In re: Samuel R. Pierce, Jr. (Sanders Fee Application)
198 F.3d 899 | D.C. Cir. | 1999
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Filed December 21, 1999
Division No. 89-5
In re: Samuel R. Pierce, Jr.
(Sanders Fee Application)
Division for the Purpose of
Appointing Independent Counsels
Ethics in Government Act of 1978, as Amended
---------
Before: Sentelle, Presiding, Fay and Cudahy, Senior
Circuit Judges.
O R D E R
This matter coming to be heard and being heard before the
Special Division of the Court upon the petition of R. Carter
Sanders for reimbursement of attorneys' fees and costs pur- suant to section 593(f) of the Ethics in Government Act of
1978, as amended, 28 U.S.C. s 591 et seq. (1994), and it
appearing to the court for the reasons set forth more fully in
the opinion filed contemporaneously herewith that the peti- tion is not well taken, it is hereby
ORDERED, ADJUDGED, and DECREED that the peti- tion of R. Carter Sanders for attorneys' fees he incurred
during the investigation by Independent Counsels Arlin M.
Adams and Larry D. Thompson be denied.
Per curiam
For the Court:
Mark J. Langer, Clerk
by
Marilyn R. Sargent
Chief Deputy Clerk
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Filed December 21, 1999
Division No. 89-5
In re: Samuel R. Pierce, Jr.
(Sanders Fee Application)
Division for the Purpose of
Appointing Independent Counsels
Ethics in Government Act of 1978, as Amended
---------
Before: Sentelle, Presiding, Fay and Cudahy, Senior
Circuit Judges.
ON APPLICATION FOR ATTORNEYS' FEES
Opinion for the Special Court filed Per curiam.
Per curiam: R. Carter Sanders petitions this court under
Section 593(f) of the Ethics in Government Act of 1978, as
amended, 28 U.S.C. s 591 et seq. (1994) (the "Act"), for
reimbursement of attorneys' fees in the amount of $17,500.00
that he incurred during and as a result of the investigation
conducted by Independent Counsels ("IC") Arlin M. Adams
and Larry D. Thompson. Because we conclude that Sanders
has not carried his burden of showing that he was a subject of
the investigation and that the fees would not have been
incurred but for the requirements of the Act, we deny the
petition in its entirety.
Background1
In 1978 Congress established the moderate rehabilitation
("mod rehab") program within the U.S. Department of Hous- __________
1 We have had recent occasion to review the facts of this matter
in In re Samuel R. Pierce, Jr. (Olivas Fee Application), 178 F.3d
ing and Urban Development ("HUD"). This program encour- aged developers to upgrade moderately substandard housing
units for occupation by low income families. In 1988 HUD's
Inspector General ("IG") conducted an audit of the mod rehab
program as administered from 1984 through 1988 and found
that the program was not being administered efficiently,
effectively, or economically. The Inspector General's audit
report triggered congressional investigations into abuses, fa- voritism, and mismanagement at HUD during the 1980s
under the tenure of HUD Secretary Samuel R. Pierce, Jr. R.
Carter Sanders, the fee petitioner here, was Associate Gener- al Deputy Assistant Secretary of Housing/Deputy Federal
Housing Commissioner during a portion of the time that
Pierce was Secretary. Subsequently, Sanders returned to
the private sector as a consultant, assisting local housing
authorities to obtain mod rehab funding from HUD. Sanders
Application at 1.
Based on information elicited during the congressional
investigations, the House Judiciary Committee wrote to At- torney General Richard Thornburgh seeking the appointment
of an independent counsel to investigate the matter. Follow- ing a preliminary investigation, Attorney General Thornburgh
applied to this court for appointment of an independent
counsel. On March 1, 1990, we appointed former United
States Circuit Judge Arlin Adams2 as independent counsel "to
investigate ... whether Samuel R. Pierce, Jr., and other
[HUD] officials may have committed the crime of conspiracy
to defraud the United States or any other Federal crimes ...
relating to the administration of the selection process of the
Department's Moderate Rehabilitation Program from 1984
__________ 1350 (D.C. Cir., Spec. Div., 1999) (per curiam). Rather than re- plow recently tilled ground, we have adopted much of the language
in the background portion of this opinion, and, where applicable, a
portion of the analysis from that decision.
2 Independent Counsel Adams resigned in May of 1995. This
court appointed his deputy, Larry D. Thompson of the Atlanta bar,
to succeed him.
through 1988." Order Appointing Independent Counsel,
March 1, 1990.
The IC conducted a comprehensive investigation ultimately
confirming a widespread pattern of corruption at HUD dur- ing Pierce's tenure. Although the IC announced on January
11, 1995, that he would not seek indictment of Pierce, during
the course of the investigation seventeen (17) other persons
were charged with and convicted of federal crimes as a result
of the IC's investigation. That investigation and the indict- ments ranged well beyond the core facts of the original
application for appointment of independent counsel. Of par- ticular reference to the petitioner before us, in May of 1990
the IC served a subpoena on Sanders seeking documents
related to Sanders' work while he was an official at HUD as
well as his work on mod rehab projects after he left HUD.
