Settlement of FDCPA Claim Does Not Qualify as a “Successful Action” Entitling Plaintiff to Attorney Fees

The United States Court of Appeals for the Fifth Circuit recently held that a private settlement on favorable terms for the plaintiff does not qualify as a “successful action” triggering the fee shifting provisions of the Fair Debt Collection Practices Act (“FDCPA”) as codified at 15 U.S.C.A. § 1692k.  Tejero v. Portfolio Recovery Assocs. LLC.

Luis Tejero had sued Portfolio Recovery Associates LLC (“Portfolio”) for reporting allegedly overdue credit card debt without also reporting that the debt was disputed as required under the FDCPA.  The parties notified the U.S. District Court in February 2018 that they had reached a settlement under which Portfolio would forgive the debt and pay Tejero $1000, the maximum damages Tejero could have recovered under the statute.

Tejero’s counsel moved for $14,100 in attorney fees, asserting that the favorable settlement was a “successful action” under the FDCPA’s fee-shifting provisions.  The District Court disagreed, finding that a private settlement was not a successful action under the statute.

The Fifth Circuit agreed with the trial court. The Appeals Court pointed to the United States Supreme Court’s Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health and Human Resources decision, which stated a party needs a judgment on the merits or court-enforced consent decree in order to be considered a prevailing party for fee-shifting under the Fair Housing Amendments Act and the Americans with Disabilities Act. Because the FDCPA’s fee-shifting is not meaningfully different from those statutes’, a successful action likewise requires either a judgment or consent decree, and a private settlement cannot trigger the fee-shifting provisions of the FDCPA.

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