MIKE DEVOLDER, - Complainant, and IOWA CIVIL RIGHTS COMMISSION,



VS.

FRIEDMAN MOTOR CARS, LTD., MIKE FRIEDMAN, SCOTT HENRY, AND PAT SULLIVAN, Respondents.

CONCLUSIONS OF LAW

Procedure:

1A. In this case, the parties elected to have the attorney's fee issue heard pursuant to written pleadings submitted by the parties and information submitted therein. See Finding of Fact No. 2A. An award of attorneys fees may be made in the absence of a separate evidentiary hearing where, as here, the opportunity for an attorneys fees hearing has been provided and all parties have elected to not take advantage of the opportunity. See Rouse v. Iowa Department of Transportation. 408 N.W.2d 767, 768 (Iowa 1987).

Official Notice.

Official Notice in General.

2A. Official notice may be taken of all facts of which judicial notice may be taken and of other facts within the specialized knowledge of the agency. Iowa Code § 17A.14(4) (1991). Judicial notice may be taken of matters which are "common knowledge or capable of certain verification." In Re Tresnak, 297 N.W.2d 109, 112 (Iowa 1980). Judicial notice does not depend on actual knowledge of the judge. He may investigate and refresh his recollection of facts by any means he deems to be safe and proper. Haaren v. Mould, 144 Iowa 296,303,122 N.W. 921 (Iowa 1909).

Official Notice and Statistics:

3A. The Iowa Supreme Court has taken judicial notice of case processing statistics set forth in annual reports of the Iowa Civil Rights Commission. Estabrook v. Iowa Civil Rights Commission, 283 N.W.2d 306, 311 (Iowa 1979). Judicial notice may also be taken of other impartial compilations of statistical data, such as census statistics, Iron Workers Local No. 67 v. Hart, 191 N.W.2d 758, 769 (Iowa 1971), or industry data. 29 AM. JUR. 2d Evidence § 112 & n.8 (1967).

Official Notice and Attorney's Fees

4A. Judicial notice may also be taken of facts generally known in the legal profession. In Re Tresnak, 297 N.W.2d 109,112 (Iowa 1980); see State v. Kaufman, 202 Iowa 157, 161, 209 N.W. 417 (Iowa 1926). An adjudicator who is an attorney, as the Commissions's Administrative Law Judge is, may determine the value of a lawyer's services based on the judge's own knowledge. 29 AM. JUR. 2d Evidence § 82 (1967)(citing In Re Gudde's Will, 260 Wis. 79, 49 N.W.2d 906). A court is presumed to have some knowledge of the value of an attorney's services, particularly when the services were rendered in the court's own jurisdiction and presence. See Kratz v. Heins, 169 N.W. 33 (Iowa 1918); Gates v. McCienahan, 103 N.W. 969 (Iowa 1905). It is reasonable to conclude that an administrative tribunal with the authority to award attorney's fees and experience in doing so also has such expertise as part of the "specialized knowledge of the agency." Iowa Code § 17A.14(4). Cf. Lynch v. City of Des Moines, 464 N.W.2d 236,240 (Iowa 1990)(court is an expert on attorney fees and need not adopt fees suggested by expert witnesses); Landals v. Rolfes, 454 N.W.2d 891, 897 (Iowa 1990)(court an expert on attorney fees); Parrish v. Denato, 262 N.W.2d 281 " 285 (Iowa 1978)(court an expert on fees, but cannot exclude other relevant evidence). See e.g. Frank Robinson, CP # 08-86-15103, slip op. (Iowa Civil Rights Comm'n August 29, 1991)(fees for complainant's attorney); Ruth Miller, CP # 04-86-14561, slip op. at 71, 75 (October 29, 1990)(fees for employer on motion for sanctions); Diane Humburd, 10 Iowa Civil Rights Commission Case Reports 13 (1989) (Supplemental Decision awarding fees for complainant's attorney).

Reasonable Attorney's Fees Remedy:

5A. The Iowa Civil Rights Act allows the award of reasonable attorney fees" as part of the remedial action which the Commission may take in response to the Respondents' discriminatory practices Iowa Code § 601A.15(8)(a)(8) (1991). Attorneys fees can only be awarded to complainants when discrimination has been proven. See Id. The burden of persuasion is upon the Complainant to prove "both that the services were reasonably necessary and that the charges were reasonable in amount." Landals v. George A. Rolfes, Co., 454 N.W.2d 891, 897 (Iowa 1 990).

6A. The reason for awarding attorneys fees to prevailing complainants in contested cases under the Iowa Civil Rights Act is the same as that for awarding attorneys fees to prevailing plaintiffs in civil actions brought under the Act, i.e. "to ensure that private citizens can afford to pursue the legal actions necessary to advance the public interest vindicated by the policies of the civil rights acts." Ayala v. Center Line Inc., 415 N.W.2d 603, 605 (Iowa 1987)(citing Newman v. Piggie Park Enterprises, 390 U.S. 400,40102,88 S.Ct. 964,966,19 L.Ed.2d 1263,1265-66 (1968)). Therefore, a prevailing complainant "should ordinarily recover an attorneys fee." Newman v. Piggie Park Enterprises, 390 U.S. 400,402,88 S.Ct. 964,19 L. Ed.2d 1263 (1968)(emphasis added). The Respondents in this case concede that Complainant DeVolder, as a successful plaintiff, is entitled to reasonable attorney's fees. Resistance at 1.

Standards for Awarding Attorney's Fees:

7A. It is the policy and practice of this "Commission to award reasonable attorneys fees to successful complainants for services performed at all stages of the administrative complaint process." Diane Humburd, 10 Iowa Civil Rights Commission Case Reports 13,15 (1990)(Supplemental Decision).

