Opinion ID: 612732
Heading Depth: 1
Heading Rank: 4

Heading: The District Court Applied an Incorrect Legal Standard When It Awarded Attorney's Fees and Costs against the United States under the Hyde Amendment.

Text: The government makes two arguments that the district court abused its discretion when it awarded attorney's fees and costs against the United States under the Hyde Amendment. First, the government argues that the district court clearly erred when it found that the superseding indictment was significantly motivated by ill-will. Second, the government argues that the district court committed a legal error because the litigating position of the United States was not vexatious[], in bad faith, or so utterly without foundation in law or fact as to be frivolous. Gilbert, 198 F.3d at 1299. We need not decide whether the finding that the filing of the superseding indictment was motivated by subjective ill-will is clearly erroneous. The district court found the superseding indictment was motivated by Cronin's ill-will because [t]he patients [who] were included in the Superseding Indictment were known to the Government long before the motion to suppress was litigated, yet no Superseding Indictment was sought at an earlier time. The government contends that some of the patients who were included in the superseding indictment were not known to the government until after the motion to suppress had been filed and soon before the hearing on that motion. The government also argues that the finding that the filing of the superseding indictment was motivated by ill-will is clearly erroneous because Cronin's superiors in the United States Attorney's Office reviewed and approved the superseding indictment before it was presented to the grand jury; the final decision rested with others. We need not decide these issues because, even if we assume that the filing of the superseding indictment was subjectively motivated by ill-will, that finding alone cannot support a sanction against the United States under the Hyde Amendment. We agree with the government that the district court failed to understand the narrow scope of the Hyde Amendment. Congress enacted the Hyde Amendment as part of the Appropriations Act of 1998, and it provides a high standard for an award of attorney's fees and costs against the United States in a criminal case: [T]he court, in any criminal case (other than a case in which the defendant is represented by assigned counsel paid for by the public) ... may award to a prevailing party, other than the United States, a reasonable attorney's fee and other litigation expenses, where the court finds that the position of the United States was vexatious, frivolous, or in bad faith, unless the court finds that special circumstances make such an award unjust. Such awards shall be granted pursuant to the procedures and limitations (but not the burden of proof) provided for an award under [the Equal Access to Justice Act]. Pub.L. No. 105-119, § 617, 111 Stat. 2440, 2519 (1997) (reprinted in 18 U.S.C. § 3006A, historical and statutory notes). The initial proposed version of the Hyde Amendment would have allowed a prevailing defendant to recover attorney's fees and costs unless the government could establish that its position was substantially justified  modeled after the Equal Access to Justice Act, 28 U.S.C. § 2412(d)(1)(A)  but that version was criticized on the ground that it made recovery for a prevailing defendant too easy. See Gilbert, 198 F.3d at 1299-1303 (explaining the legislative history of the Hyde Amendment). [I]n response to concern that the initial version of the Hyde Amendment swept too broadly, the scope of the provision was curtailed significantly by Congress in two ways. Id. at 1302. First, instead of the substantially justified standard from the Equal Access to Justice Act, the Hyde Amendment imposed a standard more favorable to the government: a prosecution must be vexatious, frivolous, or in bad faith. Second, unlike the Equal Access to Justice Act, the Hyde Amendment placed the burden of satisfying that standard on the defendant, not on the government. We explained in Gilbert the daunting obstacle, id. at 1302, a defendant must overcome  at a minimum, satisfying an objective standard that the legal position of the United States amounts to prosecutorial misconduct  for an award of attorney's fees and costs under the Hyde Amendment: From the plain meaning of the language Congress used, it is obvious that a lot more is required under the Hyde Amendment than a showing that the defendant prevailed at the pre-trial, trial, or appellate stages of the prosecution. A defendant must show that the government's position underlying the prosecution amounts to prosecutorial misconduct  a prosecution brought vexatiously, in bad faith, or so utterly without foundation in law or fact as to be frivolous. Id. at 1299. Gilbert established that our inquiry under the Hyde Amendment is whether the prosecution of Shaygan for illegally dispensing controlled substances amounted to misconduct. Because the words vexatious, frivolous, or in bad faith, are not defined in the Hyde Amendment, we defined them in Gilbert