In RE: BRUCE EDWARD BABBITT (Babbitt Fee Application)

290 F.3d 386, 351 U.S. App. D.C. 300, 2002 U.S. App. LEXIS 9558, 2002 WL 1011796

• Court: Court of Appeals for the D.C. Circuit
• Decided: May 21, 2002
• Docket: Division 98-1
• Status: Published

Opinions

Opinion of the Special Court filed by Circuit Judge SENTELLE.

Opinion concurring in part and dissenting in part filed by Senior Circuit Judge CUDAHY.

PER CURIAM

ORDER

This matter coming to be heard and being heard before the Special Division of the Court upon the application of Bruce Edward Babbitt 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. (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 United States reimburse Bruce Edward Babbitt for attorneys’ fees and expenses he incurred during the investigation by Independent Counsel Carol Bruce in the amount of $52,091.94 this 21st day of May, 2002.

ON APPLICATION FOR ATTORNEYS’ FEES

SENTELLE, Circuit Judge:

Bruce Edward Babbitt petitions this court under Section 593(f) of the Ethics in Government Act of 1978, as amended, 28 U.S.C. § 591 et seq. (1994) (the “Act”), for reimbursement of attorneys’ fees in the amount of $206,265.16 that he incurred during and as a result of the investigation conducted by Independent Counsel (“IC” or “OIC”) Carol Elder Bruce. Because we conclude that with one relatively minor exception Babbitt 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 large part while allowing recovery as to one element.

Background

In 1993 a joint venture consisting of three Indian tribes and the owner of a dog track in Hudson, Wisconsin, applied to the U.S. Department of the Interior (“DOI”) requesting permission to take the dog track into trust in order to establish a casino on the property, as permitted under certain conditions by federal law. See 25 U.S.C. § 2701 et. seq. The joint venture hired as a lobbyist Paul Eckstein, a friend and former law partner of the Secretary of the Interior, Bruce Edward Babbitt. On July 14,1995, with denial of the application by the DOI imminent, Eckstein met alone with Babbitt in Babbitt’s office seeking to delay the denial until Babbitt could meet with the leaders of the joint venture. The DOI nevertheless issued the denial later that same day. Eckstein subsequently testified in a civil suit challenging the Hudson application decision that when he requested the delay, Babbitt informed him that Harold Ickes, the White House Chief of Staff, had called and directed that Babbitt make a decision concerning the casino request that day.

Eckstein also alleged that during their meeting Babbitt informed him that certain Indian tribes opposed to the casino had contributed a substantial amount of money to the Democratic National Committee or other Democratic interests. About this same time there were allegations that the DOI’s decision to deny the casino application was influenced by the donations made to the Democrats by the opposing tribes.

Eckstein’s statements about his conversation with Babbitt were thereafter reported in the press. Two congressional committees, the Senate Governmental Affairs Committee and the House Committee on Government Reform and Oversight, then conducted investigations into the matter. Upon questioning of Babbitt by committee members of his conversation with Eck-stein, Babbitt responded that he had never discussed the casino matter with Ickes and he disputed Eckstein’s assertion that he told Eckstein that Ickes had instructed him to issue the decision that day. He further stated that he may have told Eck-stein that Ickes wanted or expected the DOI to decide the matter promptly but that if he said this it was only an effort to terminate the meeting.

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 Babbitt made false material statements in his responses to the congressional inquiries. On February 11, 1998, at the conclusion of the preliminary investigation, the AG, having determined that further investigation was warranted, submitted her application to us for the appointment of an independent counsel to look into the matter (hereinafter referred to as “Application”). The AG recommended that the independent counsel’s prosecutorial jurisdiction include not only federal perjury and false statements violations by Babbitt but also, to the extent necessary to resolve these issues, the DOI’s casino decision itself.

On March 19, 1998, we appointed Carol Elder Bruce as independent counsel to further investigate the allegations. After an investigation lasting 21 months that included numerous interviews, extensive document review, and substantial grand jury activity, IC Bruce concluded her investigation without bringing criminal charges against any person. Pursuant to the statute, the IC submitted a final report to this court on January 3, 2000. See 28 U.S.C. § 594(h)(1)(B). We ordered the report made public by order of August 22, 2000.

