Fifth Circuit Denies Attorneys’ Fees in Successful FDCPA Action Due to Attorneys’ “Outrageous” Actions

The United States Court of Appeals for the Fifth Circuit recently held that the attorneys representing a successful plaintiff in a Fair Debt Collection Practices Act (“FDCPA”) litigation were not entitled to any fees due to their “outrageous” fee request and other actions in the matter.  See Davis v. Credit Bureau of the South, 2018 WL 6009258 (5th Cir. Nov. 16, 2018).  In the case, the defendant debt collector misrepresented itself as a credit bureau in violation of 15 U.S.C. 1692e(16).  The district court granted plaintiff’s motion for summary judgment, finding a FDCPA violation had occurred and awarding $1,000 in statutory damages, but denied her request for compensatory damages and her state law claims.  Plaintiff’s counsel then filed a motion for attorneys’ fees, seeking $130,410 based on a claim that the attorneys spent nearly 300 hours on the matter at a rate of $450 per hour.  The district court found that both the number of hours and the rate were “excessive by orders of magnitude” and denied the motion in its entirety.  Plaintiff appealed the decision, arguing that the FDCPA mandates that a debt collector “is liable” for reasonable attorneys’ fees and that a court is required to award such fees to a prevailing plaintiff.

On appeal, the Fifth Circuit affirmed.  Although it acknowledged that some circuits have found that the award of fees to a successful plaintiff is mandatory under the FDCPA, it also noted that the Third and Fourth Circuits permit the denial of fees in “unusual circumstances.”  See, e.g., Graziano v. Harrison, 950 F.2d 107 (3d Cir. 1991).  The Court then found that the “extreme facts of the instant case justify the district court’s denial of attorney’s fees.”  Among other things, the Court found that this type of straightforward case did not justify almost 300 hours in fees and that counsel’s work product, which was “replete with grammatical errors, formatting issues, and improper citations” did not support a $450 hourly rate.  The Court further noted that plaintiff—a former employee at the law firm who brought this action—seemingly manufactured this claim by requesting a letter be sent to her parents’ home in Texas and calling defendant on a recorded line from the law firm, and that she was “not the type of person Congress intended to protect with the attorney fee-shifting provision.”  Based on all of these issues, the Court affirmed the denial of fees, stating that “[a]lthough complete denial of otherwise generally mandatory attorney’s fees is a rare and drastic sanction, the outrageous facts in this case suggest that the district court did not abuse its discretion.”

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, or Dylan Goetsch at dgoetsch@riker.com.