The District of Columbia Court of Appeals heard arguments this morning in a fee dispute between attorneys who worked on the same side of a decade-long class action on behalf of older television writers.
Local solo practitioners Daniel Wolf and Maia Caplan contend that an arbitrator hired to divide up more than $23 million in fees awarded to class counsel based his decision on issues that were outside his authority. The class counsel had agreed that the fee petition submitted to the court wouldn't be binding on arbitration, they argued, but the arbitrator nonetheless rejected the idea that the parties could object to the petition and claim different fees in arbitration.
Wolf and Caplan's former co-counsel have argued that the arbitrator had legal authority to base his decision on a his reading of the original co-counsel agreement. Contract provisions gave him the right to base his decision on the fee petition submitted to the court, even if the parties disagreed.
Wolf and Caplan represented a group of television writers who sued studios, networks and talent agencies for age discrimination in Los Angeles County, Calif., Superior Court. Their co-counsel included attorneys from Sprenger + Lang and Kator, Parks & Weiser, both in Washington; Sprenger + Lang co-founders Paul Sprenger and Jane Lang, who are of counsel to that firm and also run a separate practice; and Schwartz, Steinsapir, Dohrmann & Sommers in Los Angeles. Sprenger was lead class counsel.
The writers reached a $70 million settlement with the bulk of the defendants in 2010. The court awarded the class counsel one-third of the settlement. According to briefs, the parties agreed to bring any fee disputes to mediation and arbitration to avoid a public scene that might delay or jeopardize the settlement. The parties went to mediation and, when that failed, to arbitration. The arbitrator issued a decision in late 2010. Wolf and Caplan sued in District of Columbia Superior Court to vacate the award, and Judge Michael Rankin denied their motions, prompting the appeal.
Wolf’s attorney, William Stein of Hughes Hubbard & Reed, argued today that the problem is that the arbitrator never made a finding about the reasonableness of the fees, instead finding that he was bound to use the fee petition because of language in the contracts signed by co-counsel.
Senior Judge Inez Smith Reid pressed Stein for evidence in the record that there was a “meeting of minds” among the class counsel about an agreement that the fee petition wouldn’t prejudice arbitration. Stein pointed to e-mails written by the lead class counsel, Paul Sprenger, that he said showed there was agreement that the arbitrator would allocate fees. Those e-mails supported a conference call that the attorneys had solidifying that agreement, Stein said.
Judge Stephen Glickman asked about the arbitrator’s contention that the purported non-prejudice agreement raised ethical concerns about whether the attorneys could submit one fee petition to the court and then argue for a different set of fees in arbitration. Stein said that the arbitrator didn’t have grounds to base his decision on those concerns, and that also there was nothing in the record that suggested the attorneys’ behavior was “untoward,” noting that Wolf consulted with the Office of Bar Counsel about how to proceed.
Caplan, who is representing herself on appeal, briefly spoke. Chief Judge Eric Washington asked her to explain whether the non-prejudice agreement was that the parties had a right to challenge the fee petition, or that the arbitrator should pretend that the fee petition never existed, stressing that those were two different scenarios. Caplan replied that if the parties had thought the fee petition was relevant, they never would have gone to arbitration.
Daniel Edelman of Katz, Marshall & Banks, representing Sprenger and Lang individually, noted at the beginning of his arguments that judicial review of an arbitrator’s decision is “extremely limited.”
The judges asked Edelman to explain how the arbitrator’s decision that the contract required him to base fees on the petition squared with the fact that he was hired to determine whether the fees were reasonable. Glickman questioned the sense of relying on the fee petition if the arbitrator knew that the fees the attorneys had claimed in the petition was the source of their dispute.
Edelman said that there was no evidence that the arbitrator found that there was a non-prejudice agreement binding him against relying on the fee petition.
Gerald Maatman Jr. of Seyfarth & Shaw, lead counsel for Sprenger + Lang, faced similar questions from Glickman during his arguments about why the arbitrator didn’t make a determination about the reasonableness of the fees, if that was what he was hired to do. Maatman said that it was also within the arbitrator’s authority to make a determination on whether the contract said he could divide the fees in any other way beyond the fee petition.