In a case that was defended by Martin Golden Lyons Watts Morgan and Kaufman Dolowich, a state court judge in New Jersey has largely denied a fee petition in a Fair Debt Collection Practices Act case, ruling that the plaintiff cannot recover attorney’s fees for work performed in an earlier federal lawsuit that was dismissed for lack of standing.
The background: The plaintiff first sued the defendant in federal court, accusing it of violating the FDCPA.
- The federal case was litigated for nearly four years, including written discovery, discovery disputes that required court intervention, and depositions of both parties, before it was dismissed in 2022 for lack of standing.
- The same day the federal case was dismissed, the plaintiff refiled what her attorney conceded was substantially the same single-count FDCPA class action in state court.
- The state case then sat largely dormant for more than three years. Neither side conducted discovery and no substantive motions were filed before the parties settled on the eve of trial for $1,000 in statutory damages, the maximum available, with attorney’s fees and costs left for the court to decide.
- The plaintiff’s counsel sought nearly $75,000, including more than $29,000 for 46.7 hours of discovery work performed in the federal case, more than $11,000 for litigating the fee petition itself, a $1,668 court reporter fee from a federal court deposition, and a 20% contingency enhancement.
- The plaintiff argued the claims in the two cases were intertwined and shared a common core of facts, and that the federal discovery would have been used at a state court trial. The defendant argued the FDCPA permits fees only in a “successful action,” and a dismissal for lack of standing makes no one a prevailing party.
- In a twist, the judge indicated at oral argument earlier this year that the federal discovery time was compensable because it spared the parties from conducting discovery in the state case, and ordered supplemental briefing on the issue.
The ruling: Judge Stephen Petrillo of the Superior Court of New Jersey granted the fee motion only in part, awarding $19,497.50 and adopting the defendant’s reasoning.
- The judge also trimmed the time billed for drafting the state court complaint from 2.5 hours to one hour, since it was substantially similar to the federal complaint, and awarded the uncontested $310 in filing and service costs.
- Judge Petrillo ruled the FDCPA’s fee-shifting provision is limited to the action in which the plaintiff prevails, and the plaintiff obtained no relief in the federal case. The statute “does not authorize recovery of fees incurred in a separate, unsuccessful action, even if the claims and facts are similar or the work performed was useful in the later action,” he wrote.
- The judge found persuasive a recent Wisconsin appeals court decision holding that a plaintiff who voluntarily dismissed a federal FDCPA suit could not recover those fees in a later state case, even where the federal work “furthered” the state case.
- The plaintiff’s argument that the state case was a “continuation” of the federal one was unavailing; the two cases are distinct actions under the statute’s plain language.
- The judge denied the 20% contingency enhancement, agreeing with the defendant that this was a routine FDCPA case involving no complex issues, no risk of nonpayment, and only statutory damages.
