Berscheid v. Experian Information Solutions, Inc.

Background

Midland Credit Management, Inc. sued Becky Berscheid in state conciliation court over a credit account that Midland allegedly purchased. The state court found that Midland had not shown that it owned the account and dismissed Midland’s claim with prejudice. The opinion states that Midland continued reporting to nationwide credit bureaus that Berscheid owed it money. Berscheid disputed that information, but Experian Information Solutions, Inc. allegedly did not correct her credit report.

Berscheid brought claims under the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. Experian removed the case to federal court. Berscheid later added Midland and TransUnion, LLC as defendants. TransUnion settled with Berscheid, while the claims against Experian and Midland remained.

Midland first offered Berscheid $1,001 through an offer of judgment under Federal Rule of Civil Procedure 68; she did not accept that offer. Midland later offered judgment for $10,001 on Berscheid’s claims against Midland, plus reasonable attorney’s fees and costs. Berscheid accepted the second offer. The parties entered judgment, but they could not agree on the amount of attorney’s fees and costs.

Motion and Legal Standard

Berscheid ultimately requested $50,000 in attorney’s fees and $32.50 in costs. Her lawyers had applied reductions to their recorded time to account for possible inefficiencies. Midland argued that $21,899.25 was a more reasonable fee because of its settlement efforts, alleged inefficiency and overstaffing, discovery disputes, and the results obtained.

The court explained that prevailing plaintiffs under the Fair Debt Collection Practices Act and the Fair Credit Reporting Act may recover reasonable attorney’s fees and costs. It used the lodestar method, which calculates a fee by multiplying the reasonable hours worked by reasonable hourly rates. The party requesting fees must support the request with evidence about the work performed, the hours billed, and the requested rates.

Hourly Rates

The court found that Ryan Peterson’s requested hourly rate of $365 was reasonable. It also found that Anthony Chester’s requested rate of $395 was too high, but rejected Midland’s proposed reduction to $300. Based on Chester’s experience and consumer-protection specialization, the court set his reasonable rate at $365. The court also found the paralegal’s $150 hourly rate reasonable because Midland did not challenge it.

Hours Expended

The court declined to make an additional across-the-board reduction for general overlawyering or internal communications because Berscheid’s lawyers had already reduced their fees by 15% and the use of two lawyers was not inherently unreasonable in this multi-defendant case.

The court found that some of the time spent challenging the protective order was unreasonable. It reduced Peterson’s time for that work by 5.0 hours and Chester’s time by 9.0 hours, representing a 66% reduction in each lawyer’s time on that issue.

The court rejected Midland’s request for a 50% reduction for discovery-related work. It found that Midland’s discovery responses were deficient and that Berscheid was entitled to challenge them. The court also found reasonable the time Berscheid’s lawyers spent negotiating and litigating the fee award, including the additional $4,931.42 requested for briefing the fee motion.

The court reduced administrative work by 100%. It deducted 1.3 hours from Peterson’s time, 0.4 hours from the paralegal’s time, and 1.5 hours from Chester’s time.

Results Obtained

The court declined to reduce the fee award based on Berscheid’s level of success. Berscheid obtained a $10,001 judgment against Midland, which the court described as more than ten times the maximum statutory damages available under either cited statute and ten times Midland’s first offer of judgment. The court concluded that Berscheid achieved a successful result.

Disposition

After the reductions, the court calculated 61.8 compensable hours for Peterson, 3.2 compensable hours for the paralegal, and 60.5 compensable hours for Chester. Applying the approved hourly rates, the paralegal’s rate, and the 15% across-the-board reduction, the court awarded $38,351.58 for the underlying litigation and an additional $4,931.42 for litigating the fee motion.

The order granted in part and denied in part Berscheid’s motion for attorney’s fees and costs against Midland. It ordered Midland to pay Berscheid $43,283.00 in attorney’s fees and $32.50 in costs. The order addressed the fee motion against Midland; the opinion does not state a disposition of Berscheid’s claims against Experian.