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. e du/thir dc ir c uit_1998/93Filed April 27, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 96-3314

TERENCE D. MORGAN,

Appellant

v.

WILLIAM PERRY, in his capacity as Secretary of Defe nse; JOHN DALTON, in his capacity as Secretary of the Na vy; GENERAL C. E. MUNDY, in his capacity as Commandant of the Marine Corps; BRIGADIER GENERAL J.W. CLIMP, in his capacity as Commanding General, Marine Corps Recruit Depot, Eastern Recruiting Region, Parris Is land.

On Appeal from the United States District Court for the Western District of Pennsylvania (Civil No. 91-1064)

Argued: April 30, 1997

Before: MANSMANN and McKEE, Circuit Judges, and VANARTSDALEN, Senior District Judge*

(Opinion Filed: April 27, 1998)

JAMES B. LIEBER, ESQ. (Argued)

M. JEAN CLICKNER, ESQ. Lieber & Hammer, P.C.

5528 Walnut Street Pittsburgh, PA 15232 Attorneys for Appellant

___________________________________________________ ______________

*The Honorable Donald W. VanArtsdalen, United State s District Court Judge for the Eastern District of Pennsylvania, sit ting by designation.FREDERICK W. THIEMAN, ESQ.

United States Attorney

BONNIE R. SCHLUETER, ESQ. Assistant U.S. Attorney

ALBERT W. SCHOLLAERT, ESQ. (Argued) Assistant U.S. Attorney

633 U.S. Post Office & Courthouse Pittsburgh, PA 15219 Attorneys for Appellees

SAMUEL J. CORDES, ESQ. MICHAEL A. MURPHY, ESQ. Ogg, Jones, Cordes & Igenlzi, LLP

245 Fort Pitt Boulevard Pittsburgh, PA 15222 Attorneys for Amicus, The Allegheny County Bar Association

JOHN PUSHINSKY, ESQ. 1808 Law & Finance Building Pittsburgh, PA 15219

WITOLD J. WALCZAK, ESQ. American Civil Liberties Union, Greater Pittsburgh Chapter

237 Oakland Avenue Pittsburgh, PA 15213 Attorneys for Amicus, The American

Civil Liberties Union of PA

OPINION OF THE COURT

McKEE, Circuit Judge

We are asked to determine whether the district cour t abused its discretion in denying attorney's fees an d costs to a "prevailing party" under the Equal Access to Just ice Act ("EAJA"), 28 U.S.C. S 2412. Terence D. Morgan, a fo rmer Master Sergeant in the United States Marine Corps,f iled a civil action seeking declaratory and injunctive rel ief against the defendants for alleged violations of his consti tutional rights.

2After a non-jury trial, the district court found th at all but

one of his claims were without merit, and awarded M organ declaratory and equitable relief based upon the sin gle meritorious claim. However, in a subsequent fee app lication under the EAJA, the court held that the government' s position in defending Morgan's due process claim wa s substantially justified and denied Morgan's claim f or attorney's fees and costs. This appeal followed. Fo r the reasons that follow, we will affirm.

I. FACTUAL BACKGROUND

The circumstances leading up to this suit are as co mplex as they are intricate. The district court correctly stated that "[t]he factual allegations of plaintiff's complaint are too lengthy to summarize. However, the essence of the complaint is a wide-ranging conspiracy among variou s officers of the United States Marine Corps to `ruin [plaintiff's] reputation.' " Dist. Ct. EAJA Op. at 2. The government's investigation of Morgan centered upon allegations of recruiting fraud; however, our analy sis must focus on the agency decision that resulted in this appeal. That decision resulted from a military prosecutor's assertion that he had a "gray book" that purportedl y contained evidence that Morgan was involved in ille gal gambling. In order to understand the significance o f the "gray book" and its impact on Morgan's claim for co sts and fees under the EJAJ it is necessary to detail the e vents leading up to this appeal and the structure of the Marine Corps' recruiting efforts at some length.1

A.

Terence D. Morgan joined the United States Marine C orps in September, 1973. After receiving various promoti ons, he was ordered to the Greensburg substation of Pittsbu rgh, Pennsylvania Recruiting Station ("RS") in June of 1 980. RS Pittsburgh is part of the 4th Marine Corps District

,

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1. Morgan did not appeal from the district court's decision on the merits of his claim. Consequently, the recitation of the f acts is taken from the district court's merits opinion.

3headquartered in Philadelphia, Pennsylvania. The 4t h

Marine Corps District in turn is part of the Easter n Recruiting Region, which is headquartered at Parris Island, South Carolina. Major General Jarvis D. Lynch, Jr., became the Commanding General of the Eastern Recruiting Re gion and Parris Island on October 5, 1988. Colonel David A. Jones was then the Director of the 4th Marine Corps District, which encompasses nine recruiting station s in

seven states.

A recruiting station is operated by a Command Group

. During the periods relevant to this appeal, Major G eorge A. Eberhart, Jr., was the Commanding Officer. A recrui ting station is organized around recruiting substations, which are recruiting facilities manned by one or more ful l-time recruiters. A recruiting substation is under the di rect operational and administrative control of the recru iting station and is supervised by a Non-Commissioned Off icer in Charge ("NCOIC"). A Command Group's main concern is ensuring that the recruiting station makes its "mis sion", i.e., procures a specified number of new recruits w ho are willing and eligible to enlist, and to ship a speci fied number of these new recruits for basic training. Recruiter s are rated largely by the number of recruits they enlist in th e Marines.

Normally, an applicant must have a high school dipl oma to enlist in the Marine Corps. A General Equivalenc y Diploma ("GED") is not acceptable. Recruiters are p ermitted to place eligible recruits who are willing to ship to basic training within 365 days of signing the enlistment contract into the Delay Entry Program ("DEP"). High school s eniors who anticipate graduating within one year are also permitted to sign enlistment contracts and enter th e DEP pool. These "poolees" sign a contract evidencing th eir intent to be subject to the Uniform Code of Military Justi ce ("UCMJ"). In addition, people with temporary medica l conditions that preclude immediate shipment for bas ic training, and people with other non-permanent disqualifications, are allowed to sign enlistment c ontracts and enter the DEP pool. A large DEP pool enhances a recruiting station's ability to meet its monthly sh ipping mission. A DEP pool containing poolees who are not qualified to join the Corps for some reason, such a s the

4lack of a high school diploma or a disqualifying me dical

condition, is referred to as a "dirty pool".

A recruiter prepares a package for each "poolee" including inter alia, a high school diploma, social security card, birth certificate and medical form. Recruit p ackages are the direct responsibility of the individual rec ruiter, the NCOIC of the recruiting substation, the Commanding Officer, the Operations Officer and the "MEPS" liai son.2

Morgan was selected "Rookie Recruiter of the Year" after his first year of recruiting duty in 1983, and prom oted to the rank of NCOIC of the Greensburg substation of R S Pittsburgh. In 1984, he was named "Non-Commissioned Officer (`NC0') of the Year." In late 1985, Morgan was promoted to the rank of Assistant Recruiting Instru ctor for RS Pittsburgh. Master Sergeant ("MSG") Eugene Zuro was then the Recruiting Instructor of RS Pittsburgh; ho wever, Morgan replaced him in January of 1986. The Recruit ing Instructor is the most senior professional recruite r in a recruiting station, but need not be the most senior NCO within the recruiting station. The Recruiting Instr uctor travels throughout the recruiting station to train recruiters in sales techniques and the completion of paperwork , and provides assistance to recruiters who are having tr ouble making "mission." For our purposes, it is important to note that the Recruiting Instructor has no duty to verif y recruit packages.

B.

In 1984 and 1985, RS Pittsburgh ranked first in the nation in recruiting. It was then under the command of Major J. P. Walsh. In 1986, Major Eberhart became t he Commanding Officer and he was determined to continu e

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2. "MEPS" is the abbreviation for Military Entrance Processing System, which is a service shared by all branches of the mi litary that recruit applicants. It conducts medical exams, administers tests and otherwise processes applicants. The MEPS liaison is the quali ty control person for the Commanding Officer of a recruiting station. He or she is not a member of the Command Group and does not have to ma ke "mission". Rather, the MEPS liaison's prime concern is to ensu re adherence to military regulations. Dist. Ct. Merits Opn. at 6.

5that success. This created tremendous pressure to"m ake

mission."

Despite Eberhart's determination to continue the Recruiting Station's success, RS Pittsburgh barely made its mission in September, 1988, and by October 1, 1988, RS Pittsburgh was in serious trouble. In response to t he decreasing number of recruits, the station began en listing and shipping qualified recruits to Parris Island fo r basic training within 30 days of their enrollment. This p rocedure was known as "direct ship mode." However, it is dif ficult for a recruiting station to meet its monthly mission by operating in "direct ship mode."

