In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

No. 17-3259 

ISAAC PAZ, 

Plaintiff-Appellant, 

v.

PORTFOLIO RECOVERY ASSOCIATES, LLC, 

Defendant-Appellee. 

____________________ 

Appeal from the United States District Court for the 

Northern District of Illinois, Eastern Division. 

No. 1:14-cv-9751 — Jorge L. Alonso, Judge. 

____________________ 

ARGUED APRIL 2, 2019 — DECIDED MAY 15, 2019 

____________________ 

Before HAMILTON, BARRETT, and SCUDDER, Circuit Judges. 

SCUDDER, Circuit Judge. Sometimes settling a case is the 

only course that makes sense. This case provides a good example. Isaac Paz sued Portfolio Recovery Associates, LLC for 

violations of the Fair Debt Collection Practices Act and Fair 

Credit Reporting Act, and the case dragged on for years, with 

the district court then entering summary judgment for PRA 

on the lion’s share of Paz’s claims. Paz disregarded multiple 

offers to settle—both at the outset of the litigation and after 
2 No. 17-3259 

summary judgment—and proceeded to trial, where he won 

but recovered only $1,000 in damages. He then sought to recover attorneys’ fees of $187,410. The district court awarded 

fees of $10,875, underscoring that Paz’s rejection of meaningful settlement offers precluded a fee award in such disproportion to his trial recovery. Seeing no abuse of discretion, we affirm. 

I 

A 

After Isaac Paz defaulted on a credit card debt of $695, 

PRA, a debt collector, purchased the debt and attempted to 

collect. Alongside these collection efforts, however, PRA violated the Fair Debt Collection Practices Act by failing to report 

to credit reporting agencies that Paz disputed the debt. Paz 

responded by suing PRA in June 2014. 

PRA promptly offered to settle by invoking Federal Rule 

of Civil Procedure 68 and offering to eliminate the debt and 

pay Paz $1,001 plus reasonable attorneys’ fees and costs 

“through the date of Plaintiff’s acceptance of this offer, in an 

amount agreed upon by the parties, and if no agreement can 

be made, to be determined by the Court.” By its terms, the 

offer also provided not only that PRA would “allow judgment 

to be entered against it,” but also that “[t]his offer of judgment 

is made solely for the purposes specified in Rule 68 of the Federal Rules of Civil Procedure and is not to be construed as an 

admission that Defendant is liable in this action, that Plaintiff

has suffered any damage, or for any other reason.” Paz accepted PRA’s offer, and counsel then traded e-mails and 

agreed to reasonable attorneys’ fees of $4,500. 
No. 17-3259 3

Despite the settlement, PRA continued to report Paz’s debt 

to credit reporting agencies, even confirming the validity of 

the debt in response to inquiries from the agencies. This continued reporting violated the FDCPA, and Paz, upon learning 

of it, filed a second lawsuit against PRA in December 2014. 

The second lawsuit alleged violations of the FDCPA and 

the Fair Credit Reporting Act. Paz later attempted to add class 

claims but was unsuccessful. PRA answered the second lawsuit by admitting that, due to an oversight, it both attempted 

to collect Paz’s debt after the prior settlement and continued 

to report the debt to credit agencies. PRA attempted to resolve 

the case by once again invoking Rule 68 and making a series 

of settlement offers—first in January 2015 for $1,500, then in 

February 2016 for $2,500, and later in March 2015 for $3,501. 

The terms of PRA’s offers mirrored those Paz accepted in the 

first lawsuit: PRA would allow judgment to be entered 

against it; the judgment would include reasonable attorneys’ 

fees and costs through the date of acceptance of the offer in an 

amount agreed upon by the parties, or (as necessary) by the 

district court; and the offer otherwise should not be construed 

as an admission of liability. 

Paz never responded to PRA’s settlement offers. The parties eventually cross-moved for summary judgment, with the 

district court’s ensuing ruling dealing a substantial blow to 

Paz’s case. The court permitted Paz to proceed to trial on only 

one of his alleged violations of the FDCPA, 15 U.S.C. 

