Mitchell v. Allied Interstate, Inc.

[David A. Szwak]

Mitchell v. Allied Interstate, Inc.,
Not Reported in F.Supp.2d, 1999 WL 1100961, N.D.Ill., Dec 02, 1999

United States District Court, N.D. Illinois, Eastern Division.
Eric D. MITCHELL, Individually and on Behalf of All Others Similarly Situated,
Plaintiff,
v.
ALLIED INTERSTATE, INC., a Minnesota Corporation, Defendant.
No. 97 C 7177.
Dec. 2, 1999.


MEMORANDUM OPINION AND ORDER

LEINENWEBER, J.
*1 The motion before the court is the Motion of the Class for an Award of Attorneys' Fees and Expenses.

BACKGROUND
On September 14, 1999, the court ordered that the defendant's objections to the plaintiffs' fee request would be barred because of the defendant's non-compliance with Local Rule 47. As the defendant has been barred from objecting to the fee request, the court will rule on the fee petition without the benefit of a defendant's response.
The underlying case is a class action alleging violation of the Fair Debt Collection Practices Act (the "FDCPA") by the defendant. The plaintiffs alleged that certain form collection letters sent out by the defendant violated the FDCPA. There are 174 members of the class as well as one individual plaintiff serving as the class representative. The case was resolved through a settlement agreement. Pursuant to the settlement agreement, the defendant agreed to modify the form collection letters so that the letters would comply with the FDCPA. The settlement agreement noted that the defendant denies that it ever violated the FDCPA. The class representative was awarded $1,000.00 under the agreement. One thousand dollars is the maximum statutory damages recoverable by an individual plaintiff under Section 1692k of the FDCPA. Each member of the class was awarded $150.00. Under Section 1692k, the maximum statutory damages recoverable by a class is the lesser of one percent of the defendant's net worth or $500,000.00. The maximum statutory damages recoverable in this case was $184.00 for each member of the Class. The total monetary damages recovered were approximately $27,100.00, computed as follows: $150.00 multiplied by 174 equals $26,100.00, plus $1,000.00 equals $27,100.00.
The plaintiffs were represented by the law firm of Beeler, Schad & Diamond, P.C. The plaintiffs request a total award of $110,355.00, broken down as follows: $98,672.00 in attorneys' fees and $11,683.00 in expenses. Plaintiffs' counsel asserts that an additional $6,000.00 in fees were eliminated from their request because those fees reflected hours incurred for clerical matters, work that could have been handled more efficiently, and work that was solely related to claims against dismissed defendant Education Credit Management Corporation.