Morgan began inspecting recruit packages that had b een prepared at RS Pittsburgh and he discovered that 35 0 documents were missing from those packages, includi ng high school diploma verifications.3 The Marine Corp s has strict regulations regarding education verification , and recruiters are required to obtain a high school cou nselor's signature or a school seal on a copy of the applica nt's transcript or diploma before an applicant is proces sed for shipping to Parris Island. The large number of miss ing documents caused Morgan to ask Eberhart to conduct an inspection, but Eberhart merely responded by assuri ng Morgan that he would "take care of [the recruiter i n question]," and refused to make an inspection.

Despite Eberhart's assurances, Morgan called Zuro, the former Recruiting Instructor of RS Pittsburgh, and a member of the Contact Team for the 4th Marine Corps District.4 Morgan told Zuro that RS Pittsburgh was in "direct ship" mode; that documents were missing fro m recruit packages; that Eberhart was submitting fals e

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3. Testimony at trial established that all recruiti ng stations have documents missing from recruit packages. However, i t was unusual to have 300 to 400 missing documents unless the size o f the DEP pool was very large.

4. Contact Teams are comprised of a small group of individuals who are experts in the field of recruiting. The Team provid es guidance to recruiting stations and is required to visit each r ecruiting station twice a year. They conduct investigations, and also provi de guidance. Dist. Ct. Merits Opn. at 10, n.9.

6information to the 4th Marine Corps District concer ning the

number of DEP pool discharges and the need for dire ct ship applicants; and that he was having serious argument s with Eberhart. Zuro told Morgan that he would visit RS Pittsburgh at the end of October, 1988, which was apparently the Contact Team's next regularly schedu led visit to RS Pittsburgh.

C.

At the end of October, 1988, the Contact Team visit ed RS Pittsburgh. Morgan and First Lieutenant Brown, the Operations Officer of RS Pittsburgh, compiled a lis t of pending DEP pool discharges, missing documents and other problems. Morgan informed the Team of numerou s improprieties and/or problems, including Eberhart's refusal to discipline recruiters, Eberhart's use of threats to enhance recruiting and his practice of requiring th at

recruiters be in their offices from 6:00 a.m. to 11 :00 p.m. Zuro responded by telling Morgan that the Contact T eam would not conduct an inspection of RS Pittsburgh du ring the visit. Zuro apparently believed it was more imp ortant to provide additional training.

On November 1, 1988, Captain Hoffman, the officer i n charge of the Contact Team, prepared a memorandum f or Colonel David A. Jones, Director of the 4th Marine Corps District, concerning the Contact Team's October vis it to RS Pittsburgh. The memo discussed the DEP pool problem s at RS Pittsburgh and described the training that was p rovided by the Contact Team. A reorganization of the struct ure of the substations of RS Pittsburgh was "highly recomm ended to avoid further turmoil and maximize prospecting." In early November, 1988, Colonel Jones called Eberhart to di scuss his concern about the number of discharges in the D EP pool. Eberhart acknowledged that he had to take som e discharges, but said that the DEP pool would be"cle aned up" in the next few months.

Nevertheless, Colonel Jones remained concerned abou t the problems in RS Pittsburgh and sent Colonel Niewenhous, Executive Officer of the 4th Marine Cor ps District, to talk to Eberhart. Niewenhous met with

7Eberhart, but Eberhart vehemently denied that there were

problems in RS Pittsburgh.

When General Lynch became the Commanding General of the Eastern Recruiting Region and Parris Island in early October, 1988, he had no experience in recruiting, and he requested a briefing on the subject. He subsequentl y received, and reviewed, a detailed briefing, but wa s not sure that the problems at RS Pittsburgh were caused by misconduct or ineptitude. Accordingly, he ordered C olonel C.R. Casey, his Deputy Chief of Staff for Recruitin g, to investigate the situation and remedy it. The ensuin g investigation stemmed solely from the detailed brie fing General Lynch had received from his staff and was t otally unrelated to Morgan's complaints about missing documents, and the high rate of discharges from the DEP pool maintained by RS Pittsburgh. In fact, Lynch di d not know Morgan and had never been informed about Morga n's complaints.

D.

About the same time that Lynch was being briefed, George Sens, a new recruit from RS Pittsburgh, was shipped to Parris Island for basic training. After he reported, Sens admitted that he had a bleeding ulce r. That medical condition should have precluded his enlistm ent in

the Marines. Sens said that he had informed his rec ruiter of his medical condition, and had been told not to tell the doctors at Parris Island. Based on Sens' statement, other recruits who had been shipped for basic training fr om RS Pittsburgh were interviewed. During those interview s, approximately 80 recruits made allegations of recru iting misconduct at RS Pittsburgh.

On Friday, January 27, 1989, Colonel Jones, Directo r of the 4th Marine Corps District, received a telephone call from Colonel Casey, General Lynch's Deputy Chief of Staff for Recruiting, regarding the allegations of recrui ting misconduct by RS Pittsburgh's recruiters. Jones was instructed to send out a team to investigate, and, on Saturday, January 28, 1989, he assembled an investi gating team. The Senior Investigating Officer was Lieutena nt

8Colonel John Spencer Evans, and the team included

Captain D.J. Koleos, a lawyer who was assigned to p rovide legal advice to the investigating team. Koleos was Deputy Staff Judge Advocate for the Eastern Recruiting Reg ion, and

it is his actions that would later be the basis for the relief the district court afforded Morgan.

Lieutenant Colonel Evans team began its investigati on in Pittsburgh on the morning of Monday, January 30, 19 89. Captain Evans,5 who was a member of Lieutenant Colo nel Evans investigation team, read each individual who was interviewed, his or her rights under Article 31 of the UCMJ, 10 U.S.C. S 831. Those rights are similar to Mirand a warnings. No allegations of recruiting misconduct h ad been made against Morgan prior to the Evans investigatio n. Indeed, Morgan was initially elated because he assu med the investigation was in response to his complaints.

However, an applicant named Michael Lockwood was processed at RS Pittsburgh during Evans' investigat ion. When Lockwood was confronted with a false high scho ol diploma that was part of his recruit package, he sa id that Morgan had procured the false diploma for him. Lock wood then identified Morgan's picture from a group photo graph of the members of RS Pittsburgh. He also identified Mo rgan in Colonel Evans' presence, and stated that Morgan was the Marine who had sold him the false diploma.

Morgan denied this allegation and told Colonel Evan s that he had never seen Lockwood before. Another mem ber of the investigating team, Master Sergeant Cawman, then accused Morgan of having a printing press in his ba sement. Morgan said that allegation was ludicrous, and requ ested legal counsel. Captain Evans responded by telling M organ that he was a legal advisor. Morgan then talked to Captain Evans for 30 to 45 minutes.6 During that conversati on

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5. There are two officers named Evans who figure in this case. Lieutenant Colonel John Spenser Evans was the head of the investigating team and Captain John E. Evans was a member of that team. To avoid any possible confusion, we will indi cate each Evans by

rank when reference is made to him.

6. Captain Evans was not an attorney. Apparently, h e served as an advisor to the Commanding Officer in the area of pe rsonnel

9Morgan told Evans that he never met Lockwood and th at he

had not created any false high school diplomas. On February 2, 1989, Morgan made a written statement t o that effect in response to a request from Evans that he do so. Morgan was not provided independent legal counsel.

E.

Colonel Evans completed his investigation and prepa red a report for Colonel Jones. Evans' report concluded that administrative procedures were not in place at RS Pittsburgh to insure that quality control of recrui ts received as much emphasis as recruiting and shipping them. T he report alluded to the existence of various factions of "cliques" at RS Pittsburgh, concluded that Morgan w as the leader of one of these "cliques," and that his "cli que" appeared to be at the center of the bulk of recruit er malpractice there. Colonel Evans opined that Morgan , "[i]n his capacity as the senior expert on enlisted recru iting, . . . bears a tremendous amount of responsibility for the problems in Pittsburgh." Although Colonel Evans was not personally convinced that Morgan had made a false diploma as alleged by Lockwood, he did not doubt th at Morgan knew that diplomas and other documents were being falsified. The report rejected Morgan's claim that he lacked the training and experience to identify and deal with the problems in RS Pittsburgh.

