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Castro v. Lloyd & Mcdaniel, PLC

United States District Court, S.D. Indiana, Indianapolis Division

September 19, 2016

DENNIS CASTRO individually and on behalf of all others similarly situated, Plaintiff,
LLOYD & MCDANIEL, PLC a Kentucky limited liability company, PCA ACQUISITIONS V, LLC a Delaware limited liability company, Defendants. PHILIPPS & PHILIPPS, LTD., Interested Party.



         This matter is before the Court on Interested Party Philipps & Philipps, Ltd. (“Philipps”) Petition for Payment of Attorney's Fees and Expenses, under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq. (Filing No. 62.) On February 26, 2016, the Court entered a final Order approving the class action settlement between the Plaintiffs Dennis Castro (“Mr. Castro”) on behalf of himself and all others similarly situated, and Defendants Lloyd & McDaniel, PLC (“L&M”), and PCA Acquisitions V, LLC (“PCA”) (collectively, “the Defendants”). Philipps served as Class Counsel in this matter and requested that the Court award it $72, 302.50 in fees and $3, 104.96 in expenses, as well as $6, 686.50 in fees to Taft, Stettinius and Hollister, LLP (“Taft”). Defendants filed a Response in Opposition to the amount of fees requested. (Filing No. 66.) On April 22, 2016, Class Counsel filed their Reply in Support of Petition for Payment of Attorney's Fees and Expenses, in which they assert that Class Counsel should be awarded the total amount of $84, 124.46 in fees and $3, 410.50 in expenses to Philipps & Philipps, Ltd., and $27, 783.00 in fees to Taft Stettinius & Hollister LLP; for time spent preparing and defending the fee petition. (Filing No. 71.) Having considered the Petition, Response in Opposition, and the Reply, the Court issues the ruling below.

         I. BACKGROUND

         PCA operates a nationwide debt collection business, in which PCA buys large portfolios of defaulted consumer debt. Id. at 2. PCA then employs other collection agencies, such as L&M, to collect defaulted debt. Id. It is unclear at what point PCA acquired Mr. Castro's defaulted credit card debt. (Filing No. 19 at 2.) However, PCA admits that it did. Id. On September 19, 2014, L&M sent Mr. Castro a debt collection letter on behalf of PCA. (Filing No. 20 at 3.) Thereafter, on April 8, 2015, Mr. Castro filed a complaint bringing suit against the Defendants under the FDCPA. (Filing No. 1.) That same date, attorneys David J. Philipps, Mary E. Philipps, and Angie K. Robertson, with the Chicago area law firm of Philipps and Philipps, Ltd., each filed their Notice of Appearance on behalf of Mr. Castro. (Filing No. 3, Filing No. 4, and Filing No. 5.)

         In his suit, Mr. Castro alleged that the Defendants violated the FDCPA by failing to effectively identity the current creditor, in violation of section 1692g(a)(2) and alleged that the Defendants' statement “[b]ecause of interest, late charges and other charges that may vary from day to day, the amount due on the day you pay may be greater” was false, deceptive or misleading, in violation of section 1692e. Id. at 5.

         On October 28, 2015, Mr. Castro, as an individual and on behalf of all others similarly situated, entered into a settlement agreement with the Defendants. (Filing No. 59 at 1.) As part of the settlement agreement, the Defendants agreed to discontinue the practices alleged in Mr. Castro's Complaint, to pay Mr. Castro $1, 000.00 as a class representative, and to pay $21, 550.00 to the class. Id. On February 26, 2016, this Court approved the settlement agreement. Id. Unfortunately, the parties were not able to reach an agreement for attorney's fees and expenses, so Mr. Castro filed the motion currently before the Court.

         In order to handle the petition for attorney's fees and expenses, Philipps, as class counsel, employed the legal services of Taft law firm. Initially, Philipps' attorney's fees and expense petition was for a total amount of $75, 407.46 in fees and expenses. (Filing No. 63 at 10.) However, Mr. Castro incurred an additional $6, 686.50 in fees from Taft for preparing the expense petition. Id. Subsequently, the Defendants filed a twenty-seven page objection to the fees petition, which caused Mr. Castro's attorneys to incur additional expenses and fees. (Filing No. 71 at 1.) Thus, Mr. Castro now petitions this Court to grant an award of $84, 124.46 in fees and $3, 410.50 in expenses to Philipps and an award of $27, 783.00 in fees to Taft. Id. at 19. Together, Mr. Castro has requested a total amount of $115, 317.96 in his attorney's fees petition.


