Miller Legal LLP v. Miller

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

Miller Legal, LLP, d/b/a Banner Legal, :
:
Plaintiff, : Civil Action No.: 18-1007 (RC)
:
v. : Re Document No.: 23
:
Peter Miller and Miller DellaFera, PLC, :
:
Defendants. :
MEMORANDUM OPINION

DENYING MOTION TO COMPEL ARBITRATION AND DISMISS COUNTERCLAIM

I. INTRODUCTION

Currently before the Court is Plaintiff’s motion to dismiss Defendants’ counterclaim and

compel arbitration. See ECF No. 23. This motion arises from a dispute among attorneys moving

among firms. Plaintiff alleges interference with contract by all Defendants and breach of

fiduciary duty by Defendant Peter Miller. Despite several attempts to resolve their differences

via private mediation, the parties have been unable to reach a settlement agreement on all of the

underlying issues. On November 5, 2018, Defendants filled an answer and asserted a

counterclaim for breach of contract. See Defs.’ Answer and Countercl. (“Defs.’ Answer”), ECF

No. 20. Plaintiff now moves to dismiss Defendants’ counterclaim and compel arbitration,

contending that the instant dispute is controlled by an arbitration clause contained in the Banner

Legal Partnership Agreement. See Pl.’s Mot. Dismiss and Compel Arbitration (“Pl.’s Mot.

Compel”) ¶¶ 21–23, 29–31, ECF No. 23. Because this Court concludes that Plaintiff’s litigation

conduct has waived the right to invoke arbitration, it will deny Plaintiff’s motion.
 II. BACKGROUND

Plaintiff Miller Legal, LLP, d/b/a Banner Legal (“Banner Legal”) is a law firm based in

Washington, D.C. Banner Legal is led by managing partner Cary McDonald, Compl. ¶¶ 2, 15,

ECF No. 1, a non-lawyer who operates alongside the firm’s other partner, D.C.-licensed attorney

Jeremy Shafer, id. ¶ 21. As of September 2017, in addition to these two partners, the firm

included six other “Profit Share Members.” See Pl.’s Mot. Compel, Ex. A, ECF No. 23-2.

Defendants are, respectively, an individual attorney, Mr. Miller, and another law firm with which

Mr. Miller is associated, Miller DellaFera, PLC (“Miller DellaFera”). Mr. Miller’s relationship

with Banner Legal soured in early 2018, leading Mr. Miller to declare his intention to leave the

firm via an email sent on March 28, 2018. See Compl. ¶ 26; Defs.’ Answer ¶ 26.

The parties dispute the reason for Mr. Miller’s departure from Banner Legal. According

to Plaintiff’s Complaint, Mr. McDonald had funded Banner Legal and lent money to Mr. Miller

for use by Miller DellaFera, PLC (“Miller DellaFera”) since 2015. Compl. ¶ 22. Plaintiff

contends that Mr. Miller departed the firm because he was unable to “come to an agreement”

with Mr. Shafer regarding the settlement of debts that Mr. Miller owed to Banner Legal and to

Mr. McDonald. See id. ¶¶ 21–25. Defendants describe the events differently, asserting that Mr.

Shafer and Mr. McDonald forced Mr. Miller out of the partnership through a series of actions

taken in fall 2017 and early 2018. See Defs.’ Opp’n TRO 6–7, ECF No. 11. Defendants proffer

that Mr. Shafer and Mr. McDonald narrowed Mr. Miller’s involvement in the firm by redefining

his role from “Partner” to “Profit Share Member.” Id. at 6. Defendants further aver that Mr.

McDonald “refused to honor the co-counsel agreement between [Banner] Legal and Miller

DellaFera,” id., and under which “[Banner] Legal financed Miller DellaFera’s overhead, payroll,

litigation and operating expenses” from October 2014 to May 2017, Defs.’ Countercl. ¶ 15.

