to state the construction in another way: “the [p]arties agreed in
15
Paragraph 15 to provide the [c]ourt with reasonable hours and reasonable rates as a
baseline upon which to make a fee award to them, and they correspondingly agreed
in Paragraph 16 that those same hours and rates would constitute the basis upon
which the [c]ourt‟s fee award – whatever it might be – would be proportionately
allocated among themselves.”
The arbitrator recognized that the parties differed as to the construction of
Paragraphs 15 and 16, and that it could be argued that these paragraphs should be
construed to mean that “the [p]arties‟ submission to the [c]ourt in the fee petition
of their lodestar fees is of no moment to this dispute, as that submission was
„merely used to support a request for a contingent one-third fee award‟”; and that
“notwithstanding the [p]arties‟ having submitted to the [c]ourt their reasonable
hours and reasonable rates via sworn declarations and a joint petition for the fee
award, they „in no way consented to the hourly rates and the number of hours
presented by other law firms.‟” Nevertheless, the arbitrator rejected that argument,
saying in part: “As an initial proposition, when a [f]irm submitted to the [c]ourt its
hours and rates, it unquestionably established that [p]arty‟s own lodestar in the
sense that it cannot thereafter disavow the veracity of that filing.” Furthermore, the
arbitrator declared, “in filing each fee petition, the [p]arties did not just bind
themselves to their own submissions.” Rather, “[t]heir declarations join in and
16
support the fee petition and the petition itself is a joint fee petition” (emphasis in
original), meaning that “by definition all [p]arties affirmed and consented to the
other [p]arties‟ lodestar fees as set out in the joint petition,” and no [p]arty could
“later challeng[e] another [p]arty‟s lodestar fees in the allocation process.” The
arbitrator maintained that a construction of the amended agreement that would
permit different hours and rates in the allocation proceeding “would bring into
question the ethical propriety of the [amended] [a]greement itself” and “could
subject the [amended] agreement to being voided as a violation of public policy.”
In addition, the arbitrator saw nothing in Paragraphs 15 and 16 that “authorize[d]”
him “to enhance a particular [p]arty‟s lodestar.” Furthermore, the arbitrator noted
that “prior to submitting their joint [fee] petition, the [p]arties could have amended
their [a]greement [under Paragraph 21 of the amended agreement] to establish a
different allocation process that was not interlinked with the fee petition
submissions, but they did not.”
After taking into account “unreimbursed expenses” which had to be paid
first, the arbitrator allocated the remaining amount of the fees and expenses fund as
follows (preliminary percentages requested by the “parties,” some of which were
modified later in the parties‟ arbitration briefs, are in parentheses): S+L – 51.99%
(74.06% minimum plus 15% enhancement), JLPS – 19.88% (27.5%, including a
17
33% enhancement for Paul Sprenger), KPW/Caplan Kats – 10.45% (Caplan Kats –
14 to 20%), Mr. Wolf – 8.73% (12.75%), SSDS – 7.70% (12.30%), AARP –
1.00%, and Daniel Edelman - .25%. The allocation order provided that the
combined 1.25% allocated to AARP and Mr. Edelman, “shall be pro-rated between
the remaining [p]arties that participated in the arbitration.”4
4
Before any briefs were filed for the Stage Two arbitration process, Ms.
Caplan Kats filed an ex parte motion in the California trial court in late December
2010, seeking to stay disbursement of the fee awards and apparently stating her
intent to file a motion to reopen the California trial court‟s order awarding fees and
costs; and in early January 2011, Mr. Wolf filed a pleading in the same court
challenging the rates and hours that had been submitted in the petition for
attorneys‟ fees. On January 6, 2011, the California trial judge held a hearing
regarding the papers filed by Ms. Caplan Kats and Mr. Wolf. Ms. Caplan Kats
leveled accusations against S+L, including an allegation that in the fee petition
submitted to the California trial court, S+L‟s “fees are exaggerated by at least 100
percent”; that “fraudulent statements have been made to [the California court]” or
“misstatements”; and that the fee petition submitted to the California trial court “is
dishonest.” When the judge said to Ms. Caplan Kats, “[y]ou‟re claiming that there
are misrepresentations to the [c]ourt, you knew them and you participated in
making them to me,” Ms Caplan Kats responded: “No, your Honor. I did not fully
understand them until the arbitration process.” Mr. Wolf explained that the intent
of his pleading was “to alert the [c]ourt of the existence of allegations of excess
with regard to the lodestar.” Steven Sprenger announced that he “st[oo]d 100
percent behind the declarations in support of the fee[] [petition],” and Paul
Sprenger claimed that the arbitrator had rejected the allegations that Ms. Caplan
Kats and Mr. Wolf were making. David Weiser of KPW stated that his “firm was
not thrilled with the result of the arbitration” but that “it is conclusive” and the
California trial court did not have jurisdiction. After questioning the parties and
observing that she had not received a copy of the arbitrator‟s award, the California
trial judge declared that she saw nothing showing that “the fees that [she] awarded
were not appropriate for the amount of work . . , done on [the class action] case”;
that she did not believe she had jurisdiction, and that even if she did, she would
“not exercis[e] it because lawyers, sophisticated people, entered into an arbitration
(continued…)
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Mr. Wolf submitted a Stage Two arbitration brief to the arbitrator on
February 10, 2011. Both Mr. Wolf and S+L transmitted other papers to the
arbitrator prior to the date on which the arbitrator closed the record, February 22,
2011. Some papers were submitted after the closing date, including papers from
Mr. Wolf, S+L and Ms. Caplan Kats. The arbitrator read the submissions, except
for a March 15 filing which he only scanned. However, the arbitrator based his
Stage Two order “solely upon the parties‟ submissions prior to the closing of the
record.” As indicated earlier, Stage Two of the arbitration process involved “[t]he
determination of individual counsel‟s allegations, specifically among S+L and
[Mr.] Wolf; and S+L and Jane Lang and Paul Sprenger; and KPW and [Ms.]