Colonel Evans recommended various forms of discipli ne for 29 Marines at RS Pittsburgh, including members of the Command Group and recruiters. The recommended discipline ranged from nonjudicial punishment ("NJP ")7

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administration, and advised the Commanding Officer on legal matters. Evans claims that he never represented himself to M organ as an attorney. However, Morgan's testimony to the contra ry was corroborated by other recruiters of RS Pittsburgh who also testi fied that Captain Evans led them to believe that he was acting as the ir legal counsel during the investigation. Moreover, although the di strict court did not make a specific finding of fact as to this conflict in the testimony, it

is clear from the court's opinion that it credited Mor gan's testimony on this point despite Evans' denial. See Dist. Ct. Opn. at 16-17, n.19. 7. Nonjudicial punishment is governed by Article 15 of the UCMJ, 10 U.S.C. S 815. It is a summary procedure designed to allow a commander to quickly impose minor punishment for minor offens es committed by members of his command. See generally, DAVID A. SCH LUETER, MILITARY

CRIMINAL JUSTICE: PRACTICE AND PROCEDURE, SS 3-1 to 3-8 (4th ed. 1996).

10such as letters of caution, to summary8 and specia l courtmartials.9 Evans also recommended that Major Eberha rt be relieved of duty despite Evans' belief that Eberhar t did not intentionally direct the enlistment of any unqualif ied applicant into the Marine Corps.

Evans' report contained findings of fact with respe ct to members of the Command Group and the recruiters for whom Evans recommended disciplinary action. Colonel Evans found that Morgan was involved in the procure ment of false diplomas for several recruits. The allegat ions as to one recruit, Wayne Bellew, were corroborated by Bel lew's civilian wife, Tracey. Another recruiter stated tha t Morgan was responsible for the improper education verifica tion for a recruit named Angela Robinson. Evans also found t hat Morgan improperly administered the Armed Services Vocational Aptitude Battery test ("ASVAB") to two M arine Corps personnel and that he routinely used his government-owned car for personal business. The rep ort noted that Morgan denied all of the allegations.

General Lynch was not satisfied with the report bec ause it did not address the failure of the Command Group of RS Pittsburgh to fulfill its responsibilities. Consequ ently, he directed his Deputy Chief of Staff for Recruiting, Colonel Casey, to go to RS Pittsburgh to conduct a further investigation focusing on the Command Group. The Ca sey investigation team conducted numerous interviews at RS Pittsburgh, and issued a report noting the numerous allegations of misconduct against persons in the re cruiting station. However, most were not corroborated by independent facts, and, typically, the allegations were

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8. A summary court-martial is designed to dispose o f minor offenses in a simplified proceeding. SCHLUETER, supra note 9, S 1-8(D)(1). The maximum punishment that may be imposed includes con finement at hard labor for one month, forfeiture of two-thirds of one month's pay for one month, hard labor without confinement for 45 da ys or restriction for

two months. 10 U.S.C. S 820.

9. A special court-martial is the intermediate cour t in the military's judicial structure. 10 U.S.C. S 816; SCHLUETER, sup ra note 9, S 1-8(D)(2). Maximum punishments include confinement at hard lab or for 6 months and forfeiture of two-thirds of one month's pay for 6 months. A bad conduct discharge may also be assessed. 10 U.S.C.S 819.

11refuted by the alleged perpetrator. To further comp licate the

situation, the accusers were often biased. Accordin gly, Casey resolved uncorroborated allegations in favor of the accused. Though there was evidence of criminal cond uct and dereliction of duty, Colonel Casey was convince d that the problems in RS Pittsburgh were the result of le adership

failure.

Casey did, however, believe that Morgan deliberatel y helped recruiters falsely enlist high school junior s into the DEP; that Morgan created high school diplomas for t he purpose of unlawfully enlisting unqualified applica nts into the Marine Corps; that Morgan solicited a man named Jerry L. Williams to join in his criminal enterpris e; that Morgan communicated a threat to Williams; and that Morgan gave a false statement to Colonel Evans duri ng his investigation of RS Pittsburgh. Based on his findin gs, Colonel Casey recommended that Morgan's alleged recruiting misconduct be investigated pursuant to A rticle 32 of the UCMJ, 10 U.S.C. S 832, the military count erpart to a civilian grand jury.

Jerry L. Williams was a civilian who owned a printi ng shop called Precision Printing in Bedford, Pennsylv ania. During the Evans investigation, several recruiters alleged that the services of Precision Printing had been ut ilized to make false diplomas for certain recruiters. Because these allegations were unsubstantiated in the Evans' investigation, Major Kelley, the legal advisor for the Casey investigation, directed Captain Koleos to contact W illiams. Koleos did so and prepared a "Results of Interview of Mr. Jerry Williams, Owner of Precision Printing" which was made part of Colonel Casey's report.

In his report, Koleos stated that Williams accused Morgan of coercing him to create fraudulent documen ts for recruits who were not qualified for the Marine Corp s. According to Koleos' report, Williams said that Mor gan paid him to alter the names on original diplomas. Koleos ' report stated that Williams, his wife and other employees could positively identify Morgan and the corporal who accompanied him when Morgan visited Williams' print shop.10

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10. At trial, Koleos contradicted the information c ontained in his

"Results". Koleos testified that Williams could not remember the name of

12F.

When Morgan learned of these allegations he called Captain Louis J. Puleo, a defense attorney at Parri s Island. In March, 1989, Puleo assigned himself to be Morgan 's defense counsel. On March 22, 1989, Corporal Palmer , one of the two recruiters who had implicated Morgan in recruiting fraud, told Puleo that the statements he had given to the Evans' investigating team regarding Mo rgan's involvement in recruiting fraud were false.

On March 27, 1989, numerous charges were preferred 11 against Morgan for violations of various provisions of the UCMJ.12 He was charged with engaging in fraudulent recruiting practices on several, enumerated occasio ns (Charges I & III), improper administration of the A SVAB test (Charge III), making false statements regarding dru g use of members of a recruiting substation (Charge IV), pre senting a false claim for travel expenses (Charge V), and m aking a false statement under oath (Charge VI).

On March 28, 1989, Koleos interviewed Palmer, and Palmer told him that the statements he gave during the Evans' investigation were false. Koleos responded b y telling

Palmer that he would have to call Colonel Evans and Captain Evans. However, Palmer exercised his Articl e 31 rights under the UCMJ and spoke with his defense co unsel, First Lieutenant Ansa. After speaking with Ansa, Pa lmer decided to remain silent. In response, Koleos impli ed that Palmer's record would suffer and Palmer may be disc iplined if Palmer said anything against Colonel Evans or Ca ptain

Evans.

Nonetheless, despite Koleos purported threat, Palme r

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the Marine who had come to his shop for a false dip loma. However, Koleos did testify that William's description of th e Marine who came to his shop fit Morgan's description.

11. The preferring of charges is the first formal s tep in prosecuting a

criminal case under the UCMJ. For a discussion of t he process, see SCHLUETER, supra note 9, S 6-1.

12. Specifically, Articles 80, 81, 84, 92 and 134 o f the UCMJ. 10 U.S.C. SS 880, 881, 884, 892 and 934.

13made a statement on March 29, 1989. In that stateme nt

Palmer declared:

I was interviewed by Captain Koleos. During my conversation with the Captain, I made it cle ar that I was going to say things in court that would incriminate LtCol. Evans and Capt Evans, because I recan ted my statements [to them]. The reason I recanted my statement is that they were made under press ure and I was cohersed (sic) and told by [both] Evan s what to say there-for (sic), making them false state ments. During my conversation with. . . Koleos he m ade it unmistakably (sic) clear that if I did not s tick with my first two statements (which were false), tha t the sentence of my February 24, 1989 NJP would b e vacated, which means a reduction in rank and forfeiture (sic) in pay. This came across to me as a threat.

I am making this statement because I know t hat I will eventually have to make these statement s in court and I know that they will vacate my sentence . And I want to have record of my knowledge of this prior to it happening.

What I am saying is true and I do not feel an innocent man should be judged on statements that someone was pressured into making.

This statement was incorporated into a Stipulation for Morgan's upcoming Article 32 hearing.13

Similarly, Williams (the owner of Precision Printin g whose accusations are set forth above) testified at a dep osition and denied ever incriminating Morgan. He stated tha t

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13. An Article 32 Investigation, 10 U.S.C. S 832, i s, as noted earlier,

the military counterpart to the civilian grand jury. Ac cording to the Manual for Courts-Martial (MCM), United States (1995 Editi on), "[t]he primary purpose of [the Article 32 Investigation] is to inq uire into the truth of

the matters set forth in the charges, the form of the c harges, and to secure information on which to determine what disposition should be made of the case." See Rules for Courts-Martial ("R.C.M.") 405(a), Discussion. No charge may be referred to a general court-martial f or trial until an

Article 32 investigation has been conducted. 10 U.S.C. S 83 2(a).

14investigators were trying to "get the goods" on Mor gan, but

that he, Williams, could not assist them because he did not know Morgan and had never seen him. He flatly denie d ever making the inculpatory statements against Morgan th at Koleos had reported. On the contrary, Williams swor e that he could not link Morgan to any fraudulent diplomas

.

