United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Filed July 18, 2006

Division No. 95-1

IN RE: CISNEROS

(NEEDLE FEE APPLICATION)

Division for the Purpose of

Appointing Independent Counsels

Ethics in Government Act of 1978, As Amended

Before: SENTELLE, Presiding, FAY and REAVLEY, 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 Martin Needle

for reimbursement of attorneys’ fees and costs pursuant to

section 593(f) of the Ethics in Government Act of 1978, as

amended, 28 U.S.C. § 591 et seq. (2000), and it appearing to the

court for the reasons set forth more fully in the opinion filed

contemporaneously herewith, that the petition is for the most

part well taken, it is hereby
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ORDERED, ADJUDGED, and DECREED that Martin

Needle shall be reimbursed for attorneys’ fees and expenses in

the amount of $22,390.86.

 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 July 18, 2006

Division No. 95-1

IN RE: CISNEROS

(NEEDLE FEE APPLICATION)

Division for the Purpose of

Appointing Independent Counsels

Ethics in Government Act of 1978, As Amended

Before: SENTELLE, Presiding, FAY and REAVLEY, Senior

Circuit Judges.

ON APPLICATION FOR ATTORNEYS’ FEES

PER CURIAM: Martin Needle petitions this Court under

section 593(f) of the Ethics in Government Act of 1978, as

amended, 28 U.S.C. §§ 591-599 (“the Act”), for reimbursement

of attorneys’ fees in the amount of $23,746.77 that he claims

were incurred during and as a result of the investigation

conducted by the Independent Counsel. Because we find that

Needle has established his entitlement under the statutory

criteria for reimbursement of a portion of the fees we will, for

the reasons set forth more fully below, allow recovery of

$22,390.86.
4

Background

In 1994 allegations arose that Henry Cisneros, thenSecretary of Housing and Urban Development, during his

appointment process may have made false statements to the FBI

concerning alleged payments made by him to his mistress. After

conducting a preliminary investigation pursuant to the

Independent Counsel statute, the Attorney General requested

that this court appoint an independent counsel to further

investigate the matter, and the appointment was made on

May 24, 1995. Approximately one and a half years after his

appointment, the Independent Counsel (“IC” or “OIC”)

requested that the Attorney General expand his jurisdiction to

include investigation of possible tax violations by Cisneros in

years 1989, 1991, 1992, and 1993. Apparently based in part on

a recommendation from the IRS, this request was granted only

for the year 1992.

During his subsequent investigation, the IC apparently came

into possession of an internal IRS memorandum (hereinafter

“the improprieties memorandum”) that contained allegations of

impropriety by the IRS Washington, D.C., office in its decision

not to recommend prosecution of Cisneros for the remaining tax

violations. The IC, beginning in 1997, then undertook his own

investigation into whether obstruction of justice occurred in the

decisions of certain DOJ and IRS officials in not authorizing the

investigation or prosecution of Cisneros for these possible tax

violations. Martin Needle, the fee applicant here, was

investigated by the IC in his capacity as an IRS attorney who

had reviewed the Cisneros case.

 In 1998 this “obstruction investigation” was temporarily

suspended, until 2000. After resumption, Needle was called

before the grand jury after being granted “informal use

immunity.” He was never indicted and now, pursuant to the
5

Act, seeks reimbursement for his attorneys’ fees expended in

this matter, in the amount of $23,746.77.

Discussion

Unlike persons investigated by Executive Branch

prosecutors, the subjects of investigations under the Ethics in

Government Act are entitled to reimbursement of attorneys’ fees

expended in defense against such investigation under limited

circumstances delineated in 28 U.S.C. § 593(f)(1), which 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.

In applying this statute, this court has held repeatedly that

as “a waiver of sovereign immunity it is to be strictly

construed.” In re Nofziger, 925 F.2d 428, 438 (D.C. Cir., Spec.

Div., 1991) (per curiam). Therefore, we will award counsel fees

only to a petitioner who is unindicted and who demonstrates

that: 

(1) he is a “subject” of such investigation;

(2) the fees were incurred “during” the investigation;

(3) the fees would not have been incurred “but for” the

requirements of the Act; and

(4) the fees are “reasonable.”
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In re Mullins (Mullins Fee Application), 84 F.3d 459, 463 (D.C.

Cir., Spec. Div., 1996) (per curiam) (quoting In re North (Cave

Fee Application), 57 F.3d 1117, 1119 (D.C. Cir., Spec. Div.,

1995) (per curiam)). As to each of these necessary

requirements, the petitioner bears the burden of proof. See, e.g.,

In re North (Reagan Fee Application), 94 F.3d 685, 690 (D.C.

