Summary
holding that time spent coordinating with amici is “a reasonable use of time as it prevents duplication of the issues among the several briefs” and awarding fees
Summary of this case from Equal Emp't Opportunity Comm'n v. FreemanOpinion
No. 96 C 2001 and No. 96 C 3233.
September 25, 2000.
MEMORANDUM OPINION ORDER
Plaintiffs in these consolidated class actions, members of homeowner and condominium associations, have moved for an award of $189,509 in attorneys' fees and $13,859 in expenses from Defendants pursuant to § 1692k(a)(3) of the Fair Debt Collection Practices Act ("FDGPA" or "the Act"), 15 U.S.C. § 1692 et seq.
In 1996, homeowner and condominium owners filed two separate actions in the Northern District of Illinois pursuant to the FDCPA against the Defendants, two Illinois law firms. One case ( Riter, No. 96 C 2001) was assigned to Judge Norgle and the second ( Newman, No. 96 C 3233) to Judge Gettleman. Plaintiffs in those actions alleged that the law firms had sent letters in an effort to collect overdue condominium and homeowner association assessments and that these letters violated § l692g of the FDCPA because they did not include the validation notice required under that section of the statute. Plaintiffs also alleged that the law firms had violated § 1692e(11) because the letters did not disclose that Defendants were attempting to collect a debt and that any information collected would be used for that purpose.
In Riter, Defendant law firm moved to dismiss, arguing that the overdue assessments were not "debts" as defined under the Act. Judge Leinenweber had previously held, as had courts in other districts, that such assessments did not qualify for protection under the Act because they are not "debts," which the Act defines as:
any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.15 U.S.C. § 1692a(5). See, e.g., Vosatka v. Wolin-Levin, Inc., No. 94 C 4129, 1995 WL 443950 (N.D. III. July 21, 1995); Azar v. Hayter, 874 F. Supp. 1314 (N.D. Fla.), afft'd, 66 F.3d 342 (11th Cir. 1995) (condominium fees do not qualify as "debts" under the Act because they do not reflect deferred payments on a prior benefit); see also Zimmerman v. HBO Affiliate Group, 834 F.2d 1163, 1168-69 (3rd Cir. 1987) (a "debt" under the FDCPA requires "a transaction in which a consumer is offered or extended the right to acquire money, property, insurance, or services' which are `primarily for household purposes' and to defer payment."). Following these authorities, Judge Norgle held that because the assessments were not an offer or extension of credit to a consumer, they did not fall under the statutory definition of "debt." He therefore dismissed the Riter action for lack of subject-matter jurisdiction, granted the motion to reassign Newman to his docket as a related case, and sua sponte dismissed that action, as well.
Plaintiffs appealed. The Seventh Circuit reversed, finding that the assessments have a specific household purpose, namely that of "improv(ing) and maintain(ing) commonly owned areas used by each unit owner." Newman v. Boehn, Pearistein Bright, Ltd., 119 F.3d 477, 481-82 (7th Cir. 1997). Upon remand to the district court, the parties proceeded to discovery and the case was subsequently reassigned to this court. Shortly thereafter, the parties filed a joint motion for preliminary approval of a class action settlement agreement, which the court granted in an order that also certified the class. This led to a fairness hearing and final approval of the class-action settlement, after which the court conducted a settlement conference on the issue of attorneys fees and expenses. The parties have come to an agreement as to much of the fee award. Defendants, however, object to portions of the Plaintiffs' petition as "duplicative, excessive, and unnecessary." As set forth below, Plaintiffs' petition is granted in part and denied in part.
DISCUSSION
Standards for Award of Fees
A prevailing plaintiff in an FDCPA action is entitled to recovery of "the costs of the action, together with a reasonable attorney's fee as determined by the court." 15 U.S.C. § 1692k(a)(3). A reasonable attorney's fee is mandatory when a plaintiff brings a successful action under the Act. Zagorski v. Midwest Billing Services, Inc., 128 F.3d 1164, 1166 (7th Cir. 1997).