2
After his departure from Banner Legal, Mr. Miller sent letters to clients whom he had

represented during his tenure as a litigator at Banner Legal. See Compl. ¶¶ 6–14 (alleging

improper and unethical communication with clients); Defs.’ Answer ¶¶ 7–8 (discussing letters

and arguing that Mr. Miller was professionally obligated to update clients). 1

On April 30, 2018, Banner Legal initiated this suit against Mr. Miller and Miller

DellaFera. See generally Compl. Plaintiff’s complaint alleged interference with contract by

both Defendants and breach of fiduciary duty by Defendant Mr. Miller and sought a temporary

restraining order and preliminary injunction. Id. After this Court denied Plaintiff’s request for a

temporary restraining order, see May 3, 2018 Minute Order, and before the scheduled hearing on

Plaintiff’s request for a preliminary injunction, the parties agreed to private mediation to attempt

to resolve their dispute, see June 8, 2018 Minute Order. On July 17, 2018, the parties reported

that they had reached a signed settlement agreement on some of the claims and issues and agreed

to meet with the private mediator later in the summer to attempt to settle the remaining disputes.

See Joint Status Report Regarding Mediation at 1, ECF No. 16. But further mediation did not

resolve the case.

On November 5, 2018, Defendants filed an answer to Plaintiff’s complaint along with a

series of counterclaims. See Defs.’ Answer. Plaintiff responded with a motion to dismiss

Defendants’ counterclaim for breach of contract and compel arbitration based on the terms of the

Banner Legal “Limited Liability Partnership Agreement” (“Partnership Agreement”), which was

operative during approximately two years of Mr. Miller’s tenure at Banner Legal. 2 See Pl.’s

1
The Court notes these letters to provide factual background for Plaintiff’s motion to
compel arbitration, yet takes no position on the merits of parties’ contentions regarding the
letters.
2
The Partnership Agreement took effect on February 5, 2016, see Pl. Mot. Compel 1, Ex.
B, ECF No. 23-3, and Mr. Miller departed in early 2018, see Defs.’ Countercl. ¶¶ 7, 19.

3
Mot. Dismiss Countercl., Ex. A. This Partnership Agreement contains an arbitration provision

stipulating that “any claim or controversy arising out of or relating to this Agreement, or a breach

of it, shall, upon the request of any party involved, be submitted to and settled by arbitration.”

Id. at 10. The original Partnership Agreement was amended on September 13, 2017, with the

“First Amendment to the Limited Liability Partnership Agreement” (“First Amendment to the

Partnership Agreement”). See id. at Ex. B. This document reaffirmed the original agreement,

except as “expressly modified.” Id. at ¶ 7. The First Amendment to the Partnership Agreement

did not expressly modify the arbitration clause. 3

Defendants contest the arbitrability of their counterclaims, which they argue arise out of a

different document, the “Agreement Between Miller Legal, LLP, Miller DellaFera PLC, and

Peter A. Miller Concerning the Funding of Miller DellaFera PLC,” which Defendants refer to as

the “Co-Counsel Agreement.” 4 Defs.’ Opp’n Mot. TRO, Ex. B, ECF No. 11-3. The undated,

unsigned Co-Counsel Agreement provides that “[Banner Legal] agrees to fully finance [Miller

DellaFera’s] overhead, payroll, litigation, and operating expenses in conjunction with the

litigation of Mass Tort Cases” and lays out terms of repayment. Id. at 2. Defendants allege that

the parties began operating under an oral version of this same agreement in July 2014 and

reduced it to writing in 2016. See Defs’ Countercl. ¶ 13; Defs.’ Opp’n Mot. Compel Arbitration

and Mot. to Dismiss 2 (“Defs.’ Opp’n Mot. Compel”), ECF No. 25. Defendants further argue

that the counterclaims are not properly subject to arbitration because Defendant Miller DellaFera

3
The First Amendment to the Partnership Agreement mentions arbitration, but only to
affirm that “[t]he Partners submit to the jurisdiction of the courts of the District of Columbia for
the enforcement of this Amendment or any arbitration award or decision arising from th[e]
Amendment.” Pl.’s Mot. Dismiss Countercl., Ex. B ¶ 6.
4
Although the Court adopts Defendants’ term for expositional consistency, this
document primarily addresses funding and repayment—not co-counsel matters in general.

