Court Opinion

ID: 185023
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:26:47+00
Date Added: 2024-06-11T17:26:12.716574
License: Public Domain

United States Court of Appeals

               FOR THE DISTRICT OF COLUMBIA CIRCUIT

                     Filed December 21, 1999

                        Division No. 89-5

                  In re:  Samuel R. Pierce, Jr. 
                    (Sanders Fee Application)

                   Division for the Purpose of 
                 Appointing Independent Counsels 
           Ethics in Government Act of 1978, as Amended

                            ---------

     Before:  Sentelle, Presiding, Fay and Cudahy, Senior 
Circuit Judges.

                            O R D E R

     This matter coming to be heard and being heard before the 
Special Division of the Court upon the petition of R. Carter 
Sanders for reimbursement of attorneys' fees and costs pur-
suant to section 593(f) of the Ethics in Government Act of 
1978, as amended, 28 U.S.C. s 591 et seq. (1994), and it 
appearing to the court for the reasons set forth more fully in 
the opinion filed contemporaneously herewith that the peti-
tion is not well taken, it is hereby

     ORDERED, ADJUDGED, and DECREED that the peti-
tion of R. Carter Sanders for attorneys' fees he incurred 
during the investigation by Independent Counsels Arlin M. 
Adams and Larry D. Thompson be denied.

                         Per curiam

                          For the Court:

                         Mark J. Langer, Clerk

                    by

                         Marilyn R. Sargent

                         Chief Deputy Clerk

                                 

                    United States Court of Appeals

               FOR THE DISTRICT OF COLUMBIA CIRCUIT

                     Filed December 21, 1999

                        Division No. 89-5

                  In re:  Samuel R. Pierce, Jr. 
                    (Sanders Fee Application)

                   Division for the Purpose of 
                 Appointing Independent Counsels 
           Ethics in Government Act of 1978, as Amended

                            ---------

     Before:  Sentelle, Presiding, Fay and Cudahy, Senior 
Circuit Judges.

                ON APPLICATION FOR ATTORNEYS' FEES

     Opinion for the Special Court filed Per curiam.

     Per curiam:  R. Carter Sanders petitions this court under 
Section 593(f) of the Ethics in Government Act of 1978, as 
amended, 28 U.S.C. s 591 et seq. (1994) (the "Act"), for 
reimbursement of attorneys' fees in the amount of $17,500.00 
that he incurred during and as a result of the investigation 
conducted by Independent Counsels ("IC") Arlin M. Adams 
and Larry D. Thompson.  Because we conclude that Sanders 
has not carried his burden of showing that he was a subject of 
the investigation and that the fees would not have been 
incurred but for the requirements of the Act, we deny the 
petition in its entirety.

                           Background1

     In 1978 Congress established the moderate rehabilitation 
("mod rehab") program within the U.S. Department of Hous-

__________
     1 We have had recent occasion to review the facts of this matter 
in In re Samuel R. Pierce, Jr. (Olivas Fee Application), 178 F.3d 

ing and Urban Development ("HUD").  This program encour-
aged developers to upgrade moderately substandard housing 
units for occupation by low income families.  In 1988 HUD's 
Inspector General ("IG") conducted an audit of the mod rehab 
program as administered from 1984 through 1988 and found 
that the program was not being administered efficiently, 
effectively, or economically.  The Inspector General's audit 
report triggered congressional investigations into abuses, fa-
voritism, and mismanagement at HUD during the 1980s 
under the tenure of HUD Secretary Samuel R. Pierce, Jr.  R. 
Carter Sanders, the fee petitioner here, was Associate Gener-
al Deputy Assistant Secretary of Housing/Deputy Federal 
Housing Commissioner during a portion of the time that 
Pierce was Secretary.  Subsequently, Sanders returned to 
the private sector as a consultant, assisting local housing 
authorities to obtain mod rehab funding from HUD.  Sanders 
Application at 1.

