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Zuckerman Spaeder, Llp v. James A. Auffenberg

July 29, 2011

ZUCKERMAN SPAEDER, LLP, APPELLEE
v.
JAMES A. AUFFENBERG, JR., APPELLANT



Appeal from the United States District Court for the District of Columbia (No. 1:09-cv-00906)

The opinion of the court was delivered by: Ginsburg, Circuit Judge:

Argued February 8, 2011

Before: GINSBURG and GARLAND, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge GINSBURG.

Zuckerman Spaeder, LLP filed this lawsuit against James Auffenberg, Jr. for recovery of unpaid attorneys' fees. Auffenberg counterclaimed for malpractice and later petitioned for arbitration before the District of Columbia Attorney/Client Arbitration Board (ACAB), an arm of the District of Columbia Bar. He also moved the district court for a stay pursuant to the Federal Arbitration Act (FAA), 9 U.S.C. § 3, the denial of which he now appeals. We affirm the order.

I. Background

Zuckerman Spaeder represented Auffenberg in a criminal tax fraud case tried in the District Court for the United States Virgin Islands. After he had been acquitted Auffenberg refused to pay Zuckerman's last two bills, or approximately $834,000.

Zuckerman sued Auffenberg in the District of Columbia Superior Court to recover the fees plus interest. Auffenberg removed the case to federal court, answered the complaint, and counterclaimed for legal malpractice. In the counterclaim he alleged Zuckerman had agreed to cap its fees at $1.5 million, and the $834,000 it had charged beyond that was unreasonable and actionable under Rule 1.5 of the District of Columbia Rules of Professional Conduct.

One month later Auffenberg moved for leave to amend his counterclaims to include allegations Zuckerman had violated its duties under Rule 1.6 by discussing the dispute with third parties, including former co-counsel and a reporter for the Blog of the Legal Times. Auffenberg also asked for a protective order to prevent Zuckerman from communicating with third parties absent Auffenberg's prior consent.

Zuckerman then filed an amended complaint seeking relief quantum meruit. Auffenberg in turn amended his answer and counterclaim, again alleging violations of both Rule 1.5 and Rule 1.6. Zuckerman moved for various reasons to strike or in the alternative to dismiss the amended counterclaims. A hearing before the district court was scheduled for October 28, 2009.

Two weeks before the scheduled hearing the parties filed a joint statement pursuant to the district court's standing order that litigants meet to discuss the possibility of settlement and the usefulness if any of alternative dispute resolution. Although they acknowledged "the prospects of settlement are unclear at this time" and the usefulness of mediation "uncertain," they requested a "rather early mediation session" before a Magistrate Judge. They also submitted a proposed schedule culminating in a trial to take place in January 2011.

At the October 28 hearing, the district court agreed to refer the case to mediation for two months only. The court also directed the parties to negotiate a protective order allowing Zuckerman to contact its former co-counsel, denied without prejudice Zuckerman's motion to dismiss, and ordered Auffenberg within two weeks to amend his counterclaims so as to cure any defects.

The parties appeared before a Magistrate Judge for a single day of mediation in December 2009. Little came of the talks other than the magistrate's suggestion the parties submit their claims to binding arbitration before either a Magistrate Judge or the ACAB. Although a client may invoke mandatory arbitration of any fee dispute under D.C. Bar Rule XIII, both attorney and client must agree to arbitrate a malpractice claim before the ACAB.

Auffenberg claims to have engaged in a "long back and forth" with Zuckerman in the hope of obtaining the firm's consent to arbitration before the ACAB. In any event, on January 29, 2010, he filed a unilateral petition with the ACAB and that same day moved the district court for a stay of the proceedings. ...


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