### In the



# United States Court of Appeals

For the Seventh Circuit

____________________

No. 18

‐ 2358

J ACK W. C OOPER

, Plaintiff

‐ Appellant

,

v.

R ETRIEVAL

‐ M ASTERS C REDITORS B UREAU

, I NC

., Defendant

‐ Appellee

.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 1:16

‐ cv

‐ 02827

— Gary Feinerman

, Judge

.

____________________

A RGUED J ANUARY 19, 2022

— D ECIDED J ULY 29, 2022

____________________

Before W OOD

, H AMILTON

, and J ACKSON

‐ A KIWUMI

, Circuit

Judges

.

H AMILTON

, Circuit Judge

. This appeal addresses a tt orney

fee awards to prevailing plainti ff s under consumer

‐ protection

statutes where damages are usually modest and the plainti ff

has rejected what hindsight shows to have been a substantial

early se tt lement o ff er. Plainti ff Jack Cooper sued defendant

Retrieval

‐ Masters Creditors Bureau for violating prov isions

of the Fair Debt Collection Practices Act in trying to collect a2 No. 18

‐ 2358

debt. See 15 U.S.C. § 1692 et seq. Shortly after the defendant

fi led its answer, a magistrate judge tried to mediate a se tt le

‐

ment. During the meeting, the defendant made and plainti ff

rejected an oral se tt lement o ff er of $500 in damages plus rea

‐

sonable a tt orney fees and costs incurred to that poin t. The

meeting ended without an agreement. The next day, the de

‐

fendant made a wri tt en o ff er of judgment under Federal Rule

of Civil Procedure 68 for $4,600 including a tt orney fees and

costs. Cooper did not accept the o ff ered ju dgment, and the

lawsuit proceeded.

The district court eventually granted summary judgment

to Cooper on liability. Damages were tried to a jury, which

awarded Cooper $500. Cooper and his a tt orneys then sought

an award of a tt orney fees and costs totaling more than

$66,000. The district court awarded fees and costs of less than

$8,000, e ff ec tively limiting the fee award to fees incurred up

to the time when Cooper rejected the oral se tt lement o ff er in

the early mediation session, as if defendant had made a Rule

68 o ff er more favorable than the fi nal verdict. Cooper v. Re

‐

trie val

‐ Masters Creditors Bureau, Inc.

, 338 F. Supp. 3d 729 (N.D.

Ill. 2018). Cooper has appealed the a tt orney fee award as in

‐

su ffi cient. We vacate the district court’s fee award and remand

for proceedings consistent with this opinion.

I. Factual and Procedural Background

A. The Case on the Mer its

In February 2016, defendant Retrieval

‐ Masters Creditors

Bureau (RMCB) sent plainti ff Jack Cooper a le tt er seeking to

collect a consumer debt of a li tt le over $300. The le tt er directed

Cooper to include certain information with his payment so

that RMCB could update the credit bureau. CooperNo. 18

‐ 2358 3

responded the next month by suing RMCB for violating 15

U.S.C. § 1692e(5) & (10). Cooper alleged that RMCB’s le tt er

falsely threatened to report his debt to credit bureaus even

though RMCB had no actual intention to do so.

After Cooper fi led his complaint, defendant asked his law

‐

ye r for a se tt lement demand. Cooper replied that he would

se tt le for $7,600 including a tt orney fees and costs. Defendant

rejected the demand and answered the complaint. The district

court referred the ma tt er to a magistrate judge for a se tt lement

conference that was held in July 2016.

During the se tt lement conference, RMCB ma de an oral of

‐

fer to pay Cooper $500 in damages, plus reasonable a tt orney

fees and costs incurred to date. Cooper rejected the oral o ff er.

Later in the session, RMCB actually backtracked. It reduced

its oral o ff er to $250 in damages, plus reasonable a tt orney fee s

and costs to date. Not surprisingly, Cooper rejected that o ff er

as well, and no se tt lement was reached. The next day, defend

‐

ant made a wri tt en o ff er of judgment pursuant to Federal Rule

of Civil Procedure 68, proposing to pay $4,600 includ ing at

‐

torney fees and costs and to allow the court to enter judgment

against it. Cooper also rejected that o ff er.

Cooper later fi led a motion for summary judgment as to

liability. RMCB fi led several motions seeking more time to re

‐ spond, all of which the district court granted. In th e end,

though, RMCB failed to submit any brief or evidence to op

‐

pose Cooper’s motion. The court granted summary judgment

for Cooper as to liability and scheduled a jury trial for the

damages. Cooper v. Retrieval

‐ Masters Creditors Bureau, Inc.

, No.

