Lloyd v. Credit Systems International, Inc.

Filing 48

MEMORANDUM Opinion and Order. Pursuant to the parties' joint stipulation of dismissal 47 , Plaintiff's claims are dismissed with prejudice. For the reasons stated herein, Plaintiff's Petition for Attorneys' Fees and Costs 41 is granted in part and denied in part. Plaintiff is entitled to $9,826.73 in attorneys' fees and $400.00 in costs. Civil case terminated. Signed by the Honorable Harry D. Leinenweber on 10/21/2019:Mailed notice(maf)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CYNTHIA LLOYD,
Plaintiff,

Case No. 18 C 4267

v.

Judge Harry D. Leinenweber

CREDIT SERVICES
INTERNATIONAL, INC.,
Defendant.

MEMORANDUM OPINION AND ORDER
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’ CrossMotions 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.
The

touchstone

STANDARD

a

district

for

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.
A.

DISCUSSION
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
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prevailing in the community.” Pickett v. Sheridan Health Care Ctr.,
664 F.3d 632, 640 (7th Cir. 2011). Because the FDCPA is a feeshifting 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.

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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. 441.) 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.
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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
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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.”

233

Moriarty,

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
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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 Moriarty because it “[cut] off attorneys’ fees
at the time of acceptance, a provision that [plaintiff] sees as
exposing him to an unknown amount of fees for the time his counsel
would

spend

doing

the

paperwork

necessary

to

finalize

the

settlement and enter the Rule 68 judgment against [defendant].”
Id. at 954-55. The Seventh Circuit rejected this argument, noting:
Paz’s position inheres with an air of unreality. … All
Paz’s counsel had to do was request a fee award that
would cover the time necessary to finalize the
settlement. This would not have been difficult given the
relative simplicity of the claims. By no means was this
a
scenario
where
a
defendant
conveyed
an
incomprehensible offer or acted in bad faith by setting
a trap to preclude a plaintiff from recovering a
reasonable amount in attorneys’ fees as part of a
settlement.
Paz, 924 F.3d at 955.
Plaintiff now advances the same argument that the Seventh
Circuit rejected in Paz. Plaintiff contends that although the
Rule 68 offer granted her $1 more in damages than the settlement
she ultimately accepted nine months later, the original offer was
not “substantial” under Moriarty because it did not allow Plaintiff
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to

recover

attorneys’

fees

accumulated

in

preparing

her

fee

petition. Plaintiff urges that because a prevailing party in an
FDCPA action is entitled to collect attorneys’ fees for time spent
preparing a fee petition, see generally Robinson v. City of Harvey,
Ill., 617 F.3d 915, 917 (7th Cir. 2010), a Rule 68 offer that
limits an attorneys’ fees award to hours spent prior to the
expiration of the offer is not “roughly equal to or more than” the
total damages recovered by the prevailing party. See Moriarty, 233
F.3d at 967.
Plaintiff

asserts

that

by

accepting

Defendant’s

Rule

68

offer, she would have lost out on the 5.6 hours her attorneys
ultimately spent preparing the fee petition because Defendant did
not agree to her requested fees. Moreover, Plaintiff urges that
plaintiffs in fee-shifting cases would be prejudiced if they were
penalized under Moriarty for not agreeing to an offer that cut off
fees after acceptance, because of the possibility that a defendant
could “quickly eat[] away” at the monetary value of its offer by
going on to contest fees. (Pl.’s Reply at 5, Dkt. No. 46.)
Plaintiff is correct that the language of Defendant’s Rule 68
offer provides that if the parties are unable to agree on fees and
have to brief the issue for the Court, Plaintiff would not be able
to recover those “fees on fees.” (See Offer of Judgment (offering
reasonable attorneys’ fees “incurred in this action prior to
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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…”)

(emphasis

added).

Courts

generally

use

contract

principles to interpret Rule 68 offers, Webb v. James, 147 F.3d
617, 620 (7th Cir. 1998), and courts must enforce Rule 68 judgments
according to their plain language. See id. at 621 (“the district
court has no discretion to alter or modify the parties’ [Rule 68]
agreement”); Morjal v. City of Chicago, 774 F.3d 419, 422 (7th
Cir. 2014) (where Rule 68 offer limited attorneys’ fees to those
“accrued to date” of plaintiff’s acceptance, plaintiff cannot
recover for fees accrued during fee litigation if defendant was
not

litigating

fees

frivolously).

