UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA
March 28, 2012
KELKRIS ASSOCIATES, INC. DBA CREDIT BUREAU ASSOCIATES, DEFENDANT.
MEMORANDUM AND ORDER RE: MOTION FOR ATTORNEY'S FEES
Plaintiff Loren Scott brought this action against defendant Kelkris Associates, Inc., dba Credit Bureau Associates arising out of defendant's allegedly improper service of plaintiff in a debt collection action. Presently before the court is defendant's motion for attorney's fees.
I. Factual and Procedural Background
Defendant was assigned a debt that plaintiff allegedly owed to Travis Credit Union. After failing to collect the debt from plaintiff voluntarily, defendant initiated a debt collection suit against plaintiff in the Superior Court of California for Sacramento County on January 23, 2009. (Compl. ¶ 6, Ex. B.)
Through a licensed process server, defendant unsuccessfully attempted to effectuate substitute service on the plaintiff by leaving a copy of the summons and lawsuit with plaintiff's father at a house that defendant incorrectly believed to be plaintiff's residence and by mailing copies of the same to the residence. (Steinheimer Decl. ¶¶ 7-9 (Docket No. 28).) A default judgment was entered against plaintiff in the debt collection action. (Compl. ¶ 8.)
The first that plaintiff learned of the suit filed against him was when he received a letter notifying him of an Earning Withholding Order. After learning of the lawsuit and the default judgment against him, plaintiff contested the default judgment, which the Superior Court vacated "on the ground of inadvertence and excusable neglect." (Friedman Decl. Ex. A (Docket No. 18).)
Plaintiff brought suit against defendant alleging violations of §§ 1692b(1)-(2), 1692c(b), 1692d, 1692e, 1692e(10), and 1692f of the federal Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and §§ 1788.12(b) and 1788.14(a) of the California Rosenthal Fair Debt Collection Practices Act ("Rosenthal Act"), Cal. Civ. Code § 1788 et seq. (Docket No. 1.)
Defendant then brought a special motion to strike plaintiff's state law claims under California's anti-Strategic Lawsuits Against Public Participation ("anti-SLAPP") statute, Cal. Civ. Proc. Code § 425.16. (Docket No. 8.) The motion was granted only as to plaintiff's claim for invasion of privacy, eliminating the possibility that plaintiff could recover punitive damages. (Oct. 29, 2010, Order (Docket No. 13).) After the court issued its order on defendant's anti-SLAPP motion, defendant's counsel sent plaintiff's counsel an email requesting attorney's fees, but did not file a motion. (Shaw Decl. ¶¶ 5-8, Ex. A (Docket No. 29).) Plaintiff's counsel objected to the request, contending that because the invasion of privacy claim was not "the crux" of plaintiff's lawsuit and plaintiff would not have ultimately sought to recover the punitive damages requested in the complaint, defendant was not a "prevailing defendant" on its anti-SLAPP motion. (Id. ¶¶ 3-7, Ex. A.)
During discovery, plaintiff served one set of what defendant characterizes as "boilerplate discovery" and did not take any depositions. (Steinheimer Decl. ¶ 3.) Plaintiff identified only one witness who supported his claims, his father Lewis Scott. (Id. ¶ 4.) Shortly before defendant had requested that he be deposed, Lewis Scott suffered a stroke that rendered him unable to attend the deposition. (Friedman Decl. ¶ 11 (Docket No. 29); Scott Decl. ¶ 12.) The deposition was rescheduled after he had recovered, but he failed to appear at the deposition. (Friedman Decl. ¶ 11; Scott Decl. ¶¶ 9-12.) Lewis Scott did not respond to calls from plaintiff or plaintiff's counsel when they attempted to find out why he had not appeared at the deposition as he had indicated he would. (Friedman Decl. ¶ 11; Scott Decl. ¶¶ 9-12.)
At the close of discovery, defendant moved for summary judgment on all of plaintiff's remaining claims. (Docket No. 17.) The only evidence plaintiff produced were declarations filed by himself and his father, which were similar to declarations filed in the state court debt collection action. (Steinheimer Decl. ¶ 5.) The court found that there were no disputed material facts and that plaintiff had failed to produce evidence sufficient to support his allegations that defendant had violated the FDCPA and the Rosenthal Act. (Mar. 23, 2012, Am. Order at 8-17 (Docket No. 32).) Accordingly, the court granted defendant's motion for summary judgment as to all remaining claims.
Defendant now moves for reasonable attorney's fees in the amount of $24,929.29 pursuant to 15 U.S.C. § 1692k(a)(3) and California Civil Code section 1788.30(c), or for reasonable attorney's fees in the amount of $8,459.00 pursuant to California Code of Civil Procedure section 425.16(c) as the prevailing defendant on its special motion to strike.