The starting point for determining a reasonable fee is the lodestar, that is, the number of hours reasonably expended on the litigation, multiplied by the attorney's reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. 424, 433(1983). In determining the reasonableness of the hours expended, the court considers several factors, including the time and labor required, the novelty and difficulty of the issues, the legal skill required, reputation of the attorneys, the time burdens imposed by the client or the circumstances, and awards in similar cases. Hensley, 461 U.S. at 430 n. 3. The "degree of success obtained" is the most important consideration when the court determines what is a reasonable fee award. Hensley, 461 U.S. at 436; Tolentino v. Friedman, 46 F.3d 645, 652 (7th Cir. 1995). "Success is not measured only by the amount of recovery but also in terms of the significance of the legal issue on which the plaintiff prevailed and the public purpose the litigation served." Morales v. City of San Rafael, 96 F.3d 359, 365, as amended on denial of rehearing and rehearing en banc, 108 F.3d 981 (9th Cir. 1997). The amount of attorneys' fees requested need not be proportionate to the settlement or judgment amount, however, as that would defeat the public benefit advanced by the litigation. Dunning v. Simmons Airlines, Inc., 62 F.3d 863, 873, n. 13 (7th Cir. 1995).
Plaintiffs' Fee Petition
Plaintiffs' petition for attorneys fees seeks an award of $189,509.00 for 985.1 hours of attorney time, plus $13,859.00 in expenses. As the Supreme Court has explained, to arrive at the lodestar figure, "(t)he party seeking an award of fees should submit evidence supporting the hours worked and rates claimed. Where the documentation of hours is inadequate, the district court may reduce the award accordingly." Hensley, 461 U.S. at 433,103 S. Ct. at 1939. Counsel is obligated to exclude hours in a fee petition for which it would not bill a client. Id. Plaintiffs here have submitted detailed records of the hours counsel worked and the type of work completed. They claim that the task they faced at the outset of the litigation, namely convincing the district court to depart from the opinions of the Third Circuit and other courts in this district, required thorough research and investigation even before the complaint was filed. Likewise, when pursuing the case on appeal, Plaintiffs faced the difficult task of obtaining a reversal of case law adopted by two district court judges in the Northern District of Illinois. They claim that the hours expended on this case are therefore reasonable, as are their hourly rates. They also assert that their high level of success, as evidenced by their obtaining the maximum statutory award permitted under the FDCPA, by Defendants' modification of their collection practices, and by Plaintiffs achieving a change in the law in this district, should result in the court's granting their fee petition in its entirety. Hensley, 461 U.S. at 440, 103 S. Ct. at 1943.
Plaintiffs seek: $50,702 in attorneys' fees and $4,925 in expenses in Riter and $28,112 in attorneys' fees and $4,391 in expenses in Newman for work performed before and after the appeal through March 31, 1999; $92,295 in attorneys' fees and $4,023 in expenses for work performed for the consolidated appeal and for work performed jointly in both matters after the appeal through March 31, 1999; and $18,400 in attorneys' fees and $520 in expenses for work performed after March 31, 1999. According to the court's calculations, Plaintiffs therefore request $106,049.50 in attorneys' fees in Riter and $83,459.50 in attorneys' fees in Newman.
Defendants do not claim that counsel's hourly rates are unreasonable or higher than their actual market rate. The court agrees that the rates requested are reasonable. Plaintiffs seek $240-$290 per hour for senior lawyers ("shareholders"), $190 per hour for senior associates, $160 per hour for associates, and $130 per hour for junior associates. Counsel have been paid fees at these rates, which are within the range of what Chicago attorneys of comparable skill charge. ( See Phillips Affidavit, Ex. A; ¶ 11; Affidavits of Joyce, Bragg, and Langone, Exs. G, H, and I.)