Caplan.” The arbitrator had reserved decision pertaining to the arbitrability of
those claims and/or his jurisdiction over them.5
(…continued)
agreement in another jurisdiction and have availed themselves of that process.”
Hence, the judge said, if the parties believed that the “arbitration award was done
by fraud or something was done wrong,” the arbitration award should be contested
where the arbitration occurred and in accordance with the arbitration process there.
5
During the January 6, 2011 hearing before the California trial court, Ms.
Caplan Kats took issue with the judge‟s statement that she, the judge, had a
declaration from KPW that the attorneys‟ fees awarded would go to KPW. Ms.
Caplan Kats insisted that the judge‟s statement was “false” and that the arbitrator
ruled that the attorneys‟ fees award “goes to [KPW and Ms. Caplan Kats] jointly
until a further arbitration.” She took no issue with the arbitrability of and the
arbitrator‟s jurisdiction over at least her dispute with KPW as part of the Stage
Two arbitration process. Nor did Mr. Wolf challenge the arbitrability of and the
(continued…)
19
In mid-March 2011, prior to the arbitrator‟s Stage Two order, Mr. Wolf and
Ms. Caplan Kats filed separate motions for partial vacatur of the arbitrator‟s award
in the Superior Court of the District of Columbia. 6 They set forth identical reasons
for their motion, maintaining that the arbitrator (1) “exceeded his authority in
violation of section 10 (a)(4) of the FAA [Federal Arbitration Act] and section 16-
4423 (a)(4) of the RUAA [District of Columbia Revised Uniform Arbitration
Act],” and (2) “committed misconduct prejudicial to [their] rights, refused to
(…continued)
arbitrator‟s jurisdiction over his dispute with S+L pertaining to his attorney‟s fees.
In fact, in his Stage Two arbitration brief, Mr. Wolf contended that under his
independent contractor and employment agreements with S+L, he was entitled to
an upward adjustment of his Stage One award, and that his Stage Two adjusted
award should reflect a rate of $800 per hour rather than an hourly rate of $686, or
in the alternative, he should receive “approximately $110,000 in additional
compensation above and beyond [his] Stage One award.” He also claimed that the
Stage Two award should include “the lodestar fees attributable to the hours”
worked by paralegals at his former firm, Hughes Hubbard. The arbitrator‟s two-
page Stage Two award, issued on March 23, 2011, summarily rejected Mr. Wolf‟s
claim to a higher rate in relation to S+L counsel, but granted his claim concerning
the Hughes Hubbard paralegals and awarded Mr. Wolf $28,200 for that claim.
6
In his Memorandum of Points and Authorities in support of his motion for
partial vacatur of arbitral award, Mr. Wolf mentioned in a footnote that the Stage
Two proceedings “are now complete and awaiting a decision by Arbitrator
Hughes.” In their opposition to Mr. Wolf‟s motion for partial vacatur, submitted to
the trial judge‟s chambers, S+L and JLPS said, “on March 23, 2011, the Arbitrator
issued a Stage Two Order . . . , granting in part and denying in part [Mr.] Wolf‟s
claim to reduce S+L‟s share of the allocation made to him under the Stage One
Award.” A copy of the Stage Two award apparently was attached to the
declaration of an attorney representing S+L in the District of Columbia trial court.
