Opinion
8:98CR249
July 19, 2000.
MEMORANDUM AND ORDER ON THE DEFENDANTS' MOTION FOR ATTORNEY'S FEES
This matter is before me on the defendants' motion for attorney's fees pursuant to the Hyde Amendment, filing 127. For the following reasons, I find that the motion should be denied.
The Hyde Amendment
The Hyde Amendment was passed in order to provide the reimbursement of attorney's fees to defendants in certain criminal cases. It provides, in relevant part, that
the court, in any criminal case (other than a case in which the defendant is represented by assigned counsel paid for by the public) . . . may award to a prevailing party, other than the United States, a reasonable attorney's fee and other litigation expenses, where the court finds that the position of the United States was vexatious, frivolous, or in bad faith, unless the court finds that special circumstances make such an award unjust. Such awards shall be granted pursuant to the procedures and limitations (but not the burden of proof) provided for an award under section 2412 of title 28, United States Code.
Pub.L. 105-119, Title VI, § 617, Nov. 26, 1997, Ill. Stat. 2519, Reprinted Historical and Statutory Notes to 18 U.S.C. § 3006A. The Hyde Amendment expressly limits recovery of fees to "a prevailing party, other than the United States," and excludes cases in which the defendant is represented by assigned counsel paid for by the public. Id.
The fee application
The application for fees in this case fails to meet the procedures and limitations of the EAJA that the Hyde Amendment incorporates. See 28 U.S.C. § 2412(d). First, there is no evidence that Hudson Foods was, as required, an unincorporated business or corporation with a net worth of $7,000,000 or less and had no more than 500 employees at the time this action was filed. See id. at § 2412(d)(2)(B). Second, there is no evidence that suggests that the fees and other expenses sought by Gregory and Wolke were, as required, incurred by them. See id. at § 2412(d)(1)(A). Nothing before me shows that either Gregory or Wolke paid the fees of his attorneys or incurred legal liability for attorneys' fees or that the "fee-deterrent-removal purpose of EAJA [ 28 U.S.C. § 2412] would . . . be served by an award of fees to an individual whose fees are fully paid by a noneligible organization." See Securities and Exchange Comm. v. Comserv Corp., 908 F.2d 1407, 1413-16 (8th Cir. 1990). Although the legal obligation of Hudson Foods to pay the fees of Gregory and Wolke was conditional, nothing suggests that whether the conditions would be met was ever a question in fact. The fees have been or will be paid in full by Tyson Foods, Inc., the successor to Hudson Foods.
I should note for the record that the parties disagree about which section or sections of the EAJA applies through its incorporation in the Hyde Amendment to the fee application in this case. The defendants argue that the Hyde Amendment permits them to obtain fees under subsection (b), unencumbered by the other procedures and limitations of subsection (d), while the government contends that the Hyde Amendment incorporates all of the procedures and limitations of subsection (d). Although I recognize that there is a split among the district courts that have addressed this issue, compare United States v. Holland, 34 F. Supp.2d 346, 358-59 (E.D.Va. 1999) (finding that the procedural limitations set forth in subsection (d) of the EAJA are not applicable if the prevailing party chooses to seek fees under subsection (b) in its fee application under the Hyde Amendment), with United States v. Peterson, 71 F. Supp.2d 695, 698 (S.D.Tex. 1999) (finding that the recovery of fees under the Hyde Amendment is subject to the procedures and limitations set forth in subsection (d) of the EAJA), and United States v. Gardner, 23 F. Supp.2d 1283, 1289 (N.D.Okla. 1998) (same), I believe, in accord with the only circuit that has spoken on this issue, that "the correct interpretation of the procedures and limitations of the EAJA as incorporated in the Hyde Amendment includes the limitations of section 2412(d)." United States v. Ranger Electronic Comm., 210 F.3d 627, 632-33 (6th Cir. 2000). Indeed,
the [g]overnment's reading is the only fair interpretation of the statutory language of the Hyde Amendment, which references all of § 2412 and not its specific provisions. There is nothing to suggest that the Hyde Amendment meant to allow a party merely to point to § 2412(b) to circumvent the requirements enumerated in § 2412(d). Indeed, § 2412(d) provides by far the most concrete procedures and limitations in all of § 2412. Without the thirty-day rule and the requirements of "eligibility," courts would be left directionless in trying to apply the Hyde Amendment's clear directive to apply the EAJA's procedures and limitations. Moreover, as the majority reasons, § 2412(b) itself shows that [the defendant's] interpretation is circular, as that provision explicitly instructs courts to rely on either common law or the "terms of any statute which specifically provides for such an award" to determine the extent to which the United States is liable for an award. 28 U.S.C. § 2412(b). In other words, § 2412(b) tells courts to look elsewhere for procedural guidance.
