FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MARTIN D. ROUSE, JR.,
Plaintiff-Appellant,
No. 09-55146
v.
D.C. No.
LAW OFFICES OF RORY CLARK; 3:06-cv-0006-
RORY WILLIAM CLARK; JAN LAB (RBB)
SHAPIRO; WORLDWIDE ASSET
OPINION
PURCHASING, LLP,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of California
Larry Alan Burns, District Judge, Presiding
Argued and Submitted
April 5, 2010—Pasadena, California
Filed May 3, 2010
Before: Harry Pregerson and Robert R. Beezer,
Circuit Judges, and James L. Graham,* District Judge.
Opinion by Judge Graham
*The Honorable James L. Graham, United States District Judge for the
Southern District of Ohio, sitting by designation.
6613
ROUSE v. LAW OFFICES OF RORY CLARK 6615
COUNSEL
Ian Chowdhury, Law Office of Ian Chowdhury, Winnetka,
California, for the plaintiff-appellant.
6616 ROUSE v. LAW OFFICES OF RORY CLARK
Mark E. Ellis and June D. Coleman, Ellis, Coleman, Poirier,
LaVoie & Steinheimer, LLP, Sacramento, California, for the
defendants-appellees.
OPINION
GRAHAM, District Judge:
This appeal presents the issue of whether a prevailing
defendant in a Fair Debt Collection Practices Act (the
“FDCPA”) case can be awarded costs without a finding that
the plaintiff brought the action in bad faith and for the pur-
pose of harassment. The FDCPA’s provision on damages
states in part: “On 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). The district court construed this pro-
vision to mean that costs are a factor in determining the rea-
sonableness of attorneys’ fees. We have jurisdiction under 28
U.S.C. § 1291, and we reverse, holding that a prevailing
defendant cannot be awarded costs under the FDCPA unless
the plaintiff brought the action in bad faith and for the pur-
pose of harassment.
I.
Martin D. Rouse, Jr. filed this action alleging unfair debt
collection practices against Worldwide Asset Purchasing and
its legal representatives, Rory Clark, Jan Shapiro, and the Law
Offices of Rory Clark. The complaint asserted claims under
the FDCPA, as well as state law claims under the California
Consumers Legal Remedies Act, Cal. Civ. Code § 1770, Cali-
fornia Fair Debt Collection Practices Act, Cal. Civ. Code
§ 1788.30, and California Unfair Business Practices Act, Cal.
Bus. & Prof. Code § 17200. The complaint additionally
ROUSE v. LAW OFFICES OF RORY CLARK 6617
asserted claims for intentional and negligent infliction of emo-
tional distress.
Rouse moved for partial summary judgment on his federal
FDCPA claim. The motion was denied and the case pro-
ceeded to a jury trial.
After the second day of trial had concluded, counsel met
outside the presence of the district judge to discuss jury
instructions. During this meeting, plaintiff’s counsel proposed
that he would pursue only his FDCPA claim and dismiss all
other claims. Plaintiff’s counsel contends that defendants’
counsel promised in return to not argue that defendants were
the prevailing party on the dismissed claims, but nothing on
the record memorializes such an agreement. According to
defendants’ counsel, plaintiff’s counsel circulated a stipula-
tion to that effect, which defendants’ counsel did not sign.
It is undisputed that only the FDCPA claim was submitted
to the jury, which returned a verdict for defendants. The court
awarded costs in the amount of $6511.46 under Federal Rule
of Civil Procedure 54(d). Plaintiff moved to re-tax costs,
arguing that the FDCPA required a finding of bad faith and
harassment on plaintiff’s part before costs could be awarded.
