Mann v. Acclaim Financial Services, Inc., No. CIV.A. 2:02-CV-00644.

• Decision Date: 10 November 2004
• Docket Number: No. CIV.A. 2:02-CV-00644.
• Citation: 348 F.Supp.2d 923
• Parties: Laura MANN, Plaintiff, v. ACCLAIM FINANCIAL SERVICES, INC., Defendant.
• Court: U.S. District Court — Southern District of Ohio

348 F.Supp.2d 923

Laura MANN, Plaintiff, v. ACCLAIM FINANCIAL SERVICES, INC., Defendant.

No. CIV.A. 2:02-CV-00644.

United States District Court, S.D. Ohio, Eastern Division.

November 10, 2004.

COPYRIGHT MATERIAL OMITTED

Steven C. Shane, Bellevue, KY, for Plaintiff.

Randal D. Robinson, Richard J. Lacivita, Robert Neil Burman, Burman, Robinson & McCarthy, Columbus, OH, for Defendant.

ORDER

KING, United States Magistrate Judge.

Plaintiff brings this action against Acclaim Financial Services, Inc., (hereinafter "Acclaim"), alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., (hereinafter "FDCPA") and Ohio's Consumer Sales Practices Act, O.R.C. § 1345.01 et seq., (hereinafter "OCSPA"). With the consent of the parties, 28 U.S.C. § 636(c), this matter is before the Court on class Plaintiff's application for statutory damages under the FDCPA and OCSPA (Doc. No. 65) and Plaintiff's motion for attorney fees and expenses. (Doc. No. 66).

I. Background

Plaintiff alleges that Acclaim violated both the FDCPA and the OCSPA when it sent a written communication to Plaintiff which demanded payment of a debt for utility services allegedly owed by Plaintiff to an entity known as "The Energy Cooperative." Amended Complaint, at ¶¶ 3, 5. Plaintiff argues that this letter contained deceptive language that overshadowed the rights and obligations established by 15 U.S.C. § 1692g(a), as well as various provisions of Ohio law (hereinafter "the overshadowing claim"). On April 29, 2003, this Court certified a class of plaintiffs under Fed.R.Civ.P. 26(b)(2) on the overshadowing claim. Opinion and Order (April 29, 2003) (Doc. No. 40). The amended complaint also asserted two individual claims alleging that Acclaim failed to note that Plaintiff disputed the debt when it reported the account to the credit reporting agency and that Acclaim continued to engage in debt collection activity by reporting the debt to a credit reporting agency without validating the debt (hereinafter "the § 1692g(b), § 1692e(5), and § 1692e(8) claims"). Defendant argued that such conduct resulted from a bona fide error and that it maintained procedures reasonably adapted to avoid such errors.

On January 13, 2004, this Court granted summary judgment to Plaintiff on the overshadowing claim under the FDCPA and granted summary judgment to Defendant on the § 1692g(b), § 1692e(5), and § 1692e(8) claims. This Court denied both motions with respect to the claims brought under the OCSPA and set all remaining matters for trial. Opinion and Order (January 13, 2004) (Doc. No. 53).

In lieu of trial, the parties entered into a stipulation by which the parties agreed that this Court could enter class-wide declaratory relief on the overshadowing claim, that Plaintiff is entitled to statutory damages under both state and federal law, but not to actual damages, and that Plaintiff could apply to this Court for an award of attorney fees and expenses. (Doc. No. 61).

II. Plaintiff's Application for Statutory Damages Under the FDCPA and OCSPA

The parties agree that Plaintiff is entitled to statutory damages. (Doc. No. 61). The maximum amount of statutory damages that may be awarded under the FDCPA is $1000 per proceeding.¹ 15 U.S.C. § 1692k(a)(2)(A). See Wright v. Finance Service of Norwalk, Inc., 22 F.3d 647, 651 (6th Cir.1994). Only a single violation need be shown to recover under the FDCPA. Cirkot v. Diversified Systems, 839 F.Supp. 941 (D.Conn.1993). Under the OCSPA, statutory damages are limited to $200 per violation.² O.R.C. § 1345.09(B).

The FDCPA sets out a number of factors to be considered by the Court in determining the amount of statutory damages, including "the frequency and persistence of noncompliance by the debt collector, the nature of such noncompliance, and the extent to which such noncompliance was intentional...." 15 U.S.C. § 1692k(b)(1). In this case, Acclaim admits that it mailed at least 1,000 letters to consumer debtors which contained overshadowing language violative of the FDCPA. (Donaldson Depo., p. 41). Plaintiff succeeded on summary judgment with regard to her class-wide overshadowing claim and, through stipulation, it was agreed that this Court could enter class-wide declaratory relief in favor of Plaintiff. Because Plaintiff prevailed on these claims, this Court concludes that Plaintiff is entitled to the maximum statutory award, i.e., $1,000 under the FDCPA and $200 under the OCSPA.