So,

had

Plaintiff

accepted

Defendant’s Rule 68 offer and the parties were unable to agree on
fees,

this

Court

could

not

have

awarded

any

fees

Plaintiff

accumulated after October 5, 2018, the date the Rule 68 offer
expired. However, Defendant’s offer clearly stated that Plaintiff
would

be

entitled

to

all

reasonable

attorneys’

fees

she

had

incurred in the case until October 5, 2019. It strikes the Court
as unlikely that, with this clear mandate in mind, Defendant would
stir up prolonged fee litigation beyond the usual response brief
to Plaintiff’s fee petition, costing itself a large amount in legal
expenses in the process. But if Defendant had, the Court would
have authority to award Plaintiff the attorneys’ fees she incurred
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in responding to Defendant’s vexatious conduct. See Morjal, 774
F.3d at 421. The fact remains that the original offer amount was
clearly “roughly equal to” the total damages Plaintiff ultimately
recovered in settlement. Accordingly, the September 2018 offer was
“substantial”

under

Because

Moriarty.

Plaintiff

declined

a

substantial settlement offer, the Court will reduce by 75% the
attorneys’ fees that Plaintiff incurred after October 5, 2018.
Before October 5, 2018, Wood performed 5.75 hours of legal
work and Chatman completed 5.1 hours. The total billed amount at
the rates the Court approved herein is $3,630.50. After October 5,
2018, Finko performed 11.4 hours of work, Wood 8.2, and Chatman
54.5 (for a total of 74.1 hours of legal work, including the 5.6
hours Plaintiff’s counsel spent preparing the fee petition). The
total billed amount at the rates the Court approved herein is
$24,784.90.

Twenty-five

percent

of

that

sum

is

$6,196.23.

Plaintiff is entitled to the full amount of her attorneys’ preoffer fees ($3,630.50) plus 25% of her post-offer expiration fees
($6,196.23), for a total of $9,826.73 in fees. This final sum
appropriately reflects the difficulty, stakes, and outcome of the
case, as well as the fact that Plaintiff declined a Rule 68 offer
that

would

have

settled

this

case

without

the

need

additional 74.1 hours of legal work by her attorneys.

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for

an

B.

Costs

The FDCPA mandates that a court award costs to a plaintiff in
a successful action. 15 U.S.C. § 1692k(a)(3). Defendant does not
dispute that Plaintiff’s settlement renders her action successful.
28 U.S.C. § 1920(2) allows a prevailing party to recover costs for
“printed

or

electronically

recorded

transcripts

necessarily

obtained for use in the case.” 28 U.S.C. § 1920(2). To that end,
Plaintiff seeks $1,845.44 in costs, which consists of a $400 filing
fee, a $50 service fee, $1,100.80 for a transcript of Victoria
Sheedy’s deposition, and $294.64 for a transcript of Cynthia
Lloyd’s

deposition.

Citing

Rule

68,

Defendant

argues

that

Plaintiff cannot be awarded costs that she incurred after declining
the Rule 68 offer, and in fact, Plaintiff must pay the costs that
Defendant incurred after declining the Rule 68 offer. Defendants
are correct. See 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.”). Therefore, the Court awards Plaintiff $400 in costs, as
the filing fee was the only taxable cost Plaintiff incurred before
Defendant made its Rule 68 offer.
Defendant

seeks

$758.60

for

a

transcript

of

Lloyd’s

deposition and $789.50 for a transcript of Sheedy’s deposition.
However, Defendant has not submitted an invoice or declaration
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that indicates the per-page rate it paid for these two deposition
transcripts. (See Transcript Invoices, Ex. E to Def.’s Resp., Dkt.
No. 44-5.) Under Northern District of Illinois Local Rule 54.1(b),
claimed transcript costs may not exceed the regular copy rate
established by the United States Judicial Conference. See N.D.
Ill. Local Rule 54.1(b). The current rate is $3.65 for ordinary
transcripts and $0.90 per page for the first copy. See id. Because
the Court cannot determine whether Defendant’s transcript costs
comply with the Local Rules, the Court will not award these costs.
IV.
For

the

reasons

stated

CONCLUSION
herein,

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 in costs.
IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
Dated: 10/21/2019

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