United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Filed June 6, 2000
Division No. 89-5
In re: Samuel R. Pierce, Jr.
(Pierce 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 Samuel R.
Pierce, Jr. 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 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 Samuel R. Pierce, Jr. 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 June 6, 2000
Division No. 89-5
In re: Samuel R. Pierce, Jr.
(Pierce 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: Samuel R. Pierce, Jr. 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 $276,580.90
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 Pierce
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 in its entirety.
BACKGROUND
Samuel R. Pierce, Jr. served as Secretary of the U.S.
Department of Housing and Urban Development (HUD) from
1981 to 1989. HUD administered many housing programs
during that time period, including the moderate rehabilitation
("mod rehab") program, which was established by Congress
in 1978 to encourage developers to upgrade moderately sub-
standard housing units for occupation by low income families.
Essentially, mod rehab funds were to be distributed to state
or local Public Housing Authorities ("PHA's"), which, in turn,
were to enter into mod rehab agreements with owners of low-
income rental properties within their areas. In 1988, howev-
er, an examination by HUD's Inspector General found, inter
alia, that the process used by HUD headquarters to allocate
mod rehab funding to PHA's was undocumented and contrary
to pertinent regulations; that former HUD officials and
employees were actively participating in a large number of
mod rehab projects as consultants and/or developers; and
that there was little assurance that mod rehab units were
allocated equitably to PHA's or that the projects were select-
ed competitively. See 1 Arlin M. Adams & Larry D. Thomp-
son, Final Report of the Independent Counsel in Re: Samuel
R. Pierce, Jr. 2-3 (1998).
The examination by HUD's Inspector General triggered
congressional investigations into abuses, favoritism, and mis-
management at HUD during the 1980s. Pierce testified
before Congress in mid-1989 concerning the mod rehab pro-
gram. Allegations of perjury concerning his testimony arose.
He asserted his privilege against self-incrimination and re-
fused to testify further. Subsequently, based on information
elicited during the congressional investigations, the House
Judiciary Committee wrote to Attorney General Richard
Thornburgh seeking the appointment of an independent coun-
sel to investigate the matter. Following a preliminary inves-
tigation, 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
Adams1 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
__________
1 Independent Counsel Adams resigned in May of 1995. This
court appointed his deputy, Larry D. Thompson of the Atlanta bar,
to succeed him.
States or any other Federal crimes ... relating to the
administration of the selection process of the Department's
Moderate Rehabilitation Program from 1984 through 1988."
Order Appointing Independent Counsel, March 1, 1990. The
IC's mandate was expanded several times thereafter, includ-
ing an expansion to investigate whether perjury and other
federal crimes may have been committed by Pierce.
The IC conducted a comprehensive investigation ultimately
confirming a widespread pattern of corruption at HUD dur-
ing Pierce's tenure. The investigation ranged well beyond
the core facts of the original application for appointment of
independent counsel. Ultimately, seventeen (17) persons
were charged with and convicted of federal crimes as a result
of the investigation. Pierce himself admitted that "[o]n a
number occasions, [he] met or spoke privately with personal
friends who were paid to obtain funding for mod rehab
projects," and that he "failed to monitor and control ... the
'mod rehab' program, when it was being operated, at least in
part, to benefit certain consultants, developers, and ex-HUD
officials." Further, Pierce acknowledged that during his
testimony before Congress his answers to certain questions
"did not always accurately reflect the events occurring at
HUD." Statement by the Honorable Samuel R. Pierce, Jr.,
December 15, 1994, reprinted in Independent Counsel's Eval-
uation of Pierce Fee Application ("IC Eval.") at Tab 1.
Nevertheless, the IC declined to seek a criminal indictment of
Pierce, citing as reasons "Secretary Pierce's age and multiple
health problems, the conflicting evidence regarding the intent
with which he acted, and the absence of any evidence that he
or his family profited from his actions at HUD." Press
Statement, Office of Independent Counsel, Jan. 11, 1995,
reprinted in IC Eval. at Tab 2.
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, Pierce, pursuant to Section 593(f)(1) of the Act, peti-
tioned this court for reimbursement of his attorneys' fees.
As directed by Section 593(f)(2) of the Act, we forwarded
copies of Pierce'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 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 Pierce has not met the "but for" require-
ment.
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 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 Unit-
ed 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 In re North
(Dutton Fee Application), 11 F.3d 1075, 1079 (D.C. Cir., Spec.
Div., 1993) (per curiam)). 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 diffi-
cult, 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 investigated in the absence of the Act.