III. Plaintiff's Motion for Costs and Attorney Fees

Plaintiff requests that this Court award Plaintiff's counsel the sum of $30,200 in attorney's fees and $970.05 in expenses.

A. Attorney Fees

In the case of a successful action against a debt collector under the FDCPA, the debt collector's liability includes the costs of the action, together with a reasonable attorney's fee as determined by the court. 15 U.S.C.A. § 1692k(a)(3). The award of attorney's fees is not a special or discretionary remedy; instead, the award of attorney's fees is intended to encourage consumers to act as "private attorneys general" to enforce the FDCPA. Johnson v. Eaton, 80 F.3d 148 (5th Cir.1996); Baker v. G.C. Services Corp., 677 F.2d 775, 780 (9th Cir.1982). An attorney's fee based on fair market rates is appropriate in order to further this Congressional intent. Tolentino v. Friedman, 46 F.3d 645, 652 (7th Cir.1995) ("Paying counsel in FDCPA cases at rates lower than those they can obtain in the marketplace is inconsistent with the congressional desire to enforce the FDCPA through private actions, and therefore misapplies the law.").

The United States Court of Appeals for the Sixth Circuit has cautioned, however, that counsel for the successful plaintiff in an FDCPA action should not be compensated for time which represents "economic waste." Lee v. Thomas & Thomas, 109 F.3d 302 (6th Cir.1997). "[A]ble counsel should aspire to achieve their clients' objectives economically ..., and counsel should not expect to reap financial rewards for prolonging litigation unnecessarily." Id. at 307. "The statute authorizes nothing more than a fee determined by the court to be `reasonable....'" Id. at 305. The "district court should exclude from [the] initial fee calculation hours that were not `reasonably expended.'" Id. at 307 (quoting Hensley v. Eckerhart, 461 U.S. 424, 434, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)). A reasonable fee is one that is adequate to attract competent counsel, but which does not produce a windfall to the attorney. Blum v. Stenson, 465 U.S. 886, 897, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984); Hadix v. Johnson, 65 F.3d 532, 535 (6th Cir.1995).

According to the United States Supreme Court, "[t]he most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate." Hensley, 461 U.S. at 433, 103 S.Ct. 1933. This lodestar calculation is strongly presumed to yield a reasonable fee. City of Burlington v. Dague, 505 U.S. 557, 562, 112 S.Ct. 2638, 120 L.Ed.2d 449 (1992). In certain circumstances, the lodestar amount may be adjusted to reflect what the court, in its discretion, considers to be a reasonable attorney's fee. Carroll v. Wolpoff & Abramson, 53 F.3d 626, 629 (4th Cir.1995) (court may reduce award to reflect limited success). The Third Circuit suggests that a court consider the following factors in determining the appropriate amount of the fee under the FDCPA: (1) the degree of success obtained by the prevailing plaintiff, with a reduction being appropriate where the plaintiff has obtained only partial or limited success, and (2) the reasonableness of the hours expended by counsel for the prevailing party. Graziano v. Harrison, 950 F.2d 107, 114 (3rd Cir.1991). The court may also consider the defendant's misconduct, including the frequency, persistence, and nature of its noncompliance with the FDCPA, and whether such noncompliance was intentional. Riveria v. MAB Collections, Inc., 682 F.Supp. 174 (W.D.N.Y.1988).

1. Rule 68 Offer of Judgment

In the case at bar, Acclaim objects not to an award of fees to the Plaintiff, but to the amount of fees requested; Plaintiff itemizes 151 hours spent by her counsel, and seeks compensation at an hourly rate of $200, for an attorney fee of $30,200. Acclaim argues that Plaintiff's request is unreasonable under 15 U.S.C. § 1692k(a)(3) and should be greatly reduced. Specifically, Acclaim represents that it made an offer of judgment on September 5, 2002 (Doc. No. 69, Exhibit B) and that Plaintiff should not recover attorney fees incurred after that date.

Rule 68 of the Federal Rules of Civil Procedure provides in relevant part "If the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after making the offer."³ Fed.R.Civ.P. 68. Furthermore, the Sixth Circuit has held that a district court may properly exclude fees for work performed after the rejection of a debt collector's offer to confess judgment so long as the proposed offer exceeded the amount later awarded to the plaintiff. Lee v. Thomas & Thomas, 109 F.3d 302.

On September 5, 2002, Acclaim offered to allow judgment to be taken against it for $2,000 and injunctive relief prohibiting it from engaging in the activities which Plaintiff asserted violated the FDCPA and the OCSPA. The offer also made clear that it was not to be construed as an admission of liability or that Plaintiff had suffered any damages. Plaintiff refused Acclaim's September 5, 2002 offer and the litigation continued until the parties entered the March 2004 stipulation.

Acclaim argues that the $2,000 settlement offer, made on September 5, 2002, was greater than the $1,200 award of statutory damages to which the Plaintiff is entitled. Consequently, Acclaim argues that both Rule 68 and Sixth Circuit case law operate to preclude compensation for fees incurred after September 5, 2002. According to Acclaim, this...