4
was not a signatory to the Partnership Agreement and hence is not bound by its arbitration

clause. See Defs.’ Opp’n Mot. Compel 3–4. Plaintiff contests this version of events, contending

that the unsigned Co-Counsel Agreement is not binding and does not “repudiate the [Partnership

Agreement’s] arbitration clause.” Pl.’s Mot. Compel ¶ 35. This matter is ripe for the Court’s

consideration.

III. LEGAL STANDARD

The D.C. Circuit has established that a district court is to examine a motion to compel

arbitration under “the summary judgment standard of Federal Rule of Civil Procedure 56(c), as if

it were a request for ‘summary disposition of the issue of whether or not there had been a

meeting of the minds on the agreement to arbitrate.’” Aliron Int’l, Inc. v. Cherokee Nation

Indus., Inc., 531 F.3d 863, 865 (D.C. Cir. 2008) (quoting Aliron Int’l, Inc., 2006 WL 1793295, at

*1 (internal citations omitted) (D. D.C. June 28, 2006) (citing Bensadoun v. Jobe–Riat, 316 F.3d

171, 175 (2d Cir. 2003)). Applying this standard, “summary judgment is appropriate only if

‘there is no genuine issue as to any material fact and . . . the moving party is entitled to a

judgment as a matter of law.” Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247

(1986) (quoting Fed. R. Civ. P. 56(c))).

IV. ANALYSIS

A. Arbitrability

Before the Court addresses the merits of Plaintiff’s motion to compel arbitration, it must

address an antecedent issue: arbitrability, or whether the suit is properly subject to arbitration.

Because Defendants do not dispute the existence of a valid and binding arbitration clause, but

rather contest the reach of that clause, the Court assumes arguendo that there is an enforceable

5
arbitration clause in the Partnership Agreement. 5 There remain two arbitrability sub-issues:

First, who decides arbitrability, using what standards? And second, is the particular controversy

or issue—Defendants’ counterclaim for breach of contract—arbitrable under the terms of the

arbitration clause?

On the first question, a clear line of precedent empowers this Court to determine whether

the instant matter is arbitrable. Unless otherwise specified by the agreement to arbitrate, see

Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 527 (2019), a deciding court

and not an arbitrator is to determine the “gateway” question of whether the parties agreed to

resolve disputes by arbitration, see Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84

(2002) (citing AT&T Tech., Inc. v. Commc’ns Workers, 475 U.S. 643, 651–652 (1986)); Atkinson

v. Sinclair Ref. Co., 370 U.S. 238, 241–43 (1962); see also Hossain v. JMU Prop., LLC, 147

A.3d 816, 821 (D.C. 2016) (citation omitted).

On the second question, once a court is “satisfied that the making of the agreement for

arbitration . . . is not in issue,” it must not stand in the way of a valid arbitration agreement. 9

U.S.C. § 4. Rather, a court must respect the Federal Arbitration Act’s status as “a congressional

declaration of a liberal federal policy favoring arbitration agreements.” Moses H. Cone Mem’l

Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). To give full effect to the Federal

5
An arbitration agreement may be unenforceable “‘upon such grounds as exist at law or
in equity for the revocation of any contract.’ This saving clause permits agreements to arbitrate
to be invalidated by ‘generally applicable contract defenses, such as fraud, duress, or
unconscionability,” but not by defenses that apply only to arbitration or that derive their meaning
from the fact that an agreement to arbitrate is at issue.” AT&T Mobility LLC v. Concepcion, 563
U.S. 333, 339 (2011) (quoting Doctor’s Assoc., Inc. v. Casarotto, 517 U.S. 681, 687 (1996))
(citation omitted). Defendants do not raise any “generally applicable contract defenses” to
contest the arbitration clause’s validity. Because the Court concludes that Plaintiff’s litigation
conduct is inconsistent with the intent to arbitrate, see infra Section IV.B, it need not address
Defendants’ other arguments regarding the scope of the arbitration agreement or the identities of
the signatory parties. See Defs.’ Opp’n. Mot. Compel 2–6.

