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Lloyd v. Credit Systems International, Inc.

United States District Court, N.D. Illinois, Eastern Division

October 21, 2019

CYNTHIA LLOYD, Plaintiff,
v.
CREDIT SERVICES INTERNATIONAL, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          Harry D. Leinenweber, Judge.

         Plaintiff's Petition for Attorneys' Fees and Costs (Dkt. No. 41) is granted in part and denied in part: Plaintiff is entitled to $9, 826.73 in attorneys' fees and $400.00 in costs.

         I. BACKGROUND

         Plaintiff Cynthia Lloyd commenced this action in June 2018, alleging that Defendant Credit Systems International, Inc., a debt collector, violated the FDCPA. The Court denied the parties' Cross-Motions for Summary Judgment in May 2019. (See Order, Dkt. No. 38). The parties agreed to settle Plaintiff's claims on June 12, 2019, and thereafter jointly stipulated to dismiss the action. (See Joint Dismissal, Dkt. No. 47.) Plaintiff accepted Defendant's settlement offer of $1, 000.00 (the maximum statutory damages for an individual plaintiff under the FDCPA, see 15 U.S.C. § 1692k(a)), with attorneys' fees and costs to be determined by the Court. Plaintiff now seeks $30, 285.77 in attorneys' fees and $1, 845.44 in costs.

         II. STANDARD

         The touchstone for a district court's calculation of attorney's fees is the lodestar method, a court calculates by multiplying a reasonable hourly rate by the number of hours reasonably expended. Gastineau v. Wright, 592 F.3d 747, 748 (7th Cir. 2010) (citing Hensley v. Eckerhart, 461 U.S. 424, 433-37 (1983)). If necessary, the Court has the flexibility to “adjust that figure to reflect various factors including the complexity of the legal issues involved, the degree of success obtained, and the public interest advanced by the litigation.” Id. The Court must assess “whether the fees are reasonable in relation to the difficulty, stakes, and outcome of the case.” Id.

         III. DISCUSSION

         A. Attorneys' Fees

         The Court will first evaluate whether Plaintiffs' attorneys' hourly rates are reasonable, and then determine whether the number of hours they expended is reasonable. In determining the appropriate hourly rate, the Court considers, among other factors, the market rate for the services rendered, Denius v. Dunlap, 330 F.3d 919, 930 (7th Cir. 2003), the “attorney's actual billing rate for similar litigation, ” and rates that are “in line with those prevailing in the community.” Pickett v. Sheridan Health Care Ctr., 664 F.3d 632, 640 (7th Cir. 2011). Because the FDCPA is a fee-shifting statute, billing rates can be difficult to determine, as plaintiffs' attorneys rarely bill their clients directly for FDCPA cases. In these circumstances, courts look to the “‘next best evidence' of an attorney's market rate, namely ‘evidence of rates similarly experienced attorneys in the community charge paying clients for similar work and evidence of fee awards the attorney has received in similar cases.'” Id. at 640 (quoting Spegon v. Catholic Bishop of Chicago, 175 F.3d 544, 555 (7th Cir. 1999)).

         Plaintiff seeks the following rates for her three attorneys: $450 for Andrew Finko, $372 for Michael Wood, and $335 for Celetha Chatman. However, these rates are higher than what courts in this district have approved for these attorneys. The Court approves a $415 rate for Finko, as other courts in this district have recently approved that reasonable rate. See Rhone v. Medical Business Bureau, LLC, No. 16-cv-5215, Order at 3 (N.D. Ill. April 27, 2018); Evans v. Portfolio Recovery Assocs., LLC, No. 15 C 4498, 2017 WL 2973441, at *3 (N.D. Ill. July 12, 2017). A $352 rate for Wood, and a $315 rate for Chatman, are appropriate for the same reason. See Rhone, Order at 3 (setting $352 rate for Wood); Chatman v. Stellar Recovery, Inc., No. 16 C 833, 2017 WL 951246, at *2 (N.D. Ill. Mar. 10, 2017) (setting $315 rate for Chatman on services rendered post-May 2016).

