iWeltman, Weinberg & Reis Co., L.P.A., the law firm that recently defeated the CFPB’s FDCPA lawsuit against it, has filed a motion seeking attorney’s fees of approximately $1.2 million from the CFPB.
After a four-day trial, the Ohio federal district court hearing the CFPB’s lawsuit, found that the CFPB had failed to prove its FDCPA and CFPA claims by a preponderance of the evidence. The CFPB’s complaint alleged that the debt collection letters sent by Weltman, which were printed on the law firm’s letterhead, violated the FDCPA and CFPA because they falsely implied that attorneys were “meaningfully involved” in the collection of the debts. Having found that the letters could be interpreted to imply meaningful involvement by an attorney, the court concluded that there was “meaningful[] and substantial[] involve[ment by Weltman attorneys] in the debt collection process both before and after the issuance of the demand letters.”
In its motion, Weltman asserts that “the Bureau’s blind pursuit of its groundless case cost Weltman dearly, both in terms of substantial expense Weltman incurred in its defense and the reputational harm that cost the firm valued clients and employees.”
Weltman’s motion seeks attorney’s fees pursuant to the Equal Access to Justice Act (“EAJA”), which permits a court to award “reasonable fees and expenses of attorneys” to the prevailing party in a civil action brought by any agency of the United States “to the same extent that any other party would be liable under the common law or under the terms of any statute which specifically provides for such an award.” 28 U.S.C. § 2412(b). Weltman asserts that “the EAJA puts the United States on equal footing with private litigants under common law and statute,” and that courts applying this provision have held the government to the same good faith standard expected of all parties to litigation. According to Weltman, Section 2412(b) of the EAJA “permits a court to sanction the United States and its agencies for attorney’s fees under th[e] common law ‘bad faith’ exception to the American Rule that each party bears its own attorney’s fees.”
Weltman argues that, as the prevailing party, it is entitled to its reasonable attorney’s fees “because the Bureau prosecuted this action in bad faith.” It asserts that “the Bureau knew, or should have known, that its claims lacked merit long before it even filed the Complaint.” It claims that based on the more than two-year investigation of Weltman that the Bureau conducted, “the Bureau knew no consumer had been harmed, misled, or confused by Weltman’s practice of truthfully identifying itself as a law firm.”
Ballard Spahr attorneys have successfully pursued attorney’s fees claims against federal government agencies under the EAJA as well as attorney’s fees claims against state government agencies under other federal statutes, such as Section 1988(b) of the Civil Rights Act. This provision entitles a “prevailing party” in a Civil Rights Act lawsuit to recover its reasonable attorney’s fees and expenses from the losing party. Several years ago, our client brought a Civil Rights Act lawsuit against a state’s banking regulator in which it successfully argued that the regulator’s attempt to apply its laws to our client’s loans was precluded by the Commerce Clause of the U.S. Constitution. That state subsequently paid our client $440,000 to resolve its petition seeking attorney’s fees as a “prevailing party” in a Civil Rights Act lawsuit.
