Ninth Circuit Affirms Award of Attorneys’ Fees in FDCPA Matter

In Hanrahan v. Statewide Collection, Inc., No. 21-16187 (9th Cir. Sep. 1, 2022), the Ninth Circuit affirmed an award of attorneys’ fees in favor of the plaintiff in an action brought under the Fair Debt Collections Practices Act (FDCPA). The case makes clear that, although the amount is discretionary, attorney fee awards to prevailing plaintiffs are mandatory under the FDCPA.

The plaintiff, Leah Hanrahan, incurred a medical bill that was sent to defendant Statewide Collection, Inc. (Statewide) for collection. In January 2018, Statewide sent the plaintiff a collection letter, which she contends was misleading and improperly threatened negative credit reporting. The plaintiff filed suit in the U. S. District Court for the Northern District of California, asserting claims for violation of the FDCPA and the Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code, § 1788 et seq. (Rosenthal Act). On December 23, 2020, the District Court granted summary judgment in favor of the plaintiff on the issues of liability under the FDCPA and Rosenthal Act, but it denied summary judgment on the issue of damages. Statewide then made an offer of judgment of $7,500 exclusive of attorneys’ fees, which was accepted by the plaintiff on February 8, 2021. Following acceptance of the offer of judgment, the District Court entered an order, awarding the plaintiff $53,604 in attorneys’ fees and $3,135.05 in costs. Statewide appealed.

On appeal, the Ninth Circuit affirmed the attorneys’ fee award. It rejected Statewide’s argument that an award of attorneys’ fees was discretionary, holding that the plain language of the FDCPA makes an award of fees mandatory. Further, because Statewide’s settlement offer was exclusive of attorneys’ fees, the plaintiff could recover for the time spent in establishing her entitlement to fees. Finally, it allowed the plaintiff to recover fees for time spent before they were admitted to practice before the District Court, finding that the plaintiffs’ attorneys were admitted pro hac vice, and there was no reason to believe that they would not have been admitted as a matter of course had they applied earlier.

This case provides a reminder that, although the court has discretion as to what amount qualifies as reasonable, FDCPA Section 1692k(a)(c) mandates an award of attorneys’ fees to a prevailing plaintiff.