§ 1692e(8) (communicating false information, including the 

failure to communicate that a debt is disputed), finding there 

was a question of fact as to whether PRA could avoid liability 

under the FDCPA by demonstrating that its violation was unintentional, the result of a bona fide error, and occurred 
4 No. 17-3259 

despite procedures reasonably adapted to avoid such error. 

See Ruth v. Triumph P’ships, 577 F.3d 790, 803 (7th Cir. 2009) 

(outlining the elements of a bona fide error defense under the 

FDCPA).

As for Paz’s alleged violations of the Fair Credit Reporting 

Act, the district court determined that the evidence could not 

support a finding that PRA had acted willfully in its continued reporting to the credit agencies. This conclusion had the 

effect of allowing Paz to proceed to trial only on his claim that 

PRA’s actions amount to negligence violations of the FCRA. 

See 15 U.S.C. § 1681o. 

The upshot heading into trial, then, was that Paz was able 

to pursue a recovery of any actual damages but not punitive 

damages. Even more specifically, Paz sought the maximum 

$1,000 in statutory damages available to him based on his 

FDCPA claim and an additional $21,000 in actual damages for 

his alleged emotional distress caused by PRA’s misreporting 

his credit card debt. On his FCRA claim, Paz sought only 

$5,000 in actual damages. 

A week before trial, PRA made a final effort to settle, offering Paz $25,000 to resolve all remaining claims and to cover 

his attorneys’ fees and costs. Paz rejected the offer and proceeded to trial, enlisting the aid of two more attorneys to help 

prepare for and conduct the trial. 

The trial did not take long. Presentation of the evidence 

began and ended the same day, September 7, 2016. The next 

day the jury found for Paz on both claims. In doing so, however, the jury determined that Paz had sustained no actual 

damages, so his total recovery was limited to $1,000 in statutory damages based on his FDCPA claim. 
No. 17-3259 5

Paz later sought to recover $187,410 in attorneys’ fees and 

$2,744 in costs, relying on the FDCPA’s provision entitling a 

successful plaintiff to “the costs of the action, together with a 

reasonable attorney’s fee as determined by the Court.” 15 

U.S.C. § 1692(k)(a)(3). 

B 

By its terms, a settlement offer made pursuant to Rule 68 

limits a plaintiff’s ability to recover costs incurred after the 

date of the offer. See FED. R. CIV. P. 68(d) (“If the judgment 

that the offeree finally obtains is not more favorable than the 

unaccepted offer, the offeree must pay the costs incurred after 

the offer was made.”). Rule 68’s limit on a plaintiff’s recovery 

of costs will often limit the recovery of attorneys’ fees as well, 

but the circumstances present here reveal an exception. Paz 

won at trial on his FDCPA claim and his doing so entitled him 

to an award of “the costs of the action, together with a reasonable attorney’s fee as determined by the court.” 15 U.S.C. 

§ 1692k(a)(3). Congress’s choice to define attorneys’ fees separately from costs in § 1692k(a)(3) meant that Paz would be 

entitled to reasonable attorneys’ fees (by operation of the 

FDCPA) without regard to the more general limitation on 

costs in Rule 68. See Marek v. Chesny, 473 U.S. 1, 9 n.2 (1985) 

(explaining that Rule 68 incorporates the definition of “costs” 

from the relevant fee-shifting statute and therefore cuts off attorneys’ fees only where the statute defines “costs” to include 

attorneys’ fees). In full alignment with our precedent, the district court reached this precise conclusion. See Moriarty v. 

Svec, 233 F.3d 955, 967 (7th Cir. 2000) (interpreting 

§ 1692k(a)(3) of the FDCPA and concluding that a prevailing 

party is entitled to attorneys’ fees notwithstanding the limitation in Rule 68). 
6 No. 17-3259 

In determining what amount of fees was reasonable, the 

district court underscored that one relevant consideration was 

Paz’s decision to reject PRA’s Rule 68 offer of $3,501 and instead to proceed to trial. This reasoning, too, is on all fours 

with our caselaw. In Moriarty, for example, we explained that 

“[s]ubstantial settlement offers should be considered by the 

district court as a factor in determining an award of reasonable attorney’s fees, even where Rule 68 does not apply.” 233 

F.3d at 967. 

