Case Information
UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA NANCY K. NATHANSON, Case (PJS/ECW) Plaintiff,
v. ORDER DIVERSIFIED ADJUSTMENT SERVICE,
INC., Minnesota corporation,
Defendant. Michael J. Sheridan, ATLAS LAW FIRM, plaintiff.
Michael A. Klutho Patrick D. Newman, BASSFORD REMELE, defendant.
Plaintiff Nancy Nathanson action on November alleging that defendant Adjustment Service, (“Diversified”) violated various provisions Fair Debt Collection Practices Act (“FDCPA”) attempted to collect from her violation automatic stay had been entered in her Chapter proceeding. A few months later, accepted Fed. R. Civ. P. offer judgment Diversified. The offer provided judgment would be entered favor against amount $1,001, plus an additional amount reasonable attorney’s fees costs. parties agreed that, if they could reach agreement amount costs, matter left Court. parties were unable agree, so matter is now before on
Nathanson’s motion attorney’s fees and costs. Nathanson seeks total $5,262.50. opposes Nathanson’s motion, arguing that “special circumstances” preclude any award attorney’s fees costs. Alternatively, argues even if an award altogether precluded, reasonable amount attorney’s fees would be $714.99. For reasons follow, grants motion awards total $4,960 attorney’s fees costs.
I. SPECIAL CIRCUMSTANCES
Generally, plaintiff who prevails an FDCPA claim entitled recover reasonable fees costs. 15 U.S.C. § 1692k(a)(3). [1] Some courts held, however, an exception applies “special circumstances render such an award unjust.” Peter v. Jax , 187 F.3d 829, 837 (8th Cir. 1999) (citation omitted) (indicating special circumstances exception exists under 42 U.S.C. § 1988—a different fee shifting statute); see Davis v. Credit Bureau S. , 908 F.3d 972, 976 (5th Cir. 2018) (stating special circumstances exception applies under FDCPA); Carroll v. Wolpoff & Abramson , F.3d 626, 628 (4th Cir. 1995) (same); Graziano v. Harrison , F.2d 107, (3d Cir. 1991) (same). “Special circumstances” render award unjust may be found when a plaintiff or her attorney acts bad faith. Davis , F.3d 78; Graziano F.2d at n.13. Diversified alleges—or least strongly implies—that attorney (Michael Sheridan) acted bad faith “manufacturing” lawsuit, thus that any or costs would be unjust. 10. Diversified’s allegations argument can summarized as follows:
Sheridan represented Nathanson her Chapter proceeding, which was initiated Sheridan filed petition various schedules her behalf. One those schedules (Schedule E/F) required Sheridan identify all unsecured creditors whom Nathanson owed money. That same schedule included section asked Sheridan identify any collection agency was attempting collect a debt from Nathanson. listed eight different collection agencies, but did list Diversified. This omission must been intentional, Diversified says, because knew very well Diversified was was attempting collect from Nathanson. fact, prior filing bankruptcy petition, had sent three letters Nathanson.
What motivated Sheridan? According Diversified, laying trap. By omitting schedule, ensuring Diversified receive notice had bankruptcy—and thus would not know that, because automatic stay, Diversified required to cease its collection efforts. Sheridan then waited until Diversified sent another collection letter to Nathanson, and, did, pounced—suing Diversified continuing to send collection letters to violation automatic stay Sheridan himself had concealed from Diversified. this way, manufactured an FDCPA claim against Diversified—part what alleges Sheridan’s “pattern practice” “ambush[ing]” collection agencies manner. 2.
At outset, notes if Diversified’s allegations were true—that is, if intentionally excluded (and other agencies) from schedules order manufacture FDCPA claims against them—the Court would only refuse costs Nathanson, but Court notify Lawyers Professional Responsibility Board conduct. But Diversified’s allegations do appear be true. Indeed, basis those allegations appears quite flimsy. first notes that, as best as can tell, Bankruptcy Code does not
actually require debtor identify every attempting collect her. And thus, although should identified every collection agency was attempting collect a from Nathanson, he did violate any law if intentionally omitted a of he was aware. (Whether he acted ethically a separate question.)
