In re: : CISNEROS (NEEDLE FEE APPLICATION ) Division for the Purpose of Appointing…

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Filed July 18, 2006
Division No. 95-1
I N RE : CISNEROS
(NEEDLE FEE APPLICATION )
Division for the Purpose of
Appointing Independent Counsels
Ethics in Government Act of 1978, As Amended
Before: SENTELLE , Presiding, FAY and REAVLEY , 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 Martin Needle
for reimbursement of attorneys’ fees and costs pursuant to
section 593(f) of the Ethics in Government Act of 1978, as
amended, 28 U.S.C. § 591 et seq. (2000), and it appearing to the
court for the reasons set forth more fully in the opinion filed
contemporaneously herewith, that the petition is for the most
part well taken, it is hereby

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ORDERED, ADJUDGED, and DECREED that Martin
Needle shall be reimbursed for attorneys’ fees and expenses in
the amount of $22,390.86.
PER CURIAM
For the Court:
Mark J. Langer, Clerk
By:
Marilyn R. Sargent
Chief Deputy Clerk

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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Filed July 18, 2006
Division No. 95-1
I N RE : CISNEROS
(NEEDLE FEE APPLICATION )
Division for the Purpose of
Appointing Independent Counsels
Ethics in Government Act of 1978, As Amended
Before: SENTELLE , Presiding, FAY and REAVLEY , Senior
Circuit Judges.
ON APPLICATION FOR ATTORNEYS’ FEES
PER CURIAM: Martin Needle petitions this Court under
section 593(f) of the Ethics in Government Act of 1978, as
amended, 28 U.S.C. §§ 591-599 (“the Act”), for reimbursement
of attorneys’ fees in the amount of $23,746.77 that he claims
were incurred during and as a result of the investigation
conducted by the Independent Counsel. Because we find that
Needle has established his entitlement under the statutory
criteria for reimbursement of a portion of the fees we will, for
the reasons set forth more fully below, allow recovery of
$22,390.86.

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Background
In 1994 allegations arose that Henry Cisneros, then-
Secretary of Housing and Urban Development, during his
appointment process may have made false statements to the FBI
concerning alleged payments made by him to his mistress. After
conducting a preliminary investigation pursuant to the
Independent Counsel statute, the Attorney General requested
that this court appoint an independent counsel to further
investigate the matter, and the appointment was made on
May 24, 1995. Approximately one and a half years after his
appointment, the Independent Counsel (“IC” or “OIC”)
requested that the Attorney General expand his jurisdiction to
include investigation of possible tax violations by Cisneros in
years 1989, 1991, 1992, and 1993. Apparently based in part on
a recommendation from the IRS, this request was granted only
for the year 1992.
During his subsequent investigation, the IC apparently came
into possession of an internal IRS memorandum (hereinafter
“the improprieties memorandum”) that contained allegations of
impropriety by the IRS Washington, D.C., office in its decision
not to recommend prosecution of Cisneros for the remaining tax
violations. The IC, beginning in 1997, then undertook his own
investigation into whether obstruction of justice occurred in the
decisions of certain DOJ and IRS officials in not authorizing the
investigation or prosecution of Cisneros for these possible tax
violations. Martin Needle, the fee applicant here, was
investigated by the IC in his capacity as an IRS attorney who
had reviewed the Cisneros case.
In 1998 this “obstruction investigation” was temporarily
suspended, until 2000. After resumption, Needle was called
before the grand jury after being granted “informal use
immunity.” He was never indicted and now, pursuant to the

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Act, seeks reimbursement for his attorneys’ fees expended in
this matter, in the amount of $23,746.77.
Discussion
Unlike persons investigated by Executive Branch
prosecutors, the subjects of investigations under the Ethics in
Government Act are entitled to reimbursement of attorneys’ fees
expended in defense against such investigation under limited
circumstances delineated in 28 U.S.C. § 593(f)(1), which 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.
In applying this statute, this court has held repeatedly that
as “a waiver of sovereign immunity it is to be strictly
construed.” In re Nofziger, 925 F.2d 428, 438 (D.C. Cir., Spec.
Div., 1991) (per curiam). Therefore, we will award counsel fees
only to a petitioner who is unindicted and who demonstrates
that:
(1) he is a “subject” of such investigation;
(2) the fees were incurred “during” the investigation;
(3) the fees would not have been incurred “but for” the
requirements of the Act; and
(4) the fees are “reasonable.”

