Schlacher v. Law Offices of Phillip J. Rotche
| Citation | 574 F.3d 852 |
| Decision Date | 03 August 2009 |
| Docket Number | No. 08-4267.,08-4267. |
| Parties | Jean SCHLACHER, et al., Plaintiffs-Appellants, v. LAW OFFICES OF PHILLIP J. ROTCHE & ASSOCIATES, P.C., Defendant-Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
Curtis C. Warner (argued), Chicago, IL, for Plaintiffs-Appellants.
Timothy Shelton (argued), Stephen R. Swofford, Hinshaw & Culbertson, Chicago, IL, for Defendant-Appellee.
Before ROVNER, WOOD, and WILLIAMS, Circuit Judges.
Plaintiffs Jean, Alfred, and Teri Schlacher sued the defendant, a debt-collection law firm, for violating the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, and, within three months of filing their complaint, they accepted offers of judgment totaling $6,500. The plaintiffs, who were represented by four attorneys from three different law firms, sought attorney's fees of $12,495 and costs of $437.70. The district court awarded $6,500 in fees and costs, explaining that the unnecessary use of multiple attorneys had led to excessive billing in a straightforward, short-lived case. We affirm.
After Jean Schlacher was delinquent on a payment for a root canal, her dentist, represented by the Law Offices of Phillip J. Rotche, sued Jean and her husband, Alfred, in state court. Judgment was entered for the dentist, and the Schlachers were required to make monthly payments of $14 until the remaining debt was paid. When they were late on their first payment, Jean received a harassing phone call from an employee of Rotche's, who accused her of being "retarded" and led her to believe that she would be jailed for failing to make the payment. Jean's daughter, Teri, called Rotche's office hoping to assuage her mother's fears, and the same employee threatened to report her to the police, recorded the conversation without her knowledge, and followed up with a threatening letter.
Hoping to halt these abusive collection practices, the Schlachers sought legal assistance and were rejected by more than half a dozen attorneys before retaining Colleen McLaughlin, who specializes in labor and employment law and consumer-contract disputes. McLaughlin recognized that the Schlachers had a claim under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, but, because the statute of limitations was about to expire and her caseload was heavy, she enlisted Dmitry Feofanov, a consumer-protection attorney, who, in turn, contacted Curtis Warner, an FDCPA specialist. With a fourth lawyer (an associate of McLaughlin's), they together investigated the case and filed suit. Within three months, and before any discovery, the plaintiffs accepted offers of judgment from the defendant totaling $6,500: $1,000 (the statutory maximum, see 15 U.S.C. § 1692k(a)(2)) to each plaintiff, plus an additional $3,000 to Jean, and $500 to Teri, for actual damages.
After the parties' efforts to negotiate a reasonable award of attorney's fees were unsuccessful, the plaintiffs moved to compel the defendant to produce its own billing records. See N.D. ILL. LOCAL R. 54.3(d)(5). The district court denied the motion because the case settled too early for the defendant's billing to be relevant. At a hearing on the motion, the court explained its approach to the anticipated fee petition in this case. First, it observed that the lawsuit was resolved "in just a couple of months," and that the involvement of multiple attorneys here necessarily created "a substantial amount of overlap." Viewing the case as a "one-lawyer lawsuit," the court warned the plaintiffs that it would ask "[w]hat kind of time would have been spent" by one competent lawyer. That, the court concluded, would be "the measure of what reasonable is in terms of time."
The plaintiffs filed a fee petition seeking $437.70 in costs and $12,495 in attorney's fees for 41.6 hours of work, divided as follows:
They supported the requested rates with their own declarations of market rates, copies of retainer agreements with other clients, and other evidence, but, with the exception of Warner (the FDCPA specialist), none of the attorneys presented evidence that they had received their proffered rate in an FDCPA case. The four lawyers billed for time that they all spent investigating and researching the plaintiffs' claims, drafting the complaint, filing and arguing a motion to strike one of the defendant's affirmative defenses, researching legal issues related to the offers of judgment, and performing legal research in response to the defendant's threat to move to strike the acceptances and seek sanctions against the plaintiffs.