The also notes that, even if was trying manufacture FDCPA claim, Diversified could have protected itself from falling into his trap. First, Diversified could have required creditors on whose behalf it collects debts notify it of any bankruptcy notices. The creditor whose behalf Diversified was working in case (TRIA Orthopaedic Center (“TRIA”)) identified by Nathanson her Schedule E/F thus notified of Nathanson’s bankruptcy filing. TRIA could have notified of filing—and Diversified, its contract TRIA, could have obligated TRIA notify such filings (and indemnify any damages caused by breach obligation).
Second, itself could checked whether for bankruptcy before sending her letter. This is, after all, public information, easily obtained through computer search public records. (It took less than one minute find case searching her name PACER database. [3] ) Although Diversified attempts to characterize Sheridan’s failure to list it on Schedule E/F as setting a “trap[]” that inevitably caused it to violate the FDCPA, that simply not case. ECF No. 30 at 9.
More to point, though, does not believe Diversified has established Sheridan intentionally failed identify it as a collection on Schedule E/F in order manufacture an FDCPA claim. Diversified makes bold allegations against Sheridan, but provides little support those allegations. For example, while Diversified alleges has “a pattern practice” failing list collection agencies on his clients’ bankruptcy schedules in order manufacture FDCPA claims, Diversified offers only (1) fact Diversified left off of Nathanson’s schedule (2) a 32 cases represented an individual both a bankruptcy proceeding an FDCPA action.
As omission Diversified schedule: notes listed eight agencies on Nathanson’s Schedule E/F. ECF No. 1 at 24 25. If really engaged a scheme set “traps” “manufacture” FDCPA claims, one would think he would have listed any collection agencies. After all, someone who sets nine traps is more likely catch a mouse than someone who sets one.
As Sheridan’s alleged “pattern practice” of failing identify collection agencies: The fact Sheridan has—over period decade—represented a total of clients in both bankruptcy proceedings FDCPA cases provides little evidence has been using bankruptcy proceedings manufacture FDCPA claims. After all, there is great deal overlap between pool those who file for pool those who file FDCPA actions. more debts person accumulates, more likely person find herself both pools.
A closer look evidence Sheridan’s alleged misconduct reveals evidence even weaker than appears first glance. First, Diversified’s list cases includes multiple cases which did list collection agency later sued. Those cases undermine Diversified’s allegations. Second, Diversified’s list includes cases later sued did try to collect client before client bankruptcy. such cases, there been no way—or reason—for agency Schedule E/F. With respect most the other cases cited by Diversified, the simply cannot determine what knew or knew it. In these cases, usually listed some collection agencies in the bankruptcy paperwork, but did not particular collection agency that he later sued for violating the FDCPA. But there no way tell whether collection became involved trying collect debt client before client filed for bankruptcy. There no way tell whether knew any such pre ‐ filing attempt collect debt collection agency. [5]
(...continued)
Minn. Aug. 18, 2017) (defendant stating that it was assigned plaintiff’s debt July 2016, while plaintiff filed bankruptcy April 2016); Eide v. Colltech, Inc. , 12 ‐ CV ‐ (JRT/JJG), ECF No. 10 at 3 (D. Minn. Apr. 25, 2013) (defendant stating that was assigned plaintiff’s debt four months after filed bankruptcy); Peterson United Collection Bureau, , 11 ‐ ‐ 1284 (ADM/JJK), ECF No. 13 at 2 (D. Minn. Oct. 14, 2011) (defendant stating was assigned plaintiff’s same day she filed her petition).