16

‐ c

‐ 2827, 2017 WL 2404952 (N.D. Ill. June 2, 2017). At trial

, Cooper’s a tt orneys argued that he was entitled to between

$6,000 and $600,000 in actual damages, plus the maximum4 No. 18

‐ 2358

$1,000 in statutory damages. The jury awarded Cooper $500

in statutory damages and no actual damages. The court en

‐

tered fi nal judgment for Cooper for $500. Cooper v. Retrieval

‐

Masters Creditors Bureau, Inc.

, 338 F. Supp. 3d at 736. RMCB

did not appeal and, at the time of oral argument in th is ma tt er,

had not yet paid the judgment.

B. The A tt orney Fee Award

The Fair Debt Collection Practices Act relies primarily on

its private right of action to enforce compliance. See 15 U.S.C.

§ 1692k; S. Rep. No. 95

‐ 382 at 5–6 (1977), as reprinted in 1977

U.S.C.C.A. N. 1695, 1699–1700 (new law expected to be “pri

‐ marily self

‐ enforcing; consumers who have been subjected to

collection abuses will be enforcing compliance,” and legisla

‐

tion provided no new personnel or budget for agency enforce

‐ ment). Damages are usually modest, however. The statute al

‐

lows aw ards of actual damages plus a maximum of $1,000 in

statutory damages in individual cases. The Act allows a pre

‐ vailing plainti ff to recover reasonable a tt orney fees and costs

from the defendant. § 1692k(a).

After winning the judgment on the merits, Cooper sought

an award of $65,357.90 as an a tt orney fee and $1,042.37 in

costs. Coop er

, 338 F. Supp. 3d at 732. The district court

awarded all of the requested costs but only about one tenth of

the fees sought. The court fi rst found that all the hours

Cooper’s a tt orneys spent working on the case after he re jected

RMCB’s oral o ff er of fi ve hundred dollars plus fees and costs

were unreasonable. Id. at 734. The court reasoned that

Cooper’s a tt orneys knew or should have known that he was

unlikely to win any actual damages or even the maximum

$1,000 in statutory damages, so they should hav e recognized

that there would have been no bene fi t in proceeding to trial.No. 18

‐ 2358 5

Id. at 733–34. The court then calculated the lodestar amount

for the time spent until the se tt lement o ff er was rejected and

reduced that amount by twenty percent. (The lodestar

amount is determined by multiplying the a tt orney’s reasona

‐

ble hourly rate by the number of hours the a tt orney reasona

‐ bly expend ed. Schlacher v. Law O ffi ces of Phillip J. Rotche & As

‐

sociates, P.C.

, 574 F.3d 852, 856 (7th Cir. 2009).) The court rea

‐

soned that Cooper received a “meager verdict,” noting that he

recovered only $500 in statutory damages after seeking as

much as $600,000 in actual damages, plus the maximu m

$1,000 in statutory damages. 338 F. Supp. 3d at 736. The fi nal

award was for $6,845.76 in a tt orney fees and $1,042.37 in costs.

Id. at 737.

II. Analysis

A. Subject

‐ Ma tt er Jurisdiction

Before reaching the merits of this appeal, we fi rst address

defendant’s contention tha t Cooper lacked standing to sue, so

that the district court lacked subject

‐ ma tt er jurisdiction to

award fees and costs. Defendant argues for the fi rst time in

this appeal by Cooper that he failed to prove a concrete injury

resulting from defendant’s le tt er.

Article III of the Constitution limits the jurisd iction of fed

‐

eral courts to cases and controversies, one essential element

of which is the plainti ff ’s standing to bring the case. TransUn

‐

ion LLC v. Ramirez

, 141 S. Ct. 2190, 2203 (2021). Standing re

‐ quires a plainti ff to plead su ffi ciently and ev entually to prove

“(i) that he su ff ered an injury in fact that is concrete, particu

‐

larized, and actual or imminent; (ii) that the injury was likely

caused by the defendant; and (iii) that the injury would likely

be redressed by judicial relief.” Id.

, citing Lujan v. Defenders of6 No. 18

‐ 2358

Wildlife

, 504 U.S. 555, 560–61 (1992). After the district court is

‐

sued its judgment on the merits in this case, this court issued

several opinions restricting standing in cases under the

FDCPA. See, e.g., Wadsworth v. Kross, Lieberman & Stone, Inc.

,

12 F.4th 665, 668–69 (7th Cir. 2021); Larkin v. Finance System of

Green Bay, Inc.

, 982 F.3d 1060, 1066 (7th Cir. 2020); Casillas v.

Madison A venue Associates, Inc.

, 926 F.3d 329, 333–34 (7th Cir.

