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Credit Discrimination: 11.8.4.3.3.1 General

As noted, the Equal Credit Opportunity Act (ECOA) provides a list of relevant factors to be considered by a court when determining the amount of punitive damages to be awarded. These factors are:

Credit Discrimination: 11.8.4.3.3.2 Amount of actual damages awarded

The statute provides that, to determine the amount of punitive damages to award, “the court shall consider, among other relevant factors, the amount of any actual damages awarded.”413 As noted above, actual damages are not a prerequisite to the award of punitive damages under the ECOA, but a large actual damages award is one factor favoring a large punitive damages award.

Credit Discrimination: 11.8.4.3.3.3 Frequency and persistence of creditor’s non-compliance

Another factor used to determine the amount of punitive damages is the frequency and persistence of the creditor’s failure to comply.414 This factor can be interpreted in two different ways.

First, it can refer to repeated discriminatory acts committed against the consumer within the same or successive transactions, particularly if the defendant has been confronted with evidence of its unlawful actions.

Credit Discrimination: 11.8.4.3.3.4 Creditor’s resources

Another factor in determining the amount of punitive damages is the resources of the creditor.415 The statute does not define resources, which could refer to the creditor’s net worth, assets, income stream, profits, or some other measure of resources.416 Congress probably intended resources to mean something other than the net worth of the creditor, as this standard—not “resources”—is used in the very same statute to set the upper limit on awards of punitive damages in class actions.

Credit Discrimination: 11.8.4.3.3.7 Other relevant factors

The ECOA provides that a court shall also consider “other relevant factors,” along with the specific factors discussed above,422 in determining the amount of punitive damages.423 Nothing in the statute, the legislative history, or case law under the ECOA indicates what might constitute other relevant factors, but other potential factors include the parties’ relative bargaining power; the sophistication of the parties, particularly if the client’s primary language is not English; the unavailabili

Credit Discrimination: 11.8.5.1 Prospective Relief

Equitable relief can be an effective way to quickly stop a creditor’s illegal practice on an individual basis and on behalf of all other potential applicants. Equitable and declaratory relief are available under all of the federal credit discrimination statutes and the federal Civil Rights Acts.

Credit Discrimination: 11.8.5.2 Restitution and Disgorgement

Absent a clear command by Congress that a statute providing for equitable relief excludes certain forms of relief, a court should presume that it has the full scope of equitable powers available for the proper and complete vindication of the statutory purpose.437 Congress, cognizant of the scope of equity, knows what it is doing when it provides for general equitable relief in a regulatory statute and can, if it so chooses, clearly and explicitly limit the scope of a court’s equitable powers under any particular regulatory structure in which

Credit Discrimination: 11.8.5.3 Voiding an Individual’s Obligation Under a Note or Security Agreement

When creditors require co-signers or guarantors to sign a note or security agreement in violation of the ECOA, it is often desirable to seek to void the co-signer or guarantor’s liability. The most common instance in which the situation arises is when a creditor, in violation of the ECOA, requires a husband to obtain his wife’s signature for a loan even though the husband was creditworthy on his own.448

Credit Discrimination: 11.8.5.4 Outcome-Based Injunctive Relief

In some kinds of credit discrimination cases—especially reverse redlining cases—the most visible, provable harm from the discrimination is repossession, foreclosure, or some other consequence that occurs when the harsh terms of the transaction cause the consumer to default. One approach to prospective relief for a class of consumers is to focus not on the terms of the transaction but on these outcomes.

Credit Discrimination: 11.8.6.1 General Standards

All of the federal discrimination and civil rights laws provide for attorney fees for prevailing plaintiffs. Although the language of the various statutes’ attorney fee provisions differ somewhat in that some refer to prevailing plaintiffs and some refer to plaintiffs in a successful action, all apply the same set of standards for determining awards of reasonable attorney fees and costs to plaintiffs. Some also allow awards to successful defendants, but under a much stricter standard, and some do not even authorize such awards.