Babbitt, pursuant to section 593(f)(1) of the Act, has petitioned this court for reimbursement of the attorneys’ fees he incurred during the IC’s investigation. As directed by section 593(f)(2) of the Act, we forwarded copies of Babbitt’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

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, 1077-82 (D.C.Cir., Spec. Div., 1993) (per curiam). Because we. find that Babbitt fails to satisfy the third requirement, known as' the “but for” test, we need not address the remaining requirements.

We have previously established 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 held 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 he 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, 1355 (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 ease been handled by the Department of Justice or other executive authorities rather than the Independent Counsel’ — then Congress did not contemplate the award of counsel fees. In re North (Dutton Fee Application), 11 F.3d at 1080.”

Babbitt argues that he satisfies the “but for” requirement under three distinct theories.

Subjected to a more rigorous application of the criminal law. First, Babbitt claims that the IC’s investigation subjected him to a more rigorous application of the criminal law than he would have been subjected to in the absence of the Act because the IC’s extensive investigation went far beyond the realm of any ordinary investigation of the same crimes. In support of this contention, Babbitt cites to section 592(a)(2)(B)(ii) of the Act which states that for the AG, after conducting a preliminary investigation, to determine that no further investigation is warranted because the person being investigated lacked the required state of mind for a violation, the evidence relied .on to make this determination must be “clear and convincing.” Babbitt argues that “[sjince the potential crimes here under investigation, perjury and false statements, both require proof of criminal intent, section 592(a)(2)(B)(ii) — uniquely in this case — required prosecutive actions that demonstrably subjected Secretary Babbitt ‘to a more rigorous application of the criminal law.’ ” Absent the constraints of section 592(a)(2)(B)(ii), Babbitt contends that “the Attorney General may very well have exercised her normal prosecutorial discretion to terminate the investigation” at a much earlier stage.

Babbitt further claims that he was subjected to a more extensive and rigorous investigation than an ordinary citizen would endure under similar circumstances because “[t]he OIC investigation ... extended well beyond the bounds of a typical investigation of a private individual into perjury or false statements charges based on similar facts.” These “similar facts,” he states, “mostly concerned a slight discrepancy in two men’s recollection of a brief, hurried one-on-one conversation that took place more than two years before either man testified about it.” Therefore, according to Babbitt, the IC’s investigation was more extensive and rigorous than would ordinarily have occurred because in addition to the conversation between Babbitt and Eckstein “ — the sole basis of the Attorney General’s application — the OIC also conducted an exhaustive investigation of the underlying decision-making process in the Hudson Casino, as reflected in the nearly 300 pages the OIC devoted to that issue in the Final Report.”

While Babbitt acknowledges that this court gave the OIC jurisdiction to investigate the DOI’s underlying decision in the Hudson case “[t]o the extent necessary to resolve the allegations that Secretary Babbitt made false statements concerning th[e] decision,” Order Appointing Independent Counsel, March 19, 1998, he argues that “the OIC went well beyond what would have been undertaken by an ordinary prosecutor’s office in a case involving an ordinary man.” For authority, Babbitt relies on our decision in In re Sealed Case, where we found the “but for” requirement fulfilled as the fee applicant was subjected to a more rigorous application of the criminal law than is applied to other citizens because the IC was appointed to investigate the applicant’s 1981,1982, and/or 1984 tax returns but actually examined the applicant’s tax returns for nine years, from 1976 to 1984. We noted that “the ordinary examination of a taxpayer for [the same] violation would have been substantially less probing.” 890 F,2d at 453-64.