according to their ordinary meaning. Id. at 1298-99. `Vexatious' means `without reasonable or probable cause or excuse.' Id. (quoting Black's Law Dictionary 1559 (7th ed. 1999)). A `frivolous action' is one that is `[g]roundless ... with little prospect of success; often brought to embarrass or annoy the defendant.' Id. at 1299 (alterations in original) (quoting Black's Law Dictionary 668 (6th ed. 1990)). `[B]ad faith' `is not simply bad judgment or negligence, but rather it implies the conscious doing of a wrong because of dishonest purpose or moral obliquity; ... it contemplates a state of mind affirmatively operating with furtive design or ill will.' Id. (second alteration in original) (quoting Black's Law Dictionary 139 (6th ed. 1990)). The district court erroneously concluded that the superseding indictment was filed in bad faith under the Hyde Amendment. The district court found that it was Cronin's displeasure and ill-will toward defense counsel as a result of Defendant's Motion to Suppress, as evidenced by his `seismic shift' comment[] [that] led to the filing of a Superseding Indictment, but the record establishes that, regardless of Cronin's displeasure or subjective ill-will, the government had an objectively reasonable basis for superseding the indictment. We do not measure bad faith or vexatiousness only by whether a prosecutor expressed displeasure with defense counsel. Bad faith is an objective standard that is satisfied when an attorney knowingly or recklessly pursues a frivolous claim. Peer v. Lewis, 606 F.3d 1306, 1314 (11th Cir.2010); see also United States v. Knott, 256 F.3d 20, 29 (1st Cir.2001) ([A] determination that a prosecution was `vexatious' for the purposes of the Hyde Amendment requires ... a showing that the criminal case was objectively deficient, in that it lacked either legal merit or factual foundation[]....); United States v. Sherburne, 249 F.3d 1121, 1126-27 (9th Cir.2001) (We conclude that for purposes of the Hyde Amendment, the term `vexatious' includes both of these characteristics: subjective and objective.) (footnote omitted). [A] prosecutor's discretion is [also] `subject to constitutional constraints.' United States v. Armstrong, 517 U.S. 456, 464, 116 S.Ct. 1480, 1486, 134 L.Ed.2d 687 (1996) (quoting United States v. Batchelder, 442 U.S. 114, 125, 99 S.Ct. 2198, 2204-05, 60 L.Ed.2d 755 (1979)). [T]he decision whether to prosecute may not be based on `an unjustifiable standard such as race, religion, or other arbitrary classification.' Id. (quoting Oyler v. Boles, 368 U.S. 448, 456, 82 S.Ct. 501, 506, 7 L.Ed.2d 446 (1962)). But a finding of bad faith under the Hyde Amendment cannot rest on evidence of displeasure or subjective ill-will alone. In the light of the evidence that supported the superseding indictment, the charges against Shaygan were not objectively filed in bad faith; the government did not knowingly or recklessly pursue a frivolous claim, Peer, 606 F.3d at 1314, or exceed any constitutional constraint, see Armstrong, 517 U.S. at 464, 116 S.Ct. at 1486. The government interviewed additional patients of Shaygan after his arrest, and those patients gave incriminating information about Shaygan, including that he had dispensed controlled substances without performing physical examinations. The government also used evidence from Shaygan's medical files and day planner to build its case. All of the patients who were added by the superseding indictment testified as witnesses for the government at trial. Even if the testimony of Tucker and McQuarrie contradicted the DEA-6 reports prepared after their initial interviews, [f]or Hyde Amendment purposes[]... the court must assess the basis for pursuing charges from the perspective of the government at the time.  Knott, 256 F.3d at 35. We define bad faith for purposes of the Hyde Amendment as `the conscious doing of a wrong,' Gilbert, 198 F.3d at 1299 (quoting Black's Law Dictionary 139 (6th ed. 1999)), and superseding an indictment with the support of newly discovered evidence does not meet that standard. Newly obtained evidence is unquestionably a good faith reason to supersede an indictment. See United States v. Bryant, 770 F.2d 1283, 1287 (5th Cir.1985) ([N]ewly discovered evidence[] [that] indicat[ed] that the extent of [a defendant's] misconduct was much greater than had been known at the time the original indictment was filed[] justifiably motivated the prosecutorial decision to obtain additional counts.). The filing of a superseding indictment supported by newly discovered evidence is not prosecutorial misconduct. A comparison with the Equal Access to Justice Act confirms that Congress created an objective standard of bad faith to govern an award of attorney's fees and costs under the Hyde Amendment. Under the Equal Access to Justice Act, which provides for an award of attorney's fees and costs against the United States for a prevailing party in a civil action, the government can avoid an award by establishing that its legal position was substantially justified. 