Klug v. BurgherGray LLP

Background

Christopher Klug sued BurgherGray LLP, Gopal M. Burgher, and Sandra M. Honegan-Pounder under the D.C. Wage Act. Klug had previously started an arbitration against the defendants involving contract and related claims. His employment and of-counsel agreements required claims against the firm and certain associated people under federal, state, or local law to be resolved exclusively through binding arbitration in New York, under American Arbitration Association rules. The agreements also selected New York law.

During the arbitration, Klug tried to add his D.C. Wage Act claim, but the arbitrator refused the request. The arbitrator later issued an award in Klug’s favor on his contract claims, including $406,098 in unpaid wages and more than $300,000 in attorney’s fees, costs, and interest. Separately, Klug filed the D.C. Wage Act claim in the D.C. Superior Court, which dismissed that case without prejudice based on the agreements’ arbitration and forum-selection provisions. Klug then filed this federal action but did not serve the defendants within the 90-day period required by Federal Rule of Civil Procedure 4(m). He later served them after the court ordered him to do so.

Court’s Analysis

The court concluded that the written agreements were valid and that Klug had agreed to arbitrate all claims against the defendants. It held that the D.C. Wage Act claim fell within the broad wording of the arbitration provisions. The court said that, even if the arbitrator had wrongly refused to add the claim, Klug’s remedy was to seek to vacate the arbitration award under the demanding standards governing such requests—not to bring the claim in court despite the arbitration agreement.

The court also ruled that the late service independently required dismissal. Klug acknowledged that he intentionally delayed service while hoping the defendants would waive it to reduce costs. The court found that this did not establish the exceptional circumstances or good cause needed to excuse the missed deadline.

Disposition

The court, acting on its own, dismissed the action for lack of jurisdiction. The dismissal was with prejudice to Klug’s ability to bring the D.C. Wage Act claim anew in court. The court denied as moot the defendants’ motion to vacate the arbitration award, Klug’s motion for partial vacatur, and his counsel’s motion to withdraw. The dismissal was without prejudice to either party’s right to file a petition to confirm or vacate the arbitration award. The court did not decide whether such a petition would be timely or what effect the motions filed in this case might have on timeliness. The Clerk was directed to terminate all pending motions and close the case.