Sanders Application at 6. He later voluntarily appeared for
an interview at the IC's office. IC's Evaluation at 3.
The IC's investigation is now complete. Pursuant to the
statute, the IC submitted a final report to this court on
March 30, 1998. See 28 U.S.C. s 594(h)(1)(B). We ordered
the report made public by order of October 27, 1998. There- after, Sanders, pursuant to Section 593(f)(1) of the Act,
petitioned this court for reimbursement of his attorneys' fees.
As directed by Section 593(f)(2) of the Act, we forwarded
copies of Sanders' fee petition to the Attorney General and
the IC and requested written evaluations of the petition. The
court expresses its appreciation to the IC and the Attorney
General for submitting these evaluations, which we have
given due consideration in arriving at the decision announced
herein.
Analysis
Unique in the criminal law structure of the United States,
the Ethics in Government Act provides for reimbursement of
attorneys' fees expended by subjects in defense against an
investigation under the Act. Specifically, 28 U.S.C.
s 593(f)(1) states:
Upon the request of an individual who is the subject of
an investigation conducted by an independent counsel
pursuant to this chapter, the division of the court may, if
no indictment is brought against such individual pursuant
to that investigation, award reimbursement for those
reasonable attorneys' fees incurred by that individual
during that investigation which would not have been
incurred but for the requirements of this chapter.
Because the Act "constitutes a waiver of sovereign immuni- ty it is to be strictly construed." In re Nofziger, 925 F.2d
428, 438 (D.C. Cir., Spec. Div., 1991) (per curiam). Therefore,
the Act provides only reimbursement for attorneys' fees that
survive an elemental analysis determining whether the peti- tioner is the "subject" of the independent counsel's investiga- tion, incurred the fees "during" that investigation, and would
not have incurred them "but for" the requirements of the Act.
The petitioner "bears the burden of establishing all elements
of his entitlement." In re North (Reagan Fee Application),
94 F.3d 685, 690 (D.C. Cir., Spec. Div., 1996) (per curiam).
We conclude that Sanders has not met either the "subject" or
the "but for" requirement.
A. "Subject" Status
We have previously defined the term "subject" as a person
whose conduct is within the scope of the independent coun- sel's investigation in such fashion that "the Independent
Counsel might reasonably be expected to point the finger of
accusation" at him. In re North (Dutton Fee Application),
11 F.3d 1075, 1078 (D.C. Cir., Spec. Div., 1993) (per curiam);
see also In re North (Shultz Fee Application), 8 F.3d 847, 850
(D.C. Cir., Spec. Div., 1993) (per curiam). Although Sanders
argues forcefully that he fits within this definition, we con- clude that he has not carried his burden of establishing that
he was in fact a subject of the IC's investigation.
Sanders' main argument, in essence, is that because the IC
investigated the mod rehab program, and because he was
involved with the mod rehab program, he was a subject of the
IC's investigation. Reply at 3. We are not persuaded,
however, that the IC was focused on any possible criminal
culpability by Sanders during the IC's investigation. Sand- ers' involvement with the IC's investigation appears to have
been minimal: he was served one subpoena for documents at
the beginning of the IC's investigation, and three years later
was interviewed by the IC's staff. He had no other contacts
with the IC's office. See, e.g., In re North (Gregg Fee
Application), 57 F.3d 1115, 1116 (D.C. Cir., Spec. Div., 1995)
(per curiam). He was never informed by the IC that he was
a subject of the investigation. See, e.g., In re North (Haskell
Fee Application), 74 F.3d 277, 280 (D.C. Cir., Spec. Div.,
1996) (per curiam). There is no evidence before us that
anyone he was associated with was targeted by the IC. See,
e.g., In re North (Teicher Fee Application), 48 F.3d 1267,
1268-69 (D.C. Cir., Spec. Div., 1995) (per curiam). And there
is no mention of him in the IC's Final Report. See, e.g., In re
North (Adkins Fee Application), 33 F.3d 76, 76-77 (D.C. Cir.,
Spec. Div., 1994) (per curiam).
Sanders also argues that it was "plainly evident from the
inception of the [IC's] investigation that [he] faced 'a realistic
possibility ... [that he] would become a defendant' " because
that investigation was based on the congressional and HUD
IG investigations which, according to Sanders, "already had
inquired extensively into Mr. Sanders' involvement with cer- tain MRP [mod rehab] projects." Sanders Application at 8
(internal citation omitted). It appears, however, that the only
contact Sanders had with these previous investigations was an
administrative subpoena seeking documents that was served
on him by the HUD IG. In sum, we conclude that Sanders
could not consider himself to be under a "reasonable appre- hension of prosecution" by the IC during his investigation.
