Tuesday, October 17, 2023

FYI: 8th Cir Upholds Lodestar Reduction of Attorney Fee Award in FDCPA Case by 50%

The U.S. Court of Appeals for the Eighth Circuit recently affirmed the ruling of a trial court that followed the lodestar method and reduced an attorneys' fees award by 50%.


In so ruling, the Eighth Circuit held that there is a "strong presumption" that the lodestar method represents a reasonable fee and the trial court here did not abuse its substantial discretion in finding that fifty hours of work was unreasonable for the "factually and legally straightforward" federal Fair Debt Collection Practices Act (FDCPA) claim at issue.


A copy of the opinion is available at:  Link to Opinion


A debt collector called a consumer to collect an alleged $900 debt to her former landlord. Afterward, without sending the relevant documents to the consumer, the debt collector reported her debt to a credit reporting agency, failing to tell the agency that the debt was disputed.


The consumer commenced an action against the debt collector, alleging that it violated the FDCPA. The consumer requested an award of $18,810 in attorneys' fees for work by two attorneys and a paralegal. The debt collector challenged the fees requested by both attorneys, who submitted sworn declarations and detailed billing records.


The trial court, applying the lodestar method of calculating an attorneys' fees award, found that the attorneys' claimed hourly rates were reasonable, but the hours expended on the case were excessive. The trial court reduced the claimed attorney hours by fifty percent, exclusive of paralegal work, and awarded the consumer $9,480 in attorneys' fees. The consumer appealed, accusing the trial court of departing from the lodestar calculation by imposing a "cap" that violates FDCPA policies and deprives counsel of full compensation.


"The starting point for determining attorneys' fees is the 'lodestar,' which is calculated by multiplying the number of hours reasonably expended by the reasonable hourly rate." Orduno v. Pietrzak, 932 F.3d 710, 719 (8th Cir. 2019). The trial court must "exclude from a fee request hours that are excessive, redundant, or otherwise unnecessary." Hensley v. Eckerhart, 461 U.S. 424, 434 (1983). The Eighth Circuit determined that the trial court here did exactly this.


The Eighth Circuit found that the trial court thoroughly reviewed the question of attorney hourly rates, finding that the claimed hourly rates were reasonable and consistent with the rates in the community for similar services by lawyers of comparable experience.


It then conducted a detailed review of hours performed on specific tasks by the two attorneys, concluding that many hours spent on pre-complaint research and communicating with each other and the client were excessive or redundant.


Additionally, the Eighth Circuit reasoned that it should show "substantial deference" to a trial court's determination that fees were excessive. Fox v. Vice, 563 U.S. 826, 838 (2011). Furthermore, the Appellate Court noted that there is a "strong presumption" that the lodestar method represents a reasonable fee. Pennsylvania v. Del. Valley Citizens' Council for Clean Air, 478 U.S. 546, 565 (1986).


Despite the consumer's attempts to paint the FDCPA claims as complex and cutting edge, the Eighth Circuit agreed with the trial court that the case was factually and legally straightforward. Thus, the Court concluded that the trial court did not abuse its substantial discretion in finding that fifty hours was unreasonable for such a claim. See Orduno, 932 F.3d at 720.


Nor did the trial court abuse its discretion by focusing on the reasonableness of the time two attorneys spent on legal research and communicating with each other, and in finding that a fifty percent reduction was appropriate. See Quigley v. Winter, 598 F.3d 938, 958-59 (8th Cir. 2010). Moreover, the Court held that "[a] request for attorneys' fees should not result in a second major litigation." Hensley, 461 U.S. at 437. "The essential goal in shifting fees (to either party) is to do rough justice, not to achieve auditing perfection." Fox, 563 U.S. at 838.


Accordingly, the Eighth Circuit affirmed the ruling of the trial court.




Ralph T. Wutscher
Maurice Wutscher LLP
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Email: rwutscher@MauriceWutscher.com


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