Archbold et al v. Tristate ATM, Inc. et al
Filing
8
ORDER granting 7 Motion for Default Judgment. See attached Report and Recommendation. Ordered by Magistrate Judge Lois Bloom on 9/7/2012. (Sullivan, Meghan)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------------------------X
SARAH ARCHBOLD
and DONALD W. MARVIN,
Plaintiffs,
11 CV 5796 (SJ)(LB)
-againstTRISTATE ATM, INC.
and DOES 1-10, inclusive,
Defendants.
---------------------------------------------------------X
SARAH ARCHBOLD
and DONALD W. MARVIN,
Plaintiffs,
12 CV 847 (SJ)(LB)
-againstCASH ON THE SPOT ATM SERVICES, LLC
and DOES 1-10, inclusive,
Defendants.
---------------------------------------------------------X
BLOOM, United States Magistrate Judge:
REPORT AND RECOMMENDATION
Plaintiffs Sarah Archbold and Donald W. Marvin bring the above-captioned actions
pursuant to the Electronic Fund Transfer Act, 15 U.S.C. § 1693, et seq. (the EFTA). In virtually
identical complaints, plaintiffs allege that defendants Tristate ATM, Inc. and Cash on the Spot
ATM Services, LLC charged them a fee for using automatic teller machines (ATMs) operated by
defendants without posting a notice of the fee “in a prominent and conspicuous location on or at
the [ATM],” as required by the EFTA. Both defendants failed to answer or otherwise defend
these actions, and plaintiffs now move for a default judgment under Rule 55(b)(2) of the Federal
Rules of Civil Procedure, seeking an award of $3,350.00 in each action. The Honorable Sterling
1
Johnson, Jr. referred plaintiffs’ motions to me for a Report and Recommendation in accordance
with 28 U.S.C. § 636(b). For the reasons set forth below, it is respectfully recommended that
plaintiffs’ motions for a default judgment against defendants should be granted. It is further
recommended that a default judgment should be entered against Tristate ATM, Inc. in the
amount of $825.00, and that a default judgment should be entered against Cash on the Spot ATM
Services, LLC in the amount of $825.00.
BACKGROUND
On February 11, 2011, plaintiff Donald W. Marvin withdrew twenty dollars from an
ATM operated by defendant Tristate ATM, Inc. (“Tristate”) located at a Fairfield Inn and Suites
in Avenel, New Jersey.1 See No. 11-cv-5796, Compl. ¶¶ 20, 24 (ECF No. 1); id. Ex. 1.
Although Tristate charged Marvin a “terminal fee” of $2.00 in connection with this withdrawal,
the ATM did not have a notice posted on or at the machine informing customers that they may be
charged a fee for their ATM transactions. Id. ¶¶ 26-27. Approximately five months later, on
July 7, 2011, plaintiff Sarah Archbold used the same ATM to withdraw twenty dollars. Id. at ¶
29; id. Ex. 5. At the time of this transaction, there was no notice posted on or at the ATM
apprising customers of the potential fee for using the ATM. Id. ¶ 32. Nonetheless, Tristate
charged Archbold a “terminal fee” of $2.00 for her ATM withdrawal. Id. ¶ 31.
On September 25, 2011, in two separate transactions conducted approximately one
minute apart, both plaintiffs withdrew twenty dollars from an ATM operated by defendant Cash
on the Spot ATM Services, LLC (“Cash on the Spot”) located at 216 W. 50th Street, New York,
New York. See No. 12-cv-847, Compl. ¶¶ 25, 30 (ECF No. 1); id. Exs. 1, 5. Plaintiffs were
1
The Court deems the factual allegations presented in plaintiffs’ complaints as admitted solely for the purposes of
this motion. See, e.g., Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 108 (2d Cir.
1997) (on a motion for default judgment, the court “deems all the well-pleaded allegations in the pleadings to be
admitted.”).
2
charged a $2.00 “terminal fee” for each withdrawal. Id. ¶¶ 27, 32. When these transactions took
place, there was no notice posted on or at the ATM informing customers that a fee would be
charged for use of the ATM. Id. ¶¶ 28, 33. Instead, a notice affixed to the ATM indicated that
the owner of the ATM charges a “surcharge fee $___.” Id.; see also id. Ex. 7.2 Plaintiffs
characterize this notification as “deceptive and inaccurate.” Id. at ¶¶ 28, 33.