2019).

If this were a direct appeal from a fi nal judgment on the

merits, we would of course entertain such a challenge to sub

‐ ject

‐ ma tt er jurisdiction ev en if the issue were being raised for

the fi rst time on appeal. E.g., Perez v. K & B Transportation, Inc.

,

967 F.3d 651, 654 (7th Cir. 2020). The problem here is that de

‐

fendant did not appeal the judgment against it on the merits.

That judgment wa s entered in 2017 and was not appealed. It

is fi nal. Defendant is a tt empting in this appeal to raise a col

‐

lateral challenge to subject

‐ ma tt er jurisdiction after it had a

fair opportunity to raise such a challenge in a direct appeal.

Between these parties, the district court’s su bject

‐ ma tt er juris

‐

diction is now res judicata. See Travelers Indemnity Co. v. Bai

‐ ley

, 557 U.S. 137, 152

− 53 (2009), citing Insurance Corp. of Ireland,

Ltd. v. Compagnie des Bauxites de Guinee

, 456 U.S. 694, 702 n.9

(1982) (“A party that has had an opportuni ty to litigate the

question of subject

‐ ma tt er jurisdiction may not

... reopen that

question in a collateral a tt ack upon an adverse judgment.”);

Chicot County Drainage District v. Baxter State Bank

, 308 U.S.

371, 376 (1940) (federal courts’ determinations of jurisdiction

are “open to direct review [but] may not be assailed collater

‐ ally”); see also Dexia Crédit Local v. Rogan

, 602 F.3d 879, 883

(7th Cir. 2010) (reje cting collateral challenge to subject

‐ ma tt er

jurisdiction for judgment that had become fi nal); 18A Charles

Alan Wright & Arthur R. Miller, Federal Practice andNo. 18

‐ 2358 7

Procedure § 4428 (3d ed.) (explaining general rule against col

‐

lateral challenges to subject

‐ ma tt er jurisdiction and noting a

few exceptions that do not apply here). Res judicata defeats

defendant’s challenge to Cooper’s standing. 1

B. The A tt orney Fee Award

We now turn to the merits of the fee award. We review an

award of a tt orney fees for abuse of discretion, though we re

‐

view de novo the district court’s legal conclusions and meth

‐

ods for calculating the award. Anderson v. AB Painting & Sand

‐

blas ting Inc.

, 578 F.3d 542, 544 (7th Cir. 2009).

A person who prevails on an FDCPA claim against a debt

collector is entitled to recover the costs of the action and rea

‐

sonable a tt orney fees. 15 U.S.C. § 1692k(a)(3). No precise for

‐

mula establishes a reasonable a tt orney fee, but the starting

point is usually the lodest ar method. Schlacher v. Law O ffi ces of

Phillip J. Rotche & Associates, P.C.

, 574 F.3d 852, 856 (7th Cir.

2009). As mentioned previously, the lodestar method multi

‐ plies the a tt orney’s reasonable hourly rate by the hours the

a tt orney reasonably expended. Id. After cal culating the lode

‐

star, the court may adjust the fi gure “to re fl ect various factors

including the complexity of the legal issues involved, the de

‐

gree of success obtained, and the public interest advanced by

the litigation.” Id. at 856–57. The controversy here focuses on

1 Defendant’s effort to vacate the entire fee award faces another obsta

‐

cle. Defendant did not file a cross

‐ appeal. The longstanding rule requiring

a cross

‐ appeal would prevent us from modifying a judgment in favor of

an appellee who did not file its own cross

‐ appeal. See, e.g., Greenlaw v.

United St ates

, 554 U.S. 237 (2008) (reversing appellate court’s increase in

defendant’s sentence where government filed no cross

‐ appeal); Richardson

v. City of Chicago

, 740 F.3d 1099, 1101 (7th Cir. 2014) (applying Greenlaw in

civil case).8 No. 18

‐ 2358

the dramatic reduction in the requested fee by applying these

factors to Cooper’s rejection of the oral se tt lement o ff er in the

early se tt lement conference. The district court held that all the

hours spent by Cooper’s counsel after rejecting that se tt le

‐

ment o ff er we re unreasonable.

1. Substantial Se tt lement O ff

er

The role of rejected se tt lement o ff ers in reducing statutory

a tt orney fee awards is a di ffi cult and recurring subject, espe

‐ cially under consumer

‐ protection statutes, employment and

civil

‐ rights statutes, and other statutes under which damages

awarded to successful plainti ff s may often be modest as com

‐ pared to the a tt orney e ff orts needed to prev ail. Since Marek v.

