IN THE SUPREME COURT OF IOWA
GEORGE A. ROLFES CO.,
No. 17 / 88-1638
Filed April 18,1990
Appeal from the Iowa District
Court for Boone County, Dale E. Ruigh, Judge.
Appeal from final judgment entered upon jury verdict in favor of plaintiff in age discrimination suit. AFFIRMED AND REMANDED. Leon R. Shearer, Dean C. Mohr, and Kristin H. Johnson, of Shearer, Templer & Pingel, P.C., West Des Moines, for appellant.
Victoria L. Herring, West Des Moines, for appellee.
Considered by McGiverin, C.J., and Harris, Schultz, Neuman, and Andreasen, JJ.
Bernard Landals (Landals)
was discharged from his job with George A. Rolfes Co. (employer)
in July 1983 at age fifty- two. He filed a complaint with the
Iowa Civil Rights Commission under the Iowa Civil Rights Act,
Iowa Code chapter 601A (1983), alleging age and disability discrimination.
He obtained an administrative release and then filed suit in district
court. After Landals presented his case to a jury, the court granted
the employer's motion for directed verdict on the disability discrimination
claim, but denied its motion on the age discrimination claim.
The jury returned a special verdict for Landals on the age discriminaiton
claim, awarding him $72,100 for past loss of income and benefits.
The employer filed motions for new trial and judgment notwithstanding
the verdict, which the court denied.
On appeal, the employer challenges the sufficiency of the evidence to support a prima facie case of age discrimination and urges Landals failed to establish that the employer's reason for discharge was a pretext. The employer also urges the jury failed to follow the court's instruction when it awarded damages beyond the date Landals secured employment and stopped looking for another job. On cross-appeal, Landals challenges the method used by the district court in allowing interest on the judgement. We have consolidated with this appeal another appeal and cross-appeal challenging an award of attorney fees entered after the first appeal was taken.
I. Scope of Review.
Our scope of review is to
correct errors of law when an appeal is taken from the actions
of the civil rights commission in a chapter 601A proceeding. Peoples
Memorial Hosp. v. Iowa Civil Rights Comm'n, 332 N.W.2d 87,
90, 91 (Iowa 1982). When a chapter 601 A suit is tried to the
district court as an equitable action, our review is de novo.
Frank v. American Systems, Inc., 398 N.W.2d 797, 799 (Iowa
1987). If tried to the district court as a law action, as in this
case, our review is on errors of law. Trobaugh v. Hy-Vee Food
stores, Inc., 392 N.W.2d 154,156 (Iowa 1986); Iowa R. App.
If the findings of the jury are supported by substantial evidence, we are bound by them. Nadler v. city of Mason City, 387 N.W.2d 587, 591 (Iowa 1986); Iowa R. App. P. 14 (f)(1). Evidence is substantial if a reasonable mind would accept it as adequate to reach a conclusion. Trobaugh, 392 N.W.2d at 156.
II. Proof of Age Discrimination.
A person may prove age discrimination
by either of two methods. One method is to present direct or circumstantial
evidence that age was a determining factor in the employer's employment
decision. The other method of proof is to utilize the indirect,
burden-shifting method of proof as established in McDonnell
Douglas Corp. v. Green, 411 U.S.792, 93 S. Ct. 1817, 36 L.
Ed. 2d 668 (1973). See Oxman v. WLS-TV, 846 F.2d 448, 452
(7th Cir. 1988). See also United States Postal serv. Bd. of
Governors v. Aikens, 460 U.S. 711, 717-18, 103 S. Ct. 1478,
1483, 75 L. Ed 2d 403, 412 (1983) (Blackmun, J., concurring).
In the past, we have applied
the McDonnell Douglas principles and analytical framework
as refined in Texas Dep't of Community Affairs v. Burdine,
450 U.S. 248, 101 S. Ct. 1089, 67 L. Ed. 2d 207 (1981), in our
civil rights cases. See, e.g., Hulme v. Barrett,
449 N-W.2d 629, 632 (Iowa 1989); King v. Iowa Civil Rights
Comm'n, 334 N.W.2d 598, 601-03 (Iowa 1983); Linn Coop.
