Opinion
CV-18-02103-PHX-ROS
08-10-2023
Marshall Gross, Plaintiff, v. CitiMortgage Incorporated, Defendant.
ORDER
HONORABLE ROSLYN O. SILVER, SENIOR UNITED STATES DISTRICT JUDGE
Pending before the Court is Plaintiff's Motion for Attorneys' Fees seeking over $480,000 in fees. (Doc. 203). The billing records counsel submit reflect an astonishing level of time spent on tasks. In fact, the time recorded for certain tasks is so implausible that it renders the billing records, in their entirety, unreliable. Based on counsel's decision to not keep accurate billing records, the motion will be granted in part and denied in part.
I. Background
Plaintiff Marshall Gross filed this suit under the Fair Credit Reporting Act alleging CitiMortgage Incorporated (“Citi”) failed to conduct a reasonable investigation following his written credit reporting dispute. The Court granted summary judgment in favor of Citi (Doc. 137), but the Ninth Circuit reversed and remanded that decision (Doc. 142). On remand, the case was proceeding to trial when Plaintiff accepted Citi's Offer of Judgment, settling the case for $50,000. (Doc. 200). That settlement did not include or address attorneys' fees, so Plaintiff subsequently filed a Motion for Attorneys' Fees pursuant to the fee shifting provision of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681n(a)(3) and 1681o(a)(2), the Offer of Judgment, and Local Rule 54.2. (Doc. 203). Plaintiff seeks to recover $481,807.50 in attorneys' fees. (Doc. 203 at 1). Citi argues that amount is excessive and requests an award capped at $150,333.20. (Doc. 206 at 18).
II. Lodestar Calculation
“[C]ourts employ the ‘lodestar' method to determine a reasonable attorney's fees award.” Kelly v. Wengler, 822 F.3d 1085, 1099 (9th Cir. 2016) (citing Fischer v. SJB-P.D. Inc., 214 F.3d 1115, 1119 (9th Cir. 2000)). “[A] court calculates the lodestar figure by multiplying the number of hours reasonably expended on a case by a reasonable hourly rate.” Id. The Court has “considerable discretion” in determining the reasonableness of attorney's fees. Webb v. Ada County Idaho, 195 F.3d 524, 527 (9th Cir. 1999). After calculating the lodestar amount, a Court may reduce or multiply the award based on a variety of factors. Those factors include:
“(1) the time and labor required, (2) the novelty and difficulty of the questions involved, (3) the skill requisite to perform the legal service properly, (4) the preclusion of other 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, (10) the ‘undesirability' of the case, (11) the nature and length of the professional relationship with the client, and (12) awards in similar cases.”Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975) (citing Johnson v. Georgia Highway Express, inc., 488 F.2d 714, 720 (5th Cir. 1974)) (“Kerr factors”). Some of these factors normally are subsumed in the lodestar such that they should not be considered again after the lodestar is determined. See Gonzalez v. City of Maywood, 729 F.3d 1196, 1209 (9th Cir. 2013) (identifying factors that are normally considered when calculating lodestar).
Local Rule 54.2 also lists factors the Court must address when determining the reasonableness of the requested award. These factors are largely duplicative of the Kerr factors.
A. Hourly Rates
The first question is whether the rates asserted by Plaintiff are reasonable. “A reasonable hourly rate is ordinarily the prevailing market rate in the relevant community.” Southwest Fair Housing Council v. WG Scottsdale LLC, 2022 WL 16715613, *3 (D. Ariz. Nov. 4, 2022) (citing Kelly, 822 F.3d at 1099). And “the burden is on the fee applicant to produce satisfactory evidence-in addition to the attorney's own affidavits-that the requested rates are in line with those prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation.” Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984).
Plaintiff submitted the following rates and asserts they are reasonable:
Attorney
2018-19
2020
2021
2022
2023
David A. Chami
$500/hour
$550/hour
$650/hour
$725/hour
$725/hour
Nemer N. Hadous
N/A
N/A
N/A
$500/hour
$550/hour
Beth Findsen
$500/hour
$525/hour
N/A
N/A
$575/hour
Michael Yancey III
N/A
N/A
$275/hour
$275/hour
N/A
To support Plaintiff's claim of reasonableness, each of the four attorneys submitted affidavits stating they have determined these rates are reasonable. (Docs. 203-4, 203-5, 203-7, and 203-8). Plaintiff also submitted additional declarations from other lawyers litigating in the consumer protection practice area to substantiate that these rates are reasonable for the years at issue. (Docs. 203-6, 203-9, 203-10). These declarations all include the same language indicating the market rate in Arizona for this type of case “is a range from $300-850+ per hour,” and that the “market rate in Phoenix is generally skewed to the higher end of that rang [sic] to account to [sic] the higher cost of living in a metropolitan area.” (Docs. 203-6 at 3, 203-9 at 12, and 203-10 at 3). Lastly, Plaintiff submitted a United States Consumer Law Attorney Fee Survey Report for the year 2017 2018, which supports that the median rate for attorneys handling credit rights cases was between $350 and $675/hour. (Doc. 203-2 at 73).
