Heroux v. Callidus Portfolio Management Inc.

Background

Callidus sought to collect a debt from Heroux and hired Messerli & Kramer as its counsel. After a state-court action resulted in a judgment against Heroux, Heroux filed this federal action alleging several violations of the Fair Debt Collection Practices Act, a federal law regulating debt collection.

In an earlier order, Judge David S. Doty granted the defendants’ motion for judgment on the pleadings in part and denied it in part. He dismissed with prejudice all claims against Callidus because Callidus was not a debt collector under the Act. He also dismissed all but one claim against Messerli & Kramer—the claim concerning the use of a document called “Plaintiff’s First Set of Interlocking Discovery.” Judge Doty allowed that remaining claim to proceed because Heroux had plausibly alleged that the document was misleading and confusing.

The parties later settled the remaining dispute. Messerli agreed to pay Heroux $1,500 and to pay his reasonable attorney’s fees and costs. They could not agree on the amount of fees, so they stipulated that the court would decide that issue.

Fee Request and Parties’ Positions

Heroux requested $41,720 in attorney’s fees, based on 104.3 hours at $400 per hour, plus $400 in costs. The defendants argued that the award should be no more than $5,000 total. They challenged the hourly rate and argued that the number of hours was excessive given the $1,500 settlement, the dismissal of five of the six claims, and the similarities between some of Heroux’s filings and filings from another case.

The defendants particularly challenged the time spent responding to the motion for judgment on the pleadings, including research concerning claim preclusion, the rule barring repeated litigation of the same claim; the related principle known as res judicata; the Rooker-Feldman doctrine, which can limit federal review of state-court judgments; and the standard for considering materials outside the complaint. They also challenged time spent on the “Interlocking Discovery” issue, settlement consultations, initial client consultations, and certain filing-related tasks.

Court’s Analysis

The Fair Debt Collection Practices Act permits a successful plaintiff to recover litigation costs and a reasonable attorney’s fee. The court used the lodestar method, which starts by multiplying reasonable hours by a reasonable hourly rate, while recognizing that the resulting figure may be adjusted.

The court concluded that Schwiebert’s requested $400 hourly rate was reasonable. In reaching that conclusion, it considered his more than twenty years of practice, his experience litigating Fair Debt Collection Practices Act claims, evidence concerning local billing rates, and decisions approving similar rates.

The court nevertheless found that a substantial reduction in hours was warranted. It calculated that nearly 75 hours had been recorded for portions of the pleadings motion related to the one issue that survived, including approximately 42 hours on claim-preclusion, res judicata, and Rooker-Feldman issues and 8.5 hours on the applicable motion standard and consideration of outside materials. The court also found more than 9.5 hours spent on the “Interlocking Discovery” issue excessive. It agreed that at least some early consultations and settlement-consultation time should be reduced, but it did not find the time spent drafting the surviving claim’s complaint allegations or reviewing the defendants’ answer necessarily excessive.

The court rejected the defendants’ argument that the fee award had to be proportionate to the settlement amount. It also rejected their argument that Heroux should have attempted settlement before filing suit. Still, the court considered the limited success and the reasonableness of the time spent on particular activities. It reduced the requested fees by 45 percent.

Disposition

Judge Hildy Bowbeer granted Heroux’s Motion for Determination of Amount of Reasonable Attorney Fees. The order awarded Heroux $22,946 in attorney’s fees and $400 in costs, and directed Messerli & Kramer, P.A., to pay those amounts. The order did not award fees against Callidus; the text specifically directs Messerli & Kramer to make the payment.