United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Filed February 21, 2006
Division No. 94-1
IN RE: MADISON GUARANTY SAVINGS & LOAN
(STONNINGTON 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.
ORDER
This matter coming to be heard and being heard before the
Special Division of the Court upon the petition of Nicholas
Stonnington 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
not well taken, it is hereby
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ORDERED, ADJUDGED, and DECREED that the
petition of Nicholas Stonnington for attorneys’ fees that he
incurred during the Independent Counsel’s investigation 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 February 21, 2006
Division No. 94-1
IN RE: MADISON GUARANTY SAVINGS & LOAN
(STONNINGTON 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
Opinion for the Special Court filed PER CURIAM.
PER CURIAM: Nicholas Stonnington petitions this Court
under the Ethics in Government Act of 1978, as amended, 28
U.S.C. §§ 591-599 (2000) (“the Act”), for reimbursement of
attorneys’ fees in the amount of $47,419.09 that he claims were
incurred during and as a result of the investigation conducted by
independent counsel. Because we conclude that Stonnington has
not carried his burden of showing that he was a “subject” of the
independent counsel’s investigation or that the fees would not
have been incurred “but for” the requirements of the Act, we
deny the petition in its entirety.
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Background
In the early 1990’s, regulatory special counsel Robert Fiske
was investigating possible criminal wrongdoing concerning the
demise of the Madison Guaranty Savings & Loan Association
in Arkansas. As part of his investigation Fiske looked into the
activities of the Rose Law Firm, which had represented Madison
Guaranty. This investigation uncovered evidence that then-
Associate Attorney General Webster L. Hubbell had been
involved in billing fraud while he was a partner at the Rose Law
Firm. After reports of these fraud allegations became public,
Hubbell resigned from his Department of Justice position.
In August 1994, Fiske’s investigation was handed over to
statutory independent counsel Kenneth W. Starr (hereinafter
“IC” or “OIC”). In December, Hubbell pled guilty to two felony
counts and agreed to cooperate with the IC’s investigation.
Thereafter, in order to support himself, Hubbell apparently was
hired as a consultant by numerous individuals who paid fees to
him totaling around $450,000. One of these individuals was
Nicholas Stonnington, the fee petitioner here. Stonnington was
a financial consultant at Merrill Lynch in Los Angeles who
retained Hubbell in efforts to obtain an appointment to a public
services board or commission at the federal level, paying
Hubbell $18,000.
Subsequently, government prosecutors determined that
Hubbell’s cooperation had not substantially assisted their
investigation, and they began looking into whether his
consulting fees were in fact paid to him to influence his
cooperation. The OIC ultimately concluded that the evidence
was insufficient to prove beyond a reasonable doubt that anyone
had paid Hubbell in an effort to influence his cooperation with
the government. Pursuant to § 593(f)(1) of the Act, Stonnington
now petitions the court for reimbursement of attorneys’ fees in
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the amount of $47,419.09 that he claims were incurred during
and as a result of the IC’s investigation. As directed by section
593(f)(2) of the Act, we forwarded copies of Stonnington’s fee
petition to the AG and the IC for their written evaluations of the
petition. The court expresses its appreciation to the IC and the
AG for submitting these evaluations, which we have given due
consideration in arriving at the decision announced herein.
Discussion
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. § 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, 1077-81 (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). The issues
in dispute are whether Stonnington has established that he was
a “subject” of the investigation and that his fees would not have
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been incurred “but for” the requirements of the Act.
“Subject” status. Stonnington argues that his subject status
began when he received notice from the OIC in January 1997
that he would be interviewed concerning his relationship with
Webster Hubbell. According to Stonnington, at that point it
was, as in In re Pierce (Abrams Fee Application), 190 F.3d 586,
590-91 (D.C. Cir., Spec. Div., 1999), “reasonable for [him] to
conclude . . . . that there was a ‘realistic possibility he would
require a legal defense.’”