The Court notes the presence of the typographical errors in each of the affidavits from three different attorneys in the same paragraph, suggesting this boilerplate language was provided to the affiants.
Plaintiff states the following information about the lawyers practicing in this case. Citi does not object or respond specifically to any of this information.
David Chami has been practicing law for 13 years, with extensive experience in consumer protection litigation. (Doc. 203 at 11). Mr. Chami has been the managing partner of Price Law Group, APC since 2014, and he has served as the co-chair for the National Association of Consumer Attorneys in Arizona. (Id.) He has worked as either lead or supervising attorney in over 750 consumer and civil rights cases in federal courts in the past six years. (Id. at 14-15). Nemer Hadous has been practicing as an attorney since 2009. He has participated in nine jury trials over the past 10 years, and has extensive experience in civil trial and appellate litigation. Beth Findsen has practiced law for approximately 26 years, and for the past 15 years has focused primarily on consumer protection cases. (Id. at 17). Lastly, Michael Yancey III has been practicing law for just over a year, but has worked with Price Law Group, APC since his first year of law school. (Id.)
David Chami is noted as “DAC” in the attached spreadsheet.
Nemer Hadous is noted as “NEMER H.” in the attached spreadsheet.
Beth Findsen is noted as “BETH F.” in the attached spreadsheet.
Michael Yancey III is noted as “MYIII” in the attached spreadsheet.
Citi does not specifically respond to Plaintiff's proffered reasonable rates, except to argue that in December of 2022, Mr. Chami told Defense Counsel that his billing rate for 2022 was $650/hour. The present motion asserts his billing rate for 2022 was $725/hour. (Doc. 206 at 9). Plaintiff responds that the touchstone in attorneys' fees awards is not what was actually billed, but what a reasonable rate was at that time. (Doc. 209 at 14-15). Plaintiff has provided sufficient evidence to demonstrate that the rates requested are generally reasonable, that is, that they fall within a broad $400 window of reasonableness and that attorneys in Phoenix receive the higher end of that window, accounting for inflation. (See, e.g., Doc. 203 at 10-11). However, Plaintiff cannot simply assert a higher rate (here, $725/hour) with no specific justification, especially when there is evidence Plaintiff's counsel in fact previously believed a lower rate ($650/hour) was reasonable for the same year.
The Court finds that the experience, reputation, and ability of Plaintiff's counsel generally support the hourly fees requested in this case. Accordingly, the Court finds Plaintiff's rate schedule above is reasonable, with the exception of Mr. Chami's rate for 2022. The Court will assess his rate for hours billed in 2022 at $650/hour. Because of inflation and the lack of contrary evidence from Citi, the Court will assess his hours billed in 2023 at $725/hour.
Several of the Kerr factors are relevant to the reasonableness of Plaintiff's proposed hourly rates. The Court incorporates its discussion of the Kerr factors below.
B. Reasonable Hours
Next, the Court turns to the reasonableness of the hours spent on the litigation. Courts may “exclude from this initial fee calculation hours that were not ‘reasonably expended.'” Hensley v. Eckerhart, 461 U.S. 424, 433-34 (1983). See also McKown v. City of Fontana, 565 F.3d 1097, 1102 (9th Cir. 2009) (district court should exclude hours from lodestar calculation that are “excessive, redundant, or otherwise unnecessary”); Lassley v. Secura Supreme Ins. Co., CV-14-1667 JWS, 2015 WL 7567467, *2 (D. Ariz. Nov. 25, 2015). Citi argues the hours in the lodestar calculation should be reduced for a number of reasons. The Court addresses each below.
i. Cutoff Date
On April 28, 2021, while Plaintiff's appeal to the Ninth Circuit was pending, Citi offered to settle with Plaintiff for $35,000. Plaintiff counteroffered a few months later with a demand of $750,000, which his own attorney admitted was “too high.” (Doc. 206 at 34). Citi rejected that demand but offered $100,000 on July 21, 2021. Plaintiff rejected that offer in September of 2021. The parties then argued the appeal before the Ninth Circuit. The case ultimately settled in January of 2023 within a month of trial, after the Ninth Circuit reversed and remanded this Court's order on summary judgment, for $50,000.