Chesny

, 473 U.S. 1 (1985), Rule 68 has provided a clear path for

a defendant who wants to reduce the risk of a high fee award,

at least under some fee

‐ shifting statutes. Rule 68 limits the

costs that a prev ailing party may recover if the party rejected

the defendant’s pre

‐ trial o ff er of judgment and ultimately re

‐

ceived a less favorable award at trial. Fed. R. Civ. P. 68(d); see

also Cole v. Wodziak

, 169 F.3d 486, 487–88 (7th Cir. 1999), citing

Marek

, 473 U.S. at 11.

To obtain th e bene fi t of Rule 68, a defendant’s o ff er must

be made in writing and presented to the plainti ff at least 14

days before the date set for trial. Fed. R. Civ. P. 68(a);

Grosvenor v. Brienen

, 801 F.2d 944, 948 (7th Cir. 1986). Once

those requirements are met, Rule 68 applies to bar the prev ail

‐ ing party from recovering any costs incurred after the party

rejected the defendant’s o ff er. Fed. R. Civ. P. 68(d).

Rule 68 was created to encourage se tt lements, but recov

‐

erable “costs” are usually a small part of litigation expenses.

Under fee

‐ shifting statutes that treat a tt orney fees as part ofNo. 18

‐ 2358 9

the costs subject to Rule 68, however, the rule’s power is mag

‐

ni fi ed exponentially. Under such statutes, a plainti ff who re

‐

ceives a Rule 68 o ff er of judgment must “think very hard”

about whether to continue with the litigation. Marek

, 473 U.S.

at 11. A plainti ff who rejects an early o ff er of judgme nt that

includes a tt orney fees and costs incurred to date runs the risk

of forfeiting fees for all later work unless the fi nal verdict is

more favorable than the early o ff er.

Imposing such a di ffi cult decision on plainti ff s has been

justi fi ed be cause Rule 68 strikes a balance by including sev

‐

eral important protections for the plainti ff

. The Rule 68 o ff er

must be in writing, the plainti ff must have 14 days to respond,

and the o ff ering party may not revoke or amend the o ff er dur

‐ ing th at time. The o ff ering party also bears the risk of any si

‐

lence or ambiguity, especially related to a tt orney fees. Sanchez

v. Prudential Pizza, Inc.

, 709 F.3d 689, 692 (7th Cir. 2013);

Grosvenor

, 801 F.2d at 948.

Rule 68’s limit on “costs” does not apply, however, to at

‐

torney fees when the statute providing for recov ery, like the

FDCPA, was drafted to treat a tt orney fees as separate from

costs. Paz v. Portfolio Recovery Associates, LLC

, 924 F.3d 949, 953

(7th Cir. 2019). The FDCPA entitles plainti ff s to an award of

“costs of the action, to gether with a reasonable a tt orney’s fee

as determined by the court.” 15 U.S.C. § 1692k(a)(3). Because

of this language separating costs and a tt orney fees in the stat

‐

ute, we have held that Rule 68 does not apply by its terms to

a tt orney fee awards under the FDCPA. Pa z

, 924 F.3d at 953. At

the same time, nothing prevents an FDCPA defendant from

making a formal Rule 68 o ff er of judgment that includes at

‐

torney fees and costs, as occurred here.10 No. 18

‐ 2358

Even though Rule 68 is not directly applicable to this case

because the district court did not base its fee award on

RMCB’s later Rule 68 o ff er of judgment, the rule’s procedures

and protections for plainti ff s are still relevant to our review of

the district court’s a tt orney fee aw ard here. They provide

guidance for a district court considering whether and how a

rejected se tt lement o ff er should a ff ect an a tt orney fee award

to a prevailing plainti ff

. As we explain below, a district court

should not impose what amounts to the harshest conse

‐

quences of a rejected Rule 68 o ff er when the o ff ering party has

not also co mplied with the procedural protections that Rule

68 itself provides.

The principal question in this appeal is whether the dis

‐

trict court abused its discretion when it relied on Cooper’s re

‐ jection of RMCB’s oral se tt lement o ff er to deny fees for the

post

‐ o ff er work his a tt orneys did. The dist rict court referred

to the mandate in Moriarty v. Svec

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

as its guide for deciding the fee award but did not factor in

the procedural di ff erences betw een a Rule 68 o ff er of judg

‐

ment and RMCB’s oral o ff er here.

