                  United States Court of Appeals

               FOR THE DISTRICT OF COLUMBIA CIRCUIT

                       Filed June 22, 1999

                        Division No. 89-5

                  In re:  Samuel R. Pierce, Jr. 
                     (Kisner 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 Gerald D. 
Kisner for reimbursement of attorneys' fees and costs pursu-
ant 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 petition is not well 
taken, it is hereby

     ORDERED, ADJUDGED, and DECREED that the peti-
tion of Gerald D. Kisner 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 22, 1999

                        Division No. 89-5

                  In re:  Samuel R. Pierce, Jr. 
                     (Kisner 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.

     Concurring opinion filed by Senior Circuit Judge Cudahy.

     Per curiam:  Gerald D. Kisner 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 $2,759.39 
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 Kisner 
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.

                           Background1

     In 1978 Congress established the moderate rehabilitation 
("mod rehab") program within the U.S. Department of Hous-
ing and Urban Development ("HUD").  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-
voritism, and mismanagement at HUD during the 1980's 
under the tenure of HUD Secretary Samuel R. Pierce, Jr.  
Gerald D. Kisner, the fee petitioner here, was Deputy Gener-
al Counsel of HUD during a portion of the time that Pierce 
was Secretary.  In May of 1990 Kisner was called to testify 
before the Employment and Housing Subcommittee of the 
Committee on Government Operations of the United States 
House of Representatives (the "Lantos Committee") about his 
activities as Deputy General Counsel.

     Based on information elicited during the congressional 
investigations, the House Judiciary Committee wrote to At-
torney General Richard Thornburgh seeking the appointment 
of an independent counsel to investigate the matter.  Follow-
ing a preliminary investigation, Attorney General Thornburgh 
applied to this court for appointment of an independent 
counsel.  On March 1, 1990, we appointed former United 

__________
     1 We have had recent occasion to review the facts of this matter 
in In re:  Samuel R. Pierce, Jr. (Olivas Fee Application, No. 89-5 
(D.C. Cir., Spec. Div., June 22, 1999) (per curiam).  Rather than re-
plow recently tilled ground, we have adopted much of the language 
in the background portion of this opinion, and, where applicable, a 
portion of the analysis from that decision.

States Circuit Judge Arlin Adams2 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 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 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 
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 November of 
1993 the IC apparently called Kisner before the grand jury to 
ask again about his activities as Deputy General Counsel.  
Kisner Application at 2.

     Subsequently, in March of 1994, Kisner received a letter 
from the IC's office which stated, in pertinent part, "that you 
were not truthful about several matters on which you testified 
in the grand jury and in front of the Lantos Committee."  
March 3, 1994 Letter from Roscoe C. Howard, Jr., Esq., 
Associate Independent Counsel.  Upon receipt of the letter 
Kisner retained legal counsel.  Although he states that he 
was informed by the IC's office that he would be indicted, see 
Kisner Application at 3, no charges were ever filed against 
him.

     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-

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

after, Kisner, 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 Kisner'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 Kisner has met the "subject" and "during" 
requirements.  However, we agree with the evaluations of the 
Independent Counsel and the Attorney General that Kisner 

has not carried his burden of establishing 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 the absence of the Act.

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

     There can be no serious argument that Kisner's claim fits 
in either of the first two categories previously identified by 
the court.  As to the first, the Independent Counsel's investi-
gation 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 investiga-

tion.  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 Kisner his counsel fees.  
He cannot fit this category either.  Therefore, in order to 
establish eligibility for counsel fees under the "but for" test, 
Kisner must either put his facts within category three or four 
or otherwise establish the necessary unique special features.  
This he has not done.

     Kisner argues that he satisfies the "but for" requirement 
because "if the statute had not authorized the appointment of 
the Independent Counsel, then the grand jury before whom 
Rev. Kisner testified would not be in existence."  Kisner 
Response at 3.  We have repeatedly held, however, 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.  As we stated in Olivas, "If the investigative act generat-
ing the defensive costs would, in the absence of the Act, have 
been pursued by other authorities--'had the case been han-
dled by the Department of Justice or other executive authori-
ties rather than the Independent Counsel,'--then Congress 
did not contemplate the award of counsel fees."  In re Pierce, 
(Olivas Fee Application), slip op. at 7 (quoting In re North 
(Dutton Fee Application), 11 F.3d at 1080).  We have found 
this requirement to be met where, as in Dutton, among other 
cases, the independent counsel has treated as criminal acts 
that would not have been investigated by a political or 
professional attorney in the Department of Justice.  Similar-
ly, in In re Segal (Sagawa Fee Application), 151 F.3d 1085 
(D.C. Cir., Spec. Div., 1998) (per curiam), 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.  Here, in contrast, it is 
the case that if the grand jury that Kisner testified before 
had not been in existence then some other would have been 
employed to investigate the HUD matter, i.e., 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.