Hence, our trial court was aware of the Stage Two arbitration order prior to
rendering its August 2011 judgment.
20
consider evidence and argument material to the controversy and otherwise denied
[them] the right to be heard in violation of section 10 (a)(3) of the FAA and
sections 16-4423 (a)(2)(C) and 16-4423 (a)(3) of the RUAA.” S+L, SSDS, KPW,
and JLPS lodged responsive pleadings. After reviewing the record and examining
case law applicable to the court‟s limited review of an arbitration award, the
District of Columbia trial court signed an order on August 23, 2011, denying the
motions for partial vacatur and confirming the arbitrator‟s December 13, 2010,
arbitral award. Mr. Wolf and Ms. Caplan Kats noticed appeals.
ANALYSIS
Mr. Wolf contends (Ms. Caplan Kats incorporates all of the arguments of
Mr. Wolf) that before arbitration, the parties agreed that the filing of the fee
petition in the California trial court would have no effect on their fee allocation
dispute; hence, that was a resolved issue that was beyond the scope of the
arbitration proceeding. Moreover, he asserts, each party further agreed that its
respective challenges to the attorney fee hours and rates claimed by another party
would be resolved during the arbitration proceedings; nevertheless, the arbitrator
addressed the resolved issue (the effect of the attorney fee petition on the allocation
of fees) and failed to consider the unresolved issue (the disputes about the parties‟
21
claimed hours and rates). Relatedly, Mr. Wolf argues that the trial court failed to
address his arguments that “the arbitrator (1) committed „misconduct‟ within the
meaning of section 10 (a)(3) of the FAA, and (2) exceeded his powers within the
meaning of section 10 (a)(4) of that Act.” He maintains that his due process right
was violated because “at no point prior to issuing his [decision] did the [a]rbitrator
himself ever suggest that his decision might turn on the filing of the fee petition
and some kind of (purportedly) contractually-derived estoppel[] rule” about which
the arbitrator failed to give him notice and an opportunity to be heard.
In addition, Mr. Wolf states, as he did in the District of Columbia trial court,
that the arbitrator exceeded his authority because (1) the arbitral award was based
on the amended agreement which did not apply to him, and specifically, Paragraph
21 of the amended agreement precluding “modification, termination or attempted
waiver . . . unless in writing, signed by the party against whom such modification,
termination or waiver is sought to be enforced”; and (2) the arbitral award was
based on the arbitrator‟s “own notions of „ethical propriety‟” rather than on the
construction of Paragraphs 7 and 8 of the co-counsel agreement which contain
“nothing . . . dictating or even implying that the lodestar the parties assert in
connection with the filing of the fee petition and the lodestar that is used in the fee
allocation process must be the same.”
22
S+L and JLPS emphasize “the extremely narrow scope of judicial review”
of an arbitration decision and award and insist that Mr. Wolf‟s and Ms. Caplan
Kats‟ contentions “rest[] on a patent mischaracterization of the award.” They
assert that “[a]ppellants refuse to acknowledge that a motion to vacate must be
denied if any possible reading reflects that the award rests on the arbitrator‟s
construction of the parties‟ agreement.” (Emphasis in original). S+L and JLSP
contend that the arbitrator did not exceed his authority or engage in misconduct,
and that his award is based on his construction of Paragraphs 15 and 16 of the
amended agreement and Paragraphs 7 and 8 of the 2000 co-counsel agreement. In
addition, they maintain that Paragraph 1 of the amended agreement “superseded
prior agreements, including the June 2000 [co-counsel agreement]”; therefore,
under Paragraph 21, the amended agreement “could be modified only through a
new written agreement between all of the parties.” In addition, S+L and JLPS
maintain that Mr. Wolf‟s and Ms. Caplan Kats‟ arguments about the arbitrator‟s
award being based “on his own views of „propriety and good policy‟ are “vague
and conclusory” or “nothing more than speculation and conjecture.” They insist
that the arbitrator “based the [a]ward on his construction of” the co-counsel and
amended agreements rather than any “estoppel[] finding.”
We conduct a de novo review of a trial court‟s judgment confirming an
23
arbitration award, but our review is “extremely limited, and a party seeking to set
[the judgment] aside has a heavy burden.”7 Bolton v. Bernabei & Katz, PLLC, 954
A.2d 953, 959 (D.C. 2008) (internal quotation marks and citations omitted). Under
federal standards, a party also “must clear a high hurdle.” Stolt-Nielsen S.A. v.