In assessing a proper fee award, the district court emphasized that Paz had obtained only limited success at trial. And 

this was especially so when viewed against the backdrop of 

the settlement offer—more than three times the amount of his 

ultimate recovery—that Paz declined. Paz was free to proceed 

to trial, the district court reasoned, but his doing so was a consideration that warranted a substantial reduction in the award 

of attorneys’ fees. See Hensley v. Eckerhart, 461 U.S. 424, 436–

37 (1983) (explaining that a plaintiff who achieves only limited 

success on the merits may be entitled to only a limited award). 

The district court added that, although he insisted on going to 

trial, Paz established no new principles of law—nor did he 

check any ongoing harm (beyond the four corners of his own 

case) being perpetrated by PRA—by putting his case to a jury. 

See Zagorski v. Midwest Billing Servs., 128 F.3d 1164, 1167 (7th 

Cir. 1997) (explaining that, in determining the reasonable fee 

award, success may also be measured in terms of the principle 

established and the harm checked). 

In the end, the district court awarded Paz $10,875 in attorneys’ fees. Applying the lodestar method, the district court 

used $375 as the hourly rate of Paz’s main attorney, Mario 

Kasalo, but recognized that only 29 hours of his total work—
No. 17-3259 7

the hours he worked before PRA’s final Rule 68 offer on 

March 27, 2015 for $3,501—were reasonable. The district court 

concluded that all other hours, including those spent preparing for and conducting the trial, including by the two attorneys Kasalo enlisted to help him at trial, were unreasonable. 

When it came to costs, the district court awarded PRA 

$3,064. This amount compensated PRA for expenses incurred 

after March 27, 2015, the date of its final Rule 68 offer. Recognizing that Paz won at trial and thus was a prevailing party 

within the meaning of Federal Rule of Civil Procedure 54, the 

district court also awarded costs to Paz in the amount of $436. 

II 

Section 1692k(a)(3) of the FDCPA entitles a prevailing 

party like Paz to an award of reasonable attorneys’ fees. 15 

U.S.C. § 1692k(a)(3); Schlacher v. Law Offices of Phillip J. Rotche 

& Assocs., P.C., 574 F.3d 852, 856 (7th Cir. 2009). No precise 

formula exists for determining a reasonable fee. See Schlacher, 

574 F.3d at 856; see also Hensley, 461 U.S. at 436. The proper 

approach typically starts with using the lodestar method 

(multiplying the attorney’s reasonable hourly rate by the 

number of hours reasonably expended) and then adjusting 

that figure to account for various factors, including the complexity of the legal issues involved, the degree of success obtained, and the public interest advanced by the litigation. See 

Schlacher, 574 F.3d at 856; see also Connolly v. Nat’l Sch. Bus 

Serv., Inc., 177 F.3d 593, 597 (7th Cir. 1999) (outlining similar 

fee award considerations). 

“District courts have wide discretion in determining the 

appropriate amount of attorneys’ fees and costs,” and therefore our review on appeal “is limited to a highly deferential 
8 No. 17-3259 

abuse of discretion standard.” Spegon v. Catholic Bishop of Chicago, 175 F.3d 544, 550 (7th Cir. 1999). 

Paz sees abuses of discretion on several fronts. He first argues that PRA’s offer to settle for $3,501 plus reasonable attorneys’ fees and costs was not substantial and therefore should 

have been disregarded by the district court in determining the 

fee award. On this score, Paz contends that he did not understand what the offer meant—that its terms were so ambiguous 

and unfair as to render the offer worthless. Even more specifically, he points to the condition in the offer that he read as 

cutting off attorneys’ fees at the time of acceptance, a provision that Paz sees as exposing him to an unknown amount of 

fees for the time his counsel would spend doing the paperwork necessary to finalize the settlement and enter the Rule 

68 judgment against PRA. 