A. Attorney's Fees Pursuant to the FDCPA and the Rosenthal Act Both the FDCPA and the Rosenthal Act contain fee- shifting provisions. Under § 1692k(a)(3) of the FDCPA, "[o]n a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees reasonable in relation to the work expended and costs." 15 U.S.C. § 1692k(a)(3). To recover under this statute, there must be "evidence that the plaintiff knew that his claim was meritless and that plaintiff pursued his claims with the purpose of harassing the defendant."
Gorman v. Wolpoff & Abramson, LLP, 435 F. Supp. 2d 1004, 1013 (N.D. Cal. 2006), rev'd on other grounds, 584 F.3d 1147 (9th Cir. 2009). At a minimum, "minimally colorable" claims are not considered bad faith, Guerrero v. RJM Acquisitions LLC, 499 F.3d 926, 940 (9th Cir. 2007), and to show bad faith, a defendant must show more than mere frivilousness, Krapf v. Nationwide Credit Inc., No. SACV 09-00711, 2010 WL 2025323, at *5 (C.D. Cal. May 21, 2010).
The Rosenthal Act, in turn, provides that "reasonable attorney's fees may be awarded to a prevailing creditor upon a finding by the court that the debtor's prosecution or defense of the action was not in good faith." Cal. Civ. Code § 1788.30(c). Both statutes, therefore, limit a defendant's ability to recover attorney's fees to instances where the plaintiff has acted in bad faith in bringing his or her action. Roybal v. Trans Union, No. Civ. 2:05-01207, 2009 WL 394290, at *1 (E.D. Cal. Feb. 17, 2009).
Defendant argues that plaintiff's bad faith in bringing this action is demonstrated by the fact that plaintiff's claims lacked merit and a factual or legal basis. It notes that plaintiff produced only limited evidence in opposition to defendant's motion for summary judgment and that defendant was successful in obtaining summary judgment on all of plaintiff's claims under the FDCPA and the Rosenthal Act. It is true that the court ultimately determined that plaintiff had not demonstrated a triable issue of material fact as to his FDCPA and Rosenthal Act claims. While it might be fair to characterize plaintiff's claims as frivolous or barely colorable, there is no proof that plaintiff knew his claim was meritless, Gorman, 435 F. Supp. 2d at 1013, or other evidence to support a finding of bad faith.
It cannot be the law that any time a plaintiff loses on summary judgment, he has acted in bad faith. See id. at 1012-13 (granting defendant's motion for summary judgment on FDCPA claims, but declining to find bad faith); Walsh v. Frederick J. Hanna & Assocs., No. Civ. 2:10-2720, 2011 WL 537854, at *1 (E.D. Cal. Feb. 15, 2011) (finding no bad faith where plaintiff's FDCPA and Rosenthal Act claims were dismissed with prejudice). Defendant has not made the extra showing of bad faith. Accordingly, defendant is not entitled to attorney's fees under California Civil Code section 1788.30(c) or § 1692k(a)(3) of the FDCPA.
B. Fees Pursuant to California Code of Civil Procedure Section 425.16 Pursuant to California's anti-SLAPP statute, "a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney's fees and costs." Cal. Civ. Proc. Code § 425.16(c)(1). It is well-settled that such an award of fees and costs is mandatory under the statute, Ketchum v. Moses, 24 Cal. 4th 1122, 1131 (2001), and applies to successful anti-SLAPP motions brought in federal court, Verizon Del., Inc. v. Covad Commc'ns Co., 377 F.3d 1081, 1091 (9th Cir. 2004). An award of fees under subsection 425.16(c)(1) may also include the "fees incurred in litigating the award of attorney fees." Ketchum, 24 Cal. 4th at 1141.
"The fee-shifting provision was apparently intended to discourage  strategic lawsuits against public participation by imposing the litigation costs on the party seeking to 'chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances' and encourage 'private representation in SLAPP cases.'" Id. at 1131 (quoting Cal. Civ. Proc. Code § 425.16(a)); see also Northon v. Rule, 637 F.3d 937, 938 (9th Cir. 2011) ("The entitlement to fees and costs enhances the anti-SLAPP law's protection of the state's 'important, substantive' interests."). California courts have thus held that the anti-SLAPP statute reflects a "strong preference for awarding attorney fees to successful defendants" and the "term 'prevailing party' must be interpreted broadly to favor an award of attorney fees to a partially successful defendant." Lin v. City of Pleasanton, 176 Cal. App. 4th 408, 425-26 (1st Dist. 2009) (internal citations and quotation marks omitted). Plaintiff contends that despite defendant's success in bringing an anti-SLAPP motion as to the claim for invasion of privacy, defendant should not be considered a prevailing party.