The issue here, however, is not what would have resulted if an “ordinary prosecutor’s office” had investigated an “ordinary man.” As the IC points out, Babbitt cannot compare himself to an “ordinary citizen” because this case has “the unique circumstances of perjury allegations concerning a cabinet officer’s testimony before a Senate committee about matters involving the financing of national contests.” In In re Nofziger; 925 F.2d 428, 443 (D.C.Cir., Spec. Div., 1991). (per curiam), we observed that in order “[t]o determine whether the subject of an independent counsel investigation has been subjected to a more rigorous application of the criminal law, the court must compare the investigation of the subject of the independent counsel investigation with an investigation into possible violations of the same statute conducted in the absence of the Independent Counsel Act.” (emphasis in original). In this instance the investigation by the Independent Counsel must be compared with an investigation by the United States Department of Justice of Babbitt in his capacity not as an “ordinary man” but as Secretary of the Interior. Cf id. (“[T]he comparison must be between the investigation of Nofziger, a former high-government official subject to the Act, for alleged violations of section 207(c) and the regular investigation of a similar, high-government official subject to section 207(c) who is not covered by the Independent Counsel Act.”). We therefore agree with the IC that “in the face of allegations that a cabinet officer had committed perjury and made false statements to a U.S. Senate committee, the Justice Department would have conducted an investigation and Babbitt would have incurred substantially the attorney fees for which he now seeks reimbursement.”

The IC makes the further argument that in this case “[t]he greater question was whether Babbitt and his staff were informed that Ickes and his staff sought a particular outcome or timing to the outcome of the Hudson Casino Application” and that, considering the AG’s identification for investigation of the Hudson Casino application and issues relating to campaign finance contributions, Babbitt would have been subjected to-an investigation of the same rigor and scope by the Department of Justice as he was by the Independent Counsel. We note that the circumstances surrounding the independent counsel investigation of Babbitt are similar to those in the independent counsel investigation of U.S. Department of Housing and Urban Development (“HUD”) Secretary Samuel R. Pierce, Jr. in the early 1990’s. In that case, allegations of abuses, favoritism, and mismanagement at HUD under the tenure of Pierce led to the appointment of an independent counsel to investigate whether Pierce and other HUD officials may have conspired to defraud the United States or committed other federal crimes related to their duties at HUD. That independent counsel investigation also took a considerable amount of time and delved deep into the decision-making process at HUD. In denying all requests except one for attorneys’ fees in that matter for failure to meet the “but for” requirement, we held that “[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 appointment of an independent counsel.” In re Pierce (Kisner Fee Application), 178 F.3d 1356, 1361 (D.C.Cir., Spec. Div., 1999) (per curiam).- So too here. The serious nature of the perjury and corruption allegations, the considerable number of witnesses involved in the casino application process, and the high profile identity of those involved would have resulted in an investigation of similar length and breadth if it had been undertaken by the Department of Justice in the absence of the Independent Counsel Act.

The Act restricted the AG’s 'preliminary investigation. Babbitt next argues that the “but for” requirement is satisfied in this case because the Attorney General’s preliminary investigation was hindered by the restrictive provisions of the Independent Counsel Act which prevented her from making conclusive credibility determinations and exercising her prosecutorial discretion to terminate the investigation. In support of this argument, Babbitt submits that in the AG’s Application her “statements regarding the attenuated quality of the evidence on falsity, materiality, and criminal intent make clear that, absent (‘but for’) the requirements of the Independent Counsel Act restricting the Attorney General’s ability to call witnesses, issue subpoenas, and make credibility determinations, she could and likely would have disposed of the case without seeking appointment of an independent counsel.” In this regard, Babbitt compares his case to In re Donovan, 877 F.2d 982, 987-90 (D.C.Cir., Spec. Div., 1989), (per curiam) where we found the “but for” requirement satisfied because the alleged wrongdoing was based upon a single allegation by a single witness of extremely questionable credibility, and that if the AG had not been prohibited by the Act from convening grand juries, plea bargaining, and issuing subpoenas, then he would have been better able to evaluate the credibility of the witness and dispose of the case much sooner and at much lower cost. Likewise, Babbitt claims that he too “was subjected to an expensive and extensive investigation that, at its core, required a determination as to his credibility and state of mind that the Attorney General could have made had she been able to follow the Justice Department’s usual process of calling witnesses and issuing subpoenas.”