AnimalFeeds Int’l Corp., 130 S. Ct. 1758, 1767 (2010). “[We] will not set aside an
arbitration award for errors of either law or fact made by the arbitrator.” Bolton,
supra, 954 A.2d at 959 (internal quotation marks and citation omitted). “It is only
when [an] arbitrator strays from interpretation and application of the agreement . . .
that the decision may be unenforceable.” Stolt-Nielsen, supra, 130 S. Ct. at 1767;
see also COBEC Brazilian Trading & Warehousing Corp. of United States v.
Isbrandtsen, 524 F. Supp. 7, 9 (S.D.N.Y. 1980) (“An arbitration award will not be
vacated for a mistaken interpretation of the contract or of the law, even when, in
the court‟s view, the arbitrator[‟s] opinion was clearly erroneous both in logic and
result.”) (internal quotation marks and citations omitted). Thus, “the scope of
judicial review for an arbitrator‟s decision is among the narrowest known at law
7
After reviewing the legislative history of amendments made to the
District‟s Arbitration Act in 2007, “we conclude[d] that neither the National
Conference of Commissioners on Uniform State Laws . . . , nor the Council of the
District of Columbia, intended that the revised provisions of the Uniform
Arbitration Act . . . , would convert limited judicial review of the award to a de
novo judicial merits review of claims made in arbitration proceedings.” A1 Team
USA Holdings, LLC v. Bingham McCutchen LLP, 998 A.2d 320, 323-24 (D.C.
2010) (footnote omitted).
24
because to allow full scrutiny of such awards would frustrate the purpose of having
arbitration at all – the quick resolution of disputes and the avoidance of the
expense and delay associated with litigation.” MCI Constructors, LLC v. City of
Greensboro, 610 F.3d 849, 857 (4th Cir. 2010) (internal quotation marks and
citation omitted); see also Bolton, supra, 954 A.2d at 959 (“limited review serves
to attain a balance between the need for speedy, inexpensive dispute resolution, on
the one hand, and the need to establish justified confidence in arbitration among
the public, on the other”) (internal quotation marks and citation omitted).
The standards and principles articulated above were emphasized in the
Supreme Court‟s recent decision in Oxford Health Plans LLC v. Sutter, 133 S. Ct.
2064 (2013). There the Court declared that “the sole question for [a court] is
whether the arbitrator (even arguably) interpreted the parties‟ contract, not whether
he got its meaning right or wrong.” Id. at 2068. Thus, „“[i]t is not enough . . . to
show that the [arbitrator] committed an error – or even a serious error.‟” Id.
(quoting Stolt-Nielsen, supra, 130 S. Ct. at 1767. Moreover, “[u]nder the FAA,
courts may vacate an arbitrator‟s decision „only in very unusual circumstances.‟”
Id. (citation omitted)). Where the complaint is that the arbitrator exceeded his
powers under the FAA, “[o]nly if „the arbitrator act[s] outside the scope of his
contractually delegated authority‟ – issuing an award that „simply reflect[s] [his]
25
own notions of [economic] justice‟ rather than „draw[ing] its essence from the
contract‟ – may a court overturn his determination.” Id. (citation omitted).
The parties in this case stipulated that the “[FAA], and [t]he law of the
District of Columbia shall govern the arbitral issues.” Based upon the parties‟
arguments, the pertinent parts of the FAA are 9 U.S.C. §§ 10 (a)(3) and (4) (2006),
which provide:
In any of the following cases the United States court in
and for the district wherein the award was made may
make an order vacating the award upon the application of
any party to the arbitration--
(3) where the arbitrators were guilty of misconduct in
refusing to postpone the hearing, upon sufficient cause
shown, or in refusing to hear evidence pertinent and
material to the controversy; or of any other misbehavior
by which the rights of any party have been prejudiced; or
(4) where the arbitrators exceeded their powers, or so
imperfectly executed them that a mutual, final, and
definite award upon the subject matter submitted was not
made.
The comparable parts of the District of Columbia‟s Revised Uniform Arbitration
Act (“RUAA”) are D.C. Code §§ 16-4423 (a)(2)(C) and (a)(4), which specify:
26
Upon motion to the court by a party to an arbitration
proceeding, the court shall vacate an award made in the
arbitration proceeding if: . . .
(2) There was: . . .
(C) Misconduct by an arbitrator prejudicing the rights of
a party to the arbitration proceeding; . . . [or]
(4) An arbitrator exceeded the arbitrator‟s powers . . . .
Where the argument is that the arbitrator exceeded his powers, an
arbitrator‟s decision may not be based solely on a determination regarding the
parties‟ intent; nor may it be grounded solely on an arbitrator‟s “own conception of
sound policy,” because: “[T]he task of an arbitrator . . . is to interpret and enforce
a contract, not to make public policy.” Oxford Health Plans LLC, supra, 133 S.
