United States Court of Appeals
DISTRICT OF COLUMBIA CIRCUIT
Filed October 29, 2002
Division No. 98-2
In Re: Alexis M. Herman
(Hutt 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 Louis Hutt
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. s 591 et seq. (1994), and it appearing to
the court that the application is allowable only to the extent
reflected in the opinion issued contemporaneously herewith, it
is hereby
ORDERED, ADJUDGED, and DECREED that the Unit-
ed States reimburse Louis Hutt for attorneys' fees and
expenses that he incurred during the investigation by Inde-
pendent Counsel Ralph I. Lancaster in the amount of $1,447.
Per Curiam
For the Court:
Mark J. Langer, Clerk
By Marilyn R. Sargent
Chief Deputy Clerk
United States Court of Appeals
DISTRICT OF COLUMBIA CIRCUIT
Filed October 29, 2002
Division No. 98-2
In Re: Alexis M. Herman
(Hutt 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 of the Special Court filed Per Curiam.
Per Curiam: Louis Hutt petitions this court under section
593(f) of the Ethics in Government Act of 1978, as amended,
28 U.S.C. ss 591-599 (1994) (the "Act"), for reimbursement of
attorneys' fees in the amount of $60,675.63 that he incurred
during and as a result of the investigation conducted by
Independent Counsel ("IC" or "OIC") Ralph I. Lancaster, Jr.
Because we conclude that Hutt has not carried his burden of
showing that the fees would not have been incurred but for
the requirements of the Act, we deny the petition except for
those fees incurred for review and response to the IC's final
report.
Background
In 1997 the U.S. Department of Justice ("DOJ") received
information that then-Secretary of Labor Alexis M. Herman,
while she was Special Assistant to the President in 1996, had
engaged in possible illegal activity. Specifically, in 1994
Vanessa J. Weaver, a close friend of Herman's, formed a
partnership, International Investment for Business Develop-
ment ("IIBD"), with Laurent J. Yene. In 1996 Singaporean
Businessman Abdul Rahman entered into a retainer agree-
ment with IIBD to promote a business of his in Africa.
Weaver and Yene's partnership apparently ended soon there-
after, at which point Yene began making allegations of crimi-
nal conduct on the part of Weaver and Herman. In particu-
lar, Yene claimed that Herman, while Special Assistant to the
President, had agreed to facilitate business for IIBD and
another company co-owned by Weaver in exchange for a
percentage of the profits made by the companies as a result
of Herman's efforts. Additionally, Yene claimed that Her-
man improperly directed Weaver to solicit campaign contribu-
tions for the Democratic National Committee from clients of
IIBD, including Abdul Rahman.
Thereafter, the Attorney General (hereinafter referred to
as "AG" or "DOJ"), pursuant to section 592(a) of the Act,
conducted a preliminary investigation to determine whether
further investigation was warranted into whether Herman
accepted the illegal payments or directed the solicitation of
the illegal campaign contributions. On May 11, 1998, at the
conclusion of the preliminary investigation, the AG, having
determined that further investigation was warranted, submit-
ted her application to us for the appointment of an indepen-
dent counsel to look into the matter (hereinafter referred to
as "Application").
On May 26, 1998, we appointed Ralph I. Lancaster, Jr. as
independent counsel to further investigate the allegations.
The investigation lasted almost two years and included nu-
merous interviews, extensive document review, and substan-
tial grand jury activity. Weaver's finances and those of her
companies were looked into. In particular for our purposes
here, IC Lancaster discovered that in 1993, after Herman had
joined the White House staff, Weaver paid her $54,000 for all
of the shares of her consulting business, A.M. Herman &
Associates, Inc. ("A.M. Herman"). Evidence was produced
that in 1993 and 1994 Weaver sought to evade federal and
state income taxes concerning her purchase of A.M. Herman,
and that this tax evasion scheme also involved Herman's
accountant, Louis Hutt, the fee applicant here. Ultimately,
no charges were brought against either Weaver, Herman, or
Hutt. Abdul Rahman, however, was indicted on multiple
counts of making illegal campaign contributions.