6
Arbitration Act and the policy evidenced therein, “courts must enforce arbitration contracts

according to their terms.” Henry Schein, Inc., 139 S. Ct. at 529 (citing Rent-A-Ctr., W., Inc. v.

Jackson, 561 U.S. 63, 67 (2010)). Notwithstanding the “liberal federal policy favoring

arbitration agreements,” a court must still take care to ensure that the parties agreed to arbitrate a

particular matter. See Howsam, 537 U.S. at 84 (“Gateway” questions for a court include

“disagreement about whether an arbitration clause in a concededly binding contract applies to a

particular type of controversy”).

Here, there is no dispute about the arbitration clause’s existence. The plain text of the

Partnership Agreement contains an arbitration clause providing that “any claim or controversy

arising out of or relating to this Agreement, or a breach of it, shall, upon the request of any party

involved, be submitted to and settled by arbitration.” Pl.’s Mot. Compel, Ex. A. And as

previously stated, Defendants do not argue that the clause is unenforceable. Defendants do

contend, however, that Plaintiff has waived the right to arbitration because of its failure to timely

assert that right. Because such a finding makes it unnecessary to rule on the merits of Plaintiff’s

motion to compel, it is to this issue that the Court next turns.

B. Waiver of Right to Compel Arbitration

1. This Court is the Proper Body to Assess Waiver

Defendants’ opposition to Plaintiff’s motion to compel arbitration argues that Plaintiff

waived its right to demand arbitration through its litigation conduct to date. See Defs.’ Opp’n

Mot. Compel 1. Plaintiff counters that the question of waiver is properly one that should be

decided by an arbitrator. See Pl.’s Mem. P. & A. Supporting Mot. to Dismiss Countercl. and

Compel Arbitration ¶¶ 42–45 (“Pl.’s Mem. P. & A. Supporting Mot. Compel”), ECF No. 23-1.

More specifically, Plaintiff invokes D.C. case law to support the proposition that, “[o]nce the

7
court has settled the basic contractual question, ‘it is for the arbitrator to resolve other gateway

matters . . . and allegations of waiver, delay, or a like defense to arbitrability.” Id. at ¶ 43

(quoting Hossain, 147 A.3d at 821 (internal quotation mark omitted)). 6 In other words, Plaintiff

contends that this Court may not decide the issue of waiver.

However, as Defendants note in their opposition, the same case on which Plaintiff

primarily relies, Hossain, gives this court authority to decide the issue of waiver. As the Hossain

Court explained, interpreting the Supreme Court’s guidance in Howsam., 537 U.S., “[a]n

increasing number of state supreme courts and federal circuit courts have interpreted Howsam in

a way that holds that waiver by litigation conduct is of a different nature than other waiver

inquiries exclusively allocated to the arbitrator’s authority.” Hossain, 147 A.3d at 821 (internal

quotation omitted); see also id. at 821–22 (compiling cases in support of conclusion). Moreover,

other federal district courts in this Circuit have found it entirely proper to assess whether a

party’s litigation conduct has waived the right to compel arbitration. See, e.g., Mitchell v.

Craftworks Rests. & Breweries, Inc., No. CV 18-879 (RC), 2018 WL 5297815, at *11 (D.D.C.

Oct. 25, 2018) (analyzing waiver of the right to arbitration); Cho v. Mallon & McCool, LLC, 263

F. Supp. 3d 226, 228 (D.D.C. 2017) (same); Kelleher v. Dream Catcher, LLC, 278 F. Supp. 3d

221, 223 (D.D.C. 2017) (considering whether party forfeited the right to arbitrate); see also Khan

6
Plaintiff does not explain its reliance on non-binding state law authority, nor does
Plaintiff’s motion to compel arbitration explicitly invoke D.C. state law beyond noting
similarities between the FAA and the District of Columbia’s Arbitration Act, Pl.’s Mot. Compel
¶ 27, and stating that the District’s Act “applies to any agreement to arbitrate made on or after
February 27, 2008,” id. at ¶ 28. Plaintiff may implicitly be attempting to invoke the background
principle that a court “deciding whether the parties agreed to arbitrate a certain matter” should
generally “apply ordinary state-law principles that govern the formation of contracts.” First
Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995). In any event, Plaintiff’s argument is
unavailing: as discussed infra, both federal and state law precedents permit this Court to address
the question of waiver.

