North (Gadd Fee Application), In re

• Decision Date: 07 January 1994
• Docket Number: No. 86-6,86-6
• Parties: In re Oliver L. NORTH (GADD FEE APPLICATION). . (Division for the Purpose of Appointing Independent Counsels Ethics in Government Act of 1978, as Amended)
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 252

12 F.3d 252

304 U.S.App.D.C. 226

In re Oliver L. NORTH (GADD FEE APPLICATION).

No. 86-6.

United States Court of Appeals, District of Columbia Circuit.

(Division for the Purpose of Appointing Independent Counsels

Ethics in Government Act of 1978, as Amended)

Jan. 7, 1994.

Before: SENTELLE, Presiding, BUTZNER and SNEED, Senior Circuit Judges.

ORDER

PER CURIAM.

This matter coming to be heard and being heard before the Special Division of the Court, upon the application of Richard B. Gadd for reimbursement of attorneys' fees pursuant to Sec. 593(f) of the Ethics in Government Act of 1978, as amended, 28 U.S.C. Sec. 591 et seq. (1988), and it appearing to the Court for the reasons more fully set forth in the opinion filed contemporaneously herewith, that the motion is well taken, in part, it is hereby

ORDERED, ADJUDGED and DECREED that the United States reimburse Richard B. Gadd for attorneys' fees he incurred during the investigation by Independent Counsel Lawrence E. Walsh in the amount of $58,410.74. It is further

ORDERED, ADJUDGED and DECREED that the fee petitions of American National Management Corporation, Eagle Aviation Services and Technology, and Airmach are denied, this seventh day of January, 1994.

Opinion for the Special Division filed PER CURIAM.

PER CURIAM:

Richard B. Gadd, who was a participant in the Contra supply network investigated as part of the independent counsel function in this matter, seeks reimbursement under section 593(f) of the Ethics in Government Act of 1978 as amended, 28 U.S.C. Sec. 591 et seq. (1988) ("the Act"), for attorneys' fees expended by him allegedly in defense against that investigation. Jointly with Gadd, American National Management Corporation, Eagle Aviation Services and Technology, and Airmach, described in the application as "Mr. Gadd's companies," petition the Court for fees expended by them on behalf of themselves and two company employees, Cindy Dondlinger and John Cupp. As we find Gadd's application to have some merit, we allow it in part by order filed simultaneously herewith. By the same order, we deny the application of the companies.

A. The Companies

Because the application of the companies is the more easily determined, we will begin with it. We cannot allow that application. Although there may be multiple reasons, one will suffice. The governing statute provides for award "upon the request of an individual who is the subject of an investigation conducted by an independent counsel," and only for reimbursement of "reasonable attorney fees incurred by that individual." 28 U.S.C. Sec. 593(f). As we have previously admonished, this provision of the Ethics in Government Act is a limited waiver of the sovereign immunity of the United States and as such must be narrowly construed and must not be extended beyond the scope reasonably intended by Congress. In re Nofziger (Mark A. Bragg), 956 F.2d 287, 289 (D.C.Cir.1992); In re Nofziger, 938 F.2d 1397, 1403 (D.C.Cir.1991); In re Meese, 907 F.2d 1192, 1196 (D.C.Cir.1990).

While we have not yet addressed the meaning of the term "individual" in the context of the Ethics in Government Act's fee provision, Congress is normally presumed to afford an undefined term its ordinary meeting. Immigration and Naturalization Serv. v. Elias-Zacarias, --- U.S. ----, ----, 112 S.Ct. 812, 816, 117 L.Ed.2d 38 (1992). In common usage, "individual" describes a natural person. See WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 1152 (1981) (defining "individual" as "a single human being as contrasted with a social group or institution"). According to Black's Law Dictionary, the legal definition of the term "individual," while not excluding corporations in all cases, "very commonly" connotes a natural person as opposed to a corporate entity. BLACK'S LAW DICTIONARY 773 (6th ed. 1990) ("very commonly a private or natural person as distinguished from a partnership, corporation, or association").