Ct. at 2070 (internal quotation marks and citation omitted). So, a court may not
“rely on a finding that [the arbitrator] misapprehended the parties‟ intent,” because
“§ 10 (a)(4) [of the FAA] bars that course,” and “permits courts to vacate an
arbitral decision only when the arbitrator strayed from his delegated task of
interpreting a contract, not when he performed the task poorly.” Id. at *14 (citation
omitted). Thus, “[u]nder § 10 (a)(4) [of the FAA], the question for a judge is not
whether the arbitrator construed the parties‟ contract correctly, but whether he
construed it at all.” Id. at *16.
 27
Misconduct under section 10 (a)(3) of the FAA usually involves the
exclusion of pertinent and material evidence that deprives a party of fundamental
fairness. See Thian Lok Tio v. Washington Hosp. Ctr., 753 F. Supp. 2d 9, 18
(D.D.C. 2010). “In deciding whether the [arbitrator] denied [appellants] a fair
hearing . . . the [c]ourt‟s review is „restricted to determining whether the procedure
was fundamentally unfair.‟” Foulger-Pratt Residential Contracting, LLC v.
Madrigal Condos., LLC, 779 F. Supp. 2d 100, 120 (D.D.C. 2011) (quoting Bolton,
supra, 954 A.2d at 960 (citing Lessin v. Merrill Lynch, Pierce, Fenner & Smith,
Inc., 481 F.3d 813, 818 (D.C. Cir. 2007) (“Every failure of an arbitrator to receive
evidence does not constitute misconduct requiring vacatur.”))). “Misconduct . . .
refers to misbehavior though without taint of corruption or fraud, if born of
indiscretion.” Silicon Power Corp. v. General Elec. Zenith Controls, Inc., 661 F.
Supp.2d 524, 536 (E.D. Pa. 2009) (internal quotation marks omitted). “[A]n error
on the part of the arbitrator . . . must be . . . so gross as to amount to affirmative
misconduct.” Howard Univ. v. Metropolitan Campus Police Officer’s Union, 519
F. Supp. 2d 27, 37 (D.D.C. 2007) (citation omitted), aff’d 512 F.3d 716 (D.C. Cir.
2008).
We now apply the governing law, standards and principles to the case before
us. We begin with the basis on which the arbitrator‟s decision could be challenged
28
under the agreement and the amended agreement. Paragraph 11 of the agreement
and Paragraph 22 of the amended agreement both provide that: “The parties agree
that no appeal of the decision of the arbitrator shall be taken unless the arbitrator
has clearly exceeded the scope of his or her authority under the agreement.” Mr.
Wolf faults the trial court for failing to consider his argument regarding the alleged
misconduct of the arbitrator. We agree that the trial court should have considered
Mr. Wolf‟s argument that the arbitrator engaged in misconduct, and that the
arbitrator‟s award should have been vacated under 9 U.S.C. § 10 (a)(3). “Private
parties have no power to alter or expand [the statutory grounds for review of an
arbitrator‟s decision], and any contractual provision purporting to do so is,
accordingly, legally unenforceable.” Kyocera Corp. v. Prudential-Bache T
Services, Inc., 341 F.3d 987, 1000 (9th Cir. 2003); see also Hall Street Assocs.,
L.L.C. v. Mattel, Inc., 552 U.S. 576, 578 (2008) (statutory grounds for vacating and
modifying an arbitrator‟s award “are exclusive” and they “may [not] be
supplemented by contract”); Hoeft v. MVL Group, Inc., 343 F.3d 57, 66 (2d Cir.
2003) (“judicial review is not a creature of contract, and the authority of a federal
court to review an arbitration award . . . does not derive from a private
agreement”). We said in a footnote in the panel‟s July 2013 opinion that “[t]he
record does not support [Mr. Wolf‟s] claim” that “the arbitrator‟s decision should
be vacated because of misconduct by the arbitrator.” In light of Mr. Wolf‟s
29
petition for rehearing or rehearing en banc, we discuss the misconduct issue in
more detail below.