Notably, plaintiffs do not allege that they were unaware that these fees would be charged,
and their pleadings are conspicuously silent on whether plaintiffs affirmatively agreed to pay
these $2.00 fees when prompted by the ATMs’ on-screen notifications.
Instead, plaintiffs
preemptively insist that they “need not prove that [they] sustained any actual financial loss, or
that [they] relied upon the lack of mandatory disclosure as an inducement to enter into the
transaction” in order to recover under the EFTA. Id. at ¶ 14; see also No. 12-cv-847 Compl. ¶
15.
Plaintiffs commenced their lawsuit against Tristate on November 25, 2011, seeking an
award of actual damages in the amount of $4,000 and statutory damages of $1,000 per
transaction, as well as reimbursement of their attorney’s fees and the costs associated with
bringing their lawsuit. See No. 11-cv-5796 (ECF No. 1.) When Tristate failed to answer or
otherwise move in response to the Complaint, plaintiffs requested that the Court enter a default
against Tristate on April 19, 2012.3 (ECF No. 5.)
The Clerk of Court subsequently noted
Tristate’s default pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. (ECF No. 6.)
Plaintiffs filed the instant motion for default judgment under Rule 55(b)(2) of the Federal Rules
2
Although plaintiffs submitted a photograph of the notice they allege was affixed to the ATM they used on
September 25, 2011, this notice identifies “Alliance ATM Group” as the owner of the ATM, and makes no mention
of Cash on the Spot.
3
According to the affidavit of service plaintiffs filed, Tristate was “dissolved by proclamation pursuant to 203-a of
the NYS Tax Law on January 26, 2011.” (ECF No. 4.)
3
of Civil Procedure on May 23, 2012. (ECF No. 7.) On June 4, 2012, the Honorable Sterling
Johnson, Jr. referred plaintiffs’ motion to me for a Report and Recommendation. (ECF No. 8.)
Meanwhile, plaintiffs filed their lawsuit against Cash on the Spot on February 17, 2012.
See No. 12-cv-847 (ECF No. 1). At plaintiffs’ request, (ECF No. 4), the Clerk of Court noted
Cash on the Spot’s failure to respond to the Complaint and entered default on April 17, 2012.
(ECF No. 5). Plaintiffs recycled their motion for default judgment under Rule 55(b)(2) for use
against Cash on the Spot, and filed the repurposed papers in this action on May 23, 2012. (ECF
No. 6). After plaintiffs’ lawsuit against Cash on the Spot was reassigned as related to plaintiffs’
action against Tristate, the Honorable Sterling Johnson, Jr. referred plaintiffs’ second motion for
default judgment to me for a Report and Recommendation on August 16, 2012.
In addition to these lawsuits, plaintiffs filed two other nearly identical lawsuits in the
Eastern District of New York, which they voluntarily dismissed. See No. 12-cv-845; No. 12-cv961. Viewed collectively, the complaints filed in plaintiffs’ four actions allege that plaintiffs
were charged fees in ten separate transactions at four different ATMs, all of which failed to
provide a fee notification “on or at the [ATM]” as required by the EFTA. See No. 11-cv-5796
(alleging two transactions at an ATM in Avenel, New Jersey); No. 12-cv-845 (alleging two
transactions at an ATM in Queens Village, New York); No. 12-cv-847 (alleging two transactions
at an ATM in Manhattan, New York); No. 12-cv-961 (alleging four transactions at an ATM in
Queens Village, New York). In what is either a remarkable coincidence or a demonstration of
plaintiffs’ plan to seek out ATMs lacking the EFTA-required signage and deliberately
manufacture claims by withdrawing funds from these machines, the majority of the transactions
underlying these four lawsuits all took place on one of four dates in the fall of 2011. See id. All
in all, the lawsuits that plaintiffs filed with this Court alleged that they incurred a grand total of
4
$17.00 in unauthorized ATM transaction fees. For what plaintiffs’ pleadings uniformly describe
as “damages for inconvenience, legal fees, loss of the use of funds and pre-judgment interest,”
the four lawsuits plaintiffs filed in the Eastern District of New York sought a combined $24,000
in actual and statutory damages, in addition to attorneys’ fees and costs. Id.
