Ricketson v. Advantage Collection Professionals, LLC

Background

Kelly L. Ricketson incurred an approximately $100 financial debt in 2020. Advantage Collection Professionals, LLC (ACP), a collection agency that operates in Minnesota, repeatedly attempted to collect the debt in April, May, and June 2021. Ricketson sued ACP under the Fair Debt Collection Practices Act, seeking $1,000 in statutory damages, costs, and reasonable attorneys’ fees.

On December 17, 2021, ACP made an offer of judgment under Federal Rule of Civil Procedure 68. The offer proposed resolving the matter for $1,001 plus Ricketson’s costs and reasonable attorneys’ fees. Ricketson accepted the offer in writing on December 30, 2021. Her lawyer, Michael Sheridan, had recorded $2,220 in fees by that date.

Conduct During the Fee Dispute

After Ricketson accepted the offer, Sheridan did not disclose his billing information to ACP’s counsel. He declined requests for an outline of his time and expenses and insisted that ACP formally request the records through discovery. On January 25, 2022, Sheridan offered to settle the fee-and-cost portion of the judgment for $10,000, although his records showed that he had billed $2,880 in fees and $469.50 in costs by then. On February 3, 2022, ACP offered $1,447.50 in fees and $485 in costs, but Sheridan responded that he was authorized to settle for $9,001.

At an initial pretrial conference, Sheridan acknowledged that refusing to engage in informal discovery about his billing records may have been “petty.” He also said he was not requiring ACP to pay more than the amount he had billed his client, although his correspondence and billing records did not match that statement. His records showed $4,020 in fees and $469.50 in costs as of February 4, 2022, while he continued to describe his $9,001 settlement position as reflecting the fees billed to that date.

After the court’s August 26, 2022 order finding unreasonable and vexatious conduct and granting ACP’s request for fees in an amount to be determined, Sheridan served ACP with a document request seeking ACP’s billing records and its agreement with its lawyers. ACP produced invoices but not the retainer agreement. ACP then sought $11,655.45 for work connected to the earlier fee dispute and additional fees for bringing the present motion.

Legal Standard

Under 28 U.S.C. § 1927, a court may require a lawyer to personally pay excess costs, expenses, and attorneys’ fees caused by unreasonably and vexatiously multiplying the proceedings. The court explained that sanctions require objectively intentional or reckless disregard of the lawyer’s duties to the court. Because the sanction is penal, the law must be applied strictly, and the court must identify the additional fees caused by the improper conduct.

The court calculated reasonable fees using the lodestar method, which multiplies the reasonable hours worked by a reasonable hourly rate. ACP’s lawyers, Michael Klutho and Patrick Newman, requested compensation for 45.7 hours at a discounted hourly rate of $295.

Analysis

The court concluded that Sheridan’s repeated refusal to provide useful billing information lacked a good-faith basis and used court procedures to obstruct and prolong resolution of the fee dispute. The court also found that his conduct continued after August 30, 2022, including through an unnecessary discovery request and a request for a retainer agreement based on his suspicion that ACP’s lawyers were paid a flat rate.

The court held that ACP could recover reasonable fees for work performed after December 30, 2021, through October 21, 2022, the filing date of the present motion. It found the requested hourly rates reasonable based on the lawyers’ experience, the rates approved in similar cases, and the prevailing rates in the community. It also found the 45.7 hours reasonably expended and concluded that the requested $12,133.35 in fees was reasonable. ACP withdrew its request for costs, which it described as negligible.

Order

Judge Wilhelmina M. Wright ordered that ACP’s motion for attorneys’ fees and costs was GRANTED IN PART and DENIED IN PART. The motion for attorneys’ fees was GRANTED, and ACP was awarded $12,133.35 under 15 U.S.C. § 1692k(a)(3). The motion for costs was DENIED AS MOOT. The court further ordered Michael Sheridan to personally pay the $12,133.35 attorneys’ fee award under 28 U.S.C. § 1927.