Cir., Spec. Div., 1996) (per curiam). There is apparently no

dispute that Needle incurred his attorneys’ fees “during” the

IC’s investigation. The remainder of the discussion will

therefore address the “subject,” “but for,” and “reasonable”

requirements.

A. “Subject” Status

We have previously defined the term “subject” as a person

whose conduct is within the scope of the independent counsel’s

investigation such 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). Additionally, in Shultz we held that, under any

definition of the term, the criterion for “subject” status is

squarely met when the independent counsel tells a person that he

is in fact a subject. 8 F.3d at 850. Needle asserts that on or

about May 12, 1998, the IC’s office informed him that he was

a subject of the investigation; he consequently claims that he has

satisfied the subject requirement under Shultz. And although he

was subsequently granted use immunity for his testimony before

the grand jury, Needle argues that he nevertheless still retained

subject status in that he “remained under the threat of

prosecution until the prosecutor was satisfied with his entire

testimony.”
7

The Department of Justice, in its evaluation of Needle’s fee

application, notes that although Needle was informed that he

was a “subject” of the IC’s investigation, he was subsequently

granted use immunity and fees incurred after immunity has been

conferred – even use immunity – are generally not reimbursable.

In re Pierce (Abrams Fee Application), 190 F.3d 586, 591 (D.C.

Cir., Spec. Div., 1999). The DOJ asserts that for an applicant

nevertheless to believe that there remained a realistic possibility

that he would become a defendant he must show “extraordinary

facts.” See id. at 591. But the DOJ defers to the OIC to “shed

further light on whether Mr. Needle was treated in a manner that

would lead him reasonably to believe that he was at all times a

continuing subject of the Independent Counsel’s investigation.”

In its evaluation, the OIC does not dispute Needle’s

assertion that it told him on May 12th that his status was that of

subject. But the IC claims that on May 20th, in a conversation

between the OIC and Needle’s attorney, the OIC stated that it

considered Needle “more of a witness than a subject.”

Furthermore, according to the OIC, its obstruction investigation

was soon thereafter temporarily suspended until early 2000, and

upon resumption it informed Needle’s attorney that Needle’s

status “may be that of a witness.” Additionally, the OIC notes

that Needle was given informal use immunity, and that it is not

the norm for a person to be considered a subject after receiving

such immunity. According to the OIC, only “extraordinary

circumstances” justify a witness’s continued apprehension after

being immunized, and no such circumstances exist here. To the

contrary, argues the OIC, “the grant of immunity to Needle

should have strengthened what should have been his already

changed ‘reasonable perception’ that he was not a subject of the

OIC’s investigation.” In sum, according to the IC, after May 20,

1998, Needle was treated as a cooperating witness, and this fact

is further evidenced by the comparable treatment of Needle in

the IC’s Final Report. Taking all of the above into
8

consideration, the IC argues that at no time should Needle “have

believed that he was in serious jeopardy of becoming a

defendant . . . except perhaps before May 20, 1998, for which he

claims $2375 in fees.”

There appears to be no dispute that around May 12, 1998,

the OIC told Needle that he was considered a subject of the

investigation. As such, he fulfills the “subject” requirement of

the Act. See In re Madison Guar. Sav. & Loan (Lindsey Fee

Application), 346 F.3d 1111, 1114-15 (D.C. Cir., Spec. Div.,

2003) (per curiam) (“Although the Act does not define ‘subject,’

as we have stated before, under any definition of ‘subject’ this

element will be squarely met for fees incurred after the

Independent Counsel’s office informs an individual that he is a

subject.” (internal quotation marks and citation omitted)). The

only question appears to be how long that status was held.

According to the IC, Needle’s subject status ended a little over

a week later, when his attorney was told by the OIC that Needle

was “more of a witness than a subject,” and that at no time

thereafter should he have believed that he was in serious

jeopardy of becoming a defendant. But although the IC strives

to paint Needle as a witness and not a subject after May 20,

1998, the IC’s own words appear to belie that claim. First, the

statement made to Needle’s attorney on May 20, 1998, does not

by itself rule out his status as a subject: He may have been

considered “more” of a witness, and thus by implication “less”

of a subject, but a subject all the same. Furthermore, after

resuming its “obstruction investigation” in 2000, the OIC sent

a letter to Needle’s attorney concerning the forthcoming

issuance to Needle of a grand jury subpoena. Although the letter

provided Needle with informal use immunity, and stated that he

“may be that of a witness” with respect to the grand jury, it

nevertheless stated that it “could not assure [the attorney] that

[Needle] was not a subject.” It should also be noted that in its

evaluation the OIC relies on this court’s discussion in Abrams,
9

190 F.3d at 591, wherein it was noted that it “is not the norm”

for a person to be considered a subject after receiving use

immunity. However, in the relevant case cited in that

discussion, Dutton, 11 F.3d at 1079, as well as in Pierce itself,

the fee applicants were granted formal use immunity under the

Federal Use Immunity Statute, 18 U.S.C. § 6002. It appears that

if such immunity had been granted here, instead of the “informal

use immunity” as stated in the OIC’s February 21, 2001, letter,

the OIC’s position concerning Needle’s post-immunity status

would be considerably stronger.