8
v. Parsons Glob. Servs., Ltd., 480 F. Supp. 2d 327, 332 (D.D.C. 2007), rev’d on other

grounds, 521 F.3d 421 (D.C. Cir. 2008) (“Because this type of determination is one concerning

the arbitrability of a claim, the issue of waiver of right to arbitrate should be decided by the

Court, not an arbitrator, according to federal law.”).

In addition, Plaintiff fails to establish that the arbitration agreement at issue makes the

question of waiver one that an arbitrator must address. The arbitration clause states that “any

claim or controversy arising out of or relating to th[e] [Partnership] Agreement, or a breach of it,

shall . . . be submitted to and settled by arbitration in accordance with the rules of the American

Arbitration Association (or any other form of arbitration mutually acceptable to the parties

involved) then obtaining in Washington, D.C.” Pl.’s Mot. Compel, Ex. A. Plaintiff’s motion to

compel requests that the Court “require the parties to present their dispute to the American

Arbitration Association [“AAA”] as required by the contracts the parties executed,” Pl.’s Mot. P.

& A. Supporting Mot. Compel ¶ 52, yet contains no legal argumentation regarding the AAA

rules and their significance in this case. Two paragraphs at the end of Plaintiff’s final pleading

then contend that the arbitration agreement’s reference to the AAA requires the arbitrator to

“decide the scope and applicability of arbitration” in the instant case, including the question of

waiver. Pl.’s Reply Supporting Mot. Compel ¶¶ 23–24, ECF No. 26. Because Plaintiff did not

previously articulate this specific argument, Defendants did not have the opportunity to respond

to it in their opposition. This Court will not refer the entire matter to arbitration on the thin reed

of two paragraphs in a final pleading. See Walker v. Pharm. Research & Mfrs. of Am., 461 F.

Supp. 2d 52, 59 n.9 (D.D.C. 2006) (concluding that party who raised claim for first time in reply

had waived the argument) (citing In re Asemani, 455 F.3d 296, 300 (D.C. Cir. 2006)) (citations

omitted); see also Bronner v. Duggan, 249 F. Supp. 3d 27, 41 (D.D.C. 2017) (declining to

9
consider argument raised for first time in reply); United States ex rel. Morsell v. Symantec Corp.,

130 F. Supp. 3d 106, 122 n.14 (D.D.C. 2015) (“Because new arguments asserted in reply are

waived, the Court declines to consider . . . [the party’s] argument.”). Moreover, for the reasons

that follow, Plaintiff has not adequately demonstrated that the cited language in the arbitration

agreement requires an arbitrator to determine arbitrability.

Because arbitration agreements are contractual agreements to be treated “on an equal

footing with other contracts,” Rent-A-Ctr. W., Inc., 561 U.S. at 68 (internal citations omitted),

“the question ‘who has the primary power to decide arbitrability’ turns upon what the parties

agreed [to] about that matter. Did the parties agree to submit the arbitrability question itself to

arbitration?” First Options of Chi., Inc., 514 U.S. at 943. To answer this question, the general

rule is that courts “should apply ordinary state-law principles that govern the formation of

contracts.” Id. at 944 (citing Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 62–63

& n.9 (1995); Volt Info. Sci., Inc. v. Bd. of Tr. of Leland Stanford Junior Univ., 489 U.S. 468,

475–76 (1989); Perry v. Thomas, 482 U.S. 483, 492–93 & n.9 (1987); G. Wilner, 1 Domke on

Commercial Arbitration § 4:04, p. 15 (rev. ed. Supp. 1993)). However, a court deciding

“whether a party has agreed that arbitrators should decide arbitrability” is to apply a different

standard: “[c]ourts should not assume that the parties agreed to arbitrate arbitrability unless there

is ‘clea[r] and unmistakabl[e]’ evidence that they did so.” Id. at 944 (quoting AT&T Tech., 475

U.S. at 649) (internal citation omitted).