Citi first argues that any time spent after April 28, 2021 was de facto unreasonable. Citi argues in a case where a rejected settlement offer exceeds the ultimate recovery, the plaintiff does not receive any benefit from his attorney's services after that rejected offer. (Doc. 26 at 5) (citing Marek v. Chesny, 473 U.S. 1, 11 (1985)). Citi asserts Plaintiff rejected numerous reasonable settlement offers. Since the case ultimately settled for $50,000, Citi argues Plaintiff received “virtually no benefit” from the legal work performed after April 28, 2021. (Doc. 206 at 7). Citi argues Plaintiff's unreasonable settlement conduct should be considered in the award of attorneys' fees, and that since Plaintiff's counsel indicated their fees through April 28, 2021 were $228,057.50, that should be the absolute limit of the lodestar calculation. (Doc. 206 at 7).
Plaintiff responds he in fact litigated a successful appeal after this date. Plaintiff argues the offer of $35,000 on April 28, 2021 was inclusive of attorneys' fees and costs, which would not have come close to covering the fees and costs accrued to date. (Doc. 209 at 8). Plaintiff also asserts the unreasonable settlement negotiations went both ways, and that Citi's recitation of the facts is one-sided and misleading.
Both parties acted unreasonably at various points during the litigation with respect to settlement offers. And Plaintiff did succeed in obtaining a reversal and remand at the Ninth Circuit after the date which Citi urges the Court to cut off attorney's fees. Thus, the Court will not strictly “cut off” the date for Plaintiff's request for attorney's fees. However, the Court will consider Plaintiff's refusal of various reasonable settlement offers, including at least one that doubled what he finally settled for, as a factor when reviewing the reasonableness of the hours spent on this matter (see below). See, e.g., Paz v. Portfolio Recovery Assocs., LLC, 924 F.3d 949, 953-54 (7th Cir. 2019) (affirming award of $10,875 in FCRA case where Plaintiff requested $187,410 in fees after refusing settlement and proceeding to trial).
ii. Unreliable Evidence, Vague Descriptions, and Billing Judgment
Next, Citi argues Plaintiff's evidence of their hours worked is unreliable and too vague to assess reasonableness. Citi argues there is no evidentiary basis for the spreadsheet provided by Plaintiff's counsel, no corroborating evidence of the hours worked, and serious discrepancies in the entries that suggest the hours are not accurate. Plaintiff responds that counsel were not required to maintain contemporaneous time records, and that their spreadsheet was sufficient under the Ninth Circuit precedent and the local rules. Citi relatedly argues Plaintiff's counsel failed to reduce its request for excessive, inefficient, redundant, or duplicate entries, and Citi asks the Court to reduce the total lodestar figure by 20% to account for these failures. Plaintiff argues he did make such reductions, including removing charges attributed to “legal work unrelated to Citi” and not including unscheduled communication with opposing counsel. (See Doc. 209 at 12).
Citi also argues Plaintiff's counsel failed to exercise “billing judgment,” by which an attorney eliminates time resulting from work that was “excessive, redundant, or otherwise unnecessary.” (Doc. 206 at 10) (citing Hensley, 461 U.S. at 433-34). Citi argues 91% of Plaintiff's time was billed by Mr. Chami, the most senior lawyer involved, which indicates a failure to delegate appropriately. Plaintiff responds it is his decision how best to run his law firm and manage his cases, and that the Court cannot substitute its judgment on those issues. The Court will not reduce attorney's fees based on failure to delegate to lower-level attorneys. However, Plaintiff was not free to bill attorney time for clerical tasks. The Ninth Circuit recognized long ago “[i]t simply is not reasonable for a lawyer to bill, at her regular hourly rate, for tasks that a non-attorney employed by her could perform at a much lower cost.” Davis v. City & Cnty. of San Francisco, 976 F.2d 1536, 1543 (9th Cir. 1992). Thus, the Court will reduce all tasks that could have been performed by a non-attorney.
The Court notes that the “legal work unrelated to Citi” constitutes 33 out of 530 entries, each of which was only billed at 0.1 hours, for a total reduction of 3.3 hours out of a request for over 800 hours. Additionally, the Court agrees with Citi that many of Plaintiff's entries are excessive, vaguely worded, or otherwise poorly itemized. While some of the time entries contain sufficient information and documentation to support the hours spent, the Court finds that numerous entries are excessive, duplicative, or too vague to assess reasonableness.
Citi specifically mentions the following entries: spending 16 hours to draft a one-count complaint; spending 30 minutes to pay a filing fee; spending 30 minute reviewing a summons; spending 1.8 hours reviewing a one-page order denying an extension of time; spending over an hour to review a notice of deposition; and spending 1.4 hours to review their own amici's uncontested, 2.5 page request to participate in oral argument at the Court of Appeals. (Doc. 206 at 9).
Before considering the specific time entries, the Court will analyze some of the Kerr factors. See, e.g., Graves v. Arpaio, 633 F.Supp.2d 834, 846 (D. Ariz. 2009) (listing Kerr factors normally subsumed in lodestar calculation). This case, brought under FCRA, was a complex case. As Plaintiff argues, the case progressed through summary judgment briefing, a full appeal to the Ninth Circuit, reversal and remand, briefly re-opened discovery, and trial preparation. The case required multiple expert witnesses and spanned nearly five years. The Ninth Circuit reversal indicates to some extent how complex FCRA questions can be. However, the Court notes the parties engaged in fruitless settlement talks, and apparently did not have a realistic sense of Plaintiff's damages at various points in the litigation. Given these facts, a large award of fees is not surprising.