Credit Discrimination: 11.8.6.2 When Is an Action Successful?

Like several titles of the Consumer Credit Protection Act, the Equal Credit Opportunity Act (ECOA) awards fees in a “successful action,” while the Civil Rights Act standard is that fees are awarded when the aggrieved party “prevails.” This is a distinction without a difference.463

Credit Discrimination: 11.8.6.3 Fees for Legal Services and Pro Bono Attorneys and Pro Se Litigants

Attorney fees should be awarded to legal services attorneys or other pro bono attorneys, even though the client is not obligated to pay the attorney or even though a fee is not actually charged.505 Legal services attorneys are generally entitled to market rates in fee-shifting cases.506 Most circuits, though, refuse to provide attorney fees to pro se litigants, irrespective of whether that litigant is an attorney.507

Credit Discrimination: 11.8.6.4 Calculating the Award

The different circuit courts have adopted somewhat different approaches to calculating attorney fee awards and some Supreme Court decisions have further complicated the issue. This subsection will only briefly cover the general approach used by the federal courts, known as the “lodestar” method. The lodestar is the number of allowable hours multiplied by a reasonable hourly rate. Allowable hours must be actually documented and reasonably expended.508 Duplicative or excessive time will not be compensated.

Credit Discrimination: 11.8.6.5 Fee Applications

The Federal Rules of Civil Procedure require motions for attorney fees and expenses to be filed and served no later than fourteen days after judgment.522 However, all that is required in this time period is notice to the court and to the opposite side that fees will be sought and a fair estimate of the total fees and expenses claimed.

Credit Discrimination: 11.8.6.6 Costs and Witness Fees

A successful plaintiff should recover costs as well as reasonable expenses as part of attorney fees under an Equal Credit Opportunity Act (ECOA), Fair Housing Act (FHA), or federal Civil Rights Act claim.529 Costs generally include filing fees, transcripts, deposition costs for at least some depositions, fees and disbursements for witnesses, and other court and litigation expenses not otherwise claimed as attorney fees.530 Reasonable expenses may be awarded in addition to costs.

Credit Discrimination: 11.8.6.8 Tax Consequences of Attorney Fees Award

Although awards of attorney fees in many types of consumer cases may be taxable to the client, Internal Revenue Code (I.R.C.) § 62 provides favorable treatment of such awards in certain “civil rights” cases if the fees relate to the causes of action delineated in this Code section. I.R.C.

Credit Discrimination: 11.8.6.9 Appeals of Attorney Fees Awards

If the action is successful but the attorney fees award is inadequate, this issue alone may be appealed.536 Even if the client does not wish to pursue the appeal, the attorney has standing to do so.537 If the appeal is successful, fees for time spent on it are likewise recoverable.538 If the appeal is unsuccessful but the consumer ultimately prevails on remand or thereafter, hours spent on the unsuccessful appeal may be compensable.

Credit Discrimination: 11.8.6.10 Interim Fees

In protracted litigation, creditors may slowly deplete the resources of the consumer’s attorney by requiring the expenditure of numerous hours that may not be compensated, if at all, until after the termination of the litigation. In some cases interim fees may be awarded, which may support the litigation or place additional pressure upon the lender to settle. In order to qualify for an interim award of fees, the applicant must have prevailed at least to some degree on the merits of their claim.540

Credit Discrimination: 11.8.6.11 Apportionment of Award Among Defendants

Courts may apportion the fee award among several unsuccessful defendants to ensure that a single defendant is not liable for fees greater than those incurred to litigate the case against that defendant. If some but not all the defendants settle, the total award may be reduced by the amount allocated to attorney fees by any settlement.541

Credit Discrimination: 11.9.1 General

This section focuses on the most common creditor defense, the alleged expiration of the statute of limitations, and on additional defenses unique to Fair Housing Act (FHA) and Equal Credit Opportunity Act (ECOA) claims. Another frequent defense argument is that false statements in the plaintiff’s loan application constitute unclean hands that bar recovery.