Here, the plain text of the arbitration clause does not clearly and unmistakably establish

that the parties agreed to arbitrate arbitrability. The arbitration clause states that disputes are to

be “settled by arbitration in accordance with the rules of the American Arbitration Association

(or any other form of arbitration mutually acceptable to the parties involved).” Pl.’s Mot.

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Compel, Ex. A (emphasis added). The rules, then, are not “unmistakably” stipulated by the

clause itself in the way that Plaintiff argues. Rather, as the parenthetical in the clause

establishes, the parties must mutually agree on the form of arbitration. And because the form

that will be mutually acceptable to the parties cannot be predicted in the abstract, there is not

“clear and unmistakable” evidence that the parties agreed to delegate the question of arbitrability

to an arbitrator pursuant to AAA rules. Accordingly, this Court will follow the law of this

Circuit and proceed to address whether Plaintiff may properly compel arbitration at this point in

the law suit.

2. Plaintiff’s Waiver of Right to Arbitrate

As previously discussed, Defendants contend that Plaintiff has waived the right to

arbitrate. More specifically, Defendants argue that Plaintiff “has been an active participant in

this litigation” and “did not seek arbitration in this matter until after Defendants brought their

Counterclaim and after Defendants served Plaintiff with written Interrogatories and a Request for

Production of Documents.” Defs.’ Opp’n Mot. Compel 6–7. Thus, Defendants argue that

Plaintiff’s participation in the litigation to date evinces a choice to litigate rather than arbitrate

that amounts to a waiver of their right to compel arbitration now. Plaintiff proffers that there is

no such waiver because trial has not begun, and “‘litigation activity’ short of the commencement

of trial does NOT constitute a waiver.” Pl.’s Reply Supporting Mot. Compel ¶ 22. For the

following reasons, Defendants have the better argument.

A party “waive[s] its right to arbitration by acting ‘inconsistently with the arbitration

right.’” Khan v. Parsons Global Servs., Ltd., 521 F.3d 421, 425 (D.C. Cir. 2008) (quoting Nat’l

Found. for Cancer Research v. A.G. Edwards & Sons, Inc., 821 F.2d 772, 774 (D.C. Cir. 1987));

see also Mitchell, 2018 WL 5297815 at *11. In order to determine whether a party’s conduct has

11
waived the right to arbitration, a court is to conduct a “totality of the circumstances” analysis.

Khan, 521 F.3d at 425 (quoting Nat’l Found. for Cancer Research, 821 F.2d at 774). This

totality of the circumstances analysis may consider factors that include “whether a party timely

sought arbitration” and whether the party that now seeks arbitration previously “engaged in

litigation activity that induced the other party and ‘the district court to expend time and effort on

disputes, the resolution of which would not’ move the dispute toward arbitration.” Partridge v.

Am. Hosp. Mgmt. Co., LLC, 289 F. Supp. 3d 1, 17 (D.D.C. 2017) (quoting Zuckerman Spaeder,

LLP v. Auffenberg, 646 F.3d 919, 923 (D.C. Cir. 2011)). This analysis may also assess whether

“the party opposing arbitration would suffer prejudice from the movant’s delay in seeking

arbitration,” id., although a finding of prejudice to the non-movant is not required to conclude

that waiver has occurred, see Khan, 521 F.3d at 425.

Here, Defendants contend that Plaintiff waived the right to arbitrate by initiating this suit

in April 2018 and then actively participating in litigation for seven months—and only then

moving to compel arbitration. 7 See Defs.’ Opp’n Mot. Compel 6. Because a totality of the

circumstances test applies, the length of time between filing the complaint and Plaintiff’s request

to arbitrate is not itself dispositive. The Court’s inquiry must ascertain whether, based on

Plaintiff’s overall conduct, Plaintiff acted inconsistently with the arbitration right and thereby

waived the right to arbitration. See Khan, 521 F.3d at 425 (internal citation omitted) (discussing

what constitutes waiver of right to arbitrate). For the reasons that follow, based on the totality of

the circumstances, this Court concludes that Plaintiff did indeed waive the right to compel

arbitration at this point in the lawsuit.