As reflected in his hourly rate, Plaintiff's counsel has the skill and experience to litigate this FCRA case successfully. As discussed above when determining whether the hourly fees requested were reasonable, Plaintiff's counsel has extensive experience in this practice area. Plaintiff's counsel also litigated the appeal themselves. Plaintiff additionally argues that all FCRA plaintiffs' attorneys “are financially limited in the number of cases, and the types of other cases, that they may accept while litigating under the FCRA.” (Doc. 203 at 8). Plaintiff argues this factor weighs in favor of his fee request. However, Plaintiff's counsel provided no particular details about their caseloads or whether they were, in fact, precluded from working on other cases while this matter was pending. Additionally, as discussed below, even if Plaintiff's counsel turned down other cases while working on Plaintiff's, many of the hours Plaintiff's counsel spent on this litigation were not reasonably expended; thus, it is unclear what significance this factor has in Plaintiff's fee calculation.
Plaintiff's counsel was retained on a contingent basis, due to FCRA's fee-shifting provision. (Doc. 203 at 12). This factor is irrelevant to the lodestar calculation. Davis v. City & Cnty. of San Francisco, 976 F.2d 1536, 1549 (9th Cir. 1992), vacated in part on other grounds, 984 F.2d 345 (9th Cir. 1993).
Counsel's experience and skill, which support a high hourly rate, undercut many of the time entries reflected in the records. Experienced counsel should be able to perform simple tasks in very little time and even complex tasks should take experienced counsel far less than counsel unfamiliar with this area of law. The billing entries, however, reflect Plaintiff's lead counsel spent an inordinate amount of time performing tasks he should have been able to perform in significantly less time. For example, an experienced attorney able to bill at $725 per hour should be able to draft a seven-page complaint in less than fifteen hours.
The Court carefully considered the time and labor reasonably required for each task on Plaintiff's spreadsheet. While some tasks, like preparing for deposition or drafting motions, undoubtedly take hours of time, some of Plaintiff's requests are so excessive as to render all of the entries unreliable. The following are only a few of the more extreme entries reflecting unreasonable time spent on tasks:
1) On April 16, 2019, counsel allegedly spent 2.7 hours to “draft[]/review[] statement of discovery dispute.” Plaintiff's portion of that filing is nine lines of text and Citi's portion is 14 lines. (Doc. 81). It is not remotely plausible a reasonable, experienced attorney would spend three hours on this task. Shortly after the parties' filing, the Court issued an Order resolving this dispute. That Order was less than two pages. Plaintiff's counsel recorded 0.8, or 48 minutes, reading that Order. No reasonable attorney would take that long to perform that task.
2) On May 8, 2019, Plaintiff's counsel recorded he spent 1.8 hours reviewing an Order denying a request for extension of time. That Order consisted of five lines, totaling 69 words. It is not possible a reasonable attorney would spend almost two hours reading five lines of text.
3) On May 29, 2019, Plaintiff's counsel recorded 1.4 hours for drafting and reviewing another discovery dispute statement. Plaintiff's portion of that statement was fifteen lines and Citi's was the same length. A reasonable attorney would not have spent almost 90 minutes drafting and reviewing 30 lines of text.
4) On June 17, 2019, Plaintiff's counsel recorded 1.9 hours for drafting a statement of discovery dispute. Plaintiff's portion of that statement was longer than previous discovery disputes but was still only one page of text. A reasonable attorney would not have spent 2 hours drafting a single page. After receiving the dispute, the Court called for additional briefing in an Order approximately 180
words in length. Plaintiff's counsel recorded spending 0.7 reading that order. A reasonable attorney would be able to read more than four words per minute.
5) On August 12, 2019, Plaintiff's counsel recorded 1.4 hours “receiving” expert disclosures. There is a separate entry for reviewing the expert disclosure, meaning the “receiving” entry reflects only the task of receipt. But “receiving” documents takes no time at all. No reasonable attorney would bill 1.4 hours for a task that take effectively zero time.
6) On December 19, 2022, Plaintiff's counsel recorded 6.1 hours to “review” the three motions in limine filed by Citi. Those motions totaled less than 15 pages. A reasonable attorney would not spend hours and hours merely “reviewing” such filings.
These few examples show there are two possibilities: either the billing records are false, or counsel is not competent to perform tasks at a pace that any court would deem to be reasonable. Regardless of which possibility is accurate, the Court will make significant and required reductions to the requested time.