Oil Co. v. Quigley,305 N.W.2d 729, 733 (Iowa 1981).
However, the McDonnell
Douglas framework is not well suited as a detailed instruction
to the jury. Grebin v. sioux Falls Indep. School Dist.,
779 F.2d 10, 20 (8th Cir. 1985). It "add[s] little to the
juror's understanding of the case and, even worse, may lead jurors
to abandon their own judgment and to seize upon poorly understood
legalisms to decide the ultimate question of discrimination."
Id. at 20-21 (quoting Loeb v. Textron, 600 F.2d 1003, 1016,
(1st Cir. 1979)). Furthermore, a uniform instruction is of little
value because application of the McDonnell Douglas framework
will vary in different fact situations. See Hildebrand v. M-Tron
Indus., Inc., 827 F.2d 363, 368 (8th Cir. 1987).
Although the three-stage
order of proof and the presumptions described in McDonnell
Douglas are useful to the court structuring proof while the
trial is in progress, once the jury finds discrimination, and
the resulting judgment is being evaluated on appeal, these presumptions
fade away and the appellate court should simply study the record
to determine whether the evidence is sufficient to support the
verdict and judgment. Barber v. American Airlines, Inc.,
791 F.2d 658, 659-660 (8th Cir.), cert. denied, 479 U.S. 885, 107 S. Ct. 278, 93 L. Ed. 2d 254
Once an employer offers
reasons for discharging the plaintiff, the presumption
of discrimination recognized in the first state of McDonnell
Douglas loses its significance in the case. see Aikens, 460
U.S.at 714-15, 103 S. Ct. at 1481-82, 75 L. Ed. 2d at 409-10.
The interference of discrimination, however, does not drop
from the case. The jury also may rationally draw an inference
of discrimination from proof that the reasons given by the employer
for discharging the plaintiff were not the true reasons. Barber,
791 F.2d at 660.
The ultimate question, however,
is whether the employer intentionally discriminated against the
plaintiff. See Aikens, 460 U.S. at 714-15, 103 S. Ct. at
1481-82, 75 L. Ed. 2d at 409- 10. When a case is fully tried on
the merits, "we focus our attention on the ultimate question
presented and not on the adequacy of a party's showing at any
particular stage of the analysis." Smith v. Goodyear Tire
& Rubber Co., 895 F.2d 467, 471 (8th Cir. 1990).
Under the McDonnell Douglas framework, the burden of proving the ultimate question remains on the plaintiff. The McDonnell Douglas framework cannot be applied where the plaintiff uses the direct method of proof of discrimination. See Trans World Airlines, Inc. v, Thurston, 469 U.S. 111, 121, 105 S. Ct. 613, 621-22, 83 L. Ed. 2d 523, 533 (1985). Where direct evidence is presented and the employer suggests other factors influenced the decision, the employer has the burden of proving by a preponderance of the evidence that it would have made the same decision even if it had not considered the improper factor. Price Waterhouse v. Hopkins, 490 U.S. , 109 S. Ct. 1775, 1795. 104 L. cd. 2d 268, 293(1989).
Here the district court drafted its instructions to the jury using the framework of McDonnell Douglas. Instruction number nine provided:
Before Landals can recover on his claim for age discrimination, he must prove all of the propositions described in this instruction. He must first prove all of the following three propositions:
1. In July of 1983, Landals was qualified for the job at Rolfes from which he was discharged.
2. Despite being qualified, Landals was laid off from his job at Rolfes and not recalled for employment.
3. When Landals was laid off and not recalled, Rolfes retained persons to do Landals' job who were younger than Landals and who had comparable or lesser qualifications for the job.
If Landals has failed to prove one or more of the above three propositions, you will then consider Rolfes' claim that its decision to lay off and not recall Landals was based upon reasons other than age. More specifically, Rolfes alleges that it laid off and failed to recall Landals because a large decrease in company sales and profits during 1983 required large layoffs, including that of Landals, and the consolidation or eliminatiion of several job positions, including that of Landals'. Rolfes does not have to prove these reasons for laying off and not recalling Landals. Rather, Rolfes is only required to present enough evidence to create a genuine issue of fact in your mind.