7
Plaintiff filed its Complaint on April 30, 2018, see ECF No. 1, and submitted its motion
to compel arbitration on December 10, 2018, see ECF No. 25. In their opposition, Defendants
round this period up to eight months, but it is in fact closer to seven.

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 First, Plaintiff did not timely seek arbitration. The procedural posture of this case—a

motion to compel arbitration of a counterclaim—requires close attention to the question of when

Plaintiff could have moved to compel arbitration. Although the instant motion to compel

arbitration refers specifically to Defendant’s counterclaim for breach of contract, Plaintiff’s own

discussion of this counterclaim reveals that it is closely related to the claims that Plaintiff

pursued in its complaint. In the very first paragraph supporting Plaintiff’s motion to compel

arbitration, Banner Legal asserts that “[t]he gravamen of the matter is a dispute concerning the

rights to fees and expenses of litigation with respect to thousands of clients primarily involved in

Multi District and/or ‘mass tort’ litigation.” Pl.’s Mem. P. & A. Supporting Mot. Compel ¶ 1.

Plaintiff proceeds to argue that the Partnership Agreement for Banner Legal “govern[ed] the

relationship among the parties with respect to the allocation of fees and responsibility for the

conduct of certain ‘mass tort’ litigation.” Id. at ¶ 4. Plaintiff further contends that the right to

compel arbitration comes from the same Partnership Agreement provision stating that “any claim

or controversy arising out of or relating to this Agreement, or a breach of it, shall, upon the

request of any party involved, be submitted to and settled by arbitration.” Id. at ¶ 6. Moreover,

in Banner Legal’s subsequent response to Defendants’ opposition to the motion to compel

arbitration, Plaintiff reiterates the argument that any claim Mr. Miller makes regarding “money

[owed] by Banner is a dispute squarely within [the Partnership Agreement and the First

Amendment to the Partnership Agreement], and squarely subject to the arbitration clauses of the

Agreements.” Pl.’s Reply Supporting Mot. Compel ¶ 8.

But this argument is a double-edged sword for Banner Legal. Plaintiff argues that

Defendants’ breach of contract counterclaim is properly subject to arbitration because it involves

questions about Mr. Miller’s tenure at Banner Legal and whether he or Miller Dellafera are owed

13
funds, and this “claim or controversy aris[es] out of or relat[es] to” the Partnership Agreement.

Pl.’s Mot. Compel ¶ 23. Applying this read to Plaintiff’s complaint, however, Plaintiff’s original

claims also arise out of or relate to the Partnership Agreement. For one, Plaintiff’s interference

with contract claim alleges that Defendants “intentionally interfered with Banner’s engagements

with its clients” and “Banner’s co-counsel agreements with it[s] co-counsel firms.” Compl. ¶¶

104–05. The Partnership Agreement states that “MILLER shall have complete and unequivocal

control of, and veto power for, any decision relating to . . . co-counsel relationships, referrals to

counsel, . . . and any and all decisions which are related to the practice of law.” Pl.’s Mot.

Compel., Ex A 5. Because the Partnership Agreement specifically discusses co-counsel

agreements and provides Mr. Miller with authority regarding such matters, Plaintiff’s claim for

interference with contract necessarily relates to the Partnership Agreement. As such, Plaintiff’s

interference with contract claim in the complaint presents a claim that falls within the scope of

the arbitration clause in the Partnership Agreement.

The same is true of Plaintiff’s original claim for breach of fiduciary duty. Indeed,

Plaintiff at times acknowledges as much, averring that the “Breach of Fiduciary duty, unethical

theft of Clients, and theft of software-database” claims pled in the original complaint against Mr.

