Appeals Court Vacates Attorney’s Fees Award, Overturns Sanctions in FDCPA Case

In separate rulings tied to the same parties in two Fair Debt Collection Practices Act lawsuits, the Seventh Circuit Court of Appeals on Friday vacated a District Court’s award of attorney’s fees that were significantly lower than what the plaintiff’s attorneys had requested and overturned sanctions that were impost against the plaintiff’s attorneys.

Copies of the rulings in the cases of Cooper v. Retrieval-Masters Creditors Bureau (Cooper I) and Cooper v. Retrieval-Masters Creditors Bureau (Cooper II) can be accessed by clicking here and here.

In Cooper I, a District Court judge reduced the fees awarded to the plaintiff’s attorneys to $8,000 from their original request of $66,000, ruling that the plaintiff’s decision to not accept a settlement offer which was nine times higher than what a jury ultimately awarded entitled the attorneys to fees covering their work only to the point where the settlement offer was rejected. The judge ruled that the hours worked after the settlement offer was rejected were unreasonable.

But because the settlement offer was only made orally, and the plaintiff was not given time to consider the offer, the District Court judge misapplied existing precedent, the Appeals Court ruled. If the offer had been made in writing and the plaintiff then rejected it, “we would understand that denial of all post‐offer fees to be an appropriate exercise of discretion,” the Appeals Court wrote. “This provision of reasonable attorney fees under the FDCPA is particularly important for plaintiffs like Cooper, who recovered only $500 in statutory damages but incurred thousands of dollars in fees and costs. Congress’s goal of using attorney fee awards as an incentive for plaintiffs to bring actions enforcing the rights of the public, like those under the FDCPA, is greatly undermined if courts apply a strict proportionality analysis that fails to account for the remedial policies that such fee awards to private attorneys general are designed to promote.”

In Cooper II, the plaintiff filed a second lawsuit against the defendant asserting additional violations arising from the same debt that was the subject of Cooper I. A District Court judge dismissed the case, ruling that the new claims were improperly split from Cooper I, while also sanctioning the plaintiff’s attorneys for filing a misleading complaint and engaging in a pattern of improper litigation practices. The District Court judge ordered the plaintiff’s attorneys to pay $7,800 — which equaled the amount of attorney fees and costs that were awarded to the plaintiff in Cooper I. The District Court judge said the plaintiff’s attorneys included misleading allegations in the complaint, engaged in a regular practice of claim splitting, and consistently failed to follow procedures for identifying related cases.

The Appeals Court ruled that the lower court misconstrued deposition testimony given by the plaintiff and “read too much into the testimony and complaint,” while also determining that the claim splitting allegations were unfounded, and any failure by the plaintiff’s attorneys to not follow proper procedure did not justify imposing monetary sanctions.

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