In Hyde v. Midland Credit Management, Inc., — F.3d —-, 2009 WL 1587902 (9th Cir. 2009), the Court of Appeals for the Ninth Circuit held that the FDCPA (15 U.S.C. § 1692k(a)(3)) does not allow an award of reverse attorneys’ fees against the debtor’s attorney, only the debtor. In Hyde, the defendants prevailed on the merits against the debtor’s FDCPA claim, and moved for an award of attorneys’ fees against the Plaintiffs and their attorneys, Robert L. Hyde, Joshua B. Swigart and their law firm Hyde & Swigart. The defendants proceeded under both FRCP 11 and Section 1692k(a)(3), the latter of which provides, “On a finding by the court that an action under [the FDCPA] 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.”
The district court had held, in support of its award, that “Plaintiff’s only supporting witness was wholly without credibility.” It wrote further, “The record of the present case as well as Plaintiff’s pattern of filing apparently frivolous cases asserting debt collection violations establish that the present case was brought in bad faith and for the purpose of harassment as defined in 15 U.S.C. § 1692k(a)(3).” The district court had awarded attorney’s fees and costs of $155,979.09 against the Plaintiff under § 1692k(a)(3). It awarded the same amount against Hyde & Swigart under § 1692k(a)(3) and Federal Rule of Civil Procedure 11.
The Court of Appeals explained that, “[w]hether attorney’s fees and costs may be awarded under § 1692k(a)(3) against an attorney of an unsuccessful abusive plaintiff is an issue of first impression in this circuit. The district court relied in part on Terran v. Kaplan, 109 F.3d 1428 (9th Cir.1997), but we decided Terran under Rule 11. 109 F.3d at 1434-35. It is therefore inapposite to the appeal now before us. For the reasons that follow, we hold that § 1692k(a)(3) does not authorize the award of attorney’s fees and costs against a plaintiff’s attorneys.” The Court of Appeals explained:
Rule 11 and § 1927 are not specific to any particular statute. Rather, they apply to any civil suit in federal district court. Further, each explicitly provides for remedies against offending attorneys. See Rule 11(c) (1998) (“Sanctions. If, after notice and a reasonable opportunity to respond, the court determines that [Rule 11(b) ] has been violated, the court may … impose an appropriate sanction upon the attorneys, law firms, or parties that have violated [Rule 11(b) ] or are responsible for the violation.”) (emphasis added); § 1927 (“Any attorney … who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorney’s fees reasonably incurred because of such conduct.”) (emphasis added). Finally, each gives discretion to the district court to determine the amount of the sanction depending on the nature of the conduct. [P] By contrast, § 1692k(a)(3) is specific to the FDCPA. Further, it nowhere specifically authorizes an award against an “attorney.” Finally, it does not authorize an award of a “sanction” of an indeterminate amount in the discretion of the district court; rather, it provides for an award of the entire amount of “reasonable” “attorney’s fees.” ¶ The second case is Sierra v. Foster & Garbus, 48 F.Supp.2d 393 (S.D.N.Y.1999), in which the district court awarded attorney’s fees against the plaintiff’s attorney in a FDCPA case. The court did so without considering the question whether the award should run against the plaintiff and not against his attorney. ¶ We are not persuaded by the limited analysis in Chaudhry and Sierra that an award of attorney’s fees under § 1692k(a)(3) against plaintiffs’ attorneys is proper. Based on the text and legislative history of § 1692k(a)(3), on our decision in Pfingston under the FCA, and on the presumption against awarding attorney’s fees against attorneys, we believe that the better analysis of § 1692k(a)(3) is that it authorizes attorney’s fees and costs only against the offending plaintiff or plaintiffs.