Dennis L. Smith v. Iowa State University of Science and Technology, State of Iowa , 2016 Iowa Sup. LEXIS 91 ( 2016 )

IN THE SUPREME COURT OF IOWA
No. 15–0852
Filed September 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
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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
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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.