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Lee v. State

Supreme Court of Iowa

January 12, 2018

TINA ELIZABETH LEE, Appellant,
v.
THE STATE OF IOWA and THE POLK COUNTY CLERK OF COURT, Appellees.

         Appeal from the Iowa District Court for Polk County, James M. Richardson, Judge.

         A plaintiff appeals an attorney fee and expense award.

          Paige Fiedler and Brooke Timmer of Fiedler & Timmer, PLLC, for appellant.

          Thomas J. Miller, Attorney General, Jeffrey S. Thompson, Solicitor General, David M. Ranscht and Jeffrey Peterzalek, Assistant Attorneys General, for appellee.

          WIGGINS, Justice.

         This case is before us for the fourth time on appeal. See Lee v. State (Lee I), 815 N.W.2d 731 (Iowa 2012); Lee v. State (Lee II), 844 N.W.2d 668 (Iowa 2014); Lee v. State (Lee III), 874 N.W.2d 631 (Iowa 2016). In this appeal, the plaintiff contests the most recent fee and expense award entered by the district court. In our review of the record, we find the district court did not abuse its discretion by using the plaintiff's attorneys' current hourly rates or by using the percentage reduction method to reduce the total requested fees and expenses. However, we find the district court abused its discretion in the manner it used the percentage reduction method. We also find the district court abused its discretion by not awarding the plaintiff any of the expenses she requested in her application for fees and expenses. We therefore reverse the latest order of the district court awarding plaintiff her attorney fees and expenses.

         We exercise our discretion to decide this case on appeal rather than remand it to the district court for further proceedings regarding fees and expenses because of the protracted history of this case. For the reasons stated in this opinion, we set the fee award at $241, 700.05 and the expense award at $5654.10. We remand the case to the district court for the sole purpose of entering judgment consistent with these awards.

         I. Background Facts and Proceedings.

         Tina Lee worked for the Polk County clerk of court beginning in 1981 until her termination in November 2004 after taking leave pursuant to the Family Medical Leave Act (FMLA) to treat her anxiety disorder. On January 3, 2006, Lee filed suit against the State of Iowa and the Polk County clerk of court, [1] alleging violation of her statutory rights under 29 U.S.C § 2612(a)(1)(D) (2000), [2] the self-care provision of the FMLA. The State filed a motion for summary judgment alleging sovereign immunity. The district court denied the motion.

         On September 13, 2007, the jury returned a verdict in favor of Lee and against the State on her wrongful discharge and retaliation claims. The jury found Lee suffered $165, 122 in damages in lost past earnings. Additionally, the jury issued a special verdict recommending the Polk County clerk of court's office to receive FMLA training and additional training regarding awareness of mental health. On September 18, the district court entered judgment awarding $165, 122 in backpay, plus interest at the legal rate.

         The State filed a motion for judgment notwithstanding the verdict and, in the alternative, a motion for new trial. Lee filed a motion for reinstatement and other equitable relief, additional judgment for liquidated damages, and fees and expenses.

         In October 2007, the district court entered judgment overruling the State's motions. The district court awarded Lee reinstatement; backpay damages as determined by the jury plus prejudgment interest for a total of $184, 249.71; liquidated damages in an amount equal to the jury verdict and prejudgment interest for a total of $184, 249.71; lost wages and benefits in the amount of $1146.47 per workweek from September 15, 2007, to the date of actual reinstatement; $68, 109.75 in fees and $5734.46 in expenses for a total of $73, 844.21; and postjudgment interest at the legal rate. The court used the 2007 hourly rates of Lee's attorneys when awarding the fees. For purposes of Iowa Public Employees Retirement System (IPERS) and FMLA benefits, the court ordered the State to credit Lee for years of employment as if the State had never terminated her.

         In November, the State appealed the jury verdict and the district court's October 2007 order. Later that month, the State moved to stay all proceedings pending appeal without filing a supersedeas bond. In its motion to stay, the State promised to make Lee whole again by paying the judgment, plus any amounts owed to her during the time she should have been reinstated and when she is reinstated, on the condition that this court affirms the October 2007 order. Lee agreed to stay collection of the monetary judgment but requested the district court to compel her reinstatement. In January 2008, the district court denied the State's motion to stay the reinstatement and ordered the State to immediately reinstate Lee because delaying her return to work any further would cause significant harm to her in terms of receipt of salary and benefits.

         On February 6, Lee filed a second supplemental motion for fees and expenses. Later that month, the State requested us to stay Lee's reinstatement pending its appeal. In March, the district court granted Lee's second supplemental motion, awarding Lee $8303.40 in fees and expenses incurred from October 2, 2007, through February 18, 2008.

         We granted the State's motion to stay and transferred the case to our court of appeals. The court of appeals affirmed the judgment of the district court. We granted the State's application for further review but held the case in abeyance pending a decision by the United States Supreme Court in Coleman v. Court of Appeals of Maryland, 566 U.S. 30, 132 S.Ct. 1327 (2012), on the issue of whether the self-care provision of the FMLA abrogated sovereign immunity.

