Jean Schlacher v. Law Offices of Phillip J. Rotc

In the
United States Court of Appeals
For the Seventh Circuit
No. 08-4267
JEAN S CHLACHER, et al.,
Plaintiffs-Appellants,
v.
L AW O FFICES OF P HILLIP J. R OTCHE & A SSOCIATES, P.C.,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 1:08-cv-02844—Milton I. Shadur, Judge.
A RGUED JULY 8, 2009—D ECIDED A UGUST 3, 2009
Before R OVNER, W OOD , and W ILLIAMS, Circuit Judges.
W ILLIAMS, Circuit Judge. Plaintiffs Jean, Alfred, and Teri
Schlacher sued the defendant, a debt-collection law
firm, for violating the Fair Debt Collection Practices Act,
15 U.S.C. § 1692, and, within three months of filing their
complaint, they accepted offers of judgment totaling
$6,500. The plaintiffs, who were represented by four
attorneys from three different law firms, sought
attorney’s fees of $12,495 and costs of $437.70. The
2 No. 08-4267
district court awarded $6,500 in fees and costs, explaining
that the unnecessary use of multiple attorneys had led
to excessive billing in a straightforward, short-lived case.
We affirm.
I. BACKGROUND
After Jean Schlacher was delinquent on a payment for
a root canal, her dentist, represented by the Law Offices of
Phillip J. Rotche, sued Jean and her husband, Alfred,
in state court. Judgment was entered for the dentist,
and the Schlachers were required to make monthly pay-
ments of $14 until the remaining debt was paid. When
they were late on their first payment, Jean received a
harassing phone call from an employee of Rotche’s, who
accused her of being “retarded” and led her to believe
that she would be jailed for failing to make the payment.
Jean’s daughter, Teri, called Rotche’s office hoping to
assuage her mother’s fears, and the same employee
threatened to report her to the police, recorded the con-
versation without her knowledge, and followed up with
a threatening letter.
Hoping to halt these abusive collection practices, the
Schlachers sought legal assistance and were rejected
by more than half a dozen attorneys before re-
taining Colleen McLaughlin, who specializes in labor
and employment law and consumer-contract disputes.
McLaughlin recognized that the Schlachers had a
claim under the Fair Debt Collection Practices Act
(“FDCPA”), 15 U.S.C. § 1692, but, because the statute of
No. 08-4267 3
limitations was about to expire and her caseload was
heavy, she enlisted Dmitry Feofanov, a consumer-protec-
tion attorney, who, in turn, contacted Curtis Warner,
an FDCPA specialist. With a fourth lawyer (an associate
of McLaughlin’s), they together investigated the case
and filed suit. Within three months, and before any
discovery, the plaintiffs accepted offers of judgment from
the defendant totaling $6,500: $1,000 (the statutory maxi-
mum, see 15 U.S.C. § 1692k(a)(2)) to each plaintiff, plus an
additional $3,000 to Jean, and $500 to Teri, for actual
damages.
After the parties’ efforts to negotiate a reasonable
award of attorney’s fees were unsuccessful, the plaintiffs
moved to compel the defendant to produce its own
billing records. See N.D. ILL. L OCAL R. 54.3(d)(5). The
district court denied the motion because the case settled
too early for the defendant’s billing to be relevant. At a
hearing on the motion, the court explained its approach
to the anticipated fee petition in this case. First, it observed
that the lawsuit was resolved “in just a couple of months,”
and that the involvement of multiple attorneys here
necessarily created “a substantial amount of overlap.”
Viewing the case as a “one-lawyer lawsuit,” the court
warned the plaintiffs that it would ask “[w]hat kind of
time would have been spent” by one competent lawyer.
That, the court concluded, would be “the measure of
what reasonable is in terms of time.”
