Opinion
3:22-cv-00140-JR
04-19-2022
SHAWN SMITH, Plaintiff, v. OPPORTUNITY FINANCIAL, LLC, dba OPPLOANS, Defendant.
FINDINGS AND RECOMMENDATION
Jolie A. Russo United States Magistrate Judge
Plaintiff Shawn Smith moves for entry of default judgment pursuant to Fed.R.Civ.P. 55(b) against defendant Opportunity Financial, LLC. For the reasons explained below, plaintiff's motion should be granted in part.
BACKGROUND
This action arises out of the Fair Credit Reporting Act (“FCRA”). Specifically, plaintiff asserts his May 2021 credit report reflected inaccurate information regarding a loan purportedly provided by defendant, even though plaintiff has never borrowed money from or done business with defendant. Plaintiff attempted to have both defendant and Equifax/Transunion/Experian complete an investigation (providing evidence that he had been the subject of an identity theft), correct the inaccurate information, and cease reporting the debt on his credit report, but to no avail.
In January 2022, plaintiff filed a complaint in this Court premised on defendant's negligent or, alternatively, willful violations of the FCRA. As relief, plaintiff requested actual damages associated with “his failure to obtain credit, higher interest rates available for purchase of a vehicle, stress, anxiety, and embarrassment at having to deal with a debt he does not owe, ” as well as “sums mailing dispute letters, traveling with his vehicle to resolve the disputes and for printing and copying costs in disputing the improper credit reporting, ” which he “estimates . . . at $20,000.” Compl. ¶ 15 (doc. 1). Plaintiff also sought statutory damages, attorney fees, and punitive damages.
Plaintiff filed a certificate of service, and defendant was required to answer or respond to plaintiff's complaint by February 22, 2022. On March 2, 2022, the Court granted plaintiff's motion for entry of default. On March 30, 2022, plaintiff filed the present motion for entry of default judgment.
STANDARDS
The decision to grant or deny a motion for default judgment is within the discretion of the court. DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 852 (9th Cir. 2007). The court must consider seven factors, often referred to as the Eitel factors, in resolving such a motion: (1) the possibility of prejudice to the plaintiff; (2) the merits of plaintiff's substantive claim; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
Upon the entry of default, the court accepts “the well-pleaded factual allegations in the complaint as true.” DIRECTV, Inc., 503 F.3d at 854. However, the court “does not accept as admitted facts that are not well-pleaded, conclusions of law, or facts relating to the amount of damages.” United States v. River Cliff Farm, Inc., 2017 WL 3388172, *1 (D. Or. Aug. 7, 2017) (citations omitted); see also Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 702 (9th Cir. 2008) (“[t]he general rule of law is that upon default the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true”) (citation and internal quotations omitted). In other words, “[i]t is well settled that a default judgment for money may not be entered without a hearing unless the amount claimed is a liquidated sum or capable of mathematical calculation.” Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir. 1981).
DISCUSSION
Plaintiff seeks $3,000 in statutory damages for “willful violations” of the FCRA, as well as attorney fees in the amount of $6,814.50. Second Piteo Aff. ¶¶ 7-9 (doc. 10). To grant default judgement, the Court must first address the appropriateness of such a judgment pursuant to the factors laid out in Eitel, and then assesses damages and reasonable attorney fees. Stross v. Smith Rock Masonry Co., 2021 WL 2453388, *2 (D. Or. June 16, 2021).
I. Eitel Factors
The Court accepts plaintiff's well-pleaded factual assertions as true because default has been entered against defendant. And the Court concludes that the Eitel factors, on balance, support granting plaintiff's motion.
The first factor “considers whether a plaintiff would suffer prejudice if default judgment is not entered, and any potential prejudice to the plaintiff favors granting a default judgment.” Contractors Bonding & Ins. Co. v. Radian Constr. Corp., 2021 WL 5927682, *2 (D. Or. Nov. 29), adopted by 2021 WL 5925962 (D. Or. Dec. 15, 2021) (citation and internal quotations omitted). Because plaintiff has no other means to address defendant's FCRA obligations and, by extension, obtain a correction to his credit report, the first factor favors granting plaintiff's motion.
The second and third factors - the merits of plaintiff's claims and the sufficiency of plaintiff's complaint - also favor granting plaintiff's motion. The Ninth Circuit has directed that the second and third factors, taken together, require the dispositive pleading to “state a claim on which the [plaintiff] may recover.” Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978). Plaintiff has sufficiently pleaded an actual controversy regarding defendant's duty to investigate and correct inaccurate credit information under the FCRA. Compl. ¶¶ 5-13 (doc. 1); see also Lawrence v. Paramount Residential Mortg. Grp., Inc., 2020 WL 6689371, *2 (D. Or. July 20), adopted by 2020 WL 6685706 (D. Or., Nov. 10, 2020) (articulating the elements for a failure to furnish accurate credit information claim) (citations omitted).