Defendants do object to the amounts sought, however, on the ground that "a substantial amount of the fees and expenses incurred by Plaintiffs are duplicative, excessive, and unnecessary." Response to Petition Award of Fees at p. 2. They argue generally that because counsel in these cases litigated the same issues in a previous case, also before Judge Norgle, the time spent on the issues in the instant case is excessive. See Purnell v. Kovitz Shifrin and Waitzman, No. 95 C 2554, 1996 WL 521401 (N.D. Ill. Sept. 11, 1996) (granting in part and denying in part plaintiffs' petition for fees). In Purnell, Plaintiffs' counsel represented a similar class of condominium association members who brought an action against a law firm pursuant to the FDCPA. Although defendant in that case filed a motion to dismiss, citing Vosatka in which Judge Leinenweber held that association assessments were not "debts" under the FDCPA, the case settled before that motion was fully briefed. The plaintiffs subsequently submitted a fee petition. In his ruling on that petition, Judge Norgle addressed the hours counsel spent on tasks such as drafting the complaint and conducting settlement negotiations. Id. at *3. Defendants argue that Plaintiffs' attorneys were appropriately compensated by that award and should not seek an award here for duplicative effort. With this background in mind, the court considers Defendants' more specific objections below.
1. Pre-Filing Investigation
First, Defendants object to the time it took counsel to draft the complaints in the two cases (14 hours in Newman and 13.9 hours in Riter) because at least some of the language in the complaints is taken from or based on the language from the complaint in Purnell Defendants claim that the issues in this case were not so difficult that experienced counsel would take this amount of time to draft the five-page, single-count complaints. Although counsel's work in Purnell does not eliminate the need for research or a fresh drafting of the complaint, the court does find that the time spent drafting the complaints is somewhat excessive. The court finds that the reasonable amount of time for such a task in this situation is five hours for each complaint. It therefore reduces the award by 17.9 hours (9 hours in Riter and 8.9 hours in Newman).
2. Conferences and Research
Defendants make rather vague objections to the 19.7 hours Plaintiffs' counsel spent conferring about the complaint and the issues it presented, again claiming that counsel had previously addressed these issues during the Purnell litigation. The court agrees that the 1.9 hours spent retrieving cases from the clerk's office could have been completed by a paralegal and the court will award these hours at the paralegal rate. Because the hours were expended obtaining cases both Defendants had filed in Will County, the court will split this reduction between the two Defendants. Otherwise, without citing to particular hours or issues, Defendants have not rebutted Plaintiffs' explanation of their work except to assert that the hours are excessive and unnecessary. The court finds that, to the contrary, Plaintiffs' counsel would have faced the task of determining whether the lawsuit was worth the fairly substantial risk it posed, considering the case law in opposition to Plaintiffs' position, and of developing a strategy as to how best to address that case law. It therefore declines to further reduce Plaintiffs' hours.
Defendants also object to time spent researching "procedural issues," claiming that this could have been handled by a "nonprofessional, paralegal/law clerk." First, this objection is too vague in its identification of the hours at issue for the court to consider it. In addition, as Plaintiffs note, it is attorneys, not "nonprofessionals," who must comply with FED. R. Civ. P. 11 before filing a complaint.
3. Responses to Motion to Dismiss
A similar analysis is appropriate as to Defendants' objections to the hours Plaintiffs spent preparing their response to the motion to dismiss. They again claim that many of the hours spent researching are unnecessary because counsel billed for the same legal research in Purnell. Plaintiffs' point that the Purnell litigation settled before they even responded to the motion to dismiss is well taken. Attorneys also have the obligation to consider the case law anew and to determine whether courts have addressed the issue at hand since counsel last considered it.