The plaintiffs filed a fee petition seeking $437.70 in
costs and $12,495 in attorney’s fees for 41.6 hours of
work, divided as follows:
4 No. 08-4267
Attorney Hourly Hours Total
Rate Fees 1
Curtis Warner $260/285 2 20.9/1.6 $5,899
Dmitry Feofanov $375 4.7 $1,762.50
Law Offices of Colleen
McLaughlin:
~Colleen McLaughlin $425 8.7 $3,697.50
~Elissa Hobfoll (third- $250 3.7 $925
year associate)
~Paralegal $100 2 $200
They supported the requested rates with their own declara-
tions of market rates, copies of retainer agreements
with other clients, and other evidence, but, with the
exception of Warner (the FDCPA specialist), none of the
attorneys presented evidence that they had received
1
This chart reflects the breakdown that plaintiffs presented
to the district court, but their math was shoddy. They repre-
sented Warner’s total fees as $5,899, but we calculate $5,890,
and, although they calculated the total fees from McLaughlin’s
office as $4,833.50, the figure should be $4,822.50. Thus, the
total fees requested should have been $12,475.
2
Warner increased his billing rate during the course of the
litigation.
No. 08-4267 5
their proffered rate in an FDCPA case. The four lawyers
billed for time that they all spent investigating and re-
searching the plaintiffs’ claims, drafting the complaint,
filing and arguing a motion to strike one of the
defendant’s affirmative defenses, researching legal issues
related to the offers of judgment, and performing legal
research in response to the defendant’s threat to move to
strike the acceptances and seek sanctions against the
plaintiffs.
The defendant made detailed objections to both the
rates and the hours billed. It did not contest the costs of
$437.70 or the two hours of paralegal work, but asserted
that the attorney rates were unreasonable and proposed
instead a $250/hour rate for McLaughlin, Feofanov, and
Warner, and $195/hour for Hobfoll. The defendant also
objected to the hours requested for the attorneys as ex-
cessive and identified 16.2 of the 39.6 hours that it
believed were unnecessary or duplicative. Specifically,
the defendant identified several instances in which
McLaughlin and Warner had billed for the same task,
multiple billing entries for internal communication, and
billing entries for research that was either premature
or unrelated to the plaintiffs’ FDCPA claims. They thus
offered to pay $5,885 in fees and $437.70 in costs, for a
total of $6,322.70.
At the hearing on the fee petition, the court reiterated
its view that the case was “essentially a one-lawyer law-
suit.” While acknowledging the possible efficiencies of
using multiple lawyers in some cases, the court explained
that, in this case, “the multiplication of time that was
6 No. 08-4267
involved by the fact of the multiplication of counsel just
does not justify the kind of request that’s involved here.”
Evidently because only Warner was an FDCPA specialist,
the court also was troubled by the apparent “training
on the job” in the case. Further, the court was critical of
McLaughlin and Feofanov for not relinquishing the
case entirely to Warner, explaining that “it doesn’t make
a lot of sense for a $500-an-hour lawyer to do work that
might be performed by a $200-an-hour lawyer.” After
defense counsel asserted that a reasonable award for fees
would be around $6,400, the court noted that the pro-
posed figure was “coincidentally” almost equivalent to
the amount recovered by the plaintiffs and concluded,
“It seems to me that a figure that roughly equates to
what the plaintiffs themselves recovered seems more
reasonable.” The district court then sustained the defen-
dant’s objections to the petition and awarded $6,500
for attorney’s fees and costs to be divided among counsel
as they saw fit.
II. ANALYSIS
Plaintiffs who prevail under the Fair Debt Collection
Practices Act are entitled to an award of costs and rea-
sonable attorney’s fees. 15 U.S.C. § 1692k(a)(3); Tolentino
v. Friedman, 46 F.3d 645, 651 (7th Cir. 1995). Although
there is no precise formula for determining a reasonable
fee, the district court generally begins by calculating the
lodestar—the attorney’s reasonable hourly rate multiplied
by the number of hours reasonably expended. Hensley
No. 08-4267 7
v. Eckerhart, 461 U.S. 424, 433-37 (1983); Gautreaux v. Chi.
Hous. Auth., 491 F.3d 649, 659 (7th Cir. 2007). The district
court may then adjust that figure to reflect various
factors including the complexity of the legal issues in-
volved, the degree of success obtained, and the public
interest advanced by the litigation. Connolly v. Nat’l Sch.
Bus Serv., Inc., 177 F.3d 593, 597 (7th Cir. 1999); Strange v.
Monogram Credit Card Bank of Ga., 129 F.3d 943, 946 (7th Cir.
1997). The district court must provide a clear and concise
explanation for its award, and may not “eyeball” and
decrease the fee by an arbitrary percentage because of a
visceral reaction that the request is excessive. Small v.