In re North (Gadd Fee Application), 12 F.3d 252, 256 (D.C.
Cir., Spec. Div., 1994) (per curiam).
B. Fees Not Incurred "But For" the Requirements of the
Act
As we have held, "[a]ll requests for attorneys' fees under
the Act must satisfy the 'but for' requirement of" the Act. In
re Sealed Case, 890 F.2d 451, 452 (D.C. Cir., Spec. Div., 1989)
(per curiam). The purpose of awarding only fees that would
not have been incurred "but for" the Act is to ensure that
"officials [and here derivative 'subjects'] who are investigated
by independent counsels will be subject only to paying those
attorneys' fees that would normally be paid by private citi- zens being investigated for the same offense by" federal
executive officials such as the United States Attorney. Id. at
452-53 (citing S. Rep. No. 97-496, 97th Cong., 2d Sess. 18
(1982), reprinted in 1982 U.S.C.C.A.N. 3537, 3554 (referring
to "fees [that] would not have been incurred in the absence of
the special prosecutor [independent counsel] law")).
As we have stated "[t]he most difficult element for a fee
applicant to establish under the Act is that the fees 'would not
have been incurred but for the requirements of [the Act].' "
In re North (Bush Fee Application), 59 F.3d 184, 188 (D.C.
Cir., Spec. Div., 1995) (per curiam) (quoting Dutton, 11 F.3d
at 1079). In part this is so because the element requires a
petitioner to prove a negative and one with a high component
of speculation. In part, though, it is difficult because the law
contemplates that it should be difficult, that such fees will not
be a common thing. As we stated above, the contemplation
of the legislation is not that subjects of independent counsel
investigations will be reimbursed for all legal fees, but only
that they will be reimbursed for those legal fees that would
not have been incurred by a similarly-situated subject investi- gated in the absence of the Act.
Nonetheless, we have found that petitioners qualify for an
award of fees in the face of the but-for test in at least four (4)
circumstances:
1. When the independent counsel's investigation sub-
stantially constituted duplication of the preliminary in-
vestigation conducted by the Department of Justice. See
In re Olson, 884 F.2d 1415, 1420 (D.C. Cir., Spec. Div.,
1989) (per curiam); Dutton Fee Application, 11 F.3d at
1080.
2. When the petitioning subject has been "prejudiced
by the Department of Justice's failure to comply with the
substantial protective features of the Act." In re Nofzig-
er, 925 F.2d at 438 (citing In re Meese, 907 F.2d 1192
(D.C. Cir., Spec. Div., 1990) (per curiam)).
3. When in the absence of the requirements of the Act
" 'the case could have been disposed of at an early stage
of the investigation,' " without subjecting the petitioning
subject to the conditions that led to his incurring the fees
sought. In re Segal (Sagawa Fee Application), 151 F.3d
1085, 1089 (D.C. Cir., Spec. Div., 1998) (per curiam)
(quoting In re Nofziger, 925 F.2d at 438).
4. Not wholly distinct from No. 3, supra, when "high
public officials [or derivative subjects] were investigated
under the Act in circumstances where private citizens
would not [have been] investigated." In re Nofziger, 925
F.2d at 442; see also Dutton, 11 F.3d at 1080.
Sanders argues that his case falls into categories (1) and
(3). As to (1), Sanders claims that the IC duplicated the
investigations of Congress and the HUD IG, and that such
duplication is sufficient to satisfy the "but for" element. For
authority on his position Sanders cites to In re Olson (Perry
Fee Application), 892 F.2d 1073 (D.C. Cir., Spec. Div., 1990)
(per curiam), and In re Olson. In Perry we held that the
IC's investigation of Perry was duplicative because the inves- tigation by the Public Integrity Section of the DOJ had
recommended against prosecution in the matter. See 892
F.2d at 1074. Similarly, in In re Olson, we found that the
Independent Counsel's investigation was duplicative because
it covered the same ground "that had been covered by the
preliminary investigation of the Department of Justice." 884
F.2d at 1420. In both those cases, then, it was duplication of
the preliminary investigation that satisfied the "but for"
element, not duplication of any other investigation, and we
conclude that this is what the Congress intended when it first
passed the attorneys' fees provision in 1982. We find support
for this conclusion in two areas.
First, s 593(f)(1) of the Act states that fees may be award- ed to individuals who would not have incurred the fees "but
for the requirements of [the Act]." (emphasis added) Conse- quently, as we noted in Olivas,
attorneys' fees are to be awarded to those who have
incurred the fees not because of the Act itself (and
therefore the appointment of the independent counsel per
se), but because of the requirements of the Act. In re
Nofziger, 925 F.2d at 445. And requirements "refers to
the special limitations and procedures established by the
Act," e.g., the two-step investigatory procedure by the
Attorney General and the restrictions on the Attorney
General in complying with that procedure, id. ...