When calculating the lodestar amount, the Court may “reduce the amount of requested fees . . . to deduct those hours the court deems excessive.” Ryan v. Editions Ltd. West, Inc., 786 F.3d 754, 763 (9th Cir. 2015). Instead of applying a blanket reduction, as Citi requested, the Court reviewed each individual line item and determined, based on the phase of the litigation and the surrounding entries, whether each entry represented a reasonable request. Compare Welch v. Metropolitan Life Ins. Co., 480 F.3d 942, 948 (9th Cir. 2007) (vacating across-the-board reduction of hours and ordering district court to tie reductions to actual hours). Based on all of these reasons, the Court will reduce and remove entries in Plaintiff's request. The attached spreadsheet shows the Court's reductions, with explanatory labels such as “excessive,” “vague,” or “excessive and vague” as relevant.The Court reduced some of these entries by 50%, reduced some to a nominal or reasonable time expenditure, or removed the entry altogether, depending on the description of the task and the length of time noted for that task. See, e.g., Southwest Fair Housing Council v. WG Scottsdale LLC, 2022 WL 16715613, *7 (D. Ariz. Nov. 4, 2022) (reducing entries by 50% and removing some entries altogether, for entries that are “so vague such that their reasonableness cannot be evaluated,” including entries such as “draft complaint” or “deposition preparation”); Abrams v. Sequium Asset Solutions, LLC, 2023 WL 2757195, *9 (W.D. Wash. Mar. 31, 2023) (reducing various entries by 50% for lack of specificity). Because some entries undoubtedly reflect actual legal work performed by Plaintiff's counsel, a 50% reduction is appropriate in that it accounts for the lack of clarity while still awarding a significant amount of hours to Plaintiff's counsel. Where entries were so vague that the Court was unable to assess reasonableness, or so very excessive as to be unreliable, the Court awarded a nominal or reasonable amount of hours to indicate that while counsel undoubtedly did perform the task, the requested hours were completely detached from any concept of reasonableness and so warrant a significant reduction.
For a few entries, the Court reduces them for other reasons, such as redundancy with other entries. The Court indicated additional reasons for reduction as relevant on the attached spreadsheet.
The Court reduced the lodestar figure to $309,938.75 for these reasons.
iii. Fees Incurred on Appeal
Lastly, Citi argues the Court does not have jurisdiction to award attorney's fees related to Plaintiff's appeal, because Plaintiff failed to request attorney's fees from the Ninth Circuit directly pursuant to Ninth Circuit Rule 39-1.6. (Doc. 206 at 17). Under Ninth Circuit rules and case law, a plaintiff must bring a motion for fees in the appellate court when his success on appeal qualifies him as a “prevailing party.” Cummings v. Connell, 402 F.3d 936, 947-48 (9th Cir. 2005). But when a plaintiff “is not entitled to attorney's fees after an interlocutory appeal . . . it cannot immediately request attorney's fees from [the Ninth Circuit].” Yamada v. Snipes, 786 F.3d 1182, 1210 (9th Cir. 2015). But if “the plaintiff subsequently become[s] a prevailing party, however, it should presumptively be eligible for attorney's fees incurred during the first appeal, because that appeal likely contributed to the success of the underlying litigation.” Id.
The question then becomes whether Plaintiff was a “prevailing party” upon conclusion of the appeal in this case, in July 2022. Citi argues Plaintiff was a prevailing party at that time because he “succeed[ed] on [a] significant issue in litigation which achieves some of the benefit the parties sought in bringing suit.” Hensley, 461 U.S. at 433. Citi argues Plaintiff obtained a judgment from the Ninth Circuit that Citi's reporting was inaccurate as a matter of law, which was a “significant issue” in the litigation. Plaintiff does not respond to this argument, but instead cites inapplicable case law.
It is true the Ninth Circuit held as a matter of law that Citi's reporting was inaccurate. However, the Ninth Circuit's order specifically left multiple other elements of Plaintiff's FCRA claim open. Gross v. CitiMortgage, Inc., 33 F.4th 1246, 1252 (9th Cir. 2022) (“Establishing an inaccuracy is not enough, however; Gross must also show that the inaccuracy was the product of an unreasonable investigation by CitiMortgage.”); id. at 1253 (leaving question of actual damages to jury on remand). Thus, Plaintiff was not a “prevailing party” entitled to attorney's fees under FCRA at that point in the litigation. While the Ninth Circuit held he established one element of his FCRA claim, it remanded for trial on the remaining elements of his claim. This situation is fundamentally different than the case cited by Citi in which a preliminary injunction was granted in favor of a party before the case was settled. See, e.g., Higher Taste, Inc. v. City of Tacoma, 717 F.3d 712, 716 (9th Cir. 2013). In that case, the Ninth Circuit explained the settlement transformed the preliminary injunction into an “enduring” victory rather than an “ephemeral” one, which meant that there was a “material alteration of the parties' legal relationship” sufficient to render the plaintiff a “prevailing party.” Id. at 717-18. Here, the Ninth Circuit's legal determination was neither enduring nor ephemeral, since it addressed only one element of Plaintiff's claim. On remand, a jury may have found for Citi on every other element Plaintiff had left to prove. Only upon accepting Citi's offer of judgment did Plaintiff achieve enduring victory.