Our de novo review of the record satisfies us that the arbitrator did not
engage in misconduct within the meaning of the federal and District of Columbia
arbitration acts. In his appeal brief, Mr. Wolf appeared to contend that the
arbitrator failed to give him notice and denied him the opportunity to address “the
filing of the fee petition and some kind of (purportedly) contractually-derived
estoppel[] rule” applied by the arbitrator. Mr. Wolf‟s petition for rehearing or
rehearing en banc attempts to enhance his appeal argument, and even asserts an
issue that was not raised in his appeal brief. He claims that misconduct is not
“limit[ed] . . . to the exclusion of material evidence,” and that “[t]here is, after all,
no meaningful difference from the standpoint of fundamental fairness between an
order that directly prohibits a party from proffering material evidence and an order
that resolves an arbitration on the basis of an argument that was never raised by
any of the parties (or the arbitrator).” Furthermore, he insists that “no one ever
argued that, under the terms of the Co-Counsel Agreement or otherwise, the hours
and rates that each party submitted to the California court were controlling for
purposes of determining each party‟s relative share in the allocation”; and that
“[h]ad the parties or the Arbitrator ever raised that argument, [he] would have
30
proffered to the Arbitrator” certain evidence, and would have argued that “the
parties had agreed to limit the scope of the arbitration such as to deny the
Arbitrator any authority to make his allocation decision on the basis of the hours
and rates submitted to the California court.”
Generally, a misconduct challenge is grounded in the arbitrator‟s exclusion
of pertinent and material evidence that deprives a party of fundamental fairness.
See Thian Lok Tio, supra, 753 F. Supp. 2d at 18. Not only do we discern no
evidence of misconduct on this record, but we also reject Mr. Wolf‟s belated effort
in a petition for rehearing or rehearing en banc to raise an issue that was not
presented to the Superior Court, or in his appeal brief in this court.8 As we discuss
8
Mr. Wolf states in his petition for rehearing or rehearing en banc that his
“challenge was [not] to the Arbitrator‟s interpretation of his Co-Counsel
Agreement,” but that he “challenged arbitrability.” The record simply does not
support this belated assertion. From the outset of this case, Mr. Wolf couched his
arguments and statement of issues not only in terms of the arbitrator‟s
interpretation of his co-counsel agreement, or the parties‟ agreement, but also in
terms of whether the arbitrator exceeded his powers or engaged in misconduct
within the meaning of the federal and District arbitration acts. His motion for
partial vacatur of the arbitrator‟s award specified two grounds: (1) the arbitrator
“exceeded his authority. . . .” and (2) the arbitrator “committed misconduct
prejudicial to [his] rights. . . . Mr. Wolf‟s statement of each issue set forth in his
appellate court brief began “Did the arbitrator exceed his arbitral authority,” and in
the case of one issue, “and engage in procedural misconduct warranting vacatur of
the award.” The word “arbitrability” does not appear in the statement of issues.
The Supreme Court has made clear that not every “potentially dispositive gateway
question [is] a „question of arbitrability‟”; rather, “the phrase „question of
(continued…)
31
below, the arbitrator obviously considered the fee petition filed in the California
trial court, as well as the basis for that petition as set forth in the parties‟ co-
counsel agreements; and in construing the pertinent provisions of the co-counsel
(…continued)
arbitrability‟ has a far more limited scope,” and includes issues such as “whether
the parties are bound by a given arbitration clause,” “whether an arbitration
agreement survived a corporate merger and bound the resulting corporation,” and
“whether an arbitration clause in a concededly binding contract applies to a
particular type of controversy.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S.
79, 83-84 (2002). In addition, the word “arbitrability” does not appear in any of
the topic headings of Mr. Wolf‟s main brief or reply brief on appeal, and the
question of “arbitrability” is not explicitly discussed in either brief. Consequently,
the panel was never faced with the issue of arbitrability. See Oxford Health Plans
LLC, supra, 133 S. Ct. 2068 n.2. (“We would face a different issue if Oxford had
argued below that the availability of class arbitration is a so-called „question of
arbitrability.‟”). Moreover, the arbitrator sent the parties a procedural order on
June 28, 2010, before the arbitration proceeding commenced, advising that the
arbitration would be divided into two stages. Stage One related to the percentage
allocation of the fee award to the respective parties. For Mr. Wolf and Ms. Caplan
Kats, Stage Two appeared to be critical since it called for “[t]he determination of
individual counsel‟s allocations, specifically among S+L and [Mr.] Wolf, and S+L
and [Ms.] Lang and [Mr.] Sprenger; and KPW and [Ms.] Caplan.” At that point,
Mr. Hughes had “made no findings . . . regarding the arbitrability of, and/or
jurisdiction over, the claims reserved for Stage Two.” Hence Mr. Wolf and Ms.
Caplan Kats were given the opportunity to present their case to the arbitrator
concerning the individual allocation of fees to them, as well as their views about
the arbitrability of Stage Two claims. The arbitrator set the deadline for Stage Two
documents for February 22, 2011. Mr. Wolf made a timely initial submission, but
Ms. Caplan Kats did not. Mr. Wolf‟s brief contained no argument regarding
arbitrability. Both appellants lodged pleadings after the deadline had passed; the
arbitrator generally read them but did not consider them in reaching his Stage Two
decision. Even so, the arbitrator resolved one issue favorably to Mr. Wolf. That
issue related to paralegals who had worked with him at his former law firm. Mr.