To explain, we fi rst summarize Moriarty and its directive

to courts to consider substantial se tt lement o ff ers. Next, we

clarify how Moriarty ’s directive should be used to ensure we

maintain the key distinction betw een Rule 68 and non

‐ Rule 68

o ff ers. We then apply these general principles to the facts of

this case and fi nd that the district court abused its discretion

when it denied Cooper fees for all post

‐ o ff er work by his at

‐

torneys.No. 18

‐ 2358 11

a. Moriarty’s Directive and Se tt lement O ff

er Types

In Moriarty

, we said that district courts must consider

“substantial” se tt lement o ff ers when determining a reasona

‐

ble a tt orney fee award. 233 F.3d at 967. A substantial se tt le

‐

ment o ff er is one that is equal to or more than the da mages

that the prevailing party ultimately won. Id. We explained in

Moriarty that such o ff ers are relevant because the fees a party

incurs after rejecting the o ff er often provide li tt le bene fi t to the

party. Id. Because of the limited bene fi t of proceeding with the

litigation, we stated th at courts “should re fl ect on whether to

award only a percentage (including zero percent) of the a tt or

‐ ney’s fees that were incurred after the date of the se tt lement

o ff er.” Id. We also cautioned, however, that the existence of a

substantial se tt lement o ff er “is only one of the factors that a

district court should ev aluate in making an a tt orney’s fee

award, and (absent an o ff er complying with Rule 68 where

that Rule applies) is not necessarily determinative.” Id.

District courts applying Moriarty ’s mandate should con

‐

sider the important di ff erences betw een Rule 68 o ff ers of

judgment and non

‐ Rule 68 se tt lement o ff ers. As noted, Rule

68 o ff ers of judgment must be in writing and be served on the

opposing party at least 14 days before trial. Fed. R. Civ. P.

68(a); Grosvenor

, 801 F.2d at 948. If accepte d, the terms of the

o ff er will be binding on both parties. Webb v. James

, 147 F.3d

617, 621 (7th Cir. 1998). In contrast, a non

‐ Rule 68 o ff er need

not be in writing, need not be left open for any particular time,

and may be amended at will. Gro svenor

, 801 F.2d at 948–49. In

fact, plainti ff s may tentatively accept an oral o ff er during ne

‐ gotiations and reconsider that decision once the o ff er is actu

‐ ally put in writing, giving all parties a chance to change the

terms of their prior or tentativ e agreement. Id. The fi nality of12 No. 18

‐ 2358

the agreement that exists when a Rule 68 o ff er is accepted is

simply absent for many non

‐ Rule 68 o ff ers. Also, in contrast

to a Rule 68 o ff er, rejection of a non

‐ Rule 68 o ff er does not

necessarily result in a limit on the recov ery of a tt orney fees

and costs. Id.

Because of these di ff erences between Rule 68 o ff ers of

judgment and non

‐ Rule 68 se tt lement o ff ers, we have empha

‐

sized that courts should not treat them as interchangeable.

See, e.g., Cole

, 169 F.3d at 487 (district court legally erred when

it refused to grant fees for post

‐ o ff er work based on o ff er

made during oral se tt lement neg otiations that were not even

transcribed); Grosvenor

, 801 F.2d at 948–49 (explaining that

plainti ff ’s post

‐ o ff er fees could not be cut o ff because defend

‐

ant’s o ff er had been only oral and thus did not satisfy require

‐

ments of Rule 68). Mori arty did not discuss or cite these cases

when discussing the e ff ect of substantial se tt lement o ff ers, but

its direction for courts to consider such o ff ers must be read

through the lens of our cases cautioning against imposing

Rule 68’s h arsh consequences on rejected o ff ers that do not

satisfy its requirements for protecting their recipients.

b. Clari fi cation of Moriarty’s Mandate

Before we address Cooper’s main argument challenging

the district court’s fee award, we take this opportunity to clar

‐ ify Moriarty ’s mandate to courts and to ens ure it is applied in

a manner consistent with the teachings of Grosvenor and Cole

.

Moriarty was a prolonged suit to collect an employer’s de

‐ linquent contributions to employee bene fi t plans adminis

‐

tered by a union. In the fi rst appeal, 164 F.3d 323 (7th Cir.

1998), we va cated on the merits the district court’s grant of

summary judgment to the plan’s trustee. On remand, theNo. 18

‐ 2358 13

district court again granted summary judgment to the plans’

trustee and awarded a tt orney fees. In the second trip to this

court, on cross

‐ appeals, we a ffi rmed in part and vacated in

part on the merits. 233 F.3d at 962–63. On a tt orney fees, we

a ffi rmed what we called the “Phase I” aw ard but vacated and

remanded the “Phase II” award. We vacated because the dis

‐

trict court had not evidently considered a non

‐ Rule 68 sub

‐

stantial se tt lement o ff er that the defendant had made. We

wrote that the district court was required to consider the o ff er

as a factor but did not provide further guida nce about what

weight it should receive. Id. at 967.

