Iowa’s Highest Court: Not So Fast as to Plaintiff’s Claimed Attorney Fees

Posted on: October 11th, 2016

In Iowa, a plaintiff is generally entitled to recovery of attorney fees where such a recovery is contemplated by a contract or a statute.  Of course, the plaintiff has to succeed in his or her lawsuit to recover as well.  But, to what extent must a plaintiff succeed prior to recovery of attorney fees?  For example, is a plaintiff entitled to recover attorney fees in full even if a plaintiff’s claim is successful only in part?  The Iowa Supreme Court had an opportunity to address that issue in a recent case involving a former Iowa State University employee.

Dennis L. Smith was employed as a technical writer in the engineering department at Iowa State University.   Smith’s position for the university of eliminated.  Smith sued.  After a two week trial, Smith was awarded a total of $1,284,027.40 in damages against ISU and the State of Iowa.  Smith recovered $500,000 for his claim of intentional infliction of emotional distress and an additional $784,027.40 for his whistleblowing statute claim for retaliation. Iowa State appealed the award.  The Iowa Supreme Court affirmed Smith’s common law emotional distress award in its entirety, but reversed much of his whistleblower award.  The Court reversed the whistleblower award because the Court determined Smith had not met the showing required under the statute, namely that Smith suffered retaliation directly from Smith’s reports of financial improprieties to management.

On remand, Smith sought recover of most all his attorney fees incurred in the litigation.  Indeed, the whistleblower statute authorizes recovery of attorney fees upon a finding of liability.  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. 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.”  That finding was also appealed by the university.  Essentially, the university wanted the attorney-fee award reduced for work not performed on the whistleblower claim and a reduction for the fact Smith was not ultimately successful on much of his whistleblower claim.

The Supreme Court of Iowa reduced the district court’s award of attorney fees.  It held the ultimate question in determining recovery for attorney fees is whether work for which recovery is sought can be deemed to have been “expended in pursuit of a claim for which attorney fees are recoverable.” Time spent pursuing claims unrelated to a claim in which fees are recoverable is deemed “unrelated time,” not devoted generally to the litigation as a whole. Additionally, when a plaintiff achieves only partial or limited success on the claim for which attorney fees are recoverable, a reduction in the fee awarded may be appropriate even if the entire lawsuit flows from a common core of facts.

The Court held an award of attorney fees must follow a two-step process. First, the district court should make an appropriate reduction for unrelated time spent on unsuccessful claims, or time spent on claims for which fees are not recoverable. Then, the court must consider the reasonableness of the hours expended in light of the ultimate result. The Court was careful to point out, “there is no ‘rigid formula’ that must be followed.” Yet, “Whatever methodology the court employs, it must provide in its order ‘a concise but clear explanation of its reasons for the award.’”  Ultimately, the Court remanded the case to the district court for further proceedings consistent with the opinion.

Smith v. Iowa State University of Science and Technology, et al., No. 15-0852 (Iowa Sept. 23, 2016).

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