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In re Mullins (Mullins Fee Application), 84 F.3d 459, 463 (D.C.
Cir., Spec. Div., 1996) (per curiam) (quoting In re North (Cave
Fee Application), 57 F.3d 1117, 1119 (D.C. Cir., Spec. Div.,
1995) (per curiam)). As to each of these necessary
requirements, the petitioner bears the burden of proof. See, e.g.,
In re North (Reagan Fee Application), 94 F.3d 685, 690 (D.C.
Cir., Spec. Div., 1996) (per curiam). There is apparently no
dispute that Needle incurred his attorneys’ fees “during” the
IC’s investigation. The remainder of the discussion will
therefore address the “subject,” “but for,” and “reasonable”
requirements.
A. “Subject” Status
We have previously defined the term “subject” as a person
whose conduct is within the scope of the independent counsel’s
investigation such that “the Independent Counsel might
reasonably be expected to point the finger of accusation” at him.
In re North (Dutton Fee Application), 11 F.3d 1075, 1078 (D.C.
Cir., Spec. Div., 1993) (per curiam); see also In re North (Shultz
Fee Application), 8 F.3d 847, 850 (D.C. Cir., Spec. Div., 1993)
(per curiam). Additionally, in Shultz we held that, under any
definition of the term, the criterion for “subject” status is
squarely met when the independent counsel tells a person that he
is in fact a subject. 8 F.3d at 850. Needle asserts that on or
about May 12, 1998, the IC’s office informed him that he was
a subject of the investigation; he consequently claims that he has
satisfied the subject requirement under Shultz. And although he
was subsequently granted use immunity for his testimony before
the grand jury, Needle argues that he nevertheless still retained
subject status in that he “remained under the threat of
prosecution until the prosecutor was satisfied with his entire
testimony.”

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The Department of Justice, in its evaluation of Needle’s fee
application, notes that although Needle was informed that he
was a “subject” of the IC’s investigation, he was subsequently
granted use immunity and fees incurred after immunity has been
conferred – even use immunity – are generally not reimbursable.
In re Pierce (Abrams Fee Application), 190 F.3d 586, 591 (D.C.
Cir., Spec. Div., 1999). The DOJ asserts that for an applicant
nevertheless to believe that there remained a realistic possibility
that he would become a defendant he must show “extraordinary
facts.” See id. at 591. But the DOJ defers to the OIC to “shed
further light on whether Mr. Needle was treated in a manner that
would lead him reasonably to believe that he was at all times a
continuing subject of the Independent Counsel’s investigation.”
In its evaluation, the OIC does not dispute Needle’s
assertion that it told him on May 12 th that his status was that of
subject. But the IC claims that on May 20 th
, in a conversation
between the OIC and Needle’s attorney, the OIC stated that it
considered Needle “more of a witness than a subject.”
Furthermore, according to the OIC, its obstruction investigation
was soon thereafter temporarily suspended until early 2000, and
upon resumption it informed Needle’s attorney that Needle’s
status “may be that of a witness.” Additionally, the OIC notes
that Needle was given informal use immunity, and that it is not
the norm for a person to be considered a subject after receiving
such immunity. According to the OIC, only “extraordinary
circumstances” justify a witness’s continued apprehension after
being immunized, and no such circumstances exist here. To the
contrary, argues the OIC, “the grant of immunity to Needle
should have strengthened what should have been his already
changed ‘reasonable perception’ that he was not a subject of the
OIC’s investigation.” In sum, according to the IC, after May 20,
1998, Needle was treated as a cooperating witness, and this fact
is further evidenced by the comparable treatment of Needle in
the IC’s Final Report. Taking all of the above into

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consideration, the IC argues that at no time should Needle “have
believed that he was in serious jeopardy of becoming a
defendant . . . except perhaps before May 20, 1998, for which he
claims $2375 in fees.”
There appears to be no dispute that around May 12, 1998,
the OIC told Needle that he was considered a subject of the
investigation. As such, he fulfills the “subject” requirement of
the Act. See In re Madison Guar. Sav. & Loan (Lindsey Fee
Application), 346 F.3d 1111, 1114-15 (D.C. Cir., Spec. Div.,
2003) (per curiam) (“Although the Act does not define ‘subject,’
as we have stated before, under any definition of ‘subject’ this
element will be squarely met for fees incurred after the
Independent Counsel’s office informs an individual that he is a
subject.” (internal quotation marks and citation omitted)). The
only question appears to be how long that status was held.
According to the IC, Needle’s subject status ended a little over
a week later, when his attorney was told by the OIC that Needle
was “more of a witness than a subject,” and that at no time
thereafter should he have believed that he was in serious
jeopardy of becoming a defendant. But although the IC strives
to paint Needle as a witness and not a subject after May 20,
1998, the IC’s own words appear to belie that claim. First, the
statement made to Needle’s attorney on May 20, 1998, does not
by itself rule out his status as a subject: He may have been
considered “more” of a witness, and thus by implication “less”
of a subject, but a subject all the same. Furthermore, after
resuming its “obstruction investigation” in 2000, the OIC sent
a letter to Needle’s attorney concerning the forthcoming
issuance to Needle of a grand jury subpoena. Although the letter
provided Needle with informal use immunity, and stated that he
“may be that of a witness” with respect to the grand jury, it
nevertheless stated that it “could not assure [the attorney] that
[Needle] was not a subject.” It should also be noted that in its
evaluation the OIC relies on this court’s discussion in Abrams,

