Arbitrators Govern Counsel Fees for Awards

By Danielle N. Rodier
Of the Legal Staff
A plaintiff seeking attorney fees on an award in compulsory arbitration must present that claim first to the board of arbitrators, rather than taking it straight to common pleas court, the Superior Court has ruled in a case of first impression.
The role of the arbitrators is the same as the court's, meaning they consider all evidence and make all conclusions of law, the Superior Court said, including the determination of attorney fees.
"Under the Supreme Court's rules, the board is required to rule on all issues and dispose of all claims É ," Superior Court Judge Robert A. Graci wrote for the three-judge panel in Conner v. DaimlerChrysler Corp.
"We can think of no reason why the question of attorneys' fees should be treated any differently than other questions that arbitrators customarily decide in a case."
Compulsory arbitration is governed by 42 Pa.C.S.A. Section 7361, Graci said, which provides that in general, matters brought up in compulsory arbitration "shall first be submitted to and heard by a board of three members of the bar of the court."
According to the opinion, Scott Conner filed suit against DaimlerChrysler, claiming it sold him a defective vehicle and then refused to correct the defects. He included claims under the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act and the Unfair Trade Practices and Consumer Protection Law. A compulsory arbitration hearing was held, resulting in a $2,000 award to Conner. Neither party appealed, Graci said.
Conner later filed a motion for attorney fees and court costs in Allegheny County Common Pleas Court. The court denied the motion, saying it could not award such fees because Conner had not pursued them in arbitration.
In his appeal to the Superior Court, Conner argued that he was not required to submit his claim for attorney fees to the board of arbitrators.
Graci said the commonwealth's courts had not addressed the issue before, although federal courts had done so. The Eastern District Court, he said, has granted an award of attorney fees after arbitration proceedings under the federal counterpart to Section 7361 in cases stemming from the Magnuson-Moss Act.
But those cases were not on all fours with Conner's case, Graci said.
"They appear to have assumed that claims for attorneys' fees were to be presented to the district court after the arbitration proceedings were concluded," Graci said.
Conner's situation was different, Graci said, and his conduct did not lend itself to an award of attorney fees.
"There is no reason why the attorneys' fees question could not have been presented to the arbitration board," Graci said. "The compulsory arbitration statute could not be clearer in mandating that 'matter or issues' subject to compulsory arbitration 'shall first be submitted to and heard by a board' of arbitrators," Graci said.
The Eastern District Court rejected a similar argument in Haug v. Toyota Motor Sales USA Inc., from 1996, Graci said, concluding a plaintiff's request for treble damages had to first be presented to the arbitrators, subject to appeal and trial de novo.
"The arbitrators in every case not only decide questions of fact and the amount of damages, if any, but also rule on the admissibility of evidence and resolve issues of law," the Haug court said.
"The matter of enhancement of damages is no less a proper issue for the arbitrators than is compensatory damages or any other legal or factual matter."
Graci said that the Superior Court agreed with the Haug decision and that adopting Conner's argument would defeat the overall purpose of compulsory arbitration, "the expeditious disposition of pending litigation."
The court also rejected Conner's argument that a plaintiff under the Magnuson-Moss Act cannot be found to have "finally prevailed" until the time to appeal the board of arbitrators' decision has expired.
(Copies of the 13-page opinion in Conner v. DaimlerChrysler Corp., PICS NO. 03-0356, are available from The Legal Intelligencer. Please refer to the order form on Page 10.)    
This article is reprinted with permission from the March 24, 2003 issue of The Legal Intelligencer. Copywrite 2003 ALM Properties, Inc. Further duplication without permission is prohibited. All rights reserved.