8A. The amount of the attorneys fee to be awarded depends on the facts of each case. Hensley v. Eckerhart, 461 U.S. 424, 429, 103 S. Ct. 1933, 76 L.Ed. 2d 40, 48 (1983). Where, as here, agreement on the attorneys fees issue has not been reached, the successful complainant bears the burden of establishing the amount of her attorneys fees by "documenting the appropriate hours expended and hourly rates." Id., 461 U.S. at 437, 76 L.Ed. 2d at 53. The complainant's attorney is not required to document each minute of his time in great detail, but should identify the general subject matter of his time expenditures. Id. & n.12. This burden has been met here. See Findings of Fact Nos. 3A-4A, 6A, 8A, 10A.

The Lodestar Calculation (Hours Reasonably Expended Multiplied by a Reasonable Hourly Rate):

9A. "The intial estimate of a reasonable attorney's fee is properly calculated by multiplying the number of hour's reasonably expended on the litigation times a reasonable hourly rate." Blum v. Stenson, 465 U.S. 886, 888, 104 S.Ct. 1541, 79 L.Ed. 2d 891, 895 (1984). The product of this calculation is known as the "lodestar." Landals v. George A. Rolfes Co., 454 N.W.2d 891, 898 (Iowa 1990). The lodestar amount for the period ending June 30,1992 is $23,639.50. The lodestar amount for the period from July 1, 1992 to July 15, 1992 inclusive is $1320.00. See Findings of Fact Nos. 3A, 4A, 6A, 7A. These amounts are based on "customary rates" which reflect an expectation that the attorney will "be paid promptly and without regard to success or failure" and account for no risk of nonpayment. Hensley v. Eckerhart, 461 U.S. at 448-49, 76 L.Ed. 2d at 60. See Findings of Fact Nos. 22A-23A. Such customary rates take into account the place of residence of the attorney or the location where the attorney's services are to be performed, Stanley v. Indianola, 261 Iowa 146, 152,153 N.W.2d 706 (1967), and the "prevailing market rates in the relevant community." Blum V. Stenson, 465 U.S. 886, 895, 104 S.Ct. 1541, 79 L. Ed. 2d 891, 900 (1984). See Findings of Facts Nos. 22A-24A.

Determination of Hours Reasonably Expended:

10A.

Cases may be overstaffed, and the skill and experience of lawyers vary widely. Counsel for the prevailing party should make a good-faith effort to exclude from a fee request hours that are excessive, redundant, or otherwise unnecessary, just as a lawyer in private practice ethically is obligated to exclude such hours from his fee submission. "In the private sector, 'billing judgment' is an important factor in fee setting. It is no less important here. Hours that are not properly billed to one's client." also are not properly billed to one's adversary."

Hensley v. Eckerhart, 461 U.S. at 434, 76 L.Ed. 2d at 50-51 (Quoting Copeland v. Marshall, 205 U.S. App. D.C. 390, 401, 641 F. 2d 880, 891 (1980)(en banc)(emphasis in original)). "Hensley requires a fee applicant to exercise "billing judgment" not because he should necessarily be compensated for less than the actual number of hours spent litigating a case, but because the hours he does seek compensation for must be reasonable." Riverside v. Rivera, 477 U.S. 561, 569, 106 S.Ct. 2686, 91 L. Ed. 2d 466, 476 at n.4. In light of the complexity of this case, and other appropriate factors,the number of hours expended has been found to be reasonable. See Finding of Fact No. 11A. "Thus, counsel did, in fact, exercise the 'billing judgment' recommended in Hensley." Id.

11A. Although hours may be excluded after examination of the claims in light of appropriate factors, Lynch v. City of Des Moines, 464 N.W.2d 236, 240 (Iowa 1990), the tribunal is not required to reduce hours claimed and may award all hours claimed if it believes such hours were reasonably expended after viewing the case as a whole. Landals v. George A. Rolfes, Co., 454 N.W.2d 891, 897 (Iowa 1990).

12A. In this case, after consideration of the factors discussed below, the only hours excluded from Complainant's billing were those spent before the district court on the petition for judicial review of the final decision. See Finding of Fact No. 4A. This was not because those hours were found to be unreasonable or unnecessary. Rather, the claim for those hours was brought at an inappropriate point in this litigation. The district court sits in an appellate capacity when reviewing final contested case decisions, Mary v. Iowa Dept. of Transportation, 382 N.W.2d 128 (Iowa 1986), and the tee determination on such review should not be made until after the district court has rendered its decision. See Lynch v. City of Des Moines, 464 N.W.2d 236, 240-41 (Iowa 1990)(case remanded to trial court for determination of appellate attorney fees).

13A. Respondents challenged the hours spent by Complainant DeVolder's counsel litigating legal issues which arose between the Commission, Complainant Cristen Harms, and the Respondents. See Finding of Fact No. 1 1 A. The rejection of this challenge is appropriate given the complete success of Complainant DeVolder and the closely interrelated nature of these claims as set forth in the Findings of Fact. See Riverside v.. Rivera, 477 U.S. 561, 569,106 S.Ct. 2686,91 L. at n.4; Hensley v. Eckerhart, 461 U.S. at 434-37, 76 L.Ed. 2d at 51-52. See Finding of Fact No. 14A.