Under certain circumstances, a defendant may not be considered a prevailing party even though the court granted its anti-SLAPP motion because "the results of the motion were so insignificant that the party did not achieve any practical benefit from bringing the motion." Mann v. Quality Old Time Serv., Inc., 139 Cal. App. 4th 328, 340 (4th Dist. 2006). "The crucial question is one of practicality; did anything of substance (technical victories notwithstanding) change in the posture of the case and the claims being lodged against the defendant after it brought the special motion to strike than were in existence beforehand." Brown v. Elec. Arts, Inc., 722 F. Supp. 2d 1148, 1155 (S.D. Cal. 2010).
In Moran v. Endres, 135 Cal. App. 4th 952 (2d Dist. 2006), the trial court denied fees under subsection 425.16(c) when the defendant had moved to strike all eleven causes of action in the complaint, but was successful only in striking a purported cause of action for "conspiracy." Id. at 954-56. The appellate court upheld this decision on the grounds that such a trivial victory on a cause of action that was not truly a cause of action to begin with did not entitle the defendant to attorney's fees where the ruling "in every practical sense meant nothing." Id.
In contrast, in Mann, the court held that the defendants were entitled to fees even though they had successfully eliminated only a trade libel cause of action. Mann, 139 Cal. App. 4th at 340. In holding that the defendants were the prevailing party despite the partial success of their motion, the court noted that the eliminated cause of action, although similar to a remaining claim for defamation, was not identical to that claim and that its elimination had the "potential to narrow the litigation" and "reduc[e] recoverable damages." Id.
Here, it cannot be said that the court's ruling on defendant's anti-SLAPP motion "in every practical sense meant nothing." To the contrary, the motion was successful in eliminating plaintiff's invasion of privacy claim, and with it the threat of punitive damages as that was the only claim in the complaint on which punitive damages were available. The motion also narrowed the scope of discovery. Plaintiff's protestations that the invasion of privacy claim was not central to his action and that punitive damages would likely not have been available in this case are of no moment. If this claim was truly one that plaintiff did not intend to seriously pursue, then it was precisely the type of claim that the anti-SLAPP statute is intended to protect against. See Cal. Civ. Proc. Code § 425.16. Accordingly, defendant is a prevailing party entitled to an award of the attorney's fees incurred in bringing the special motion to strike.
III. Calculating the Award
"[T]he fee setting inquiry in California ordinarily begins with the 'lodestar,' i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate." PLCM Grp. v. Drexler, 22 Cal. 4th 1084, 1095 (2000); see Ketchum, 24 Cal. 4th at 1131 (indicating that the lodestar is used to calculate fees under the anti-SLAPP statute). "The reasonable hourly rate is that prevailing in the community for similar work." PLCM Grp., 22 Cal. 4th at 1095 (citing Margolin v. Reg'l Planning Comm'n, 134 Cal. App. 3d 999, 1004 (2d Dist. 1982)). The lodestar may then by adjusted upward or downward by the court based on relevant factors. Ketchum, 24 Cal. 4th at 1132. Specifically, Local Rule 293(c) provides the following list of non-exhaustive factors that guide a court's award of attorney's fees:
(1) the time and labor required of the attorney(s);
(2) the novelty and difficulty of the questions presented;
(3) the skill required to perform the legal service properly;
(4) the preclusion of other employment by the attorney(s) because of the acceptance of the action;
(5) the customary fee charged in matters of the type involved;
(6) whether the fee contracted between the attorney and the client is fixed or contingent;
(7) any time limitations imposed by the client or the circumstances;
(8) the amount of money, or the value of the rights involved, and the results obtained;
(9) the experience, reputation, and ability of the attorney(s);
(10) the "undesirability" of the action;
(11) the nature and length of the professional relationship between the attorney and the client;
(12) awards in similar actions; and
(13) such other matters as the Court may deem appropriate under the circumstances.
Local R. 293(c); see also Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975) (identifying the same factors as relevant). The purpose of adjusting the lodestar is to "fix a fee at the fair market value for the particular action." Ketchum, 24 Cal. 4th at 1132.
Defendants propose a lodestar figure of $8,459.00 for work done on the anti-SLAPP motion. This figure accounts for hours expended by Andrew M. Steinheimer, a partner at Ellis Law Group, LLP, and Brandon Reeves, an associate at Ellis Law Group, LLP.
A. Reasonable Hourly Rate
The first step in calculating the lodestar is
determining the reasonable hourly rate, which is the rate "prevailing in the community for similar work." PLCM Group, 22 Cal. 4th at 1095. "Generally, the relevant community is the forum in which the district court sits." Barjon v. Dalton, 132 F.3d 496, 500 (9th Cir. 1997).
Defendant requests rates of $200 per hour for Mr. Steinheimer and $195 per hour for Mr. Reeves, which are the hourly rates agreed upon by defendant and defendant's counsel.