Wolf received a $28,200 award in Stage Two for the paralegals.
32
agreements, the arbitrator specifically sought the views of the parties.
Consequently, Mr. Wolf not only had the opportunity to present whatever evidence
and arguments he desired to make, but he also submitted a response to the
arbitrator‟s inquiry. Yet, he now asks this court to declare that the arbitrator
committed misconduct because the parties denied him “any authority to make his
allocation decision on the basis of the hours and rates submitted to the California
court.”
Given the duty of the arbitrator to interpret the parties‟ co-counsel
agreements, and the opportunity given to the parties to present their views, we see
no misconduct or prejudicial error on the part of the arbitrator that falls within the
federal or District arbitration acts. There is nothing in the record before us that
manifests action on the part of the arbitrator that is “so gross as to amount to
affirmative misconduct.” Metropolitan Campus Police Officer’s Union, supra,
519 F. Supp. 2d at 37. Nor do we see any “misbehavior” that is “born of
indiscretion.” Silicon Power Corp., 661 F. Supp. 2d 536. In short, the record is
devoid of any action on the part of the arbitrator that “so affect[ed] the rights of
[Mr. Wolf] that it may be said that he was deprived of a fair hearing.” National
Casualty Co. v. First State Ins. Grp., 430 F.3d 492, 498 (1st Cir. 2005).
33
We now turn to Mr. Wolf‟s argument that the arbitrator exceeded the scope
of his powers. In light of the trial court‟s and this court‟s “extremely limited”
review of an arbitrator‟s decision, Bolton, supra, 954 A.2d at 959, “the sole
question” before the court in a challenge under 9 U.S.C. § 10 (a)(4), is “whether
the arbitrator (even arguably) interpreted the parties‟ contract.” Oxford Health
Plans LLC, supra, 133 S. Ct. at 2068. There can be no doubt in this case that the
arbitrator reached his decisions in Stage One and Stage Two of the arbitration
proceeding after interpreting the parties‟ co-counsel agreements. Two months
before his December 2010 Stage One decision, the arbitrator submitted two written
questions to the parties regarding the meaning of key Paragraphs 15 and 16 of the
amended agreement, which are virtually the same as Paragraphs 7 and 8 of the
agreement.9 These paragraphs controlled the content of the attorney fee petition
submitted to the California court on behalf of attorneys representing litigants in the
class action. Paragraph 15 required the submission of “all hours reasonably
expended at reasonable hourly rates and reasonable costs incurred by the [law]
[f]irms for which contemporaneous records have been submitted.” Paragraph 16
served as the basis for an allocation of fee funds to the respective law firms; that
allocation had to be made “in proportion to [the law firms‟] reasonable hours
9
Because these key provisions of the agreement and the amended agreement
are virtually the same, Mr. Wolf‟s argument that the amended agreement does not
apply to him is unavailing.
34
worked times reasonable hourly rates (lodestar fees).”
Not only did Mr. Hughes request the parties to submit their views as to how
Paragraphs 15 and 16 should be interpreted, but he also considered these
submissions, including Mr. Wolf‟s and Ms. Caplan Kats‟ assertions that, in
essence, what was submitted to the California court in accordance with Paragraph
15, would not preclude a later challenge during arbitration to the reasonableness of
the hours and rates given to the California court. Thus, Mr. Hughes‟ Stage One
decision obviously construed Paragraphs 15 and 16 of the amended agreement. He
concluded, in plain terms: “the parties agreed in Paragraph 15 to provide the
[c]ourt with reasonable hours and reasonable rates as a baseline upon which to
make a fee award to them, and they correspondingly agreed in Paragraph 16 that
those same hours and rates would constitute the basis upon which the [c]ourt‟s fee
award – whatever it might be – would be proportionately allocated among
themselves.” Still interpreting the amended agreement, Mr. Hughes observed that
had the parties wanted a different allocation process, they could have further
amended their agreement in accordance with Paragraph 21 of the amended
agreement, but they did not, clearly suggesting that the pre-fee petition email
communications among the attorneys regarding the impact of the submission of the
fee petition, did not constitute an agreement or a meeting of the minds that satisfied
35
contract formation principles.10
In addition to squarely centering his arbitration decisions on the meaning of
paragraphs in the amended agreement, Mr. Hughes asserted that “the award is a
function of the governing law to the evidence of record,” and the fee award to the
law firms “was not based upon general equity principles, pragmatic or other such
factors that might play a role in the mediation of a dispute.” Mr. Hughes also
directly addressed the parties‟ varying interpretations of Paragraphs 15 and 16. In
doing so, he used language that Mr. Wolf and Ms. Caplan Kats attack as reflecting
a decision based on the arbitrator‟s “own notions of ethical propriety.” Mr.