Factors Considered in Determining a Reasonable Hourly Rate and Reasonable Hours Expended:

14A. The courts have relied on two sets of factors which should be taken into account in determining "whether services were reasonably necessary and that the charges were reasonable in amount." Landals v. George A. Rolfes Co., 454 N.W.2d 891, 897 (Iowa 1990). These lists are somewhat duplicative. This duplication has been eliminated in the final list of factors set forth in Finding of Fact No. 9A. All of th factors set forth in Finding of Fact No. 9A have been considered in this case. See Findings of Fact Nos 10A- 46A. In Iowa, the controlling authority provides:

Appropriate factors to consider in allowing attorney fees include the time necessarily spent, the nature and extent of the service, the amount involved, the difficulty of handling and importance of the issues, the responsibility assumed and results obtained, the standing and experience of the attorney in the profession, and the customary charges for similar service.

Id.

15A. A case frequently relied upon in the Federal courts, and other state courts, is Johnson v. Georgia Highway Express, lnc., 488 F.2d 714 (5th Cir. 1974) which lists twelve factors derived from the American Bar Association Code of Professional Responsibility, Disciplinary Rule 2-106. Hensley v. Eckerhart, 461 U.S. at 430, 76 L.Ed. 2d at 48 & n.3. These same factors are set forth, although organized as eight and not twelve factors, in the Iowa Code of Professional Responsibility for Lawyers. DR 2-106(B).

16A.

The 12 [Johnson] factors are (1) the time and labor required; (2) the novelty and difficulty of the case; (3) the skill requisite to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the "undesirability" of a case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.

Hensley v. Eckerhart, 461 U.S. at 430, 76 L.Ed. at 48 n.3.

17A. Where, as here, the case presents related claims, all of which were successful, the Commission 'should focus on the overall relief obtained by the [complainant] in relation to the hours reasonably expended on the litigation." Id., 461 U.S. at 435, L.Ed. 2d at 51-52. An award of a fully compensatory fee, including compensation for all hours reasonably expended during the litigation, should be made when the complainant has obtained excellent results, as this complainant has. Id., 461 U.S. at 435, 76 L.Ed. 2d at 52. See Finding of-Fact No. 29A.

Adjustment of the Lodestar:

18A. Although there is a rebuttable presumption that the lodestar amount represents a reasonable hourly rate, Blum v. Stenson 465 U.S. 886, 897, 104 S.Ct. 1541, 79 L. Ed. 2d 891, 901 (1 984), the "lodestar" may be further adjusted either upward or downward based on the important factor of "results obtained", Hensley v. Eckerhart, 461 U.S. at 434, 76 L.Ed. 2d at 51; Schlei & Grossman, Employment Discrimination Law: Five Year Cumulative Supplement 554 (1989), or on the other factors set forth above if they are not fully accounted for in the lodestar. Blum v. Stenson, 465 U.S. at 897, 79 L. Ed. 2d 91, 901 n.14 (1984); Hensley v. Eckerhart, 461 U.S. at 434, 76 L. Ed. 2d at 51 & n.9. When as here, the Complainant has obtained "exceptional success, an upward enhancement may be justified." Blum V. Stenson, 465 U.S. 886, 897, 104 S. Ct. 1541, 79 L. Ed. 2d 891, 901 (1984). See Finding of Fact No. 29A.

30A. As noted, factors which may be considered in adjusting the lodestar include those listed previously. Hensley, 461 U.S. at 434, 76 L.Ed.2d at 51 & n.9. See Conclusions of Law Nos. 14A, 16A. As a matter of law, however, the maximum amount of the attorney's fees award is not limited by any amount set in any contingent fee agreement between the complainant and his attorney. Landals v. Rolfes, 454 N.W.2d 891, 898 (Iowa 1990)(citing Blanchard v. Bergeron, 489 U.S. 87, 96, 109 S.Ct. 939, 103 L.Ed. 2d 67, 77 (1989)). Furthermore, care must be taken to avoid either "double-counting" or cumulative application of these factors as many of them are normally adequately reflected in the lodestar. See Blum v. Stenson, 465 U.S. at 898-901, 79 L.Ed. 2d at 901-04; Schlei & Grossman, Employment Discrimination Law: Five Year Cumulative Supplement 554 (1989). In this case only two factors, delay and risk of nonpayment, have been found which justify any upward enhancement of the lodestar. See Findings of Fact Nos. 36A-45A.

Enhancement of Lodestar Amount Due to Delay In Payment:

31A. There is no question that, with respect to Federal fee shifting statutes, delay in payment in contingent fee cases is a factor which may result in an increase in the lodestar fee. Missouri v. Jenkins, 491 U.S. 274, 284, 109 S.Ct. 2463, 105 L. Ed. 2d 229, 240(1989)(fee shifting provisions in civil rights cases under 42 U.S.C. § 1988); Pennsylvania v. Delaware Valley Citizens' Council, 483 U.S. 711, 716, 750, 107 S. Ct. 3078, 97 L.Ed. 2d 585, 592, 613 n.13 (1987)(plurality and dissenting opinions)(interpreting fee shifting provision of Clean Air Act); Schlei & Grossman, Employment Discrimination Law: 19871989 Supplement 210 (1991)(fee-shifting provisions of Title VI[ of Civil Rights Act of 1964). This authority is persuasive on this issue as it takes into account the economic realities of the practice of law and is consistent with the purpose of fee shifting statutes, i.e. "ensuring that private citizens can afford to pursue the legal actions necessary to advance the public interest vindicated by the policies of [environmental and] civil rights [legislation]." See Ayala v. Center Line, Inc., 415 N.W.2d 603, 605 (Iowa 1987)(citing Newman v. Piggie Park Enterprises, 390 U.S. 400,40102 (1968)).

32A.