Stonnington claims that although he received a letter in
January 1997 informing him that he was not a subject of the IC’s
investigation, he nevertheless believed that there was a realistic
possibility that he would become a defendant and that, pursuant
to that belief, he qualifies as a subject under the Act. For
authority, Stonnington cites In re North (Shultz Fee
Application), 8 F.3d 847, 850 (D.C. Cir., Spec. Div., 1993) (per
curiam), in which the fee petitioner was able to claim subject
status even though the Independent Counsel had stated that he
would seek no further indictments. According to Stonnington,
this claim was successful because, inter alia, the Independent
Counsel’s “no further indictments” statement was qualified by
an “absence of new developments” provision, and because the
Independent Counsel did in fact attain more indictments.
Analogizing his own situation to that in Shultz, Stonnington
argues that the January 1997 IC letter sent to him was also
qualified in that it stated he was not “at present” a subject. He
further argues that the manner in which he was subsequently
investigated “demonstrates that there remained a realistic
possibility that new developments in the investigation could
have rendered him a potential defendant.” This subsequent
investigation included grand jury subpoenas, OIC and FBI
interviews, and an FBI polygraph exam. According to
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Stonnington, one of the interviews became contentious, resulting
in the IC’s withdrawal of the subpoena, and “[s]uch activity is
inconsistent with how ‘witnesses’ are treated, and entirely
consistent with how ‘subjects’ are treated.” He further claims
that despite repeated requests, he was unable to obtain an
immunity agreement “which is typically granted to witnesses but
not subjects or targets of an investigation.”
The OIC in its evaluation of Stonnington’s fee application
vigorously disputes Stonnington’s contention that he had
attained subject status at any point during the investigation.
Initially, the OIC notes that the January 1997 letter sent to
Stonnington expressly advised him that he was not a subject,
and that on other occasions Stonnington’s counsel was orally
advised of his status again as merely a witness.
The OIC then goes on to distinguish Stonnington’s case
from Shultz. First, the OIC argues that in Shultz the fee
applicant had been told in the beginning that he was a subject,
and that such an individual has a greater fear of indictment than
someone like Stonnington, who was never given subject status.
Second, citing In re Mullins (Berry Fee Application), 84 F.3d
459, 464 (D.C. Cir., Spec. Div., 1996) (per curiam), the OIC
notes that that case interpreted Shultz as requiring two other
factors, in addition to a qualified provision, needed to give rise
to a fear of subsequent indictment: indictment of other
individuals investigated for the same subject matter; and the
Independent Counsel’s refusal to relate non-subject status.
Here, the OIC argues that grand jury subpoenas and FBI
interviews do not “establish[] any facts that lead a reasonably
counseled person to believe an indictment might be
forthcoming,” and in fact no indictments concerning the matter
were returned. Additionally, the OIC argues that the refusal to
grant Stonnington immunity “is a far cry from a refusal to affirm
an individual’s status as a subject,” and that “[i]t would be
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impossible to infer from a refusal to grant immunity that one is
a subject of the investigation--most witnesses are never granted
immunity.”
In its evaluation, the Department of Justice also takes issue
with Stonnington’s claim to “subject” status. The DOJ asserts
that the cases relied upon by Stonnington, Shultz and Reagan,
involved the question of whether a fee applicant who qualified
as a subject continued in that status after he was notified by the
Independent Counsel that he was no longer a subject. Shultz, 8
F.3d at 850; Reagan, 94 F.3d at 688. But here, argues the DOJ,
Stonnington “has offered no convincing explanation that he ever
became a subject,” and “the fact that he was called to testify
before the grand jury and not granted immunity is consistent
with witness status.”
“But for” requirement. Stonnington claims that he has
satisfied the “but for” requirement because the IC investigated
him for activities involving “[t]he hiring of a paid consultant to
obtain appointment to a federal board or commission;” that such
“activities would not have attracted the attention of executive
authorities had the Independent Counsel not been appointed to
conduct his investigation;” and that he was therefore subjected
to a more rigorous application of the criminal law than would
have been applied to ordinary citizens as delineated in In re
Nofziger, 925 F.2d 428, 442 (D.C. Cir., Spec. Div., 1991) (per
curiam).
In its evaluation the OIC disputes Stonnington’s “but for”
argument. To begin, the OIC asserts that Stonnington offers no
proof that a more rigorous application of the criminal law
occurred. Instead, Stonnington “has limited his argument to the
conclusory assertion that the subject matter of the investigation,
by itself, demonstrates its unreasonableness.” This assertion is
nothing more than Stonnington’s opinion, argues the OIC, and
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is an inadequate basis upon which to ground a fee application.