     Based on information elicited during the congressional 
investigations, the House Judiciary Committee wrote to At-
torney General Richard Thornburgh seeking the appointment 
of an independent counsel to investigate the matter.  Follow-
ing a preliminary investigation, Attorney General Thornburgh 
applied to this court for appointment of an independent 
counsel.  On March 1, 1990, we appointed former United 
States Circuit Judge Arlin Adams2 as independent counsel "to 
investigate ... whether Samuel R. Pierce, Jr., and other 
[HUD] officials may have committed the crime of conspiracy 
to defraud the United States or any other Federal crimes ... 
relating to the administration of the selection process of the 
Department's Moderate Rehabilitation Program from 1984 

__________
1350 (D.C. Cir., Spec. Div., 1999) (per curiam).  Rather than re-
plow recently tilled ground, we have adopted much of the language 
in the background portion of this opinion, and, where applicable, a 
portion of the analysis from that decision.

     2 Independent Counsel Adams resigned in May of 1995.  This 
court appointed his deputy, Larry D. Thompson of the Atlanta bar, 
to succeed him.

through 1988."  Order Appointing Independent Counsel, 
March 1, 1990.

     The IC conducted a comprehensive investigation ultimately 
confirming a widespread pattern of corruption at HUD dur-
ing Pierce's tenure.  Although the IC announced on January 
11, 1995, that he would not seek indictment of Pierce, during 
the course of the investigation seventeen (17) other persons 
were charged with and convicted of federal crimes as a result 
of the IC's investigation.  That investigation and the indict-
ments ranged well beyond the core facts of the original 
application for appointment of independent counsel.  Of par-
ticular reference to the petitioner before us, in May of 1990 
the IC served a subpoena on Sanders seeking documents 
related to Sanders' work while he was an official at HUD as 
well as his work on mod rehab projects after he left HUD.  
Sanders Application at 6.  He later voluntarily appeared for 
an interview at the IC's office.  IC's Evaluation at 3.

     The IC's investigation is now complete.  Pursuant to the 
statute, the IC submitted a final report to this court on 
March 30, 1998.  See 28 U.S.C. s 594(h)(1)(B).  We ordered 
the report made public by order of October 27, 1998.  There-
after, Sanders, pursuant to Section 593(f)(1) of the Act, 
petitioned this court for reimbursement of his attorneys' fees.  
As directed by Section 593(f)(2) of the Act, we forwarded 
copies of Sanders' fee petition to the Attorney General and 
the IC and requested written evaluations of the petition.  The 
court expresses its appreciation to the IC and the Attorney 
General for submitting these evaluations, which we have 
given due consideration in arriving at the decision announced 
herein.

                             Analysis

     Unique in the criminal law structure of the United States, 
the Ethics in Government Act provides for reimbursement of 
attorneys' fees expended by subjects in defense against an 
investigation under the Act.  Specifically, 28 U.S.C. 
s 593(f)(1) states:

     Upon the request of an individual who is the subject of 
     an investigation conducted by an independent counsel 
     pursuant to this chapter, the division of the court may, if 
     no indictment is brought against such individual pursuant 
     to that investigation, award reimbursement for those 
     reasonable attorneys' fees incurred by that individual 
     during that investigation which would not have been 
     incurred but for the requirements of this chapter.
     
     Because the Act "constitutes a waiver of sovereign immuni-
ty it is to be strictly construed."  In re Nofziger, 925 F.2d 
428, 438 (D.C. Cir., Spec. Div., 1991) (per curiam).  Therefore, 
the Act provides only reimbursement for attorneys' fees that 
survive an elemental analysis determining whether the peti-
tioner is the "subject" of the independent counsel's investiga-
tion, incurred the fees "during" that investigation, and would 
not have incurred them "but for" the requirements of the Act.  
The petitioner "bears the burden of establishing all elements 
of his entitlement."  In re North (Reagan Fee Application), 
94 F.3d 685, 690 (D.C. Cir., Spec. Div., 1996) (per curiam).  
We conclude that Sanders has not met either the "subject" or 
the "but for" requirement.

     A.   "Subject" Status
          
     We have previously defined the term "subject" as a person 
whose conduct is within the scope of the independent coun-
sel's investigation in such fashion that "the Independent 
Counsel might reasonably be expected to point the finger of 
accusation" at him.  In re North (Dutton Fee Application), 
11 F.3d 1075, 1078 (D.C. Cir., Spec. Div., 1993) (per curiam);  
see also In re North (Shultz Fee Application), 8 F.3d 847, 850 
(D.C. Cir., Spec. Div., 1993) (per curiam).  Although Sanders 
argues forcefully that he fits within this definition, we con-
clude that he has not carried his burden of establishing that 
he was in fact a subject of the IC's investigation.

