Block Billing Also Discussed.
A creditor was sued under a cross-complaint by a debtor under both the Rosenthal Fair Debt Collection Practices Act and the federal Fair Debt Collection Practices Act (FDCPA). Debtor won a summary judgment motion on the FDCPA claim, on condition that she agree to a compensatory award of $1, which she did. Then, debtor moved for attorney’s fees under 15 U.S.C. § 1692k(a)(3), FDCPA’s pro-consumer fee shifting statute. To creditor’s surprise we would venture, the trial court awarded $89,489.60 in attorney’s fees and costs.
Creditor did not get anything overturned on appeal in Heritage Pacific Financial, LLC v. Monroy, Case Nos. A135274/A136043 (1st Dist., Div. 2 Mar. 29, 2013) (unpublished).
Creditor’s principal argument was that the fee/costs award was out of kilter because of debtor’s modest success. Not so, said the appellate court. Debtor was successful, showing that creditor did violate the FDCPA. Such a fee award might deter creditor from these practices in the future. Even for cases with small awards, courts have been generally reluctant to reduce fee awards of low monetary recovery since FDCPA statutory damages are capped any way at $1,000–such that requiring proportionality would be inconsistent with FDCPA’s statutory scheme and would not attract competent counsel to prosecute them unless fee recovery was available. (Defenbaugh v. JBC & Associates, Inc., 2004 WL 1874978 (N.D.Cal. Aug. 10, 2004); Phenow v. Johnson, Rodenberg & Lauinger, PLLP, 766 F.Supp.2d 955, 959 (D.Minn. 2011); Thornton v. Wolpoff & Abramson, LLP, 312 Fed.Appx. 161, 164 (11th Cir. 2008).)
After deciding that the work effort expended was not excessive given creditor’s vigorous defense, the appellate court agreed with debtor that $450 per hour for a 15 year experienced Bay Area litigator was not excessive, especially given data from expert Richard Pearl that fees awarded in class action cases in 2012 for 12-15 years of experience varied from $455 to $610 per hour. The fact that class actions were used as a comparison was not found consequential by the appellate court.
That took the appellate court to a block billing challenge. The problem is that trial courts retain discretion to penalize block billing when the practice prevents them from discerning which tasks are compensable and which are not, with no problem being identified by the lower court below. Creditor also relied on a California State Bar Committee on Mandatory Fee Arbitration opining that block billing hides accountability and inflates time between 10-30%, but the appellate court rebuffed this argument in these words: “[Creditor] seems to be suggesting that we should take this statement of the State Bar as law and ignore the consistent precedent in California cases that provide trial courts with discretion about whether to penalize block billing. The State Bar’s comment about block billing in fee arbitrations is not binding on state courts.”