Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-01646/USCOURTS-casd-3_09-cv-01646-0/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
Cause of Action: 15:1692 Fair Debt Collection Act

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JAQUI B. GOLD, ROBIEMIN A. GOLD,

Plaintiffs,

CASE NO. 09cv1646-LAB (CAB)

ORDER GRANTING IN PART

PLAINTIFFS’ MOTION FOR

ATTORNEY’S FEES

vs.

NCO FINANCIAL SYSTEMS, INC.; 

et al.,

Defendants.

In the early stages of litigation of this case, Defendant NCO Financial Systems (“NCO”

or “Defendant”) made an offer of judgment pursuant to Fed. R. Civ. P. 68, which Plaintiffs

accepted. The offer was for a sum of money, plus “reasonable attorney’s fees and costs,

to be mutually agreed upon by the parties, or if no agreement can be reached, to be

determined by the Court in accordance with 15 U.S.C. § 1692k.” Defendant OSI Collection

Services, Inc. had been dismissed earlier, leaving NCO as the sole Defendant.

The parties do not dispute that the Court can and should award costs and attorney’s

fees; their only disagreement concerns the amount Plaintiffs have requested. Defendant

argues the costs and fees are unreasonable and excessive, and asks the Court to reduce

them. Specifically, Defendant argues the claimed hourly rate is too high; fees should not be

awarded for unproductive or unnecessary work; the case was overstaffed in that work was

needlessly assigned to multiple attorneys instead of one attorney, or to attorneys instead of

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staff; and not all the costs being claimed are the “costs of the action” as defined by 28 U.S.C.

§ 1920. Defendant raised an additional objection — that Plaintiff sought fees incurred after

the offer of judgment had been accepted — but Plaintiff conceded this point and agreed the

award should be reduced to reflect this. Defendant also points out the amount recovered

was only $3,000, and the amount sought in fees and costs is nine times that. 

The Court held a hearing on this issue and gave its preliminary decision, which it now

confirms in this written decision.

I. Legal Standards

The parties agree the Court should use the lodestar method. Using this method, the

Court begins by multiplying the number of hours reasonably spent on the litigation by a

reasonable hourly rate, and then makes any necessary adjustments to account for factors

not already subsumed within the initial calculation. Mendez v. County of San Bernardino,

540 F.3d 1109, 1129 (9th Cir. 2008). 

In determining a reasonable hourly rate, the Court considers the prevailing market

rate in the community. Barjon v. Dalton, 132 F.3d 496, 500 (9th Cir. 1997). Plaintiffs’

principal counsel, Thomas Lyons, Esq., is based in Minnesota. Plaintiffs’ decision to hire him

was one of preference, not necessity. Therefore, the relevant community is this district. Id.

(explaining that the relevant community is generally the forum in which the district court sits,

though rates outside the forum may be used if local counsel was unavailable).

The Court must exclude hours that were not reasonably expended — for example,

hours that are excessive, redundant, or otherwise unnecessary. Hensley v. Eckerhart, 461

U.S. 424, 433–34 (1983). Fees are properly reduced when the task is overstaffed, id., when

hours are submitted in block format, Welch v. Metro Life Ins. Co., 480 F.3d 942, 948–49 (9th

Cir. 2007), or when the work performed is inadequately identified. Fischer v. SJB-P.D. Inc.,

214 F.3d 1115, 1121 (9th Cir. 2000). Overstaffing can include duplicative billing for

unnecessary conferences between colleagues, Welch, 480 F.3d at 948–49, or failure to

appropriately delegate tasks to staff or colleagues with lower billing rates. Northon v. Rule,

494 F. Supp. 2d 1183, 1187 (D.Or. 2007) (reducing fee award where, among other things,

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 The amended complaint alleges NCO called Mrs. Gold, demanding payment. When 1

Mrs. Gold said she could not pay and that her husband was deployed with the Navy, NCO

allegedly threatened to call his commanding officer to discuss the failure to pay. At the time,

Corpsman Jacqui Gold was on a ship in the Indian Ocean. Corpsman Gold learned about

the call later. The remaining allegations concern the frequency and time of calls, the caller’s

tone of voice and other remarks, and Plaintiffs’ emotional reactions to the call. The fact that

Corpsman Gold was at sea does not, as Plaintiffs have argued, render the case unusually

complex.

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senior attorney failed to delegate relatively simple tasks to junior associates). The party

seeking fees bears the burden of adequately documenting the hours claimed. Gates v.

Deukmejian, 987 F.2d 1392, 1397–98 (9th Cir. 1992). 

II. Discussion

A. Rates

Plaintiffs represent Thomas Lyons’ reasonable hourly rate as $400, but provide little

support for this other than citing cases where other courts approved his rates at $325 to

$400 per hour. Local counsel Christina Wickman represents her customary rate for cases

of this type is $250 per hour. Local counsel Robert Stempler, who performed a small

amount of work early in the case, represents his customary rate for this type of case is $350

per hour. Mr. Lyons represents that the customary rate for Sharon McMahon, a paralegal he

employs, is $90 per hour. 