         In this case, determining the appropriate number of hours is more complex than setting the rate. Defendant asserts that the Court must deny any attorneys' fees that Plaintiff incurred after September 21, 2018, the date that Defendant tendered an Offer of Judgment under Federal Rule of Civil Procedure 68. On that date, Defendant offered judgment “in favor of Plaintiff” in the amount of $1, 001 plus reasonable attorneys' fees and taxable costs “incurred in this action prior to expiration of this offer, such fees and costs to be determined by agreement of the parties and, if the parties cannot agree, by the Court upon Motion of the Plaintiff.” (Offer of Judgment, Ex. A to Def.'s Resp., Dkt. No. 44-1.) Plaintiff did not accept the offer, and it expired on October 5, 2018. See Fed. R. Civ. P. 68.

         An offer of judgment pursuant to Rule 68 “limits a plaintiff's ability to recover costs incurred after the date of the offer.” Paz v. Portfolio Recovery Assocs., LLC, 924 F.3d 949, 953 (7th Cir. 2019); see also Fed. R. Civ. P. 68(d) (“If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.”). The rule's purpose is to encourage settlement and to discourage protracted litigation. Sanchez v. Prudential Pizza, Inc., 709 F.3d 689, 691 (7th Cir. 2013). The Rule's limit on a plaintiff's recovery of costs often limits the recovery of attorneys' fees in fee-shifting cases. Paz, 924 F.3d at 953. Rule 68 incorporates the definition of “costs” from the relevant fee-shifting statute, and therefore cuts off recoverable attorneys' fees after a Rule 68 offer when the statute defines “costs” to include attorneys' fees. Paz, 924 F.3d at 953 (7th Cir. 2019) (citing Marek v. Chesny, 473 U.S. 1, 9 n.2 (1985)). However, in setting forth the damages to which a plaintiff in a “successful action” is entitled, the FDCPA separates costs and attorneys' fees. See 15 U.S.C. § 1692k(a)(3). Therefore, a prevailing party in an FDCPA action is entitled to attorneys' fees notwithstanding Rule 68. Paz, 924 F.3d at 953. Because Plaintiff was successful in obtaining judgment against Defendant, she is entitled to reasonable attorneys' fees under the FDCPA.

         However, even when Rule 68 does not operate to bar the recovery of attorneys' fees after an offer of judgment, a district court must consider a substantial settlement offer as a factor in determining whether a fee award is reasonable. Moriarty v. Svec, 233 F.3d 955, 967 (7th Cir. 2000). Fees “accumulated after a party rejects a substantial offer provide minimal benefit to the prevailing party, and thus a reasonable attorney's fee may be less than the lodestar calculation.” Id. (citing Marek, 473 U.S. at 11). An offer is “substantial” if “the offered amount appears to be roughly equal to or more than the total damages recovered by the prevailing party.” Moriarty, 233 F.3d at 967. In such circumstances, a district court “should reflect on whether to award only a percentage (including zero percent) of the attorney's fees that were incurred after the date of the settlement offer.” Id.

         In Paz v. Portfolio Recovery Assocs., LLC, 924 F.3d 949 (7th Cir. 2019), the Seventh Circuit considered whether a plaintiff was entitled to recover attorneys' fees after rejecting a Rule 68 offer that contained similar language as in the offer that Plaintiff rejected. In Paz, an FDCPA defendant offered: judgment to be entered in favor of the plaintiff, not to be construed as an admission of liability by defendant, $3, 501 for the plaintiff, and “reasonable attorneys' fees and costs through the date of acceptance of the offer in an amount agreed upon by the parties, or (as necessary) by the district court.” Paz, 924 F.3d at 952. The plaintiff rejected this offer, proceeded to trial, and ultimately obtained the maximum $1, 000 in statutory damages. Id. at 953. Plaintiff then sought to recover $187, 410 in attorneys' fees and $2, 744 in costs under 15 U.S.C. § 1692k(a)(3). The district court concluded that the many hours plaintiff's counsel spent on the case after the Rule 68 offer were unreasonable and awarded only $10, 875 in attorneys' fees. The district court awarded the plaintiff $436 in costs as the prevailing party under Rule 54, and awarded the defendant $3, 064 in costs, representing the expenses the defendant incurred after the date of its Rule 68 offer. The Seventh Circuit affirmed these rulings. Id. at 955-56. The plaintiff argued on appeal that the Rule 68 offer was not “substantial” under ...


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