Thus, Plaintiff was not entitled to attorney's fees upon conclusion of the Ninth Circuit appeal in this case. He did not forfeit his ability to request those fees, and this Court has jurisdiction to award them in the first instance. See Yamada, 786 F.3d at 1210.
iv. Lodestar Calculation
Accordingly, after reducing the Plaintiff's requested lodestar amount to remove unreasonable and excessive hours, the Court calculates the lodestar amount to be: $309,938.75.
C. Downward Adjustment
There is a “strong assumption that the ‘lodestar' method represents a reasonable fee,” Corrales-Gonzalez v. Speed Auto Wholesalers LLC, 2023 WL 3981139, * 7 (D. Ariz. June 13, 2023) (quoting Casavelli v. Johanson, No. CV-20-00497-PHX-JAT, 2021 WL 3400608, *6 (D. Ariz. July 20, 2021)). But the Court also “has discretion to adjust the lodestar upward or downward” based on the Kerr factors not subsumed in the lodestar calculation. Stetson v. Grissom, 821 F.3d 1157, 1166-67 (9th Cir. 2016). Courts must assess these factors and must articulate “with sufficient clarity the manner in which it makes its determination.” Carter v. Caleb Brett LLC, 757 F.3d 866, 869 (9th Cir. 2014) (citation omitted).
Some of these factors are subsumed in the above analysis. The Court considers the remaining factors here.
i. Customary Fee
Plaintiff argues there is no such thing as a “customary fee” in a FCRA case because of its fee-shifting provision. Instead, courts look to what the prevailing rates and hours in the community are for “similar services by lawyers of comparable skill, experience, and reputation.” (Doc. 203 at 9) (quoting Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984)). As discussed above, Plaintiff submitted affidavits from each of the attorneys who worked on this case as well as affidavits from lawyers in the community to substantiate the hourly fees Plaintiff requests. Plaintiff also provides data on the average hourly rates for credit related cases in Phoenix Arizona from 2017-2018, and a calculation from the Bureau of Labor Statistics accounting for inflation over the past five years. (Doc. 203 at 10-11). The Court also acknowledges that Plaintiff's counsel are all attorneys with extensive experience in consumer protection litigation. It is unclear what the significance of this factor is, other than to support that Plaintiff's requested hourly rates were reasonable, as already considered above.
ii. Time Limitations
Plaintiff admits there were no time limitations imposed by the client or the circumstances in this case. (Doc. 203 at 12). This factor is thus inapplicable.
iii. Amount Involved and Results Obtained
The Supreme Court has instructed the “most critical factor in determining the reasonableness of a fee award ‘is the degree of success obtained.'” Farrar v. Hobby, 506 U.S. 103, 114 (1992) (quoting Hensley, 461 U.S. at 436). See also Rudebusch v. Arizona, No. 95-CV-1313-PCT-RCB, 2007 WL 2774482, at *5 (D. Ariz. Sept. 21, 2007) (quoting Hensley, 461 U.S. at 436). If a “plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount.” Farrar, 506 U.S. at 114 (quoting Hensley, 461 U.S. at 436). Indeed, “[a] reduced fee award is appropriate if the relief, however significant, is limited in comparison to the scope of the litigation as a whole.” Hensley, 461 U.S. at 440.
This case settled for $50,000 and a judgment against Citi after nearly five years of litigation. Plaintiff claims this amount is a reflection of a successful litigation, because it is well above the statutory maximum of $1,000 for actual damages. (Doc. 203 at 12-13). Plaintiff further argues that under fee-shifting statutes, the attorney's fees awarded can- and perhaps should-dramatically exceed the actual recovery for the prevailing party. (Id. at 13-14). Citi, on the other hand, argues the fee-shifting nature of FCRA cases should make courts especially vigilant to guard against lawyers gouging defendants for outsized fee awards. This case presents exactly that situation, Citi asserts, where Plaintiff settled for far less than he originally sought, and where Plaintiff and Plaintiff's counsel acted irrationally during settlement negotiations. Plaintiff had at one point requested $750,000 to settle the case after remand from the Ninth Circuit, which was fifteen times what he ultimately accepted. Moreover, Plaintiff's counsel sent Citi a list of cases they claimed Plaintiff's damages (for emotional distress and punitive) would “likely be in line with.” (Doc. 206-1 at 76-80). It is difficult to discern what Plaintiff's counsel meant by that, because the list of cases includes awards from $10,000 to over $1,000,000. Citi contends the average award in Plaintiff's cited cases was $375,000, which represents a marked difference from the $50,000 Plaintiff ultimately voluntarily accepted.