         We considered the State's appeal in Lee I, in which we held state employees alleging violations of the self-care provision of the FMLA could not sue the state for monetary relief because sovereign immunity cloaked the state from suit. Lee I, 815 N.W.2d at 743. However, we also held state employees could seek Ex parte Young[3] injunctive relief against the state official who wrongfully denied them self-care leave. Id. We concluded "the [October 2007] judgment entered by the district court was predicated on legal error" and "the noninjunctive relief granted in the judgment cannot stand." Id. As a result, we vacated the judgment of the court of appeals, reversed the judgment of the district court, and remanded the case "to determine what relief granted in [the district court's October 2007] judgment is still available to Lee within the framework of this lawsuit, findings of the jury at trial, and the cloak of immunity protecting the State." Id.

         On remand, Lee filed a motion to enforce the October 2007 award of injunctive relief. She argued the State had waived sovereign immunity by promising it would pay her lost wages and benefits from the time the district court originally ordered her reinstatement on the condition that Lee I affirmed the reinstatement order. In resisting Lee's motion, the State contended Lee failed to name any state official in her original action, questioned whether lost wages and benefits constituted prospective relief, and argued it had not waived sovereign immunity.

         In October 2012, the district court granted Lee's motion. It ordered the State to not only immediately reinstate Lee but also pay her lost wages and benefits from October 26, 2007, to the date of actual reinstatement in the amount of $1146.67 per workweek; provide her IPERS and FMLA benefits credits as if the State had never terminated her; and pay postjudgment interest at the legal rate. The October 2012 order did not mention fees and expenses.

         The State appealed once again. We considered the State's second appeal to this court in Lee II. In affirming the district court's October 2012 order, we held October 29, 2007, [4] is the date from which prospective relief is properly determined. Lee II, 844 N.W.2d at 684. We agreed with Lee the State waived its objection to paying lost wages and benefits from October 29, 2007, when it obtained a stay of Lee's reinstatement by assuring us it would make Lee whole if Lee I affirmed the district court's October 2007 order. Id. at 681. We reasoned the State was "technically correct that Lee I did not 'affirm' the district court's 2007 judgment." Id. However, we stated Lee I "specifically held only the 'noninjunctive relief granted in the judgment cannot stand.' " Id. Thus, the October 2012 order "correctly concluded the 2007 reinstatement order is relief granted . . . that is still available to Lee." Id. at 681-82.

         When the State refused to pay any of the fees or expenses, Lee filed a third supplemental motion for attorney fees. Lee sought enforcement of the October 2007 and March 2008 orders by requesting the district court to order the State to pay the fees and expenses specified in the orders: $73, 844.21 plus interest from the October 2007 order and $8303.40 plus interest from the March 2008 order. Lee requested an additional $135, 054.98 calculated at 2014 hourly rates for fees and expenses she incurred since February 18, 2008. Lee argued in the alternative that if the State did not agree with the enforceability of the prior judgments, then the district court should add those fees and expenses to the new judgment at current hourly rates.

         The State resisted, arguing Lee I vacated the October 2007 and March 2008 orders and contending Ex parte Young, not the FMLA, allowed for an injunctive award. Lee filed a statement of additional fees and expenses, requesting $142, 163.78 in fees and $4903.87 in expenses, for a total of $147, 067.65 calculated at the 2014 hourly rates in addition to the October 2007 and March 2008 awards. We note Lee incorporated the previous request of $135, 054.98 into the new figure of $147, 067.65. Lee alternatively argued for a judgment against the State for all her fees and expenses incurred in the case calculated at current hourly rates.

         On June 27, [5] the district entered judgment granting Lee's third supplemental motion for fees and expenses, awarding $141, 038.78 in fees and $4903.87 in expenses incurred since February 18, 2008, for a total of $145, 942.65. As for the October 2007 and March 2008 orders awarding fees and expenses, the court held they remain in force. The court did not raise the October 2007 and March 2008 awards to reflect the 2014 hourly rates of Lee's attorneys.

         The State appealed for the third time. In Lee III, we decided Lee was entitled to an award of fees and expenses that she had incurred in seeking prospective relief, but not retroactive relief, against the State for violations of the self-care provision of the FMLA. Lee III, 874 N.W.2d at 648-50. Thus, we held the district court erred in awarding all of her fees and expenses because Lee incurred some of them in relation to her unsuccessful pursuit of retroactive relief. Id. We remanded the case with instructions to grant an award consistent with prior caselaw but excluding "fees and costs Lee incurred in proving aspects of her claims for retroactive relief that were wholly unrelated to the common core of facts or legal theories establishing her entitlement to prospective relief." Id. at 650. We also instructed the district court to enter an award "in accordance with the principles [governing fee awards] set forth in this opinion." Id.