The district court denied the motion to re-tax costs. It held
that the FDCPA requires a finding of bad faith and harass-
ment only before awarding attorneys’ fees. “This court con-
strues the FDCPA as instructing the court to determine the
‘reasonableness’ of any attorney’s fees to be awarded to a pre-
vailing defendant, after a finding of bad faith and harassment
on plaintiff’s part, in consideration of the work counsel
expended and the costs incurred to defend the action. In that
light, it has no effect on a prevailing defendant’s Rule 54
costs recovery entitlement.” Dec. 31, 2008 District Court
Order, p. 3 (emphasis in original). The court expressly
declined to consider the issue of whether the defendants were
the prevailing party as to the dismissed claims.
6618 ROUSE v. LAW OFFICES OF RORY CLARK
II.
We review de novo the district court’s interpretation of a
statute. United States v. Forrester, 592 F.3d 972, 976 (9th Cir.
2010). Whether the district court has the authority to award
costs is a question of law reviewed de novo. Hunt v. Imperial
Merchant Servs., Inc., 560 F.3d 1137, 1140 (9th Cir. 2009);
United States ex rel. Newsham v. Lockheed Missiles & Space
Co., Inc., 190 F.3d 963, 968 (9th Cir. 1999).
III.
[1] Rule 54 allows a court to award costs to a prevailing
party unless a federal statute, the Federal Rules of Civil Pro-
cedure, or a court order provides otherwise. Fed. R. Civ. P.
54(d)(1). Thus, “[w]hen the federal statute forming the basis
for the action has an express provision governing costs . . .
that provision controls over the federal rules.” Brown v. Lucky
Stores, Inc., 246 F.3d 1182, 1190 (9th Cir. 2001).
The parties dispute how to interpret the mention of costs in
§ 1692k(a)(3). “The starting point for resolving a dispute over
the meaning of a statute begins with the language of the stat-
ute itself.” In re Kagenveama, 541 F.3d 868, 872 (9th Cir.
2008) (citing United States v. Ron Pair Enters., Inc., 489 U.S.
235, 241 (1989)). “Where statutory language is plain, ‘the
sole function of the courts — at least where the disposition
required by the text is not absurd — is to enforce it according
to its terms.’ ” Id. (quoting Lamie v. United States Tr., 540
U.S. 526, 534 (2004)).
[2] Section 1692k(a)(3) is susceptible of more than one
meaning. “On a finding by the court that an action under this
section was brought in bad faith and for the purpose of harass-
ment, 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). The district court interpreted the coor-
dinating conjunction “and” as linking “work expended” with
ROUSE v. LAW OFFICES OF RORY CLARK 6619
“costs” in identifying what factors to consider in determining
the reasonableness of attorneys’ fees. The statute could also
be interpreted as connecting “attorney’s fees” with “costs” in
identifying the items that may be awarded to a prevailing
defendant.
[3] The Ninth Circuit has not directly addressed whether
§ 1692k(a)(3) of the FDCPA supersedes Rule 54(d) by requir-
ing a finding of bad faith and harassment on plaintiff’s part
before costs are awarded to a prevailing defendant. Rouse
cites two decisions, yet he acknowledges that neither is
directly on point. See Guerrero v. RJM Acquisitions LLC, 499
F.3d 926, 940 (9th Cir. 2007) (“When defending against a
claim under the Act, a debt collector may recover attorneys’
fees and costs upon a district court’s finding that the con-
sumer brought the action in bad faith and for purposes of
harassment.”); Swanson v. Southern Oregon Credit Serv.,
Inc., 869 F.2d 1222, 1229 (9th Cir. 1988) (“Under section
1692k(a)(3), a debt collector may recover attorneys’ fees and
costs upon the district court’s finding that an action under the
Federal Act was brought in bad faith and for purposes of
harassment.”). The court in both cases was not answering the
issue presented in this case but was paraphrasing
§ 1692k(a)(3) before reviewing the bad faith determinations
made by the district courts.
In dicta, a Second Circuit decision similarly paraphrased
the provision as follows: “[S]ection 1692k(a)(3) permits a
court to award reasonable attorney’s fees and costs only upon
a finding ‘that an action under this section was brought in bad
faith and for the purpose of harassment.’ ” Emanuel v. Am.
