Judge Slashes Consumer Attorney’s Fee Request After Accepted Offer of Judgment

A federal Judge from the Eastern District of Tennessee has dramatically reduced a consumer attorney’s request for an award of attorney’s fees and costs in Fair Debt Collection Practices Act (FDCPA) cases involving an accepted Offer of Judgment.  The cases were LaPointe v. Midland Funding, LLC (Case Nos. 2:15-CV-171 and 2:15-CV-172, United States District Court, Eastern District of Tennessee)

Background

The plaintiff in this case filed two separate Complaints against the defendants on June 22, 2015. The two cases raise claims under the FDCPA. The two Complaints are virtually identical. Both raised claims against the same defendants for violations of the FDCPA regarding the collection to two debts originally incurred by the plaintiff to two different creditors, i.e. Wal-Mart and JC Penney.

Defendants filed their Answers on August 24, 2015. On the same day, the defendants filed a Motion to Consolidate the two actions. Also on the same day, the defendants tendered Offers of Judgment to the plaintiff in both cases. These Offers consented to Judgments against the defendants for $1001.00 plus attorney’s fees and costs for each case.

According to plaintiff’s counsel’s records, counsel began working on responses to the Motion to Consolidate the same day the defendants tendered the Offers of Judgment on August 24, 2015. Counsel’s time records confirm that he waited until September 8, 2015, to inform the plaintiff of defendants’ Offers of Judgment. Plaintiff accepted these offers the same day they were presented to him. Almost two hours before filing notices of accepting the Offers of Judgment, plaintiff’s counsel filed responses to the Motion to Consolidate.

On September 8, 2015, the plaintiff notified the Court of his acceptance of the Offers of Judgment by filing notices with the Court. The Court entered the Judgments on September 9, 2015. Thus, the Motion to Consolidate was rendered moot. Then, on September 23, 2015, the defendants tendered to plaintiff two checks for $1,001. 00.

On October 19,2015, plaintiff’s counsel filed the instant Motions for Attorney’s Fees and Costs. In case number -171, counsel seeks $7,133.00 in attorney’s fees and costs of $470.90 in costs for a total of $7,603.90. In case number -171, counsel seeks $6,650.50 in attorney’s fees and $467.47 in costs for a total of $7, 117.97. The combined request was for attorney’s fees of $13,783.50 and costs of $938.37, for a total of $14,721.97.

The defendants opposed the motions, arguing:

1. That the total request of $14,721.97 for duplicative and unnecessary work on two identical lawsuits should not be honored and the award should be reduced
2. That the cases should have been brought in one suit
3. That a majority of the work claimed was performed after the Offers of Judgment
4. That the hourly rate requested was excessive

The Opinion

The Opinion and Order were issued by J. Ronnie Greer, United States District Court Judge.

The Judge began his opinion with a review of the federal fee-shifting statutes like the FDCPA. He wrote:

“Attorney’s fees for successful litigants under federal fee shifting statutes are commonly calculated using the “lodestar” method of multiplying the number of hours reasonably expended by a reasonable hourly rate. The reasonableness of the hours expended and the attorney’s hourly rate must be considered on a case-by-case basis.

Courts may consider several factors to determine the basic lodestar fee and whether to make adjustments to it. Factors relevant to determination of the lodestar and any adjustments are: “(1) the time and labor required by a given case; (2) the novelty and difficulty of the questions presented; (3) the skill needed to perform the legal service properly; ( 4) the preclusion of employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (1 0) the ”undesirability” of the case; ( 11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.

While the lodestar method is the appropriate starting place for determining attorney’s fees, the inquiry does not end there. Other considerations may lead the district court to adjust the fee.  The most critical factor in determining the reasonableness of a fee award is the degree of success obtained. Where the purpose of the litigation is to recover damages, then the district court must consider the amount and nature of damages awarded when determining attorney’s fees. Where the plaintiff achieves only partial success against the defendant, the district court must consider whether the plaintiff achieved a level of success that makes the hours reasonably expended a satisfactory basis for making a fee award.”

The Judge then moved to the specifics of these cases.

“The defendants’ arguments are well-taken. First, the time spent in drafting two form-based Complaints is excessive and unreasonable. Second, the time spent drafting responses to the Motion to Consolidate and drafting the Fee Petitions is excessive and unreasonable. Third, the time spent reviewing Court orders and correspondence is excessive and unreasonable. Fourth, the time billed for communicating with the plaintiff is excessive. Fifth, the time billed for drafting the Rule 26(f) report is unreasonable. Sixth, much of the work was unneeded, considering the timing of the Offers of Judgment. Seventh, the fees incurred for preparation of the fee petition must be reduced.”

The Judge determined that plaintiff’s counsel should be awarded fees and costs; however, the fees sought were reduced to a total of $2,033.88. The judge awarded total costs of $938.37. A copy of the Judge’s Opinion and Order can be found here.

insideARM Perspective

It is always interesting the read an opinion of a strong Judge. In this matter the Judge reduced the requested attorney’s fees by over 80%. From $13, 783.50 to $2,033.88. That is dramatic.  The Judge also reduced the attorney’s hourly rate from $300/hour to $250/hour in determining that amount. That is amazing.

The Judge then took the spreadsheet of the billing entries from the plaintiff’s counsel and commented on almost every entry.  He rejected duplicate time entries in the two files. He rejected the proposed time for “copied and pasted” Complaints.  He agreed with the defendants that two lawsuits were unnecessary. Finally, he also rejected entire time entries after the Offer of Judgment was received and suggested the time spent was also unnecessary.

This is two cases in a row that are very favorable to the industry. Yesterday insideARM reported on a case involving potential sanctions for a consumer lawyer failing to provide meaningful review of a case prior to filing.

This case also was critical of a consumer lawyer’s handing of a matter. While two instances do not make a trend, it is nice to see some common sense applied to these types of cases.