Baylor v. Mitchell Rubenstein & Assocs., P.C.

• Decision Date: 30 May 2017
• Docket Number: C/w 16-7071,No. 16-7070,16-7070
• Citation: 857 F.3d 939
• Parties: Demetra BAYLOR, Appellant v. MITCHELL RUBENSTEIN & ASSOCIATES, P.C., Appellee
• Court: U.S. Court of Appeals — District of Columbia Circuit

857 F.3d 939

Demetra BAYLOR, Appellant

v.MITCHELL RUBENSTEIN & ASSOCIATES, P.C., Appellee

No. 16-7070

C/w 16-7071

United States Court of Appeals, District of Columbia Circuit.

Argued February 7, 2017

Decided May 30, 2017

Radi Dennis argued the cause and filed the briefs for appellant/cross-appellee.

Ronald S. Canter, Rockville, MD, argued the cause and filed the briefs for appellee/cross-appellant.

Before: Henderson, Circuit Judge, and Edwards and Sentelle, Senior Circuit Judges.

Concurring opinion filed by Circuit Judge Henderson.

Edwards, Senior Circuit Judge:

In order to pursue a Master's degree in Computer Graphics, Demetra Baylor ("Appellant") took out six student loans. Several years after her graduation, Mitchell Rubenstein & Associates, P.C. ("Appellee") came calling to collect. At the heart of this case are a number of inconsistencies in letters that Appellee sent Appellant over the course of several months regarding her loans and the amounts that she owed on them, as well as Appellee's failure to direct all of its communications to Appellant's attorney after she retained counsel. In response, Appellant filed suit on December 17, 2013, alleging that Appellee had violated the Fair Debt Collection Practices Act ("FDCPA"), the District of Columbia Consumer Protections Procedures Act ("CPPA"), and the District of Columbia Debt Collection Law ("DCDCL"), statutes which target abusive debt collection and improper trade practices. See 15 U.S.C. § 1692(e) ; D.C. CODE §§ 28–3904, –3814.

Over the course of the next few years, the parties engaged in what the District Court termed a "particularly striking expenditure of effort and resources," generating "excessive, repetitive, and unnecessarily sharp pleadings." Order, Dkt. No. 41, at 2. Nonetheless, all of Appellant's statutory claims were eventually resolved. Appellant accepted Appellee's offer of judgment regarding her FDCPA claim and the District Court, with the aid of a Magistrate Judge, determined the attorney's fees to which she was entitled for this success. Appellee, meanwhile, prevailed in its Motion to Dismiss all of Appellant's CPPA claims and some of her DCDCL claims, the remainder of which were rejected when the District Court subsequently granted Appellee's Motion for Summary Judgment.

A number of orders from this "clutter[ed] ... docket" are challenged on appeal. Id . First , the parties dispute the District Court's decision to adopt a Magistrate Judge's recommendation that Appellant receive approximately twenty percent of the attorney's fees that she requested. Second , Appellant asserts that the District Court erred in finding that Appellee's conduct does not fall within the aegis of the CPPA. Third , Appellant also contends that the District Court abused its discretion in failing to credit her objections to a different Magistrate Judge's denial of her Motion to Compel the disclosure of communications between Appellee and an agent of Appellant's creditor on the grounds that these documents were protected by attorney-client privilege. Appellant additionally disputes the District Court's refusal to award her attorney's fees for her efforts in litigating this issue. Finally , Appellant argues that the District Court improperly granted Appellee's Motion for Summary Judgment on her DCDCL claims. On this last point, Appellant contends that the District Court failed to appropriately account for evidence demonstrating that Appellee had "willfully violated" the DCDCL and was therefore subject to liability under the statute.

We do not reach the question of whether the District Court abused its discretion in awarding Appellant only a percentage of the attorney's fees she sought in connection with her FDCPA claim. In addressing this issue, the District Court relied on the standard set forth in Local Civil Rule 72.2 in finding that the Magistrate Judge's proposed disposition was not "clearly erroneous or contrary to law." This was error. Federal Rules of Civil Procedure 54(d)(2)(D) and 72(b)(3) foreclose the District Court from using a "clearly erroneous or contrary to law" standard when evaluating a Magistrate Judge's proposed disposition of a fee request. The correct standard of review is de novo . We therefore reverse and remand to allow the trial judge to reconsider this matter in the first instance applying denovo review to assess the Magistrate Judge's recommendation. We affirm all of the remaining Orders challenged on appeal.