DISCUSSION
I.
Defendants’ Liability
Rule 55 of the Federal Rules of Civil Procedure establishes the two-step process for a
plaintiff to obtain a default judgment. First, “[w]hen a party against whom a judgment for
affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by
affidavit or otherwise, the clerk must enter the party’s default.” Fed. R. Civ. P. 55(a). Second,
after a default has been entered against a defendant, and the defendant fails to appear or move to
set aside the default under Rule 55(c), a plaintiff may request that a default judgment be entered
against the defendant. Fed. R. Civ. P. 55(b).
Rule 55(b)(1) of the Federal Rules of Civil Procedure provides that “[i]f the plaintiff’s
claim is for a sum certain or a sum that can be made certain by computation, the clerk—on the
plaintiff’s request, with an affidavit showing the amount due—must enter judgment for that
amount and costs against a defendant who has been defaulted for not appearing.” Fed. R. Civ. P.
55(b)(1). Rule 55(b)(2) requires that “[i]n all other cases, the party must apply to the court for a
default judgment.” Fed. R. Civ. P. 55(b)(2). Here, plaintiffs move for a default judgment under
Rule 55(b)(2).
In light of the Second Circuit’s “oft-stated preference for resolving disputes on the
merits,” default judgments are “generally disfavored.” Enron Oil Corp. v. Diakuhara, 10 F.3d
90, 95-96 (2d Cir. 1993). “Accordingly, just because a party is in default, the plaintiff is not
5
entitled to a default judgment as a matter of right.” Bravado Intern. Group Merch. Servs., Inc. v.
Ninna, Inc., 655 F.Supp.2d 177, 186 (E.D.N.Y. 2009) (citing Erwin DeMartino Trucking Co. v.
Jackson, 838 F. Supp. 160, 162 (S.D.N.Y. 1993)). In determining whether to issue a default
judgment under Rule 55(b)(2), the Court has the “responsibility to ensure that the factual
allegations, accepted as true, provide a proper basis for liability and relief.” Rolls-Royce plc v.
Rolls-Royce USA, Inc., 688 F. Supp. 2d 150, 153 (E.D.N.Y. 2010) (citing Au Bon Pain Corp. v.
Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981)). In other words, “[a]fter default . . . it remains for
the court to consider whether the unchallenged facts constitute a legitimate cause of action, since
a party in default does not admit conclusions of law.” Id. (quoting In re Indus. Diamonds
Antitrust Litig., 119 F.Supp.2d 418, 420 (S.D.N.Y. 2000)).
In their lawsuits against Tristate and Cash on the Spot, plaintiffs have alleged the
elements necessary to state a claim for violations of the EFTA. Pursuant to the EFTA’s fee
notification requirements, ATM operators must notify consumers that a fee may be imposed, and
the amount of any fee, both “on or at the [ATM]” and “on the screen . . . or on a paper [receipt].”
15 U.S.C. § 1693b(d)(3)(B); see also Mabary v. Hometown Bank, N.A., 276 F.R.D. 196, 199 n.1
(S.D. Tex. 2011) (“Hometown’s compliance with the on screen notice requirements of 15 U.S.C.
§ 1693b(d)(3)(B)(ii) is immaterial to Plaintiff’s claim for statutory damages because the EFTA
requires that a fee notice appear both ‘on or at’ an ATM machine and ‘on the screen’ or paper
receipt and prohibits the imposition of a fee unless both prongs of the notice requirement are
satisfied.”). In the absence of the fee notifications required by the EFTA, “[n]o fee may be
imposed by any [ATM] operator in connection with any electronic fund transfer.” 15 U.S.C. §
1693b(d)(3)(C).4 Plaintiffs’ allegations that the ATMs operated by defendants failed to provide
4
Pursuant to the EFTA, the Board of Governors of the Federal Reserve System issued regulations mirroring
the fee notification requirements in the EFTA. See 12 C.F.R.§ 205.16(b) (requiring financial institutions charging
6
the statutorily required fee notification “on or at the [ATM],” and that defendants imposed a
$2.00 “terminal fee” in connection with plaintiffs’ withdrawals, suffice to state a cause of action
under the EFTA.5 See No. 11-cv-5796, Compl. ¶¶ 26, 27, 31, 32; No. 12-cv-847, Compl. ¶¶ 27,
28. Because plaintiffs’ allegations are deemed admitted by virtue of defendant’s failure to
appear, entry of a default judgment against both defendants is appropriate.