Credit Exch., 870 F.2d 805, 809 (2d Cir. 1989). Again,
though, the court was not presented with the issue before us.
Both parties cite numerous district court decisions, many of
them unpublished, but those decisions are not helpful because
the courts did not engage in a statutory analysis of
§ 1692k(a)(3). Compare Pavone v. Citicorp Credit Servs.,
6620 ROUSE v. LAW OFFICES OF RORY CLARK
Inc., 60 F.Supp.2d 1040, 1049 (S.D. Cal. 1997) (denying
request for costs by prevailing FDCPA defendants upon find-
ing that the suit was not brought in bad faith, but not explain-
ing its interpretation of § 1692k(a)(3)), with Young v. Capital
One Bank, No. 07-60731-CIV, 2007 WL 2273669, at *1 (S.D.
Fla. Aug. 7, 2007) (awarding costs under Rule 54(d) to a pre-
vailing FDCPA defendant as a matter of course, without con-
sidering whether a bad faith finding was required).
The district court, in holding that costs is a factor in deter-
mining the reasonableness of attorneys’ fees, explained that
the statutory provision is “primarily concerned with the recov-
ery of attorney’s fees,” but this is not so. Section 1692k(a) is
entitled “Amount of damages” and it expressly deals with
actual damages, statutory damages, costs, and attorneys’ fees.
We find no binding or persuasive authority on the issue of
statutory interpretation presented in this appeal. In an effort to
help resolve the ambiguity, the parties direct our attention to
the rules of grammar. With conflicting results, the parties
invoke Strunk and White’s imperative to keep related words
together. William Strunk, Jr. & E.B. White, The Elements of
Style 30 (4th ed. 2000) (“Modifiers should come, if possible,
next to the words they modify.”); see also Barnhart v.
Thomas, 540 U.S. 20, 26 (2003) (noting the “grammatical
‘rule of the last antecedent,’ according to which a limiting
clause or phrase . . . should ordinarily be read as modifying
only the noun or phrase that it immediately follows.”). Rouse
targets the word “expended” and argues that had Congress
meant for costs to merely be a factor in determining the rea-
sonableness of attorneys’ fees, it would have written, “the
court may award to the defendant attorney’s fees reasonable
in relation to the work and costs expended.”
Appellees argue that the word “costs” belongs to the phrase
“attorney’s fees reasonable in relation to” and not the more
remote phrase “the court may award.” Appellees also empha-
size that in the sentence immediately preceding the statutory
ROUSE v. LAW OFFICES OF RORY CLARK 6621
language at issue, Congress provided that prevailing plaintiffs
receive “the costs of the action, together with a reasonable
attorney’s fee.” 15 U.S.C. § 1692k(a)(3). Had Congress
intended to require a finding of bad faith before a prevailing
defendant is awarded costs, appellees argue, then it would
have used the same sentence structure as the provision for
prevailing plaintiffs, with the result reading, “the court may
award to the defendant the costs of the action, together with
a reasonable attorney’s fee in relation to the work expended.”
[4] The problem with the interpretation espoused by appel-
lees and the district court is that it would require courts to
consider costs in determining the reasonableness of attorneys’
fees. When a statute is ambiguous, a court should construe it
in a way to avoid an absurd result. Clinton v. City of New
York, 524 U.S. 417, 429 (1998); United States v. Middleton,
231 F.3d 1207, 1210 (9th Cir. 2000). Costs are not part of the
traditional methodology of determining the reasonableness of
attorneys’ fees, and for good reason. Costs, whether defined
as those taxable under 28 U.S.C. § 1920 or as broader litiga-
tion costs, are often fixed by statute or local rule and bear no
direct causal relationship to the reasonableness of attorneys’
fees. There may be a correlation, in that the complexity of the
case could be a common variable of both — the more com-
plex the case, the greater the hours worked by attorneys and
perhaps the greater the total costs for court reporters, wit-
nesses, copies, travel, etc. Even so, it is a logical fallacy to use
costs to determine the reasonableness of attorneys’ fees.