Had Congress intended to allow corporations to seek and obtain fee awards, it could have employed language authorizing application by a "subject" rather than "an individual who is the subject." 28 U.S.C. Sec. 593(f). Indeed, to construe the statute to allow recovery by a corporation would deprive words used by Congress of all content. "[C]ourts should disfavor interpretations of statutes that render language superfluous." Connecticut Nat'l Bank v. Germain, --- U.S. ----, ----, 112 S.Ct. 1146, 1149, 117 L.Ed.2d 391 (1992). The prior version of the fee provision in the Act specifically provided that any "subject" of an investigation could apply for fees. Pub.L. No. 97-409, Sec. 5, 96 Stat. 2041 (1983) (formerly codified at 28 U.S.C. Sec. 593(g)). While not at all dispositive, this history tends to shore-up the already evident conclusion that Congress did not waive the government's sovereign immunity as to fee liability toward corporations as opposed to individuals. Not only a narrow construction, but any reasonable construction of the words of Congress precludes such award.

Although Donlinger and Cupp have not made applications personally, the fee application before us would not support an award to them even if we construed it to encompass a request on their behalf. The statute again awards reimbursement only for "reasonable attorneys' fees incurred by that individual." 28 U.S.C. Sec. 593(f)(1). We have interpreted the phrase "incurred by that individual" to mean that an individual seeking fees must have actually paid the fees or be legally liable for them. In re Olson, 884 F.2d 1415, 1422 (D.C.Cir.1989); In re Donovan, 877 F.2d 982, 991 (D.C.Cir.1989). The fee application before the Court does not disclose that Cupp and Donlinger have incurred any fee liability. Therefore, under any construction of the statute, we award no attorneys' fees for the alleged defense of the corporation or the employees, Donlinger and Cupp.

B. The Gadd Application

The application of Richard B. Gadd individually requires more extensive treatment and, as we have already indicated, is not without merit. Though we do not award the full amount prayed, our analysis reveals that Gadd is entitled to some attorneys' fees under the statute.

The relevant statute reads in pertinent 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).

Thus, to meet the statutory standard for a fee award, Gadd must demonstrate that the fees for which he seeks reimbursement were incurred during the investigation, while he was a subject of the investigation, and would not have been incurred but for the requirements of the Act. In addition, he must show that the fees are reasonable. See also In re North (Dutton Fee Application), 11 F.3d 1075, (D.C.Cir.1993), and cases collected therein. We consider these requirements in turn.

1. Subject

In Dutton, we considered at some length the meaning of the requirement that an individual receiving a fee award must be "the subject of an investigation conducted by an independent counsel." 28 U.S.C. Sec. 593(f)(1); Dutton, 11 F.3d at 1077-79. We further discussed this subject in In re North (Shultz Fee Application), 8 F.3d 847 (D.C.Cir.1993). Without rehashing the reasoning of those cases, we established in them that for purposes of the fee reimbursement provision, a "subject" is an individual who "at the time of incurring the fees involved in the application, knew that his conduct was within th[e] scope [of an investigation] in such a fashion that 'the independent counsel might reasonably be expected to point the finger of accusation' at him." Shultz, 8 F.3d at 850 (quotingDutton, 11 F.3d at 1078). Gadd meets that requirement for a portion of the period during which his fees were incurred.

Gadd was most similarly situated to the movant in Dutton, whom we previously determined met the statutory requirement. Each was a principal lieutenant of retired Air Force General Richard V. Secord "in the very enterprise which generated for Secord the status of defendant in an Independent Counsel case." Dutton, 11 F.3d at 1079. In Dutton, we ruled that the movant there was a subject where "frequent indictment references to Secord acting in concert with others cover[ed] the activities and period of Dutton's employment," although he was never named in any indictment. Id. Gadd's claim for the status of "subject" is stronger than that of the Dutton applicant. He was mentioned as a principal actor in an overt act listed in the conspiracy indictments of John M. Poindexter, Oliver L. North and Richard V. Secord, brought by the grand jury in an independent counsel case. While obviously being named in an overt act does not automatically confer on one the status of subject, in this case we are satisfied that Gadd has met the statutory requirement.

Unfortunately for the complete success of Gadd's application, his status as "subject" did not continue throughout the period during which he incurred attorneys' fees. On or about July 29, 1987, Gadd's counsel was able to secure for him a grant of immunity. Although Gadd claims he remained at risk of criminal prosecution subsequent to receiving immunity, we do not find that he was under such reasonable apprehension of prosecution that he qualified as a "subject" under the fee award statute thereafter. As we noted in Dutton, an individual obtaining immunity does not automatically lose the status of "subject." Dutton, 11 F.3d at 1078. However, the grant of immunity "does change the reasonable perception" as to whether the purported "subject" is still acting in defense against the independent counsel's...