Appeals Court Rules for JLL on Dual Representation in DC

How many times have you been warned by someone to “dot your (i)s and cross your (t)s” when you’re finalizing a legal document?

In a case that could have had wide-ranging repercussions for brokers—had it gone the other way—a federal appeals court has ruled that JLL did not fail disclose it was representing both parties in a 2020 real estate transaction in Washington, DC.

In a decision issued Friday, US Appeals Chief Judge Sri Srinivasan tossed out a March 2022 decision by US District Judge Florence Pan interpreting the DC law on dual representation by brokers—a regulation passed in 1996, but never before challenged in court—as having technically been violated by JLL in a 2018 lease transaction with an affiliate of S.C. Herman.

The lease in question involved a 51K SW space in an office building at 1441 L St. NW owned by S.C. Herman. JLL acted as the leasing representative for S.C. Herman, while a separate JLL broker represented flexible workspace company Regus, which signed the lease in 2018 for Spaces, its coworking brand.

The Spaces location closed during the pandemic in 2020. When S.C. Herman declined to pay JLL its $781K commission on the lease, the brokerage filed suit against the landlord.

S.C. Herman defended its decision to withhold the commission payment by citing the dual representation law—specifically the section that states that if dual representation disclosure is included as part of a larger contract, the stipulation should be “in bold lettering, all capitals, underlined, or within a separate box.”

Noting the Judge Pan acknowledged in her ruling that “the parties to the Regus Lease were on actual notice of JLL’s dual representation,” the three-member Court of Appeals panel ruled that failing to follow the formatting guidance did not on its face constitute a violation of the 1996 law.

“A broker can satisfy the Act’s baseline requirement of written consent to a dual representation (along with the necessarily-associated disclosure obligation) despite its nonadherence to the formatting specifications,” Srinivasan said in the ruling.

The District Court has been instructed by the Appeals Court to use this interpretation of the law and re-determine whether JLL met the disclosure requirement.

“We are pleased with the court’s ruling that confirms written notice of dual agency does not need to be in a specific format in order to be effective,” a JLL spokesperson said, in statement provided to Bisnow.

“All parties involved in this transaction were aware of JLL’s dual representation and no one expressed concerns. The court has seen through this form over substance argument, and we look forward to continuing the lawsuit and collecting the fee we are rightfully owed for our work,” the statement continued.

S.C. Herman attorney Alexander Laughlin of Odin Feldman & Pittleman did not respond to a request to comment on the ruling.

We were hoping to get a clarification on the formatting requirement. How about Helvetica Italic? Does that work? Or should it be HELVETICA ITALIC? Is it really case sensitive?