Amended November 23, 2016 Dennis L. Smith v. Iowa State University of Science and Technology, State of Iowa ( 2016 )


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  •                  IN THE SUPREME COURT OF IOWA
    No. 15–0852
    Filed September 23, 2016
    Amended November 23, 2016
    DENNIS L. SMITH,
    Appellee,
    vs.
    IOWA STATE UNIVERSITY OF SCIENCE AND TECHNOLOGY, STATE
    OF IOWA,
    Appellants.
    On review from the Iowa Court of Appeals.
    Appeal from the Iowa District Court for Story County, Kurt J.
    Stoebe, Judge.
    A former employee of a state university who successfully sued that
    university for intentional infliction of emotional distress and a statutory
    whistleblower violation seeks further review of a court of appeals decision
    reversing the district court’s award of attorney fees and remanding for
    further proceedings.   DECISION OF COURT OF APPEALS VACATED;
    DISTRICT COURT JUDGMENT REVERSED AND CASE REMANDED.
    Thomas J. Miller, Attorney General, Jeffrey S. Thompson, Solicitor
    General, and Diane M. Stahle (until withdrawal), Assistant Attorney
    General, for appellants.
    2
    William W. Graham and Aimee R. Campbell of Graham, Ervanian
    & Cacciatore, L.L.P., Des Moines, for appellee.
    3
    PER CURIAM.
    The defendants Iowa State University and the State of Iowa
    (collectively ISU) appeal the district court’s decision awarding the plaintiff
    Dennis Smith all of his requested attorney fees. For the reasons set forth
    herein, we conclude that Smith is not entitled to all fees as awarded by
    the district court, and we therefore reverse and remand this case for
    further proceedings. However, we do not agree with the court of appeals
    concerning what must occur on remand. It is not necessary, in our view,
    for Smith’s counsel to prepare a new affidavit detailing the amount of
    attorney time spent daily on each litigation task.               Hence, on further
    review, we vacate the court of appeals decision and provide somewhat
    different directions for remand.
    I. Factual and Procedural Background.
    Smith was formerly employed as a technical writer in the
    engineering department at ISU.               The events of this case cover a time
    period from approximately 2002 to 2010, when Smith’s position at the
    university was eliminated.                Our prior opinion contains a detailed
    discussion of the facts. See Smith v. Iowa State Univ. of Sci. & Tech., 
    851 N.W.2d 1
    , 4–17 (Iowa 2014). At trial, Smith initially recovered $500,000
    in damages for common-law intentional infliction of emotional distress
    and $784,027 in damages for statutory whistleblower violations. 
    Id. at 17–18;
    see Iowa Code § 70A.28(2) (2007). 1 Other claims were dismissed.
    
    Smith, 851 N.W.2d at 17
    .
    1This   section provides in part,
    A person shall not discharge an employee from or take or fail to
    take action regarding an employee’s appointment or proposed
    appointment to, promotion or proposed promotion to, or any advantage
    in, a position in a state employment system . . . as a reprisal . . . for a
    disclosure of any information by that employee to . . . any other public
    official or law enforcement agency if the employee reasonably believes the
    4
    In   Smith’s      previous   appeal,    we     affirmed   his   common-law
    emotional-distress award in its entirety but reversed most of his
    whistleblower award.        
    Id. at 38.
      We concluded that to prevail on the
    statutory whistleblower claim, Smith had to prove he had suffered harm
    as a result of making reports to a “public official”—namely, ISU President
    Gregory Geoffroy.        This Smith could not do: “[W]e . . . agree with the
    court of appeals that there is no evidence Smith suffered retaliation for
    reports of financial improprieties to President Geoffroy.”               
    Id. at 35.
    Nevertheless, we left in place a portion of the statutory whistleblower
    award—i.e., the $150,000 in damages for harm to reputation—based on
    ISU’s failure to preserve error.         
    Id. at 38.