Richard Wolf Med. Instruments Corp., 264 F.3d 702, 708
(7th Cir. 2001); In re Cont’l Ill. Sec. Litig., 962 F.2d 566, 570
(7th Cir. 1992). In light of the district court’s greater
familiarity with the litigation, we review an award of
attorney’s fees under a highly deferential abuse-of-discre-
tion standard. Spegon v. Catholic Bishop of Chi., 175 F.3d
544, 550 (7th Cir. 1999).
On appeal, the plaintiffs argue first that the district
court abused its discretion when it concluded that “a figure
that roughly equates to what the plaintiffs themselves
recovered seems reasonable.” As the plaintiffs point out,
we have cautioned that fee awards “should not be
linked mechanically to a plaintiff’s award,” Eddleman v.
Switchcraft, Inc., 927 F.2d 316, 318 (7th Cir. 1991), and
that “[i]t cannot be the case that the prevailing party can
never have a fee award that is greater than the damages
award,” Deicher v. City of Evansville, 545 F.3d 537, 546 (7th
Cir. 2008). Thus, the plaintiffs argue, the district court
8 No. 08-4267
committed an error of law in awarding a fee that was
directly proportional to their damages recovery.
The plaintiffs’ argument, however, is persuasive only
when the district court’s comment is read out of context.
The court did not settle on a $6,500 fee award simply
because it mirrored the plaintiffs’ damages. Instead, the
court explained repeatedly that it was reducing the re-
quested fee because the collaboration among four attor-
neys had inevitably led to duplicative work and excessive
billing. Further, although the court observed that a fee
award roughly equivalent to the plaintiffs’ damages
recovery seemed reasonable, it explained that the figures
were only “coincidentally” equivalent. And, in any event,
we have explained that, although there is no rule
requiring proportionality between damages and
attorney’s fees, a district court may consider proportional-
ity as one factor in determining a reasonable fee.
Moriarty v. Svec, 233 F.3d 955, 967-68 (7th Cir. 2000).
The plaintiffs next challenge the $6,500 fee award
because the district court did not specifically enunciate the
hourly rates or number of hours it had used to calculate
that figure or specify a lodestar amount. A district court
facilitates appellate review by making specific findings
en route to a fee calculation, and therefore we have re-
versed when we could not discern whether the district
court arrived at its fee award by using the proper fac-
tors. See Eddleman, 927 F.2d at 317-20. But we need not
automatically reverse a fee award in the absence of
explicit findings about rates and hours. See Small, 264
No. 08-4267 9
F.3d at 709 (approving fee award lacking “detailed expla-
nation” where district court simply accepted defendant’s
objections to billed time); Henry v. Webermeier, 738 F.2d 188,
193 (7th Cir. 1984) (explaining that there is no “Procrustean
bed to which every fee proceeding must be fitted despite
its actual dimensions”). When substantial fees are at
stake, the district court must calculate the award with
greater precision. See Vukadinovich v. McCarthy, 59 F.3d 58,
60 (7th Cir. 1995) (explaining that “proportioning of
formality to stakes is a general principle of the law” that
applies to attorney’s fee awards); In re Cont’l Ill. Sec. Litig.,
962 F.2d at 570 (remanding because district court made
substantial cuts to $9 million fee request without sufficient
explanation, but approving another court’s “meat-axe
approach” to fee petition in case where only $6,000 in
fees were at stake); Lenard v. Argento, 808 F.2d 1242, 1247
(7th Cir. 1987) (explaining that less elaborate findings
are required when a fee request is for “only a few hundred
or a few thousand dollars”). But when fees are less sub-
stantial, we may affirm so long as the district court exer-
cised its discretion in a manner that “is not arbitrary and
is likely to arrive at a fair fee.” See Evans v. City of
Evanston, 941 F.2d 473, 476-77 (7th Cir. 1991); Tomazzoli v.
Sheedy, 804 F.2d 93, 98 (7th Cir. 1986).
Although the district court could have further
elaborated how it calculated the precise fee award by
specifying the lodestar amount and which time entries
were excessive, the reasons for the court’s ultimate fee
award are apparent from the record. See Small, 264 F.3d
at 709. First, the court expressed its skepticism towards
the requested hourly rates. It explained that it made little
10 No. 08-4267
sense for high-priced attorneys such as McLaughlin
and Feofanov to continue billing in the case after
involving Warner, who was both less costly and the only
FDCPA specialist. After determining that the regular
billing rates of McLaughlin and Feofanov overstated
their value in this straightforward case, the district court
was within its discretion to lower their rates. See Mathur
v. Bd. of Trs. of S. Ill. Univ., 317 F.3d 738, 743 (7th Cir.
