- Associated Press - Friday, June 6, 2014

IOWA CITY, Iowa (AP) - Gov. Terry Branstad and top aides could be held personally liable if a jury decides that they defamed the workers’ compensation commissioner and improperly cut his salary during an attempt to force his resignation, the Iowa Supreme Court ruled Friday.

The 5-2 decision means that a lawsuit filed by Workers’ Compensation Commissioner Christopher Godfrey returns to a lower court for trial. It also sets a new standard that allows state officials to more easily be sued as individuals, which is expected to affect other pending lawsuits involving the Branstad administration. It means they - not taxpayers - will have to cover damages and attorneys’ fees if juries find that they broke the law and were acting outside the scope of their employment.

“I think it’s a victory for all Iowans. It basically says that nobody is above the law - nobody - including the governor,” said Godfrey’s attorney, Roxanne Conlin, adding that she plans to depose Branstad before the November election in which he’s seeking another four-year term.

The Iowa Democratic Party called on Branstad to admit that his treatment of Godfrey was wrong and settle the lawsuit, which has cost taxpayers $525,000 in legal fees and is rising. But Branstad’s lawyer indicated the governor would continue to defend his actions as proper.

Godfrey was appointed by Democratic Gov. Chet Culver in 2009 and confirmed by the Iowa Senate to a six-year term as commissioner, in which he decides appeals involving whether businesses and insurers must compensate injured workers. After Branstad’s election in 2010, the Republican requested Godfrey’s resignation.

He declined, arguing that he was supposed to be independent and that his term didn’t expire until 2015. Godfrey says that Branstad’s chief of staff Jeff Boeyink and legal counsel Brenna Findley threatened to slash his salary if he stayed. The governor cut Godfrey’s pay from $112,000 to $73,000, the lowest allowed. Branstad, Lt. Gov. Kim Reynolds and aides defended the actions by publicly painting Godfrey as a poor commissioner who was hurting business. He says that isn’t true.

Godfrey, who is gay, filed a lawsuit against Branstad, Reynolds, Iowa Workforce Development Director Teresa Wahlert, Boeyink, Findley and former Branstad spokesman Tim Albrecht. He alleges that he was discriminated against based on his sexual orientation, defamed by their statements, extorted and had his employment contract rights violated.

The attorney general certified that all six defendants were acting within the scope of their employment, guaranteeing that taxpayers would cover their legal costs and the lawsuit would proceed only against the state. The certification prompted a judge to dismiss some of Godfrey’s claims, including those for defamation and contract interference, because Iowa law doesn’t allow those claims against the state.

Friday’s ruling reinstates those claims. Writing for the majority, Justice David Wiggins said a jury should hear the evidence and decide whether each defendant was acting within the scope of their employment. He said the ruling would protect taxpayers from having to cover legal costs for employees who commit misfeasance.

Branstad’s attorney, George LaMarca, said the decision created a new rule that ultimately won’t change the case’s outcome.

“We fully expect the trial judge will find - as the attorney general did - that the governor was acting within his official duties both when he did not pay the commissioner the highest salary allowed by law and also when he gave the public his reasons,” said LaMarca, who’s receiving $325 hourly in taxpayer-funded legal fees.

Godfrey said he was “very happy” for himself and other workers with pending lawsuits.

The ruling could affect fired Division of Criminal Investigation agent Larry Hedlund, who contends Branstad defamed him by falsely criticizing his performance at a news conference. Hedlund was removed from duty days after pursuing Branstad’s speeding SUV and complaining that troopers driving Branstad and Reynolds endangered public safety.

It could also affect Godfrey’s deputy, Joe Walsh, who alleges that Wahlert wrongfully terminated him as the chief judge for unemployment insurance appeals. Like Godfrey, Walsh contends the administration wanted to favor businesses in those cases.

Dissenting Justice Thomas Waterman said state officials will now be less likely to comment about controversies out of fear of facing costly litigation, leading to less openness in government.

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