Datiz v. Int'l Recovery Assocs.

LISA DATIZ, Plaintiff, v. INTERNATIONAL RECOVERY ASSOCIATES, INC., Defendant.

15-cv-3549 (DRH)(AKT)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

July 7, 2020

ORDER ADOPTING REPORT AND RECOMMENDATION AS MODIFIED

APPEARANCES

BARSHAY SANDERS PLLC

For Plaintiff

100 Garden City Plaza, Suite 500

Garden City, New York 11530

By: Craig B. Sanders, Esq.

David M. Barshay, Esq.

Jonathan M. Cader, Esq.

ROBERT L. ARLEO

For Defendants

380 Lexington Avenue, 17^th Fl.

New York, NY 10168

By: Robert L. Arleo, Esq.

HURLEY, Senior District Judge:

INTRODUCTION

Presently before the Court is the Report and Recommendation of Magistrate Judge A. Kathleen Tomlinson, dated March 12, 2020, recommending that Plaintiff's motion for attorneys' fees be granted in part and denied in part ("R&R"). (ECF No. 151.) Specifically, Magistrate Judge Tomlinson recommended that this Court award Plaintiff $80,615.00 in attorneys' fees and $400.00 in costs in connection with her Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. ("FDCPA") action against Defendant.

Both Plaintiff and Defendant have filed objections to certain portions of the R&R. Defendant raises four objections: "1) the Report's rejection of the Fifth Circuit's 'special circumstances' exception to the Fair Debt Collection Practice[s] Act (FDCPA) fee shifting provision (referred to as the 'unusual circumstances' exception in the Third and Fourth Circuits); 2) the Report's refusal to reduce attorneys fees based upon Plaintiff's frivolous motion for sanctions against the undersigned attorney for the Defendant; 3) the Report's refusal to reduce attorneys fees based upon Plaintiff's attorneys agreement to proceed to trial by jury, then retaining an alleged expert, and then withdrawing the agreement to proceed to trial by jury and, instead, moving for summary judgment; and 4) the Report's awarding of $80,615 in attorneys fees to the Plaintiff." (Def.'s Obj. [ECF No. 157] at 1.) Plaintiff objects to the R&R on the basis that it was error to reduce her attorneys' fees by sixty percent and that a reduction in the ten to thirty percent range would be more appropriate. (Pl.'s Obj. [ECF No. 158] at 1.)

Also before the Court are Defendant's request for a pre-motion conference in anticipation of a motion to modify a portion of Judge Arthur D. Spatt's April 29, 2019 Memorandum Decision and Order (ECF No. 130) ("Judge Spatt's Order") in this case and Plaintiff's request for a pre-motion conference in anticipation of a motion for additional attorneys' fees. (ECF Nos. 161, 163.)

For the reasons stated below: (1) the R&R is adopted, as modified, by changing the recommended 60% reduction in Plaintiff's attorneys' fee request to a demonition of 40%, (2) Defendant's request with respect to modifying Judge Spatt's Order of April 29, 2019 is denied,and (3) Plaintiff's request asking for additional attorneys' fees for services provided after the current application was submitted is held in abeyance.

BACKGROUND

I adopt Magistrate Judge Tomlinson's very thorough overview of the procedural history and facts of this case and assume the parties' familiarity with the same. I state only some of the very long procedural history as context for the motions before me now.

In short, Plaintiff Lisa Datiz ("Plaintiff") commenced this action against International Recovery Associates, Inc. ("Defendant") for violations of the FDCPA. (Am. Compl. [ECF No. 17].) In particular, Plaintiff's claims are based on the content of a collection letter that Defendant delivered to Plaintiff in order to collect a debt. (Id.)

On August 4, 2016, Judge Spatt, who presided over the case at the time, granted Defendant's motion to dismiss two of Plaintiff's FDCPA claims and denied Defendant's motion as to two FDCPA claims based on Defendant's failure to adequately identify the creditor to whom Plaintiff owed a debt in the collection letter. (Aug. 4, 2016 Mem. Decision and Order [ECF No. 33].) After a number of intervening applications, which are detailed in the R&R, the parties filed cross motions for summary judgment. On September 24, 2018, Judge Spatt, adopting Magistrate Judge Tomlinson's recommendation, granted summary judgment to Plaintiff and denied Defendant's motion. (Sept. 24, 2018 Mem. Decision and Order [ECF No. 97].) Judge Spatt awarded Plaintiff $1,000 in statutory damages, which was later reduced to $500 after Defendant moved for reconsideration. (Apr. 29, 2019 Mem. Decision and Order [ECF No. 130].)

In accordance with Judge Spatt's direction following his decision on summary judgment, Plaintiff filed a motion for attorneys' fees and costs on November 30, 2018 to recover fees forservices provided by her counsel, Barshay Sanders. (ECF No. 113). Judge Spatt referred that motion to Magistrate Judge Tomlinson, whose report and recommendation on the motion is the subject of this decision.