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190 F.3d at 591, wherein it was noted that it “is not the norm”
for a person to be considered a subject after receiving use
immunity. However, in the relevant case cited in that
discussion, Dutton, 11 F.3d at 1079, as well as in Pierce itself,
the fee applicants were granted formal use immunity under the
Federal Use Immunity Statute, 18 U.S.C. § 6002. It appears that
if such immunity had been granted here, instead of the “informal
use immunity” as stated in the OIC’s February 21, 2001, letter,
the OIC’s position concerning Needle’s post-immunity status
would be considerably stronger.
In sum, it appears that the OIC never definitively retracted
Needle’s “subject” status. Consequently, for the full time period
in which Needle seeks fee reimbursement, it appears that he
“reasonably believed that there was a realistic possibility that he
would become a defendant.” In re North (Gardner Fee
Application), 30 F.3d 143, 146 (D.C. Cir., Spec. Div., 1994) (per
curiam) (internal quotation marks and citation omitted).
B. Fees Not Incurred “But For” the Requirements of the
Act
The Act requires that to be reimbursable, attorneys’ fees
must “not have been incurred but for the requirements of [the
Act].” 28 U.S.C. § 593(f)(1) (emphasis added). Accordingly,
“[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 limiting fee awards to 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 citizens 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.,

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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 [Act]”)).
In addressing the “but for” requirement, Needle first cites
Gardner, 30 F.3d at 146, for the proposition that this
requirement is to ensure that those who have been investigated
by an independent counsel should only have to pay those
attorneys’ fees that would have been paid if the same offense
had been investigated by the Department of Justice. Needle then
asserts that it was in his “public and official position with the
IRS” that he was involved in the Cisneros tax matter and
subsequently questioned by the OIC about that involvement.
Claiming that “[b]ut for his official duties and responsibilities,
[he] would never have been the subject of the investigation and
would not have been in a position to retain counsel to provide
advice and guidance through the process,” Needle goes on to
argue that the attorneys’ fees at issue would not have been
incurred “but for” the Independent Counsel investigation
involving Cisneros.
The OIC in its evaluation disputes Needle’s claim to
fulfillment of the “but for” requirement. To begin, the OIC cites
In re Pierce (Kisner Fee Application), 178 F.3d 1356, 1361
(D.C. Cir., Spec. Div., 1999) (per curiam), arguing that in order
for Needle to fulfill the requirement “it is necessary for Needle
to establish that special limitations and procedures of the Act,
such as those manifested in its unique two-step procedure,
forced him to incur legal costs that he otherwise would not have
incurred.” The OIC then takes issue with Needle’s cite to In re
Mullins, claiming that in that case the “but for” requirement was
satisfied because of redundant State Department and DOJ
investigations prior to the independent counsel investigation,
which is not the situation here. In closing, the OIC argues that
Needle’s assertion that he “was a public official does not begin

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to satisfy his burden of showing that he would not have incurred
some or all of the attorneys’ fees claimed in his application but
for the Independent Counsel Act.”
In contrast, the DOJ in its evaluation agrees with Needle
that he has satisfied the “but for” requirement. First, the
Department notes that although “it is appropriate” for it to take
over any remaining investigations of a closing independent
counsel office, no such action occurred here. According to the
DOJ, this case is thus analogous to In re Segal (Segal Fee
Application), 145 F.3d 1348, 1352 (D.C. Cir., Spec. Div., 1998)
(per curiam), and In re Olson (Perry Fee Application), 892 F.2d
1073, 1074 (D.C. Cir., Spec. Div., 1990) (per curiam), in that
here, as there, “this Court . . . found the ‘but for’ test satisfied
based on a lack of prosecutorial interest.”
Second, in the DOJ’s opinion the allegations investigated by
the IC “appear much more akin to bureaucratic conflict than
suggestive of criminal behavior.” In support of this statement,
the DOJ asserts that the central issue investigated by the
Independent Counsel was a dispute between the IRS’s regional
office and Washington office over whether there was sufficient
evidence to criminally prosecute Cisneros for tax violations.
Dissecting the “improprieties memorandum,” the DOJ argues
that “the complaints in the memorandum were in the nature of
bureaucratic conflict,” and further that
[t]hese sorts of allegations . . . would not in the normal
course, without additional evidence, generate a
criminal investigation of government employees
carrying out their respective duties in evaluating the
matters in question.
Third, the DOJ points out that the IC, after investigating
Cisneros for tax year 1992, ultimately decided not to indict