We disagree. Paz’s position inheres with an air of unreality. He suggests he had little idea what the offer meant, yet his 

counsel—in this case and others—had previously accepted 

offers with identical terms and, in doing so, managed to negotiate and receive a reasonable amount to cover legal fees. 

All Paz’s counsel had to do was request a fee award that 

would cover the time necessary to finalize the settlement. This 

would not have been difficult given the relative simplicity of 

the claims. By no means was this a scenario where a defendant 

conveyed an incomprehensible offer or acted in bad faith by 

setting a trap to preclude a plaintiff from recovering a reasonable amount in attorneys’ fees as part of a settlement. 

Paz also contends that the district court abused its discretion in finding that he achieved only limited success on the 

merits of his claims. On this point, Paz highlights that PRA’s 

settlement offer expressly disclaimed liability and from there 
No. 17-3259 9

argues that agreeing to settle would have prevented him from 

claiming prevailing party status and receiving attorneys’ fees. 

As Paz now sees things, the result he achieved at trial was 

much better because it yielded a judgment on the merits for 

the maximum amount of statutory damages available to him, 

$1,000. This position, too, misses the mark. 

Settlement offers regularly disclaim liability, and PRA’s 

having done so here was in no way out of the ordinary. What 

Paz overlooks is that his acceptance of the offer, by operation 

of Rule 68, would have resulted in a judgment being entered 

against PRA. The moment such a judgment hit the district 

court’s docket, the prior disclaimer of liability would have 

been a dead letter. Furthermore, by the very terms of PRA’s 

offer, the ensuing judgment would have been for $3,501 plus 

reasonable attorneys’ fees and costs. Paz’s counsel had to 

know—from his prior experience in this case alone—that 

PRA’s disclaimer of liability in its Rule 68 offer would not preclude an award of attorneys’ fees. 

What happened here is clear. At the outset of the litigation, 

PRA conveyed a substantial settlement offer of $3,501—more 

than three times the statutory damages available to Paz—plus 

reasonable attorneys’ fees and costs. Paz disregarded the offer 

and proceeded to trial even after the district court’s summary 

judgment ruling massively downsized his case. And every indication from the record is that Paz had but the slimmest of 

chances of receiving any more than $1,000 in statutory damages at trial. He nonetheless proceeded to incur $187,410 in 

attorneys’ fees, only to walk away with $1,000 in statutory 

damages. 

Paz was free to make these choices. Like any other party, 

he was not required to accept the trial court’s (or anyone 
10 No. 17-3259 

else’s) view of the best litigation strategy, including whether 

to accept a settlement offer. So, too, is it clear as a more general 

matter that a sound approach to litigation will often and inevitably entail the pursuit of what turn out to be dead ends, all 

of which will result in a party reasonably incurring fees and 

costs. See Kurowski v. Krajewski, 848 F.2d 767, 776 (7th Cir. 

1988). Nothing about this appeal calls into question these 

common, practical realities of litigation. 

In the circumstances before us here, however, we are confident that the district court did not abuse its discretion in rejecting Paz’s request for $187,410 in fees and instead awarding 

him $10,875. The time associated with the $187,410 in attorneys’ fees did not reflect the sort of reasonable attorney work 

that is often inevitable as part of traveling a diligent litigation 

course. To the contrary, the vast majority of the fees Paz 

sought to recover were for time spent pursuing an unsuccessful and ill-advised effort to win a much bigger payoff than 

was even remotely possible in the circumstances giving rise 

to his claims. This observation is precisely what led the district court to conclude that $10,875 was a reasonable fee 

award. Paz and his counsel cannot now force PRA to pay the 

legal expenses for their failure, so the reduced fee award in 

this case was appropriate and far from an abuse of discretion. 

For these reasons, we AFFIRM.