Defendants challenge all three attorneys’ hourly rates, arguing $295 is a reasonable

rate for Mr. Lyons and Mr. Stempler, and $125 is reasonable for Ms. Wickman. In reply,

Plaintiffs argue the Court should look to the prevailing rate in Minnesota. Plaintiffs argue

that, while local counsel may have been available, it was necessary to hire Mr. Lyons

because of his expertise in military matters. Plaintiffs also cite evidence that another

attorney’s hourly rate of $355 was recently found reasonable in this district.

With regard to the military issues, there is no showing Mr. Lyons’ expertise in this area

was ever required. The case settled relatively early and, as the Court noted at the hearing,

the issues were not particularly novel or complex. Even in the pleadings, the military issues

were incidental. There was nothing wrong with Plaintiffs’ hiring Mr. Lyons, but to pay a 1

premium for his expertise when it was not called on is unreasonable. 

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28 Plaintiff believed the partner who billed at this rate was Mr. Swigart; however, it was 2

actually another partner, Robert Hyde, Esq.

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The Court also finds the evidence of rates charged by a local colleague, Joshua

Swigart, Esq., unconvincing. First, Mr. Swigart’s declaration never comments on the

requested $400 rate; rather, he merely attested to the reasonableness of Ms. Wickman’s

fee, noting she is a partner in her own consumer rights firm. Second, Plaintiffs cite only one

case where $355 was found to be a reasonable hourly rate, Shaw v. Credit Collection

Servs., 09cv883-LAB. In that case, however, the $355 hourly rate applied to 0.3 hours of

work performed by a senior partner, while 6.5 hours performed by an associate were billed 2

at $225 per hour. Mr. Swigart’s own declaration identifies a different case, Bellows v. NCO

Financial Systems, 07cv1413-W, in which his own hourly rate of $355 was found reasonable.

Bellows was a much more complex case, however; among other things, it was a putative

class action. 

Review of the other cases mentioned in Mr. Swigart’s declaration shows that in other

cases, lower rates were approved. In McDonald v. Bonded Collectors, LLC, 233 F.R.D. 576

(S.D.Cal. 2005), Mr. Swigart’s $315 hourly rate was found reasonable, though he only billed

0.7 hours. Among the other cases, Defendants point to Myers v. LHR, Inc., 543 F. Supp.

2d 1215 (S.D.Cal., 2008), where Mr. Swigart’s hourly rate of $295 was found reasonable.

The Court agrees Ms. Wickman’s requested hourly rate is very close to a reasonable

rate for this case. She was filling a supporting role, though in fact she appears to have

contributed significantly to the litigation beyond merely serving as local counsel. 

Having considered the evidence and the parties’ arguments, the Court determines Mr.

Lyons’ reasonable hourly rate for this case is $295, as is Mr. Stempler’s. The Court also

concludes $225 per hour, the rate recently awarded in Shaw, is reasonable for Ms.

Wickman’s work.

B. Hours Reasonably Expended

Mr. Lyons billed 45.98 hours; Mr. Stempler, 2 hours; Ms. Wickman, 23.9 hours; and

Ms. McMahon, 1.28 hours. Defendants ask the Court to reduce Plaintiffs’ requested hours

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 As noted, Plaintiffs do not contest this reduction.

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to account for block billing, duplicative work, communications that could not be billed to the

client, unproductive work, and administrative work billed by attorneys. Defendants seek a

reduction by 43.37 hours, broken down as follows: 6.97 hours for work performed after the

offer of judgment; 7.76 hours for excessive fees, 7.01 hours for block billing or overbilling; 3

13.32 hours for inter-office communications and duplicate entries; 2.09 hours for work that

did not advance the litigation; 2.66 hours for unnecessary work; 3.06 hours for work that

should have been performed by administrators; and 0.5 hours for non-billable instructions

to staff. The Court has reviewed these and agrees Plaintiffs’ hours must be significantly

reduced. Plaintiffs do not attempt to rebut these objections in any detail, but broadly discuss

the complexity of the case and argue the hours are reasonable.

The Court agrees many of Plaintiffs’ billings were inappropriately block-billed. For

example, the first item in Mr. Lyons’ billing is for 4.03 hours for an intake conference, some

of which is billable and some of which was not. Some portion of this conference, for

example, involved discussing Mr. Lyons’ firm’s website and his qualifications, and answering

questions about the retainer agreement. As part of this conference, Mr. Lyons also billed

for looking up Defendant on the internet, a simple task that could and should have been

delegated. Looking at entries such as this, it is impossible to say with any certainty what

portion of the 4.03 hours Defendants should pay for. The Court therefore agrees a reduction

for block billing is appropriate.