178 F.3d at 1355 (emphasis in original). Included in this
"two-step investigatory procedure" is the preliminary investi- gation. See 28 U.S.C. s 592.
Second, the 1982 Senate Committee Report on the Ethics
in Government Act, referring to attorneys' fees, stated that
"[r]eimbursement may be warranted ... in instances where
the [independent counsel] duplicates actions which have been
taken by the Attorney General during the preliminary inves- tigation." S. Rep. No. 97-496, 97th Cong., 2d Sess. 19 (1982),
reprinted in 1982 U.S.C.C.A.N. 3537, 3555 (emphasis added).
As Sanders has put forth no evidence that the IC's investiga- tion duplicated the preliminary investigation conducted by the
Attorney General, he does not fit into category (1).
As to category (3), Sanders claims that the Attorney Gener- al was reluctant to have an independent counsel appointed
but that the Act compelled the Attorney General to do so.
For evidence of this reluctance, Sanders first points to the
Attorney General's Application for Appointment of Indepen- dent Counsel ("Application for Appointment"), in which the
Attorney General stated that he was encumbered in his
preliminary investigation by the constraints imposed by 28
U.S.C. s 592 on using grand juries, subpoenas, and grants of
immunity. Sanders likens this case to In re Donovan, 877
F.2d 982 (D.C. Cir., Spec. Div., 1989) (per curiam), in which
we held that the "but for" requirement was satisfied where
the Attorney General, because of the strictures of the Act,
could not convene a grand jury, plea bargain, or issue subpoe- nas and as a result was required to refer the matter to an
independent counsel. In that case, however, these strictures
prevented the Attorney General from properly evaluating the
single witness who was of extremely questionable credibility,
and upon whom the single allegation of alleged wrongdoing
was based. See In re Donovan, 877 F.2d at 990. Here, in
contrast, the Attorney General in his Application for Appoint- ment, after citing the strictures placed upon him by the Act,
went on to state that any further "determination at this time
is made especially difficult by the breadth of the allegations
and the fact that a number of the figures central to the
alleged conspiracy, including Secretary Pierce ... have de- clined to be interviewed ...." Application for Appointment
at 5 (emphasis added). Consequently, as we noted in In re
Pierce (Kisner Fee Application), 178 F.3d 1356 (D.C. Cir.,
Spec. Div., 1999) (per curiam), "[t]he convoluted nature of the
corruption involved and the high profile identity of the sus- pects and defendants would no doubt have resulted in a
complex and lengthy investigation with or without the ap- pointment of an independent counsel." Id. at 1361.
In a further attempt to show the Attorney General's reluc- tance in having an independent counsel appointed, Sanders
references a newspaper article which quotes an anonymous
source stating that prosecutors in the DOJ allegedly recom- mended to the Attorney General that the investigation be
shut down for lack of evidence. Even if it were accurate,
which is highly questionable considering the not-for- attribution source, the information is, as the IC points out,
irrelevant. Although certain prosecutors may recommend
against investigating a certain matter, this fact gives us little
guidance in trying to determine what an Attorney General
will ultimately decide to do in the matter. This is not a
situation similar to Perry, 892 F.2d at 1074, where the Public
Integrity Section definitively recommended against prosecu- tion; nor is it similar to Sagawa, 151 F.3d at 1089; and In re
Segal (Segal Fee Application), 145 F.3d 1348, 1352 (D.C. Cir.,
Spec. Div., 1998) (per curiam), in which the Attorney General
stated in her Application to the Court requesting the appoint- ment of an independent counsel that "the Department of
Justice would in all likelihood exercise its discretion to decline
to prosecute this case as a criminal matter." Here, we can
discern nothing in the Attorney General's Application for
Appointment that would lead us to believe that he was in any
way hesitant to have an independent counsel appointed based
on the substance of the evidence available to him.
In sum, we cannot agree with Sanders' statement that "had
the Independent Counsel Act not restricted the Attorney
General's ability to conduct a thorough preliminary investiga- tion, it is possible, given Attorney General Thornburgh's
obvious reluctance, that no independent counsel would have
been appointed." Sanders Application at 12. Indeed, as we
stated in Kisner, if the IC had not investigated this matter
then "the Attorney General or other investigative authority
would have pursued allegations of corruption as deep and
widespread as those occasioning the Independent Counsel's
investigation." 178 F.3d at 1360; see also Olivas, 178 F.3d at
1355.
Conclusion
The petition of R. Carter Sanders for reimbursement of
attorneys' fees is denied for failure to comply with the
"subject" and "but for" requirements of 28 U.S.C. s 593(f)(1). 