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SAVINO v. COMPUTER CREDIT

November 20, 1999

FRANK SAVINO, PLAINTIFF,
v.
COMPUTER CREDIT, INC., DEFENDANT.



The opinion of the court was delivered by: Spatt, District Judge.

MEMORANDUM OF DECISION AND ORDER

In prior proceedings in this case, this Court found that the Defendant violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692(g), in a single letter mailed to the debtor Plaintiff. Savino v. Computer Credit Inc., 960 F. Supp. 599 (E.D.N.Y. 1997) ("Savino I"). Presently before the Court is the Plaintiff's second application for attorney's fees, following remand from the Second Circuit.

BACKGROUND

The factual circumstances of the underlying case, set forth fully in Savino I, are incorporated by reference here. In short the Defendant sent a series of letters to the Plaintiff demanding payment of an outstanding debt. The Court granted summary judgment to the Plaintiff, finding that one of these letters, dated August 14, 1995, which demanded immediate payment of the debt, violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"), which entitles a debtor to request confirmation of the amount owed within 30 days of being notified of the debt. Savino I, 960 F. Supp. at 604-05.

Thereafter, the Plaintiff moved for an award of statutory damages and attorney's fees, and the Defendant moved for sanctions under Rule 11, on the ground that the Plaintiff repeatedly and frivolously changed his position on whether or not he ever received the August 14, 1995 letter. Although finding it "a close call," this Court denied the request for sanctions, and awarded the Plaintiff statutory damages in the amount of $500. In addition, finding that the Plaintiff's request for more than $34,000 in fees was "grossly excessive," the Court awarded the Plaintiff the sum of $3,675 in attorney's fees. Savino v. Computer Credit, Inc., 990 F. Supp. 159 (E.D.N.Y. 1998) ("Savino II").

The Plaintiff appealed the Court's decision to the Second Circuit, challenging the Court's refusal to certify a class of affected persons with Plaintiff as representative and the Court's reduction of both the hourly rate and the reasonable number of hours requested by the Plaintiff. The Defendant cross-appealed, challenging the findings that it had violated the FDCPA, that an award of statutory damages was appropriate, and that Rule 11 sanctions should not be imposed against the Plaintiff. The Second Circuit affirmed all of this Court's rulings with one exception; it found that this Court's "failure to explain its specific methodology and rationale supporting the substantial reduction in the number of compensable hours was error." Savino v. Computer Credit, Inc., 164 F.3d 81, 87-88 (2d Cir. 1998) ("Savino III"). The Second Circuit thus remanded the matter to this Court, with instructions "to provide specific reasons for its calculation of attorney's fees, particularly for any decision to set the number of compensable hours at a figure lower than that sought by Savino." Id.

Plaintiff is now before the Court on the remanded issue of attorney's fees, arguing that (i) this Court improperly applied the "lodestar" method of calculating a fee award, (ii) that the Second Circuit's decision affirming the denial of sanctions vindicated the Plaintiff's early changes of his theory of the case, and (iii) that such a small fee award would have a chilling effect on the willingness of attorneys to bring FDCPA cases. The Plaintiff is also seeking an award of its attorney's fees for pressing its case before the Second Circuit.

DISCUSSION

It is well established that the proper method for determining the amount of a prevailing party's attorney's fee award is the "lodestar" method, in which an initial estimate of fees is obtained by multiplying the number of hours reasonably expended by counsel on the litigation by a reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. 424, 434, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983); Quaratino v. Tiffany & Co., 166 F.3d 422, 425 (2d Cir. 1999) LeBlanc-Sternberg v. Fletcher, 143 F.3d 748, 763-64 (2d Cir. 1998); Luciano v. Olsten Corp., 109 F.3d 111 (2d Cir. 1997). However, the court "should exclude from this initial fee calculation hours that were not `reasonably expended' due to reasons such as overstaffing, unnecessarily contentious conduct, and unsuccessful claims." Hensley, 461 U.S. at 434, 103 S.Ct. 1933; Luciano, 109 F.3d at 116; Quaratino, supra. Rather than weighing the reasonableness of each individual time entry, the court may exclude excessive and unreasonable hours from a fee request by making an across-the-board reduction in the amount of hours. Kirsch v. Fleet St. Ltd., 148 F.3d 149, 173 (2d Cir. 1998); Luciano, 109 F.3d at 117.