In addition, the language and legislative history of the Hyde Amendment suggest that the Amendment was modeled precisely after § 2412(d), making the application of its procedures and limitations particularly appropriate. First, the Hyde Amendment and § 2412(d) mirror one another in that each provides fees when the "position" of the government is flawed. Second, the history of the Amendment evinces an even closer connection. To quote the Eleventh Circuit's description of the Amendment's legislative history: Hyde patterned his amendment after the Equal Access to Justice Act ("EAJA"), see 28 U.S.C. § 2412(d)(1)(A), which authorizes the award of attorneys' fees and costs to private parties who prevail against the government in civil actions unless the government establishes that its position was "substantially justified." See 143 Cong. Rec. H7786-04, H7791 (Sept. 24, 1997) (statement of Rep. Hyde). Thus, in its original form the Hyde Amendment would have allowed the award of attorney fees and costs to any federal criminal defendant who prevailed against the government, unless the government showed that its position in the prosecution had been "substantially justified." United States v. Gilbert, 198 F.3d 1293, 1300 (11th Cir. 1999). After criticism by House members and the Department of Justice that the Amendment was too broad, the provision was altered in two ways: the burden of proof was placed on the party seeking the award, and that party was tasked with showing that the government's "position" was "vexatious, frivolous, or in bad faith." See id. at 1300-02. Still, the Hyde Amendment's origin as a replica of § 2412(d) provides additional support for applying the procedures of § 2412(d).Id. at 634-35 (Jones, J., concurring).
Whether the Government's Position was Vexatious, Frivolous, or in Bad Faith
Even if the fee application were otherwise in order, I still would deny the award of fees for the reason that the government's position was not vexatious, frivolous or in bad faith.
As an example of my thinking, I agree with the Government's Brief in Opposition to Joint Motion of Michael Gregory, Brent Wolke, and Hudson Foods, Inc., for Attorneys' Fees, Expenses, and Costs Pursuant to Hyde Amendment, pp. 14-17:
The fact that Wolke's case was dismissed pursuant to Rule 29 motion or that the jury deliberated for a couple of hours is not dispositive in evaluating the government's position. United States v. Reyes, 16 F. Supp. 759, 760 (S.D.Tex. 1998), (Hyde Amendment claim denied even though the case dismissed on Rule 29 motion). Rather, the analysis requires the Court to examine the legal position taken by the United States.
Among the facts identified by counsel for Hudson Foods, Inc., which supposedly establish proof of the government's "bad faith" are the fact that the charges against Brent Wolke were dismissed at the conclusion of the government's case and the fact that the government's "concealment theory" was likewise dismissed on Rule 29 motion.
It must first be recognized that the dismissal of the charges against Brent Wolke and the striking of the concealment theory are in large measure related. The government took the position at trial that Brent Wolke had a duty to disclose the information in his possession concerning the accuracy of the 266 theory and his knowledge of where the June 4th production of seasoned beef patties had been shipped. The government argued that certain statutes and regulations . . . all operated to create a general duty of disclosure on the part of a plant manager.
The theory was not a "late in the game" justification for Mr. Wolke's prosecution. The identical theory, and the statutes and regulations supporting it, was advanced by the government in its brief filed in response to defendant Wolke's Motion to Strike the Concealment Theory of Liability. In ruling on the Motion the Court held, in effect, that ultimate resolution of the issue was not so apparent as to be amenable to pretrial resolution. The Court held "[t]he defendant Wolke may be right and he may not be right. It seems to me that I must hear the evidence before decisions can be made as to whether there was a duty to disclose and, if so, whether it was violated. . . ." The same theory was advanced in the government's trial brief. At the hearing on the Rule 29 motions, the Court ultimately rejected the government's theory. . . .
. . .
The government argued that Brent Wolke, by virtue of the statutes and regulations identified above, had a duty to speak up when he attended the meetings with government regulators. There was no controlling authority on point which said the statutes and regulations did not create such a duty. The fact that the Court disagreed with the government on an issue of first impression does not mean the government's position was vexatious, frivolous or in bad faith. [United States v.] Gilbert, 1999 WL 1258983 at *8."
. . . At a minimum . . . if the Court had agreed with the government that a duty to disclose existed then Brent Wolke would likely have remained in the case past the Rule 29 motions along with the conspiracy and concealment charges.
I agree, also, with the government's statement that, "[T]here is more than sufficient evidence to rebut any inference that the prosecution was in bad faith, vexatious or frivolous.
IT IS THEREFORE ORDERED that the defendants' motion for attorney's fees pursuant to the Hyde Amendment, filing 127, is denied.