[5] See, e.g. , In re Cohrs , 18 ‐ BK ‐ 42268, ECF No. 1 at 33 ‐ 34 (Bankr. D. Minn. filed July 13, 2018) (listing twelve collection entities, just not one was later sued); In re Kasprzak , 17 ‐ BK ‐ 40158, ECF No. 1 26 ‐ 28 (Bankr. D. Minn. filed Jan. 20, 2017) (listing nineteen collection entities, just one was later sued); In re McRaven III ‐ BK 43290, ECF (Bankr. D. Minn. filed Nov. 7, 2016) (listing nineteen entities, but only one two later sued); re Carlson BK ‐ (Bankr. D. Minn. Mar. (listing eighteen entities, just one later sued).
Diversified has identified only a single case which can conclude that may have failed a aware. [6] But even respect case, may simply made mistake. After all, Sheridan hardly be first attorney accidentally leave something off Chapter 7 schedule. sum, evidence submitted falls well short establishing that has engaged “pattern and practice” intentionally omitting collection
agencies schedules then later suing those agencies violating FDCPA. has therefore failed establish “special circumstances” justify denial motion costs. See Hatfield v. Hayes , F.2d 717, 720 (8th Cir. 1989) (discussing how “the ‘special circumstances’ exception” fee shifting statute “judicially created exception,” thus “should narrowly construed” (citation omitted)); see also De Jesús Nazario v. Morris Rodríguez F.3d (1st Cir. (same, making clear “‘the burden defendant’” establish exception applies (citation omitted)).
II. REASONABLE ATTORNEY’S FEES
Having found is entitled recover costs, must decide what amounts are reasonable this case. starting point for calculating reasonable fee lodestar—the number hours reasonably expended multiplied reasonable hourly rate . Pennsylvania v. Del. Valley Citizens’ Council Clean Air , 478 U.S. 546, 564 (1986). seems concede that $275 hourly rate reasonable, agrees. past couple of years, judges District approved similar hourly rates successful plaintiffs’ attorneys FDCPA cases. See, e.g. , Bell v. Am. Accounts & Advisers, Inc. , No. 18 ‐ CV ‐ 2474 (MJD/ECW), 2018 WL 6718573, at *3 ‐ 4 (D. Minn. Nov. 15, 2018) ($275 an hour), R&R adopted at 2019 WL 1405606 (D. Minn. Mar. 28, 2019); Price v. Midland Funding LLC , No. 18 ‐ CV ‐ 0509 (SRN/SER), 2018 WL 5259291, at *4 ‐ 5 (D. Minn. Oct. 22, 2018) ($400 an hour); Meidal v. Messerli & Kramer, P.A. , No. 18 ‐ CV ‐ 0985 (PAM/BRT), 2018 WL 4489693, at *2 (D. Minn. Sept. 19, 2018) ($300 an hour); Goetze v. CRA Collections, , No. ‐ CV ‐ (MJD/FLN), WL 5891693, *4 (D. Minn. Nov. 28, 2017) ($220 an hour); Kuntz v. Messerli & Kramer P.A. CV (JNE/BRT), WL 3332222, *2 ‐ 3 (D. Minn. Aug. 4, 2017) ($350 an hour); Iverson Greystone All., LLC (ADM/HB), WL *3 (D. Minn. Aug. ($250 $300 hour). takes issue the manner which recorded his time and the amount time devoted particular tasks. Broadly speaking, Diversified’s complaints pertain use block billing his charging administrative tasks other tasks regards as “unnecessary.”
