A federal court in Wisconsin recently granted a motion for attorneys’ fees in a Fair Debt Collection Practices Act case based on the defendant’s “aggressive litigation tactics.” The case is Michael J. Broome v. Kohn Law Firm, S.C., et al.
Consumer plaintiff Michael Broome claimed the defendants violated the FDCPA by filing a debt-collection lawsuit against him in the wrong venue. The Court entered judgment after Broome’s acceptance of the defendants’ offer of judgment, and Broome’s counsel followed up with a motion for attorneys’ fees.
While the defendants did not oppose Broome’s request for costs, they argued that the Court should deny the request for attorneys’ fees or, alternatively, award a lessor amount for time expended before a settlement offer was made.
Thoroughly disagreeing with the defendants, the Court granted Broome’s fee petition in full. The Court acknowledged that while there may have been ways that fees could have been reduced, overall the rates and hours were reasonable, “particularly in light of defendants’ own aggressive litigation tactics.”
The Court reiterated its determination that “the most persuasive evidence of reasonableness [of fees] is the hourly rate that clients actually pay, both to the counsel in that case and to other lawyers in the relevant markets.” The Court was satisfied that Broome’s counsel submitted this type of evidence and found the rates reasonable.
The Court further rejected the defendants’ argument that Broome’s counsel should not be awarded fees for any work performed after the defendants offered to settle. Noting that this argument might have “surface appeal,” the Court found it overlooked an important difference – that the original offer included fees and costs. Accepting this original settlement offer would have meant that Broome would receive no settlement or one that was greatly reduced based on the obligations under the retainer agreement. As a result, the Court found that the defendants’ original settlement was not substantial, and it declined to reduce counsel’s fees for refusing to accept the offer.
The defendants went on to object to almost every aspect of work Broome’s counsel performed, including time spent researching the case, drafting the complaint, considering the offer of judgment, and drafting the fee petition. According to the Court, “the gist of defendants’ objections is that counsel over-litigated what is a simple claim with a small amount of damages.” While the Court agreed that this is a “fair point as a general matter,” it determined that “a substantial portion of the blame for the size of the fees lies with defendants themselves.” The Court pointed out that it was the defendants who prompted much of the research because they contended that they would prevail on a “bona fide error” and Broome was forced to spend many hours on their fee petition as a result of the defendants’ 26-page opposition brief.
Ultimately, the Court found that “when a defendant drives up litigation costs through its own aggressive strategy, it cannot later object to counsel’s efforts to do what is necessary to prevail.” Using this logic, the Court awarded Broome’s counsel $22,333,25 in fees and $446 in costs.
The case provides a good reminder of the fine line between zealous advocacy and overly aggressive litigation. Practitioners should also be cautious in extending offers of judgment in cases where there is a potential the plaintiff may petition for a fee award.