In sum, it appears that the OIC never definitively retracted

Needle’s “subject” status. Consequently, for the full time period

in which Needle seeks fee reimbursement, it appears that he

“reasonably believed that there was a realistic possibility that he

would become a defendant.” In re North (Gardner Fee

Application), 30 F.3d 143, 146 (D.C. Cir., Spec. Div., 1994) (per

curiam) (internal quotation marks and citation omitted).

B. Fees Not Incurred “But For” the Requirements of the

Act

The Act requires that to be reimbursable, attorneys’ fees

must “not have been incurred but for the requirements of [the

Act].” 28 U.S.C. § 593(f)(1) (emphasis added). Accordingly,

“[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 limiting fee awards to 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 citizens 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.,
10

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 [Act]”)).

In addressing the “but for” requirement, Needle first cites

Gardner, 30 F.3d at 146, for the proposition that this

requirement is to ensure that those who have been investigated

by an independent counsel should only have to pay those

attorneys’ fees that would have been paid if the same offense

had been investigated by the Department of Justice. Needle then

asserts that it was in his “public and official position with the

IRS” that he was involved in the Cisneros tax matter and

subsequently questioned by the OIC about that involvement.

Claiming that “[b]ut for his official duties and responsibilities,

[he] would never have been the subject of the investigation and

would not have been in a position to retain counsel to provide

advice and guidance through the process,” Needle goes on to

argue that the attorneys’ fees at issue would not have been

incurred “but for” the Independent Counsel investigation

involving Cisneros.

The OIC in its evaluation disputes Needle’s claim to

fulfillment of the “but for” requirement. To begin, the OIC cites

In re Pierce (Kisner Fee Application), 178 F.3d 1356, 1361

(D.C. Cir., Spec. Div., 1999) (per curiam), arguing that in order

for Needle to fulfill the requirement “it is necessary for Needle

to establish that special limitations and procedures of the Act,

such as those manifested in its unique two-step procedure,

forced him to incur legal costs that he otherwise would not have

incurred.” The OIC then takes issue with Needle’s cite to In re

Mullins, claiming that in that case the “but for” requirement was

satisfied because of redundant State Department and DOJ

investigations prior to the independent counsel investigation,

which is not the situation here. In closing, the OIC argues that

Needle’s assertion that he “was a public official does not begin
11

to satisfy his burden of showing that he would not have incurred

some or all of the attorneys’ fees claimed in his application but

for the Independent Counsel Act.”

In contrast, the DOJ in its evaluation agrees with Needle

that he has satisfied the “but for” requirement. First, the

Department notes that although “it is appropriate” for it to take

over any remaining investigations of a closing independent

counsel office, no such action occurred here. According to the

DOJ, this case is thus analogous to In re Segal (Segal Fee

Application), 145 F.3d 1348, 1352 (D.C. Cir., Spec. Div., 1998)

(per curiam), and In re Olson (Perry Fee Application), 892 F.2d

1073, 1074 (D.C. Cir., Spec. Div., 1990) (per curiam), in that

here, as there, “this Court . . . found the ‘but for’ test satisfied

based on a lack of prosecutorial interest.”

Second, in the DOJ’s opinion the allegations investigated by

the IC “appear much more akin to bureaucratic conflict than

suggestive of criminal behavior.” In support of this statement,

the DOJ asserts that the central issue investigated by the

Independent Counsel was a dispute between the IRS’s regional

office and Washington office over whether there was sufficient

evidence to criminally prosecute Cisneros for tax violations.

Dissecting the “improprieties memorandum,” the DOJ argues

that “the complaints in the memorandum were in the nature of

bureaucratic conflict,” and further that 

[t]hese sorts of allegations . . . would not in the normal

course, without additional evidence, generate a

criminal investigation of government employees

carrying out their respective duties in evaluating the

matters in question.

Third, the DOJ points out that the IC, after investigating

Cisneros for tax year 1992, ultimately decided not to indict
12

because willfulness could not be established - the same reason

that led the IRS to decline referral in the first place. And the

DOJ also notes that it too declined to refer other tax years to the

IC, leading to the conclusion that in the end the IC, the DOJ, and

the IRS Washington office were all in agreement that

prosecution of the tax matters was not warranted. Under such

circumstances, asserts the DOJ, “the conflict would not have

been the topic of a criminal investigation ‘but for’ the existence

of the Independent Counsel statute.”