Defendants also argue Plaintiffs inappropriately billed for inter-office communications.

In part they object that many of the entries are so vague it is impossible to know whether the

attorneys were doing work that advanced the litigation. And in part they object that many of

the entries describe work that would not ordinarily be billed to clients. In many cases, only

one attorney billed for the call, suggesting that the other didn’t consider it billable. But in

some cases both billed, and Defendants point out that the effect is a duplicative billing.

Where the relationship of the task to the litigation is marginal to begin with, doubling the

hours through duplicative billings is unreasonable.

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 Unraveling the exact time spent on these emails is impossible because Mr. Lyons’ 4

entry is block-billed. His two entries on September 14 include 0.23 hours for a call and

follow-up email to Ms. Wickman, and 0.28 hours for “continuation on substitution of attorneys

for San Diego District.” Ms. Wickman on September 15 billed 0.6 hours for reading the

emails and doing something unidentified about a power of attorney. Ms. Wickman’s billing

entry also shows the communication concerned the “contract with Golds,” which may refer

to the retainer agreement.

 In other cases, courts have applied this factor after calculation of the lodestar 5

amount, to reduce the total amount. See, e.g., Bridgeport Music, Inc. v. WB Music Corp.,

520 F.2d 588, 596 (6th Cir. 2008) (affirming district court’s fee award, where district court

reduced lodestar amount by 25% “to account for top-heavy billing by partners for work that

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While billing for conferences between counsel can be appropriate — for example,

where attorneys are collaborating on work or engaging in collective problem solving — the

Court agrees the entries identified here do not identify such work. Instead, the tasks are

either unidentified or pertain to business or administrative matters. As an example, on

March 13, 2009, Mr. Lyons billed 0.3 hours for a “long discussion” with Mr. Stempler, while

Mr. Stempler billed 0.2 hours for the same conference; neither explained the subject matter

or task at hand. As a second example, on September 14 and 15, 2009, Mr. Lyons and Ms.

Wickman together billed over an hour for emails about signatures on a substitution of 4

counsel motion.

Defendants also argue that such 2.09 hours spent on such tasks as file review,

checking voicemails, working on business matters, and the like did not advance the litigation

and are therefore not properly billed. Defendants also point out Mr. Lyons began working

on discovery matters even before the early neutral evaluation conference had been held,

and they argue the hours spent on discovery were needless at this early stage. The Court

agrees that much of Plaintiff’s counsel’s work was unnecessary, and the requested reduction

of 2.09 hours is very reasonable.

As Defendants also point out, much of the work Plaintiffs’ counsel did could and

should have been delegated to staff and was either billable only at the rate for a paralegal,

or else not billable at all. This includes matters such as arranging for meetings and travel,

sending or obtaining documents, and the like. The top-heavy billings (nearly 46 hours for

Mr. Lyons, 26 hours for the two local counsel, and 1.28 hours for the paralegal), which

resemble an inverted pyramid, illustrate this point. 

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28 could have been performed by associates). But here, Defendants have identified particular

entries they think should be discounted. The end result is the same, except that, as long as

it is feasible, discounting based on particular identified entries is likely more accurate.

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This raises an additional issue, however, regarding billing for intra-office

communication. While Mr. Lyons delegated some work to Ms. Wickman and Ms. McMahon,

he should have delegated more. But the delegation, such as it was, was appropriate and

necessary. Ms. Wickman’s own review of the materials and some of her communications

with Mr. Lyons and other involvement in the case are a necessary part of the delegation

process. The Court therefore finds it inappropriate to discount Ms. Wickman’s hours for the

second September 2, 2009 entry, the entries for December 3 through 7, the second

December 9 entry, the second December 21 entry, the first entry for January 6, 2010 (except

for the block billing deduction), the January 10 entry, the February 3 entry, and the first

February 12 entry. These amount to 5.7 hours the Court will not deduct from Ms. Wickman’s

billings. The delegation was not so extensive or efficient as to merit including both attorneys’

hours, however, so Mr. Lyons’ hours will still be deducted.

Defendants’ opposition to the motion for attorneys’ fees gives only illustrative

examples, but the Court has independently reviewed the billings and agrees the hours

claimed are excessive. Defendants’ requested reductions are well within reason and are

approved.

C. Lodestar Calculation

After applying the reductions in hours claimed, the Court concludes the hours to be

used in the lodestar calculation are 19.71 hours for Mr. Lyons, 1.7 hours for Mr. Stempler,

and 12.8 hours for Ms. Wickman. Multiplied by the reasonable rates the Court has found,

the totals are $5814.45 for Mr. Lyons’ work, $501.50 for Mr. Stempler’s work, and $2880 for

Ms. Wickman’s work. Defendants have not disputed that Ms. McMahon properly billed

$115.20 so the Court adds this to the other fees. The lodestar amount is therefore

$9311.15.