DISCUSSION
The award of a reasonable attorney's fee is mandatory where a plaintiff brings a successful action under the FDCPA. Zagorski v. Midwest Billing Services, Incorporated, 128 F.3d 1164, 1166 (7th Cir.1997). Under the settlement agreement the defendant did not admit that it violated the FDCPA. Nevertheless, as the plaintiffs obtained $27,100.00 in damages as well as an agreement by the defendant to modify its form letter, the court finds that the plaintiff did bring a successful action under the FDCPA. Cf. Hensley v. Eckerhart, 103 S.Ct. 1933, 1939 (1983). The plaintiffs are therefore entitled to a reasonable attorney's fee.
The Seventh Circuit has held that in determining a reasonable attorney's fee for an FDCPA plaintiff, the court should use the methodology set out in Hensley v. Eckerhart, 103 S.Ct. 1933 (1983). Zagorski at 1166. "The 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 at 1939. Here the plaintiffs have submitted the following hourly rates:
*2 $240.00 for the one partner who worked on the case;
$160.00 for mid-level associate time;
$130.00 for junior associate time;
$80.00-95.00 for paralegal time; and
$30.00 for paralegal assistant time.
David J. Philipps, a partner at Beeler, Schad and lead counsel for the plaintiffs, asserts in an affidavit that these rates are the same rates normally charged by Beeler, Schad for both hourly and contingent fee cases. The court finds that these hourly rates are reasonable. See Tolentino v. Friedman, 46 F.3d 645, 653 (7th Cir.1995) (counsel in FDCPA cases should be paid at the same rate as what they could obtain in the marketplace).
The plaintiffs have also submitted time records showing a total of 590.4 hours spent on the case. The work performed by plaintiffs' counsel included the following: interviewing the client; analyzing the facts of the case; drafting the complaint; preparing discovery against the defendant and against non-party witnesses; enforcing discovery, including the drafting of two motions to compel; taking numerous out-of-state depositions; researching the defendant's "collection on behalf of a government agency" defense; briefing a motion for class certification; drafting a notice of certification to be sent to the Class; briefing a summary judgment motion; negotiating a settlement; drafting the settlement documents; administering the settlement; and litigating the fee issue, including drafting the motion now before the court.
The potential recovery in this case was relatively modest. Because of the statutory maximums, plaintiffs' counsel could have easily determined the potential maximum recovery as soon as they had determined the defendant's net worth and the number of individuals in the class. As there are 174 class members and a $184-per-member maximum award, the largest amount that the plaintiffs could have recovered was $32,016.00 for the class plus $1,000.00 for the individual plaintiff for a total of $33,016.00. Although plaintiff's counsel would not initially have been aware that the class would contain only 174 members, plaintiff's counsel should have known from the beginning that this was not going to be a multi-million-dollar case. The court finds that 590.4 hours of lawyer and paralegal time is more than what should have been reasonably spent on a case where the potential maximum recovery was only $33,016.00. Cf. Lenard v. Argento, 808 F.2d 1242, 1248 (7th Cir.1987) ("When a personal-injury lawyer takes on a tort case that he reasonably thinks is worth $250,000, he doesn't put in 3,000 hours on the case; a 33 or 40 or even 50 percent contingent fee will not remunerate him for that amount of time."). The plaintiffs could taken fewer out-of-state depositions, which would have saved not only attorney-hours but also travel costs. The plaintiffs could also have negotiated a settlement earlier in the litigation, perhaps prior to drafting the summary judgment motion.
*3 Rather than going through plaintiff counsel's time records and making "nickel-and-dime" reductions to individual time entries, the court will make an overall adjustment to the lodestar to reflect the reduction in hours to a reasonable level. The plaintiffs' suggested attorneys fee is $98,672.00, which was computed by multiplying the various billing rates of Beeler, Schad's lawyers and paralegals by the fraction of 590.4 hours billed by each person. Adding the costs, totaling $11,683.00, equals a suggested lodestar of $110,355.00. The court finds that this number should be reduced to $80,000.00 to reflect the reduction in hours to a reasonable level.
The calculation of the lodestar "does not end the inquiry. There remain other considerations that may lead the district court to adjust the fee upward or downward, including the important factor of the 'results obtained." ' Hensley at 1940. The "most critical factor in determining the reasonableness of a fee award is the degree of success obtained." Tolentino v. Friedman, 46 F.3d 645, 652 (7th Cir.1995).
The plaintiffs achieved a high degree of success. The plaintiffs obtained the maximum statutory damages recoverable for an individual plaintiff and close to the maximum statutory damages recoverable for class members. Where a plaintiff achieves maximum statutory damages under the FDCPA, the plaintiff has obtained a high degree of success. Tolentino at 653. In addition, the defendant agreed to modify its form letter. This external benefit, i.e., a benefit not enjoyed by the plaintiffs themselves, warrants a fee greater than what might be justified by the damage award alone. Lenard v. Argento, 808 F.2d 1242, 1248 (7th Cir.1987). The court therefore finds that the plaintiffs' high degree of success precludes any reduction in the lodestar. The court further finds that there is no other factor present which would justify an upward or downward adjustment to the lodestar. See Tolentino at 652 (listing factors to be considered).

CONCLUSION
Therefore, for the foregoing reasons, the Motion of the Class for an Award of Attorney's Fees and Expenses is GRANTED in the amount of $80,000.00.
IT IS SO ORDERED.
N.D.Ill.,1999.
Mitchell v. Allied Interstate, Inc.
Not Reported in F.Supp.2d, 1999 WL 1100961 (N.D.Ill.)