Williams testified that, on the contrary, it was th e investigators who did the threatening. They purport edly told Williams that he was also under investigation; that he could be charged as a result of the investigation; and that the FBI might be notified of his conduct. Williams also testified that he had refused to sign a statement t hat Koleos had prepared which identified Morgan as the Marine who was coming into his shop for false diplomas.

Puleo was able to interview several key witnesses b efore the Article 32 hearing. The majority of them were M arine Corps applicants, who not only absolved Morgan of wrongdoing, but also identified other Marines who w ere involved in the recruiting fraud. In addition, they either stated that they had been pressured into implicatin g Morgan or denied making statements that had been credited to them in which they purportedly accused Morgan of improper conduct.

G.

The Article 32 investigation took place in Pittsbur gh, Pennsylvania, on April 2 and 3, 1989. Major Ellen B . Healy was designated the Investigating Officer,14 Captain Koleos was the government's counsel, and Captain Puleo was Morgan's counsel. Much of the testimony at that hea ring exonerated Morgan. At the conclusion of the investi gation, Major Healy prepared a report in which she stated t hat the government was not able to present key testimony, a nd that, with the exception of allegations relating to Charge III (the wrongful enlistment of a particular recruit), the charges against Morgan were not supported by the

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14. The Investigating Officer is appointed by the c ommanding officer. R.C.M. 405(d)(1). He or she conducts the investigat ion and makes a report of conclusions and recommendations. Id.

15evidence. Moreover, the testimony as to even that c harge

was equivocal. The prosecution had produced testimo ny that Morgan directed a recruiter to fill out a fals e education verification. However, the witness stated that Morg an directed him to verify it the following day.

Based on the evidence at that hearing, Healy recommended that Morgan be subjected to NJP, the lo west form of punishment under the UCMJ. On April 6, 1989

, Morgan was ordered to report to Parris Island.

Puleo was initially unable to interview Lockwood, t he recruit who had first implicated Morgan in the sche me to falsify diplomas. However, Puleo finally was able t o interview Lockwood after the Article 32 hearing, an d Lockwood told him that he had lied to the investiga ting team. Lockwood said that Master Sergeant Cawman, a member of the Evans investigating team, told him th at he (Lockwood) would have to implicate Morgan and Cawma n told him what to say.

Based on Lockwood's allegations, Puleo preferred ch arges against Cawman.15 Puleo gave the charge sheet to Ko leos to be forwarded to the Commanding General. Koleos late r told Puleo that the charge sheet had been sent through channels, but Puleo subsequently found it in a wast e basket. Cawman was never prosecuted.

As these disclosures were occurring, General Lynch was reviewing Healey's recommendation that Morgan recei ve only an NJP. However, Lynch rejected that recommend ation and ordered yet another investigation. Consequently , the Article 32 hearing was reopened. Staff Sergeant Cum mings testified for the government at the reopened hearin g under a grant of immunity. As a result, new charges were brought against Morgan and a new charge sheet was prepared that contained the original charges plus two new ones.16 One of

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15. Anyone subject to the UCMJ may serve as an "acc user" and prefer charges against someone else. 10 U.S.C. S 801(9).

16. Under Article 32, the investigating officer may , subject to certain conditions, investigate other, uncharged offenses, if the evidence indicates that the accused may have committed those offenses. 10 U.S.C. S 832(d).

16the new charges was an allegation that Morgan was

engaging in an illegal bookmaking operation in RS Pittsburgh.

Following that reopened investigation, Major Healy prepared another report in which she noted that Cum mings testified under a grant of immunity, that he had pr eviously lied, and that he admitted to using cocaine while o n recruiting duty. Healey also noted that the governm ent called witnesses who negated Cummings' testimony ag ainst Morgan. Nonetheless, she recommended that Morgan be tried by general court-martial.17

H.

Morgan's general court-martial18 was scheduled for Tuesday, August 8, 1989, in Parris Island. However, one week before the scheduled trial, Koleos19 suggeste d to Puleo

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17. After Healey filed her second report, Morgan wr ote to then Pennsylvania Senator John Heinz and complained abou t the conduct of the government, and the charges brought against him . That letter formed the substance of Morgan's "whistleblower" claim. Ho wever, the district court found that General Lynch did not know of the letter and that no action was taken against Morgan because of it. That finding of fact is not clearly erroneous.

18. A general court-martial is the highest trial co urt in military law. Article 16 of the UCMJ, 10 U.S.C. S 816. Articles 2 2 through 29 of the UCMJ, 10 U.S.C. SS 822-29, establish the mechanics of convening a court-martial and the composition of its members. F or a detailed discussion of the entire process, see SCHLUETER , s upra note 9, SS 8-1 through 8-6.

19. Koleos had by this time been assigned to be the prosecutor for Morgan's general court-martial. In military jurispr udence, the prosecutor is called "trial counsel." HOMER E. MOYER, JR., JUS TICE AND THE MILITARY, S 2-306; 10 U.S.C. S 827(a)(1).

Koleos occupied a number of positions in this case. He was the Deputy Staff Judge Advocate for the Eastern Recruiting Reg ion and the legal advisor to the Evans' investigation. At the request of Major Kelley, legal advisor to the Casey investigation, he interviewed Jerry Williams, the printer accused of printing false high school diplo mas for applicants. Further, he was government counsel in Morgan's Arti cle 32 investigation conducted by Major Healey.

17that Morgan should opt for an Other Than Honorable

("OTH") discharge in lieu of a general court-martia l.20 Puleo

declined the offer on behalf of his client. Koleos then asked Puleo if his position would be different if the gov ernment had a notebook in which Morgan had recorded his bookmaking. Cummings had allegedly taken this "gray book" from Morgan's car, and Koleos purportedly all owed Cummings to travel to Pittsburgh to retrieve it.

Later that week, on Thursday or Friday, Koleos told Puleo that Cummings was bringing the gray book to Parris Island for Morgan's court-martial. On Saturday, August 5, Koleos again told Puleo that Cummings had the gray book; b ut claimed that he did not know where Cummings was. Th at afternoon, Puleo went to Koleos' office. Koleos hap pened to be speaking to Cummings on the telephone when Puleo arrived, and Puleo told Koleos he wanted to speak w ith Cummings. However, as soon as Koleos finished his conversation he hung up the phone. Koleos told Pule o that Cummings was on his way to Parris Island with the g ray book and that the offer to allow Morgan to take the OTH discharge was only open until Cummings and the gray

book arrived at Parris Island.

On Monday morning, August 7, 1989, Puleo spoke to Koleos again about the gray book and Koleos indicat ed that Cummings had the gray book. Based on Koleos' representations about the gray book, Morgan decided to accept the government's offer of an OTH discharge i n lieu of trial by general court-martial. Accordingly, Morgan submitted a request for administrative discharge un der other than honorable conditions in lieu of a genera l courtmartial. In the request, which he prepared with def ense counsel Puleo, Morgan pleaded guilty to wrongfully participating in gambling activity while on duty as the Recruiting Instructor -- the least serious offense that Morgan had been charged with. General Lynch approve d the request the same day. Consequently, Morgan was administratively reduced in rank to lance corporal with a

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20. The regulations of the various armed services p ermit an enlisted accused to apply for an administrative discharge ra ther than face a trial by court-martial. SCHLUETER, supra note 9, S 9-4.

18corresponding reduction in pay, and he became ineli gible to

serve in the Marine Corps Reserve.

However, after the request for the OTH discharge wa s approved, Cummings informed Puleo that he did not h ave the gray book, that he never did have it, and that he had been in constant touch with Koleos the previous wee kend. Cummings told Puleo that he had only stated that he was looking for the gray book, and denied ever telling Koleos that he actually had it. Cummings also told Puleo t hat Koleos had promised him a general discharge in exch ange for his testimony against Morgan.

Thereupon, Puleo filed a motion to dismiss the char ges against Morgan based on prosecutorial and governmen tal misconduct. Puleo based the motion upon the numerou s attempts to falsely implicate Morgan by named Marin es, including Koleos, and members of the Evans' investi gation team, and the evidence of coercion and perjury that were part of that alleged scheme. However, the request t o dismiss the charges against Morgan was denied.

Puleo also prepared a request for Morgan to withdra w his OTH discharge and that was submitted to General Lyn ch on April 9, 1989. The request was based on Morgan's prior reliance on the government's representations that i t had the gray book in its possession, and his subsequent dis covery that the government could not produce that evidence . If Morgan's request had been granted, his trial by gen eral court-martial would have proceeded.21

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21. Under military criminal procedure, an accused m ust be tried within 120 days of the date the charges are preferred, pre trial restraint in the form of confinement, arrest or restriction in lieu of arrest or the

accused is brought on active duty. R.C.M. 707(a)(1), (2), ( 3). In Morgan's case,

the last day of his "speedy trial" time was August 8, 1 989, the date of his scheduled trial. Puleo testified that he expected t hat Morgan's request to withdraw the OTH discharge would be treated as a de fense delay, which would toll the speedy trial clock. R.C.M. 707(c). H owever, there is no indication that Morgan was willing to waive his spe edy trial rights. Furthermore, the filing of the request would not by itself have stopped the clock from running. R.C.M. 707(c)(1) and Discus sion. By August 9, 1989, Morgan's speedy trial time would have expired

.