Following the summary judgment decision, Defendant attempted to remove Judge Spatt from the case, both by writing letters to then-Chief Judge Dora L. Irizarry and by filing a motion for Judge Spatt to recuse himself from the case. Though he initially denied Defendant's motion, Judge Spatt ultimately recused himself on December 17, 2019. (Order of Recusal [ECF No. 150].) The case was then randomly reassigned to me.¹

DISCUSSION

I. Standard of Review

Federal Rule of Civil Procedure 72(b) provides that when a magistrate judge issues a report and recommendation on a matter "dispositive of a claim or defense of a party," the district court judge shall make a de novo determination of any portion of the magistrate judge's disposition to which specific written objection has been made. Fed. R. Civ. P. 72(b). If, however, the objecting party "makes only conclusory or general arguments, or simply reiterates the original arguments, the Court will review the [report and recommendation] strictly for clear error." IndyMac Bank, F.S.B. v. Nat'l Settlement Agency, Inc., 2008 WL 4810043, at *1 (S.D.N.Y. Nov. 3, 2008). For those portions of a report and recommendation to which no objections are made, the Court also applies a clear error standard. Lewis v. Zon, 573 F. Supp. 2d 804, 811 (S.D.N.Y. 2008).

Plaintiff argues that the clear error standard should apply to Defendant's arguments because, even though they are not "'verbatim' recitations of Defendant's opposition, they are substantively identical." (Pl.'s Obj. at 17.) Defendant argues that the Court should review the objections on a de novo basis. (Def.'s Obj. at 7-8.) The Court will address the relevant standard of review for each objection based on whether it asserts a specific objection or conclusory, general arguments.

II. The R&R Is Adopted as Modified

a. The Objection Based on "Special Circumstances" is Rejected

The Court reviews this issue de novo because Defendant's objection specifically discusses the perceived errors in Judge Tomlinson's reasoning. Under a de novo review, the Court adopts Magistrate Judge Tomlinson's recommendation on this issue.

A consumer who prevails in a FDCPA action is entitled to recover "the costs of the action, together with reasonable attorney's fees as determined by the court." 15 U.S.C. § 1692k(a)(3). As Magistrate Judge Tomlinson explained in the R&R, the Second Circuit views the FDCPA attorney's fees provision as mandatory for successful plaintiffs. (R&R at 11 (collecting cases).) Nonetheless, Defendant argues that this Court should follow the Third, Fourth, and Fifth Circuits in finding an exception to the FDCPA's mandatory attorneys' fees provision based on "special" or "unusual circumstance" because "Plaintiff submitted a grossly intolerable, exaggerated and dishonest fees request." (Def.'s Obj. at 8.)

Besides the fact that this Court is not bound by the law of any circuit other than the Second Circuit, the "special circumstances" exception is not applicable here. Defendant relies primarily on a Fifth Circuit case, Davis v. Credit Bureau of the South, which notes that it applied the "special circumstances" exception in that case "largely based on the district court's finding of bad faith conduct on the part of plaintiff and her counsel: 'It appears this cause of action was created bycounsel for the purpose of generating, in counsel's own words, an 'incredibly high' fee request.'" 908 F.3d 972, 978-979 (5th Cir. 2018). The plaintiff in Davis engaged in objectively outrageous conduct such as claiming to be from a different state to manufacture her claim, which she did in conjunction with attorneys who were her former employers. Id. at 980. Though Barshay Sanders' fee estimate was problematic in certain respects, as will be discussed in more detail below, the conduct displayed by Plaintiff or her counsel in this case could not be categorized as bad faith such that their conduct constitutes a "special circumstance."

Defendant also argues that the cases Judge Tomlinson relied on "did not consider the special/unusual circumstances argument." (Def.'s Obj. at 9.) The Court is not persuaded by this argument because, as Magistrate Judge Tomlinson clearly explained, and the court in Davis acknowledged, the Second Circuit views the attorney's fees provision of the FDCPA as mandatory. (R&R at 11 (collecting cases).) Indeed, even Davis acknowledges that a "complete denial of otherwise generally mandatory attorney's fees is a rare and drastic sanction." 908 F.3d at 981 (emphasis added). In the absence of Second Circuit law to the contrary, I find that the "special circumstances" exception does not apply and therefore adopt Judge Tomlinson's R&R on this issue.

b. The Objection Based on the Sanctions Motion is Rejected

Defendant argues that Plaintiff should not be reimbursed for what it views as a "frivolous" motion for sanctions against its attorney, Robert Arleo. (Def.'s Obj. at 11.) Because Defendant's objection on this issue is merely one paragraph that repeats prior arguments advanced in various submissions to Judge Spatt and Magistrate Judge Tomlinson, the Court reviews this part...