Before addressing Diversified’s arguments, the Court emphasizes it does not duty—or usually ability—to closely scrutinize each entry time sheet an attorney who is seeking an award fees. As Supreme Court has explained, “trial courts need not, indeed should not, become green eyeshade accountants. The essential goal shifting fees (to either party) is do rough justice, achieve auditing perfection.” Fox Vice , U.S. (2011). this case, however, has submitted only entries document only 17.5 hours work. ECF 5. The Court has therefore examined each entries Diversified objected. begins noting that, as general matter, has no problem with
block billing—and, more importantly, neither does Eighth Circuit. See, e.g. Nassar v. Jackson F.3d (8th Cir. (holding district court did abuse its discretion declined reduce due time entries being block billed). As far as concerned, “block billing problematic only where hours billed multiple tasks appear[] excessive, or where billed time needs be eliminated for certain tasks . . . .” Washington v. Denney Civ. No. 2:14 cv ‐ NKL, WL 4399566, at *6 (W.D. Mo. Oct. 3, 2017) (citation omitted). Here, Sheridan’s block billing is problematic for the latter reason: Some his block entries include both “lawyer” tasks for he should be paid and “administrative” tasks for which he should paid, the fact he has block billed makes difficult for the Court separate two. Taylor City Amboy (PJS/TNL), WL *5 (D. Minn. Sept. (“Ordinarily, clerical tasks ‘cannot fairly be accounted for attorney’s, or even paralegal’s, billing rate.’” (citation omitted)). Court is concerned about most block entries mention administrative tasks, as likely administrative tasks took no more than a couple minutes. But there are two entries will adjust downward because they include administrative tasks:
First, Sheridan’s second time entry bills 1.6 hours for: Final review Fair Debt Collection Practices Act complaint exhibits; draft civil cover sheet; prepare complaint and exhibits for filing; file same; confer client re: next steps potential for settlement. (emphasis added). Given multiple administrative tasks this entry, finds 50% reduction warranted.
Second, third time entry, bills .3 hours strictly administrative tasks (specifically, preparing summons, complaint, exhibits service of process, searching for the proper address to serve, and conferring with the process server). id. The Court will thus reduce Sheridan’s time by .3 hours.
In total, then, the Court finds 1.1 hours should deducted Sheridan’s time sheet for administrative tasks. Although complains about some other hours expended by believes were excessive or unnecessary— specifically, the amount time spent drafting the complaint, and his drafting an eight page letter Diversified’s attorneys—the Court finds these hours and tasks be reasonable. As drafting complaint, spent total 3.6 hours reviewing his client’s file, drafting five page complaint, putting together complaint’s two corresponding exhibits, conferring his client about case and potential settlement, giving complaint exhibits final review. See ECF 3. The Court does find this unreasonable. As eight page letter wrote Diversified’s attorneys, complains “[t]here no good reason ” draft letter. 14. disagrees. was attempting promote settlement refuting various arguments had been made by Diversified. This reasonable use time. sum, finds 16.4 hours were reasonably expended this
litigation $275 reasonable hourly rate Sheridan. entitled $4,510 $450 costs.
ORDER
Based foregoing, on all files, records, proceedings herein, IT IS HEREBY ORDERED THAT:
1. motion attorney’s fees [ECF 15] GRANTED IN PART AND DENIED IN PART.
2. awarded $4,510 $450 costs, a total $4,960.
Dated: September s/Patrick J. Schiltz Patrick J. Schiltz
United States District Judge
[1] Camacho v. Bridgeport Fin., F.3d (9th Cir. 2008) (“The FDCPA’s statutory language makes mandatory.” (citation omitted)); Tolentino Friedman F.3d (7th Cir. (same).
[2] U.S.C. § 521(a)(1)(A) (requiring debtor file “a creditors ” (continued...)
[2] (...continued) (emphasis added)); see (letter Association Credit and Collection Professionals stating § 521(a)(1)(A) should amended require debtors to—in addition filing creditors —also file list known third party debt collectors ).
[3] Diversified contracts third party vendor run “bankruptcy scrub”—i.e., search court records determine if an individual has for bankruptcy—when first assigned account collection. ECF No. at 8; ECF No. at ¶ 5. claims ran such “bankruptcy scrub” Nathanson. See ECF 8; ECF No. at ¶ 6. But does run new “bankruptcy scrub” before sending each new letter. ¶¶ 7. Diversified claims doing “not [be] reasonable,” id. ¶ but does explain why.
[4] See, e.g. Engelby I.C. Sys., (PJS/FLN), (D. (continued...)
[6] Robinson Creditor Advocates, (SRN/LIB), ¶¶ (D. Minn. Mar. 2015).