19After Morgan submitted his request to withdraw the OTH

discharge, the Staff Judge Advocate, Colonel Jones, interviewed Koleos and Puleo. On August 9, 1989, Jo nes sent a memo to General Lynch, recommending disappro val of Morgan's request. The memo states in part:

3. The evidence in question, a grey book con sistin g of memorandum records of respondent's gambling transactions with customers, was never in th e possession of government counsel nor was it ever represented to be so. The government counsel indicated to respondent's counsel that a gov ernment witness had taken the book from the responde nt's vehicle in December, 1988, claimed that he p ossessed it, and was making efforts to bring it under the control and custody of the government counsel by the close of business of August 7, 1989.

4. Whether or not the representations of gov ernmen t

counsel were the causal factor in the submis sion of the request is speculative at best. It should be noted however, that the respondent did not indicat e in his request for separation that he considered th e book to be the dispositive factor in his decision to avoid trial by court-martial. Furthermore, the government w as not relying upon its production to obtain a conv iction but rather the testimony of six witnesses and ot her corroborative documentary evidence.

On August 9, 1898, General Lynch denied Morgan's re quest to withdraw the OTH discharge. He offered no explan ation for doing so. That same day, General Lynch dismisse d the charges against Morgan in light of the OTH discharg e. On August 31, 1989, Morgan was discharged from the Mar ine Corps on an "other than honorable" basis. 22

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22. Following his discharge, Morgan sent a letter t o Congressman Murtha complaining of his treatment. Morgan subsequ ently argued

before the district court that his Constitutional r ights were violated because the Marines retaliated against him for writ ing that letter. However, the district court properly rejected that argument as the letter was written after he had been discharged from the M arine Corps, and could not, therefore, have been the basis for any r etaliation.

20II.

In 1991, Morgan filed a complaint in the United Sta tes District Court for the Western District of Pennsylv ania seeking declaratory and equitable relief against th e Secretary of Defense, the Secretary of the Navy, th e Commandant of the Marine Corps, and the Commanding

General of Parris Island. The six counts of the Com plaint alleged violations of the Constitution, including v iolations of free speech, cruel and unusual punishment,23 equal protection and due process. The court rejected all but one of Morgan's claims24 after a nonjury trial. The cou rt did not

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23. Morgan did not pursue his eighth amendment clai m at trial.

24. The following is a synopsis of each claim and o f the district court's holding on each.

1. First Amendment Claim. -- Morgan claims he was a "whistleblower" who was retaliated against for blow ing the whistle on recruiting fraud. However, the district court rejec ted this claim because it found the testimony of General Lynch credible. T hus, Lynch ordered Colonel Casey, to investigate and fix the RS Pittsb urgh problem. Lynch testified that he did not know Morgan; that he was never informed that Morgan had complained about the problems in RS Pitt sburgh to Master Sergeant Zuro; and that his investigation was not t he result of any "whistleblowing" by Morgan. District Court Opinion, Conclusions of Law

P 52.

2. Sixth Amendment right to counsel claim.-- Morgan claimed that he was mislead by Captain Evans into believing that Evans was an attorney and thus, his right to counsel was violate d. Captain Evans indicated that he was a legal advisor and Morgan ta lked to Captain Evans for about 30 to 45 minutes. However, Captain Evans is not an

attorney.

The district court rejected this claim by holding t hat Morgan failed to establish that he sustained any harm as a result of Evan's misrepresentation. Id. at P 53.

3. Claim under the Equal Protection component of th e Fifth Amendment. -- Morgan claims that gambling is tolera ted in the Marine Corps and, by preferring gambling charges against h im, the government was engaging in selective prosecution. The district court rejected this selective prosecution claim by finding that, althou gh gambling in the form of football pools, raffle tickets and the Penn sylvania Lottery took place in RS Pittsburgh, Morgan was not being prosec uted for this type of gambling. Rather, Morgan was being prosecuted for r unning a bookmaking operation at RS Pittsburgh. Id. at P 54.

21discuss Morgan's claim that his right to substantiv e due

process had been violated, but it did conclude that Koleos' conduct "during the week preceding [Morgan's] sched uled trial by general court-martial. . . ." had denied M organ's right to due process of the law. Dist. Ct. Op. atP 55. The

court wrote:

Specifically, the court finds that Captain K oleos engaged in deceptive conduct in connection w ith the availability of Staff Sergeant Cummings and the availability of the government to gain posse ssion of the gray book. The court further finds that such deception was improper, and that it was the determinin g factor in [Morgan's] decision to request an OTH discha rge in lieu of trial by general court-martial, violating his right for an opportunity to be heard on the charges ag ainst him. Accordingly, [Morgan] is entitled to a decla ratory judgment that defendants violated his right to procedural due process of law under the Fift h

Amendment.

Id. The court also noted other allegations of misco nduct alleged against Koleos and others, including the al leged attempts to falsely accuse Morgan of procuring frau dulent diplomas. However, the court was "unpersuaded that these incidents of misconduct were factors in [Morgan's] decision to request the OTH discharge. . . ." Thus, the dist rict court "decline[d] to find that such misconduct also viola ted [Morgan's] Fifth Amendment right to due process." I d. at

P 55 n.62.

Despite ruling in Morgan's favor on his procedural due process claim, the court concluded that it could gi ve only limited relief. The court determined that it is"imp racticable to vacate General Lynch's August 9, 1989 decision, which denied [Morgan's] request to withdraw his request f or an OTH discharge, and to order the Marine Corps to pro ceed with [Morgan's] trial by general court-martial," as he had requested. Id. at P 56, The court also rejected Mor gan's request for reinstatement in the Corps. "[I]t is un disputed that there is no vested property right in future re enlistment in the Marine Corps." Id.. The court reasoned that the Marines would not have permitted Morgan to reenlist upon the expiration of his last reenlistment period on F ebruary 5,

221990. Thus, the district court directed the Marines to

reinstate Morgan for the limited period of time bet ween August 31, 1989, the date of his OTH discharge, and February 5, 1990, the date of the expiration of his last reenlistment. Id. The Marine Corps was also directe d to expunge Morgan's military records insofar as they r eflected a reduction in rank and the OTH discharge, to resto re him to his status as a Master Sergeant, and to recharac terize his discharge as honorable or general using the sta ndards applicable to those discharged at the expiration of their normal term of service. Finally, the district court denied Morgan's claim for back pay under Hubbard v. Administrator, Environmental Protection Agency, 982 F.2d 531 (D.C.Cir. 1991), which held "that the waiver of sovereign immunity in Section 702 of the Administra tive Procedure Act for `relief other than money damages' does not waive sovereign immunity for an award of backpa y." Id.

III.

Morgan did not appeal the district court's merits decision. However, on September 28, 1995, he filed an application to the district court for an award of a ttorney's fees and costs under the Equal Access to Justice Ac t EAJA. Under the EAJA, a prevailing party25 in non-tort li tigation against the United States is entitled to attorney's fees and costs, unless the court finds that the position tak en by the government "was substantially justified or that spe cial circumstances make an award unjust." 28 U.S.C. S 2412(D)(1)(A). In a Memorandum and Order, dated M ay 3, 1996, the district court found that the government' s position was substantially justified and, denied Mo rgan's application for attorney's fees and costs. This app eal

followed.

IV.

The district court's determination of substantial justification in a suit under the EAJA is reviewed for abuse

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25. The government concedes that Morgan is the prev ailing party for purposes of the EAJA.

23of discretion. Pierce v. Underwood, 487 U.S. 552, 5 60

(1988). An abuse of discretion arises when the dist rict court's decision "rests upon a clearly erroneousfin ding of fact, an errant conclusion of law or an improper ap plication of law to fact." Hanover Potato Products, Inc. v. S halala, 989 F.2d 123, 127 (3d Cir. 1993). An abuse of discretio n can also occur "when no reasonable person would adopt t he district court's view." Id. Therefore, we will not interfere

with the district court's exercise of discretion"un less there

is a definite and firm conviction that the court. .

. committed a clear error of judgment in the conclusi on it reached upon a weighing of the relevant factors." I d. Finally, as a part of our abuse of discretion revie w, we examine the district court's factual findings for c lear error. Id. Our task in this regard is more difficult becau se the factual underpinnings of the EAJA claim are not set forth in the district court's opinion denying fees and co sts, but in its decision on the merits. There, the district cou rt notes the numerous instances of conflicting testimony but makes very few findings of fact or credibility determinat ions. Although our task is thus complicated, the issue be fore us is sufficiently narrow that we can proceed with our analysis based upon our review of the record and the finding s that the district court made along with those that are i mplicit in

that court's decision.