Clearly compensation received several years after the services were rendered-as is frequently the case with complex civil rights litigation-is not equivalent to the same dollar amount received reasonably promptly as the legal services are performed, as would normally be the case with private billings....... This delay, coupled with the fact that..... the attorney's expenses are not deferred pending completion of the litigation, can cause considerable hardship.... If no compensation were provided for the delay in payment, the prospect of such hardship could well deter otherwise willing attorneys from accepting complex civil rights cases that might offer great benefit to society at large;the result would work to defeat Congress purpose in enacting [attorney's fees shifting statutes.)

Missouri v. Jenkins, 491 U.S. 274, 284,109 S.Ct. 2463, 105 L. Ed. 2d 229, 240 & n.6. (1989).


33A.

[D]elay in payment . . . is an integral aspect of contingency payments for which compensation is appropriate. Delay in payment causes cash-flow problems and deprives an attorney of the use of money, thus magnifying the economic risk associated with the uncertainty of payment.

Pennsylvania v. Delaware Valley Citizens' Council, 483 U.S. at 750, 97 L.Ed. 2d at 613 (dissenting opinion).

34A. Delay may be viewed as a factor separate from the risk of nonpayment, Id., 483 U.S. at 716, 97 L-Ed. 2d at 592, or as a factor which is part of the risk of nonpayment, Id., 483 U.S. at 749, 97 L.Ed. 2d at 613 (1987)(dissenting opinion), but which should not be again factored in when considering an enhancement for risk of nonpayment after a separate enhancement for delay has been granted. Cf. Schlei & Grossman, Employment Discrimination Law: Five Year Cumulative Supplement 554 (1989)(noting that, in Blum the Supreme Court cautioned against the cumulative application of the Johnson criteria). See Finding of Fact No. 44A. An enhancement for delay may be implemented "either by basing the award on current rates or by adjusting the fee based on historical rates to reflect its present value." Pennslyvania v. Delaware Valley Citizens' Council, 483 U.S. at 716, 97 L.Ed. 2d at 592 (1987)(plurality opinion). The first option was followed in Landals v. Rolfes, 454 N.W.2d 891, 89798 (Iowa 1990). The latter option was followed here, resulting in a 10% enhancement of the lodestar. See Finding of Fact No. 37A.

Enhancement of Lodestar Amount Due to Risk of Nonpayment:

Federal Court Decisions as Precedent:

35A. Because this Commission hereby adopts a position with respect to the enhancement of attorney's fees awards for risk of nonpayment which is inconsistent with the majority opinion expressed in the recent United States Supreme Court decision of Burlington v. Dague, 505 U.S. __ , 112 S. Ct. __ $ 120 L. Ed. 2d 449 (1992), it is necessary to review the factors which should be taken into account when determining whether federal precedent is considered to be persuasive authority. In Burlington, the Court interprets fee-shifting provisions which are similar to those found in Federal civil rights laws, and the Iowa Civil Rights Act, Iowa Code § 601A.15(8)(a)(8)(1991),so as to bar an enhancement of an attorney's fee award due to the risk of nonpayment present in a contingent fee case under the particular "fee shifting statutes at issue." Id. 120 L. Ed. 2d at 459. (construing fee shifting provisions of the Solid Waste Disposal Act and the Clean Water Act).

36A. Federal court decisions, including United States Supreme Court decisions, applying Federal anti-discrimination laws or fee-shifting statutes are not controlling or governing authority in cases arising under the Iowa Civil Rights Act. See e.g. Franklin Manufacturing Co. v. Iowa Civil Rights Commission, 270 N.W.2d 829, 831 (Iowa 1978). Nonetheless, they are often relied on as persuasive authority in these cases. Eg. Landals v. Rolfes, 454 N.W.2d 891, 898 (Iowa 1990); Iowa State Fairgrounds Security v. Iowa Civil Rights Commission, 322 N.W.2d 293, 296 (Iowa 1982). Although opinions of the United States Supreme Court are often entitled to great deference, Quaker Oats Company v. Cedar Rapids Human Rights Commission, 268 N.W.2d 862,866 (Iowa 1978), its decisions have been rejected as persuasive authority when their reasoning is inconsistent with the broad remedial purposes of the Act, Franklin Manufacturing Co. v. Iowa Civil Rights Commission, 270 N.W.2d at 831, or of local civil rights ordinances. Quaker Oats Company v. Cedar Rapids Human Rights Commission, 268 N.W.2d at 866-67.

37A. In determining the persuasive value of any Federal decision, or decision of another state, or other legal authority, it must be borne in mind that the Act is a "manifestation of a massive national drive to right wrongs prevailing in our social and economic structures of our country," Iron Workers Local No. 67 v. Hart, 191 N.W.2d 758, 765 (Iowa 1971).

38A. Federal decisions should be rejected as persuasive authority when violative of the controlling authority requiring liberal interpretation and construction of the Iowa Civil Rights Act. When determining the sense and meaning of the written text of a statute providing regulations conducive to public good or welfare, the statute is liberally interpreted. State ex. rel. Turner v. Koscot Interplanetary, Inc., 191 N.W.2d 624, 629 (Iowa 1971). When determining the legal effect of its provisions, the Iowa Civil Rights Act "shall be broadly construed to effectuate its purposes," Iowa Code § 601A.18 (1991), and "liberally construed with a view to promote its objects and assist the parties in obtaining justice." Iowa Code § 4.2. "in construing a statute, the court must look to the object to be accomplished, the evils and mischief sought to be remedied, or the purpose to be subserved, and place on it a reasonable or liberal construction which will best effect its purpose rather than one which will defeat it." Monroe Community School District v. Marion County Board of Education, 251 Iowa 992,998, 103 N.W.2d 746 (1960); Franklin Manufacturing Co. v. Iowa Civil Rights Commission, 270 N.W.2d 829,832 (Iowa 1978). Therefore, constructions of the statute which "effectively defeat the remedial purpose of Chapter 601A [the Iowa Civil Rights Act]." should be rejected. See Foods, Inc. v. Iowa Civil Rights Commission, 318 N.W.2d 162,167 (Iowa 1982).