On Moriarty ’s third trip to this court, we considered cross

‐ appeals of the district court’s a tt orney fee award of $41,045.13.

429 F.3d 710 (7th Cir. 2005). We va cated again and directed

the district court to clarify its treatment of several issues af

‐ fecting the fee award, including the proportionality of fees to

damages, and we described the district court’s treatment of

the se tt lement o ff er issue as “perplexing.” Id

. at 719. We wrote

that the district court had discretion, but wa s not required, to

cut o ff fees incurred after a substantial se tt lement o ff er was

rejected. Id

. at 719–20. We did not address in the Moriarty

opinions any of the procedural aspects of the substantial set

‐

tlement o ff ers relevant to the ultimate fee award, thou gh we

noted in the second Moriarty appeal that it was not clear

whether the most important o ff er was a Rule 68 o ff er of judg

‐

ment

. 233 F.3d at 967 n.5. (It appears likely the parties se tt led

after Moriarty III ; there is no reported district court decision

after that th ird remand.)

The statement in Moriarty II that district courts could even

decide to award “zero percent” of the post

‐ o ff er fees and our

a ffi rmance of that decision in Moriarty III have signaled to14 No. 18

‐ 2358

courts that they may apply a strict cut

‐ o ff for post

‐ o ff er fees.

The district court here cited both cases when it held that

Cooper was not entitled to recover fees for work his a tt orneys

did after he rejected RMCB’s oral se tt lement o ff er. Cooper

, 338

F. Supp. 3d at 733. Ho wever, as applied to the facts here, the

district court’s conclusion goes too far and con fl icts with

Grosvenor

, Cole

, and other cases that have insisted on strict

compliance with Rule 68 before imposing such harsh conse

‐

quences. See Grosvenor

, 801 F.2d at 948–49; see also Cole

, 169

F.3d at 487.

The best wa y to clarify this tension in our caselaw is to fo

‐

cus on the procedural aspects of a substantial se tt lement o ff er

that is being considered to reduce a fee award. We adhere to

the teachings of Moriarty II and III that a district court must

consider sev eral factors when se tt ing a reasonable a tt orney

fee, including the rejection of a substantial se tt lement o ff er.

But the rejection of that o ff er, especially if it is not a Rule 68

o ff er of judgment that quali fi es fo r limited fees, should not be

the sole fact that determines the fee award. Rather, courts

should consider the totality of the circumstances and focus on

whether the lodestar re fl ects the unique facts of the case or

whether it should be adjusted up or down to be tt er account

for those facts. E.g., Pa z

, 924 F.3d at 952, 955 (upholding denial

of post

‐ o ff er fees because district court dealt a “substantial

blow” to the plainti ff ’s case before trial by dismissing several

of his claims, the se tt lement o ff er was three times the statutory

damages available, and “ev ery indication from the record

[was] that [the plainti ff ] had but the slimmest chances of re

‐ ceiving” any more than the statutory damages). But see Capps

v. Drake

, 894 F.3d 802, 806–07 (7th Cir. 2018) (rejecting district

court’s determination that plainti ff ’s damages award was de

minimis and he wa s not entitled to post

‐ o ff er fees because theNo. 18

‐ 2358 15

plainti ff ’s primary goal from the litigation was to obtain a

judgment of liability, which none of the se tt lement o ff ers pro

‐ vided).

Most pertinent here, in considering the totality of the cir

‐

cumstances, it is important for district courts to maintain and

respect the distinction betw een Rule 68 o ff ers of judgment

and other se tt lement o ff ers. Rule 68’s potentially powerful

consequences are justi fi ed by several protections that are not

available for plainti ff s considering non

‐ Rule 68 o ff ers like the

one here. In this case, for example, RMCB made its initial oral

o ff er, had it rejected, and replaced it with a less favorable o ff er

all within th e same meeting. Permi tt ing courts to deny fees for

all post

‐ o ff er work solely because a party rejected a non

‐ Rule

68 o ff er without considering such circumstances of the case,

as seems to hav e happened here, would give defendants the

bene fi t of Rule 68 without providing any of the key safe

‐ guards that protect a plainti ff considering a Rule 68 o ff er.

c. Application

Here, RMCB made a $500 oral o ff er during the se tt lement

conference in July 2016. Cooper rejected it on the spot, and

RMCB the n lowered its o ff er to $250, which Cooper also re

‐ jected. We agree with the district court’s initial determination

that RMCB’s $500 o ff er counts here as a “substantial” se tt le

‐

ment o ff er because Cooper recovered exactly that amount in

damages fr om the jury. Nevertheless, we conclude that the

district court’s refusal to grant any post

‐ o ff er fees was an

abuse of discretion because its only justi fi cation was that

Cooper rejected that oral o ff er.