If Rolfes has presented evidence raising an issue in your mind about the reason for Landals' layoff, Landals is then required to prove at least one of the following propositions:
(a) Landals' age more likely motivated Rolfes to lay him off than did any of the reasons given by Rolfes; or
(b) The reasons given by Rolfes for laying off Landals are not worthy of belief.
If Landals has failed to prove at least one of these propositions, he cannot recover on his claim for age discrimination. If, however, he has proved at least one of these propositions and also proved the three propositions shown above, he is entitled to recover on his claim for age discrimination and you will proceed to consider the amount of his damages, as explained further in Instruction No. 10.
The employer's only objection to this instruction was that it should have listed Landals' lack of qualification as a third reason for his layoff.
IV. Substantial Evidence of Age Discrimination.
The ultimate issue in this
case is whether Landals has shown that age was a determining factor
in the employer's decision to discharge him or lay him off. We
view the evidence in the light most favorable to Landals and give
him the benefit of all reasonable inferences that may be drawn
from the evidence. Winter v. Honeggers' & Co., 215
N.W.2d 316, 321 (Iowa 1974).
Viewing the evidence in
this light, Landals presented substantial evidence he was qualified
for the position he held. He had been employed by Rolfes since
1958. After working in the shipping and receiving department for
approximately two years, he was promoted to a supervisory position.
In 1982, the employer acquired a line of products marketed under
the name of Bazooka. Landals, who had been supervisor at the main
warehouse in Boone, Iowa, was transferred in early 1983 to the
Bazooka production and shipping work area. The Boone plant manager,
Bill Coen, and other employees testified Landals was an extremely
competent and dedicated employee.
On July 15,1983, Landals'
employment was terminated. He was not given any reasons for being
laid off. Most supervisory employees subject to layoff were offered
an opportunity to take a nonsupervisory position; Landals was
not. He was not recalled after being laid off.
Although Landals' employment
was eliminated, his responsibilities were assumed by younger employees.
Jeff Russell (age twenty-five), who was hired in January of 1983,
assumed Landals' shipping duties. David Cain (age thirty- six),
who had been with the company for approximately one year, assumed
Landals' other duties. Taken together, these circumstances raise
an inference of age discrimination.
The employer claimed Landals
was laid off or discharged because of legitimate economic reasons.
It is clear the employer suffered severe economic problems starting
in the fall of 1982 and resulting in a significant business loss
in 1983. The decision in July of 1983 to lay off approximately
fifty percent of the company's employees was necessary.
However, the jury rationally
could conclude Landals had been targeted for discharge by the
company president, James Banton, approximately one month before
the plant-wide layoff. Under the reduction in force, each plant
manager had been directed to reduce personnel by fifty percent.
Landals; plant manager, Bill Coen, intended to lay off employees
on the basis of least seniority. Landals, because of his seniority,
would not have been laid off under Coen's plan. Banton, however,
specifically ordered Coen -- without any explanation -- to lay
off Landals. Banton had previously discussed with Coen how to
get rid of an employee whose wife had filed a discrimination suit
against the employer. Coen was told to lay off personnel down
to that employee and then later call back the others. Furthermore,
a month prior to the layoff, Banton required Landals to undergo
physical examination or else face discharge after he complained
of chest pains.
There was substantial evidence that Landals was not part of the general layoff and the claim that he was discharged because of economic conditions was a pretext. The jury rationally could draw an inference of age discriminaiton from Landals' proof that the reasons given were false. Under the instruction given, the jury had sufficient evidence to reach the conclusion that the plaintiff had established his right to recover damages.
V. Damages After Accepting Another Job.
A successful plaintiff under
chapter 601A may be awarded "actual damages, court costs
and reasonable attorney fees." Iowa Code § 601A.15 (8)(a)
(8). Actual damages may include lost wages and benefits or "backpay."
See Foods, Inc. v. Iowa Civil Rights Comm's, 318 N.W.2d
162, 171 (Iowa 1982). Earned income and unemployment compensation
operate to reduce the amount awarded for lost wages. See Iowa
Code § 601 A. 15 (8)(a) (1).