28 U.S.C. § 2412(d)(1)(A). If a finding of subjective ill-will alone were sufficient to sustain an award of fees under the Hyde Amendment, then it would be more difficult to obtain an award of fees under the Equal Access to Justice Act than under the Hyde Amendment: a prosecution might be substantially justified within the meaning of the Equal Access to Justice Act because it is supported by substantial evidence, but punishable by sanctions under the Hyde Amendment if the prosecutor harbored ill-will. Congress intended the opposite: that is, to make an award of attorney's fees and costs under the Hyde Amendment more, not less, difficult to obtain than under the Equal Access to Justice Act. See Gilbert, 198 F.3d at 1302. In other words, if Shaygan failed even to establish that the government's prosecution ... was not substantially justified, [he] cannot establish that the prosecution was vexatious, frivolous, or in bad faith. United States v. Truesdale, 211 F.3d 898, 910 (5th Cir.2000). Bad faith is also measured objectively in other instances of litigation misconduct that, unlike the Hyde Amendment, do not implicate sovereign immunity. A federal court, for example, can sanction a private attorney for unreasonably and vexatiously multiplying a proceeding, 28 U.S.C. § 1927, only when the attorney's conduct is so egregious that it is `tantamount to bad faith,' Amlong & Amlong, P.A. v. Denny's, Inc., 500 F.3d 1230, 1239 (11th Cir.2007) (quoting Avirgan v. Hull, 932 F.2d 1572, 1582 (11th Cir.1991)), and bad faith turns not on the attorney's subjective intent, but on the attorney's objective conduct, id.; see also Norelus v. Denny's, Inc., 628 F.3d 1270, 1282 (11th Cir. 2010) (The standard is an objective one....). In a recent decision, where we reviewed the denial of sanctions under Federal Rule of Civil Procedure 11, section 1927, and the inherent power of a district court, we reaffirmed that [b]ad faith is an objective standard that is satisfied when an attorney knowingly or recklessly pursues a frivolous claim. Peer, 606 F.3d at 1314. If a determination of bad faith is governed by an objective standard when sanctions are imposed on private attorneys and litigants, bad faith cannot be established by a lesser showing when sanctions are imposed against the United States. After all, the established principle that waivers of sovereign immunity are to be construed narrowly counsels our construction of the Hyde Amendment. Aisenberg, 358 F.3d at 1341. Respect for the separation of powers also informs our understanding that the Hyde Amendment provides an objective standard for bad faith. In our criminal justice system, the Government retains `broad discretion' as to whom to prosecute. Wayte v. United States, 470 U.S. 598, 607, 105 S.Ct. 1524, 1530, 84 L.Ed.2d 547 (1985) (quoting United States v. Goodwin, 457 U.S. 368, 380 n. 11, 102 S.Ct. 2485, 2492 n. 11, 73 L.Ed.2d 74 (1982)). The Attorney General and United States Attorneys have this latitude because they are designated by statute as the President's delegates to help him discharge his constitutional responsibility to `take Care that the Laws be faithfully executed.' Armstrong, 517 U.S. at 464, 116 S.Ct. at 1486 (quoting U.S. Const. art. II, § 3). This broad discretion rests largely on the recognition that the decision to prosecute is particularly ill-suited to judicial review. Wayte, 470 U.S. at 607, 105 S.Ct. at 1530. It also stems from a concern not to unnecessarily impair the performance of a core executive constitutional function. Armstrong, 517 U.S. at 465, 116 S.Ct. at 1486. In the light of this constitutional framework, we cannot read the Hyde Amendment to license judicial second-guessing of prosecutions that are objectively reasonable. Our review of the good or bad faith of a prosecution under the Hyde Amendment is akin to our review of qualified immunity, which shields official acts that are objectively reasonable. Qualified immunity is a real-world doctrine designed to allow [public] officials to act (without always erring on the side of caution) when action is required to discharge the duties of public office. Foy v. Holston, 94 F.3d 1528, 1534 (11th Cir.1996). In that context, [o]bjective legal reasonableness is the touchstone. Lassiter v. Ala. A & M Univ., Bd. of Trs., 28 F.3d 1146, 1150 (11th Cir. 1994) (en banc); see also Hope v. Pelzer, 536 U.S. 730, 747, 122 S.Ct. 2508, 2519, 153 L.Ed.2d 666 (2002) (applying the objective immunity test of what a reasonable officer would understand). For that reason, we will grant qualified immunity from civil liability for an official whose conduct is objectively reasonable even when motivated by a dislike or hostility to certain protected behavior by a citizen. Foy, 94 F.3d at 1534. And we do so for a sound reason: When public officials do their jobs, it is a good thing. Id. In the same way, we cannot interpret the Hyde Amendment to thwart the objectively reasonable performance of prosecutorial duties. Shaygan did not even argue that the charges in the superseding indictment were frivolous or exceeded any constitutional constraint. Shaygan relied instead primarily on Cronin's seismic shift comment to establish that the superseding indictment was filed in subjective bad faith, but tough negotiating tactics and harsh words used by prosecutors cannot alone be grounds for a determination of bad faith under the Hyde Amendment. A rule that would allow a determination of bad faith whenever a prosecutor uses harsh words, such as seismic shift, and harbors some ill-will toward the defense would chill the ardor of prosecutors and prevent them from prosecuting with earnestness and vigor. The Hyde Amendment was not intended to do that. Gilbert, 198 F.3d at 1303. In United States v. Schneider , for example, the Second Circuit held that an alleged vow to indict [a defendant] if he invoked the Fifth Amendment... without more, could not support an award of attorney's fees under the Hyde Amendment. 