V.

Although our inquiry must be controlled by the lang uage of the statute in question, our analysis is aided b y the Supreme Court's statement of the policy underlying the

EAJA:

Concerned that the Government, with its vast resources, could force citizens into acquies cing to adverse Government action, rather than vindi cating their rights, simply by threatening them wit h costly litigation, Congress enacted the EAJA, waivi ng the United States' sovereign and general statuto ry immunity to fee awards and creating a limite d exception to the `American Rule' against awa rding attorneys fees to prevailing parties.

24Pierce v. Underwood, 487 U.S. at 575 (Brennan, J.,

concurring in part and concurring in the judgment). The section of the EAJA applicable here26 provides as f ollows:

Except as otherwise specifically provided by statute, a court shall award to a prevailing party othe r than the United States fees and other expenses, in ad dition to any costs awarded pursuant to subsection (a) , incurred by that party in any civil action (other tha n cases sounding in tort), including proceedings for judicial review of agency action, brought by or again st the United States in any court having jurisdicti on of that action, unless the court finds that the posi tion of the United States was substantially justified or that special circumstances make an award unjust.

28 U.S.C. S 2412(d)(1)(A). "Fees" include "reasonab le attorney fees." 28 U.S.C. S 2412 (d)(2)(A). The que stion of whether the position of the United States was "subs tantially justified shall be determined on the basis of the r ecord (including the record with respect to the action or failure to act by the agency upon which the civil action is ba sed)

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26. Morgan argues that his fee application can also be considered under section 2412(b) of the EAJA which provides:

Unless expressly prohibited by statute, a co urt may award reasonable fees and expenses of attorneys, i n addition to the costs which may be awarded pursuant to subsection (a), to the prevailing parties in any civil action brought by or ag ainst the United States

or any agency or any official of the United Sta tes acting in his or

her official capacity in any Court having jurisd iction of such action.

The

United States shall be liable for such fees and expenses to the extent that any other party would be liable under the common law or the terms of any statute which would spec ifically provide for

such

an award.

28 U.S.C. S 2412(b). This section of the EAJA does not relieve the government of liability for attorney's fees to the prevailing party even

in a case where the government's position was substant ially justified. However, it does require that the prevailing party identify some other statute or rule of common law which specifically pr ovides for an award of attorney's fees. Morgan has not identified any s uch statute or rule of common law and, therefore, his argument that a fee award can be made under 2412(b) is without merit.25which is made in the civil action for which fees an d other

expenses are sought." 28 U.S.C. S 2412(d)(1)(B).

The Supreme Court has defined substantial justifica tion under the EAJA as "justified in substance or in the main -- that is, justified to a degree that could satisfy a reasonable person." Pierce v. Underwood, 487 U.S. at 565. That is to say, the government's position is substantially jus tified "if it

has a reasonable basis in both law and fact." Hanov er Potato Products, Inc. v. Shalala, 989 F.2d at 128. The government has the burden of establishing that ther e is substantial justification for its position. Id. at 128. In order to do so, the government must show: (1) a reasonabl e basis in truth for the facts alleged; (2) a reasonable ba sis in law for the theory it propounded; and (3) a reasonable connection between the facts alleged and the legal theory

advanced. Id.

The government's position under the EAJA includes " not only the position taken in the litigation but the a gency position that made the litigation necessary in thef irst place." Id. Thus, unless the government's pre-litig ation and litigation positions have a reasonable basis in bot h law and fact, the government's position is not substantiall y justified. Id.; see also Taylor v. Heckler, 835 F.2d 1037, 104 0 (3d Cir. 1988) ("[T]he government is deemed to have two posi tions for EAJA purposes, both [of which] must be substant ially justified. . . . [I]f either government position do es not bear scrutiny, the prevailing party should be awarded at torneys' fees [and other reasonable fees and expenses].").

VI.

In denying Morgan's fee application, the district c ourt noted that Morgan raised six claims against the def endants alleging violations of the First, Fifth, Sixth, Eig hth and Fourteenth Amendments and that the relief Morgan so ught was (1) a declaration that the constitutional right s guaranteed under those provisions were violated; (2 ) an injunction providing for his reinstatement into the Marine Corps, with restitution of all financial losses and other benefits and the expungement of his record of his O TH discharge; (3) costs, expenses and attorneys fees; and (4)

26other just and equitable relief. Dist. Ct. EAJA Opn . at 3.

The district court then noted that Morgan prevailed on only one of his claims, i.e., that Koleos' conduct durin g the week preceding the scheduled court-martial violated his Fifth Amendment procedural due process rights, and failed to prove any of his other constitutional claims. Thus, "the relief awarded to plaintiff was very limited in rel ation to the requested relief." Id. at 12.

We must emphasize, however, that the limited nature of the relief fashioned by the district court does not in anyway obscure the seriousness of even the single instance of misconduct that the court found. Koleos was appoint ed to prosecute this matter for the Marine Corps. He cond ucted himself in a manner that violated rights afforded u nder the very constitution he had sworn to uphold as an atto rney and as an officer in the Marine Corps.

The ABA Rules of Professional Conduct and the ABA

Standards for Criminal Justice: Prosecution Functio n and Defense Function, are applicable to Marine Corps ju dge advocates. United States v. Pack, 9 M.J. 752, 754 ( C.M.A. 1980). Rule 4.1 of the Rules of Professional Conduc t requires that a lawyer "shall not knowingly . . . m ake a false statement of material fact . . . to a third p erson."

MODEL RULES OF PROFESSIONAL CONDUCT Rule 4.1. A "th ird person" within the meaning of the rule includes opp osing counsel. Id., Legal Background. Criminal Justice St andard 3-4.1 provides that it is "unprofessional conduct f or a prosecutor knowingly to make false statements or representations in the course of plea discussions w ith

defense counsel or the accused." STANDARDS FOR CRIM INAL JUSTICE: THE PROSECUTION FUNCTION, Standard 3-4.1. Accordingly, Koleos' fabrications about the gray bo ok constituted a gross ethical violation of his duty a nd responsibility as a lawyer as well as government pr osecutor. Koleos' conduct is also "conduct unbecoming an offi cer and a gentleman" which is prohibited by Article 133 of the UCMJ, 10 U.S.C. S 933.27 The military demands that its officers comport themselves in accordance with a st rict moral standard, a deviation from which can be a

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27. See Parker v. Levy, 417 U.S. 733 (1974).

27punishable offense under the UCMJ. See M.C.M., Part IV,

P 59(c)(2). Counsel for the government in this appe al deems it advantageous to dwell upon Morgan's limited vict ory in its attempt to defeat his petition for fees under t he EJAJ. However, Koleos' utter disregard for his duties and responsibilities as an attorney and as a commission ed officer, coupled with his contempt for the constitu tional rights of Master Sergeant Morgan, affords the gover nment little room to trumpet the limited scope of Morgan' s victory. We are thus guided not by Koleos' misconduct, but b y the extent to which the government's position in defend ing itself against Morgan's claim was substantially jus tified.

VII.

"[D]etermining whether the government's position is substantially justified for the resolution of an EA JA claim has proved to be an issue of considerable conceptua l and practical difficulty." Roanoake River Basin Associa tion v. Hudson, 991 F.2d 132, 138 (4th Cir. 1993). We canno t assume that the government must pay Morgan's attorn ey's fees merely because it did not successfully defend against Morgan's suit on the merits in its entirety. The EA JA is not a "loser pays" statute.28 Thus, a court cannot assu me that the government's position was not substantially jus tified simply because the government lost on the merits. " [T]he inquiry into reasonableness for EAJA purposes may n ot be collapsed into [the] antecedent evaluation of the m erits, for EAJA sets forth a distinct legal standard." Cooper v. United States Railroad Retirement Board, 24 F.3d 1414, 141 6 (D.C. Cir. 1994). Furthermore, as previously noted, we mu st scrutinize both the government's prelitigation posi tion and its litigation position. Both positions must be sub stantially

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28. It has been argued persuasively, however, that where the government acts in bad faith or acts dishonestly, the governme nt's conduct "undermines the `substantial justification' for the government's position" and an award of attorney's fees should follow. Greg ory C. Fisk, The Essentials of the Equal Access to Justice Act: Cour t Awards of Attorney's Fees for Unreasonable Government Conduct (Part Two) , 56 La. L. R. 1, 54 (1995). Fee-shifting in such a case is " `automatic ' only in the circular sense that fee-shifting occurs automatically when t he government acts unreasonably." Id. at 41.

