9th Circuit Reviews Attorney's Fees Under FDCPA
In Comacho v. Bridgeport Financial, Inc., 523 F.3d 973 (9th Cir. 2008), the Ninth Circuit issued a rare published opinion on calculating attorney's fees under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"), reversing a district court's award of fees and remanding for a recalculation. The opinion provides significant guidance on how courts are to calculate attorney's fees under the FDCPA.
In Comacho, plaintiff sued defendant Bridgeport in a putative class action alleging violation of the FDCPA. The parties settled the case shortly after the district court certified a statewide class with more than 7,000 members. As part of the settlement, Bridgeport agreed to pay "reasonable and necessary" attorney's fees to be determined by the district court if the parties could not agree (and they could not). The district court awarded plaintiff $77,069.36 of the $167,434.36 in attorney's fees she sought, and plaintiff appealed. The Ninth Circuit reversed and remanded, holding: (1) the district court failed to identify the relevant community in awarding fees; (2) the district court failed to address or determine the prevailing market rate in awarding attorney's fees; and (3) the district court abused its discretion by awarding a flat $500 award without calculating the lodestar. In reversing the district court, the Ninth Circuit held that FDCPA attorney's fees must be calculated based on prevailing rates in the "relevant community." The district court based its calculations on district courts far and wide. Wrong, said the Court. The relevant community for the case was the Northern District of California, or a "community shown to be comparable to the Northern District" where attorney rates trend higher than in other parts of the country.
And what is that prevailing rate? According to the Court, "the rate prevailing in the community for similar work performed by attorneys of comparable skill, experience, and reputation." Here, that meant the district court's award of $200 per hour was too low (plaintiffs sought between $425 and $500 per hour). The Court did not specify the correct rates, but noted that the rate should not be discounted because plaintiff's attorney's happen to be experienced in this area of law. Neither should the district court's calculation be based solely on prior attorney's fee award that may be publicly available, because rates increase over time. Moreover, the Court said the district court had to show its work with detailed calculations.
Finally, the Court held that the district court's award of a $500 flat fee for attorney's fees spent on seeking fees (known as "fees-on fees") was incorrect for two reasons. First, the district court failed to use the lodestar method. Second, the district court failed to detail its calculations.
In Comacho, plaintiff sued defendant Bridgeport in a putative class action alleging violation of the FDCPA. The parties settled the case shortly after the district court certified a statewide class with more than 7,000 members. As part of the settlement, Bridgeport agreed to pay "reasonable and necessary" attorney's fees to be determined by the district court if the parties could not agree (and they could not). The district court awarded plaintiff $77,069.36 of the $167,434.36 in attorney's fees she sought, and plaintiff appealed. The Ninth Circuit reversed and remanded, holding: (1) the district court failed to identify the relevant community in awarding fees; (2) the district court failed to address or determine the prevailing market rate in awarding attorney's fees; and (3) the district court abused its discretion by awarding a flat $500 award without calculating the lodestar. In reversing the district court, the Ninth Circuit held that FDCPA attorney's fees must be calculated based on prevailing rates in the "relevant community." The district court based its calculations on district courts far and wide. Wrong, said the Court. The relevant community for the case was the Northern District of California, or a "community shown to be comparable to the Northern District" where attorney rates trend higher than in other parts of the country.
And what is that prevailing rate? According to the Court, "the rate prevailing in the community for similar work performed by attorneys of comparable skill, experience, and reputation." Here, that meant the district court's award of $200 per hour was too low (plaintiffs sought between $425 and $500 per hour). The Court did not specify the correct rates, but noted that the rate should not be discounted because plaintiff's attorney's happen to be experienced in this area of law. Neither should the district court's calculation be based solely on prior attorney's fee award that may be publicly available, because rates increase over time. Moreover, the Court said the district court had to show its work with detailed calculations.
Finally, the Court held that the district court's award of a $500 flat fee for attorney's fees spent on seeking fees (known as "fees-on fees") was incorrect for two reasons. First, the district court failed to use the lodestar method. Second, the district court failed to detail its calculations.
