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Zuckerman Spaeder, LLP v Auffenberg

Case No. 10-7041 (C.A. D.C., Jul. 29, 2011)

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.


Judge(s): Douglas Ginsburg
Jurisdiction: U.S. Court of Appeals, D.C. Circuit
Related Categories: ADR , Civil Remedies , Malpractice , Torts
Circuit Court Judge(s)
Merrick Garland
Douglas Ginsburg
Stephen Williams

Appellant Lawyer(s) Appellant Law Firm(s)
Thomas Duckenfield, III
David Holzworth

Appellee Lawyer(s) Appellee Law Firm(s)
Francis Carter
Douglas Miller



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Click the maroon box above for a formatted PDF of the decision.
million, and the $834,000 it had charged beyond that was including any potential prejudice to the non-moving party. id. forfeiture, not waiver, is the appropriate standard for that litigants meet to discuss the possibility of settlement and pending arbitration. on the contrary, auffenberg petitioned david a. holzworth argued the cause for appellant. with 3 first, to be technically correct as well as clear, we note machinery had been substantially invoked"). before: ginsburg and garland, circuit judges, and 4 auffenberg from obtaining a stay to try his luck in yet another (identifying both waiver and delay as "defense[s] to we have taken account of the "totality of the circumstances," the usefulness if any of alternative dispute resolution. arbitration so long as the suit in which he is a party is pleading or motion to dismiss, has presumptively forfeited filed this lawsuit against james auffenberg, jr. for recovery auffenberg immediately appealed the district court's talks other than the magistrate's suggestion the parties submit separation-of-powers defense after intervening decision of we would have the district court apply. this is our effort to order pursuant to 16 of the faa, 9 u.s.c. 16(a)(1)(a) ("an the substantive issues in the case"). we have only once rule 1.5 and rule 1.6. zuckerman moved for various reasons the acab to arbitrate the malpractice claims he now calls denial of stay where movant had sought to transfer venue, waste of resources occasioned by this lawsuit, for one, might intention to arbitrate, that representation is nowhere "non-arbitrable." auffenberg therefore has forfeited any one month later auffenberg moved for leave to amend not in default in proceeding with such arbitration." 9 u.s.c. xiii, both attorney and client must agree to arbitrate a therefore, we have examined the record to determine whether (no. 1:09-cv-00906) of unpaid attorneys' fees. auffenberg counterclaimed for no. 10-7041 zuckerman spaeder, llp, a party may float all sorts of intentions, serious or not; a court refused to pay zuckerman's last two bills, or approximately research found. v. a.g. edwards & sons, inc., 821 f.2d 772, prejudiced non-moving party, which was "forced to litigate involvement in litigation, filing a motion for summary answer is undisputed. assuming for the sake of his argument allegations he sought arbitration "early and often" are unpersuasive 6 meaning of this provision. cornell & co. v. barber & ross cancer research, 821 f.2d at 777, auffenberg's purportedly and that same day moved the district court for a stay of the if auffenberg had not engaged substantially with zuckerman mandatory arbitration of any fee dispute under d.c. bar rule depositions, all of which activity related to auffenberg's states v. olano, 507 u.s. 725, 733 (1993). in our prior cases, v. carlisle, 129 s. ct. 1896, 1900 (2009). district of columbia attorney/client arbitration board allowing zuckerman to contact its former co-counsel, denied arbitrable" claim regarding third-party communications, evaluating a late-filed motion under section 3 of the faa. 2 "reactive" litigation activity induced zuckerman and the $834,000. the parties disagree about the relevant history of this auffenberg claims to have engaged in a "long back and 7 for the district of columbia circuit addressed the question of "waiver" in a case where the party their claims to binding arbitration before either a magistrate litigation or otherwise acted in a manner inconsistent with an (acab), an arm of the district of columbia bar. he also and corresponding motion for a stay eight months earlier, zuckerman or to the district court that auffenberg was with his months-long delay before petitioning the acab, now appeals. we affirm the order. failure to invoke arbitration); cf. fec v. legi-tech, inc., 75 iii. conclusion considering a question of forfeiture is properly concerned arbitration. accordingly, the order of the district court is arbitrability" under the faa, 9 u.s.c. 2). resolution of which would not equally advance the future ginsburg, circuit judge: zuckerman spaeder, llp to and filed discovery requests, and begun preparing for was asking the district court to stay only the fee dispute him on the briefs was thomas a. duckenfield, iii. discretion permitting defendant to amend answer to include resolution of auffenberg's claims in arbitration. these costs in this appeal, we affirm the district court's denial of the ltd., 521 f.3d 421, 425 (d.c. cir. 2008). columbia rules of professional conduct. by this opinion we alert the bar in this circuit that failure the form of savings inuring to all. forfeiture is the "failure to make a timely assertion of a right" that could not have prejudiced zuckerman. auffenberg's mediation, all before filing his petition or even indicating he defenses defendant must raise in answer or else forfeit). a the parties appeared before a magistrate judge for a "referable to arbitration" under a valid agreement and he "is forth" with zuckerman in the hope of obtaining the firm's compel arbitration." 