28justified and if either is not, attorney's fees sho uld be

awarded to the prevailing party.

A.

The usual conceptual difficulties inherent in resol ving an EAJA claim are further complicated here because Mor gan and the government have a fundamental disagreement over what the district court should have examined in determining whether the government's prelitigation position was substantially justified. Morgan argues that bec ause he alleged a number of constitutional claims involving a number of military personnel, the district court"sh ould have taken a broader view and consider[ed] not only General Lynch's decision, and subjective knowledge, but also that of his advisors and other government agen ts, especially the actions and intent of Captain Koleos

, Morgan's Marine Corps prosecutor." Reply Br. at 2. Morgan

would have us revisit his merits claim and consider whether General Lynch's decision was reasonable in light of all of the constitutional violations Morgan alleged in his complaint, including allegations of misconduct duri ng the Evans' investigation, allegations against Cawman an d allegations about the fabrication of William's stat ement. See Appellant's Br. at 23-34. In essence, Morgan argues that the district court ignored the numerous constitutio nal

violations which caused him to file his civil actio n by limiting the focus of the EAJA inquiry to the reasonableness of General Lynch's decision, which o nly addressed Koleos' fabrications about the gray book.

Not unexpectedly, the government urges us to focus only upon General Lynch's reasons for refusing to allow Morgan to withdraw his request for the OTH discharge in li eu of court-martial. The government argues that we cannot look beyond Lynch's refusal and examine every instance o f misconduct alleged by Morgan.

Although we have detailed some (though by no means all) of the allegations surrounding the Marine Corps investigation into recruiting fraud in RS Pittsburg h, the deceit purportedly perpetrated by Marine Corps pers onnel, and by Morgan himself, we do not suggest that this

29backdrop controls our substantial justification ana lysis.

Rather, as noted above, we state it only because it is impossible to understand Morgan's EJAJ petition in a

vacuum.

The Marine Corps' investigation of Morgan had two p arts. One involved recruiting fraud and one involved book making charges. Koleos' misconduct in regard to the gray b ook,

which the district court found was the decisive fac tor in Morgan's decision to opt for the OTH discharge, 29 has nothing to do with the recruiting fraud charges lev eled against Morgan. In fact, Morgan was willing to be t ried by the general court-martial until Koleos lead him to believe that the government had solid proof of Morgan's gam bling activities in the form of the gray book. Once Morga n was informed that the government had his gray book, he requested an OTH discharge. And once he learned tha t Koleos did not have the gray book, he immediately attempted to withdraw that request. Further, Morgan did not plead guilty to any charge that arose from the recruiting fraud investigations. He did plead guilt y to charges of bookmaking. Thus, we can not allow the government's conduct during the recruiting fraud investigations to guide our analysis of its positio n with regard to Morgan's requested discharge or his attem pt to withdraw the request.30

Morgan also insists that Koleos' misconduct is rele vant to determining substantial justification even if we fo cus solely

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29. Koleos also engaged in misconduct in the recrui ting fraud aspect of

the case when he misstated the results of his conve rsation with Williams, the printer, about Morgan's complicity in the scheme involving the preparation of false high school diplomas. Howe ver, the district court found that Koleos"s misconduct in regard to the Wil liams conversation was not relevant to Morgan's request for an OTH dis charge. Dist. Ct. Opn. at P 55 n.62.

30. For a discussion of the extent to which the EAJ A inquiry focuses only upon the narrow issue on which a party prevail ed or upon the entire litigation of which that issue may have been only a small part, see

Ronoake River Basin Associates v. Hudson et al. 991 F.2d 132 (4th Cir. 1993). There, the narrow issue that the prevailing party relied upon for its fee request under the EAJA had a much closer ne xus to the government's overall action than the challenged act ion here.

30upon Lynch's refusal to allow Morgan to withdraw hi s

requested discharge. We disagree. Although we in no way minimize the gravity or impropriety of Koleos' cond uct, it is

clear to us that Koleos' conduct is not the issue b efore us. Rather, the issue is General Lynch's refusal to all ow Morgan to withdraw his request of an OTH discharge and proceed to a general court martial. The fact that M organ's request was triggered by Koleos' conduct does not e levate that conduct to the level of agency action under th e facts

before us nor transform his conduct into the decisi on that was challenged in court.31 Morgan challenged Genera l Lynch's decision, and that is the agency action tha t must be substantially justified32 if Morgan is to be den ied fees under the EAJA even though Koleos' conduct formed t he basis of Morgan's relief in the district court. The refore, the

district court's exclusive focus on the reasonablen ess of General Lynch's decision was proper.33 After revie wing this

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31. We need not determine under what circumstances the unlawful actions or misconduct of an agency employee who is not responsible for the challenged action can amount to agency action f or purposes of an EAJA fee petition. It has been held that, as genera l rule, an agency employee's unauthorized conduct, which is not subje ct to judicial review, cannot be regarded as agency action. Chiu v. United States, 948 F.2d 711, 716 (Fed. Cir. 1991). However, where the agenc y acts based upon the misconduct of its employee, agency action can b e found. Id. (supervisory employee's unlawful motivation in reco mmending elimination of plaintiff 's government position was deemed agency action where the agency official implementing the reductio n-in-force decision acted on supervisor's recommendation).

32. In opposing Morgan's fee application in the dis trict court, the government argued not only that its position was su bstantially justified but also that special circumstances made a fee awar d unjust. However, the district court did not address the government's special circumstances argument because it found that the go vernment's position was substantially justified. Dist. Ct. EAJA Op. at 5 n.3. In this appeal, the government is not arguing that special circumst ances make a fee award unjust.

33. Had Lynch allowed Morgan to withdraw his OTH re quest, Morgan would have faced a general court martial where he c ould have raised all of the constitutional claims he litigated in the di strict court. Military tribunals have the same responsibilities to protect a person from

constitutional violations as do federal courts. In re Kelly, 401 F.2d 211

31record, we cannot say that the district court abuse d its

discretion in finding that the government's preliti gation position (General Lynch's refusal to allow Morgan t o withdraw his request for an OTH) was substantially justified.

The district court believed that General Lynch's re liance

on Colonel Jones' recommendation was reasonable. Admittedly, Jones' report appears to contain a fact ual error. Jones wrote that "[w]hether or not the representati ons of government counsel were the causal factor in the submission of the request is speculative at best." Supp. App. at 33. However, it is obvious that Koleos' representations did cause Morgan to request dischar ge just

as the district court concluded.

However, the district court's finding about Morgan' s reasons for seeking to withdraw his request for the OTH discharge does not mean that either Jones or Lynch had to accept Morgan's explanation. Jones made his own credibility determination and Lynch relied on it. T he fact

that the district court made a different determinat ion does not make Lynch's reliance on Jones' report unreason able.

While General Lynch did not give any reason for den ying Morgan's request, his testimony at trial suggests t hat his primary concern was avoiding the expense and inconvenience of flying witnesses to Parris Island for a

court martial.

When he first brought [the request for OTH d ischarge] in, . . . I was disinclined to approve it.

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(5th Cir. 1968). Simply stated, if Lynch had allowe d Morgan to withdraw his OTH request, there would have been no district court litigation and no consequent EAJA fee application.

Further, Lynch's decision, made in his capacity as the Commanding General of the MCRD, Parris Island, is the agency a ction we are examining here. The Marine Corps is within the Depa rtment of the Navy, Neal v. Secretary of the Navy, 639 F.2d 1029, 1033 n.4 (3d Cir. 1981, and each branch of the military is an agency within the meaning of the Administrative Procedures Act, 5 U.S.C. S 551 et se q. See Id. at 1036 and Jaffee v. United States, 592 F.2d 712, 719 (3d Cir. 1979).

32* * *

Because I thought that justice would be bett er served if Master Sergeant Morgan stood trial by cou rt-martial,

. . .

And the point was made in general terms tha t if it went to court-martial, it would be a great e xpense to the government, we would probably have to br ing witnesses in on a worldwide basis, and whate ver, and we were serving the needs or requirements of justice just as well by acceding to Master Sergeant Morgan's request.

Having been convinced on that score, I then approved the request.

App. at 38. General Lynch also explained that he di d not allow Morgan to withdraw the OTH once it was grante d because "nothing had changed, nothing that is in te rms of what had prompted the initial decision to accept hi s request had changed. There was discussion on this b ook, this gambling book." App. at 40. Lynch added:"Any decision to do anything other than continue on the course, we were going, would have had to have been influenc ed by a change in circumstances and there was no change." App.

at 41.

