Donovan, In re, 85-1

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Citation877 F.2d 982
Docket NumberNo. 85-1,85-1
PartiesIn re Raymond J. DONOVAN. Division
Decision Date09 June 1989

Before MacKINNON, Presiding, BUTZNER and PELL, Senior Circuit Judges.

PER CURIAM.

Upon consideration of Raymond J. Donovan's Application for Attorneys' fees and expenses and Supplemental Application for Attorneys' fees and expenses filed pursuant to Independent Counsel Reauthorization Act of 1987, P.L. 100-191, 101 Stat. 1293 codified at 28 U.S.C. 591 et seq., it is hereby

ORDERED, by the Court, that Donovan be awarded $72,875.06 in reasonable attorneys' fees and expenses for the reasons stated in the following opinion.

PER CURIAM.

Raymond J. Donovan, former Secretary of Labor, was the subject of an independent counsel investigation conducted by Leon Silverman. The Independent Counsel's investigation revealed insufficient credible evidence to warrant prosecution and a grand jury returned a no true bill. Donovan now presents this court with an application for reimbursement of attorneys' fees and expenses as provided for by the Independent Counsel Reauthorization Act of 1987. 1

I. BACKGROUND OF THE ETHICS IN GOVERNMENT ACT

In 1978, Congress passed the original Ethics in Government Act. 2 The Act provided, upon request by the Attorney General, for a Special Division of the Court of Appeals 3 to appoint a special prosecutor (now independent counsel) for the purpose of avoiding the inherent appearance, if not actuality, of a conflict of interest produced by the Department of Justice investigating possible criminal violations allegedly committed by high officials in the Executive branch. The Act provided a mechanism for ensuring the appearance and actuality of an independent, impartial investigation and prosecution, if warranted, of allegations of high level misconduct in the Executive branch. The Act included a sunset provision, with a five year span.

The first investigation by a special prosecutor demonstrated some defects in the initial legislation. Specifically, Congress and others were troubled by 1) the procedure which led up to the Attorney General requesting the appointment of a special prosecutor and 2) the absence of reimbursement for attorneys' fees incurred by unindicted subjects of special prosecutor investigations. The Special Prosecutor's investigation of Hamilton Jordan provided an example of an allegation which would not have ordinarily been subject to federal investigation yet Jordan incurred attorneys' fees in excess of $100,000. In re Jordan, 745 F.2d 1574, 1576 (D.C.Cir.1984) (The allegation against Jordan was that he had used small amounts of cocaine.).

The Jordan case provided some impetus to the movement to amend the Ethics in Government Act. The Hearings before the Senate Subcommittee on Oversight of Government Management of the Committee on Governmental Affairs, S.Rep. No. 496, 97th Cong., 1st Sess., (July 14, 1982), U.S.Code Cong. & Admin.News 1982, p. 3537, addressed the issues of whether the Act should be extended beyond 1983 and what improvements should be made to the Act. As a result of these Hearings, Congress amended the Act by raising the standard for initiating the Justice Department's preliminary investigation of an allegation of criminal misconduct and referral to the Special Division for the appointment of an independent counsel through incorporating ordinary Department of Justice prosecutorial discretion in determining whether to pursue an allegation. Congress also provided for the reimbursement of "reasonable" attorneys' fees for the subject of an Independent Counsel investigation where the subject is not indicted and the fees "would not have been incurred but for the requirements of the [Act]." 4

The 1983 amendments that raised the standards which triggered a preliminary investigation by the Department of Justice and referral to the Special Division for appointment of an independent counsel were designed to "establish[ ] a standard administration of justice for officials and non-officials;" thereby avoiding the "unfairness ... [of] imposing a stricter application of the criminal law on public officials." S.Rep. No. 496, 97 Cong., 1st Sess. 15 (1982), U.S.Code Cong. & Admin.News 1982, p. 3551.