        We reversed in part and
    remanded for further proceedings. 
    Id. On remand,
    Smith sought recovery of essentially all his attorney
    fees incurred in this litigation (and in some other satellite proceedings).
    The basis for Smith’s request was that Iowa’s whistleblower statute
    authorizes awards of attorney fees. It provides,
    A person who violates subsection 2 is liable to an
    aggrieved employee for affirmative relief including
    reinstatement, with or without back pay, or any other
    equitable relief the court deems appropriate, including
    attorney fees and costs.
    Iowa Code § 70A.28(5)(a) (emphasis added). Otherwise, in Iowa, attorney
    fees are generally not recoverable in the absence of a statute or a
    contractual provision that permits their recovery. See Branstad v. State
    ___________________________________
    information evidences a violation of law or rule, mismanagement, a gross
    abuse of funds, an abuse of authority, or a substantial and specific
    danger to public health or safety.
    Iowa Code § 70A.28(2).
    5
    ex rel. Nat. Res. Comm’n, 
    871 N.W.2d 291
    , 294 (Iowa 2015); Bethards v.
    Shivvers, Inc., 
    355 N.W.2d 39
    , 47 (Iowa 1984).
    Although the statutory whistleblower claim was only one of Smith’s
    claims, and he recovered only $150,000 on that claim, the district court
    awarded Smith $368,607.35 in fees and costs, amounting to virtually all
    of Smith’s attorney fees incurred in this litigation and the other
    administrative and legal matters. 2 The district court reasoned that “all of
    the plaintiff’s claims, successful and unsuccessful, involved a common
    body of facts” and that it would be “impractical to require the Court to
    sift through all of the legal work to determine whether each hour was
    related to a particular claim.”
    ISU once again appealed.          It argued that the attorney-fee award
    should be reduced for work not performed on the whistleblower claim
    and to account for an overall lack of success on that claim.
    On appeal, we transferred the case to the court of appeals. That
    court concluded the district court had abused its discretion by failing to
    take into consideration that “a large part of Smith’s whistleblowing
    claim—the only claim that permitted the recovery of attorney fees—was
    set aside by the supreme court in light of the lack of proof on the issue of
    causation.” The court of appeals also faulted the district court for failing
    to consider that “the main portion of Smith’s recovery—$500,000.00 of
    the total $650,000.00 awarded—was based on the emotional distress
    claim, which is a tort claim that does not permit the recovery of attorney
    2The   district court declined to award some of the costs sought by Smith but
    granted his entire attorney fee application. Smith omitted from that application several
    thousand dollars’ worth of attorney fees related to the preparation of his unsuccessful
    petition for rehearing in this court.
    6
    fees.”    Accordingly, the court of appeals reversed and remanded.        In
    addition, it stated,
    On remand, the court should direct Smith’s counsel to
    submit an attorney fee affidavit that better details the
    amount of time spent on each task, rather than using block
    billing that specifies only daily activities but does not
    indicate how much time was spent on each task.
    One judge on the court of appeals panel dissented. He found that
    Smith could recover all of his attorney fees because all of his claims were
    tethered to a “common core of facts.”        Also, he noted that the district
    court stated it would have awarded the $500,000 in emotional distress
    damages as statutory whistleblower damages if it had been necessary to
    do so. We granted Smith’s application for further review.
    II. Standard of Review.
    As we have previously stated,
    We review a challenge to a district court’s grant of attorney
    fees for an abuse of discretion. We will reverse a court’s
    discretionary ruling only when the court rests its ruling on
    grounds that are clearly unreasonable or untenable. When
    reviewing an attorney fees award for an abuse of discretion,
    we will correct erroneous applications of the law.
    NevadaCare, Inc. v. Dep’t of Human Servs., 
    783 N.W.2d 459
    , 469 (Iowa
    2010) (citations omitted).