It seems, judging both from Plaintiff's collected cases and the Court's review of the conduct and claims in this matter itself, that $50,000 was actually a minor victory for Plaintiff. And Citi argues it was “patently unreasonable for counsel to spend 815 hours litigating a $50,000 case, particularly where the disclosed economic damages were less than $2,000 and the balance was a speculative claim for emotional distress.” (Doc. 206 at 14) (emphasis in original). Citi asserts Plaintiff's counsel would receive a windfall were the Court to award the full lodestar amount. (Id.) The Court agrees.
Moreover, the Court reviews Plaintiff's success in the accepted offer within the context of the litigation as a whole. It seems highly likely that this case could have settled sooner, perhaps even more favorably for Plaintiff, had both parties acted reasonably. Instead, the settlement negotiations in this case were remarkedly unreasonable on both sides. As far back as August of 2018, the year Plaintiff filed suit, Plaintiff offered to settle the case for $50,000, the amount he would settle for nearly five years later. (Doc. 206-1 at 1). Citi rejected that offer because, they claim, at that time Plaintiff had not substantiated any of his economic damages. Citi later offered to settle for $2,000, which Plaintiff refused. A month later, Plaintiff demanded $125,000, inclusive of $81,050 in fees (leaving $43,950 for Plaintiff, very close to the $50,000 he ultimately accepted). Just over a month after that, Plaintiff increased his demand to $200,000, inclusive of $113,100 in fees and $86,900 for Plaintiff, without any new disclosure of additional damages. Citi refused the $200,000 demand and offered $7,500, which Plaintiff's counsel said was a “ridiculous offer[].” (Doc. 206-1 at 39). After Citi prevailed on summary judgment, Citi offered Plaintiff $35,000, which Plaintiff refused. Plaintiff countered with $750,000, which even Mr. Chami admitted was “too high.” (Doc. 206-1 at 48). On July 21, 2021, Citi offered $100,000, which Plaintiff rejected. Finally, after remand from the Ninth Circuit, Plaintiff demanded $1,500,000. (Doc. 206-1 at 53).
Believe it or not, this was not the end of the parties' shenanigans. Within a month of trial, Citi served a $50,000 offer of judgment. Citi offered to increase the offer to Plaintiff to $75,000 if the parties could settle upon reasonable attorney's fees without litigation at $275,000. (Doc. 206-1 at 54). Mr. Chami responded, “No way[.] I'd rather pay Mr. Gross out of my fees to get him on board with the current [offer of judgment].” (Doc. 206-1 at 54).
Both parties expressed unreasonable attitudes towards settlement-that much is clear. Citi's offers at times dramatically undervalued Plaintiff's claims. But far more egregious were Plaintiff's wild and ever-increasing, unreasonable demands that seem largely detached from any evidentiary basis. As Plaintiff's demands kept increasing, so too did Plaintiff's counsel's fees, in an unreasonable manner. Plaintiff's counsel's hours expended on this litigation were not “required” nor “reasonable.”
The Court weighs this factor against awarding the full amount of the lodestar.
iv. Undesirability of the Case
Plaintiff argues cases under FCRA are generally undesirable to most attorneys because plaintiffs do not pay attorney's fees and costs up front or along the way. The feeshifting provision of FCRA only awards fees if the plaintiff is successful. Plaintiff argues the “undesirability” of FCRA cases generally weighs in favor of Plaintiff's requested fees. The Court generally agrees with Plaintiff and find this factor weighs in favor of Plaintiff's requested fees. See, e.g., Caccamise v. Credit One Bank, N.A., No. 18-CV-971-JLS (BLM), 2020 WL 804741, *10 (S.D. Cal. Feb. 18, 2020) (finding FCRA cases are “undesirable” absent the fee-shifting provision, and that awarding reasonable attorney's fees encourages attorneys to work on such cases).
v. Nature and Length of Client Relationship
Plaintiff did not have a professional relationship with his counsel before this matter arose. (Doc. 2013 at 19). This factor is neutral.
