In Cooper v. Retrieval-Masters Creditors Bureau, Inc., 16 C2827, —F. Supp. 3d—, 2018 WL 2299203 (N.D. Ill. May 21, 2018), appeal filed (7th Cir. June 20, 2018), available here, plaintiff Jack Wesley Cooper alleged violations of the Fair Debt Collection Protection Act (“FDCPA”), seeking statutory and actual damages and attorneys’ fees.

At a settlement conference five months later, defendant RMCB offered to settle for $500 in damages plus reasonable attorneys’ fees and costs that Cooper had incurred to date.  Cooper flatly rejected that offer.  The court granted Cooper summary judgment as to liability, and the case proceeded to a damages trial more than a year later.  The jury consequently awarded Cooper $500 in statutory damages, no actual damages, and $65,357.90 in attorneys’ fees, plus $1,042.37 in costs.

The issue before the court was whether the jury award of attorneys’ fees was reasonable.

In calculating the loadstar figure and the number of hours reasonably expended by Cooper’s counsel, the court highlighted the significance of Rule 68.  More specifically, “substantial settlement offers,” or offers that are roughly equal to or more than the total damages recovered by the prevailing party, should be considered by the district court as a factor in determining reasonable attorneys’ fees.  In such circumstances, the district court should consider only awarding a percentage of the attorneys’ fees (including zero percent) incurred after the settlement offer.

In this case, RMCB’s settlement offer was substantial because it was the same amount that Cooper ultimately recovered at trial.  Perhaps more importantly, Cooper’s counsel knew that he faced numerous personal challenges, such as recent deaths in the family and recent unemployment, that obviously overshadowed any distress he experienced in the aftermath of receiving RMCB’s letter with a one-line FDCPA violation.  Moreover, Cooper’s counsel absolutely should have known that the jury was unlikely to award the statutory maximum of $1,000.  Because proceeding to trial was likely to provide Cooper with zero benefit, the district court found all attorneys’ fees that he had incurred after the settlement offer were unreasonable.

This case serves as an important reminder of the power of a Rule 68 offer of judgment, including the dramatic impact that it may have on the attorneys’ fees to be awarded to a plaintiff under fee shifting statutes, such as the FDCPA.