    III. Legal Analysis.
    We agree with the court of appeals that the district court abused
    its discretion in awarding Smith all of his requested attorney fees on the
    ground that this case presented a “common core of facts.” Two points
    should be noted here. First, in considering whether a claim for which
    attorney fees are available and claims for which they are unavailable
    arise out of a common factual core, we need to focus on the underlying
    purpose of this inquiry. The ultimate question is whether the work for
    7
    which recovery is sought can be “deemed to have been ‘expended in
    pursuit of’ ” a claim for which attorney fees are recoverable. See Hensley
    v. Eckerhart, 
    461 U.S. 424
    , 435, 
    103 S. Ct. 1933
    , 1940, 
    76 L. Ed. 2d 40
    ,
    51 (1983) (quoting Davis v. Cty. of Los Angeles, No. 73-63-WPG, 
    1974 WL 180
    , at *3 (C.D. Cal. June 5, 1974)).          A defendant should not be
    immunized “against paying for the attorney’s fees that the plaintiff
    reasonably incurred in remedying” the violation for which attorney fees
    were recoverable. See Fox v. Vice, 
    563 U.S. 826
    , 834, 
    131 S. Ct. 2205
    ,
    2214, 
    180 L. Ed. 2d 45
    , 54 (2011).
    Here, Smith asserted a number of different claims, but fees could
    only be recovered for the statutory whistleblower claim, which was based
    specifically upon Smith’s reporting to President Geoffroy in August 2007
    and   alleged   adverse   consequences    flowing   from   that   reporting.
    Therefore, it would not be accurate to say that all of Smith’s fees were
    reasonably spent “in pursuit of” this whistleblower claim. As ISU points
    out, Smith’s attorneys spent considerable time exclusively on issues
    related only to the common-law emotional distress claim and on other
    matters such as a separate open-records lawsuit and an administrative
    proceeding alleging age discrimination.     This unrelated time was not
    “devoted generally to the litigation as a whole.”    
    Hensley, 461 U.S. at 435
    , 103 S. Ct. at 
    1940, 76 L. Ed. 2d at 51
    .
    Second, when a plaintiff achieves only “partial or limited success”
    on the claim for which attorney fees are recoverable, a reduction in the
    fee award may be appropriate even if the entire lawsuit flows from a
    common core of facts. See 
    id. at 436,
    103 S. Ct. at 
    1941, 76 L. Ed. 2d at 52
    .   The district court did not consider this issue, ending its analysis
    once it had concluded (erroneously in our view) that every aspect of the
    litigation arose out of a common core of facts.
    8
    As we have already noted, our prior appellate decision found “no
    evidence Smith suffered retaliation for reports of financial improprieties
    to President Geoffroy.” 
    Smith, 851 N.W.2d at 35
    . Most of the $784,027
    whistleblowing judgment was accordingly reversed. Smith recovered only
    $150,000 in reputational damages on this claim, and he recovered this
    amount only because ISU had failed to preserve error on the reputational
    damages.      
    Id. at 38.
      Hence, Smith attained only partial or limited
    success on the statutory whistleblower claim.
    In sum, given what the record shows both about the time Smith’s
    counsel devoted to unrelated matters for which attorney fees are not
    authorized and Smith’s partial, limited success on the statutory
    whistleblower claim that is the only basis for awarding attorney fees, we
    think the district court’s attorney fee ruling amounted to an abuse of
    discretion.
    We reaffirm today what we have held in the past:
    In determining an appropriate fee award in this case, the
    district court should consider the general principles
    governing attorney fee awards in actions in which plaintiffs
    are only partially successful.      Thus, to the extent [the
    plaintiff’s] unsuccessful claims for retroactive relief were
    unrelated to her successful claims for prospective relief, the
    court may not award fees or costs she obviously incurred in
    pursuing only the unsuccessful claims. But to the extent
    counsel devoted time “generally to the litigation as a whole,
    making it difficult to divide the hours expended on a claim-
    by-claim basis,” the court may “focus on the significance of
    the overall relief obtained by the plaintiff in relation to the
    hours reasonably expended on the litigation.” The court may
    properly award any fees incurred in the litigation involving “a
    common core of facts” or “based on related legal theories.”
