Judge Denies Prevailing Party's Motion For Attorneys' Fees in FDCPA Case

A recent opinion issued by the United States District Court for the Eastern District of Missouri showcases the challenges for ARM industry companies facing Fair Debt Collection Practices Act (FDCPA) litigation. The opinion in Anderson v. Portfolio Recovery Associates, LLC (U.S. District Court, E.D. Ill., Case No. 4:15-CV-766) discusses the request and denial of an award of attorney’s fees for a victorious defendant in a FDCPA matter. A copy of the opinion can be found here.

Background

Plaintiff Debbie Anderson filed suit on May 14, 2015, alleging that defendant Portfolio Recovery Associates, LLC (PRA) violated the FDCPA by sending two letters attempting to collect a debt. The two parties agreed to a scheduling plan and attended mediation in January 2016, but the case was not settled.

PRA filed a motion for summary judgment in April 2016 after a period of limited written discovery. The plaintiff failed to respond to PRA’s motion for summary judgment, and ultimately the Court issued a Memorandum and Order granting summary judgment to the defendant. PRA then brought a motion for attorneys' fees.

Opinion

The Court began their discussion of the case by citing Section 1927 of the U.S. Code, which provides for sanctions against an attorney who "multiplies the proceedings in any case unreasonably and vexatiously," generally interpreted by other courts as a way to penalize attorney conduct that when "viewed objectively, manifests either intentional or reckless disregard of the attorney’s duties to the court."

In this case, the defendant argues that the plaintiff’s acts of extending the proceedings and then failing to respond to the defendant’s motion for summary judgment warrants a penalty in accordance with U.S.C. Section 1927. The defendant specifically sought to have its attorneys’ fees reimbursed for the time spent preparing the summary judgment motion, which they told the plaintiff’s attorney would be coming during the January 2016 mediation session.

The Court disagreed with the defendant about the conduct of the plaintiff’s attorney, saying the following:

"The Court does not find that plaintiff’s counsel acted with objectively unreasonable behavior and bad faith by not voluntarily dismissing the suit after mediation. Nor does the Court find that plaintiff vexatiously and unreasonably multiplied the proceedings under 28 U.S.C. § 1927. This is an FDCPA case that was resolved within thirteen months on defendant’s summary judgment motion. The case followed the usual course—the parties did not bicker over discovery, take depositions, or engage in voluminous motion practice. The Court has reviewed the filings and correspondence between the parties, and finds no intentional or reckless disregard of any attorney’s duties to the court."

The Court held that the failure to respond to the defendant’s motion for summary judgment "can be seen as a tacit admission that defendant’s summary judgment motion is meritorious, it does not amount to vexatious and unreasonable behavior," finding that an award of attorneys’ fees "would likely dampen the legitimate zeal of an attorney in representing his client."

insideARM Perspective

The case is again highlighting the financial burden for firms defending themselves against FDCPA litigation and the incredibly difficult challenge of getting a court to award attorneys' fees after successfully defending a case.

This case should be read in conjunction with Hamburger v. Northland Group, Inc. (U.S. District Court, M.D. Pa., Case No. 3:13-CV-01155), which insideARM covered in February 2016. In that case, the Court laid out a terrific argument for an award of attorneys' fees, yet failed to pull the trigger on an award.

The short observation: good luck convincing a judge to award attorneys' fees.