39A. When the Supreme Court of Iowa rejected the holding of the Supreme Court of the United States, in General Electric Company v. Gilbert, 429 U.S. 125, 97 S.Ct. 401, 50 L. Ed. 2d 343 (1976), that employment discrimination on the basis of pregnancy was not sex discrimination, the Iowa Court relied on the holdings of four federal Circuit Courts of Appeal which, prior to General Electric, had found that pregnancy discrimination did constitute sex discrimination and upon the reported decisions of two trial and two appellate state courts which rejected the holding in General Electric. Quaker Oats Company v. Cedar Rapids Human Rights Commission, 268 N.W.2d at 866.

Federal Authority on Enhancement for Risk of Non-Payment:

40A. In two decisions, in which a majority of the United States Supreme Court did not address the issue, Hensley v. Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 76 L.Ed. 2d 40 (1983); Blum v. Stenson, 465 U.S. at 901, 79 L.Ed. 2d at 903 & n.17, Justice Brennan authored separate opinions, joined by Justices Marshall, Blackmum and Stevens in Hensley, Hensley, 461 U.S. at 448-49 (concurring and dissenting in part), and Justice Marshall in Blum, Blum, 465 U.S. at 90204 (concurring opinion), asserting that under the legislative history of 42 U.S.C. § 1988, "the risk of not recovering any attorney's fees [in a case where payment of attorney's fees is contingent on success) is a proper basis [for] an upward adjustment to an otherwise compensatory fee." Blum, 465 U.S. at 902 (Brennan, J., concurring)(citing Hensley, 461 U.S. at 448-49)(Brennan, J. concurring in part and dissenting in part).

41A. In 1987, three years after Blum, the United States Supreme Court rendered its decision in Pennsylvania v. Delaware Valley Citizens' Council, 483 U.S. 711, 107 S. Ct. 3078, 97 L.Ed. 2d 585 (1987). In that case, a plurality of four justices (White, Rehnquist, Powell, Scalia) concluded that "enhancement of a reasonable lodestar fee to compensate for assuming the risk of loss is impermissible under the usual feeshifting statutes." Id., 483 U.S. at 727. In a ruling in the alternative, the plurality suggested that, if fee shifting statutes were to be construed to allow such an enhancement, then an upward adjustment of the lodestar to compensate for risk of nonpayment could be made, but such adjustment would only exceed an amount equal to one-third (33%) of the lodestar only under "the most exacting justification." Id., 483 U.S.
at 730.

42A. It must be noted however, that the plurality opinion on this issue did not constitute the governing federal law because a majority (five) of the court, as reflected by Justice O'Connor's concurrence and Justice Blackmun's dissent (joined by Justices Brennan, Marshall, and Stevens), recognized that an enhancement to the lodestar amount to compensate for risk of nonpayment "is appropriate in specified cases." Id., 483 U.S. at 742 & n.7 (Blackman, J. dissenting). The reason Justice O'Connor concurred in judgment reversing such enhancement is not because of disagreement with the principle that such enhancement is appropriate, Id., 483 U.S. at 731 (O'Connor, J., concurring), but because, in her view, the enhancement in the case was not supported by either evidence or findings of fact which would justify such an enhancement under her standards, which differed from those set forth by the dissent. Id., 483 U.S. at 731-34 (O'Connor, J., concurring),

43A. At the time that Pennsylvania v. Delaware Valley Citizens' Council was decided, not only did a majority of the Court agree that enhancement for risk of nonpayment in a contingent fee case was appropriate under fee shifting statutes, but, as the plurality admitted, "[m]ost [federal circuit] Courts of Appeals ['numerous Courts of Appeals'] [agreed with Justice Brennan's concurrence in Blum]and have allowed upward adjustment of fees because of the risk of loss [or nonpayment] factor."Delaware Valley, 483 U.S. 711, 717 & n.4. By the plurality's count, the 4tt., 5th, 6th, 8th, 9th, 10th, llth and Federal Circuit Courts of Appeals ail had actually "approved an upward adjustment of the lodestar to compensate for the risk of not prevailing." Id. The plurality also noted the lst Circuit allows such an upward adjustment. Id. 483 U.S. at 717-18. The dissent agreed with this, but-noted that the 2nd, and 3rd Circuit Courts of Appeals had also either "upheld enhancements for contingency or ruled that such enhancements are allowable in appropriate circumstances." Id., 483 U.S. at 741 n.6 (Blackmun, J. dissenting). Both the plurality, Id, 483 U.S. at 71920 & n.6 (plurality opinion) and the dissent, Id., 483 U.S. at 741 n.6 (Blackmun, J. dissenting), agreed that the 7th and District of Columbia Circuits had questioned the propriety of risk enhancement. The dissent, however, also noted that panels of both the 7th and District of Columbia Circuits had "indicated such enhancements would be appropriate in certain circumstances." Id ., 483 U.S. at 741 n.6 (Blackmun, J. dissenting).

44A. After the Delaware Valley case was decided, panels in both the District of Columbia Circuit and the Seventh Circuit, as well as most of the other circuits, came to view Justice O'Connor's opinion allowing contingency fee enhancements as the holding of the case. Soto v. Adams Elevator Equipment Company, 941 F.2d 543,56 Fair Empl. Prac. Cas. 1270, 1278 (7th Cir. 1991); McKenzie v. Kennickell, 875 F.2d 330, 55 Fair Empl. Prac. 1037,1040-41 (D.C;. Uir. 1989); Schlei & Grossman, Employment Discrimination Law: 1987-1989 Supplement 209 (1991).