    Nevertheless, the court ultimately must consider the
    reasonableness of the hours expended on the litigation as a
    whole in light of the degree of success actually obtained.
    9
    Lee v. State (Lee III), 
    874 N.W.2d 631
    , 648–49 (Iowa 2016) (citations
    omitted) (quoting 
    Hensley, 461 U.S. at 435
    , 103 S. Ct. at 1941, 
    76 L. Ed. 2d
    at 51–52). 3
    Lee III requires a two-step process to be followed in awarding fees
    under a fee-shifting statute. First, while fees can be awarded for time
    devoted generally to the litigation as a whole, the district court should
    make an appropriate reduction for unrelated time spent on unsuccessful
    claims—or as here, unrelated time spent on claims for which fees are not
    recoverable.       Then, after this initial step has been performed, if the
    plaintiff only obtained partial or limited success on the claim for which
    the legislature has authorized fees, the court must consider the
    reasonableness of the hours expended in light of this ultimate result.4
    The second step may warrant a further reduction.                     In this case, on
    remand, the district court should follow the Lee III steps. 5
    3Smith   suggests at one point that the Hensley/Lee III principles may not apply
    here because the language of Iowa Code section 70A.28(5)(a) does not require him to be
    a prevailing party in order to recover fees. We disagree. The statute states that one
    who violates section 70A.28(2) is liable to the aggrieved employee for “affirmative relief
    including reinstatement, with or without back pay, or any other equitable relief the
    court deems appropriate, including attorney fees and costs.” Thus, the only thing the
    statute makes clear is that the plaintiff must prove a violation of section 70A.28(2) as a
    condition to getting any fees. We think the Hensley/Lee III principles fill in the gaps in
    this statute, as they do in other fee-shifting situations.
    4This   principle was also on display in Hensley:
    We are unable to affirm the decisions below, however, because
    the District Court’s opinion did not properly consider the relationship
    between the extent of success and the amount of the fee award. . . . We
    emphasize that the inquiry does not end with a finding that the plaintiff
    obtained significant relief. A reduced fee award is appropriate if the
    relief, however significant, is limited in comparison to the scope of the
    litigation as a 
    whole. 461 U.S. at 438
    –40, 103 S. Ct. at 1942–43, 
    76 L. Ed. 2d
    at 54.
    5Smith   argues that the $500,000 in intentional infliction of emotional distress
    damages also should be treated as statutory whistleblower damages. That is because
    the district court in its original order indicated Smith would have been entitled to the
    same $500,000 as statutory whistleblower damages but did not award them to avoid
    10
    However, we do not agree with the court of appeals that Smith’s
    counsel must submit more detailed time records to the district court,
    identifying for each day of billing the amount of time spent on each task.
    This would be a substantial undertaking, assuming the original bills do
    not contain that information. And precedent does not require it. To the
    contrary, Hensley indicates that “[t]here is no precise rule or formula for
    making these determinations” and “[a] request for attorney’s fees should
    not result in a second major 
    litigation.” 461 U.S. at 436
    –37, 103 S. Ct.
    at 
    1941, 76 L. Ed. 2d at 52
    –53.                  Hensley adds that “[w]here the
    documentation of hours is inadequate, the district court may reduce the
    award accordingly.” 
    Id. at 433,
    103 S. Ct. at 1939, 
    76 L. Ed. 2d
    at 50.