In response, the Independent Counsel argues that even if the AG was not limited by the Act in conducting her preliminary investigation, she would nevertheless have conducted an extensive investigation of this matter. Quoting from In re Sealed Case, 890 F.2d at 453, the IC notes that under the “but for” analysis, the question is whether any of the Act’s restrictions “interfered with [the AG’s] ability to conduct an adequate preliminary investigation” and, had the Attorney General not been so limited, whether the circumstances of this case are such that Babbitt “might have been subjected to a lesser investigation, or perhaps exonerated at this early stage.” In arguing that Babbitt would have been subjected to a similar investigation by the DOJ, the IC cites to the AG’s Application, which states in pertinent part:

[B]ecause of the close connection between the potential perjury and the underlying casino decision, I recommend that the Independent Counsel’s prosecu-torial jurisdiction specifically include any potential criminal violations in connection with the underlying casino decision that may emerge during the course of the investigation of the potential perjury and false statement allegations, insofar as exploration of those matters is deemed necessary to resolve these allegations.

Application at 8-9. Because the AG specifically mentions the possible investigation of the “underlying casino decision,” the IC argues that if DOJ had been free to investigate this matter to conclusion on its own then, in order to resolve the perjury allegation, it would have explored the facts surrounding the underlying casino application and the campaign contributions that some parties claimed had influenced the process. We agree.

In Nofziger, the independent counsel was appointed to investigate whether the fee applicant had engaged in illegal lobbying communications within the prohibited one-year period after leaving his position at the White House. In denying the petitioner attorneys’ fees because of his failure to satisfy the “but for" requirement, we noted that in the application to the court for appointment of independent counsel, the Acting Attorney General “did not complain that the limitations on his ability to investigate had ‘hampered’ or restricted his preliminary investigation.” 925 F.2d at 439 (emphasis in original). In the case before us, the AG in her Application also made no such complaint. As previously noted, Babbitt claims that the AG in her Application made “statements regarding the attenuated quality of the evidence on falsity, materiality, and criminal intent.” But although the AG stated in her Application that there was “evidence suggesting that Secretary Babbitt lacked criminal intent,” she nevertheless stated on the issue of “falsity” that “[t]he investigation has determined that there is specific and credible evidence indicating that Secretary Babbitt may have testified falsely” about his conversation with Eckstein, and concerning the issue of “materiality,” the AG stated that “[ejvidence that the Secretary of the Interior, on the day the [Hudson Casino decision] issued, made a statement suggesting that the White House Deputy Chief of Staff was dictating the decision’s timing would appear to be capable of influencing the nature and extent of the [Senate Governmental Affairs Committee’s] inquiry and findings.” We consequently find, paraphrasing Nofziger, that there is nothing in the record or in the circumstances of Babbitt’s alleged offenses that indicates that the Attorney General, if freed of the restrictions of the Act, would have subjected Babbitt to a lesser investigation, or perhaps exonerated him at the preliminary investigation stage. Id.

Investigation duplication. Finally, Babbitt claims that he satisfies the “but for” requirement because the IC’s investigation duplicated other previous examinations of the Hudson Casino issue, particularly the investigation of the Senate Governmental Affairs Committee, the investigation of the House Committee on Government Reform and Oversight, and the preliminary investigation of the Department of Justice. We have in the past awarded fees when the independent counsel’s investigation constituted a substantial duplication of the preliminary investigation of the DOJ. See In re Olson, 884 F.2d 1415, 1420 (D.C.Cir., Spec. Div., 1989) (per curiam) (IC’s investigation “necessarily duplicated ground that had been covered by the preliminary investigation of the Department of Justice”); In re Perry, 892 F.2d 1073, 1074 (D.C.Cir., Spec. Div., 1990) (per curiam) (fee applicant “was being subjected to expenses for a duplicative investigation that he would not have been subjected to in the absence of the Ethics in Government Act”). But we have specifically held that it is only duplication of the preliminary investigation by the DOJ that merits fee reimbursement, and so duplication by the IC of other investigations, such as those conducted by the Congress, is not relevant to this issue. See In re Pierce (Sanders Fee Application), 198 F.3d 899, 904 (D.C.Cir., Spec. Div., 1999) (per curiam), and In re Pierce (Seligman Fee Application), 201 F.3d 473, 476 (D.C.Cir., Spec. Div., 2000) (per curiam). Consequently, although Babbitt argues that the “OIC’s endeavors substantially overlapped with the work of the two congressional Committees,” it is only duplication of the DOJ’s investigation that need concern us here.