Hutt, pursuant to section 593(f)(1) of the Act, has petitioned
this court for reimbursement of the attorneys' fees that he
incurred during the IC's investigation. As directed by sec-
tion 593(f)(2) of the Act, we forwarded copies of Hutt's 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 submit-
ting these evaluations, which we have given due consideration
in arriving at the decision announced herein.
Analysis
The Independent Counsel statute provides:
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.
28 U.S.C. s 593(f)(1). Accordingly, in order to obtain an
attorneys' fees award under the statute, a petitioner must
show that all of the following requirements are met: 1) the
petitioner is a "subject" of the 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." See In re North (Dutton
Fee Application), 11 F.3d 1075, 1077-82 (D.C. Cir., Spec.
Div., 1993) (per curiam). 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). There appears to be little dispute
that Hutt's fees were incurred during the investigation and
that they are reasonable. And although there appears to be
some dispute as to when Hutt's "subject" status ended, we
nevertheless need only limit our discussion to the third re-
quirement, known as the "but for" test.
* * * * * * *
We have previously held that "[a]ll requests for attorneys'
fees under the Act must satisfy the 'but for' requirement."
In re Sealed Case, 890 F.2d 451, 452 (D.C. Cir., Spec. Div.,
1989) (per curiam). And we have repeatedly observed that
"[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
order to establish eligibility for an award, the fee applicant
must show that the amounts claimed are only those fees and
expenses above and beyond those she would have incurred as
a result of an investigation by the DOJ. In re Sealed Case,
890 F.2d at 452-53. As we stated in In Re Pierce (Olivas Fee
Application), 178 F.3d 1350 (D.C. Cir., Spec. Div., 1999) (per
curiam), "[i]f the investigative act generating the defensive
costs would, in the absence of the Act, have been pursued by
other authorities--'had the case been handled by the Depart-
ment of Justice or other executive authorities rather than the
Independent Counsel'--then Congress did not contemplate
the award of counsel fees." Id. at 1355 (quoting Dutton, 11
F.3d at 1080).
Hutt argues that he satisfies the "but for" requirement
under two separate theories.
Case could have been disposed of at an early stage. Hutt
argues that "but for" the requirements of the Act, the case
could have been disposed of at an early stage of the investiga-
tion, without subjecting him to the incurrence of attorneys'
fees. He claims that "two different restrictions in the Act
forced the Attorney General to unnecessarily appoint an
Independent Counsel." First, he asserts that because of the
Act's limitations, "the Attorney General was unable to devel-
op the evidence necessary to judge whether further investiga-
tion was warranted," and that "[u]ltimately, the Act limited
the Attorney General's ability to dispose of the charges
quickly." Hutt contends that "[i]f the Herman investigation
centering on Mr. Yene's allegations of influence peddling and
illegal campaign contributions ... had been resolved by the
Attorney General without resort to an IC, then Mr. Hutt
would never [have] been forced to incur the legal fees at issue
here."
Second, he argues that "the statutory time limits on the
investigation hampered the Attorney General from resolving
the issue without resort to an independent counsel." He
notes that the Attorney General's preliminary investigation
took 90 days plus a 60 day extension and that the Attorney
General "was still pressed for time." Hutt asserts that if the
AG had not been restricted by the Act and had had more time
to investigate the allegations, then the case would have been
brought quickly to a close with little or no investigation of
him.
But for these two restrictions, Hutt claims, "which limited
the investigative tools and timeframe for the Justice Depart-
ment investigation, the OIC investigation would never have
occurred, and Mr. Hutt would not have incurred any legal
fees." Hutt implies that an unfettered preliminary investiga-
tion by the DOJ would have uncovered no reason for any
further investigation, and the case would have been promptly
terminated. We cannot agree. Instead, we concur with the
IC that in the absence of the Act, "any investigation conduct-
ed by the Attorney General would necessarily have had to
have followed the same leads--identified by Public Integrity
in the preliminary investigation--that formed the starting
point for the Independent Counsel's investigation," and that
such an investigation would have just as thoroughly investi-
gated not only Herman, but also Weaver and therefore Hutt.