    Thus, while Smith’s counsel should not be entitled to a presumption that
    time was spent on the litigation as a whole just because his billing
    records lack detail, any lack of necessary detail can be taken into
    account with an appropriate discount or reduction. 6
    ___________________________________
    duplicate recoveries. However, in the prior appeal, ISU made a contingent argument
    that Smith could not have recovered emotional distress damages under the
    whistleblower statute because they do not qualify as “other equitable relief.” See Iowa
    Code § 70A.28(5)(a). Smith responded that ISU had failed to preserve error by not filing
    a rule 1.904(2) motion directed at this aspect of the district court’s ruling, although this
    observation by the court did not actually result in any relief being granted to Smith. We
    did not reach these arguments because we affirmed the $500,000 as common-law
    emotional distress damages.
    6To  support his attorney fees application, Smith originally submitted his billing
    records in redacted form. Apparently he later put unredacted versions into evidence.
    We agree that the unredacted versions should be submitted.             Absent “unusual
    circumstances,” production of billing records does not invade the attorney–client
    privilege, and such records as are available should be produced. See Avgoustis v.
    Shinseki, 
    639 F.3d 1340
    , 1344–46 (Fed. Cir. 2011). Our present point is simply that
    when the actual billing records do not reflect how much time was spent on each task
    during each day, this should not be a sine qua non of any attorney fee recovery.
    Nothing prevents an attorney from providing additional details that were missing from
    the contemporaneous billing records, but a reliance on “block billing” in those records
    should not bar all recovery.
    11
    Further, we do not agree with ISU that the district court must
    make dollar-by-dollar attorney fee reductions for time spent on matters
    such as an overlong proof brief. (Smith did file a motion to exceed the
    page limit, but our court denied the motion.).        Rarely is litigation an
    unbroken string of successes. Just about every legal proceeding involves
    setbacks. See 
    Hensley, 461 U.S. at 440
    , 103 S. Ct. at 1943, 
    76 L. Ed. 2d
    at 55 (noting that a plaintiff should not have his attorney fees reduced
    “simply because the district court did not adopt each contention raised”).
    While the district court may certainly take items like the overlong brief
    into account when it exercises its discretion in crafting a fee award, it is
    not required to “sift through all the legal work done.” Vaughan v. Must,
    Inc., 
    542 N.W.2d 533
    , 541 (Iowa 1996).         Moreover, there is no “rigid
    formula” that must be followed. See 
    id. It is
    not necessary “to tie the
    recovery of fees to a precise ratio of the amount of damages awarded.”
    
    Id. Thus, in
    Vaughan we upheld the district court’s decision to award
    seventy-five percent of the plaintiff’s attorney fees, a total of $21,261, in a
    case where the plaintiff prevailed on his claim of age discrimination but
    recovered only approximately twenty percent of his original demand for
    damages. 
    Id. at 541–42.
    IV. Conclusion.
    For the foregoing reasons, we vacate the decision of the court of
    appeals and reverse that aspect of the district court’s judgment awarding
    attorney fees to Smith. We remand for further proceedings at which the
    district court should consider adjustments in the requested fee award for
    time spent on matters clearly unrelated to the statutory whistleblower
    claim as well as for Smith’s partial success on that claim. The district
    court also should consider whether attorney fees ought to be awarded for
    this appeal.   See Worthington v. Kenkel, 
    684 N.W.2d 228
    , 234 (Iowa
    12
    2004). The court should support its determinations with findings of fact.
    See Boyle v. Alum-Line, Inc., 
    773 N.W.2d 829
    , 834 (Iowa 2009).
    “[W]hatever methodology the court employs, it must provide in its order
    ‘a concise but clear explanation of its reasons for the award.’ ” Lee 
    III, 874 N.W.2d at 650
    (quoting 
    Hensley, 461 U.S. at 437
    , 103 S. Ct. at
    1941, 
    76 L. Ed. 2d
    at 53).
    Costs on appeal are divided equally.
    DECISION OF COURT OF APPEALS VACATED; DISTRICT
    COURT JUDGMENT REVERSED AND CASE REMANDED.
    This opinion shall be published.