Pierce puts forth several arguments in support of his
contention that in the absence of the Act either no investiga-
tion, or a much lesser investigation, would have resulted in
this matter, and consequently the attorneys' fees incurred by
him during the IC's investigation would not have come about
"but for" the Act. For the reasons stated below, we do not
find these arguments persuasive.
Pierce first argues that the "but for" element is satisfied
where regular prosecutorial practices would not have resulted
in any investigation. This is so in his case, Pierce claims,
because staff prosecutors in the Public Integrity Section of
the Department of Justice had concluded prior to the appoint-
ment of an independent counsel that no investigation of him
was necessary. For evidence of this position by the Public
Integrity Section, Pierce references certain contemporaneous
newspaper articles reporting that staff prosecutors had rec-
ommended that the investigation of Pierce be shut down for
lack of evidence. See, e.g., Philip Shenon, Criminal Inquiry
Is Opened Into Ex-H.U.D. Chief's Acts, N.Y. Times, Dec. 5,
1989, at A20.
Pierce cites to our decision in In re Olson (Perry Fee
Application), 892 F.2d 1073 (D.C. Cir., Spec. Div., 1990) (per
curiam), for the proposition that where an IC is appointed to
investigate a subject despite the Public Integrity Section's
recommendation to the contrary, the "but for" requirement is
satisfied. In Perry we noted that the fee applicant was
subjected to a duplicative investigation that he would not have
been subjected to but for the Act because the Public Integrity
Section had definitively decided not to recommend prosecu-
tion in that matter. Id. at 1074. Here, the suggestion that
"but for" the Act the purported views of unidentified persons
in the Public Integrity Section would have prevailed is specu-
lative. As we noted in In re Pierce (Sanders Fee Applica-
tion), 198 F.3d 899 (D.C. Cir., Spec. Div., 1999) (per curiam),
the information contained in the referenced news articles
"gives us little guidance in trying to determine what an
Attorney General will ultimately decide to do in the matter."
Id. at 905. We agree with the Department of Justice that the
kind of pervasive and high-level corruption of a government
program that occurred here would inevitably have come
under scrutiny with or without an independent counsel law,
and any investigation would necessarily have concerned itself
with Pierce's involvement.
Pierce further argues that since the IC's original jurisdic-
tion was expanded from investigation of one program over a
four-year period to several programs over an eight-year
period, and the investigation itself went on for almost five
years, then he satisfies the "but for" element because he was
subjected to a more rigorous application of the criminal law
than he would have been in the absence of the Act. He relies
on In re Sealed Case, 890 F.2d at 452-53, and In re Meese,
907 F.2d 1192, 1196-97 (D.C. Cir., Spec. Div., 1990) (per
curiam), which held that when an independent counsel's inves-
tigation exposes a subject to a more rigorous examination
than the ordinary citizen is likely to receive, the "but for"
element is satisfied.
In Sealed Case we held that the fee applicant was subjected
to a more rigorous application of the criminal law in part
because his tax returns and financial dealings were examined
for a period of nine years.2 We noted in that case that the
ordinary examination of a taxpayer would have been substan-
tially less probing. See 890 F.2d at 454. No such less
probing examination would have been made of Pierce's con-
duct in the absence of the Act. As we stated elsewhere
referring to this same investigation, "[t]he convoluted nature
of the corruption involved and the high profile identity of the
suspects and defendants would no doubt have resulted in a
complex and lengthy investigation with or without the ap-
pointment of an independent counsel." In re Pierce (Kisner
Fee Application), 178 F.3d 1356, 1361 (D.C. Cir., Spec. Div.,
1999) (per curiam).
Similarly, in Meese, we held that Attorney General Edwin
Meese III was subjected to a more rigorous application of the
criminal law, and satisfied the "but for" requirement, in part
because the investigation concerning him as initially referred
was greatly expanded and continued for fourteen months.
We noted, however, that Meese also fulfilled the "but for"
requirement in part because no preliminary investigation
pursuant to the Act was conducted prior to referral of the
matter to the independent counsel by the Acting Attorney
General; the referral "did not eliminate the necessity for
compliance with the requirement ... that there be a prelimi-
nary investigation and finding of reasonable grounds to be-
lieve that further investigation or prosecution of [Meese] ...
