U.S. Fifth Circuit Affirms Rejection of Attorney’s Fee Award to Prevailing Party Where Litigation Appeared Manufactured to Generate Fees

Steve Herman - April 10, 2019

The prevailing plaintiff in a FDCPA action appealed the denial of her petition for attorney’s fees, arguing that the fee-shifting provision in the statute awarding fees to the prevailing party is mandatory.  Yet, based on “the outrageous facts in this case” including the conduct of the plaintiff’s attorneys, the U.S. Fifth Circuit affirmed.

On cross-motions for summary judgment in the FDCPA action, the district court granted summary judgment, in part, in favor of the plaintiff, and awarded her $1,000 in statutory damages.  A subsequent petition for attorneys’ fees was referred to the Magistrate Judge, who denied the petition in its entirety, on the following basis: “It appears that this cause of action was created by counsel for the purpose of generating, in counsel’s own words, an ‘incredibly high’ fee request. While Defendant has been found to have committed a violation of the FDCPA, which ordinarily justifies an award of fees as a disincentive to future similar conduct, the Court is even more concerned about disincentivizing the conduct of Plaintiff’s counsel.”  As further support of his decision, the magistrate judge discussed, inter alia, that the collusion between Davis and her counsel essentially created her claim. Additionally, the magistrate judge explained that the court was “stunned” by Davis’ request for $130,000 in attorney’s fees, noting that there were substantial duplicative and excessive fees charged by Plaintiff’s multiple counsel; the case was simple with a Fifth Circuit case on point and was disposed of on summary judgment; and the number of hours (nearly 300 hours), as well as the hourly rate of $450 demanded by Plaintiff’s counsel, was “excessive by orders of magnitude.”

The District Court, and the Court of Appeals, affirmed.

“As an initial matter, we join the magistrate judge’s stunned reaction to Davis’ request for $130,000 in attorneys’ fees and concur that ‘the record reflects neither the quality of legal work necessary for the requested hourly billing rate ($450.00 per hour), nor the quantity of work to support the 156.55 hours claimed by Jonathan Raburn and the 133.25 hours claimed by Dennis McCarty.’ The pleadings filed by McCarty and Raburn, including the brief on appeal, are replete with grammatical errors, formatting issues, and improper citations, and is certainly not the caliber of work warranting such an extraordinary hourly rate.”

As to the legal question, the Court of Appeal noted that, while unaware of a previous Fifth Circuit decision with special circumstances warranting the denial of attorney’s fees in an FDCPA action, the Court has acknowledged that “special circumstances” can justify a decision not to award fees in similar contexts.

In this particular case, the Plaintiff retained Jonathan Raburn in April 2015, a date prior to the Defendant’s alleged FDCPA violations, and worked for the Raburn Law Firm in the summer of 2015.  “Certainly the appearance is that she had the water bill mailed to Texas for the purpose of generating this cause of action. It just seems suspicious to me that while employed by the law firm she asks for this Shreveport bill to be mailed to Texas and now files a lawsuit based upon that mailing. Additionally, Davis admits that the phone call she made from Shreveport to CBOTS on September 22, 2015, which was one of at least three calls wherein she asked the same questions, was recorded using the Raburn Law Firm’s recorder, and was apparently made in the presence of her attorney. Raburn’s involvement in the recorded phone call — conduct at the center of this case — arguably made him a fact witness, potentially disqualifying him from representing Davis. Although Davis is correct that CBOTS failed to raise the disqualification argument at the district level and thus waives it here, CBOTS nevertheless asserted, and the district court considered, allegations of collusion between Davis and her counsel. Such allegations are relevant to the consideration of the conduct of Davis’ counsel and the special circumstances inquiry.”

“Although complete denial of otherwise generally mandatory attorney’s fees is a rare and drastic sanction, the outrageous facts in this case suggest that the district court did not abuse its discretion in determining that Davis was not entitled to attorney’s fees, or that the reasonable attorney’s fee was $0.”

Davis v. Credit Bureau of the South, 908 F.3d 972 (5th Cir. 2018).