State Authority on Enhancement for Risk of Non-Payment:

45A. State courts addressing this issue have either held that an enhancement of attorney's fees for risk of nonpayment is appropriate under some circumstances, Xieg v. Peoples National Bank, 63 Wash. App. 572, 821 P.2d 520, 528 (1991)(enhancement-for-risk of nonpayment allowed); Lane v. Head, 566 So.2d 508, 513 (Fla. 1990)(Overton, J. concurring)(enhancement for risk of nonpayment allowed in severely restricted circumstances)(interpreting Standard Guaranty insurance Co. v. Quanstrom, 555 So.2d 828 (Fla. 1990)); Wilson v. General Motors Corp., 454 N.W.2d 405 (Mich. App.1990)(enhancement for risk of loss available in extraordinary circumstances); Bishop Coal v Salyers, 380 S.E. 2d 238, 239 & n.11 (W. Va. 1989) (contingent fee enhancement due to risk of loss appropriate in many circumstances); Doran v. University of Maine, 40 Fair Empl. Prac. Cas. 1459, 1462-63 (Maine Superior Court 1986)(contingent risk of nonpayment is one factor to be considered in determining whether fee is to be enhanced), or that the contingent nature of the fee should be taken into account in computing the lodestar, Standard Guaranty Insurance Co. v. Quanstrom, 555 So.2d 828, 834 (Fla. 1990)(contingent fee considered as a factor in computing attorney's fees).

Analoguous Iowa Authority:

46A. The Iowa appellate courts have not ruled upon the question of whether an award of attorney's fees under the Iowa Civil Rights Act may be enhanced to compensate for the risk of nonpayment. The Iowa Supreme Court has held, however, that when determining the amount of an attorney's fees award in a condemnation case, courts should consider that "the recovery of a fee in this type of action is wholly contingent upon plaintiff recovering damages in a larger amount than awarded by the condemnation commission." Stanley v. Indianola, 261 Iowa 146,152, 153 N.W.2d 706 (1967). In cases involving the determination of fees for court appointed defense attorneys, the Court has also held that the opposite of risk of nonpayment, which is the "certainty of payment from the public treasury," should be taken into account in determining fees for court appointed defense attorneys in criminal cases. Hulse v. Wifvat, 306 N.W.2d 707, 712 (191981). The factor of "whether the fee is fixed or contingent" is recognized under the Iowa Code of Professional Responsibility for Lawyers as a factor to be taken into account when determining fees. DR 2-106(B)(6).

The Rule of Burlington v. Dague Prohibiting Enhancement of Attorney's Fees Awards for Risk of Non Payment Should be Rejected:

47A. In light of the prevailing state and federal authority allowing the enhancement of fees for the risk of nonpayment at the time Burlington v. Daque was decided, and of Iowa authority recognizing contingency as a factor in the establishment of an appropriate fees award, it is reasonable to conclude that the Iowa Supreme Court will reject the rule of Burlington and allow an enhancement of attorney's fees for the risk of nonpayment in civil rights cases. See Quaker Oats Company v. Cedar Rapids Human Rights Commission, 268 N.W.2d at 866.

48A. The reasoning expressed in the dissents in Burlington and Delaware Valley also reflects an understanding of the legislature's intent and the purposes served by allowing an award of a "reasonable attorney's fee" in civil rights cases. See Conclusions of Law Nos. 5A, 6A, 31A, 38A. While not denying the principles that (a) a reasonable attorney's fee is to be a fully compensatory fee calculated on basis of prevailing market rates and practices, and (b) that an attorney paid on a contingent fee basis will charge more than one who is paid regardless of whether his client wins or loses:

[The Burlington majority] . . . refuses to draw the conclusion that follows ineluctably: If a statutory fee consistent with market practices is"reasonable," and if in the private market an attorney who assumes the risk of nonpayment can expect additional compensation, then it follows that a statutory fee may include additional compensation for contingency and still qualify as reasonable. [The majority's decision] will seriously weaken the enforcement of . . . many of our Nation's civil rights laws and environmental laws.
...

[Due to this decision which denies compensation for the risk of nonpayment] in precisely those situations targeted by the fee-shifting statutes-[such as civil rights cases] where plaintiffs lack sufficient funds to hire an attorney on a win or lose basis and where potential damage awards are insufficient to justify a standard contingent fee arrangement [where the fee is taken as a percentage of the total damages] . .. the expected return from [environmental and civil rights] cases brought under ... fee shifting provisions will be less than could be obtained in otherwise comparable private litigation offering guaranteed, win-or-lose compensation. Prudent counsel under these conditions [will] tend to avoid... fee-bearing [environmental and civil rights] claims in favor of private litigation, even in the very situations for which the attorney's fee statutes were designed. This will be true even if the [environmental or civil rights] fee-bearing claim is more likely meritorious than the competing private claim.

Burlington v. Dague, 505 U.S.__, 120 L. Ed. 2d at 460, 461 (Blackmun, J. dissenting).

