United States District Court, District of Columbia
MEMORANDUM OPINION 
N. McFADDEN, U.S.D.J.
Employees International Union Local 32BJ (the
“Union”) brought this case to compel Preeminent
Protective Services, Inc. (“Preeminent”) to
arbitrate a dispute about two Union members. Despite a clear
court Order directing the parties to arbitrate, Preeminent
dragged its feet for over a year. It took dozens of attorney
hours, three show cause hearings, two failed arbitrations,
and a civil contempt Order for Preeminent to comply. The
original dispute itself is now overshadowed by
Preeminent's stonewalling. The issue here is what amount
of the Union's attorneys' fees Preeminent should bear
because of its long and calculated obstruction.
year-long effort to force Preeminent's compliance cost
the Union over $50, 000 in attorney hours and expenses.
Preeminent requested that the Court mitigate the amount owed
because of its limited ability to pay. After considering the
parties' briefings, the Court rejects Preeminent's
inability-to-pay arguments. Preeminent alone caused the
delay. And Preeminent alone must bear the costs of its
contemptuous and dilatory tactics. For the reasons stated
below, the Court will order Preeminent to pay the Union's
attorneys' fees and expenses.
reviewing the parties' arguments on the merits of the
case, in May 2018 the Court agreed with the Union and ordered
Preeminent to arbitrate. See Order (May 9, 2018),
ECF No. 14. Four months later, Preeminent still had not
entered arbitration. The Union filed for a show cause order,
suggesting Preeminent should be held in contempt for
violating the Court's Order. See Pl.'s Mot.
for Order to Show Cause, ECF No. 15.
response, the Court held the first of three show cause
hearings. See ECF Minute Entry (Nov. 16, 2018). At
this hearing, and with the hope of encouraging arbitration,
the Court ordered the parties to split the cost of
arbitration but determined that a contempt order was
premature. See Hr'g Tr. 8:19-9:4 (Nov. 16,
2018), ECF No. 33. The Court continued the show cause hearing
until January 3, 2019, with the understanding that it would
be discharged upon completion of arbitration. Id. at
9:6-9. And the Court warned Preeminent against any further
refusal to pay its half of the arbitration costs.
Id. at 9:10-11.
Union immediately tried to resume the arbitration process,
but within two weeks Preeminent refused to pay and forced the
recusal of a potential arbitrator. See Status
Report, Ex. A, ECF No. 20-1. The arbitrator required a
written assurance of payment “[g]iven Preeminent's
history of denying [its] responsibility” to pay its
share of the arbitration. Id. at 3. But Preeminent
refused, forcing the arbitrator's recusal. Id.
at 2. In his recusal, the arbitrator noted that
Preeminent's actions amounted to “an effective
refusal . . . to participate in good faith in this
Arbitration proceeding” and showed that
“Preeminent has no intention of ever paying its
share.” Id. The arbitrator also
“strongly suggest[ed] that the Court be notified of
Preeminent's continued refusal to participate fully, and
in the required good faith.” Id.
afterward, the Union informed the Court, see Status
Report, ECF No. 20, prompting the second show cause hearing.
See ECF Minute Entry (Jan. 3, 2019). There, the
Court recounted the history of the case to date, including
its clear order at the first hearing “that Preeminent
needed to agree to pay its half of the arbitration.”
Hr'g Tr. 16:16-17. Then the Court found that Preeminent
“repeatedly” and “explicitly ignor[ed] the
continued request from [the arbitrator and the Union] to
agree to pay their half to allow the arbitration to
commence.” Id. at 17:11-13, 19:15. The Court
noted that it “continued the show cause hearing . . .
to ensure [its] order was followed and that the arbitration
took place. Neither happened.” Id. at
18:17-20. And the Court warned Preeminent in no uncertain
terms that it could not ignore court orders or dictate their
terms. Id. at 18:24-19:1.
denying Preeminent's “borderline frivolous”
motion for attorneys' fees, and to compensate the Union
for the time it had wasted to date, the Court granted the
Union's motion for attorneys' fees and invited a
memorandum outlining its fees and expenses. Id. at
19:16-24, 23:12-15; see Def.'s Resp. to Show
Cause Order and Mot. for Atty's Fees, ECF No. 16. The
Union identified nearly $20, 000 in fees. See
Pl.'s Mem. in Support of App. For Atty's Fees
(“Pl.'s Fee Mem.”), ECF No. 24.
so, Preeminent dragged its feet in paying the second
arbitrator, delayed arbitration yet again, and willfully
forced the recusal of the arbitrator. See Hr'g
Tr. 25-26 (June 6, 2019). After being “shocked and
disappointed” to learn the circumstances of the first
arbitrator's recusal, the second arbitrator insisted upon
“enforceable assurances from both parties that I will
be paid for my services.” See Def.'s Mot.
to Cont. (4/23/2019), Ex. 7, ECF No. 34-7. Through
back-and-forth with both parties, the second arbitrator
proposed a revised fee agreement that incorporated the
parties' suggested language. See Errata Entry,
Ex. A (“Sec. Arbitrator's Recusal”) 2, ECF
No. 39-1; see Hr'g Tr. 25:10-12 (June 6, 2019).