The OIC notes that in any event, if the Department of
Justice would have investigated the matter in the absence of the
Act, then Stonnington must necessarily fail the “but for” test.
Here, the matter involved obstruction of justice, including
witness tampering, which the OIC asserts is routinely
investigated by the DOJ. But more important, states the OIC, is
the fact that the DOJ initially investigated the Hubbell matter
through Independent Counsel Fiske, and it is not reasonable to
posit that Fiske, if he had continued his investigation, would
have ignored “the question of whether anyone had obstructed
justice by attempting to influence the cooperation of the former
Associate Attorney General in an ongoing federal criminal
investigation.” As such, the OIC argues that Stonnington has
not passed the “but for” test.
For similar reasons, the DOJ in its evaluation also argues
that Stonnington has not put forth valid reasons why he has
satisfied the “but for” requirement. First, the DOJ asserts that
without question it would have investigated the matter in the
absence of the Act, noting that it began the investigation of the
underlying Whitewater matter through regulatory special
counsel Fiske, that on transfer of the matter to statutory
independent counsel Starr the Attorney General stated that there
were reasonable grounds to believe that further investigation
was warranted, and that “ultimately [it was] proved that
numerous individuals--including Webster Hubbell--engaged in
criminal conduct.” Second, the DOJ argues that Stonnington’s
claim that an ordinary prosecutor would not have investigated
the hiring of a paid consultant to obtain appointment to a federal
board “does not address the particular context of this
investigation; . . . that he and others made substantial payments
to Webster Hubbell, a Department of Justice official who had
recently resigned in connection with allegations, eventually
10
found to be true, of involvement in criminal activity.”
Analysis
The statute by its terms provides reimbursement of fees
only to “an individual who is the subject of an investigation
conducted by an independent counsel.” 28 U.S.C. § 593(f)(1)
(emphasis added). A fee applicant must establish that he is a
person whose conduct was within the scope of the independent
counsel’s investigation in the sense that “the Independent
Counsel might reasonably be expected to point the finger of
accusation” at him. Dutton, 11 F.3d at 1078. We agree with the
IC and the DOJ that Stonnington has not established status as a
subject of the IC’s investigation. Without more, his connection
to the Hubbell consulting matter arguably may have been
enough for him to reasonably believe that the IC would “point
the finger of accusation at him.” See, e.g., In re Madison
Guaranty Sav. & Loan Assoc. (Livingstone Fee Application),
373 F.3d 1373, 1380 (D.C. Cir., Spec. Div., 2004) (per curiam).
The OIC, however, informed Stonnington initially by letter and
more than once thereafter orally that he was in fact not a subject.
And Stonnington has not established that any action taken by the
OIC during the investigation was so contrary to the OIC’s “not
a subject” declarations that it would reasonably lead Stonnington
into believing that he was a subject in fact.
We further agree with the OIC and the DOJ that
Stonnington has not fulfilled the “but for” requirement of the
Act. The purpose of this requirement is to ensure that “officials
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.
Stonnington’s argument in this regard is apparently that only the
appointment of the IC led to the investigation of him. As we
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have repeatedly held, however, see, e.g., In re Pierce (Kisner
Fee Application), 178 F.3d 1356, 1360 (D.C. Cir., Spec. Div.,
1999) (per curiam), “subjects of an independent counsel
investigation do not automatically meet the ‘but for’ test simply
because the investigation was conducted by an independent
counsel under the Act.” Furthermore, as the evaluations point
out, this matter was initially investigated by regulatory counsel
Fiske and it is not reasonable to assume that had he continued
with the investigation he would not have looked into the
Hubbell-Stonnington connection in a similar fashion. Finally,
the allegations here of obstruction of justice, including witness
tampering, would surely have been investigated with or without
the Independent Counsel statute. See, e.g., In re Madison
Guaranty Sav. & Loan (Watkins Fee Application), 375 F.3d
1211, 1216 (D.C. Cir., Spec. Div., 2004) (per curiam).
Conclusion
The petition of Nicholas Stonnington for reimbursement of
attorneys’ fees is denied for failure to satisfy the “subject” and
“but for” requirements of the Act.