To defend the minimal fee award, RMCB asserts that the

court did not use Cooper’s rejection of the $500 o ff er as the16 No. 18

‐ 2358

sole justi fi cation for denying the post

‐ o ff er fees. RMCB con

‐

tends that the court also focused on the overall strength of the

case and the unlikelihood that Cooper would recover much

more than RMCB’s o ff er if he went to trial.

We read the district court’s d ecision di ff erently. The

court’s reference to the weakness of Cooper’s case was simply

another explanation for why he should have accepted

RMCB’s o ff er. It was not a separate factor or consideration un

‐ derlying the court’s decision. The court instead gave decisive

weight to one factor, the rejected oral o ff er. The district court

abused its discretion when it decided to exclude all the hours

Cooper ’s a tt orneys worked after he rejected RMCB’s $500 of

‐

fer from the lodestar calculation, e ff ectively giving defendant

the bene fi t of Rule 68 without having complied with its pro

‐

cedures to protect plainti ff s.

There wa s a way for defendant to obtain the bene fi ts of

Rule 68 as to the $500 o ff er here: make a fi rm o ff er in writing,

leaving it open for 14 days. If defendant had done that, if

plainti ff had rejected that fi rm o ff er, and if the district court

had giv en decisive weight to that rejection, we would under

‐

stand that denial of all post

‐ o ff er fees to be an appropriate ex

‐

ercise of discretion. While Rule 68 does not apply to a tt orney

fee awards under the FDCPA, as noted above, that scenario

would be a permissible exercise of discretion. Giving such de

‐

cisiv e weight to an oral o ff er of se tt lement, however, was not

fair.

2. Proportionality

In addition to denying Cooper post

‐ o ff er fees, the district

court also reduced the lodestar calculation of the remaining

pre

‐ o ff er hours by tw enty percent because it found thatNo. 18

‐ 2358 17

Cooper had limited success at trial. Cooper

, 338 F. Supp. 3d at

736. The court based its conclusion on the fact that Cooper’s

counsel had asked the jury to award between $6,000 and

$600,000 in actual damages, but the jury awarded only $500 in

statutory damages. Id.

Courts sho uld consider the proportionality between the

amount of damages the plainti ff recovered and the fee award

as a factor when deciding to adjust the lodestar amount. Spe

‐

gon v. Catholic Bishop of Chicago

, 175 F.3d 544, 558 (7th Cir.

1999). However, the “fee awards ‘should not be linked me

‐ chanically to a plainti ff ’s [damages] aw ard.’” Schlacher

, 574

F.3d at 857, quoting Eddleman v. Switchcraft, Inc.

, 927 F.2d 316,

318 (7th Cir. 1991). A court should not deny a party its re

‐ quested fees solely because they would exceed the damages

or automatically reduce the fees to make them equiv alent to

the damages received. Deicher v. City of Evansville

, 545 F.3d

537, 546 (7th Cir. 2008). The assumption in general should not

be that the fee award can never be larger than the damages.

Id.

We have warned district courts against applying such a

mechanical proportionality analysis. Some ca ses involve “im

‐

portant public interests which may not be re fl ected in the size

of a particular recovery.” Connolly v. National School Bus Ser

‐

vice, Inc.

, 177 F.3d 593, 597 (7th Cir. 1999). For example, aside

from the possibility of receiving actual damages, plainti ff s

pursuing an action under the FDCP A can recover a maximum

of $1,000 in statutory damages. 15 U.S.C. § 1692k(a)(1)–(2)(A).

Despite the likelihood of small awards, Congress explicitly in

‐

cluded a provision in the FDCPA allowing successful plain

‐

ti ff s to recover reasonable a tt orney fees. § 1692k(a)(3). We

have explained: “‘Unlike most private tort litigants, [an18 No. 18

‐ 2358

FDCPA plainti ff ] seeks to vindicate important

... rights that

cannot be valued solely in monetary terms,’” and “the public

as a whole has an interest in the vindication” of those rights.

Tolentino v. Friedman

, 46 F.3d 645, 652 (7th Cir. 1995) (omission

in original), quoting City of Riv erside v. Rivera

, 477 U.S. 561, 574

(1986). This provision of reasonable a tt orney fees under the

FDCPA is particularly important for plainti ff s like Cooper,

who recovered only $500 in statutory damages but incurred

thousands of dollars in fees and costs. Congress’s goal of us

‐ ing a tt orney fee aw ards as an incentive for plainti ff s to bring

actions enforcing the rights of the public, like those under the

FDCPA, is greatly undermined if courts apply a strict propor

‐ tionality analysis that fails to account for the remedial policies

that such fee awards to private a tt orneys general are designed

to promote

.