Landals introduced evidence
of his salary and benefits at Rolfes, of the unemployment compensation
he received between his layoff and his acceptance of a job at
another business, and of his salary and benefits at his new job.
With factors such as the time value of money and tax consequences
applied to the lost wages and benefits, Landals submitted he had
sustained damages of $72,100 as of February 1, 1988, the date
of trial. The jury agreed and awarded $72,100 for past loss of
income and benefits but denied any amount for loss of future income
or mental distress. The following instruction was submitted to
If at any time after his layoff and acquisition of a new job, Landals voluntarily decided to thereafter be unavailable for any other comparable jobs paying substantially the same or greater income and benefits as his old job at Rolfes, even if such jobs actually became available to him, he cannot recover damages [for past and future loss of income and benefits] which may have accrued or would have accrued after the time he made that decision.
The employer contends the
jury failed to follow this instruction. The amount awarded indicates
the jury awarded damages for lost income and benefits after Landals
accepted another job.
The jury reasonably could have decided that Landals remained available for a job with duties, income, and benefits comparable to his old job. Although Landals was happy with his new job and no longer actively sought other employment, the jury could conclude that other employers had access to or could obtain Landals' services by offering him a job like his job at Rolfes, and that Landals was willing to accept such offers. Even if Landals decided to be unavailable, the jury reasonably could have concluded he did not so decide voluntarily. Evidence presented by Landals showed the lack of availability of comparable jobs and the necessity that he accept some other job in order to make a living and to fulfill his legal duty to mitigate damages.
By statute, interest is
allowed on all money due on judgments and decrees of court at
the rate of ten percent per year. Iowa Code § 535.3. Interest
accrues "from the date of the commencement of the action."
Id. Although the amount awarded included the lost value
of money up to the date of trial, the court nonetheless allowed
interest on the award at the rate of ten percent from the date
of commencement of the action in district court in 1984. Cf.
Drovers Bank of Chicago v. National Bank & Trust Co. of
Chariton, 829 F.2d 20, 22-23 (8th Cir. 1987)(award of double
interest disallowed). On appeal, Landals contends he is
entitled to interest on the award from the date of filing
his complaint with the civil rights commission in 1983.
The legislature clearly
does not consider the filing of a complaint with the commission
to be the "commencement of an action." A complainant
may not "commence and action for relief in the district
court" until the commission issues an administrative release.
Iowa Code § 601A.15 (1)(emphasis added). The release
must state the complainant "has a right to commence an
action in the district court." Iowa Code § 601A.15
(2) (emphasis added). Furthermore, an "action"
is barred "unless commenced within ninety days after
issuance" of the release. Iowa Code § 601A.15 (3) (emphasis
added). Thus, under Iowa Code chapter 601A, and action is not
commenced until it is filed in the district court. The district
court did not err in refusing to allow interest on the award from
the date of filing the initial complaint with the commission.
Landals also contends he
is entitled to compound rather than simple interest on the award.
The language of the statute gives us little guidance. We note.
however. it allows interest "on all money due on judgments
and decrees of court" and does not appear to allow interest
on interest. See Tri-state Ref. & Inv. Co. v. Apaloosa
Co., 431 N.W.2d 311, 317 (S.D. 1988) (construing similar South
The attorney general has expressed the opinion that the statute does not authorize compounding of interest. See 1980 Op. Iowa Att'y Gen. 708, 714; 1916 Op. Iowa Att'y Gen. 103; Peterson v. Ford Motor Credit Co., 448 N.W.2d 316, 319 (Iowa 1989)(we give respectful consideration to the opinions of the attorney general). The general rule in the United States is that, when interest is allowable, it is to be computed on a simple rather than a compound basis in the absence of express authorization to the contrary. See Cherokee Nation v. United States, 270 U.S. 476, 490, 46 S. Ct. 428, 433-34, 70 L. Ed. 694, 700 (1926) Stovall v. Illinois Cent. Gulf R.R., 722 F.2d 190, 192 (5th Cir. 1984); In re Realty Assoc. Sec. Corp., 163 F.2d 387, 392 (2d Cir.), cert. denied, 332 U.S. 836, 68 S. Ct. 218, 92 L. Ed. 409 (1947); Donavan v. Bryans, 566 f. Supp. 1258, 1265 (E.D. Pa. 1983); Aspinwall v. Blake, 25 Iowa 319, 320 (1868); Schwartz v. Piper Aircraft Corp., 90 Mich. App. 324, 326-27, 282 N.W.2d 306, 308-09 (1979) and cases cited therein: Abbott v. Abbott, 188 Neb. 61, 68,195 N.W.2d 204, 209, (1972); Tri-State Ref., 431 N.W.2d at 317 (N.D.); 47 C.J.S. Interest & Usury §§ 24, 71 at pp. 70, 161-62 (1982); 45 Am. Jur. 2d Interest & Usury §§ 76, 78, at pp. 69, 71 (1969) & Supp 1989). Because the statute does not provide for allowance of compound interest, we conclude it allows only simple interest, we conclude it allows only simple interest on judgments and decrees of court.