In challenging the hours spent by Plaintiffs to research the "debt" issue, Defendants rely heavily on Judge Norgle's findings in his ruling on the fee petition in Purnell. In the court's view, this reliance is misplaced. Judge Norgle found that the debt issue was "easy"-therefore requiring limited research and drafting time-because judge Leinenweber had already ruled on the issue and had required only a nine-page opinion to discuss it. In Purnell, Judge Norgle apparently concluded, as well, that the conclusion reached in Vosatka was correct. As a result, although the issue of whether assessments qualified as "debts" may have been relatively straightforward, Plaintiffs in this action faced the difficult task in this case of convincing Judge Norgle that Judge Leinenweber's ruling on that issue-as well as the rulings from another circuit and district courts — was incorrect and that he should depart from its reasoning. This task required thorough research of the existing case law, both within and outside this district, and careful crafting of their response to the motion. The fact that partners conferenced with lower-level attorneys on the motion does not necessarily indicate that the work was duplicative, as Defendants suggest. As another court in this district has observed:
The fact that both attorneys billed time on these activities does not suggest duplication. In fact, when a more experienced and higher rate attorney combines with an attorney billing at a lower rate efficiency is generally increased by having some work performed by each. Had [senior counsel] performed all the work on these tasks plaintiff would rightly object that some of it should have been delegated and billed at a lower rate. The fact that both attorneys billed time on a task is at least as likely to evidence efficiency as duplication.Haak v. Hults Ford-Mercury, Inc., 79 F. Supp.2d 1020, 1023 (W.D. Wis. 1999). The court declines to reduce the fees sought for responding to motions to dismiss.
4. Appeal
a. Research
Defendants continue their argument that Plaintiffs' hours were excessive in their objections to the hours Plaintiffs billed during the appeal of this case to the Seventh Circuit. They claim, first, that after spending a large number of hours researching the motion to dismiss, Plaintiffs' counsel billed another 59.7 hours on research of the same issues on appeal. While the court acknowledges the importance of keeping abreast of the current case law, this amount of time researching the same issues does appear duplicative of the hours billed for the motion to dismiss. Considering the familiarity counsel should have had by this time with the existing case law, research alone would have entailed updating the case law but not a repeat of the extensive research necessary at the beginning of the litigation. The court will therefore reduce these hours to 30, granting each defendant a reduction of 14.85 hours.
Because Defendants did not identify with particularity where in the voluminous timesheets these hours appear and because the cases were consolidated after the court granted the motion to dismiss in Riter, the court will apply any further reductions equally between the two Defendants.
b. Amicus Brief
The next objection Defendants make is to any "time working with amicus." They claim that Plaintiffs offer no detailed explanation of how this time was spent. Plaintiffs' records indicate that counsel coordinated with the attorneys who were submitting the amicus brief so that the issues covered in the different briefs did not overlap. Fees for work on an amicus brief have been allowed in cases where the attorney seeking fees submitted an amicus brief in a different case because the issues raised in that brief advance the plaintiff's own case. Shakman v. Democratic Organization of Cook County, 634 F. Supp. 895, 900 (N.D. Ill. 1986) (citations omitted). With that in mind, the court finds that counsel's discussing which issues would be covered in the separate briefs filed in the instant case is a reasonable use of time as it prevents duplication of the issues among the several briefs.
c. Observing another Argument
The same reasoning can be applied to Defendants' argument that the court should exclude the time Plaintiffs' counsel spent tracking the progress of and attending oral argument in Bass v. Stolper, Koritzinsky, Brewster Neider, S.C., 111 F.3d 1322 (7th Cir. 1997). In that case, the Seventh Circuit considered the question of what "constitutes a "debt" as defined in the Act." 111 F.3d at 1323. Defendants in Bass argued, as did Defendants here, that a debt must arise from an offer or extension of credit to a consumer. Id. at 1324. In Bass, the Seventh Circuit examined the plain language of the statutory definition of debt as well as its legislative history. It is not uncommon for lawyers to spend at least some time observing in a forum in which they intend to appear, and not unreasonable to expect such efforts, if not excessive, will be compensated. Considering the similarity of the central issue in Bass to the central issue in the instant case, the court finds that counsel s decision to attend oral argument to educate itself on what to expect during its own oral argument in that case was reasonable.