Investigated where private citizens would not have been.
Hutt further contends that he satisfies the "but for" require-
ment because he "was clearly subjected to a more rigorous
application of the criminal law than he would have been if the
investigation had been pursued by officials other than the
OIC." This is so, he claims, "because of the expanded scope
of the OIC investigation. It is extremely unlikely that a
professional prosecutor investigating Secretary Herman and
Mr. Hutt's client Vanessa Weaver for transactions involving
IIBD ... would have subpoenaed and scrutinized tax records
stretching back to 1993 and involving Weaver entities other
than IIBD." For authority, Hutt relies on In re Sealed Case,
in which we held that the "but for" requirement was satisfied
because the petitioner's tax returns were examined for a
period of nine years and "the ordinary examination of a
taxpayer for [such a] violation would have been substantially
less probing." 890 F.2d at 454. In her fee petition Vanessa
Weaver also cited to In re Sealed Case while making essen-
tially this same argument; as we noted there, however, "[i]t
does not appear that any such less probing examination would
have been made of Weaver's conduct in the absence of the
Act," because the Department of Justice would have thor-
oughly investigated such serious allegations concerning the
business dealings of a senior White House official (Herman)
and her business partner and friend (Weaver). In re Her-
man (Weaver Fee Application), 301 F.3d 648, __ (D.C. Cir.,
Spec. Div., 2002) (per curiam).
Hutt nevertheless takes his argument one step further,
claiming that he "was far removed from the principal focus of
the investigation" and therefore "[i]t is highly unlikely that a
prosecutor would target such a marginal party for transac-
tions involving relatively small monetary amounts...." We
disagree. As the IC points out, the accounting records
concerning the $54,000 payment "raised serious questions as
to whether Weaver, with Hutt's assistance, had perpetrated a
tax sham in order to lessen the financial impact of this
transaction," and any investigation by the DOJ would have
uncovered this evidence, and it would have been thoroughly
looked into, just as was done by the Independent Counsel.
* * * * * * *
In sum, we agree with both the Independent Counsel and
the Department of Justice that if there had there been no
Independent Counsel Act, the Attorney General would have
thoroughly investigated the allegations against Herman, lead-
ing in turn to an investigation of Weaver and Hutt similar to
that conducted by the IC. Hutt therefore has not satisfied
the "but for" requirement under either of the theories that he
relies upon because he "was not subjected to an investigation
that he would not have been subjected to in the absence of
the Act." In re Nofziger, 925 F.2d 428, 446 (D.C. Cir., Spec.
Div., 1991) (per curiam).
But although Hutt was not investigated by the IC differ-
ently than he would have been otherwise, in the absence of
the Act he would not have incurred fees for review and
response to the IC's final report. Section 594 of the Act
requires that the independent counsel "file a final report with
the division of the court, setting forth fully and completely a
description of the work of the independent counsel...." 28
U.S.C. s 594(h)(1)(B). Absent the Act, federal "prosecutors
do not issue reports." In re North, 16 F.3d 1234, 1238 (D.C.
Cir., Spec. Div., 1994). Indeed, as we have observed before,
"[t]he filing of reports by Independent Counsels is 'a com-
plete departure from the authority of a United States Attor-
ney' and is 'contrary to the practice in federal grand jury
investigations.' " Id. (quoting In re Sealed Motion, 880 F.2d
1367, 1369-70 (D.C. Cir., Spec. Div., 1989) (per curiam)).
Therefore, we hold that the amount of $1,447 in reasonable
attorneys' fees that Hutt incurred for reviewing and respond-
ing to the IC's final report is reimbursable.
Conclusion
For the reasons set forth above, we allow in part the
petition of Louis Hutt to the extent of ordering reimburse-
ment for attorneys' fees in the amount of $1,447. We deny
the balance of the petition as not meeting the "but for"
requirement of the Act, 28 U.S.C. s 593(f)(1).