/ / /

/ / /

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D. Reduction for Limited Success

As Hensley points out, the lodestar calculation is not necessarily reasonable, and may

need to be reduced to account for a plaintiff’s limited success. 461 U.S. at 436. The Court’s

review of the billings and Plaintiffs’ pleadings suggests Mr. Lyons initially expected a large

award based on emotional harm. His work on retaining a forensic psychologist and his trip

to San Diego to meet Plaintiffs in person support this conclusion.

Instead of the large recovery Mr. Lyons may have expected, however, Plaintiffs

settled for $2000 in statutory damages plus $1000 in actual damages. Defendants also

argue this demonstrates Plaintiffs prevailed on only two of their causes of action. Thus, if

the Court awards the lodestar amount, Plaintiffs will have spent three times their damages.

Plaintiffs point out that for a variety of reasons, fee awards need not be proportionate

to the recovery, and the Court agrees. See Owens v. Howe, 365 F. Supp. 2d 942, 947 (N.D.

Ind., 2005) (in Fair Debt Collection Practices Act case, holding that the fee award “need not

be proportionate to the settlement or judgment amount . . . as that would defeat the public

benefit advanced by the litigation”) (citing Morales v. City of San Rafael, 96 F.3d 359, 365,

as am on den. of reh’g and reh’g en banc, 108 F.3d 981 (9th Cir. 1997)). The relatively low

settlement amount, however, makes clear Plaintiffs did not succeed on most of their claims,

and their settlement for statutory damages plus $1000 is analogous to an abandonment of

the remaining claims.

While Plaintiffs argue this was a complex case, in fact it appears to have been fairly

ordinary. Even if Plaintiffs’ initial impression was reasonable, it eventually became clear the

case was rather straightforward and the claims would not likely bring a large recovery; and

the settlement reflects this. Bearing in mind the relatively low value of the claims, fees

should have been kept lower. Plaintiffs’ counsel’s error in over-valuing and over-preparing

the case should not be visited on Defendants. The Court is required to consider the

relationship between the fee award and the degree of success, McGinnis v. Kentucky Fried

Chicken of California, 51 F.3d 805, 809–10 (9th Cir. 1994), and has discretion to reduce the

/ / /

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fee award to account for the limited success. Robins v. Matson Terminals, Inc., 283 Fed.

Appx. 535, 535 (9th Cir. 2008).

While Plaintiffs obtained only $3000, they have also effectively deterred NCO from

engaging in offensive and objectionable collection tactics, and that deterrence is worth

something. See City of Riverside v. Rivera, 477 U.S. 561, 575 (1986) (discussing the

potential value a plaintiff’s recovery of damages in civil rights actions may have in light of its

deterrence effect). See also Van Skike v. Director, 557 F.3d 1041, 1047 (9th Cir. 2009)

(discussing the importance of encouraging attorneys to undertake Fair Debt Collection

Practices Act cases by making adequate fee awards).

Having weighed these factors, the Court concludes a 1/3 reduction is appropriate

here. The Court therefore awards $6207.43 in attorney’s fees.

E. Costs

Plaintiffs have sought $2,406.51 for Mr. Lyons’ costs, $58 for Ms. Wickman’s costs,

and $13 for Mr. Stempler’s costs. Ms. Wickman’s costs are unremarkable and Defendants

do not object to them. Defendants object to all charges for experts, mailing, lunches, and

travel expenses, citing 28 U.S.C. § 1920 and arguing the costs were inadequately

documented.

Mr. Lyons’ expenses include $1,756.51 for a trip to San Diego to meet Plaintiffs

personally in Ms. Wickman’s office, for lunch on the way to that meeting, and for consultation

with a forensic psychologist who Mr. Lyons considered using as an expert witness. The

Court finds these charges unreasonable and will not award them. Mr. Lyons’ mailing

charges are simply designated “Postage” with no further explanation. The Court finds these

inadequately documented and will therefore not award them. The Court finds Mr. Stempler’s

costs for filing the complaint by mail to be a reasonable out-of-pocket litigation expense that

would ordinarily be paid by clients, and will therefore award them. See Molina v. Creditors

Specialty Serv., Inc., 2010 WL 235042, slip op. at *4 (awarding non-taxable costs of filing

the complaint). 

/ / /

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Plaintiffs have also argued several other types of costs are awardable, including the

cost of electronic research and long-distance phone calls. They have not, however,

documented any such costs.

III. Conclusion and Order

For these reasons, the Court AWARDS Plaintiffs $6207.43 in attorney’s fees plus $71

in costs.

IT IS SO ORDERED.

DATED: August 20, 2010

HONORABLE LARRY ALAN BURNS

United States District Judge

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