vi. Awards in Similar Cases
Lastly, the Court considers awards in similar cases. Plaintiff points the Court to seven cases it argues demonstrate similar awards in similar cases. (Doc. 203 at 20-21). Plaintiff's cited authority is misleading. While some of the cases support an hourly rate similar to what Plaintiff's counsel has requested, the total fees awarded in many of those cases fall well below what Plaintiff requests here. Shelago v. Marshall Ziolkowski Enter., LLC, No. CV-07-0279-PHX-JAT, 2009 WL 1097534, *2 (D. Ariz. Apr. 22, 2009) (awarding $17,175.33 in attorneys' fees with rates of $400/hour); Meguerditchian v. Aetna Life Ins. Co., No. 2:12-CV-10999-ODW (JCx), 2014 WL 3926805, *6 (C.D. Cal. Aug. 12, 2014) (awarding $19,807.50 in reasonable attorneys' fees with rates of $600/hour in ERISA case); Doyle v. Midland Credit Mgmt. Inc., No. 2:14-CV-3893-KM-SCM, 2017 WL 6944789, *6 (D.N.J. Dec. 1, 2017) (awarding $11,594.38 in attorneys' fees, with hourly rates of between $250/hour and $467.50/hour in FDCPA case); Heling v. Creditors Collection Serv. Inc., No. 15-CV-1274-JPS, 2017 WL 2539785, *7 (E.D. Wis. June 12, 2017) (awarding $36,190.80 in attorneys' fees with hourly rates of $450/hour in FDCPA case).
Plaintiff also attempts to elide this matter with other types of cases entirely. E.g., In re Sears, Roebuck and Co. Front-Loading Washer Prods. Liab. Litig., No. 06-C-7023, 2018 WL 3707804, *8 (N.D. Ill. Aug. 3, 2018) (awarding nearly $500,000 in warranty class action). Plaintiff also asserts Phoenix fees are similar to those charged in San Francisco and Los Angeles. Wit v. United Behavioral Health, 578 F.Supp.3d 1060 (N.D. Cal. 2022) (awarding over $19 million in an ERISA case). The relevance and persuasiveness of these cases is dubious.
The Court is unpersuaded that this factor weighs in favor of granting the full lodestar amount. On the contrary, Plaintiff provided case law suggesting far smaller awards are reasonable. And the Court's own review suggests that reasonable attorneys' fees in FCRA cases are far less than Plaintiff requests, especially given Plaintiff's limited success here. See, e.g., Jansen v. Experian Info. Solutions, Inc., No. 05-CV-385-BR, 2011 WL 846876, *17 (D. Ore. Mar. 9, 2011) (awarding $298,959.75 in reasonable attorneys' fees in FCRA case that settled for $275,000 after nearly six years of litigation); Smith v. General Info. Servs., Inc., 2019 WL 2106171, *9 (E.D. Cal. May 14, 2019) (awarding $103,840.00 in reasonable attorneys' fees in FCRA case that settled for $105,000); Seungtae Kim v. BMW Fin. Servs. NA, LLC, 2015 WL 12734013, *11 (C.D. Cal. Nov. 12, 2015) (awarding $280,934.90 in reasonable attorneys' fees in FCRA and California Identity Theft (CIT) case where Plaintiff secured judgment after trial of $250,000 on FCRA claim and $150,000 on CIT claim).
This factor thus weighs against awarding the full lodestar amount to Plaintiff.
vii. Lodestar Reduction
Having considered all of the Kerr factors, the Court determines a 20% reduction of the lodestar amount is appropriate in this case. See Rodriguez v Barrita, Inc., 53 F.Supp.3d 1268, 1290 (N.D. Cal. 2014) (reducing lodestar by additional 20% which “reflects that while the enormous time spent on this litigation was in some respects out of proportion to the results ultimately obtained, counsel nonetheless achieved significant success for their client and the public”); Achloul v. Fair Debt Collections and Outsourcing, 2010 WL 1730789, *4 (M.D. Fla. Mar. 19, 2010) (reducing lodestar by additional 20% in light of limited success); Sonrai Sys., LLC v. Romano, 2023 WL 4205518, *4, 6 (N.D. Ill. June 27, 2023) (reducing lodestar by additional 20% for lack of success). In this case, the 20% reduction is based on the limited success achieved by Plaintiff after a lengthy litigation with multiple unreasonable settlement negotiations. While Plaintiff had what turned out to be a meritorious claim, reflected in the Ninth Circuit's order and the ultimate settlement agreement, the time spent on litigation here was not proportional to the results obtained. The 20% reduction is also based on the Court's review of awards in similar cases, which rarely reach the amount Plaintiff's counsel seeks.
III. Conclusion
In calculating the lodestar amount, the Court reduced Plaintiff's requested hourly rate for Mr. Chami for 2022 to $650 because Plaintiff failed to provide evidentiary support for the reasonableness of the requested rate of $725/hour. The Court further reduced the hours reasonably expended on the litigation for a variety of entries where Plaintiff's counsel did not provide enough specificity or where the hours spent were excessive for the task at hand. The Court thus calculated the lodestar amount to be $309,938.75. Finally, after reviewing the remaining Kerr factors, the Court applied a 20% reduction to the lodestar amount for lack of success and to closer align with awards in similar cases. The Court will award attorneys' fees in the amount of $247,951.00.
Accordingly,
IT IS ORDERED Plaintiff's Motion for an Award of Attorneys' Fees is GRANTED IN PART and DENIED IN PART. Defendants shall pay Plaintiff $247,951.00 in attorneys' fees.
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