II.
Damages
It is axiomatic that, although a default constitutes an admission of well-pleaded factual
allegations, those allegations relating to damages are not deemed true by virtue of a defendant’s
failure to defend. Credit Lyonnais Secs. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir.
1999) (“Even when a default judgment is warranted based on a party’s failure to defend, the
allegations in the complaint, with respect to the amount of the damages are not deemed true.”).
Instead, a plaintiff seeking a default judgment under Rule 55(b)(2) has the burden to prove
damages to the Court with a “reasonable certainty.” Id. (citing Transatlantic Marine Claims
Agency, Inc., 109 F.3d at 111). While the Court “may conduct hearings or make referrals . . .
[to] determine the amount of damages or establish the truth of any allegation by evidence,” Fed.
R. Civ. P. 55(b)(2), “[d]etailed affidavits and other documentary evidence can suffice in lieu of
an evidentiary hearing.” Century 21 Real Estate LLC v. Bercosa Corp., 666 F.Supp.2d 274, 285
(E.D.N.Y. 2009).
fees for electronic fund transfers or balance inquiries to “[p]rovide notice that a fee will be imposed” and “[d]isclose
the amount of the fee.”); 12 C.F.R. § 205.16(c)(1) (requiring fee notice to be posted “in a prominent and
conspicuous location on or at the automated teller machine”); 12 C.F.R. § 205.16(c)(2) (requiring notice “on the
screen of the automated teller machine or [] on paper, before the consumer is committed to paying a fee.”).
5
Contrary to plaintiffs’ assertion that “[t]he EFTA imposes strict liability upon ATM operators which fail to
comply with its disclosure requirements,” see Compl. ¶ 14, the statute expressly provides that an ATM operator
shall have no liability for failure to comply with the fee notification requirements if the notice posted “on or at” the
ATM “is subsequently removed, damaged, or altered by any person other than the operator of the [ATM].” 15
U.S.C. § 1693h(d). Similarly, “a person may not be held liable in any action brought under [the EFTA] if the person
shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error
notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.” 15 U.S.C. § 1693m(c).
7
In support of their claim for damages, plaintiffs submit photographs of the ATMs at
issue, copies of their ATM receipts, affidavits of their counsel regarding his experience and
customary fees, and time sheets purporting to show the time counsel spent litigating these
lawsuits. See No. 11-cv-5796, Compl. Exs. 1-8 (ECF No. 1), Motion for Default Judgment (ECF
No. 7-1, 7-4, 7-5); No. 12-cv-847, Compl. Exs. 1-7 (ECF No. 1), Motion for Default Judgment
(ECF No. 6-1, 6-5, 6-6). These documents, combined with the virtually identical pleadings
plaintiffs filed in their other lawsuits, do little to prove plaintiffs’ damages with “reasonable
certainty.” What is abundantly clear from these submissions, however, is that plaintiffs’ actions
are among the hundreds of lawsuits filed across the country in a transparent attempt to capitalize
on the EFTA’s award of statutory damages. Through serial transactions conducted at ATMs that
lack the EFTA-required signage (whether due to the ATM operator’s failure or to the strategic
removal of the physical fee notice), plaintiffs can manufacture claims, file suit in federal court,
and either collect the statutorily-mandated damages and fees or exact a settlement offer.6 As one
lawmaker explained, “some individuals have seen the potential to make a quick buck off a
frivolous claim and have begun to remove stickers from ATMs across the country, thereby
placing financial institutions and merchants out of compliance [with the EFTA].” 158 Cong.
Rec. H4665 (daily ed. July 9, 2012) (statement of Rep. Luetkemeyer).