     Sanders' main argument, in essence, is that because the IC 
investigated the mod rehab program, and because he was 
involved with the mod rehab program, he was a subject of the 
IC's investigation.  Reply at 3.  We are not persuaded, 
however, that the IC was focused on any possible criminal 

culpability by Sanders during the IC's investigation.  Sand-
ers' involvement with the IC's investigation appears to have 
been minimal:  he was served one subpoena for documents at 
the beginning of the IC's investigation, and three years later 
was interviewed by the IC's staff.  He had no other contacts 
with the IC's office.  See, e.g., In re North (Gregg Fee 
Application), 57 F.3d 1115, 1116 (D.C. Cir., Spec. Div., 1995) 
(per curiam).  He was never informed by the IC that he was 
a subject of the investigation.  See, e.g., In re North (Haskell 
Fee Application), 74 F.3d 277, 280 (D.C. Cir., Spec. Div., 
1996) (per curiam).  There is no evidence before us that 
anyone he was associated with was targeted by the IC.  See, 
e.g., In re North (Teicher Fee Application), 48 F.3d 1267, 
1268-69 (D.C. Cir., Spec. Div., 1995) (per curiam).  And there 
is no mention of him in the IC's Final Report.  See, e.g., In re 
North (Adkins Fee Application), 33 F.3d 76, 76-77 (D.C. Cir., 
Spec. Div., 1994) (per curiam).

     Sanders also argues that it was "plainly evident from the 
inception of the [IC's] investigation that [he] faced 'a realistic 
possibility ... [that he] would become a defendant' " because 
that investigation was based on the congressional and HUD 
IG investigations which, according to Sanders, "already had 
inquired extensively into Mr. Sanders' involvement with cer-
tain MRP [mod rehab] projects."  Sanders Application at 8 
(internal citation omitted).  It appears, however, that the only 
contact Sanders had with these previous investigations was an 
administrative subpoena seeking documents that was served 
on him by the HUD IG.  In sum, we conclude that Sanders 
could not consider himself to be under a "reasonable appre-
hension of prosecution" by the IC during his investigation.  
In re North (Gadd Fee Application), 12 F.3d 252, 256 (D.C. 
Cir., Spec. Div., 1994) (per curiam).

     B.   Fees Not Incurred "But For" the Requirements of the 
          Act
          
     As we have held, "[a]ll requests for attorneys' fees under 
the Act must satisfy the 'but for' requirement of" the Act.  In 
re Sealed Case, 890 F.2d 451, 452 (D.C. Cir., Spec. Div., 1989) 
(per curiam).  The purpose of awarding only fees that would 

not have been incurred "but for" the Act is to ensure that 
"officials [and here derivative 'subjects'] who are investigated 
by independent counsels will be subject only to paying those 
attorneys' fees that would normally be paid by private citi-
zens being investigated for the same offense by" federal 
executive officials such as the United States Attorney.  Id. at 
452-53 (citing S. Rep. No. 97-496, 97th Cong., 2d Sess. 18 
(1982), reprinted in 1982 U.S.C.C.A.N. 3537, 3554 (referring 
to "fees [that] would not have been incurred in the absence of 
the special prosecutor [independent counsel] law")).

     As we have stated "[t]he most difficult element for a fee 
applicant to establish under the Act is that the fees 'would not 
have been incurred but for the requirements of [the Act].' "  
In re North (Bush Fee Application), 59 F.3d 184, 188 (D.C. 
Cir., Spec. Div., 1995) (per curiam) (quoting Dutton, 11 F.3d 
at 1079).  In part this is so because the element requires a 
petitioner to prove a negative and one with a high component 
of speculation.  In part, though, it is difficult because the law 
contemplates that it should be difficult, that such fees will not 
be a common thing.  As we stated above, the contemplation 
of the legislation is not that subjects of independent counsel 
investigations will be reimbursed for all legal fees, but only 
that they will be reimbursed for those legal fees that would 
not have been incurred by a similarly-situated subject investi-
gated in the absence of the Act.