d. Preparation for Argument
According to Defendants, the "excessive and duplicative billing continued in preparing for oral arguments and in the drafting of Plaintiffs' appellant brief." Response at 6. They object to hours billed for moot court practice sessions, especially the 72.2 hours billed by "two other attorneys." Generally, "compensation is available for the participation in mock arguments . . . Where the number of mock arguments or length of travel is unnecessary or excessive, compensation should be denied." Zbaraz v. Hartigan, No. 84 C 771, 1988 WL 84721, *9 (N.D. Ill. Aug. 5, 1988). The court finds that a moot court practice session is a reasonable use of time but could have been accomplished with one additional attorney. It therefore reduces the total hours allowed to 36.1, granting each defendant a reduction of 18.05 hours. It also strikes as duplicative the 19.6 hours that a less-senior attorney devoted to reanalyzing the cases for oral argument when another attorney actually argued the case.
5. Post Appellate Work
Defendants' objections to the post-appellate work on the merits are meritless. They object to the time spent on Plaintiffs' motion to compel discovery responses, stating only that if these motions had any merit, they would not have been withdrawn. In the court's experience, it is often such a motion that prods opposing counsel to comply with deadlines or discovery requests and a subsequent withdrawal of the motion in no way indicates that the motion was meritless. Indeed, Plaintiffs urge that is precisely what happened here. Although Defendants object to the hours Plaintiffs' counsel spent drafting the settlement agreement, they have not indicated the amount of time actually spent on this task and the court will not undertake the chore of combing the record for these entries when Defendants have not bothered to do so themselves.
6. Fees for Fees
The final objection to the Plaintiffs' hours is that "there is no authority for class counsel to recover fees and expenses in pursuing its own fees." That is incorrect. See, e.g., Uphoff v. Elegant Bath, Ltd., 176 F.3d 399, 411 (7th Cir. 1999) (hours expended on fee petition should be in proportion to total reasonable hours billed). Billing for preparing a fee petition pursuant to a statute that mandates an award of attorneys fees for a prevailing plaintiff is clearly reasonable. Because Defendants object generally to billing for the preparation for the fee petition but state no specific objections to the number of hours or the work performed, the court declines to reduce Plaintiffs' hours for completing this task.
7. Overall Objection
As a final matter, Defendants state in a perfunctory manner that the issue involved in this case was not novel or difficult; that the skill required to perform the work was not unusual; and that the amount of money Plaintiffs recovered was de minimus, especially when compared to the fees that are being sought by Plaintiffs' counsel. The court has already discussed the difficulty Plaintiffs faced in convincing the district court as well as the Court of Appeals that the existing case law was wrongly decided. Although the amount of money involved may not have been substantial, Plaintiffs sought and received the maximum statutory award allowed under the FDCPA as well as a change in Defendants' practices. This is generally the goal of consumer protection litigation and Plaintiffs were completely successful in achieving that goal. The court therefore declines to further reduce the award for attorneys' fees and costs on this basis.
CONCLUSION
The court has reduced Plaintiffs' fee petition by 50.7 hours in Riter and 50.6 hours in Newman and has indicated that a 1.9-hour task should have been completed by a paralegal instead of an attorney. Because Defendants have made general objections to the time spent on particular tasks instead of pointing to specific entries in the records, they have failed to indicate the hourly rate charged for those tasks. The court will therefore use the hourly rate Plaintiffs' counsel charged for a mid-level associate: $160. It reduces Plaintiffs' attorneys' fees in Riter by $8,235.50 (50.7 hours x $160/hour plus $247/2) (1.9 hours x $160/hour ($304) minus 1.9 hours x $30/hour ($57)), and reduces the attorneys' fees in Newman by $8219.50 (50.6 hours x $160/hour plus $24712) for a grand total reduction of $16,455. Plaintiffs' petition for $189,509 in attorneys' fees is therefore granted in the amount of $173,054, $97,814 in Riter ($106,049.50 minus $8,235.50) and $75,240 in Newman ($83,459.50 minus $8,219.50). As Defendants have not identified any irregularity in plaintiffs' request for expenses, the court grants in full the Plaintiffs' petition for $13,859 in expenses; $7,196.50 in Riter and $6,662.50 in Newman.