We must disagree that "nothing had changed." Morgan had learned that the government did not have his gr ay book, and apparently believed that the Corps' case against him was seriously compromised without it. Furthermo re, when Morgan sought to withdraw his request for the OTH discharge, Lynch knew that Koleos had been accused of misconduct and he knew that the government did not have the gray book in its possession. App. at 40, 105. H owever, Lynch's erroneous belief that "nothing had changed" does not compel a finding that denial of Morgan's reques t was without substantial justification. The government's "position can be justified even though it is not co rrect." Pierce v. Underwood, 487 U.S. at 566 n.2.

When Morgan sought to withdraw his request for the OTH discharge and proceed to trial by general court martial, he never recanted his admission of guilt. He never

33claimed that he was innocent of the gambling charge . 34

Morgan had the benefit of defense counsel when he m ade the admission in his request for an OTH discharge. Moreover, the wording of his request to withdraw hi s OTH discharge reaffirms that evidence existed that woul d prove that he was guilty of the gambling offense to which he had pleaded guilty. When Morgan learned that the govern ment did not have the gray book, he decided that he want ed to force the Marine Corps to conduct a general court-m artial to determine the truth of the gambling charge as we ll as the other charges against him. He was willing to risk t hat the government could not prove the gambling charge with out the gray book, and the other charges against him we re based in large part upon testimony that had since b een recanted, and witnesses who were either biased, or who were willing to testify that they had been coerced into falsely accusing him of various recruiting irregula rities.

Since Morgan never sought to withdraw his admission of guilt, Lynch's belief that the ends of justice woul d be served by simply accepting the still pending admission of guilt and giving Morgan the OTH discharge that he requested a day earlier was eminently reasonable. Accordingly, the district court's finding that the government's prelitigation position was substantially justified was not an abuse of dis cretion.35

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34. Although Morgan claimed that the gray book neve r existed, that claim is not credible. See Dist. Ct. EAJA Opn. at 1 1 n.5. Had there been no gray book, Morgan would not have been persuaded to request the OTH discharge when Puleo told him of Koleos' repres entation that the government had such a book.

35. We also note that Morgan's request to rescind h is requested OTH was submitted to General Lynch on August 8, 1989. Under the UCMJ, the military had 120 days to bring Morgan to court mart ial. See note 21 supra. August 8th was the last possible day that he could have been tried consistent with that limitation. Although Cap tain Puleo testified that he assumed that the request to withdraw the OT H discharge and proceed to court martial would act as a waiver of M organ's "speedy trial" rights, Morgan did not waive those rights in the re quest he submitted on August 9. However, since General Lynch was apparent ly unaware of this possible legal hurdle, it is not a factor in our an alysis.

34B.

Morgan argues that the government's repeated attack s on the jurisdiction of the district court in his merit s suit demonstrate the complete lack of justification for the government's litigation position. We disagree. The government argued that Morgan's complaint failed to assert any waiver of its sovereign immunity. Absent such w aiver, Morgan could not bring an action against his superi or officers.

In its EAJA opinion, district court indicated that its jurisdiction to hear Morgan's claims was "far from clear and presented a close question of law" and noted that t he jurisdictional issue presented a "substantial quest ion of law." Dist. Ct. EAJA Opn. at 6 and n.4. Further, th e district court noted that "government counsel would have bee n remiss in not strenuously pursuing its argument tha t[the] court lacked jurisdiction to hear [Morgan's] claims ." Id. at 6

n.4.

Ultimately, that court held that it had jurisdictio n over Morgan's claims under Section 702 of the Administra tive Procedures Act ("APA"), 5 U.S.C. S 702. 36 See Jaff ee v.

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36. Section 702 of the APA provides as follows:

A person suffering legal wrong because of ag ency action, or adversely affected or aggrieved by agency ac tion within the meaning of a relevant statute, is entitled to judici al review thereof. An

action in a court of the United States seeking reli ef other than money damages and stating a claim that an agency o r an officer or employee thereof acted or failed to act in a n official capacity or under color of legal authority shall not be dismissed nor relief therein be denied on the ground that it is a gainst the United

States or that the United States is an indispensabl e party. The United States may be named as a defendant in any su ch action, and a judgment or decree may be entered against th e United States: Provided, That any mandatory or injunctive d ecree shall specify the Federal officer or officers (by name or by t itle), and their

successors in office, personally responsible for compli ance. Nothing herein (1) affects other limitations on judicial review or the power or duty

of the court to dismiss any action or deny reli ef on any other appropriate legal or equitable ground; or (2 ) confers authority to grant relief if any other statute that grant s consent to suit expresslyor impliedly forbids the relief which is sou ght.

5 U.S.C. S 702.

35United States, 592 F.2d 712, 719 (3d Cir. 1979). Ho wever,

in its EAJA opinion the district court expressly no ted that Morgan "exacerbated the jurisdictional controversy by failing to allege the appropriate waiver of soverei gn immunity under the APA" in his complaint or subsequ ent filings and that Morgan "specifically disregarded t he court's specific instruction to file an amended complaint a lleging the appropriate waiver of sovereign immunity under the APA." EAJA Op. at 6.

Even if we disagreed with the district court's asse ssment of the difficulty of the jurisdictional issue, we c annot conclude that the government's actions in challengi ng jurisdiction were unreasonable, especially in light of Morgan's failure to plead a waiver of sovereign imm unity. Moreover, although Morgan argues that jurisdiction was clear from the very beginning and that the challeng es to jurisdiction were therefore unreasonable, he was gi ven an opportunity to clarify any jurisdictional uncertain ty when the district court instructed him to amend his comp laint to plead waiver under the APA. Consequently, we believ e that the government's litigation position was substantia lly justified.

VIII.

Our holding that the government's position in the underlying litigation was substantially justified a nd that the denial of attorney's fees was appropriate does not end our inquiry. Morgan argues that he is entitled to costs under the EAJA even if he is not entitled to attorney's f ees, and in support of that argument he relies on Section 2412( a)(1) of the EAJA which provides, in relevant part, as follo ws:

Except as otherwise specifically provided by statute, a judgment for costs, as enumerated in section 1920 of this title, but not including the fees and e xpenses of attorneys, may be awarded to the prevailing party in any civil action brought by or against the U nited States or any agency or any official of the United States acting in his or her official capacity in any court having jurisdiction of such action.

3628 U.S.C. S 2412(a)(1). He notes that, unlikeS 2412 (d)(1)(A),

which requires a finding that the government's posi tion was not substantially justified before a district court can award attorney's fees, S 2412(a)(1) does not require such a finding as a condition to the award of costs. Thus, he argu es that because he was the prevailing party, he is entitled to costs without regard to the reasonableness of the governm ent's position in defending against his claims.

However, we do not believe it necessary to reach th e merits of Morgan's argument. Section 2412(a)(1) spe cifically refers to costs as enumerated in 28 U.S.C. S 1920, which provides as follows:

A judge or clerk of any court of the United States may tax as costs the following:

(1) Fees of the clerk and marshal; (2) Fees of the court reporter for all or an y part of the stenographic transcript necessarily obtained for use in the case; (3) Fees and disbursements for printing and witnesses; (4) Fees for exemplification and copies of p apers necessarily obtained for use in the case; (5) Docket fees under section 1923 of this t itle; (6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretatio n services

under section 1828 of this title.

A bill of costs shall be filed in the case a nd, upon allowance, included in the judgment or decre e.

28 U.S.C. S 1920 (emphasis added). It is clear that such costs are an incident of judgment. Rude v. Buchhalt er, 286 U.S. 451, 459 (1931); see also Fed.R.Civ.P. 54.

Morgan inserted a prayer for costs in his complaint , but

the district court did not address it in its merits disposition. See App. at 410-11. The award or non-award of costs is inherent to, and appealable from, the initial judgm ent. See Gonzales v. Fairfax-Brewster School, Inc., 569 F.2d 1294 (4th Cir. 1978). However, Morgan did not appeal fro m any part of the district court's merits decision. Conse quently, his failure to appeal from the district court's fai lure to

37award costs makes that aspect of the judgment afina l

decision which Morgan cannot now attack. Id. at 129 7.

IX.

In closing, we wish to reiterate that although we a ffirm the denial of relief to Morgan under the EJAJ, we d o not

intend to minimize the seriousness of the misconduc t that has been attributed to Captain Koleos, or various o ther Marine Corps officers, nor do we minimize or ignore the seriousness of the allegations of violations of Mor gan's constitutional rights. Indeed, in the usual case, a constitutional violation will preclude a finding th at the government's conduct was substantially justified. S ee U.S. v. $12,248 U.S. Currency, 957 F.2d 1513, 1517 (9th Cir. 1991) ("[T]he government's position was not substan tially justified because the government violated the claim ant's Fifth Amendment Due Process rights . . ."). Rather, we merely state, that on this record, the district cou rt did not abuse its discretion in finding the government's po sition was substantially justified. Thus, for all of the a bove reasons, we will affirm the decision of the distric t court.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

38