The Fifth Circuit has affirmed a denial of all attorney fees under the Fair Debt Collection Practices Act based on the “outrageous facts” and the conduct of the plaintiff’s attorneys.
Crystal Davis alleged that Credit Bureau of the South violated Texas and Federal Debt Collection Practices Acts by using the words “credit bureau” in its name when attempting to collect a water bill of $107.29. Davis also alleged that the defendant misrepresented itself in a phone call she recorded. No actual damages were claimed. The district court granted summary judgment and awarded her $1,000 in statutory damages under the federal act. Davis then filed a motion seeking $130,410 in attorney fees under 15 U.S.C. § 1692k(a)(3), which provides that a person who violates the Act is liable for actual and statutory damages and a reasonable attorney’s fee as determined by the court.
The attorney-fee motion was referred to the magistrate judge, who refused to award any fees finding that the case involved “special circumstances” that would render an award of fees unjust. He found that the claim “was created by counsel for the purpose of generating, in counsel’s own words, an ‘incredibly high’ fee request.” Davis, who lived in Louisiana, was also found to have created a false claim under Texas law. While employed at her lawyer’s law firm, she requested Defendant to mail her water bill to her parents’ address in Texas. Davis’ recorded phone call with the Defendant was made using the law firm’s recorder and in the presence of her attorney. The magistrate judge found that Plaintiff’s counsel believed that prevailing on a simple claim under the FDCPA “gives rise to a blank check for attorney’s fees” and had treated the fee request as an opening bid. The magistrate judge was “stunned” by the request for $130,000 in fees for a simple case governed by a Fifth Circuit opinion directly on point. He found substantial duplicative and excessive fees by multiple counsel, and that the requested hourly rate of $450 was “excessive by orders of magnitude” for such a straightforward matter. The district judge overruled objections to the magistrate’s ruling and Davis appealed.
The Fifth Circuit acknowledged that attorney fees in a successful FDCPA action are mandatory and that no Fifth Circuit opinion had allowed zero fees where the Plaintiff recovered actual or statutory damages. However, it cited numerous cases that deny fees in similar contexts. The Fifth Circuit has found that “special circumstances” can justify not awarding fees in civil rights cases. Romain v. Walters, 856 F.3d 402, 407 (5th Cir. 2017) (quoting Hensley v. Eckerhart, 461 U.S. 424, 429 (1983)). The Third and Fourth Circuits permit outright denial of fees under the FDCPA in “unusual circumstances.” Graziano v. Harrison, 950 F.2d 107, 113 (3d Cir. 1991); Carroll v. Wolpoff & Abramson, 53 F.3d 626, 628 (4th Cir. 1995). The First Circuit has upheld the denial of fees under the Truth in Lending Act under “the most unusual of circumstances” such as bad faith, obdurate conduct, unjust hardship, or other special circumstances. de Jesus v. Banco Popular de Puerto Rico, 918 F.2d 232, 234 & n.4 (1st Cir. 1990). The concurring opinion in a D.C. Circuit case suggests that even though a reasonable fee is required under FDCPA, “the statutory text does not preclude a court from deciding — consistent with its inherent authority to protect the integrity of its proceedings, Chambers v. NASCO, Inc., 501 U.S. 32, 42–51 (1991)—that a ‘reasonable’ fee in response to an exorbitant request is a nominal amount approaching zero.” Baylor v. Mitchell Rubenstein & Assocs., P.C. , 857 F.3d 939, 958 (D.C. Cir. 2017) (Henderson, J., concurring).
The Fifth Circuit concurred with the magistrate judge’s findings. It criticized the requested hourly rate noting that the pleadings and brief on appeal were replete with grammatical errors, formatting issues, and improper citations. It agreed that no incentive for bringing claims under the FDCPA was needed in this case since the plaintiff’s counsel “essentially created her claim.” It disapproved of “utilizing technical violations of the FDCPA solely as a means for generating attorney’s fees” and concluded: “This simply cannot be tolerated. Bottom-line: the FDCPA does not support avaricious efforts of attorneys seeking a windfall.” It held that the district court did not abuse its discretion in determining that Davis was not entitled to attorney’s fees, or that the reasonable attorney’s fee was $0.
Davis v. Credit Bureau of the South, No. 17-41136 (Fifth Cir. Nov. 16, 2018).