49A. The objections to contingency fee enhancement set forth by the majority in Burlington, and the plurality in Delaware Valley, are largely based on the misconception that the enhancement must be based on the "degree of risk presented by a particular case." Pennsylvania v. Delaware Valley Citizens'Council, 483 U.S. at 745, 97 L.Ed. 2d at 610 (dissenting opinion). The award of contingent fees based on an analysis of the strength or weakness of the particular case at the outset of the litigation is fraught with difficulties. Id. 483 U.S. at 745-47, 97 L. Ed. 2d at 610- 12. This is not the path followed by the dissents in Burlington or Delaware Valley or the path this Commission proposes to follow. Burlington v. Dague, 505 U.S. __, 120 L. Ed. 2d at 462 (Blackmun, J. dissenting); Pennsylvania v. Delaware Valley Citizens' Council,483 U.S. at 745, 747 97 L.Ed. 2d at 610, 612 (Blackmun, J., dissenting).

50A.

Enhancement for risk is not designed to equalize the prospective returns among contingent cases with different degrees of merit. Rather it is designed to place contingent employment as a whole on roughly the same economic footing as non contingent practice.

Pennsylvania v. Delaware Valley Citizens' Council, 483 U.S. at 745-46, 97 L.Ed. 2d at 610-11 (Blackmun, J. dissenting).

51A.

[T]he "risk" for which enhancement might be available is not the particular factual and legal riskiness of an individual case, but the risk of nonpayment associated with contingent cases considered as a class.

Burlington v. Dague, 505 U.S. __ , 120 L. Ed. 2d at 461 (Blackmun, J. dissenting).

52A. Additional objections of the majority to contingent fee enhancement are adequately and accurately addressed in Justice Blackmun's dissent in Burlington, Id., 505 U.S. __ , 120 L. Ed. 2d at 462-464 (Blackmun, J. dissenting).

Three Step Analysis For Determining When an to What Degree Enhancement for Risk of Nonpayment Is Appropriate in Attorney's Fees Awards Under the lowa Civil Rights Act.

53A. The Blackmun dissent in Delaware Valley set forth a three step analysis, suggested by the American Bar Association in an amicus (friend of the court) brief, for "determining when, and to what degree, enhancement is appropriate in calculating a statutory attorney's fee." Pennsylvania v. Delaware Valley Citizens' Council, 483 U.S. at 748, 97 L.Ed. 2d at 612 (Blackmun, J. dissenting) .

This analysis is followed in this case. See Findings of Fact Nos. 35A, 39A, 40A.

54A. The first step is for the tribunal to:

determine whether an attorney has taken a case on a contingent basis. If a client has contracted to pay the "lodestar" fee (i.e. reasonable hours times a reasonable hourly rate), regardless of the outcome of the case, and has paid the attorney on a continuing basis, then the attorney has clearly avoided the risk of nonpayment and enhancement is not appropriate.

(emphasis added). It was determined in this case that the case was taken on a contingent fee basis. See Findings of Facts No. 35A, 39A.

55A. The second step requires the court to:

determine if an attorney has been able to mitigate the risk of nonpayment in any way. For example, if a client has agreed to pay some portion of the lodestar amount, regardless of the outcome of the case, the attorney has mitigated the risk of loss to some extent, although the percentage of total expenses paid by the client will indicate how much of a mitigating factor this contribution should be considered to be.... Or, for example, if the attorney has entered into a contingent fee contract in a suit seeking substantial damages, the attorney again has mitigated the risk to some extent by exchanging the risk of nonpayment for the prospect of compensation greater than the prospective lodestar amount. Even in such cases, of course, a court must still calculate a reasonable attorney's fee to be assessed against the defendant. There is no reason to grant a defendant a "windfall" by excusing payment of attorney's fees simply because a plaintiff has entered into a contingent fee contract.

Id., 483 U.S. at 748-49, 97 L. Ed. 2d at 612-13 (Blackmun, J. dissenting)(emphasis added).

56A. In this case, the contingent fee arrangement was not found to have mitigated the risk z)f nonpayment as there was never any chance that the one third of damages awarded to Complainant DeVolder would ever have equaled, let alone exceeded, the lodestar amount. See Finding of Fact No. 39A. "If an attorney and client have been unable to mitigate the risk of nonpayment, then an enhancement for contingency is appropriate." Id., 483 U.S. at 749, 97 L. Ed. 2d at 613 (Blackmun, J., dissenting)(emphasis added). Since the Complainant has met his burden of persuasion on the issue of enhancement for risk of nonpayment by demonstrating both (a) that the case was taken on a contingent basis, and (b) that the attorney has not been able to mitigate the risk of nonpayment, such an enhancement is being awarded in this case.

57A. In the third step of the analysis, the fact finder is required to:

determine whether specific aspects of the case have aggravated [the] economic risk [of nonpayment beyond that demonstrated by reference to contingent fee cases as a class]. The enhancement for contingency compensates the attorney primarily for the risk of spending numerous hours, often years, on a case with the knowledge that no payment may ever be recovered. Other aspects of the case, however, can aggravate the economic risk inherent in contingency
payments.

Pennsylvania v. Delaware Valley Citizen's Council, 483 U.S. at 749-50, 97 L. Ed. 2d at 613 (Blackmun, J. dissenting).

58A. These "other aspects of the case" are accounted for by this third step. Id. There is no further enhancement in the lodestar for risk of nonpayment in this case due to analysis under this third step. Under the dissent's treatment of contingency enhancement cases, delay in payment would be taken into account at this time. Id., 483 U.S. at 750, 97 L.Ed. 2d at 613. Since a separate enhancement is already being given for delay, delay is not being considered as part of the enhancement for risk of nonpayment. See Findings of Fact Nos. 36A-37A. At this stage, any greater economic risks due to an attorney's particular circumstances would be taken into account. Id., 483 U.S. at 750-51, 97 L. Ed. 2d at 614. None were shown here. Finally, "the 'legal' risks facing a case may be so apparent and significant that they will constitute an economic disincentive independent of that created by the basic contingency in payment." Id., 483 U.S. at 751, 97 L. Ed. 2d at 614. In most cases, however, including this one, the novelty and difficulty of the case will be reflected.in the lodestar, and no further enhancement of the fee will be appropriate. Id. See Finding of Fact No. 40A.

