UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


SAMUEL R. PIERCE


89-0005b

D.C. Cir. 1999


*	*	*


Opinion for the Special Court filed Per Curiam.


Per curiam: Ernest Olivas, 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 34Act34), for reimbursement of attorneys'
fees in the amount of $14,555.76, which he incurred during and as a
result of the investigation  conducted by Indepedent Counsels (34IC34)
Arlin M. Adams and Larry D. Thompson. Because we conclude that Olivas
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 In 1978 Congress established the moderate rehabilitation
(34mod rehab34) program within the U.S. Department of Hous- ing and
Urban Development (34HUD34). This program encour- aged developers to
upgrade moderately substandard housing units for occupation by low
income families. In 1988 HUD's Inspector General 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- voratism, and
mismangement at HUD during the 1980's under the tenure of HUD
Secretary Samuel R. Pierce, Jr. Based on information elicited during
these congressional in- vestigations, the House Judiciary Committee
wrote to Attor- ney General Richard Thornburgh seeking the appointment
of  an independent counsel to investigate the matter. Following 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 Adams1 as
independent counsel 34to 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 through 1988.34
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





__________

n 1 Independent Counsel Adams resigned in May of 1995. This  Court
appointed his deputy, Mr. Larry D. Thompson of the Atlanta  bar to
succeed him.


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 1992 the IC began an investigation of HUD funding of two
subsidiaries of  Communications International Inc. ("CII"), whose
former  senior vice president was then-Treasurer of the United 
States, Catalina Villalpando. Ernest Olivas, the fee petitioner  here,
was assistant to Villalpando when she was at CII. In  furtherance of
this investigation, the IC served a subpoena on  Villalpando for
documents relating to the CII subsidiaries.  After receiving the
subpoena, Villalpando contacted Olivas,  who was by then the local
office manager at CII, and directed  him to destroy and/or conceal
certain documents responsive  to the subpoena. Villalpando eventually
pled guilty to an  obstruction of justice charge for directing Olivas


Contemporaneous with the IC's investigation of Villalpando  was a
separate U.S. Department of Justice ("DOJ") investiga- tion of her for
irregularities in her receipt of financial benefits  from CII while
she was Treasurer. During this investigation,  the DOJ had placed a
wiretap on Villalpando's phone and  picked up the conversation between
her and Olivas concern- ing destruction of the documents. The DOJ
notified the IC,  who began an investigation of Olivas for destroying
and/or  concealing the documents and thus interfering with an on-
going grand jury investigation. However, the IC subsequent- ly
"decided, on the basis of considerations such as time,  resources and
the other matters under investigation, not to  bring charges against
Mr. Olivas." Independent Counsel's  Evaluation of Olivas Fee


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, Olivas, 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
Olivas'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). In  their analysis of Olivas's application, both the IC and
the DOJ  conclude that Olivas has met the "subject" and "during" 
requirements. We agree. However, we also agree with both  evaluations
that Olivas has not carried his burden of estab-


lishing that he would not have incurred the fees "but for" the 
requirements of the Ethics in Government 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 "the 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)
(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 compo- nent 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
contempla- tion 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


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. In 


re Olson, 884 F.2d 1415, 1420 (D.C. Cir., Spec. Div.,  1989); In re
North (Dutton Fee Application), 11 F.3d at  1080 (per curiam).


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)
(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; In re North (Dutton
Fee Application), 11  F.3d at 1080.


Olivas fits none of the four categories. Granted, these  categories are
not exhaustive, and probably could not be,  given the "fact-specific
nature of each independent counsel's  undertakings." In re North
(Dutton Fee Application), 11  F.3d at 1080. Nonetheless, if Olivas is
to establish his  entitlement under the Act he must establish some
sort of  "unique special factual features that but for the requirement
 of the Act would have permitted a quick termination" of the 
investigation or otherwise not have subjected him to the fees  for
which he petitions. In re Nofziger, 925 F.2d at 439.  Though striving
mightily, he falls short.


There can be no serious argument that Olivas's claim fits in  either of
the first two categories previously identified by the  Court. As to
the first, the Independent Counsel's investiga- tion ranged far beyond
the preliminary investigation not only  in depth but breadth. The
matters investigated as to Olivas  are far beyond anything in the
preliminary investigation. He  cannot fit category one. As to category
two there is neither 


allegation nor evidence of the Department's failure to comply  with
substantial protective features and thereby pretermit the 
investigation that cost Olivas his counsel fees. He cannot fit  this
category either. Therefore, in order to establish eligibili- ty for
counsel fees under the "but for" test, Olivas must either  put his
facts within category three or four or otherwise  establish the
necessary unique special features. This he has  not done.


In his submissions to the Court, Olivas has repeatedly  advanced a post
hoc ergo propter hoc rationalization, claiming  that he is entitled to
an award of attorneys' fees because had  there been no IC
investigation of Villalpando, then his activi- ties allegedly
obstructing it would not have been an issue for  investigation; in
other words, that the IC investigation itself  led to the incurrence
of Olivas's attorneys' fees. But as the  Independent Counsel points
out, if we were to allow reim- bursement under this line of reasoning
then "virtually every  person investigated by the Independent Counsel
for potential- ly criminal conduct would satisfy the 'but for'
requirement of  the Act." IC Eval. at 10. We have repeatedly held that
 subjects of an independent counsel investigation do not auto-
matically meet the "but for" test simply because the investi- gation
was conducted by an independent counsel under the  Act. If 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 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
Appli- cation), 11 F.3d at 1080. We have found this requirement to  be
met where, as in Dutton, among other cases, the indepen- dent counsel
has treated as criminal acts that would not have  been investigated by
a political or professional attorney in the  Department of Justice.
Similarly, in Segal, we awarded fees  where the investigation would
have been terminated by a  political or professional Department of
Justice attorney with- out the incurrence of the fees sought. 151 F.3d
at 1089.  Olivas's fees reflect no such unique claim. We cannot hold 
that the Attorney General and other investigative authorities  would


widespread as those revealed by the Independent Counsel's 
investigation had there been no such Act. Nor is it in any  way
apparent that such an Executive Branch investigation  would not have
raised just as much occasion for obstruction  by Villalpando and


Indeed, as we have formulated previously, 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 require- ments 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
proce- dure by the Attorney General and the restrictions on the 
Attorney General in complying with that procedure, id., which  we
discern as having no bearing on Olivas's situation here. 
Investigation and potential prosecution of Olivas by the IC for 
destruction and/or concealment of documents responsive to a  grand
jury subpoena "does not satisfy the 'but for' require- ment since it
is a type of prosecution that is not uniquely  related to the Act." In
re North (Corr Fee Application), 56  F.3d 261, 264 (D.C. Cir., Spec.
Div., 1995) (per curiam).  Therefore, absent some showing not made by
Olivas, we  cannot say that the fees would pass the "but for" test.


Olivas also advances the slightly more sophisticated argu- ment that
the IC's investigation generated the subpoenas that  were the
foundation for the acts of obstruction by Ms. Villal- pando which he
in turn was investigated for having aided and  abetted or having
participated in a conspiracy to commit.  Again, given the allocation
of the burden, see In Re North  (Reagan Fee Application), 94 F.3d at
690, we cannot say that  this rather convoluted reasoning takes
Olivas's claim outside  the category of those fees that would have
been incurred  defending against investigation by an executive agency
even  in the absence of the Act.


Conclusion


The petition of Ernest Olivas, 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).