In the Courts

Attorneys Fees and the Hyde Amendment

In a Matter of First Impression, the Sixth Circuit Sets Forth the Proper Procedure for Determining Whether to Award Attorneys Fees and Costs Pursuant to the Hyde Amendment Where Only Some of the Counts Are Found to Be Frivolous.

In United States v. Heavrin, 330 F.3d 723 (6th Cir. 2003), a panel of the Sixth Circuit, in a matter of first impression, set forth the proper procedure for determining whether to award attorneys fees and costs pursuant to the Hyde Amendment where some of the counts are found to be frivolous and others are not.

Donald Heavrin was indicted and went to trial on 14 counts of bankruptcy fraud. Before the case was submitted to the jury, Heavrin moved pursuant to Rule 29 of the Federal Rules of Criminal Procedure for a judgment of acquittal on all of the charges. The district court granted Heavrin's motion. Heavrin subsequently filed a motion to have the government pay his attorneys fees and costs (1997), codified as an amendment to 18 U.S.C ' 3006A. The Hyde Amendment provides 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.' 18 U.S.C. ' 3006A. Applying the Hyde Amendment, the district court found that three of the substantive counts, along with their respective money-laundering counts, were frivolous and granted, in part, Heavrin's motion. The Government appeal contending, inter alia, that the court applied the wrong legal standards to Heavrin's motion.

The Sixth Circuit agreed and held that the district court applied the wrong standard. After a detailed analysis into the terms 'vexatious' and 'frivolous,' the court turned to the meaning of the term 'position' in the Hyde Amendment. Because the Hyde Amendment expressly states that it is subject to the procedures and limitations of the Equal Access to Justice Act (EAJA), 28 U.S.C. ' 2412, 18 U.S.C. '3006A, the court looked for guidance in the EAJA. The EAJA provides, in pertinent part, that 'a court shall award to a prevailing party other than the United States fees and other expenses ' incurred by that party in any ' action ' brought by or against the United States ' unless the court finds that the position of the United States was substantially justified. ' ' 28 U.S.C. ' 2412(d)(1)(A). Based on case law construing the term 'position' in the EAJA, the court held that the district court should have made only one finding based on the case 'as an inclusive whole' and explained that a count-by-count analysis is inconsistent with this approach.  The court cautioned, however, that evaluating a case as an inclusive whole is not susceptible to a precise litmus test. The court explained:

'The fact that only one count among many is frivolous or not frivolous is not determinative as to whether a movant should receive an award under the Hyde Amendment. ' By the same token, a determination that part of the government's case is frivolous does not automatically entitle the movant to a Hyde Amendment award if the court finds that the government's 'position' as a whole was not vexatious, frivolous, or in bad faith. The district court, in other words, must not fail to see the forest for the trees.' 330 F.3d at 730.

After providing that guidance, the Sixth Circuit remanded the case to the district court for a determination of whether Heavrin was entitled to recover under the Hyde Amendment.

The Business Crimes Hotline and In the Courts were compiled by Bradley J. Bondi, Esq., an associate with Williams & Connolly LLP, Washington, DC, and Associate Editor of this newsletter.

Attorneys Fees and the Hyde Amendment

In a Matter of First Impression, the Sixth Circuit Sets Forth the Proper Procedure for Determining Whether to Award Attorneys Fees and Costs Pursuant to the Hyde Amendment Where Only Some of the Counts Are Found to Be Frivolous.

In United States v. Heavrin , 330 F.3d 723 (6th Cir. 2003), a panel of the Sixth Circuit, in a matter of first impression, set forth the proper procedure for determining whether to award attorneys fees and costs pursuant to the Hyde Amendment where some of the counts are found to be frivolous and others are not.

Donald Heavrin was indicted and went to trial on 14 counts of bankruptcy fraud. Before the case was submitted to the jury, Heavrin moved pursuant to Rule 29 of the Federal Rules of Criminal Procedure for a judgment of acquittal on all of the charges. The district court granted Heavrin's motion. Heavrin subsequently filed a motion to have the government pay his attorneys fees and costs (1997), codified as an amendment to 18 U.S.C ' 3006A. The Hyde Amendment provides 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.' 18 U.S.C. ' 3006A. Applying the Hyde Amendment, the district court found that three of the substantive counts, along with their respective money-laundering counts, were frivolous and granted, in part, Heavrin's motion. The Government appeal contending, inter alia, that the court applied the wrong legal standards to Heavrin's motion.

The Sixth Circuit agreed and held that the district court applied the wrong standard. After a detailed analysis into the terms 'vexatious' and 'frivolous,' the court turned to the meaning of the term 'position' in the Hyde Amendment. Because the Hyde Amendment expressly states that it is subject to the procedures and limitations of the Equal Access to Justice Act (EAJA), 28 U.S.C. ' 2412, 18 U.S.C. '3006A, the court looked for guidance in the EAJA. The EAJA provides, in pertinent part, that 'a court shall award to a prevailing party other than the United States fees and other expenses ' incurred by that party in any ' action ' brought by or against the United States ' unless the court finds that the position of the United States was substantially justified. ' ' 28 U.S.C. ' 2412(d)(1)(A). Based on case law construing the term 'position' in the EAJA, the court held that the district court should have made only one finding based on the case 'as an inclusive whole' and explained that a count-by-count analysis is inconsistent with this approach.  The court cautioned, however, that evaluating a case as an inclusive whole is not susceptible to a precise litmus test. The court explained:

'The fact that only one count among many is frivolous or not frivolous is not determinative as to whether a movant should receive an award under the Hyde Amendment. ' By the same token, a determination that part of the government's case is frivolous does not automatically entitle the movant to a Hyde Amendment award if the court finds that the government's 'position' as a whole was not vexatious, frivolous, or in bad faith. The district court, in other words, must not fail to see the forest for the trees.' 330 F.3d at 730.

After providing that guidance, the Sixth Circuit remanded the case to the district court for a determination of whether Heavrin was entitled to recover under the Hyde Amendment.

The Business Crimes Hotline and In the Courts were compiled by Bradley J. Bondi, Esq., an associate with Williams & Connolly LLP, Washington, DC, and Associate Editor of this newsletter.