As the DOJ suggests, the matter looked into in the IC’s

“obstruction investigation” appears to have been nothing more

than a “bureaucratic conflict.” In several fee applications

considered at the end of the Iran/Contra independent counsel

investigation, this court noted that during that investigation the

Independent Counsel treated efforts to circumvent the Boland

Amendments as a criminal conspiracy. See, e.g., Dutton, 11

F.3d at 1080; Gardner, 30 F.3d at 146. The court stated that no

executive branch authorities, including a politically appointed

Attorney General, would have subjected such attempts to

criminal prosecution, and thus the “but for” requirement was

fulfilled as no fees would have been incurred “but for” the

appointment of the Independent Counsel. Dutton, 11 F.3d at

1080. The situation here appears to be analogous - executive

branch authorities do not treat “bureaucratic conflicts” as

criminal, and the Department of Justice says as much in its

evaluation: “an internal disagreement of this sort over a

prosecution decision would rarely, if ever, lead to a criminal

investigation by the Department of Justice.”

Furthermore, addressing the “but for” requirement in

Nofziger, 925 F.2d at 444, we held that the appropriate question

was whether “Nofziger, absent the statute, [would] have been

similarly investigated and prosecuted by the Department of

Justice . . . .” In its evaluation the Department strongly opines
13

more than once that the answer to that question here is in the

negative:

[i]t is unlikely that an investigation of the pertinent

matters in this case would have been conducted by the

Department of Justice absent the existence of the

Independent Counsel statute.

It is exceedingly unlikely that the core allegations that

gave rise to the Independent Counsel’s investigation

with respect to IRS employees would have led to an

investigation by an ordinary prosecutor.

In sum, it appears that in the absence of the Act an

investigation of this matter would not have been undertaken by

the Department of Justice, and Needle would therefore not have

incurred attorneys’ fees “but for” the appointment of the

Independent Counsel.

C. Fees Are “Reasonable” Under the Act

This court must determine whether Needle’s attorneys

charged reasonable rates, and whether the time expended by

Needle’s attorneys on his representation was reasonable. In re

Meese, 907 F.2d 1192, 1201 (D.C. Cir., Spec. Div., 1990) (per

curiam). 

Although the DOJ asserts that “the fees generally are

adequately documented and appear to be reasonable,” the OIC

argues that the following should be rejected as unreasonable: 1)

those expenses for travel, hotel, taxi, and phone calls incurred

because Needle’s attorney practices in Miami, Florida and had

to travel or make calls to Washington, see In re North (Bush Fee

Application), 59 F.3d 184, 194 (D.C. Cir., Spec. Div., 1995) (per

curiam); and 2) insufficiently documented expenses for long
14

distance telephone calls, photocopies, and courier service.

From the entries contained in the billing documents for the

attorneys’ fees, it appears that the entry descriptions are

sufficient and the time expended reasonable. But, as the IC

pointed out, some of the expenses sought are problematical.

First, Needle’s attorney practiced in Miami, and in the first or

second week of March, 2001, apparently traveled to

Washington, D.C., on the Needle matter. Total expenses sought

for this trip: $1280.91. In Bush, we noted that

in the absence of some showing that local counsel

could not have rendered the service involved and

thereby obviated the necessity of employing an

attorney who must necessarily spend billable time

travelling from his normal home to the work site, we

do not find such travel to be within the reasonableness

contemplated by Congress.

Id. at 194. As no excusing showing has been made by Needle,

the expenses for this trip will not be reimbursed.

Second, the expense pages contain multiple entries for

“Long Distance Telephone” calls and “Photocopies,” as well as

an entry for “Courier,” all of which are not otherwise explained.

The total amount sought for these entries is $158.36. This court

has in the past made deductions for comparable expenses

because of a lack of supporting documentation, see In re

Madison Guar. Sav. & Loan (Marceca Fee Application), 366

F.3d 922, 929 (D.C. Cir., Spec. Div., 2004) (per curiam), and we

will do so here, reducing the amount by $75.00.

Total deductions for expenses: $1280.91 + $75.00 =

$1355.91.
15

In sum, Needle has requested that his attorneys’ fees be

reimbursed in the amount of $23,746.77. Subtracting $1355.91

in expenses leaves a remainder of $22,390.86.

Conclusion

In light of the foregoing discussion, Martin Needle shall be

reimbursed for attorneys’ fees and expenses in the amount of

$22,390.86.