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Gagliano v. State Collection Service

United States District Court, E.D. Wisconsin

May 13, 2016



WILLIAM E. DUFFIN U.S. Magistrate Judge.

I. Facts and Procedural History

When attempting to purchase a business, unpaid debts on her credit report were impairing plaintiff Paige Gagliano’s ability to obtain a loan needed to purchase a business. She contacted defendant State Collection Service, Inc. regarding multiple debts totaling $807.20. The parties reached an agreement pursuant to which, according to Gagliano, all the debts would be immediately removed from her credit report if she made a single payment resolving one of the debts and entered into a payment plan for the others. State Collection Service accepted one payment in the amount of $162.90 but did not remove the unpaid debts from her credit report.

Gagliano promptly filed this suit on December 4, 2014, alleging that State Collection Service violated the Fair Debt Collection Practices Act (FDCPA) and the Wisconsin Consumer Act (WCA). (ECF No. 1.) She sought the maximum $1, 000 in damages permitted under the FDCPA. She also sought $42, 500 in actual damages, representing the additional sum she allegedly had to pay for the business due to delays in obtaining financing. She further sought $145, 246 in alleged increased loan costs due to a higher interest rate she had to pay, $100, 000 in punitive damages, and $100, 000 for emotional distress. (ECF No. 55 at 1-2.) Gagliano made no further payment toward the relevant debts.

A jury trial commenced on January 27, 2016. Shortly before trial Gagliano withdrew her claim for damages related to increased interest costs. (ECF No. 35.) And the court concluded at trial that Gagliano had not established a basis for an award of punitive damages. Ultimately, Gagliano asked the jury to award her $1, 000 in statutory damages and actual damages encompassing $42, 500 for alleged increased costs relating to the purchase of her business and an additional unspecified sum for emotional distress. After a two-day trial, the jury found that State Collection Service used “false representations or deceptive means to collect or attempt to collect a debt.” (ECF No. 43.) Consistent with Kobs v. Arrow Serv. Bureau, 134 F.3d 893, 896 (7th Cir. 1998), the questions of actual and statutory damages were presented to the jury. It awarded Gagliano $162.90 in statutory damages and no actual damages. (ECF No. 43.) Judgment was entered accordingly. (ECF No. 46.)

On February 10, 2016, Gagliano filed a motion seeking $94, 225.00 in attorney fees pursuant to 15 U.S.C. § 1692k(a)(3) for 345.7 hours of attorney and paralegal time. State Collection Service opposes the motion, arguing that Gagliano’s recovery was nominal and only an insignificant fraction of the $381, 746.00 she demanded prior to trial. (ECF No. 55.) The Clerk of Court assessed costs in the amount of $2, 513.40 against State Collection Service (ECF No. 60) and neither party has asked the court to review that determination in accordance with Civil Local Rule 54(c).

II. Legal Standard

“Plaintiffs who prevail under the Fair Debt Collection Practices Act are entitled to an award of costs and reasonable attorney’s fees.” Schlacher v. Law Offices of Phillip J. Rotche & Assocs., P.C., 574 F.3d 852, 856 (7th Cir. 2009) (citing 15 U.S.C. § 1692k(a)(3); Tolentino v. Friedman, 46 F.3d 645, 651 (7th Cir. 1995)). “[T]he award of attorney’s fees to plaintiffs for a debt collector’s violation of ‘any provision’ of the FDCPA is mandatory.” Zagorski v. Midwest Billing Servs., 128 F.3d 1164, 1166 (7th Cir. 1997) (citing Tolentino, 46 F.3d at 651; Mace v. Van Ru Credit, 109 F.3d 338, 344 n.3 (7th Cir. 1997)). Because no fixed formula exists for calculating attorney’s fees in FDCPA actions, courts generally begin with calculating the lodestar, consisting of the reasonable hourly rate for the attorney’s work multiplied by the number of hours reasonably expended in prosecuting the action. Schlacher, 574 F.3d at 856 (citing Hensley v. Eckerhart, 461 U.S. 424, 433-37 (1983); Gautreaux v. Chi. Hous. Auth., 491 F.3d 649, 659 (7th Cir. 2007)). The court then adjusts the lodestar figure, up or down, based on a variety of factors, including “the complexity of the legal issues involved, the degree of success obtained, and the public interest advanced by the litigation.” Id. at 856-57 (citing Connolly v. Nat'l Sch. Bus Serv., Inc., 177 F.3d 593, 597 (7th Cir. 1999); Strange v. Monogram Credit Card Bank of Ga., 129 F.3d 943, 946 (7th Cir. 1997)). “‘[T]he most critical factor’ in determining the reasonableness of the award ‘is the degree of success obtained.’” Zagorski, 128 F.3d at 1166-67 (quoting Farrar v. Hobby, 506 U.S. 103, 114 (1992)). “Success must be measured not only in the amount of the recovery but also in terms of the principle established and the harm checked.” Id. at 1167.

