The District of Columbia Court of Appeals heard oral arguments Monday morning in a challenge to D.C. Bar Rule XIII, which requires mandatory arbitration of attorney-client fee disputes.
The full appellate bench is being asked to decide, first, whether Washington solo practitioner Pamela Stuart had legal standing to appeal a trial judge's order compelling arbitration, and, second, whether the Court of Appeals overstepped its legal authority when it adopted the rule requiring mandatory arbitration for the D.C. Bar.
As previously reported in The National Law Journal, Stuart sued her former client, Barbara Walker, in District of Columbia Superior Court in 2008 for breach of contract and fraud. Stuart claimed Walker had not only refused to pay Stuart for her services, but had misrepresented her ability to pay in order to convince Stuart to keep working.
The two never signed a contract. At Walker’s request and over Stuart’s objection, District of Columbia Superior Court Judge Judith Macaluso sent the case to arbitration under Rule XIII. Stuart appealed. A split three-judge appellate panel ruled against Stuart in October 2010, finding that Macaluso’s order was not appealable, and Stuart petitioned for an en banc hearing.
Stuart is representing herself. She was joined at oral arguments by Senior Assistant Attorney General James McKay Jr. of the D.C. Office of the Attorney General, which filed an amicus brief defending a 2007 local law that gave Stuart a right to appeal.
Walker, a lawyer in Alexandria, Va., did not attend oral arguments. Susan Friedman of Wilmer Cutler Pickering Hale and Dorr, who represented the D.C. Bar Attorney/Client Arbitration Board in filing the board’s amicus brief agreeing with Walker, argued her side before the court on Monday.
McKay, who argued first, defended the city’s Arbitration Act of 2007, which allowed appeals of orders compelling arbitration. Previously, only orders denying arbitration could be appealed. McKay said that an order compelling arbitration should be thought of as injunctive or final, and therefore appealable. He said that the council wasn’t expanding the court’s jurisdiction, but rather trying to “level the playing field” by recognizing that such an order should be appealable.
Chief Judge Eric Washington asked McKay to explain why allowing such appeals wouldn’t go against the court’s preference for avoiding “piecemeal litigation.” McKay said that an order compelling arbitration was a “threshold issue” that needed to be resolved before the case could go forward.
Stuart reiterated the argument from her brief that the case boiled down to a question of whether mandatory arbitration is unfair and denies attorneys due process, since it isn’t required in other disputes. The appeals court ran afoul of its legislative authority when it enacted Rule XIII, she said, since it altered the structure of the court by sending an “entire class of litigants” to the arbitration board.
Judge John Fisher pressed Stuart to respond to the fact that other state courts have held that they do have the authority to require mandatory arbitration in fee disputes. Stuart said that Washington is different from other jurisdictions because of its legal status and the Home Rule Act, which restricts legislative action that might alter the authority and scope of local courts.
Friedman said that the court should find that orders denying and compelling arbitration are not appealable. Once the parties go through arbitration, she said, the case can go back to the court if one side wants to challenge the award.
Judge Phyllis Thompson asked Friedman why the appeals shouldn’t give deference to the council’s power to legislate. Friedman said that while the court isn’t bound to federal case law, “they are persuasive.”