In that regard, Babbitt claims that the OIC’s work substantially duplicated the Justice Department’s efforts of reviewing transcripts from the congressional hearings, interviewing witnesses, and gathering relevant information concerning the conflicting testimony. He further claims that the Justice Department also conducted an inquiry into the substance and process of the underlying casino decision, and that he was interrogated before the grand jury by the OIC about many of the same topics that he had been asked about in a Justice Department/FBI interview.

We note that the process of an independent counsel investigation set up by the Act will by its very nature necessarily replow some of the same ground already tilled by the DOJ. The issue to be addressed is whether the investigation by the IC merely duplicates that of the DOJ. Duplication by definition does not occur if the IC’s investigation extends significantly beyond that of the DOJ’s preliminary investigation. See In re Olson, 884 F.2d at 1420 (“but for” requirement satisfied where “[t]he greater portion of [the IC’s] investigation” duplicated that of the DOJ.) (emphasis added). As we stated in Kis-ner, the fee applicant could not satisfy the “but for” requirement by claiming that the Independent Counsel’s investigation duplicated that of the DOJ because “the Independent Counsel’s investigation ranged far beyond the preliminary investigation not only in depth but breadth. The matters investigated as to Kisner are far beyond anything in the preliminary investigation.” 178 F.3d at 1360. We find similar circumstances here. Under the Act the AG is limited to 90 days to complete her preliminary investigation and while conducting it she is not allowed, inter alia, to convene grand juries or issue subpoenas. 28 U.S.C. § 592(a). In her Application she stated that only “a limited inquiry” was conducted by the DOJ into the underlying casino decision. In contrast, the IC over a period of 21 months conducted an extensive investigation of Babbitt’s statements and the underlying casino decision. Her office interviewed 460 people, reviewed over 630,000 documents, issued grand jury subpoenas to 167 people, and interrogated 58 of them before the grand jury. Final REPORT OF THE INDEPENDENT COUNSEL In RE: Bruce Edward Babbitt at 3-4. Therefore, the IC’s investigation cannot in any relevant sense be considered duplicative of the DOJ’s preliminary investigation.

In sum, Babbitt has not satisfied the “but for” requirement under any of the aforementioned theories because “he was not subjected to an investigation that he would not have been subjected to in the absence of the Act.” Nofziger, 925 F.2d at 446. The allegations concerning both the perjury and false statements by the Secretary of the Interior as well as the corruption of the underlying casino decision would in all probability have been extensively investigated by the Department of Justice in the absence of the independent counsel statute. See Kisner, 178 F.3d at 1360-61. We do however conclude that Babbitt’s petition and the accompanying affidavits support recovery for one element. Babbitt incurred legal fees for the time spent by his counsel in reviewing and responding to the final report of the independent counsel. No such report would have been prepared, filed, reviewed, or responded to but for the Act. Specifically, 28 U.S.C. § 594(h)(1)(B) 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.... ” Absent the Act, federal “prosecutors do not issue reports.” In re: North, 16 F.3d 1234, 1238 (D.C.Cir., Spec. Div., 1994) (per curiam). Indeed, as we have observed before, “the filing of reports by independent counsels is ‘a complete departure from the authority of a United States Attorney’ 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 Babbitt has established that he has incurred the fees occasioned by the report itself and would not have incurred those fees but for the Act. We therefore order filed simultaneously herewith an entered judgment in favor of Babbitt for $52,091.94 representing legal services expended in the processing of the final report and Babbitt’s response thereto.

Conclusion

For the reasons set forth above, we allow in part the petition of Bruce Edward Babbitt to the extent of ordering reimbursement for attorney fees in the amount of $52,091.94. We deny the balance of the petition for failure to comply with the but for requirements, 28 U.S.C. § 593(f)(1).