395 F.3d 78, 88 (2d Cir.2005). The same result is required here, where the prosecution filed a superseding indictment supported by newly-discovered evidence, even if that filing was prompted by Shaygan's allegations in support of his motion to suppress. The Supreme Court has explained that, in all but an exceptional case, so long as the prosecutor has probable cause to believe that the accused committed an offense defined by statute, the decision whether or not to prosecute, and what charge to file or bring before a grand jury, generally rests entirely in his discretion. Bordenkircher v. Hayes, 434 U.S. 357, 364, 98 S.Ct. 663, 668, 54 L.Ed.2d 604 (1978). This appeal is unlike United States v. Adkinson, 247 F.3d 1289 (11th Cir.2001), where we affirmed an award under the Hyde Amendment because the litigating position of the government was vexatious, frivolous, and in bad faith, id. at 1293. In Adkinson, the government, `[w]ith full knowledge that it was contrary to recent and controlling precedent, ... induced the grand jury' to charge the defendant with a crime that did not exist. Id. at 1292 (alterations in original) (quoting United States v. Adkinson, 135 F.3d 1363, 1374 (11th Cir.1998)). We held that [p]rosecuting [defendants] in defiance of controlling authority constitutes `vexatious,' `frivolous,' and `bad faith' prosecutions. Id. at 1293. In this appeal, no one contends that Shaygan was charged with conduct that did not constitute a crime. Dispensing controlled substances outside the scope of professional practice is a crime, 21 U.S.C. § 841(a)(1), and Shaygan would have been legitimately convicted if the jury had believed the witnesses for the government. See Schneider, 395 F.3d at 85 (The case was not vexatious because the government had more than adequate evidence to establish each element of the crimes and the jury's credibility determinations did not undermine the legal merit or factual foundation of the prosecution.). The district court also erroneously concluded that discovery violations alone can support an award of attorney's fees and costs under the Hyde Amendment. The Hyde Amendment allows an award of attorney's fees and costs against the United States only when its overall litigating position was vexatious, frivolous, or in bad faith. The district court erroneously relied on the decision of the Supreme Court in Hall, 412 U.S. 1, 93 S.Ct. 1943, to conclude that [t]he Hyde Amendment is applicable to conduct by the government during the course of a prosecution taken in bad faith even if the commencement of the prosecution was commenced legitimately. The Supreme Court in Hall did not address the Hyde Amendment, but observed the general principle that `bad faith' may be found, not only in the actions that led to the lawsuit, but also in the conduct of the litigation. Id. at 15, 93 S.Ct. at 1951. Hall involved fee-shifting between two private litigants under the inherent equitable power of the court. The Hyde Amendment establishes a more stringent standard and applies only to a prosecution brought vexatiously, [frivolously, or] in bad faith. Gilbert, 198 F.3d at 1299; see also Schneider, 395 F.3d at 90 (quoting Pub.L. No. 105-119, § 617, 111 Stat. 2440, 2519) (We note that the statute does not allow an award for any instance of vexatious, frivolous, or bad-faith conduct. An award is allowed only where the court finds that `the position of the United States was vexatious, frivolous, or in bad faith.'). Moreover, Hall did not involve a waiver of sovereign immunity, but the established principle that waivers of sovereign immunity are to be construed narrowly counsels our construction of the Hyde Amendment. Aisenberg, 358 F.3d at 1341. The district court also erroneously relied on Troisi, 13 F.Supp.2d 595, and Ranger, 22 F.Supp.2d 667, for the proposition that courts have held that discovery violations in the course of a prosecution can form a basis for the award of attorney's fees under the Hyde Amendment. Troisi is inapposite; the district court denied the defendant's motion under the Hyde Amendment because the position of the United States in prosecuting Troisi was reasonable and did not rise to the level of vexatious, frivolous, or bad faith litigation. Troisi, 13 F.Supp.2d at 597. Although the district court in Ranger awarded sanctions under the Hyde Amendment based only on discovery violations, that decision is unpersuasive. The district court in Ranger failed to discuss the meaning of position of the United States for purposes of the Hyde