521 f.3d at 428. prejudice to the party available opportunity, typically in filing his first responsive * record discussions described by auffenberg's counsel at a hearing litigation.* at the october 28 hearing, the district court agreed to and, unlike waiver, entails no element of intent. olano, 507 auffenberg argues he made only "reactive defensive efforts" unclear at this time" and the usefulness of mediation failed to invoke arbitration in (or before filing) his original i. background malpractice claim before the acab. his counterclaims to include allegations zuckerman had only with intentions placed upon the record. "participation" in the courts and in mediation precluded violated its duties under rule 1.6 by discussing the dispute ii. analysis judge or the acab. although a client may invoke have been avoided had we been more clear about the standard "uncertain," they requested a "rather early mediation session" proceedings. his petition to the acab covered both the fee time of both the district court and the magistrate judge. his initial answer and counterclaim imposed substantial costs upon opposing counsel and the courts. in this vein, to strike or in the alternative to dismiss the amended for the blog of the legal times. auffenberg also asked for a him on the brief was douglas r. miller. would have been avoided had he filed his petition to arbitrate virgin islands. after he had been acquitted auffenberg participation in discovery and mediation, however, combined answered the complaint, filed a counterclaim, taken a appeal may be taken from ... an order ... refusing a stay of any imposed a cost upon both litigants and the district court. the case are "referable to arbitration" before the acab, nor do affirmed. counterclaims to cure the defects zuckerman identified, also appellant filings, including the repeated amendment of his answer and only to non-arbitrable claims would not by itself indicate and counterclaimed for legal malpractice. in the counterclaim moved the district court for a stay pursuant to the federal on appeal, zuckerman does not dispute the claims in this documented in the record. in his pre-trial huffery and puffery opposing a stay, which may be treated as a function of the litigation conduct of the party seeking the stay, is "a relevant before a magistrate judge. they also submitted a proposed after the first responsive pleading imposed no or little cost presumptively extinguish a client's ability later to opt for which he says was the only subject to which his litigation james a. auffenberg, jr., malpractice and later petitioned for arbitration before the 8 williams, senior circuit judge. district court to expend time and effort on disputes, the relief quantum meruit. auffenberg in turn amended his stay because auffenberg failed to make a timely assertion of zuckerman spaeder represented auffenberg in a criminal the party seeking a stay has acted in a manner "inconsistent also directed the parties to negotiate a protective order the district court denied auffenberg's request for a stay counterclaims. a hearing before the district court was petitioning the acab, was trying to "get a second bite" at court of appeals where there was no prejudice to the fec). therefore, the only issue before us is whether ordered auffenberg within two weeks to amend his relinquishment or abandonment of a known right," united zuckerman sued auffenberg in the district of columbia consent to arbitration before the acab. in any event, on his right to arbitrate, and his litigation activity after he filed united states court of appeals to invoke arbitration at the first available opportunity will unquestionably prejudiced zuckerman, which reasonably removal. a rebuttable presumption of forfeiture will realign a stay pending arbitration under section 3 who has not litigants' incentives consistent with the faa, with benefits in 360 f.2d at 513-14 (emphasizing congressional intent to intended to arbitrate his claims before the acab. his although they acknowledged "the prospects of settlement are line rules in this area. with third parties absent auffenberg's prior consent. our reluctance thus far to define the standard further has in our caselaw, from cornell & co. in 1966 through protective order to prevent zuckerman from communicating research, 821 f.2d at 775 (conduct of discovery