United States District Court, District of Columbia
MEMORANDUM OPINION AND ORDER
Kessler United States District Judge
Kotchen & Low LLP ("Plaintiff" or "K&L")
and Defendants Precision Discovery, Inc.
("Precision") and Jerry Barbanel (together,
"Defendants") are currently arbitrating
Precision's claims for over $3 million in unpaid bills
for electronic data processing, hosting, and related charges,
costs and fees. Plaintiff K&L filed this action seeking
declaratory judgment that Precision's arbitration claims
are barred by the doctrines of res judicata and
issue preclusion and that they are not subject to
arbitration. Defendants have moved to stay proceedings before
this Court in favor of ongoing arbitration.
matter is presently before the Court on Defendant's
Motion to Stay Proceedings and Compel Arbitration or in the
Alternative to Dismiss ("Motion to Compel
Arbitration") [Dkt. No.18], Defendant's Motion to
Stay Proceedings and Compel Arbitration or in the Alternative
to Dismiss the Amended Complaint ("Am. Motion to Compel
Arbitration") [Dkt. No. 21], Defendant's Motion to
Stay Rule 2 6 Obligations Pending Determination on
Arbitrability ("Mot. to Stay") [Dkt. No. 26], and
Plaintiff's Motion for Rule 16 Scheduling Conference
("PL's Mot.") [Dkt. No. 29].
consideration of the Motions, Oppositions, and Replies, the
entire record herein, and for the reasons stated below,
Defendants' Motion to Compel Arbitration is denied as
moot. Defendants' Amended Motion to Compel Arbitration
and Motion to Stay is granted in part and denied in part.
Defendant's Motion to Stay is denied as moot, and
Plaintiff's Motion is denied.
dispute stems from a contractual agreement reached between
the parties in relation to a separate suit, In re
Delta/AirTran Baggage Fee Antitrust Litig., MDL 09-2089
(N.D.Ga.) ("Delta Litigation"). On November 19,
2012, the judge in the Delta Litigation issued a decision
finding discovery misconduct by Delta, the defendant in that
case. See In re Delta/AirTran Baggage Fee Antitrust
Litig., 09-md-2089, 2015 WL 4635729, at *5 (N.D.Ga.
August 3, 2015). As a remedy, the judge ordered
plaintiff's counsel, K&L, to retain a discovery expert to
investigate Delta's misconduct, and for Delta to pay the
November 25, 2012, K&L signed a retainer letter with
Precision. PL's Ex. G ("Retainer Agreement")
[Dkt. No. 22-7]. The Retainer Agreement stated that Precision
had been hired, "to perform computer forensic services
in the matter of In Re Delta/AirTran Baggage Fee
Antitrust Litigation, MDL 2089, " and that
"[Precision] will need to perform those procedures that
[it] consider[s] necessary to express a professional
conclusion." Id. at 1. The Retainer Agreement
added that, "The scope of services may change during the
course of this engagement."
arbitration clause of the Retainer Agreement states that,
Any controversy or claim arising out of, or relating to
services provided by Precision Discovery and covered by this
letter for Counsel or at its request (including any such
matter involving any parent, subsidiary, affiliate, successor
in interest, of Counsel or of Precision Discovery) shall be
submitted first to voluntary mediation, and if mediation is
not successful, then to binding arbitration, in accordance
with the dispute resolution procedures set forth in the
attachment to this letter.
addition, the Retainer Agreement attached and incorporated by
reference Dispute Resolution Procedures, which contained an
additional arbitration clause. Id. at 6. The clause
states that, "
If a dispute has not been resolved within 90 days after the
written notice beginning the mediation process (or a longer
period, if the parties agree to extend the mediation), the
mediation shall terminate and the dispute shall be settled by
arbitration. The arbitration will be conducted in accordance
with the procedures in this document and the Rules for
Non-Administered Arbitration of the CPR Institute for Dispute
Resolution ("Rules") as in effect on the date of
the engagement letter, or such other rules and procedures as
the parties may designate by mutual agreement. . .
Any issue concerning the extent to which any dispute is
subject to arbitration, or concerning the applicability,
interpretation, or enforceability of these procedures,
including any contention that all or part of these procedures
are invalid or unenforceable, shall be governed by the
Federal Arbitration Act and resolved by the arbitrators.
January 2013, Precision asked K&L for authorization to
perform E-discovery services. PL's Opp. to Defs.'
Mot. to Stay Proceedings and Compel Arbitration, or to
Dismiss at 5 ("PL's Opp.") [Dkt. No. 22]. On
January 4, 2013, Precision sent K&L a proposed E-discovery
Statement of Work ("SOW"). PL's Ex. E [Dkt. No.
22-5] . K&L never signed the SOW. PL's Opp. at 6.
Instead, K&L authorized Precision by email to proceed with a
limited amount of E-discovery. PL's Ex. B ¶¶
5-7 ("Low DecL") [Dkt. No. 22-2].
November 2012 and March 2013, Precision billed $797, 481 for
computer forensic services and $4, 102, 020 for E-discovery
services. PL's Opp. at 7; PL's Ex. C [Dkt. No. 22-3].
On May 20, 2013, Precision "request[ed] the Court's
assistance in ordering Delta to. . . pay for the services
rendered by Precision Discovery." PL's Ex. K,
("Pixley Report") [DKt. No. 22-11].
28, 2013, Delta requested a hearing on Precision's fees
before the judge in the Delta Litigation. PL's Opp. at 8.
On July 24, 2013, the Delta Litigation court held a full-day
evidentiary hearing. Id. In an Order dated September
25, 2013, the Delta Litigation court ruled that
Precision's fees were not reasonable. PL's Ex. P
[Dkt. No. 22-16]. The court ordered Delta to reimburse $655,
635 in fees advanced by plaintiff's counsel, and to pay
Precision an additional $1, 794, 116 in fees. Id. at
38. Together, these amounts represented a 5 0 percent
reduction in Precision's fees. Id.
2013, Precision sent Delta a hard drive containing
approximately 3 71, 000 documents that had been collected by
Precision for Delta's review. Low Decl. ¶ 16. In
late 2013, one of Precision's Vice Presidents left
Precision to start his own company, Pixley Forensics Group
("Pixley"). Id. at ¶ 13. Thereafter,
K&L discontinued its use of Precision and retained Pixley as
its expert witness. Id.
December 2013, the Delta Litigation court ordered Precision
to make all data, including the hard drive with 371, 000
documents, available to Pixley. PL's Opp. at 11. Instead
of sending a hard drive to Pixley with the documents,
Precision provided Pixley with a password to an online
database of approximately 8 million documents hosted by
Precision, which included but did not identify the 371, 000
21, 2014, Precision sent K&L an invoice for approximately
$70, 00 0 for hosting charges. PL's Ex. T [Dkt. No.
22-20]. K&L refused to pay the invoice. Low Decl. ¶ 17.
Precision now seeks to recover from K&L "under theories
of unjust enrichment and quantum meruit for the
$485, 558 in fees incurred for the hosting and related
services." PL's Ex. D at 3 [Dkt. No. 22-4].