For a class of older television writers suing studios, networks and talent agencies for age discrimination, a $70 million settlement reached in 2010 was a happy ending. For the writers’ lawyers, though, it was only the opening act in a story line that might seem cliché to some of their clients — a fight over money.
Next month, the District of Columbia Court of Appeals will hear arguments on whether an arbitrator hired to divvy up the more than $23 million awarded in fees to class counsel exceeded his authority. Courts are historically loath to undo arbitration awards, but the case offers a behind-the-scenes look at a fee fight that attorneys had hoped to keep under wraps.
The investigation into alleged discrimination against television writers older than 40 began in the late 1990s, and the litigation stretched more than a decade. The $70 million settlement approved by a Los Angeles County, Calif., Superior Court judge in June 2010 resolved most of the writers’ claims, and was the largest sum awarded to the plaintiffs to date.
A dispute over fees began brewing in late 2009, but, fearing a public spectacle, the class counsel agreed at the time to take any fee disputes to mediation and, if that failed, arbitration.
Mediation did fail and an arbitrator issued a decision in late 2010. Two former class counsel, Washington solo practitioners Daniel Wolf and Maia Caplan, filed motions to vacate most of the award in District of Columbia Superior Court in early 2011, claiming the arbitrator based his decision on factors he wasn’t supposed to consider. Judge Michael Rankin denied the motions in August; Wolf, supported by Caplan, appealed.
The case has pitted Wolf and Caplan against their former co-counsel at 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.
Wolf has argued that the arbitrator exceeded his authority by dividing the fees based on a fee petition that the class counsel submitted to the Los Angeles judge. Wolf claimed that he and his co-counsel agreed not to publicly challenge the hours and rates each submitted as part of the petition, but that information wouldn’t bind the arbitrator.
The arbitrator rejected that argument, finding that the co-counsel agreements required him to award fees based on the hours and rates submitted to the court. According to an excerpt of the award in Wolf’s brief, the arbitrator also questioned the “ethical propriety” of not relying on the fee petition. The class counsel, he wrote, “invited the Court to [rely] upon the veracity of their joint petition…and in fact the Court did just that.”
Lead counsel for Sprenger + Lang, Gerald Maatman Jr. of Seyfarth Shaw, said the case presents “a very simple, straightforward application of arbitration law and the limits on the ability of a party to overturn an arbitration award.”
Bruce Meckler of Meckler Bulger Tilson Marick & Pearson in Chicago, who litigates fee disputes and serves as an attorney fee expert, said arbitration orders are “pretty much carved in stone.” Convincing a court to vacate an award “takes something extraordinary,” he said. “It usually requires some kind of real abuse of discretion or some kind of major mistake of law.”
According to Wolf’s brief, the trouble began as the majority of cases were nearing settlement in late 2009 and early 2010.
In preparing a fee petition for the court, Wolf claimed he was “incredulous” that Sprenger, Lang and other attorneys from Sprenger + Lang had listed fees in excess of $36 million. According to Wolf’s version of events in his brief, Caplan and attorneys from Schwartz and AARP Foundation, which was part of the class counsel team, shared his concerns. Caplan, Schwartz partner Henry Willis and AARP lead attorney Thomas Osborne declined to comment.
Fees awarded by the arbitrator to AARP Foundation and Daniel Edelman of Katz, Marshall & Banks, who was also a member of the class counsel, were not contested.
According to Wolf, the class counsel agreed to bring fee disputes before an arbitrator out of a concern that going before the court could delay or jeopardize the settlement. Wolf claimed that he and his co-counsel agreed in a series of e-mails and a conference call that the petition wouldn’t prejudice any future mediation or arbitration.
Wolf, represented by William Stein of Hughes Hubbard & Reed, said the arbitrator “decided the case on a basis that the parties agreed he could not base it on,” adding that the award “came as a complete surprise.” He declined to comment on the substance of the arbitrator’s award, but said he didn’t think he “received the allocation to which I was entitled by virtue of the hours that I put into this case.”
The appellees — Sprenger, Lang, the firm of Sprenger + Lang, Kator and Schwartz — argued in their brief that the arbitrator acted squarely within his discretion by basing his award on a reading of the co-counsel agreements. They disputed that there was any “non-prejudice agreement” regarding the fee petition that would have modified their contracts.
Sprenger and Lang, who are being represented by Edelman, declined comment.
The case sparked a separate fee dispute in U.S. District Court for the District of Columbia between Kator and Caplan, who worked at Kator from 2000 to 2010. Almost all of the filings in that case are under seal, but according to Kator’s complaint, the firm alleged that it hadn’t received fees it believed it was owed as of February 2011.
Kator is seeking a court order finding that Caplan isn’t an independent party and should have to make a claim against Kator to recover any fees, as opposed to making claims directly to the settlement fund. Caplan and Kator’s Jeremy Wright declined to discuss the federal court case. A trial is scheduled for September.
In denying Wolf and Caplan’s motion to vacate the arbitral award, Rankin wrote in his August 2011 order that judicial review of arbitration awards is “extremely limited.”
Rankin found that the class counsel gave the arbitrator a “broad grant of authority” to hear evidence and award fees based on his construction of their contracts. “[I]t is clear from the record that the Arbitrator in this case did just that,” he wrote.
Even if the arbitrator made a mistake in finding that there was no “non-prejudice agreement” that changed the original contracts, Rankin found that he would still need to uphold the award. “Indeed, so long as the arbitrator arguably construed or applied the contract in arriving at his decision, even the fact that a court is convinced there are ‘serious errors’ in the arbitrator’s factual findings or legal interpretations is not enough to overturn his decisions,” he wrote.
Wolf, in his brief, maintained that Rankin failed to properly scrutinize the arbitrator’s decision. He noted that no party argued before the arbitrator that the fee petition barred a challenge to the fees, and that the arbitrator’s decision wasn’t based on a reading of the contracts, but was “guided solely by his own notions of good policy and ethical propriety.”
Maatman said Wolf and Caplan failed to prove that the arbitrator showed “a manifest disregard for the law” or exceeded his authority. “Every fact-finder, both the arbitrator and the…judge, has agreed with our arguments,” he said. “We’re hopeful that the appellate court will do so also.”
A three-judge appellate panel is scheduled to hear arguments on June 13.
Contact Zoe Tillman at email@example.com.