VII. Attorney Fees.
A successful plaintiff under
chapter 601 A is entitled to reasonable attorney fees. Iowa Code
§ 601A.15 (8)(a) (8). After an appeal on the merits was taken,
the district court determined it continued to have juridsiction
over the matter of attorney fees. After an evidentiary hearing,
the court awarded attorney fees of $39,950. The court calculated
the amount by multiplying the hours reasonably expended (399.5)
by a reasonable hourly rate ($100), as determined by the court
on the bases of the evidence presented. The court refused to add
any premium to the award or to allow any prejudgment interest
on the award of attorney fees. The court also awarded $906.26
fees for work done by an another attorney for Landals and $3,735.89
for litigation expenses.
Generally, the filing of a notice of appeal deprives the district
court of jurisdiction. In re Estate of Tollefsrud, 275
N.W.2d 412, 417 (Iowa 1979). However, we have held a trial court
retains jurisdiction to proceed as to issues collateral to and
not affecting the subject matter of the appeal. Id. The
matter of attorney fees is separate and distinct from the underlying
civil rights violation. Ayala v. Center Line, Inc., 415
N.W.2d 603, 605 (Iowa 1987). We believe the district court retains
jurisdiction to consider the matter of attorney fees as collateral
to and not affecting the subject matter of the appeal. The exercise
of retained jurisdiction, however, lies within the sound discretion
of the district court, in recognition that the outcome of the
appeal may very well affect the collateral matter.
B. Standard of Review.
In other contexts we have reviewed the allowance of attorney fees
under an abuse of descretion standard. See Green v. Iowa Dist.
Court, 415 N.W.2d 606, 608 (Iowa 1987). We have recognized
the district court is an expert on the issue of reasonable attorney
fees. Id. The district court's allowance of attorney fees
under chapter 601 A calls for no greater scrutiny. We therefore
consider whether the district court abused its discretion in fixing
attorney fees in this case. Cf. Wright v. stone Container Corp.,
524 F.2d 1058 (8th Cir. 1975)(allowance of attorney fees in federal
employment discrimination cases reviewed under an abuse of discretion
The burden is upon the applicant
for attorney fees to prove boths that the services were reasonably
necessary and that the charges were reasonable in amount. Green,
415 N.W.2d at 608. Appropriate factors to consider in allowing
attorney fees include the time necessarily spent, the nature and
extent of the service, the amount invoilved, the difficulty of
handling and importance of the issues, the responsibility assumed
and results obtained, thje standing and experience of the attorney
in the profession, and the customary charges for similar service.
See id.; Parrish v. Denato, 262 N.W.2d 281, 285 (Iowa 1978).
The district court must look at the whole picture and, using independent
judgment with the benefit of hindsight, decide on a total fee
appropriate for handling the complete case. green, 415
N.W.2d at 608.
C. The Propriety of the
Method Used. The district court did not abuse its discretion
in determining the numbers of hours reasonably expended. The court
viewed the case as a whole and concluded all of the professional
time was reasonably expended. Although Landals unsuccessfully
claimed disability discrimination, emotional distress damages,
and future damages, we cannot conclude the court erred in viewing
the unsuccessful claims as alternative and related claims.