In recognition of the potential for abuse created by the EFTA’s fee notification provision,
on July 9, 2012, the United States House of Representatives passed legislation to amend the
6
Plaintiffs Archbold and Marvin’s lawsuits regarding noncompliant ATMs in the New York area are eclipsed by
those of plaintiffs in other jurisdictions. For example, since 2010, Wallace Stilz III has filed sixteen separate
lawsuits in the Illinois federal courts alleging deficient ATM fee notifications. See Nos. 10-cv-1996, 10-cv-1997,
10-cv-1998, 10-cv-2087, 11-cv-4985, 11-cv-5519, 11-cv-5520, 11-cv-5631, 12-cv-3045, 12-cv-4389, 12-cv-50132
(N.D. Ill.); Nos. 11-cv-1145, 11-cv-1146, 11-cv-3096, 12-cv-2117 (C.D. Ill.); 12-cv-628 (S.D. Ill). Other plaintiffs
have demonstrated comparably litigious tendencies. See Pfeffer v. HSA Retail, Inc., No. SA-11-cv-959-XR, 2012
WL 394645, at *1 (Feb. 6, 2012) (noting that, on the same day as filing his complaint, “Plaintiff filed eight other
lawsuits against eight different defendants, each alleging the same violation of the EFTA [fee notification
requirement]”); Buechler v. Your Wine & Spirit Shoppe, Inc., 846 F.Supp.2d 406, 412 n.4 (D. Md. 2012) (collecting
plaintiff’s seven EFTA lawsuits in the District of Maryland).
8
EFTA to eliminate the requirement that ATM operators post fee notification “on or at” the ATM,
thereby limiting the fee disclosure requirement to the screen of the ATM. See H.R. 4367, 112th
Cong. (2012); see also 158 Cong. Rec. H4665 (daily ed. July 9, 2012) (statement of Rep.
Luetkemeyer) (“The premise of this bill is simple: to eliminate an outdated and unnecessary
regulatory burden facing merchants and financial institutions while continuing to ensure
consumer protections for all ATM users through required on-screen fee disclosures.”). Until this
legislation is signed into law, however, federal courts across the country will still be called upon
to adjudicate claims such as plaintiffs’ here.
A.
Actual Damages
By plaintiffs’ own admission, both Tristate and Cash on the Spot charged them $2.00 for
each use of defendants’ ATMs.
After deliberately incurring these fees, plaintiffs filed
complaints seeking an award of actual damages in the amount of $4,000.00, on the theory that
plaintiffs “sustained actual damages as the result of the defendants’ failure to comply with EFTA
including damages for inconvenience, legal fees, loss of the use of funds and prejudgment
interest.” No. 12-cv-847, Compl. ¶ 42; No. 11-cv-5796, Compl. ¶ 42. While there are no
reported cases from this district considering the award of actual damages for an ATM operator’s
failure to provide fee notification “on or at” the ATM in violation of the EFTA, courts elsewhere
have held that, in order to be entitled to actual damages, a plaintiff must plead and prove
detrimental reliance. See, e.g., Voeks v. Pilot Travel Ctrs., 560 F.Supp.2d 718, 721-24 (E.D.
Wis. 2008) (“In short, the remedy that a customer has under the statute for the payment of a fee
after inadequate notice is to seek those statutory damages under § 1693m(a)(2)(A) and then to
seek any actual damages . . . . To show actual damages under § 1693m(a)(1) a plaintiff must
plead and prove detrimental reliance.”); Brown v. Bank of America, 457 F.Supp.2d 82, 90 (D.
9
Mass. 2006) (noting that “[t]here are no reported cases interpreting the actual damages provision
of EFTA,” and holding that “[i]n order to recover actual damages, Plaintiffs must establish
causation of harm through detrimental reliance”); Polo v. Goodings Supermarkets, 232 F.R.D.
399, 408 (M.D. Fla. 2004) (recommending denial of class certification for lack of predominance
where “court would have to determine which ATM customers were actually harmed or adversely
affected”); see also Martz v. PNC Bank, N.A., No. Civ A 06-1076, 2006 WL 3840354, at *5
(W.D. Pa. Nov. 30, 2006) (“The few reported cases that have discussed the actual damages
provision of EFTA have found that to recover actual damages, a plaintiff must establish
causation of harm in the form of detrimental reliance.”).