pertaining zuckerman then filed an amended complaint seeking of the dispute. the court concluded auffenberg, by 9 intent to arbitrate is "necessarily `in default,'" within the dispute and his malpractice claims. seeking a stay had not moved for summary judgment, and removed the case to federal court, answered the complaint, alternative dispute resolution after mediation had failed. even enough had commenced an internal investigation, responded auffenberg might have overcome the presumption of khan in 2008, we have always referred to the question of proceed with arbitration under section 3. see cornell & co., and irrelevant in any event, see infra at 7. unreasonable and actionable under rule 1.5 of the district of attempt to distinguish his "arbitrable" claim regarding fees, second, to clarify what we mean by "timely," we expand without prejudice zuckerman's motion to dismiss, and the parties dispute the occurrence and import of certain extra- refer the case to mediation for two months only. the court counterclaims so as to cure any defects. (considering but rejecting defendant's argument that single day of mediation in december 2009. little came of the forum, that is, the acab. a joint statement pursuant to the district court's standing order upon zuckerman and the district court. that auffenberg opinion for the court filed by circuit judge ginsburg. drew upon inherently limited judicial resources, including the later stay motion provided his delay did not prejudice his january 29, 2010, he filed a unilateral petition with the acab having forfeit his right to a stay had his conduct in litigation argument that he litigated only his non-arbitrable claims. of law we address de novo. khan v. parsons global servs. appellee u.s. at 733. a party who fails timely to invoke his right to on the ground that he had waived his right to seek arbitration that auffenberg "told zuckerman early and often" of his at 777 (holding party's motion for summary judgment had 775 (1987). in conducting this inherently fact-bound analysis, upon the suggestion of the district court: a defendant seeking although delay alone "rarely" constitutes prejudice, pursuing in the court only his malpractice claims, or that he on the merits, he had answered the complaint and moved the factor" in our analysis. see, e.g., cancer research, 821 f.2d mem'l hosp. v. mercury constr. corp., 460 u.s. 1, 25 (1983) that right. see fed. r. civ. p. 8(c) (enumerating affirmative 5 auffenberg is "in default" of his right to arbitrate, a question in auffenberg's filings prior to his motion to stay indicated to fill that gap. conduct after filing his answer was addressed. see cancer intervening decision by supreme court excused its earlier there we did not purport to prescribe a standard for general which he says he did not attempt to litigate, from his "non- case from state to federal court, and from the court to schedule culminating in a trial to take place in january 2011. 3. we have held a party who has actively participated in application. see cornell & co., 360 f.2d at 513 (affirming two weeks before the scheduled hearing the parties filed judgment ... is inconsistent with preserving the right to prevent "dilatoriness and delay"); see also moses h. cone arbitrate is "necessarily `in default'" when he later attempts to when he first answered the complaint and filed his notice of scheduled for october 28, 2009. for the district of columbia arbitration act (faa), 9 u.s.c. 3, the denial of which he f.3d 704 (d.c. cir. 1996) (district court did not abuse tax fraud case tried in the district court for the united states f.3d at 425. waiver refers to a party's "intentional after his first available opportunity might still prevail on a action under section 3 of this title"); see arthur andersen llp with any intent to assert its right to arbitrate." nat'l cancer argued february 8, 2011 decided july 29, 2011 in the district court on march 16, 2010. auffenberg's unsupported with third parties, including former co-counsel and a reporter answer and counterclaim, again alleging violations of both for similar reasons we reject auffenberg's belated opponent or the court. see cancer research, 821 f.2d at 776 deposition, and obtained discovery because "[t]he litigation superior court to recover the fees plus interest. auffenberg francis d. carter argued the cause for appellee. with v. co., 360 f.2d 512, 513 (d.c. cir. 1966). under the faa a litigant is entitled to a stay pending default exclusively in terms of waiver. 360 f.3d at 513; 521 defendant who delays seeking a stay pending arbitration until appeal from the united states district court forfeiture of right to arbitration of arbitrable claims). nothing arbitrable as well as non-arbitrable claims. auffenberg's at 774, 777. consequently, we have established few bright- he alleged zuckerman had agreed to cap its fees at $1.5 in khan we held "irrespective of other indicators of invoked the right to arbitrate on the record at the first

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