Consumer Statutes, Equity: Fifth Circuit Court Of Appeals Affirms Denial Of Fees In Fair Debt Collection Practices Act Case Where Plaintiff Only Recovered $1,000 Statutory Damages But Sought Recovery Of $130,410 In Fees

Fifth Circuit Sided With Two Other Circuits That Fees Can Be Denied In Unusual Circumstances, With Shocking Nature Of The Request Plus Conspiracy To Manufacture The Claim Solidifying The Fee Denial.

            Davis v. Credit Bureau of the South, No. 17-41136 (5^th Cir. Nov. 16, 2018) (per curiam) demonstrates how federal courts, even under a statutory scheme where fee recovery is mandatory, can affirm a fee denial where unusual circumstances show it would be unjust to award anything to plaintiff’s attorneys.

            What happened in this one was that plaintiff sued defendant on the theory that defendant misrepresented itself as a credit bureau in its attempt to collect on a $107.29 water bill via a collection letter and a subsequent phone call, suing under the Fair Debt Collection Practices Act (FDCPA).   The district judge, based on a magistrate recommendation, found a violation and awarded $1,000 statutory damages, but nothing more.

Plaintiff then sought to recover $130,410, an amount which shocked the district court and resulted in a denial of any fees.

            The Fifth Circuit affirmed.

            There is a fee-shifting provision under the FDCPA which is codified at 15 U.S.C. § 1692k(a)(3) in favor of prevailing plaintiffs. But there is a split in thinking on whether it is mandatory in nature, although worded that way. The Third and Fourth Circuits determined, contrary to other circuits, that a district judge can deny fees in “unusual circumstances,” such as bad faith. The Fifth Circuit followed suit under the facts of this particular case.

            Here is what cemented why “unusual circumstances” were present: (1) the case was easily resolved through one Fifth Circuit opinion, such that not a lot of work was justified to get to the ultimate merits result; (2) the request was shockingly excessive in nature, with duplicative and inefficient work being contained in the supporting substantiation; and (3) there was some evidence that plaintiff “conspired” with attorneys to create a claim in order to generate a high fee request. Fee denial affirmed.