         Prevailing plaintiffs under the FDCPA are entitled to an award of costs and reasonable attorney's fees as determined by the court. 15 U.S.C. § 1692k(a)(3); Tolentino v. Friedman, 46 F.3d 645, 651 (7th Cir. 1995). In proving the reasonableness of attorney's fees, the burden rests on the party seeking the fees award. Spegon v. Catholic Bishop of Chi., 175 F.3d 544, 550 (7th Cir. 1999). However, if the petitioner of attorney's fees meets his or her burden, then the opposing party bears the burden of providing evidence that demonstrates why a lower rate is essential. Pickett v. Sheridan Health Care Ctr., 664 F.3d 632, 640 (7th Cir. 2011). The same burden applies to the market rate component of the lodestar calculation. The burden of proving the market rate is on the petitioner, however, a petitioner's own affidavit is insufficient to establish a reasonable market rate. Id. Instead, a petitioner can meet his or her burden if the petitioner presents third party affidavits from similar attorneys who charge similar rates for comparable work. Spegon, 175 F.3d at 556. In the alternative, the petitioner can provide evidence of clients paying him or her a similar rate for similar work in the relevant market. Id.

         Because the fees amount is not mechanically linked to the amount of the plaintiff's award, Eddleman v. Switchcraft, Inc., 927 F.2d 316, 318 (7th Cir. 1991), the lodestar method of calculating the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate is an appropriate and helpful determination. Gastineau v. Wright, 592 F.3d 747, 748 (7th Cir. 2010). This method may be adjusted by the court to “reflect various factors including the complexity of the legal issues involved, the degree of success obtained, and the public interest advanced by the litigation.” Schlacher v. Law Offices of Phillip J. Rotche & Assocs., P.C., 574 F.3d 852, 856-57 (7th Cir. 2009). In this manner, the lodestar method produces a fees award that is presumptively reasonable, while still deferring to the district court's “greater familiarity with the case”, regarding the reasonable number of hours expended on the case. See Pa. v. Del. Valley Citizens Council for Clean Air, 478 U.S. 546, 565 (1986); see also Gastineau, 592 F.3d at 748 (stating that a “highly deferential” version of the abuse of discretion standard applies when reviewing a district court's fees award).

         Once the lodestar figure is calculated, by multiplying the number of hours reasonably expended on the litigation by a reasonable hourly rate, the Seventh Circuit permits district courts to adjust the amount up or down after considering various relevant factors, including:

the time and labor required; the novelty and difficulty of the questions; the skill requisite to perform the legal services properly; the preclusion of employment by the attorney due to acceptance of the case; the customary fees; whether the fees are fixed or contingent; time limitations imposed by the client or the circumstances; the amount involved and the results obtained; the experience, reputation, and ability of the attorneys; the “undesirability” of the case; the nature and length of the professional relationship with the client; and awards in similar cases.

Mathur v. Bd. of Trs. of S. Ill. Univ., 317 F.3d 738, 742 n.1 (7th Cir. 2003). Determining the amount of a fees and expense award is a matter that rests within the sound discretion of the trial court. See In re Dairy Farmers of Am., Inc., Cheese Antitrust Litig., 80 F.Supp.3d 838, 844 (N.D. Ill. 2015).

         In evaluating the reasonable time expended for the lodestar calculation, courts will consider similar factors used to reduce the total lodestar amount. For example, when assessing the reasonableness of time expended, courts look at “the time and labor required, the novelty and difficulty of the issues, the legal skill required, the reputation of the attorneys, the time burdens imposed by the client or the circumstances, and awards in similar cases”. Owens v. Howe, 365 F.Supp.2d 942, 947 (N.D. Ind. 2005).

         In evaluating the reasonable rate for the lodestar calculation, courts consider what the petitioner's attorneys charge for similar work in the relevant market. Bratton v. Thomas Law Firm, P.C., 943 F.Supp.2d 897, 902 (N.D. Ind. 2013). In particular, courts consider what lawyers with similar abilities and experience charge their clients for similar work in the same market. Owens, 365 F.Supp. 2d. at 947. Nonetheless, courts generally presume the attorney's billing rate for comparable work to be a reasonable rate. Id.