Notwithstanding their claim that defendants’ alleged failure to post a fee notification on
their ATMs caused them “inconvenience” and “loss of funds” worth $4,000.00 in actual
damages, plaintiffs do not, and presumably could not, establish the facts necessary to entitle
them to actual damages. Although the Court does not doubt that plaintiffs’ efforts to seek out
ATMs for the purpose of manufacturing EFTA violations involves inconvenience, legal fees, and
the loss of funds, the Court finds that these damages are of plaintiffs’ own making.
B.
Statutory Damages
On their motion for default judgment, plaintiffs abandon the fiction that they sustained
actual damages through their strategic ATM transactions. Instead, presumably because the
EFTA does not require a consumer to suffer any actual injury in order to recover statutory
damages, plaintiffs seek to recover pursuant to 15 U.S.C. § 1693m, which provides in part that
“any person who fails to comply with any provision of this subchapter with respect to any
consumer . . . is liable to such consumer in an amount . . . not less than $100 and not more than
10
$1,000.”7 See 15 U.S.C. § 1693m(a) (calculating liability as “the sum of (1) any actual damage
sustained by such consumer as a result of such failure; (2)(A) in the case of an individual action,
an amount not less than $100 nor greater than $1,000; . . . (3) in the case of any successful action
to enforce the foregoing liability, the costs of the action, together with a reasonable attorney’s fee
as determined by the court.”).
The EFTA requires a court determining the amount of liability to “consider, among other
relevant factors . . . the frequency and persistence of noncompliance, the nature of such
noncompliance, and the extent to which the noncompliance was intentional.” 15 U.S.C. §
1693m(b)(1). According to plaintiffs’ motions for default judgment, they “should be awarded
the maximum statutory damage amount of $1,000.00 each because the Defendant’s failure to
plead has deprived Plaintiffs the opportunity to conduct discovery into these factors.” See No.
11-cv-5796, ECF No. 7-1, ¶ 27; No. 12-cv-847, ECF No. 6-1, ¶ 26.
This Court disagrees. Moreover, notwithstanding plaintiffs’ assertion that their lawsuits
“persuade[] responsible financial institutions and ATM operators to ‘comply with the spirit and
letter of the law,’” the Court is disinclined to recommend that plaintiffs be rewarded for their
efforts to gain a windfall through opportunistic litigation in the federal court system. See No. 11cv-5796, Compl. ¶ 15; No. 12-cv-847, Compl. ¶ 16. Put simply, the record reflects that plaintiffs
sought out and used defendants’ ATMs because they wanted to file EFTA lawsuits and collect
statutory damages. Nonetheless, the Court is constrained to award damages mandated by the
statute, which requires that each defendant that fails to comply with the statute’s fee notification
7
Although plaintiffs’ motion attempts to rewrite § 1693m(a), claiming that it “provides for a statutory damage
amount of ‘not less than $100 and not more than $1000’ for each violation,” the statutory language unambiguously
sets the range of statutory damages to each consumer for the individual action as a whole. See Stilz v. Global Cash
Network, Inc., No. 10-cv-1998, 2010 WL 3975588, at *4-5 (N.D. Ill. Oct. 7, 2010) (“The EFTA’s plain language is
clear that a plaintiff may recover a maximum of $1,000 in statutory damages. . . . If Congress had intended to
provide for other, additional statutory damages—for example, up to $1,000 per violation, or $1,000 for each
offending ATM—it could have done so. . . .[T]he court finds that the EFTA permits statutory damages on only a
per-plaintiff basis.”).
11
requirements “is liable to such consumer in an amount . . . not less than $100.” 15 U.S.C. §
1693m(a). Accordingly, I recommend that plaintiff Sarah Archbold and plaintiff Donald W.
Marvin each be awarded $100 in statutory damages in their action against Tristate, and in their
action against Cash on the Spot.
C.
Attorney’s Fees and Costs
Plaintiffs also seek an award of attorney’s fees and costs associated with litigating these
two actions. Specifically, plaintiffs seek $1,000.00 in attorney’s fees in each action, as well as
the $350 cost of filing each lawsuit. Plaintiffs’ counsel submitted the identical affidavit in each
of these two cases in support of this claim for fees; both affidavits state that “the total attorney
time spent in this case is 2 hours and 30 minutes, which when billed at $400.00, results in a
corresponding lodestar value of $1,000.00.” No. 11-cv-5796, ECF No. 7-4, ¶ 17; No. 12-cv-847,
ECF No. 6-4, ¶ 17.