But Preeminent failed to sign by the deadline. See
Sec. Arbitrator's Recusal at 2. After receiving an
extension, Preeminent signed the fee agreement but continued
to delay its invoice payment. Id.; see
Hr'g Tr. 25:17-19 (June 6, 2019). When Preeminent still
had not remitted payment within hours of the new deadline,
the arbitrator reached out to the parties by email with a
final notice. See Sec. Arbitrator's Recusal at
response, Preeminent claimed-without cause-that the
arbitrator was biased against it and in favor of the Union.
See Id. The arbitrator replied that “based
solely on [the first arbitrator's] recusal email, ”
his only concern was ensuring he was paid for his services.
Id. at 3. He also noted “that during my 30
plus years as a neutral, my reputation regarding impartiality
as an Arbitrator or a Mediator has never been
questioned.” Id. Maintaining his neutrally,
the arbitrator insisted once again that both parties abide by
their fee agreement. Id. Preeminent finally remitted
payment later that day. See Id. But before the
scheduled arbitration, Preeminent challenged the arbitrator
once again, contending that his messages regarding payment
indicated a bias against Preeminent that “any objective
observer” would interpret as partiality. See
final challenge led directly to the arbitrator's recusal.
After describing Preeminent's challenges, he found that
“its attack upon my impartiality put me in an untenable
position as the arbitrator of this case.” Id.
He predicted that no matter which way he ruled on the
Union's grievances, Preeminent's challenges lay the
foundation for a challenge; either from the Union
“because of Preeminent's allegations of prejudice,
” or from Preeminent, who “would believe that my
decision confirmed its allegations that I was
prejudiced.” Id. He formally recused himself
and directed the parties to find another arbitrator. Id.;
see Status Report, Ex. A at 2. As a piece of parting
advice, he “strongly suggest[ed] that payment for
arbitration services be handled before or immediately after
the arbitrator is selected.” Id. n.2.
2019, more than a year after the initial Order directing
arbitration, the Court held a third show cause hearing, which
the clients were required to attend. See ECF Minute
Entry (June 6, 2019). The Court found “clear and
convincing evidence that Preeminent has violated the
Court's clear and unambiguous orders compelling
arbitrations” through “a deliberate strategy to
delay, perhaps indefinitely, the arbitration I
ordered.” Hr'g Tr. 21:4-11, 27:1-3 (June 6, 2019).
So the Court held Preeminent in civil contempt and ordered a
$20, 000 sanction if Preeminent failed to arbitrate within 30
days. See Conditional Order of Civil Contempt, ECF
No. 40. Properly motivated, Preeminent finally completed
arbitration with the Union-418 days after the Court's
initial order. See Notice of Completion of
Arbitration Hearings, ECF No. 41; Order, ECF No. 14.
June 2019 Order, the Court also ordered Preeminent to pay all
the Union's attorneys' fees accrued as a direct
result of Preeminent's contemptuous behavior, which the
Court calculated by the date of the first show cause hearing
in November 2018. See Conditional Order of Civil
Contempt at 2. At the Court's direction, the Union filed
a supplemental memorandum listing nearly $50, 000 in fees and
expenses not already in its previous filings, and Preeminent
responded. See Pl.'s Mem. in Supp. of Attys'
Fees and Costs (“Pl.'s Second Fee Mem.”), ECF
No. 42; Def.'s Mem. in Opp'n, ECF No. 44.
reviewing both parties' briefs on the payment of
attorneys' fees, the Court requested supplemental
briefing about Preeminent's ability to pay the
Union's attorneys' fees and expenses. See
Order (Aug. 6, 2019), ECF No. 47. The Court has received the
parties' supplemental briefs and the issue is now ripe
for decision. See Pl.'s Sealed Mem., ECF No. 48;
Def.'s Sealed Opp'n, ECF No. 52.
courts possess “inherent powers, not conferred by rule
or statute, to manage their own affairs so as to achieve the
orderly and expeditious disposition of cases.”
Goodyear Tire & Rubber Co. v. Haeger, 137 S.Ct.
1178, 1186 (2017) (cleaned up). This inherent power includes
the ability to hold a bad-faith litigant responsible for
reimbursing the other side's legal fees and costs.
Chambers v. NASCO, Inc., 501 U.S. 32, 45 (1991).
When acting under this inherent authority, the Court must
take care only to issue sanctions that are compensatory, not
punitive. Goodyear Tire, 137 S.Ct. at 1186.
compensatory award must be “calibrated to the damages
caused by the bad-faith acts on which it is based.”
Id. (cleaned up). To make this assessment, the Court
awards fees to the wronged party that it would not have
incurred but for the other side's bad faith. Fox v.
Vice, 563 U.S. 826, 836 (2011). The Court awards the sum
of the fees that “would not have been incurred in the
absence of the sanctioned conduct.” Goodyear
Tire, 137 S.Ct. at 1187. But as exacting as the Court