         As an initial matter, on April 25, 2016, the Defendants filed a Motion for Leave to File Sur-reply. (Filing No. 72.) Therein, the Defendants requested the opportunity to reply to additional fees being petitioned by Mr. Castro. However, the Defendants stated that such objections would be similar in nature to the objections raised in their initial brief. The Defendants petition this Court to be allowed to raise objections to the additional fees sought by Mr. Castro, if the Court would find it useful. The Court finds that the similar information would add no value to the analysis regarding the additional fees being petitioned by Mr. Castro. Therefore, the Court finds a sur-reply unnecessary and the motion for leave (Filing No. 72.) is DENIED.

         The Philipps firm is comprised of three attorneys, David J. Philipps (Managing Partner), Mary E. Philipps (Partner), and Angie K. Robertson (Associate). (Filing No. 62-1 at 8.) In Mr. Philipps' declaration, he asserts that his firm charges $575.00 per hour for his work, $565.00 per hour for Ms. Philipps' work, $275.00 per hour for Ms. Robertson's work, and $185.00 per hour for the work of their paralegals. Id. at 19. According to the expense report submitted by the Philipps firm, all three attorneys and two paralegals contributed to the litigation of Mr. Castro's case. (Filing No. 62-2.)

         Additionally, two partners and one associate from the Taft law firm worked on the fees petition, resulting in additional legal expenses. (See Filing No. 63 at 7.) The Taft attorneys that worked on the fees petition were Samuel Hudson (Partner), Tracy Betz (Partner), and Tammara Porter (Associate), billing $435.00 per hour, $360.00 per hour, and $295.00 per hour, respectively. Id. For the reasons stated below, the Court finds the rates and some of the time expended by Mr. Castro's attorneys to be reasonable.

         A. The rates charged by the Philipps and Taft firms were reasonable.

         The Defendants argue that the rates sought by Mr. Castro's attorneys are unreasonable and that Mr. Castro has failed to satisfy his burden of establishing the market rate for his attorneys. (Filing No. 64 at 2.) The Court is not persuaded.

         Mr. Philipps is the senior partner in the Philipps firm with over 25 years of experience, and has litigated in numerous consumer protection cases. (Filing No. 63. At 5.) Mr. Philipps has been approved as class counsel in twenty-nine contested cases, and has been appointed as class counsel for settlements in another 190 cases. Id. Ms. Philipps is the co-founder of the Philipps firm. Id. Ms. Robertson is an Associate at the Philipps firm, and has over five years of legal experience. Id.

         In support of the market rates claimed by the Philipps firm, Mr. Castro cites to past decisions in this District, including this one, in which courts have found comparable rates claimed by the Philipps firm to be reasonable. (See Filing No. 63 at 6; Filing No. 71 at 5-6.) While the Seventh Circuit has held that fees assessed in similar cases by other courts are not binding, the Seventh Circuit stated that they must be considered and must not be ignored. See Spegon, 175 F.3d at 556.

         Mr. Castro cites to Paulus v. Pride Acquisitions., to support the reasonableness of the rates sought by the Philipps firm. (Filing No. 63 at 6.) Paulus involved violations of the FDCPA. No. 1:12-cv-1433-LJM-MJD (S.D. Ind. Oct. 2, 2013). In the decision, the court found the market rates of $505.00 per hour for Mr. Philipps, $495.00 per hour for Ms. Philipps, and $165.00 per hour for paralegals, to be reasonable. Id. (order granting final approval of class settlement). Another decision cited by Mr. Castro in support of the rates sought is Baker v. Nations Recovery Ctr., which also concerned violations of the FDCPA. In that decision, the undersigned approved, the market rates of $505.00 per hour for Mr. Philipps, $495.00 per hour for Ms. Philipps, and $165.00 per hour for paralegals were again found to be reasonable. See Baker v. Nations Recovery Ctr., 1:13-cv-0071-TWP-DML (S.D. Ind. Nov. 15, 2013) (order granting final approval of class settlement).

         In addition, and perhaps the most compelling case cited by Mr. Castro, is the decision Wood v. State Collection Serv., which also dealt with allegations of FDCPA violations. Therein, the court approved the exact same rates being requested in this petition. See Wood v. State Collection Serv., No. 1:15-cv-0475-SEB-DKL (S.D. Ind. Jan. 29, 2016) (order granting final approval of class settlement). In that decision, the court found the market rate of $575.00 for Mr. Philipps, $565.00 for Ms. Philipps, $275.00 for Ms. Robertson, and $200.00 for paralegals, ...

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