We have acknowledged in the civil rights context that “the

cumulative e ff ect of pe tt y violations

... may not be pe tt y, and

if this is right then the mere fact that a suit does not result in

a large award of damages

... is not a goo d ground for refusing

to award any a tt orneys’ fees.” Hyde v. Small

, 123 F.3d 583, 585

(7th Cir. 1997). The same logic applies to FDCPA violations.

The minor nature of the violation or the limited damages re

‐

covered should not have been major barriers to Cooper re

‐ ceiving a reasonable a tt orney fee. “Success must be me asured

not only in the amount of the recovery but also in terms of the

principle established and the harm checked.” Zagorski v. Mid

‐

west Billing Services, Inc.

, 128 F.3d 1164, 1167 (7th Cir. 1997);

e.g., Capps

, 894 F.3d at 806 (holding that the plainti ff ’s s maller

damages award under 42 U.S.C. § 1983 was not de minimis

because the jury found that the o ffi cers were liable for using

excessive force against the plainti ff ). Cooper was a successful

plainti ff furthering the goals of Congress when it enacted theNo. 18

‐ 2358 19

FDCPA. At the same time, our case law also clearly allows

some consideration of proportionality, and we defer to the

district court’s exercise of discretion in choosing 20 percent as

a discount for the lack of proportionality. The problem that

calls for a remand, though, is that the distric t court erred in

denying all fees for post

‐ o ff er work.

3. Local Rule 83.5

In addition to his challenges to the court’s reasons for the

fee award, Cooper asserts that we should reverse the award

because the district court based its decision on privileged

statements. Cooper bases his arg ument on Northern District

of Illinois Local Rule 83.5, which states:

all non

‐ binding alternative dispute resolution

(“ADR”) proceedings referred or approved by

any judicial o ffi cer of this court in a case pend

‐ ing before such judicial o ffi cer, including any

act or statement made by any party, a tt orney, or

other par ticipant, shall, in all respects, be privi

‐ leged and not reported, recorded, placed in evi

‐

dence, made known to the trial court or jury

(without consent of all parties), or construed for

any purpose as an admission in the case re

‐

ferred or in any case or proceeding.

Cooper argues that information from the se tt lement confer

‐

ence proceedings, including RMCB’s $500 o ff er and his rejec

‐

tion of it, f alls squarely within the prohibition of Local Rule

83.5 and could not be used by the court, or even disclosed to

the court without his consent, to set the fee aw ard.

RMCB counters that Cooper’s argument is waived and be

‐ yond our consideration. Non

‐ jurisdictional arguments made20 No. 18

‐ 2358

for the fi rst time on appeal are deemed waived or forfeited.

Mahran v. Advocate Christ Medical Center

, 12 F.4th 708, 710 (7th

Cir. 2021). In particular, “a party has waived the ability to

make a speci fi c argument for the fi rst time on appeal when

the party f ailed to present that speci fi c argument to the dis

‐

trict court, even though the issue may have been before the

district court in more general terms.” Williams v. Dieball

, 724

F.3d 957, 961 (7th Cir. 2013), quoting Fednav International Ltd.

v. Continental Insurance Co.

, 624 F.3d 834, 841 (7th Cir. 2010).

Cooper ’s argument based on the Northern District’s Rule

83.5 raises an interesting question in light of our cases ad

‐ dressing rejected se tt lement o ff ers when se tt ing fee awards.

E.g., Paz

, 924 F.3d at 955–56; Moriarty

, 233 F.3d at 967 (direct

‐ ing courts to consider se tt lement o ff ers). Nev ertheless, we

agree with RMCB that this argument is waived. Cooper did

object to the defendant’s fi ling of con fi dential information

from the se tt lement negotiations at the fi rst opportunity, in

his reply brief in support of his motion for a tt orney fees. The

legal basis for Cooper ’s argument however was Federal Rule

of Evidence 408. He did not refer to Local Rule 83.5. Cooper’s

general discussion of the issue without a reference to his Local

Rule 83.5 theory was not su ffi cient to preserve the argument

he now makes. As a result, we will not consider the argument

for the fi rst time in thi s appeal. If there is a debate to be had

about whether courts may consider such evidence from set

‐

tlement conferences and the scope of Local Rule 83.5, it ought

to begin in the district court that established the rule.

For the reasons discussed abov e, we VACATE the district

court’s a tt orney fee award. This case is REMANDED for a de

‐

termination of the amount of a tt orney fees consistent with this

opinion.