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Federal Bar Update: Opinion provides insight on attorney fees in FDCPA cases

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Federal Bar UpdateFederal courts routinely determine fee petitions for prevailing parties in various fee-shifting cases. A recent opinion from Magistrate Judge Denise LaRue illustrates guiding principles here. In M.T. v. Accounts Recovery Bureau, Inc., No. 1:11-CV-969 (S.D. Ind. Aug. 8, 2012), LaRue issued a report and recommendation on fees in a Fair Debt Collection Practices Act case. Plaintiff was a prevailing party based on accepting defendant’s offer of judgment, and sought fees and costs pursuant to the act totaling $3,230. Over objections challenging the claimed hourly rate of $250 and the reasonableness of some of the work, LaRue determined and recommended that the total award be $2,710. That much is unremarkable, but the 13-page opinion provides a good and current summary of this area of federal practice and some useful insights for plaintiff and defense alike.

First, the court explained the general standards, writing, “The Supreme Court has recognized that the lodestar method – the product of a reasonable hourly rate and the number of hours reasonably expended on the litigation – yields a fee amount that is presumptively reasonable. The Court may exercise flexibility to ‘adjust that figure to reflect various factors including the complexity of the legal issues involved, the degree of success obtained, and the public interest advanced by the litigation.’ The party seeking the fee award bears the burden of proving the reasonableness of the hours worked and the hourly rates claimed.” LaRue also noted that the “Seventh Circuit recognizes that fee awards should include time that attorneys reasonably spend on fee disputes.”

Second, as to reasonableness of hourly rates, LaRue observed, “Generally, a reasonable hourly rate for an attorney is based on what the attorney charges and receives in the market from paying clients for the same type of work. Plaintiff bears the burden of producing satisfactory evidence that the hourly rate is reasonable and in line with those prevailing in the community. If Plaintiff satisfies this burden, the opposing party must offer evidence setting forth ‘a good reason why a lower rate is essential.’”

LaRue found the $250 hourly rate reasonable, noting counsel’s 15 years of experience, an affidavit detailing fees and costs, a fee agreement for counsel in FDCPA cases reciting the $250 hour rate, and a January 2012 decision from the court in which the same counsel received $250 hour for his rate.

Defendant objected that the rate should be $150, asserting counsel lacked experience with FDCPA cases. LaRue dismissed this argument, writing, “Defendant relies on Gastineau, 592 F.3d 747, where the Seventh Circuit affirmed the district court’s reduction of an attorney hourly rate from $250.00 to $150.00. In that case, the Seventh Circuit approved this rate reduction because the attorney seeking fees in Gastineau was handling his very first FDCPA case, he was substituted in as counsel late in the proceedings, and provided poor lawyering. Id. at 749. The Seventh Circuit noted that ‘it was inappropriate that a substantial portion of the hours billed were to compensate [the attorney in Gastineau] for learning this area of the law.’ Id. None of those factors is present in this case.”

Third, as to the reasonableness of the hours spent on the matter, LaRue went through each aspect of defense objections and recommended:

• the time charged for preparation of the form complaint and for undefined “research” should be reduced;

• the time charged for secretarial or clerical tasks should not be charged as attorney or paralegal time; and

• the time spent in creating billing records after the fact to support a fee petition is not compensable.

Finally, and notably for those on the defense side who confront this issue with insurers or corporate clients, LaRue determined that while filing matters in court is administrative time that was not compensable, e-filing is another matter.

She explained, “However, the Court views the filing of electronic documents differently. Plaintiff points out that electronic filing requires court training and is not available to everyone. Indeed, the Court’s Case Management/Electronic Case Filing system (“CM/ECF”) requires attorneys to file documents electronically and to do so requires ECF registration by an attorney. Registered attorneys are then assigned a login and password that is used when filing documents. S.D. Ind. Electronic Case Filing Policies and Procedures Manual, pp. 1, 5-6. Based on ECF requirements, the filing of the October 13, 2011 Acceptance could only be accomplished by an attorney (or a staff member utilizing the attorney’s registration.) The Court agrees with Plaintiff that the time spent electronically filing court documents should not be characterized merely as clerical or administrative in nature. ‘In light of the problems that can result from a botched electronic filing, the court will not second-guess the firm’s decision that such filing must be overseen by a paralegal.’ Williams v. Z.D. Masonry, Corp. Cause No. 07 C 6207, 2009 WL 383614 (N.D. Ill. Feb. 17, 2009), slip op at 10.”•

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John Maley – jmaley@btlaw.com – is a partner with Barnes & Thornburg, LLP, practicing federal and state litigation, employment matters and appeals. The opinions expressed are those of the author.

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