     Nonetheless, we have found that petitioners qualify for an 
award of fees in the face of the but-for test in at least four (4) 
circumstances:

     1. When the independent counsel's investigation sub-
     stantially constituted duplication of the preliminary in-
     vestigation conducted by the Department of Justice.  See 
     In re Olson, 884 F.2d 1415, 1420 (D.C. Cir., Spec. Div., 
     1989) (per curiam);  Dutton Fee Application, 11 F.3d at 
     1080.
     
     2. When the petitioning subject has been "prejudiced 
     by the Department of Justice's failure to comply with the 
     substantial protective features of the Act."  In re Nofzig-
     
     er, 925 F.2d at 438 (citing In re Meese, 907 F.2d 1192 
     (D.C. Cir., Spec. Div., 1990) (per curiam)).
     
     3. When in the absence of the requirements of the Act 
     " 'the case could have been disposed of at an early stage 
     of the investigation,' " without subjecting the petitioning 
     subject to the conditions that led to his incurring the fees 
     sought.  In re Segal (Sagawa Fee Application), 151 F.3d 
     1085, 1089 (D.C. Cir., Spec. Div., 1998) (per curiam) 
     (quoting In re Nofziger, 925 F.2d at 438).
     
     4. Not wholly distinct from No. 3, supra, when "high 
     public officials [or derivative subjects] were investigated 
     under the Act in circumstances where private citizens 
     would not [have been] investigated."  In re Nofziger, 925 
     F.2d at 442;  see also Dutton, 11 F.3d at 1080.
     
     Sanders argues that his case falls into categories (1) and 
(3).  As to (1), Sanders claims that the IC duplicated the 
investigations of Congress and the HUD IG, and that such 
duplication is sufficient to satisfy the "but for" element.  For 
authority on his position Sanders cites to In re Olson (Perry 
Fee Application), 892 F.2d 1073 (D.C. Cir., Spec. Div., 1990) 
(per curiam), and In re Olson.  In Perry we held that the 
IC's investigation of Perry was duplicative because the inves-
tigation by the Public Integrity Section of the DOJ had 
recommended against prosecution in the matter.  See 892 
F.2d at 1074.  Similarly, in In re Olson, we found that the 
Independent Counsel's investigation was duplicative because 
it covered the same ground "that had been covered by the 
preliminary investigation of the Department of Justice."  884 
F.2d at 1420.  In both those cases, then, it was duplication of 
the preliminary investigation that satisfied the "but for" 
element, not duplication of any other investigation, and we 
conclude that this is what the Congress intended when it first 
passed the attorneys' fees provision in 1982.  We find support 
for this conclusion in two areas.

     First, s 593(f)(1) of the Act states that fees may be award-
ed to individuals who would not have incurred the fees "but 
for the requirements of [the Act]." (emphasis added)  Conse-
quently, as we noted in Olivas,

     attorneys' fees are to be awarded to those who have 
     incurred the fees not because of the Act itself (and 
     therefore the appointment of the independent counsel per 
     se), but because of the requirements of the Act.  In re 
     Nofziger, 925 F.2d at 445.  And requirements "refers to 
     the special limitations and procedures established by the 
     Act," e.g., the two-step investigatory procedure by the 
     Attorney General and the restrictions on the Attorney 
     General in complying with that procedure, id. ...
     
178 F.3d at 1355 (emphasis in original).  Included in this 
"two-step investigatory procedure" is the preliminary investi-
gation.  See 28 U.S.C. s 592.

     Second, the 1982 Senate Committee Report on the Ethics 
in Government Act, referring to attorneys' fees, stated that 
"[r]eimbursement may be warranted ... in instances where 
the [independent counsel] duplicates actions which have been 
taken by the Attorney General during the preliminary inves-
tigation."  S. Rep. No. 97-496, 97th Cong., 2d Sess. 19 (1982), 
reprinted in 1982 U.S.C.C.A.N. 3537, 3555 (emphasis added).  
As Sanders has put forth no evidence that the IC's investiga-
tion duplicated the preliminary investigation conducted by the 
Attorney General, he does not fit into category (1).

