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Smalley v. Account Services Collections, Inc.

United States District Court, W.D. Pennsylvania

March 23, 2017

MIKE SMALLEY, Plaintiff,

          Craig T. Kimmel, Esq., Joseph C. Hoeffel, Esq., Katherine L. Pomerleau, Esq. Robert J. Hannen, Esq.


          David Stewart Cercone United States District Judge

         I. Introduction

         This matter is before the Court on a motion for attorney fees and costs (ECF No. 16) pursuant to Fed.R.Civ.P. 54(d) and 15 U.S.C. § 1692k(a)(3) filed by Defendant Account Services Collectives, Inc. ("ASC"). For the reasons set forth below, the motion will be denied.

         II. Background

         This is an action under the Fair Debt Collections Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq., and the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227 et seq. Plaintiff Mike Smalley filed suit on November 13, 2015, alleging that ASC contacted him on his cell phone, using an automatic telephone dialing system, automated messages, and/or a prerecorded voice, in an effort to collect a debt, in violation of the FDCPA and TCP A. (ECF No. 1). ASC filed an answer denying Plaintiffs allegations on April 4, 2016. (ECF No. 5). The court held an initial case management conference on May 18, 2016. (ECF No. 11).

         On June 2, 2016, the parties filed a joint stipulation of dismissal pursuant to Fed.R.Civ.P. 41(a)(1)(A)(ii), whereby they stipulated to dismiss the complaint with prejudice. (ECF No. 14). On June 8, 2016, the court entered an order confirming the stipulation. (ECF No. 15).

         Thereafter, ASC filed its motion for attorney fees and costs along with a brief and numerous exhibits in support. (ECF Nos. 16, 17). Plaintiff filed a response and brief in opposition (ECF Nos. 19, 20), and ASC, with leave of court, filed a reply (ECF No. 23). The matter is ripe for review.

         III. Legal Standard

         Fed. R. Civ. P. 54(d)(1) gives the court discretion to award costs, other than attorney's fees, to the “prevailing party.” Furthermore, Fed.R.Civ.P. 54(d)(2) gives the court discretion to award attorney's fees if authorized by statute, rule, or otherwise. The FDCPA provides: “[o]n a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney's fees reasonable in relation to the work expended and costs.” 15 U.S.C. § 1692k(a)(3). Although not specifically stated in the statute, “most courts appear to award attorney's fees under 15 U.S.C. § 1692k(a)(3) for a plaintiff's bad faith and harassment only to what can be considered a prevailing defendant.” Scroggin v. Credit Bureau of Jonesboro, Inc., 973 F.Supp.2d 961, 980 (E.D. Ark. 2013) (citing Montgomery v. Sessoms & Rogers, P.A., No. 5:12-cv-474-BO, 2013 WL 593949, *1 (E.D. N.C. Feb. 15, 2013)).

         IV. Discussion

         As a threshold matter, the Court must determine whether ASC is a “prevailing party.” A “prevailing party” is someone “who has been awarded some relief by the court.” Buckhannon Bd. & Care Home, Inc. v. W. Virginia Dep't of Health & Human Res., 532 U.S. 598, 603 (2001). There must have been a “material alteration of the legal relationship of the parties[, ]'” id. (quoting Texas State Teachers Assn. v. Garland Indep. Sch. Dist., 489 U.S. 782, 792-93 (1989)), or a “judicially sanctioned change in the legal relationship of the parties, ” id. In defining “prevailing party” in this manner, the Supreme Court has stressed the need for “judicial imprimatur” and “judicial relief.” Id. at 605-06 (emphasis in original). Thus, the Court explained in Buckhannon, “enforceable judgments on the merits and court-ordered consent decrees” are sufficient to confer “prevailing-party” status. Id. at 604. By contrast, “[a] defendant's voluntary change in conduct, although perhaps accomplishing what the plaintiff sought to achieve by lawsuit, ” is not enough. Id. at 605. Likewise, “[p]rivate settlements do not entail the judicial approval and oversight involved in consent decrees” and are thus not sufficient. Id. at 604 n.7.

         The parties dispute whether ASC became the “prevailing party” by virtue of the filing of the stipulation of dismissal with prejudice pursuant to Fed.R.Civ.P. 41(a)(1)(A)(ii). Under Rule 41(a)(1)(A)(ii), “the plaintiff may dismiss an action without a court order by filing . . . a stipulation of dismissal signed by all parties who have appeared.” “[A] voluntary stipulation of dismissal under Rule 41(a)(1)(A)(ii) . . . is immediately self-executing. No separate entry or order is required to effectuate the dismissal.” State Nat'l Ins. Co. v. Cty. of Camden, 824 F.3d 399, 407 (3d Cir. 2016). Indeed, “a ‘timely notice of voluntary dismissal invites no response from the district court and permits no interference by it.'” Id. (quoting In re Bath & Kitchen Fixtures Antitrust Litig., 535 F.3d 161, 165 (3d Cir. 2008)). The case simply ends upon the filing of the proper notice. Id.

         The Third Circuit Court of Appeals has not addressed whether a defendant can be considered a “prevailing party” upon stipulating to a dismissal with prejudice under Fed.R.Civ.P. 41(a)(1)(A)(ii). Several district courts in this circuit have, however, held that voluntary dismissals are not sufficient to confer “prevailing-party” status because they do not require “judicial intervention or relief.” Fassl v. Our Lady of Perpetual Help Roman Catholic Church, No. CIV.A. 05-CV-404, 2006 WL 709799, at *4 (E.D. Pa. Mar. 13, 2006); see Evans v. Chichester Sch. Dist., No. CIVA 07-0072, 2008 WL 4610240, at *2 (E.D. Pa. Oct. 15, 2008); Wiza v. SEPTA, No. CV 12-2748, 2013 WL 12155801, at *1 (E.D. Pa. July 31, 2013). While none of those cases specifically involved stipulations of dismissal with prejudice pursuant to Rule 41(a)(1)(A)(ii), they are nonetheless instructive, as the parties stipulation here similarly did not require “judicial intervention or relief.” A number of district courts outside the Third Circuit have addressed the ...

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