[5] Such an approach is also is contrary to attorneys’ fees
jurisprudence. The “lodestar method” is “the fundamental
starting point in determining a ‘reasonable attorney’s fee.’ ”
Christensen v. Stevedoring Servs. of Am., 557 F.3d 1049,
1053 (9th Cir. 2009) (citing City of Burlington v. Dague, 505
U.S. 557, 562 (1992)); see also Staton v. Boeing Co., 327
F.3d 938, 965 (9th Cir. 2003) (“Under a fee-shifting statute,
the court must calculate awards for attorneys’ fees using the
lodestar method . . . .”) (citation and internal quotation marks
6622 ROUSE v. LAW OFFICES OF RORY CLARK
omitted). This method requires a court to multiply “the num-
ber of hours the prevailing party reasonably expended on the
litigation by a reasonable hourly rate.” Morales v. City of San
Rafael, 96 F.3d 359, 363 (9th Cir. 1996). The lodestar figure
is presumptively reasonable. Dague, 505 U.S. at 562; Craw-
ford v. Astrue, 586 F.3d 1142, 1149 (9th Cir. 2009).
[6] Adjustments to the lodestar amount are allowed only
“if circumstances warrant,” Ferland v. Conrad Credit Corp.,
244 F.3d 1145, 1149 n. 4 (9th Cir. 2001), and are reserved for
“rare” or “exceptional” cases. Ballen v. City of Redmond, 466
F.3d 736, 746 (9th Cir. 2006); Cunningham v. County of Los
Angeles, 879 F.2d 481, 487 (9th Cir. 1988). Adjustments must
be carefully tailored, drawing from a finite pool of factors rel-
evant to the reasonableness determination and only to the
extent a factor has not been subsumed within the lodestar cal-
culation. See Camacho v. Bridgeport Fin., Inc., 523 F.3d 973,
982 (9th Cir. 2008) (citing the factors set out in Kerr v. Screen
Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975)). Those
factors include the preclusion of other employment by the
attorney due to acceptance of the case; time limitations
imposed by the client or the circumstances; the amount
involved and the results obtained; the “undesirability” of the
case; the nature and length of the professional relationship
with the client; and awards in similar cases. Camacho, 523
F.3d at 982 n.1. Costs are not among the factors a court may
consider in adjusting the lodestar amount.
Mandating that costs be factored into the determination of
the reasonableness of attorneys’ fees would undermine judi-
cial economy. It would require courts to engage in a fruitless
exercise of attempting to relate the lodestar figure to the
amount of costs. Courts would be left grasping to provide
some meaning to a variable that has no necessary bearing on
the reasonableness of attorneys’ fees.
[7] In defense of the district court’s interpretation, appel-
lees cite the FDCPA’s legislative history. When an ambiguity
ROUSE v. LAW OFFICES OF RORY CLARK 6623
exists in a statute, courts may look to legislative history, can-
ons of construction, and the statute’s overall purpose to
resolve the matter. Ileto v. Glock, Inc., 565 F.3d 1126, 1133
(9th Cir. 2009); Jonah R. v. Carmona, 446 F.3d 1000, 1005
(9th Cir. 2006). The legislative history does not help appel-
lees. In explaining civil liability, the Senate Report on the
FDCPA appears to contemplate that awards of both attorneys’
fees and costs to a prevailing defendant be conditioned on a
finding that plaintiff brought the action in bad faith and for
harassment: “In order to protect debt collectors from nuisance
lawsuits, if the court finds that an action was brought by a
consumer in bad faith and for harassment, the court may
award the debt collector reasonable attorney’s fees and costs.”