The defendant made detailed objections to both the rates and the hours billed. It did not contest the costs of $437.70 or the two hours of paralegal work, but asserted that the attorney rates were unreasonable and proposed instead a $250/hour rate for McLaughlin, Feofanov, and Warner, and $195/hour for Hobfoll. The defendant also objected to the hours requested for the attorneys as excessive and identified 16.2 of the 39.6 hours that it believed were unnecessary or duplicative. Specifically, the defendant identified several instances in which McLaughlin and Warner had billed for the same task, multiple billing entries for internal communication, and billing entries for research that was either premature or unrelated to the plaintiffs' FDCPA claims. They thus offered to pay $5,885 in fees and $437.70 in costs, for a total of $6,322.70.
At the hearing on the fee petition, the court reiterated its view that the case was "essentially a one-lawyer lawsuit." While acknowledging the possible efficiencies of using multiple lawyers in some cases, the court explained that, in this case, "the multiplication of time that was involved by the fact of the multiplication of counsel just does not justify the kind of request that's involved here." Evidently because only Warner was an FDCPA specialist, the court also was troubled by the apparent "training on the job" in the case. Further, the court was critical of McLaughlin and Feofanov for not relinquishing the case entirely to Warner, explaining that "it doesn't make a lot of sense for a $500-an-hour lawyer to do work that might be performed by a $200-an-hour lawyer." After defense counsel asserted that a reasonable award for fees would be around $6,400, the court noted that the proposed figure was "coincidentally" almost equivalent to the amount recovered by the plaintiffs and concluded, "It seems to me that a figure that roughly equates to what the plaintiffs themselves recovered seems more reasonable." The district court then sustained the defendant's objections to the petition and awarded $6,500 for attorney's fees and costs to be divided among counsel as they saw fit.
Plaintiffs who prevail under the Fair Debt Collection Practices Act are entitled to an award of costs and reasonable attorney's fees. 15 U.S.C. § 1692k(a)(3); Tolentino v. Friedman, 46 F.3d 645, 651 (7th Cir.1995). Although there is no precise formula for determining a reasonable fee, the district court generally begins by calculating the lodestar—the attorney's reasonable hourly rate multiplied by the number of hours reasonably expended. Hensley v. Eckerhart, 461 U.S. 424, 433-37, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983); Gautreaux v. Chi. Hous. Auth., 491 F.3d 649, 659 (7th Cir.2007). The district court may then 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. Connolly v. Nat'l Sch. Bus Serv., Inc., 177 F.3d 593, 597 (7th Cir.1999); Strange v. Monogram Credit Card Bank of Ga., 129 F.3d 943, 946 (7th Cir.1997). The district court must provide a clear and concise explanation for its award, and may not "eyeball" and decrease the fee by an arbitrary percentage because of a visceral reaction that the request is excessive. Small v. Richard Wolf Med. Instruments Corp., 264 F.3d 702, 708 (7th Cir.2001); In re Cont'l Ill. Sec. Litig., 962 F.2d 566, 570 (7th Cir.1992). In light of the district court's greater familiarity with the litigation, we review an award of attorney's fees under a highly deferential abuse-of-discretion standard. Spegon v. Catholic Bishop of Chi., 175 F.3d 544, 550 (7th Cir.1999).
On appeal, the plaintiffs argue first that the district court abused its discretion when it concluded that "a figure that roughly equates to what the plaintiffs themselves recovered seems reasonable." As the plaintiffs point out, we have cautioned that fee awards "should not be linked mechanically to a plaintiff's award," Eddleman v. Switcharaft, Inc., 927 F.2d 316, 318 (7th Cir.1991), and that "[i]t cannot be the case that the prevailing party can never have a fee award that is greater than the damages award," Deicher v. City of Evansville, 545 F.3d 537, 546 (7th Cir. 2008). Thus, the plaintiffs argue, the district court committed an error of law in awarding a fee that was directly proportional to their damages recovery.
The plaintiffs' argument, however, is persuasive only when the district court's comment is read out of context. The court did not settle on a $6,500 fee award simply because it mirrored the plaintiffs'...
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