I. BACKGROUND

On February 21, 2013, Appellee, a law firm whose primary focus is the recovery of consumer debts, sent the first of several letters to Appellant notifying her that her account, which had been assigned file number R80465, "ha [d] been referred to [its] office for collection." Complaint, Dkt. No. 1, Ex. E; see Answer, Dkt. No. 28, at 2. It listed the creditor for her debt as Arrowood Indemnity Company and stated that she currently owed $26,471.07, though cautioned that, "[b]ecause of interest, late charges and other charges that may vary from day to day, the amount due on the day you pay may be greater." Complaint, Dkt. No. 1, Ex. E. Following a request for more information regarding both the ownership and amount of this debt from Appellant, Appellee sent a second letter. It provided a new total for the amount that Appellant owed, $31,268, a slight reformulation of the name of Appellant's creditor, Arrowood Indemnity Company/Tuition Guard, and identified her original creditor as Citibank (South Dakota) N.A. Complaint, Dkt. No. 1, Ex. D; Baylor v. Mitchell Rubenstein & Assocs., P.C. , 55 F.Supp.3d 43, 46 (D.D.C. 2014).

Appellant retained counsel, who contacted Appellee regarding the provenance of this debt and advised that any "future communication regarding this matter should be directed to [her] firm" rather than to Appellant. Complaint, Dkt. No. 1, Ex. B. The parties then entered into settlement negotiations, during which Appellant informed Appellee that she had additional outstanding loans not referenced in its second letter. Appellee's client referred these new loans to Appellee so that Appellant could settle all of her debt at once. See Baylor v. Mitchell Rubenstein & Assocs., P.C. , 174 F.Supp.3d 146, 150 (D.D.C. 2016) ; Appellee's Statement of Undisputed Facts, Dkt. No. 96 ¶¶ 12–13. On August 22, 2013, Appellee sent another letter to Appellant's home, albeit addressed to her attorney, regarding this second set of loans. Complaint, Dkt. No. 1, Ex. A. It provided a new file number for this debt, R83798, which totaled $27,459.48, and noted that her creditor was Tuitionguard Arrowood Indemnity. Id. After Appellant's counsel requested additional information regarding these loans, Appellee stated that Appellant owed "$27,459.48 plus interest from 10/21/11 at the rate of 3.75% until paid" and listed Tuitionguard/Arrowood Indemnity and Student Loan Corp. as the creditor and original creditor, respectively, of this debt. Complaint, Dkt. No. 1, Ex. C.

On December 17, 2013, Appellant filed suit in the District Court. She claimed that the inconsistencies in the communications she had received from Appellee, including, most notably, the variance in the "character and amount" of Appellant's alleged debt and the creditors associated with these loans, as well as Appellee's failure to direct all of its communications to Appellant's counsel after she had retained legal representation, constituted violations of both the FDCPA and CPPA. Complaint, Joint Appendix ("JA") 26–28, 31–33. She also asserted that these actions were proof that Appellee had both violated various provisions of the DCDCL and "knowingly maintained policies, practices and procedures that were intentionally and willfully inadequate" to meet its obligations under this statute. Id. at 29–31.

Appellee moved to dismiss the Complaint. However, while this motion was pending, Appellee extended, and Appellant accepted, an offer of judgment regarding her FDCPA claims. See Baylor v. Mitchell Rubenstein & Assocs., P.C. , 77 F.Supp.3d 113, 115 (D.D.C. 2015). A judgment was then entered "in the amount of $1,001.00 plus costs and expenses together with reasonable attorney fees for all claims under the [FDCPA]" by the Clerk of Court. Id . Appellant thereafter filed a motion seeking $155,700 in attorney's fees for 346 hours of work at a rate of $450 an hour. Id. She was later permitted to amend her requested fees due to subsequent filings in this case. Id. at 115–16.

The District Court referred this request to a Magistrate Judge pursuant to Local Civil Rule 72.2. After reviewing the matter, the Magistrate Judge recommended that the hours included in Appellant's initial fee request be reduced by 85% because they were significantly higher than reasonable. Baylor v. Mitchell Rubenstein & Assocs., P.C. , 2014 WL 7014280, at *4 (D.D.C. Oct. 24, 2014). She found that certain tasks were not eligible for attorney's fees under the statute; some of the hours requested were expended on Appellant's unsuccessful state law claims or occurred after Appellant had already accepted Appellee's offer of judgment; and Appellant's counsel had failed to "heed the Court's admonition" to moderate the tenor of her filings. Id. at *4–5. The Magistrate Judge also determined that a 50% reduction should be applied to Appellant's additional request for fees because Appellant had "again engaged in the tactics against which the Court cautioned, thus expending considerable unproductive activity." Id. at *5. The District Court reviewed the Magistrate Judge's Report and Recommendation to determine if it was "clearly erroneous or contrary to law" and, after determining that it was not, adopted it in its entirety. Baylor , 77 F.Supp.3d at 124.

In July 2014, the District Court granted Appellee's Motion to Dismiss all of Appellant's claims under the CPPA and some of her DCDCL claims. Following a contentious discovery process, in which the District Court affirmed a Magistrate Judge's Memorandum Opinion granting in part and denying in...