     As to category (3), Sanders claims that the Attorney Gener-
al was reluctant to have an independent counsel appointed 
but that the Act compelled the Attorney General to do so.  
For evidence of this reluctance, Sanders first points to the 
Attorney General's Application for Appointment of Indepen-
dent Counsel ("Application for Appointment"), in which the 
Attorney General stated that he was encumbered in his 
preliminary investigation by the constraints imposed by 28 
U.S.C. s 592 on using grand juries, subpoenas, and grants of 
immunity.  Sanders likens this case to In re Donovan, 877 
F.2d 982 (D.C. Cir., Spec. Div., 1989) (per curiam), in which 
we held that the "but for" requirement was satisfied where 
the Attorney General, because of the strictures of the Act, 
could not convene a grand jury, plea bargain, or issue subpoe-
nas and as a result was required to refer the matter to an 
independent counsel.  In that case, however, these strictures 

prevented the Attorney General from properly evaluating the 
single witness who was of extremely questionable credibility, 
and upon whom the single allegation of alleged wrongdoing 
was based.  See In re Donovan, 877 F.2d at 990.  Here, in 
contrast, the Attorney General in his Application for Appoint-
ment, after citing the strictures placed upon him by the Act, 
went on to state that any further "determination at this time 
is made especially difficult by the breadth of the allegations 
and the fact that a number of the figures central to the 
alleged conspiracy, including Secretary Pierce ... have de-
clined to be interviewed ...."  Application for Appointment 
at 5 (emphasis added).  Consequently, as we noted in In re 
Pierce (Kisner Fee Application), 178 F.3d 1356 (D.C. Cir., 
Spec. Div., 1999) (per curiam), "[t]he convoluted nature of the 
corruption involved and the high profile identity of the sus-
pects and defendants would no doubt have resulted in a 
complex and lengthy investigation with or without the ap-
pointment of an independent counsel."  Id. at 1361.

     In a further attempt to show the Attorney General's reluc-
tance in having an independent counsel appointed, Sanders 
references a newspaper article which quotes an anonymous 
source stating that prosecutors in the DOJ allegedly recom-
mended to the Attorney General that the investigation be 
shut down for lack of evidence.  Even if it were accurate, 
which is highly questionable considering the not-for-
attribution source, the information is, as the IC points out, 
irrelevant.  Although certain prosecutors may recommend 
against investigating a certain matter, this fact gives us little 
guidance in trying to determine what an Attorney General 
will ultimately decide to do in the matter.  This is not a 
situation similar to Perry, 892 F.2d at 1074, where the Public 
Integrity Section definitively recommended against prosecu-
tion;  nor is it similar to Sagawa, 151 F.3d at 1089;  and In re 
Segal (Segal Fee Application), 145 F.3d 1348, 1352 (D.C. Cir., 
Spec. Div., 1998) (per curiam), in which the Attorney General 
stated in her Application to the Court requesting the appoint-
ment of an independent counsel that "the Department of 
Justice would in all likelihood exercise its discretion to decline 
to prosecute this case as a criminal matter."  Here, we can 

discern nothing in the Attorney General's Application for 
Appointment that would lead us to believe that he was in any 
way hesitant to have an independent counsel appointed based 
on the substance of the evidence available to him.

     In sum, we cannot agree with Sanders' statement that "had 
the Independent Counsel Act not restricted the Attorney 
General's ability to conduct a thorough preliminary investiga-
tion, it is possible, given Attorney General Thornburgh's 
obvious reluctance, that no independent counsel would have 
been appointed."  Sanders Application at 12.  Indeed, as we 
stated in Kisner, if the IC had not investigated this matter 
then "the Attorney General or other investigative authority 
would have pursued allegations of corruption as deep and 
widespread as those occasioning the Independent Counsel's 
investigation."  178 F.3d at 1360;  see also Olivas, 178 F.3d at 
1355.

                            Conclusion

     The petition of R. Carter Sanders for reimbursement of 
attorneys' fees is denied for failure to comply with the 
"subject" and "but for" requirements of 28 U.S.C. s 593(f)(1).