The district court properly
arrived at a reasonable hourly rate. Although Landals' attorney
historically charged a lower hourly rate. the rate chosen by the
court reflects the attorney's current hourly rate and compares
favorably to the hourly rates charged by other experienced
attorneys for similar services.
The court did not abuse
its discretion by multiplying the number of hours expended by
the hourly rate to determine the attorney fee. The "lodestar"
method used by the district court is based on sound reasoning.
See Blum v. Stenson, 465 U.S.886, 888, 104 S. Ct. 1541,
1544, 79 L. Ed. 2d 891, 895-96 (1984)(approving use of lodestar
method). The product is an appropriate estimate of a reasonable
attorney fee which then may be adjusted as necessary in the particular
The court was not required
to adjust further its estimate of a reasonable attorney fee. Delay
in payment entered into the court's determination of a reasonable
hourly rate and required no further adjustment of the fee allowance.
The degree of success was impressive, but Landals asserted unsuccessful
claims of discrimination and damages as well. The court concluded
these factors balanced out each other and yielded no adjustment
either upward or downward, and its conclusion cannot be characterized
as an abuse of discretion.
D. Effect of Contingency
Fee Agreement. The district court properly considered the
contingency fee agreement between Landals and his attorney and
properly concluded the agreement did not require adjustment of
the fee allowance. The agreement shows the parties intended that
any attorney fee allowance would reduce the contingency fee and
that any excess recovery would go to the attorney. It established
a minimum floor on attorney fees to be paid upon successful resolution
of Landals' case.
The contingency fee agreement
did not set a maximum limit on the statutory allowance for recovery
of attorney fees. Courts have rejected a contrary conclusion as
inconsistent with the purposes of statutes allowing recovery for
attorney fees. See Blanchard v. Bergeron, 489 U.S. ___,
109 S. Ct. 939, 944, 103 L. Ed. 2d 67, 76 (1989); Sisco v.
J.S. Alberici Constr. Co., 733 F.2d 55 (8th Cir. 1984); Annot.,
Effect of Contingent Fee Contract on Fee Award Authorized by
Federal Statute, 76 A.L.R. Fed. 347 (1986 & Supp. 1989).
By statute, the successful plaintiff is entitled to reasonable
attorney fees, and we will not construe the agreement as limiting
E. Litigation Expenses.
The district court properly allow recovery of various litigation
expenses as part of the "attorney fees." For example,
the district court concluded that fees for paralegal assistance
were reasonably incurred and were compensable at the paralegal's
hourly rate. Cf Missouri v. Jenkins, 491 U.S. ___, ___,
109 S. Ct. 2463, 2470, 105 L. Ed. 2d 229, 241 (1989) ("reasonable
attorney fees" include compensation for paralegal assistance).
In addition, the court acted within its discretion in limiting
recovery of deposition expenses, expert witness compensation,
and other court costs to those costs allowed by Iowa Rule of Civil
Procedure 157 (a) and Iowa Code chapters 622 and 625. See also
Woody v. Machin, 380 N.W.2d 727, 729- 31 (Iowa 1986) (construing
Iowa R. Civ. P. 157).
F. Interest on Attorney Fees. The district court had no authority to award prejudgment interest on the attorney fees under Iowa Code section 535.3 and properly refused to do so. Prejudgment interest is allowed to repay the lost value of the use of the money awarded and to prevent persons obligated to pay money to another from profiting through delay in litigation. See In re Marriage of Baculis, 430 N.W.2d 399, 401 (Iowa 1988). The employer's obligation to pay Landals' attorney fees arose at the time of judgment and Landals suffered no lost value of the use of money for attorney fees. See Harvey v. Gerqer, 153 Mich. app. 528, 396 N.W.2d 470, 471 (1986) (construing similar Michigan statute).
The judgment of the district court is affirmed. To the extent that Landals was entitled to an award of attorney fees for his litigation expense before the district court, he is likewise entitled to an award of fees necessitated by this appeal. Ayala, 415 N.W.2d at 606. This case is therefore remanded to the district court for hearing on Landals' motion for appellate attorney fees and costs.
AFFIRMED AND REMANDED.