(Steinheimer Decl. ¶ 21.) The court finds that these rates are reasonable, and if anything, below the prevailing rate in the Eastern District of California for similar work. See, e.g., Branco v. Credit Collection Servs., Inc., No. Civ. 2:10--01242, 2011 WL 6003877, at *4 (E.D. Cal. Dec. 1, 2011) ($275); Valero v. Bryant, LaFayette & Assocs., LLC, No. Civ. 1:10--01174, 2011 WL 1438436, at *6 (E.D. Cal. Apr. 14, 2011) ($250); Hartung v. J.D. Bryider, Inc., No. Civ. 1:08-00960, 2009 WL 1876690, at *12 (E.D. Cal. June 26, 2009) ($250); Lowe v. Elite Recovery Solutions, No. Civ. S-07-0627, 2008 WL 324777, at *5 (E.D. Cal. Feb. 5, 2008) ($250). Accordingly, the court finds these rates reasonable.
B. Reasonable Number of Hours
Defendant has submitted itemized billing for work on the anti-SLAPP motion that details the number of hours spent by each attorney. In total, defendant represents that counsel spent 26.7 hours on the special motion to strike. At oral arguments, plaintiff objected generally to the number of hours spent on the special motion to strike as unreasonable. However, neither in its briefing nor at oral arguments was plaintiff able to point to any specific entry as unreasonably excessive or to submit any relevant evidence in support of this contention, as he should have been prepared to do in opposition to defendant's motion.*fn1
See Premier Med. Mgmt. Sys., Inc. v. Cal. Ins. Guar. Ass'n, 163 Cal. App. 4th 550, 560-63, (2d Dist. 2008) (recognizing that, "[s]ince appellants submitted no evidence that the hours claimed by counsel were excessive, they appear to be asking that we declare as a matter of law that the hours were unreasonable," and declining to do so); Maughan v. Google Tech., Inc., 143 Cal. App. 4th 1242, 1251 (2d Dist. 2008) (discussing declaration submitted by plaintiff comparing hours requested by defendant's counsel with the significantly fewer hours spent by plaintiff's counsel in upholding trial court's reduction of hours as excessive). In light of the absence of specific objections by plaintiff and the complexity of the issues and quality of the work involved in defendant's anti-SLAPP motion, the court finds that the less than 30 hours spent on the motion as a whole is reasonable.
Defendant also seeks compensation for eight hours spent drafting the instant motion for attorney's fees as "fees incurred in litigating the award of attorney fees," which are recoverable under subsection 425.16(c)(1). Ketchum, 24 Cal. 4th at 1141. The records before the court, however, do not indicate what portion of these hours was spent seeking fees related to the anti-SLAPP motions and what portion was spent seeking fees under the Rosenthal Act and the FDCPA. Recovery on these eight hours is sought in addition to the 7.9 hours that defendant seeks to recover for work done on an earlier motion for attorney's fees under subsection 425.16(c)(1) that was never filed, but was used in preparing the instant motion. (Steinheimer Decl. ¶ 17.)
For two reasons, the court does not find it reasonable to include the eight hours spent drafting the instant motion in defendant's tally. First, the court cannot tell what portion of those hours was actually spent on matters related to defendant's special motion to strike and it does not appear that the requests for attorney's fees under various statutes were so intertwined that allocation would be impossible. See Akins v. Enterprise Rent-A-Car Co., 79 Cal. App. 4th 1127, 1133 (1st Dist. 2000) (noting that a court is not required to allocate attorney's fees between successful and unsuccessful efforts for work on issues or claims that are so intertwined that it is impossible to separate them). It would be improper to allow defendant to recover fees under the anti-SLAPP statute that were not incurred on matters related to its special motion to dismiss. Lafayette Morehouse, Inc. v. Chronicle Publ'g Co., 39 Cal. App. 4th 1379, 1383 (1st Dist. 1995).
Second, it apparently took 7.9 hours for defendant's counsel to draft a motion for attorney's fees related to its anti-SLAPP motion. It does not seem reasonable, then, that in the eight hours spent drafting the instant motion, which included new requests under two different statutes and dealt with additional facts, counsel would have had time to do much work related to the anti-SLAPP recovery beyond simply attaching the earlier drafted material. Accordingly, the court finds that while it is reasonable to include the 7.9 hours expended by defendant on its special motion to strike as time spent to recover fees, it would be unreasonable to also include the additional eight hours.
Accordingly, the court will award defendant the following fees: Motion Attorney Hours Rate Fee Special motion to Steinheimer 15.2 $200 $3,040.00 strike Reeves 11.5 $195 $2,242.50 Motion for attorney's Steinheimer 7.2 $200 $1,440.00 fees Reeves 0.7 $195 $136.50
IT IS THEREFORE ORDERED that defendant's motion for attorney's fees be, and the same hereby is, GRANTED in the amount of $6,859.00.