__________
2 We also based our holding that the fee applicant was subjected
to a more rigorous application on the Attorney General's reference
in his application for an independent counsel to the limitations
placed upon him by the Act. See infra.
was warranted." 907 F.2d at 1197. Meese was subjected to
a more rigorous application of the criminal law, then, because
of both "the extreme expansion of the resulting investigation"
and "the basis upon which the referral was made." Id. at
1201. Here, although the investigation was expanded beyond
its original mandate and lasted for a number of years, the
expansion occurred because the investigation itself revealed
further evidence of fundamental corruption of a federal hous-
ing program and such crimes as perjury, bribery, and ob-
struction of justice. We are convinced that this matter would
have been investigated for a significant period of time by any
professional or politically appointed public prosecutor. Pierce
was not, therefore, subjected to a more rigorous application of
the criminal law than would have been applied to ordinary
citizens.
Finally, Pierce contends that he was prejudiced by the
provisions of the Act which prevented the Department of
Justice from following its normal procedures. He notes that
the Attorney General in his application for appointment of an
independent counsel stated that he could not use grand juries,
subpoenas, or grants of immunity to obtain evidence, and so
was "constrained to conclude that further investigation may
be warranted." Application of Attorney General, at 5, Feb-
ruary 1, 1990. Citing to In re Donovan, 877 F.2d 982 (D.C.
Cir., Spec. Div., 1989) (per curiam), and In re Sealed Case,
Pierce argues that the "but for" test is satisfied where the
Act's restrictions interfere with the Attorney General's ability
to conduct a proper preliminary inquiry, and that if the
Attorney General had not been so limited here then Pierce
would have been subjected to a less thorough and extensive
investigation.
In Donovan we found the "but for" requirement fulfilled
where the Deputy Attorney General's application for the
appointment of an independent counsel stated that " '[t]he
Department of Justice's efforts to pursue this matter has
been hampered by the limitations in the Act that preclude the
Attorney General from convening grand juries, plea bargain-
ing, granting immunity, or issuing subpoenas.' " 877 F.2d at
988. Had the Department of Justice not been so limited by
the Act, then it could have found "that the principal witnesses
were not credible and that there were no facts provable
beyond a reasonable doubt that justified a prosecution," and
the fee applicant would have been subjected to a much lesser
investigation. Id. at 989.
In Sealed Case the Attorney General in his application for
an independent counsel also cited to the limitations imposed
on him by the Act, specifically stating that one of his reasons
for requesting the appointment of an independent counsel
was the Department of Justice's " 'inability to use compulsory
process during a preliminary investigation.' " 890 F.2d at
453. We noted in that case:
Not that the mere existence of these statutory restric-
tions satisfies the "but for" requirement in every case.
But where, as here, the Attorney General in his applica-
tion represents that the statutory restrictions have inter-
fered with his ability to conduct an adequate preliminary
investigation, and the circumstances of the alleged of-
fense indicate that, if the Attorney General were not so
limited, [the] applicant might have been subjected to a
lesser investigation, or perhaps exonerated at this early
stage, the statutory limitations are factors that the court
may rely upon in determining that the "but for" factor is
satisfied.
Id. (emphasis added). In both Donovan and Sealed Case,
then, if there had been no statutory restrictions on the
Attorney General in his preliminary investigation, there
would have either been no further investigation or a much
smaller investigation of the fee applicant. Pierce argues that
if the Attorney General had not been so constrained in his
case, then he likewise would have been subjected to a quicker,
less thorough, and less extensive investigation. We cannot
agree.
Although the Attorney General noted the constraints im-
posed upon him by law in deciding whether to seek an
independent counsel in this matter, nothing in the Attorney
General's filing or in any of the surrounding circumstances
suggests that, absent those constraints, this investigation
would have resulted in a lesser and speedier investigation of
those involved. To the contrary, the Attorney General made
specific reference to the "breadth of the allegations and the
fact that a number of the figures central to the alleged
conspiracy, including Secretary Pierce ... have declined to
be interviewed." Application of Attorney General, at 5. 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 In re
Pierce (Olivas Fee Application), 178 F.3d 1350, 1355 (D.C.
Cir., Spec. Div., 1999) (per curiam).
CONCLUSION
The petition of Samuel R. Pierce, Jr. for reimbursement of
attorneys' fees is denied for failure to comply with the "but
for" requirement of 28 U.S.C. s 593(f)(1).
In Re Samuel R. PIERCE, Jr. (Pierce Fee Application)
Court: Court of Appeals for the D.C. Circuit
Date filed: 2000-06-06
Citations: 213 F.3d 713, 341 U.S. App. D.C. 356
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