The fourth factor considers the sum of money at stake in this action. The damages here are neither nominal nor particularly substantial, as plaintiff seeks nearly $10,000 in statutory damages and attorney fees and costs. The Court concludes that the fourth factor is neutral.
The fifth factor considers the possibility of a dispute concerning material facts. As discussed above, the defendant was properly served but has not appeared in this case. The Court must therefore accept as true plaintiff's well-pleaded factual allegations that defendant violated the FCRA by failing to complete an investigation and correct the inaccurate credit information concerning the fraudulent loan.
To the extent, however, that plaintiff alleges defendant's actions were “willful” within the meaning of the statute (thereby warranting statutory damages in lieu of actual damages), there are no supporting facts. Cf. Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 53 (2007) (a consumer is limited to actual damages if the FCRA violation is negligent; “[i]f willful, however, the consumer may have actual damages, or statutory damages ranging from $100 to $1,000, and even punitive damages”). While more general allegations are sufficient to maintain a claim for willful violations of the FCRA at the motion to dismiss stage, the defendant's state of mind generally requires proof and is “a question of fact for the jury.” Edwards v. Toys “R” Us, 527 F.Supp.2d 1197, 1210 (C.D. Cal. 2007) (collecting cases); see also Kirchner v. Shred-it USA, Inc., 2014 WL 6685210, *1 (E.D. Cal. Nov. 25, 2014) (“[a] defendant's violation of the FCRA is not reckless simply because its understanding of a statutory obligation is erroneous”).
Therefore, as to plaintiff's alternate claim of willful FCRA noncompliance, the complaint's factual content does not permit the Court to draw the reasonable inference that defendant knowingly or recklessly violated its statutory duties, and the possibility of a material dispute as to this issue is significant. See Stross, 2021 WL 2453388 at *2-3 (the plaintiff's “assertion that defendant willfully infringed is merely a legal conclusion” where the well-pleaded facts in the complaint showed only that the defendant “used his Photograph”); see also Or. by & through Dep't of Corr. v. Ames, 2016 WL 9226398, *2-3 (D. Or. Sept. 13, 2016) (denoting that, in regard to the fifth element, “it is [the court's] obligation to take the possibility of a viable . . . defense into consideration in tailoring appropriate relief” before finding that the plaintiff's allegations regarding liability are “overbroad”). Accordingly, the fifth factor is neutral.
Finally, the sixth and seventh factors favor granting plaintiff's motion. The sixth factor considers whether defendant's default was due to excusable neglect, and here the record demonstrates that defendant was served but has not appeared, or otherwise indicated an intent to do so. As to the seventh factor, “default judgments are disfavored because cases should be decided on their merits whenever reasonably possible [but] the policy . . . favoring decisions on the merits does not weigh against default judgment because [the defendant's] failure to appear makes a decision on the merits impractical.” Contractors Bonding & Ins. Co., 2021 WL 5927682 at *3 (citations and internal quotations and brackets omitted). In sum, after balancing the Eitel factors, the Court concludes that default judgment should be entered.
II. Damages
Civil liability for negligent non-compliance with the FCRA is limited to “any actual damages sustained by the consumer”; statutory damages “of not less than $100 and not more than $1,000” are only available for willful violations. 15 U.S.C. §§ 1681n(a)(1), 1681o(a)(1); Safeco Ins. Co., 551 U.S. at 53.
Plaintiff's counsel had not submitted any proof of actual damages, despite having two opportunities to do so. That is, the complaint predominantly relied on actual damages and referenced statutory damages solely in the prayer for relief. See generally Compl. (doc. 1). In initially moving for entry of default judgment, the sole form of proof proffered was an affidavit from plaintiff's counsel stating:
For damages, Plaintiff requested a declaration that Defendant violated the FCRA and a subsequent order requiring that credit reporting be corrected, an award of actual and statutory damages in the amount of at least $20,000, and an award of Plaintiffs reasonable attorney fees and costs as allowed by statute, as well as punitive damages to be determined by the court at a damages evidentiary hearing.
First Piteo Aff. ¶ 8 (doc. 9). In other words, plaintiff continued to seek actual damages, but did not provide a sum certain amount or any factual information outside of the complaint.
On April 15, 2022, plaintiff's counsel filed an amended affidavit, abandoning any request for actual damages and instead seeking $3,000 in statutory damages for “three separate willful violations.” Second Piteo Aff. ¶¶ 7-9 (doc. 10). As addressed herein, because the complaint's allegations surrounding willfulness are conclusory, and there are otherwise no facts in the record establishing that defendant's actions were reckless or knowing, plaintiff has not sufficiently demonstrated an entitlement to statutory damages.