Before conducting a preliminary investigation, Sec. 592(a)(1) required the Attorney General to determine whether the allegation of criminal conduct was "specific" and "credible." The 1978 Act [Sec. 592(a) ] had required the Department of Justice to conduct a preliminary investigation merely on receipt of specific information of criminal conduct by a covered official--thus prohibiting the Attorney General from taking into account the credibility of the source of the allegation when determining whether to undertake a preliminary investigation. Moreover, under the revised standard, the Senate Report directed the Attorney General to "follow the usual practices of the Department of Justice in determining the reliability of a source." S.Rep. 97-496 at 12, U.S.Code Cong. & Admin.News 1982, p. 3548.

Pursuant to the 1983 amendments, after completing a preliminary investigation, the Attorney General was required to request the appointment of an independent counsel only where "reasonable grounds to believe that further investigation or prosecution is warranted" exist. Sec. 592(c)(1). Section 592(c)(1) also compelled the Attorney General, when determining if such grounds exist, to "comply with the written or other established policies of the Department of Justice with respect to criminal investigations."

Prior to the 1983 amendments, the 1978 Act obliged the Attorney General to seek the appointment of a special prosecutor unless the allegation was "so unsubstantiated that no further investigation is warranted." 5 Sec. 592(b)(1). In 1982, Congress found this standard to be "far lower than the standard employed at this stage of investigation by other prosecutors across the country in both the federal and state court systems." S.Rep. 97-496 at 14 (1982), U.S.Code Cong. & Admin.News 1982, p. 3550. Congress, therefore, empowered the Attorney General, when determining whether to seek the appointment of an independent counsel, to exercise the "reasonable discretion [that] is regularly practiced by the Department of Justice, U.S. Attorneys, and prosecutors throughout the federal system." Id. Congress intended the amended standard for appointing an independent counsel to remedy the problem of "an uneven application of justice [which was caused] by triggering the appointment of a special prosecutor to investigate allegations which are not ordinarily prosecuted by the Department of Justice." Id.

Congress' decision to provide for the subject of an independent counsel investigation to be reimbursed for attorneys' fees incurred, in select situations, during the investigation also reflects an intent to protect the subject from an unequal application of justice. Section 593(f)(1) provides, in part:

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. Sec. 593(f)(1). 6 Inquiries into the awarding of attorneys' fees under the Act have focused on two elements: 1) whether the fees would have been incurred "but for" the Act and (2) whether such fees are "reasonable." The legislative history indicates that the court "should only award that portion of the [reasonable] fees, if any, which it determines would not have been incurred in the absence of the special prosecutor law." S.Rep. 97-496 at 18, U.S.Code Cong. & Admin.News 1982, p. 3554.

II. THE COLUMBIAN ALLEGATION

On May 23, 1985, following the completion of a preliminary investigation, Deputy Attorney General D. Lowell Jensen 7 filed an application with the special division of the court requesting the appointment of an independent counsel to investigate the so-called "Columbian Allegation" against Donovan.

The substance of the Columbian Allegation centered on the accusation that Donovan, as vice-president of Schiavone Construction Company, (SCC), allegedly demanded and received a kickback from Columbian Steel Company. In 1976-1977, Donovan negotiated a contract for Columbian to broker steel (Hodgson Steel & Ironworks was to supply the steel) for a New York City subway construction project. Columbian submitted a low bid of $522 per ton of steel delivered to the job site. Schiavone Construction Company participated in the project as part of a joint venture and Donovan was responsible for procurement of construction materials. The kickback agreement was allegedly structured as follows: of the $522 per ton of steel charged for delivery to the job site, $490 was allocated to Hodgson, $10 per ton to Columbian as agent and the remaining $22 per ton to Donovan as a kickback. If true, the kickback arrangement may have contradicted Donovan's sworn congressional testimony, and grand jury testimony given in the earlier Independent Counsel investigation. 8

The principal witness against Donovan was Gerald Meyer, the president and co-owner of Columbian. At the time of the Donovan investigation, Meyer had been convicted and was awaiting sentencing on felony charges unrelated to the investigation. The F.B.I. uncovered the Columbian Allegation in the course of its investigation into whether Columbian Steel was making illegal payments to public officials in New York and New Jersey. The F.B.I. first learned of the Columbian Allegation in its interviews of Ronald Singer, co-owner of Columbian. 9 Singer did not have first-hand knowledge of the kickback agreement and Meyer refused to be...

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