S. Rep. No. 95-382, at 5 (1977), as reprinted in 1977
U.S.C.C.A.N. 1695, 1700. It is true, as appellees point out,
that later in its summary of the relevant section (Section 813),
the Report fails to mention costs as being available to a pre-
vailing defendant. Id. at 8, 1977 U.S.C.C.A.N. at 1702
(“Where a court finds that a suit was brought by a consumer
in bad faith and for harassment, the court may award reason-
able attorney’s fees to the defendant.”). However, nowhere
does the Report state an intention that costs be a factor in
determining the reasonableness of attorneys’ fees.
[8] The FDCPA’s remedial purpose is served by interpret-
ing § 1692k(a)(3) as authorizing an award of attorneys’ fees
and costs only upon a finding that plaintiff brought the action
in bad faith and for the purpose of harassment. See Donohue
v. Quick Collect, Inc., 592 F.3d 1027, 1033-34 (9th Cir. 2010)
(stating that the FDCPA should by construed liberally to
effect its remedial purpose); Clark v. Capital Credit & Collec-
tion Servs., Inc., 460 F.3d 1162, 1176 (9th Cir. 2006) (same).
The Act’s express purpose is to shield consumers from abu-
sive debt collection practices. 15 U.S.C. § 1692(e) (“It is the
purpose of this subchapter to eliminate abusive debt collection
practices by debt collectors, to insure that those debt collec-
tors who refrain from using abusive debt collection practices
are not competitively disadvantaged, and to promote consis-
6624 ROUSE v. LAW OFFICES OF RORY CLARK
tent State action to protect consumers against debt collection
abuses.”). Thus, insulating consumers from the prospect of
paying defendants’ costs by requiring a finding that the action
was brought in bad faith and for harassment is consistent with
the stated intent of Congress.
The wording of § 1692k(a)(3) is unlike the provisions of
other consumer credit protection statutes. See United States v.
Nader, 542 F.3d 713, 717 (9th Cir. 2008) (court may look to
related statutes to resolve an ambiguity); Jonah R., 446 F.3d
at 1007 (same). The FDCPA is part of the larger statutory
scheme of the Consumer Credit Protection Act, 15 U.S.C.
§§ 1601-1693r, which includes the following: the Truth in
Lending Act, 15 U.S.C. §§ 1601-1665e; the Fair Credit Bill-
ing Act, 15 U.S.C. §§ 1666-1666j; the Consumer Leasing Act,
15 U.S.C. §§ 1667-1667f; the Credit Repair Organizations
Act, 15 U.S.C. §§ 1679-1679j; the Fair Credit Reporting Act,
15 U.S.C. §§ 1681-1681x; the Equal Credit Opportunity Act,
15 U.S.C. §§ 1691-1691f; and the Electronic Funds Transfer
Act, 15 U.S.C. §§ 1693-1693r.
[9] While these statutes expressly provide for an award of
costs and attorneys’ fees to prevailing plaintiffs, only the
FDCPA and the FCRA provide for prevailing defendants. The
FCRA states,
Upon a finding by the court that an unsuccessful
pleading, motion, or other paper filed in connection
with an action under this section was filed in bad
faith or for purposes of harassment, the court shall
award to the prevailing party attorney’s fees reason-
able in relation to the work expended in responding
to the pleading, motion, or other paper.
15 U.S.C. § 1681n(c) (willful noncompliance); 15 U.S.C.
§ 1681o(b) (negligent noncompliance). In contrast to the
FCRA’s omission of the word “costs,” the FDCPA’s express
mention of costs further supports that Congress intended to
ROUSE v. LAW OFFICES OF RORY CLARK 6625
condition an award of costs to a prevailing defendant upon a
finding of bad faith and harassment on plaintiff’s part.
IV.
[10] We REVERSE the district court’s holding that costs
may be awarded under the FDCPA to a prevailing defendant
without a finding that plaintiff brought the action in bad faith
and for the purpose of harassment. We VACATE the award
of costs and REMAND for further proceedings consistent
with this opinion.