COURT UPHOLDS DAMAGE AWARD AGAINST UNIVERSITY OF IOWA

James Harvey

The Iowa Supreme Court recently upheld an unprecedented award of damages against the University of Iowa and one of its top officials in favor of the former local chapter of Phi Delta Theta.¹  The ruling brings to an end years of litigation over the use of an illegal tape-recording in a campus disciplinary proceeding and abuse of power by a University official.

The Illegal Recording and the Fraternity’s Suspension

As previously reported in the March 2007 issue of Fraternal Law, in fall 2001, a former Phi Delta Theta pledge approached University of Iowa Vice President Phillip Jones and alleged that the chapter was hazing and violating alcohol policies.  His evidence consisted of a voice-activated recording device he had secretly planted in the basement of the fraternity house.  The fraternity admitted the alcohol violation, but denied that any hazing had occurred and denied that the recording was authentic.  Vice President Jones offered a one-year suspension of the fraternity’s right to recognition, conditioned on the fraternity giving up its right to a formal hearing.  When the fraternity refused to waive the hearing, Vice President Jones revoked the fraternity’s recognition indefinitely.

Settlement discussions between the University and Phi Delta Theta alumni failed because Vice President Jones insisted that Phi Delta Theta admit to the hazing charge as part of any resolution.  A campus administrative hearing was finally held in August 2003.  The illicit recording was the sole evidence against the fraternity, and despite no proof of authenticity, it was admitted over the fraternity’s objections.  Based solely on the recording, the hearing officer found Phi Delta Theta guilty of hazing and continued the indefinite suspension of the fraternity’s recognition.

The fraternity appealed the decision through the University’s administrative system.  Early in that process, the fraternity’s attorneys pointed out that Iowa law prohibits use of intercepted communications in any legal or administrative proceeding.  Iowa Code §808B makes use of such a recording a Class D felony, and authorizes liquidated damages of $100 per day, as well as punitive damages and attorney’s fees, against anyone who uses such a recording.  In November 2003, on the advice of the University’s counsel, Vice President Jones dismissed the hazing charge because the recording had been used illegally.  However, Jones continued the indefinite suspension of recognition, now based solely on the admitted alcohol violation.  The suspension continued until July 29, 2004 when University President David Skorton ended it.

The Suspension Leads to Litigation

Phi Delta Theta’s recognition was suspended for 983 days.  During that time the fraternity’s membership had declined by more than 50% and the chapter and its alumni house corporation had lost tens of thousands of dollars in dues and rental income.  The chapter and its alumni also incurred substantial attorney’s fees while trying to regain recognized status.

On February 4, 2005, the chapter filed suit against the University and Vice President Jones in Iowa District Court.  After hearing testimony, on January 24, 2007 the trial court ruled in favor of the fraternity.  The trial court’s 17-page ruling found that the University and Jones “used” the illegal recording against the chapter, in violation of Iowa law, by improperly suspending its recognition.  The court also found that even after the University dismissed the hazing charge on the advice of its attorneys, Jones continued to use the recording against the fraternity by imposing disproportionately harsh sanctions under the “pretext” of the admitted alcohol violation.

The trial court ordered the University and Vice President Jones to pay damages of $98,300 to the chapter (983 days at $100 per day).  The court also ordered the University and Jones to pay the chapter $24,444.18 for attorney’s fees it incurred in the administrative proceedings and $37,216.25 for fees it incurred in the court litigation.  The court also ordered Jones, personally, to pay $5,000 in punitive damages to the chapter based on his conduct.  The total judgment against the University and Jones was more than $164,000 (plus pre-judgment interest).

The University and Jones appealed the trial court’s ruling.

The Supreme Court’s Decision

On February 20, 2009, the Iowa Supreme Court announced its decision.  The Court agreed with the trial court that the clandestine recording was a type of oral communication protected by Iowa Code §808B, and that the University and Jones had willfully used the recording against the fraternity in suspending its recognition.  However, the Court reduced the damages: it found that the University stopped using the recording on November 21, 2003 when the hazing charge was dismissed, so the period of wrongful use was reduced to 732 days, for a total of $73,200 in liquidated damages.  The Court also reversed the award of attorney’s fees arising from the administrative proceeding because Iowa law does not allow for such an award.

The Court held that Vice President Jones could be held personally liable for his actions under Iowa law as it existed at the time of the violation.  However, it reversed the award of $5,000 in punitive damages against him because he stopped using the recording after he learned that its use was illegal.

A couple of aspects of the Supreme Court’s ruling were puzzling.  First, the Court held hat the University stopped “using” the recording against the fraternity on November 21, 2003 when it dropped the hazing charge, and reduced the daily damages on that basis.  But the trial court had found that the University and Jones actually continued using the recording after that time by using the “pretext” of the alcohol violation to simply impose the same penalty as before.  The trial court did not believe the University and Jones’s denial on this issue, calling it “ludicrous”. The Supreme Court did not mention these factual findings by the trial court.

Second, the Supreme Court’s exoneration of Vice President Jones from the punitive damages award also seemed to ignore the trial court’s factual findings.  The trial court had called portions of his trial testimony “not credible” and “disingenuous at best,” and described his early dealings with the chapter as “strong-arm tactics.”  The court found that Jones’s “stubborn, obstinate, and willful conduct” in continuing to use the recording against the chapter, even after he learned that such use was illegal, justified an award of punitive damages against him personally.

In any event, even after the significant reductions ordered by the Supreme Court, the University and Jones still owe the fraternity more than $110,000 (plus interest).

Moving Forward

Just before the lawsuit came to trial, Phi Delta Theta’s General Headquarters suspended its Iowa chapter’s charter because of continued membership decline.  (The trial court found that the actions of the University and Vice President Jones were a significant cause of the failure of the chapter.)  Recently Phi Delta Theta has re-established a colony at the University of Iowa.  The money the University will pay in damages is expected to assist the chapter in starting over.

¹  Phi Delta Theta House Ass’n and Iowa Beta Chapter of Phi Delta Theta v. State of Iowa, et al., Iowa Supreme Court Case No. 07-0330, Released 2-20-09.

Mr. Harvey is an attorney in Orange County, California.  He is a member of Phi Delta Theta and the NIC Legal Advocacy Committee.