     In a similar vein, Kisner makes the argument that the Act 
"prohibits the Attorney General from actually calling a grand 
jury to make his or her preliminary determination of whether 
an investigation is warranted....  Thus, the Attorney Gener-
al could not have investigated whether or not Rev. Kisner had 
committed perjury before the Lantos Committee, and the 
DOJ was not empowered to call Rev. Kisner before a grand 
jury."  Kisner Response at 3.  But as we noted above, if the 
Independent Counsel had not called a grand jury to investi-
gate the HUD matter, then the Attorney General or some 
other government entity would likely have done so.  Conse-
quently, if Kisner's argument has any force at all it would 
seem to work against him, i.e., but for the Act the grand jury 
would have been in use sooner and his attorneys' fees would 
have been incurred at an earlier date.

     Relying on In re Donovan, 877 F.2d 982 (D.C. Cir., Spec. 
Div., 1989) (per curiam), Kisner further claims that the extent 
of the IC's investigation "added to the complexity of the 
investigation ... and exceeded anything the DOJ would have 
undertaken merely to review his actions."  Kisner Response 
at 4.  In Donovan we held that the "but for" requirement was 
satisfied where the alleged wrongdoing was based upon a 
single allegation by a single witness of extremely questionable 
credibility, and the Attorney General, because of the stric-
tures of the Act, could not convene a grand jury, plea bargain, 
or issue subpoenas, and therefore could not evaluate the 
credibility of the witness, and consequently was required to 
refer the matter to an independent counsel.  In re Donovan, 
877 F.2d at 990.  In that case if the charges had been made 
against an ordinary citizen then the Attorney General could 
have disposed of the case much sooner and at much less cost.  
Here, as we have noted, the allegations concerning fraud at 
HUD would in all probability have been extensively investi-
gated by the Executive Branch in the absence of the indepen-
dent counsel statute.

     The most that Kisner can argue under this theory is that 
the complexity of the investigation lengthened his need for 
representation and increased the attorneys' fees involved.  
The difficulty for Kisner is that the complexity and length of 
the investigation was not caused by the requirements of the 
Independent Counsel Act.  The convoluted nature of the 
corruption involved and the high profile identity of the sus-
pects and defendants would no doubt have resulted in a 
complex and lengthy investigation with or without the ap-
pointment of an independent counsel.  Kisner's difficulties 
were occasioned by his being suspected of having done mis-
chief in high company, not by the identity of the authority 
investigating the allegations of mischief.

     Further, as we pointed out in Nofziger, Congress when it 
was first considering reimbursement of attorneys' fees in 
1982 was aware that the inherently different nature of the 
independent counsel process could result in added legal ex-
penses to subjects of independent counsel investigations, but 
"[n]evertheless ... refused to authorize reimbursement for 
such alleged 'inherent' costs of subjects." In re Nofziger, 925 
F.2d at 445.  If Congress had wanted to so provide, it could 
have authorized reimbursement for those fees incurred for no 
other reason than the triggering of the Act itself.  Instead, 
Congress provided only for reimbursement of those attor-
neys' fees that "would not have been incurred but for the 
requirements of [the Act]."  Id.  And requirements "refers to 
the special limitations and procedures established by the 
Act," e.g., the two-step investigatory procedure by the Attor-
ney General and the restrictions on the Attorney General in 
complying with that procedure, id., which we discern as 
having no bearing on Kisner's situation here.  Investigation 
and potential prosecution of Kisner by the IC for perjury 
"does not satisfy the 'but for' requirement 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).

     Finally, Kisner attempts to bring his situation within the 
precedential sphere of In re North (Shultz Fee Application), 
8 F.3d 847 (D.C. Cir., Spec. Div., 1993) (per curiam).  In 

Shultz, we awarded counsel fees to a petitioner who had been 
converted from witness to subject status far along in a 
lengthy investigation, stating that "it is not reasonable to 
expect that a professional prosecutor, as opposed to an inde-
pendent counsel under the Act, would have been making 
subjects out of persons theretofore treated as witnesses four 
and one-half years after the commencement of an investiga-
tion."  Id. at 851.  Kisner contends that that same reasoning 
should benefit him, pointing out that the investigation by the 
IC began on March 1, 1990, that the IC called Kisner as a 
witness in November of 1993, and that "[i]t was not until 
March, 1994, that Rev. Kisner was notified by the IC that he 
was, at that point, a subject of their investigation."  Kisner 
Response at 4.  These facts are not by any means governed 
by the Shultz reasoning.

     We entered the opinion in Shultz in the context of a witness 
who had actually been interviewed five times at broad inter-
vals as a regular part of the investigation, and then informed 
that his status was being changed to subject.  Kisner, on the 
other hand, was simply an existing potential witness or 
potential subject for the first three and one half years of the 
investigation.  He had no status as witness.  From the time 
of his testimony in November of 1993, until he was notified of 
his status as subject was a period of only four months.  
Kisner has shown nothing to establish that a professional 
prosecutor would have handled his case any differently than 
did the IC.  Therefore, absent some showing not made by 
Kisner, we cannot say that the fees would pass the "but for" 
test.

                            CONCLUSION

     The petition of Gerald D. Kisner 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).

 

 

 

     Cudahy, Senior Circuit Judge, concurring in the judgment:  
The result here is dictated by the extensive Special Division 
precedent establishing an extraordinarily demanding test for 
eligibility for attorneys' fees.  Whether Congress originally 
intended that the bar for eligibility be set this high is to me 
unclear.  But we are not writing on a clean slate.

               