         On July 12, 2016, Lee filed an application for fees and expenses as well as a brief in support of her application. This application requested fees at present hourly rates for all the work Lee's attorneys had done in this case dating back to March 2005. Lee included a fee report that broke down the unbilled 7.1 hours for time spent on retroactive relief and the billed 967.28 hours for time expended on prospective relief as well as the applicable unbilled amount ($4963.75) and billed amount ($356, 063.25). Lee alternatively argued if the district court cuts the fees by a particular percentage, it should reduce only by one percent from the amount of $361, 027, which includes both the billed and unbilled amounts. As for the expenses, Lee requested the court to order the State to reimburse her for all of the expenses, totaling $13, 707.72.

         In its August 22 resistance, the State proposed a forty-percent reduction in fees to account for partial success. The State also objected to Lee's expense report, arguing Lee should not recover costs related to the first and third appeals, and the Westlaw charges. Lee filed a reply to the State's resistance. On October 3, Lee filed a supplemental application for fees and expenses, requesting an additional $7032.50 in fees and $143.18 in expenses for amounts incurred after the filing of her July 12 application. Relevant to this appeal, the parties have agreed that this additional total amount stated in Lee's supplemental application is not subject to any reduction because the attorneys did not incur these charges in pursuing retrospective relief.

         On October 3, the district court held a hearing to hear the dispute over the amount spent on seeking prospective relief. On October 10, the district court found the work that Lee's attorneys had performed largely centered on a common core of work directed toward obtaining both prospective and retroactive relief. Thus, because "Lee's claims for monetary relief and reinstatement are so intertwined as to make them inseparable, " the court stated $361, 027 was appropriate as an award of attorney fees.

         However, the court concluded Lee III required it to reduce a fee award "based on the ultimate result or partial success of a case." In its analysis, the district court divided Lee's claims into five subparts: "(1) sovereign immunity [monetary damages for wrongful discharge]; (2) reinstatement of her employment; (3) reinstatement of employee benefits [IPERS, etc.]; (4) an award of attorney fees and costs; and (5) the amount of attorney fees and costs." The court stated the State succeeded in the first and last areas-the last area constituting the very issue presented before the district court for a resolution-and Lee succeeded in the remaining three areas. Thus, the district court reasoned, Lee was successful in sixty percent of her claims. The court therefore reduced Lee's requested amount by two-fifths or forty percent.

         Applying a forty percent reduction, the court awarded (1) $216, 616.20 (i.e., sixty percent of $361, 027), [6] (2) the additional requested $7032.50 in fees, and (3) additional requested $143.18 in expenses. Thus, the court awarded a total sum of $223, 791.88. The district court wholly omitted consideration of the $13, 707.72 of expenses that Lee had requested in her July 12, 2016 application. We note $5134 of the $13, 707.72 of expenses was attributable to Westlaw charges.

         Lee appeals.

         II. Issue.

         The only issue we must decide is whether the district court was correct when it awarded Lee's fees and expenses.

         III. Scope of Review.

         We review challenges to the amount of an attorney fee award for abuse of discretion. Equity Control Assocs., Ltd. v. Root, 638 N.W.2d 664, 674 (Iowa 2001). "A court abuses its discretion when the grounds or reasons for the court's decision are 'clearly untenable' or when the court has exercised its discretion to an extent that is 'clearly unreasonable.' " Id. (quoting Graber v. City of Ankeny, 616 N.W.2d 633, 638 (Iowa 2000)). "A ground or reason is untenable when it is not supported by substantial evidence or when it is based on an erroneous application of the law." Id. We will presume the district court's discretionary decisions are correct until the complaining party shows the contrary. Bremicker v. MCI Telecomm. Corp., 420 N.W.2d 427, 428-29 (Iowa 1988).

         IV. Whether to Decide the Issue of Fees and Expenses on Appeal or to Remand for Determination.

         At oral argument, we asked both parties whether they wanted us to remand to the district court or decide the issue on appeal if we found legal error on the part of the district court. Both parties indicated they did not want us to remand the case if we found the district court erred and requested us to decide the merits on appeal. We agree with the parties' request because of the long history of this case. Thus, we exercise our very narrow discretion to adjust the award at the appellate level. "A request for attorney's fees should not result in a second major litigation." Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 1941 (1983); see Mims v. Shapp, 744 F.2d 946, 955 (3d Cir. 1984) ("[W]e find here an overarching consideration-the conservation of judicial resources-that compels us to invoke the narrowest of exceptions to our normal procedures" because "[t]his case has persisted for over ten years in the court system, commanding the attention of three separate district judges, three separate panels of this court, and in one instance, the court in banc."). Accordingly, we will decide the merits on appeal rather than remand the case to the district court.

         V. Analysis.

         Our first task is to decide which expenses claimed by Lee's attorneys are recoverable. After doing so, we will then determine whether the court ...


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