Amendment, and the Sixth Circuit later reversed its decision on alternative grounds, see United States v. Ranger Elec. Commc'ns, Inc., 210 F.3d 627 (6th Cir.2000). Contrary to Ranger, the Sixth Circuit later interpreted the term position in the Hyde Amendment to address a broader issue. In United States v. Heavrin, 330 F.3d 723, 725 (6th Cir.2003), the district court had awarded a defendant attorney's fees and costs under the Hyde Amendment on the ground that some of the charges against him were frivolous, but the Sixth Circuit reversed. The Sixth Circuit ruled that the district court erred when it awarded attorney's fees and costs without assess[ing] the case as an inclusive whole. Id. at 731. The Sixth Circuit reasoned that [a] count-by-count analysis was inconsistent with the Hyde Amendment because its plain language refers to the position of the United States in the singular. Id. at 730. It concluded that, [w]hen assessing whether the position of the United States was vexatious, frivolous, or in bad faith, the district court should... make only one finding, which should be based on the case as an inclusive whole. Id. (internal quotation marks omitted). We reject the dissent's reading of the text of the Hyde Amendment. The dissent argues that we have take[n] the word `or' out of the statute by reading `in bad faith' as meaning the same thing as either `vexatious' or `frivolous,' Dissenting Op. at 1320, but the dissent misreads our holding. Subjective ill-will is relevant, but not sufficient for a finding of bad faith. We have explained that a prosecution brought in bad faith is one where wrongful motives are joined to a prosecution that is either baseless or exceeds constitutional restraints; a bad faith prosecution is not necessarily vexatious or frivolous. The dissent also contends that [t]he word `position,' as used in the Hyde Amendment, can easily apply to the way in which the Government conducts the prosecution, including the ill-will state of mind that a prosecutor's acts evidence, Dissenting Op. at 1323, n. 8, but the position must be that of the United States. We read that phrase  position of the United States  to refer to the legal position of the government, not the mental attitude of its prosecutor. The dissent ignores our precedents that establish that bad faith is measured objectively and instead would create a double standard. The dissent does not deny that the prosecution of Shaygan was objectively reasonable, but instead argues that district courts have discretion to award attorney's fees against the United States under the Hyde Amendment if a prosecutor is driven along by things like personal ambition, personal vindictiveness, or politics, Dissenting Op. at 1320. The dissent fails to explain why an award of attorney's fees against the government, which implicates both the separation of powers and sovereign immunity, can be based on only subjective ill-will, but an award of attorney's fees against a private litigant must satisfy a more demanding objective standard, see 28 U.S.C. § 1927. See also Amlong, 500 F.3d at 1239; Norelus, 628 F.3d at 1282; Peer, 606 F.3d at 1314. This double standard also would create, contrary to the intent of Congress, a more lenient standard for an award of fees under the Hyde Amendment than the standard created by the Equal Access to Justice Act, see 28 U.S.C. § 2412(d)(1)(A). See also Truesdale, 211 F.3d at 910. The dissent asserts that the only serious inquiry in this case is when the liability for fees and expenses should start, Dissenting Op. at 1323, because the government earlier offered to pay some fees, but the government never waived its argument that the Hyde Amendment does not support an award of attorney's fees and costs for Shaygan. The government argues on appeal that the Hyde Amendment does not apply, and Shaygan does not even suggest that the government ever waived that argument. Although the government offered to pay some of Shaygan's attorney's fees related to the collateral investigation, Shaygan never accepted the offer, which came before the district court entered its judgment. The earlier offer by the government to pay some of Shaygan's fees voluntarily is entirely different from an order of the district court requiring that those fees and more be paid by the government under the Hyde Amendment. The district court had no discretion to award Shaygan attorney's fees and costs. When it considers a motion under the Hyde Amendment, a district court has every right to consider evidence of subjective ill-will, but that evidence is not dispositive. See Amlong, 500 F.3d at 1241 (Although the attorney's objective conduct is the focus of the analysis, the attorney's subjective state of mind is frequently an important piece of the calculus....). The starting point for a potential award of attorney's fees and costs under the Hyde Amendment is an objectively wrongful prosecution: that is, a prosecution that either is baseless or exceeds constitutional constraints. If the prosecution is objectively reasonable, as was the case here, then a district court has no discretion to award a prevailing defendant attorney's fees and costs under the Hyde Amendment.