Here, the Plaintiff's attorney has submitted a request for fees indicating roughly 187 hours spent in pursuit of the initial litigation, with more than three-quarters of those hours billed by Scott Gelfand himself. As the Court has already indicated in Savino II, it considers that amount of time to be "totally unreasonable," 990 F. Supp. at 169, and "grossly excessive." 990 F. Supp. at 170. Having presided over this case from beginning to end, the Court is well aware that this was a fairly simple case, necessitating, in the Court's view, minimal factual development. The case involved a single, unremarkable legal issue — whether the August 14, 1995 letter, which demanded immediate payment, complied with the specific statutory requirements of the FDCPA. Id. In light of the simplicity of this case the Court finds that the actual hours that Plaintiff's counsel allegedly spent on this case were excessive, and must be reduced before the lodestar figure can be properly calculated.

For example, the Court observes that Gelfand has significant expertise in representing FDCPA plaintiffs in both individual and class actions. As a result, the Court is baffled as to why an attorney with Gelfand's knowledge and experience needed more than 10 hours to conduct research "regarding FDCPA violations" before drafting the original complaint which raised no novel or unusual issues. Similarly, the Court observes that, despite Gelfand's extensive experience and prodigious pre-action research, two of the Plaintiff's attorneys spent almost 50 additional hours researching and drafting summary judgment papers, even though no complex factual or legal issues were raised. See e.g. 990 F. Supp. at 170 (when this Court characterized the issue raised by the Plaintiff as "unremarkable."). Given the simplicity and routine nature of the issues that were eventually presented to the Court, the Court finds that the vast bulk of these hours were excessive and should not be considered in the lodestar calculation.

Furthermore, the Court finds that another large percentage of the Plaintiff's attorney's hours resulted from the Plaintiff's successive efforts to amend the complaint to comport with inconsistent facts that turned up during discovery. As is set out more fully in Savino II, the Plaintiff's original complaint alleged that an August 28, 1995 letter, the only demand letter he claimed to receive, violated the FDCPA. 990 F. Supp. at 162. The Defendant immediately produced an earlier letter, dated August 14, 1995, that was sent to the Plaintiff, and he eventually amended his complaint to acknowledge the existence of the earlier letter but to deny receiving it. Id. at 163. Then, after testifying at his deposition that he did receive the August 14, 1995 letter, the Plaintiff amended his complaint a second time to admit receiving the earlier letter and change his legal theory to allege that the earlier letter violated the FDCPA, while dropping all claims relating to the August 28, 1995 letter. Id.

From its ringside seat to the parties' quarrels over these letters and the ensuing amendments, the Court is of the opinion that, under the particular facts of this case, an award of attorney's fees for the Plaintiff's successive motions to amend would be unreasonable and improper. As the Second Circuit stated, the court should exclude from a fee calculation any hours spent on claims that are factually or legally unrelated to claims on which the plaintiff succeeds. Kirsch, 148 F.3d at 173; LeBlanc-Sternberg, 143 F.3d at 764. Here, the Plaintiff eventually abandoned his initial efforts to state a claim based on the August 28, 1995 letter, and thus, attorney's fees related to the initial efforts by Plaintiff to attack the August 28, 1995 letter would not be recoverable.

Moreover, based on its knowledge of the case, the Court finds that the approximately 25 hours of time subsequently spent by the Plaintiff's attorney on moving to amend the complaint to account for the existence of the August 14, 1995 letter were also unnecessary. Initially, the Court notes that the sheer amount of time spent by Plaintiff's counsel 15 hours for "research" and preparation of a motion to amend and an additional 5 hours for preparation of reply papers was excessive, given that the standards for granting leave to amend and among the most well-known, settled, and lenient rules in the law. Furthermore, the Court notes that the Plaintiff was made aware of the existence of the August 14, 1995 letter almost immediately after the filing of the initial complaint in October 1995. A reasonable attorney would have simply amended his complaint as of right to acknowledge the letter's existence, thus avoiding later time-consuming motion practice. However, instead of amending immediately, the Plaintiff decided to deny the existence of the letter and sought to amend his complaint only after capitulating more than six months later. The unnecessary wrangling over the existence and/or receipt of the August 14, 1995 letter is particularly glaring, since the Plaintiff's eventual success in this case came from attacking that letter head-on. In the Court's view, the battle over amending the complaint was unnecessarily caused by the Plaintiff's refusal to revise his initial theory of the case promptly upon discovering evidence that contradicted it. While this Court found, and ...


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