III. Attorney Fees
Irrespective of whether the violation was willful or negligent, the FCRA permits the recovery of “reasonable attorney's fees as determined by the court.” 15 U.S.C. §§ 1681n(a)(3), 1681o(a)(2). In determining reasonableness in the context of a motion for default judgment, the court employs the “‘lodestar method,' which multiplies the number of hours the prevailing party reasonably expended on litigation by a reasonable hourly rate.” Stross, 2021 WL 2453388 at *4.
Here, plaintiff's counsel seeks 16.3 hours in attorney time, at a rate of $375 per hour; 2.4 hours of paralegal time, at a rate of $125 per hour; and the $402 court filing fee. Second Piteo Aff. Ex. 1 (doc. 10-1). It is well-established that the prevailing plaintiff in an FRCA action may recover the aforementioned fees. Grove v. Wells Fargo Fin. Cal., Inc., 606 F.3d 577, 580-81 (9th Cir. 2010). Further, with the exception of the time spent preparing the initial motion for default judgment and amended affidavit, the Court finds the hours expended in this case to be reasonable, as is the hourly paralegal rate (since it does not exceed the average rate for first-year associates).
Counsel billed 3.1 hours for the amended affidavit (2.4 hours of paralegal time and .7 hours of attorney time), in addition to the 3.8 hours billed for the initial motion (1.5 hours of paralegal time and 2.3 hours of attorney time). Second Piteo Aff. Ex. 1 (doc. 10-1). The motion itself is one paragraph long and includes boilerplate language, and the initial proposed judgment is also boilerplate and incomplete, as it left each amount of actual, statutory, and punitive damages (along with attorney fees) blank. Both of counsel's supporting affidavits offer little more than the allegations in the complaint. The Court finds 1 hour of attorney time sufficient for this task, thereby reducing counsel's time by 3.7 hours and the paralegal's time by 2.2 hours.
The attorney hourly rate, however, is excessive. A reasonable rate for legal services is “calculated according to the prevailing market rates in the relevant community.” McElmurry v. U.S. Bank Nat'l Ass'n, 2008 WL 1925119, *3 (D. Or. Apr. 30, 2008) (quoting Blum v. Stenson, 465 U.S. 886, 895 (1984)). “This District considers the most recent Oregon State Bar Economic Survey. . . as its ‘initial benchmark' in determining whether hourly billing rates are reasonable.” Prison Legal News v. Umatilla Cnty., 2013 WL 2156471, *4 (D. Or. May 16, 2013) (citations omitted).
As a preliminary matter, plaintiff's counsel did not submit any information concerning his amount of experience, practice areas, level of expertise in regard to the FCRA, or the facts attendant to this lawsuit. However, from counsel's 2009 bar number, the Court gleans that he has approximately 13 years of experience. The mean and median rates for a Portland attorney with 13 to 15 years of experience are $288 and $300, respectively. 2017 OSB Survey 39-43.
The Court finds that counsel failed to adequately justify his increased rate. The Court recognizes that counsel has been in practice for a number of years. However, the relevance of that experience, and any related expertise, to this lawsuit is limited. Namely, this case pended on the docket for approximately one month before default was entered and its posture was straightforward; the only substantive filings from plaintiff were the complaint and default-related documents. The Court therefore finds the median rate (i.e., $300 per hour) to be appropriate. See Prison Legal News, 2013 WL 2156471 at *5-6 (awarding the average rate, despite the expertise of counsel, where the case settled in its early stages and the parties had engaged in only minimal discovery); see also Moreno v. City of Sacramento, 534 F.3d 1106, 1115-16 (9th Cir. 2008) (“[t]he district court may properly use the simplicity of a given task . . . as justification for a reduction in the overall rate”). Thus, plaintiff should be awarded $3,805 in attorney fees and $402 costs.
Counsel should be awarded for 12.6 hours of work at a rate of $300 per hour (i.e., $3,780 total), and the paralegal should be awarded for .2 hours of work at a rate of $125 per hour (i.e., $25 total).
RECOMMENDATION
For the foregoing reasons, plaintiff's Motion for Default Judgment (doc. 8) should be granted in part. Specifically, the Eitel factors favor the entrance of a default judgment, but neither actual nor statutory damages have been established, and attorney fees and costs should be awarded in the reduced sum of $4,207.
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of the district court's judgment or appealable order. The parties shall have fourteen (14) days from the date of service of a copy of this recommendation within which to file specific written objections with the court. Thereafter, the parties shall have fourteen (14) days within which to file a response to the objections. Failure to timely file objections to any factual determination of the Magistrate Judge will be considered as a waiver of a party's right to de novo consideration of the factual issues and will constitute a waiver of a party's right to appellate review of the findings of fact in an order or judgment entered pursuant to this recommendation.