Miller are “covered as a ‘dispute’ among the partners of Banner, and subject to arbitration.”

Pl.’s Reply Supporting Motion Compel ¶ 15 (citing Compl. ¶¶ 109–12). As such, both of

Plaintiff’s original claims logically arise out of or relate to the Partnership Agreement. And

because the original complaint raised points that—at Plaintiff’s own admission—fall within the

Partnership Agreement’s arbitration clause, the instant motion to compel is not a timely

invocation of the right to arbitration. Plaintiff could have pursued arbitration at the time that it

filed a complaint that contained an overlapping set of claims that raise tort litigation, fee-

14
arrangement, co-counsel, and legal ethics arguments. Banner Legal did not have to wait until the

counterclaim containing an explicit breach of contract claim was filed to move to compel

arbitration pursuant to the arbitration clause. To the extent that Plaintiff desired to arbitrate its

claims rather than litigate, it could have, and should have, sought to arbitrate those claims at the

beginning of this case, not seven months later.

In addition to failing to timely pursue arbitration, Plaintiff also “engaged in litigation

activity that induced the other party and the district court to expend time and effort on disputes.”

Partridge, 289 F. Supp. 3d at 17 (quoting Zuckerman Spaeder, 646 F.3d at 923) (internal

quotation marks omitted); see also Khan, 521 F.3d 421, 428 (discussing actions by movant that

forced non-movant “to expend time and resources” in district court). The same day that the

complaint was filed, Banner Legal sought immediate legal relief from this Court by moving for a

temporary restraining order or preliminary injunction. See Compl. 1; see generally Pl.’s Mot.

TRO. Plaintiff then took the further step of seeking an emergency hearing on the TRO, Pl.’s

Mot. TRO 1, and even sought leave to present live testimony at this hearing, see Pl. Mot.

Pursuant to LCvR 65.1(d), ECF No. 6. And on May 3, 2018, Plaintiff and Defendants both

appeared before the Court for the requested emergency hearing on the temporary restraining

order. When this Court denied Plaintiff’s motion for a TRO, moreover, Plaintiff did not retreat

from its litigation posture; to the contrary, it reinforced it by seeking an extension of time to

reply to Defendants’ opposition to Plaintiff’s motion for a preliminary injunction. See Pl.

Consent Mot. Ext. Time, ECF No. 12. Plaintiff did not move to compel arbitration until nearly

seven months after filing the initial complaint, after the parties’ attempts to reconcile via private

mediation failed, after Defendants had filed their answer, see Defs.’ Answer, and after discovery

had commenced on October 17, 2018, see Scheduling Order, ECF No. 19. In short, Plaintiff’s

15
conduct led this Court and Defendants to invest time and resources over the course of seven

months. Plaintiff could have avoided these unnecessary investments by pursuing arbitration

seven months earlier.

Assessing Plaintiff’s conduct in its totality and adding up Plaintiff’s emergency motions

and appearance before this Court, the months of private mediation that Plaintiff’s litigation

strategy led Defendants to pursue in an attempt at settlement, the fact that discovery in the suit

had commenced at the time of Plaintiff’s motion to compel arbitration, and Plaintiff’s own

arguments about the scope of the arbitration agreement, the Court finds that Banner Legal’s

actions are “inconsistent with the right to arbitrate,” Nat’l Found. for Cancer Research, 821 F.2d

at 775 (citing Cornell & Co. v. Barber & Ross Co., 360 F.2d 512, 513 (D.C. Cir. 1966)), and

therefore these actions amount to a waiver of the right to arbitrate. Accordingly, this Court will

deny Plaintiff’s motion to compel arbitration.

V. CONCLUSION

For the foregoing reasons, Plaintiff’s motion to compel arbitration and dismiss

Defendants’ counterclaim is denied. Plaintiff is granted seven days from this decision to file an

answer and to assert any affirmative defenses to Defendants’ counterclaims. An order consistent

with this Memorandum Opinion is separately and contemporaneously issued.

Dated: July 19, 2019 RUDOLPH CONTRERAS
United States District Judge

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