2003); Chrapliwy v. Uniroyal, Inc., 670 F.2d 760, 767 n.16
(7th Cir. 1982). And because the only evidence of the
market rate for the type of work involved in this FDCPA
case was the evidence supporting Warner’s proposed
rate, it was reasonable for the district court to apply
roughly this rate to McLaughlin and Feofanov, as the
defendant had suggested. See Mathur, 317 F.3d at 743(explaining that, if attorney does not provide evidence of
her billing rate for comparable work, district court may
look to evidence of what other attorneys in the com-
munity charge for that work). Similarly, with respect to
Hobfoll, a third-year associate at McLaughlin’s firm, the
only evidence to support her requested rate of $250/hour
was two retainer agreements from employment-law
cases. Because this did not meet the plaintiffs’ burden of
demonstrating Hobfoll’s market rate for FDCPA work, and
Hobfoll had been practicing for only three years, the
district court was within its discretion to lower the rate
accordingly. See Uphoff v. Elegant Bath, Ltd., 176 F.3d
399, 409 (7th Cir. 1999) (explaining that when plaintiff
does not meet its burden of proving counsel’s market rate,
district court is entitled to make its own determination
of reasonable hourly rate).
No. 08-4267 11
Second, the district court referred to factors permissible
in reducing the billed time: it observed that this was an
uncomplicated, low-stakes case that settled within three
months of filing and without discovery. The court con-
cluded that it was unreasonable to require the defendant
to pay for the time that four attorneys had collectively
put into the case because their work necessarily over-
lapped and one competent attorney would have sufficed.
This conclusion was not an abuse of discretion. Though
efficiency can sometimes be increased through collabora-
tion, see Tchemkou v. Mukasey, 517 F.3d 506, 511-12 (7th
Cir. 2008), overstaffing cases inefficiently is common, and
district courts are therefore encouraged to scrutinize fee
petitions for duplicative billing when multiple lawyers
seek fees. See Trimper v. City of Norfolk, 58 F.3d 68, 76-77
(4th Cir. 1995); Lipsett v. Blanco, 975 F.2d 934, 938 (1st
Cir. 1992) (“A trial court should ordinarily greet a claim
that several lawyers were required to perform a single
set of tasks with healthy skepticism.”); Jardien v. Winston
Network, Inc., 888 F.2d 1151, 1160 (7th Cir. 1989). Here, the
district court appears to have done that. The defendant
submitted detailed objections to the hours billed, identify-
ing precisely which entries were excessive or redundant.
The district judge expressly sustained those objections,
thereby implicitly finding that it was reasonable to com-
pensate the four attorneys collectively for only about
twenty-three of the nearly forty hours of claimed work.
When added to the undisputed paralegal fees and costs,
the total came to $6,322.70, which the district court ap-
parently rounded up to $6,500. Although greater detailed
findings in calculating the fee award might have been
12 No. 08-4267
required in a higher-stakes case, the district court arrived
at a fee that was reasonable in relation to the difficulty
and stakes of this case, see Bankston v. Illinois, 60 F.3d 1249,
1256 (7th Cir. 1995), and provided an explanation that
was “limited but sufficient” to enable us to determine
that it did not abuse its discretion, see Small, 264 F.3d at
709; Uphoff, 176 F.3d at 409.
Finally, the plaintiffs argue that the district court
abused its discretion in denying their motion to compel
the defendant to produce its counsel’s billing records, as
required by Local Rule 54.3. We review a district court’s
enforcement of its own rules only for abuse of discretion.
Jessup v. Luther, 227 F.3d 993, 999 n.5 (7th Cir. 2000). The
district court concluded that enforcing Local Rule 54.3
would needlessly “multiply time for everybody” because
the defendant’s attorney’s fees were irrelevant in a case
that had been resolved so quickly. This conclusion was
neither irrational nor unreasonable and was therefore
a proper exercise of discretion.
III. CONCLUSION
Accordingly, the judgment of the district court is
A FFIRMED.
8-3-09