The district court is required to provide a clear explanation for its award. Schlacher, 574 F.3d at 857. A court is not permitted to merely “eyeball” an award or reduce an award based upon a gut reaction that the amount would otherwise be excessive. Id. (citing Small v. Richard Wolf Med. Instruments Corp., 264 F.3d 702, 708 (7th Cir. 2001); In re Cont'l Ill. Sec. Litig., 962 F.2d 566, 570 (7th Cir. 1992)).

III. Calculation of the Lodestar

State Collection Service does not challenge the hourly rates of $300 for attorney Nathan DeLadurantey, $250 for attorney Heidi Miller, and $125 for a paralegal. Thus, the only issue is the number of hours reasonably expended.

In the world of federal litigation, especially actions that proceed to trial, this action was not complex. See Pappenfuss v. Receivable Mgmt. Servs. Corp., 2013 U.S. Dist. LEXIS 138369 (E.D. Wis. Sept. 26, 2013) (noting that FDCPA cases are generally not complicated). Even the plaintiff concedes as much. (ECF No. 59 at 15.) Neither party filed a dispositive motion. Aside from motions in limine, the parties filed three pretrial motions. Gagliano sought leave to file an amended complaint to add an employee of State Collection Service as a defendant (ECF No. 15), a motion the court denied (ECF No. 17). Gagliano filed a motion to compel discovery (ECF No. 18), which the court granted in part (ECF No. 21). State Collection Service sought leave to file an untimely motion for summary judgment (ECF No. 22), which the court denied (ECF No. 24). Four depositions were taken. Gagliano deposed three employees of State Collection Service and State Collection Service deposed Gagliano. (ECF No. 50 at 4.) The parties’ motions in limine, dealing with approximately 16 issues (see ECF No. 34 at 4-5), were generally straight-forward evidentiary matters. The jury trial lasted two days and included the testimony of four witnesses.

In assessing the reasonableness of attorneys’ fees one factor is what was awarded in similar cases. Tolentino, 46 F.3d at 652 (citing Hensley, 461 U.S. at 441). While FDCPA litigation is extremely common, as are disputes over attorneys’ fees in such cases, it is uncommon for an FDCPA case to proceed to a jury trial. The court has identified only a handful of cases from around the country where courts were required to assess the reasonableness of fees following a jury trial in an FDCPA case.

In the most-recent example the court identified, the United States District Court for the District of Colorado awarded $26, 647.00 for 143.8 hours of attorney and paralegal time in a case where, following a jury trial, judgment was entered in favor of the plaintiff on one out of four of his FDCPA claims for $31 in actual damages and $1, 000 in statutory damages. Sherwood v. BRT Corp., 2015 U.S. Dist. LEXIS 144297 (D. Colo. Oct. 23, 2015). The plaintiff’s claim was for $35, 150.50 in attorneys’ fees, which included a 25% reduction for time spent on a claim that was dismissed at summary judgment. The court reduced the fee in part because certain attorneys on the case had “insufficient FDCPA experience, skill, and reputation” to merit the $250 hourly rate the court found appropriate for FDCPA “attorneys with substantial experience.” Id. at 6-10.

In another recent case, also out of Colorado, the court awarded the plaintiff $19, 900 for 115.6 hours of attorney work. Garcia v. Midland Credit Mgmt., 2015 U.S. Dist. LEXIS 108783 (D. Colo. Aug. 18, 2015). The award was a reduction of the $28, 900 sought by the plaintiff, the court noting that counsel should have been more efficient given that he had litigated over 2, 300 FDCPA cases in the District of Colorado alone. Id. at 4-5. The court concluded that 79.6 hours was the reasonable number of hours required to prosecute the matter through a jury trial where the plaintiff prevailed on two of her four FDCPA claims and was awarded statutory damages of $220.50. Id. at 1, 8.

In Evankavitch v. Green Tree Servicing, LLC, 2014 U.S. Dist. LEXIS 125557 (M.D. Pa. Sept. 9, 2014), following a two-day jury trial the plaintiff recovered $1, 000 in statutory damages on her FDCPA claim. The plaintiff sought $115, 470 for 447.3 hours of attorney and paralegal time on the case. Id. at 4-5. After excluding certain hours for matters not related to the FDCPA claims and for an unsuccessful summary judgment motion, the court reduced the billable hours to 352.54. Id. at 11. The court then reduced the lodestar by 10% because the claims were ...

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