The EFTA makes clear that “any person who fails to comply with any provision of this
subchapter with respect to any consumer . . . is liable to such consumer . . . in the case of any
successful action to enforce the foregoing liability, the costs of the action, together with a
reasonable attorney’s fee as determined by the court.” 15 U.S.C. § 1693m(a). In determining
the amount of attorney’s fees to award a prevailing party, the Court must calculate the
“presumptively reasonable fee.” Simmons v. N.Y. City Transit Auth., 575 F.3d 170, 172 (2d
Cir. 2009).
To determine this fee, the Court calculates “the number of hours reasonably
expended on the litigation multiplied by a reasonable hourly rate.” Hensley v. Eckerhart, 461
U.S. 424, 433 (1983). A reasonable rate is “the rate a paying client would be willing to pay,”
based on the “prevailing [hourly rate] in the community . . . where the district court sits.” Arbor
Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, 522 F.3d 182, 190 (2d
12
Cir.2007); see also Blum v. Stenson, 465 U.S. 886, 896 (1984) (“[T]he requested rates [must be]
in line with those prevailing in the community for similar services by lawyers of reasonably
comparable skill, experience, and reputation.”).
The Court should also consider the following factors in determining the reasonable
hourly rate:
[T]he complexity and difficulty of the case, the available expertise and capacity of
the client's other counsel (if any), the resources required to prosecute the case
effectively (taking account of the resources being marshaled on the other side but
not endorsing scorched earth tactics), the timing demands of the case, whether an
attorney might have an interest (independent of that of his client) in achieving the
ends of the litigation or might initiate the representation himself, whether an
attorney might have initially acted pro bono (such that a client might be aware
that the attorney expected low or non-existent remuneration), and other returns
(such as reputation, etc.) that an attorney might expect from the representation.
Arbor Hill, 522 F.3d at 184. The burden is on the party moving for attorney’s fees to show
evidence of the hours spent and to justify the hourly rate sought. See Hensley, 461 U.S. at 437
(“[T]he fee applicant bears the burden of establishing entitlement to an award and documenting
the appropriate hours expended and hourly rates.”); Cho v. Koam Med. Servs. P.C., 524 F. Supp.
2d 202, 209 (E.D.N.Y. 2007) (noting that “[t]he party seeking the award bears the burden of
documenting the hours reasonably spent by counsel”).
In the Eastern District of New York, hourly rates for partners range from $200 to 400 per
hour, depending on the nature of the action, extent of legal services provided, and experience of
the attorney. See Santiago v. Coco Nail HB, Inc., No. 10-cv-3373, 2012 WL 1117961, at *4
(E.D.N.Y. Mar. 16, 2012) (noting that “courts have found that the prevailing hourly rates for law
firm partners in this district are between $300 and $400,” but awarding fees based on an hourly
rate of $275 where “[t]he nature of the work performed in this matter was relatively
straightforward, particularly since the defendant defaulted and no novel or complex issues are
13
raised in the complaint.”); Trs. of the Local 813 I.B.T. Ins. Trust Fund v. Sprint Recycling, Inc.,
No. 09-cv-4435, 2010 WL 3613839, at *4 (E.D.N.Y. Aug. 6, 2010) (noting that, “[i]n the
Eastern District of New York, reasonable hourly rates for attorneys have ranged from $200 to
$350 an hour for partners”); Crapazano v. Nations Recovery Ctr., Inc., No. 11-cv-1008, 2011
WL 2847448, at *2 (E.D.N.Y. June 29, 2011) (noting hourly rates of $200–$350 for partners,
$200–$250 for senior associates with four or more years of experience, and $100–$150 for junior
associates with one to three years of experience), adopted by 2011 WL 2837415 (E.D.N.Y. July
14, 2011).