Hughes made two statements that undoubtedly prompted appellants‟ argument.
First, he said: “As an initial proposition when a [f]irm submitted to the [c]ourt its
hours and rates, it unquestionably established that [p]arty‟s own lodestar in the
sense that it cannot thereafter disavow the veracity of that filing.” Second, Mr.
Hughes declared, to construe Paragraphs 15 and 16 of the amended agreement to
allow allocation of fees based on different hours and rates from those presented to
the California court, “would bring into question the ethical propriety of the
[amended] [a]greement itself” and “could subject the [amended] agreement to
10
The parties to a contract must reach agreement about “all material terms,”
and the circumstances must reflect their intent to be bound by those terms. Jack
Baker, Inc. v. Office Space Dev. Corp., 664 A.2d 1236, 1238-39 (D.C. 1995).
36
being voided as a violation of public policy.” Arguably, in making these
statements, Mr. Hughes was mindful of Paragraph 10 of the agreement and
Paragraph 19 of the amended agreement which provided that “the laws and Rules
of Professional Conduct of the District of Columbia” would be “the governing law
for the agreement.” Consequently, Mr. Hughes appeared to have reasoned that that
it would be improper and undoubtedly a violation of the canons of professional
conduct for attorneys to make “affirmed or sworn” declarations to the California
court concerning hourly rates and then to use different hourly rates for the same
transactions in determining the allocation of fees among the respective law firms. 11
We also are satisfied that the arbitrator arguably construed Mr. Wolf‟s
independent contractor and employment agreements with S+L, in addition to the
agreement and amended agreement discussed above. Mr. Wolf‟s Stage Two
argument centered on what the arbitrator called his “bilateral agreements‟ with
S+L. In his Stage Two decision, the arbitrator indicated that he had “read carefully
11
Rule 8.4 (c) of the District of Columbia Rules of Professional Conduct
provides that “[i]t is professional misconduct for a lawyer to [e]ngage in conduct
involving dishonesty, . . . or misrepresentation.” When Ms. Caplan Kats and Mr.
Wolf returned to the California court following receipt of the arbitrator‟s Stage
One decision to lodge complaints about the rates and hours submitted with the fee
petition, the California judge said to Ms. Caplan Kats, “[y]ou‟re claiming that there
are misrepresentations to the [c]ourt, you knew them and you participated in
making them to me,” suggesting a violation of ethical rules governing attorneys‟
behavior.
37
and considered” timely filed Stage Two pleadings. Mr. Wolf‟s Stage Two brief
provided a detailed argument about his contractual entitlement to higher rates
based on his independent contractor and employment agreements, as well as an
implied covenant of good faith and fair dealing, S+L‟s rate increase practices, and
historically adjusted rates. Under the arbitration principles which control our
review, we see no basis on which to disturb the arbitrator‟s Stage Two decision
rejecting Mr. Wolf‟s request for an additional fee award in the approximate amount
of $110,000.
Whether Mr. Hughes was right or wrong in his reasoning is not a basis on
which we may reject his arbitration award, because “[i]t is not enough to show that
the [arbitrator] committed an error – or even a serious error,” Oxford Health Plans
LLC, supra, 133 S. Ct. at 2068, and “[we] will not set aside an arbitration award
for errors of either law or fact made by the arbitrator.” Bolton, supra, 954 A.2d at
959 (internal quotation marks and citation omitted). Moreover, on this record we
cannot conclude that the arbitrator‟s Stage One and Stage Two decisions are based
solely on his own “conception of sound policy,” or solely on “[his] own notions of
[economic] justice.” Oxford Health Plans LLC, supra, 133 S. Ct. at 2068, 2070
(citations omitted). In sum, the record surely does not permit us to hold that Mr.
Hughes “stray[ed] from interpretation and application of [the agreement and
38
amended agreement]” such that his “decision [is] unenforceable.” Stolt-Nielsen,
supra, 130 S. Ct. at 1767. “Because the parties „bargained for the arbitrator‟s
construction of their agreement[s],‟” and because the arbitrator‟s decision
“arguably constru[ed] or appl[ied] the contract[s],” those decisions “must stand,
regardless of a court‟s view of [their] (de)merits.” Oxford Health Plans LLC,
supra, 133 S. Ct. at 2068 (citations omitted).
Accordingly, for the foregoing reasons, we affirm the judgment of the trial
court denying appellants‟ motion to vacate the arbitral award and confirming that
award.
So ordered.