Is a Five Percent Enhancement for Risk of Nonpayment An Appropriate Amount?:

59A. During the two year period between 1987, the year in which the Delaware Valley decision was rendered, and 1989, "'pure' contingency enhancements (i.e., leaving aside cases involving partially contingent fee arrangements, or cases in which plaintiff asked for less than was justified by the record) have varied by locality, and have ranged from 10 percent to 200 percent of the lodestar award." Schlei & Grossman, Employment Discrimination Law: 197889 Supplement 209 (1991).

60A. In addition to the factors set forth in the three step analysis of the Delaware Valley dissent, and the range of risk enhancements set forth above, Professor John Leubsdorf's article "The Contingency Factor in Attorney Fee Awards" is helpful in determining if a five percent enhancement for risk of nonpayment is reasonable or excessive. This article was relied on by both the plurality and the dissent in the Delaware Valley case. 90 Yale L. J. 473 (1981)(cited in Pennsylvania v. Delaware Valley Citizen's Council, 483 U.S. at 721-22, 97 L. Ed. 2d at 595 (plurality opinion);Id., 483 U.S. at 746, 97 L. Ed. 2d at 611 n.1 1 (Blackmun, J. dissenting)). The dissent made specific reference to Professor Leubsdorf's "alternative approaches for calculating and awarding contingency enhancements." Pennsylvania v. Delaware Valley Citizen's Council, 483 U.S. at 746, 97 L. Ed. 2d at 611 n.1 1 (Blackmun, J. dissenting). Professor Leubsdorf's proposals all rely on the use of an across-the-board multiplier to be applied in all contingency cases. This reference to Professor Leubsdorf's article is not intended to suggest that the approaches set forth therein are the only acceptable methods for evaluating an appropriate enhancement for risk of nonpayment. See Pennsylvania v. Delaware Valley Citizen's Council, 483 U.S. at 747, 97 L. Ed. 2d at 612 n.12 (Blackmun, J. dissenting).

61A. Leubsdorf discussed two possible approaches which would not require legislative action. The first is to simply double the lodestar amount, an enhancement of 100%. Id. at 511-512. While this solution would be easy to administer, it is not necessarily reflective of the risk of loss for civil rights claims as a class. Clearly, however, a five percent enhancement is not excessive when compared to this solution.

62A. The second solution is a "market equalizing" approach where available litigation statistics are reviewed in order to establish an appropriate risk of loss or nonpayment for civil rights cases as a class. Id. at 507, 512. The purpose of this approach is to:

set the contingency multiplier so that claims in which success is uncertain will be as likely [but not more likely] to be litigated as are similar claims of people who can afford to pay for ordinary litigation.

Id. at 507.

63A. This method requires the examination of the success rate of paying cases in categories of litigation that are unaffected by fee awards. Id. at 509. Preference would be given to data on those categories which are analogous to civil rights cases but which do not "reflect the incentives or disincentives of current fee award practices." Id. Once the risk of loss is determined, an appropriate multiplier or enhancement is calculated in order to ensure that, over time, if the attorney took care to litigate cases with a chance of success at least equal to that of the average case, the economic incentive to litigate civil rights cases would match or approach, but not exceed, the incentive to litigate cases where the attorney is paid by the client regardless of the outcome of the case. Id. at 507-08.

64A. Once the appropriate success rate for civil rights cases is determined, the necessary enhancement multiplier can be determined by a formula: (Success rate) X (enhancement multiplier) = 1. The "multiplier" refers to the amount by which the basic hourly fee (and therefore the lodestar) is multiplied in order to account for the contingent risk. Id. at 479. For example, if the appropriate success rate for civil rights cases were two-thirds, the multiplier would be 1.5. This would reflect a 50% enhancement of the lodestar. See Id. at 507.

65A. In this case, only a five percent enhancement for contingent risk is being awarded. Expressed as a multiplier, this would be 1.05. Under Professor Leubsdorf's market equalizing approach, such an enhancement would reflect an extraordinarily high success rate of between 95% and 96% in civil rights cases, and an extremely low risk of loss of only 4% to 5%.

66A. Ideally, determination of the risk of loss would be based on the success rate of "a class [of paying cases] closely analogous to a class of fee award cases." Id. at 509. Professor Leubsdorf recognized, however, that such data would often be unavailable and reliance would have to be placed on other data, such as the success rates in categories of litigation unaffected by fee awards. Id.

67A. In this case, part of the data relied on are case processing statistics of the Iowa Civil Rights Commission. Although these cases were all technically subject to the fee shifting provisions of the Act at the time they were filed, it was the public policy of the Commission from 1985 until January of 1990 to not award attorney's fees for work done prior to the issuance of the Notice of Hearing. Diane Humburd, 10 Iowa Civil Rights Commission Case Reports 13, 15 (1990)(Supplemental Attorney Fees Decision)(overruling Cheri Dacy, 7 Iowa Civil Rights Commission Case Reports 17, 25 (1985)).

68A. For this reason, and for other reasons discussed in the Findings of Fact, Complainant success rates before the Commission during that time period and after could scarcely be said to have been influenced by attorney's fees awards. See Finding of Fact No. 42A. An examination of the available data, set forth in the Findings of Fact, demonstrates that an enhancement which would, under the market equalizing approach, reflect a plaintiff success rate in excess of 95%, and a risk of nonpayment of only 4% to 5%, is a very conservative enhancement for risk of nonpayment.