In light of the case-specific factors articulated by the Second Circuit in Arbor Hill, the
$400.00 hourly rate requested by plaintiffs’ counsel here is not reasonable. See, e.g., Alveranga
v. Winston, No. 04-cv-4356, 2007 WL 595069, at *7 (E.D.N.Y. Feb. 22, 2007) (“Rates awarded
. . . in cases not involving complex issues tend, on average, to be lower.”). Plaintiffs’ counsel’s
affidavit concedes that a district court in Maryland recently awarded him fees based on an hourly
rate of $275.00; the Court finds that this rate to be reasonable on the facts presented by the
instant lawsuits.
The Court must also evaluate whether the hours expended by plaintiffs’ counsel are
reasonable. The affidavits counsel submitted in both actions attached time reports – both dated
May 23, 2012 – purporting to detail the 2 hours and 30 minutes spent litigating each of plaintiffs’
lawsuits. The Court finds that, in light of counsel’s extensive experience litigating EFTA fee
notification claims, this time expenditure is overstated. Plaintiffs’ counsel has filed the identical
lawsuit five times in this district,8 as well as numerous times in other districts. See, e.g.,
Buechler v. Your Wine & Spirit Shoppe, Inc., 846 F.Supp.2d 406, 412 n.4 (D. Md. 2012) (citing
8
Plaintiffs’ counsel also represented the plaintiff in Leone v. American Community Bank, No. 11-cv-6181, yet
another EFTA fee notification case filed in the Eastern District of New York on December 19, 2011.
14
seven EFTA lawsuits filed by one plaintiff through the same counsel appearing here). Because
preparing the pleadings and other filings submitted in connection with these lawsuits involves
little more than inserting the plaintiff-specific allegations into a ready-made template – or, as is
the case with counsel’s affidavit in support of his claimed fees, simply filing a single document
in multiple actions – the time expended on these tasks should be minimal. See Kinder v.
Northwestern Bank, No. 10-cv-405, 2012 WL 2886688, at *5 (W.D. Mich. June 5, 2012) (noting
that where “plaintiff's counsel has handled over thirty ATM notice cases, [t]his experience must
necessarily translate into economies of scale. For example, drafting the thirtieth complaint should
require minutes, not hours . . . .”); id. at *7 (“[T]his is one of dozens of similar cases that involve
the same legal and class action issues. The real time expenditure, and legal work, is necessarily
expended in the first one or two cases.
Thereafter, handling such litigation involves an
assembly-line, cookie-cutter approach. Complaints, motions for class certification or summary
judgment, and settlement documents are demonstrably similar and should involve no substantial
additional expenditure of time.”).
The Court finds that plaintiffs’ counsel could not have
reasonably expended more than one hour on each of these actions. Accordingly, the Court
recommends that plaintiffs be awarded $275.00 in attorney’s fees in each of their lawsuits.
Finally, pursuant to 15 U.S.C. § 1693m(a)(3), the Court recommends that plaintiffs be
awarded $350.00 in each action, the costs of filing their lawsuits.
CONCLUSION
Accordingly, it is respectfully recommended that plaintiffs’ motions for a default
judgment against defendants should be granted.
It is further recommended that a default
judgment should be entered against Tristate ATM, Inc. in the amount of $825.00 as follows:
15
$200.00 in statutory damages; $275.00 in attorney’s fees; and $350.00 in costs. It is further
recommended that a default judgment should be entered against Cash on the Spot ATM Services,
LLC in the amount of $825.00 as follows: $200.00 in statutory damages; $275.00 in attorney’s
fees; and $350.00 in costs.
Plaintiffs’ counsel shall serve a copy of this Report and
Recommendation on defendants at their last known addresses and file proof of service with the
Court forthwith.
FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have
fourteen (14) days from service of this Report to file written objections. Such objections (and
any responses to objections) shall be filed with the Clerk of the Court. Any request for an
extension of time to file objections must be made within the fourteen-day period. Failure to file
a timely objection to this Report generally waives any further judicial review. Marcella v.
Capital Dist. Physician's Health Plan, Inc., 293 F.3d 42 (2d Cir.2002); Small v. Sec'y of Health
and Human Services, 892 F.2d 15 (2d Cir.1989); Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466,
88 L.Ed.2d 435 (1985).
SO ORDERED.
______________/s/____________________
LOIS BLOOM
United States Magistrate Judge
Dated: September 7, 2012
Brooklyn, New York
16
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?