$6,511.46 Costs Award Against Plaintiff Reversed, Because Bad Faith/Harassment Is Necessary Predicate For Adverse Costs Award in Favor of Prevailing Defendant.
In Rouse v. Law Offices of Rory Clark, Case No. 09-55146 (9th Cir. May 3, 2010) (for publication), a district judge awarded $6,511.46 in routine costs to a prevailing defendant in a Fair Debt Collection Practices Act (FDCPA) action even though not finding bad faith or harassment by plaintiff. The district judge found that bad faith/harassment were only predicates for an award of attorney’s fees under the FDCPA (specifically, 15 U.S.C. ยง 1692k(a)(3)), primarily based on the premise that costs is a factor in determining the reasonableness of fees under the FDCPA.
The Ninth Circuit vacated the costs ruling and remanded for further proceedings.
Although finding section 1692k(a)(3) susceptible of more than one meaning, the federal court of appeals determined the costs should not be used to determine the reasonableness of attorney’s fees and was contrary to the lodestar approach (inclusive of the lodestar adjustment factors). "Mandating that costs be factored into the determination of the reasonableness of attorneys’ fees would undermine judicial economy. It would require courts to engage in a fruitless exercise of attempting to relate the lodestar figure to the amount of costs. Courts would be left grasping to provide some meaning to a variable that has no necessary bearing on the reasonableness of attorneys’ fees." (Slip Opn., p. 6622.)
Thus, even an award of costs to a prevailing defendant under FDCPA depends upon a finding of bad faith and harassment on plaintiff’s part according to the Ninth Circuit in Rouse.