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because willfulness could not be established - the same reason
that led the IRS to decline referral in the first place. And the
DOJ also notes that it too declined to refer other tax years to the
IC, leading to the conclusion that in the end the IC, the DOJ, and
the IRS Washington office were all in agreement that
prosecution of the tax matters was not warranted. Under such
circumstances, asserts the DOJ, “the conflict would not have
been the topic of a criminal investigation ‘but for’ the existence
of the Independent Counsel statute.”
As the DOJ suggests, the matter looked into in the IC’s
“obstruction investigation” appears to have been nothing more
than a “bureaucratic conflict.” In several fee applications
considered at the end of the Iran/Contra independent counsel
investigation, this court noted that during that investigation the
Independent Counsel treated efforts to circumvent the Boland
Amendments as a criminal conspiracy. See, e.g., Dutton, 11
F.3d at 1080; Gardner, 30 F.3d at 146. The court stated that no
executive branch authorities, including a politically appointed
Attorney General, would have subjected such attempts to
criminal prosecution, and thus the “but for” requirement was
fulfilled as no fees would have been incurred “but for” the
appointment of the Independent Counsel. Dutton, 11 F.3d at
1080. The situation here appears to be analogous - executive
branch authorities do not treat “bureaucratic conflicts” as
criminal, and the Department of Justice says as much in its
evaluation: “an internal disagreement of this sort over a
prosecution decision would rarely, if ever, lead to a criminal
investigation by the Department of Justice.”
Furthermore, addressing the “but for” requirement in
Nofziger, 925 F.2d at 444, we held that the appropriate question
was whether “Nofziger, absent the statute, [would] have been
similarly investigated and prosecuted by the Department of
Justice . . . .” In its evaluation the Department strongly opines

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more than once that the answer to that question here is in the
negative:
[i]t is unlikely that an investigation of the pertinent
matters in this case would have been conducted by the
Department of Justice absent the existence of the
Independent Counsel statute.
It is exceedingly unlikely that the core allegations that
gave rise to the Independent Counsel’s investigation
with respect to IRS employees would have led to an
investigation by an ordinary prosecutor.
In sum, it appears that in the absence of the Act an
investigation of this matter would not have been undertaken by
the Department of Justice, and Needle would therefore not have
incurred attorneys’ fees “but for” the appointment of the
Independent Counsel.
C. Fees Are “Reasonable” Under the Act
This court must determine whether Needle’s attorneys
charged reasonable rates, and whether the time expended by
Needle’s attorneys on his representation was reasonable. In re
Meese, 907 F.2d 1192, 1201 (D.C. Cir., Spec. Div., 1990) (per
curiam).
Although the DOJ asserts that “the fees generally are
adequately documented and appear to be reasonable,” the OIC
argues that the following should be rejected as unreasonable: 1)
those expenses for travel, hotel, taxi, and phone calls incurred
because Needle’s attorney practices in Miami, Florida and had
to travel or make calls to Washington, see In re North (Bush Fee
Application), 59 F.3d 184, 194 (D.C. Cir., Spec. Div., 1995) (per
curiam); and 2) insufficiently documented expenses for long

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distance telephone calls, photocopies, and courier service.
From the entries contained in the billing documents for the
attorneys’ fees, it appears that the entry descriptions are
sufficient and the time expended reasonable. But, as the IC
pointed out, some of the expenses sought are problematical.
First, Needle’s attorney practiced in Miami, and in the first or
second week of March, 2001, apparently traveled to
Washington, D.C., on the Needle matter. Total expenses sought
for this trip: $1280.91. In Bush, we noted that
in the absence of some showing that local counsel
could not have rendered the service involved and
thereby obviated the necessity of employing an
attorney who must necessarily spend billable time
travelling from his normal home to the work site, we
do not find such travel to be within the reasonableness
contemplated by Congress.
Id. at 194. As no excusing showing has been made by Needle,
the expenses for this trip will not be reimbursed.
Second, the expense pages contain multiple entries for
“Long Distance Telephone” calls and “Photocopies,” as well as
an entry for “Courier,” all of which are not otherwise explained.
The total amount sought for these entries is $158.36. This court
has in the past made deductions for comparable expenses
because of a lack of supporting documentation, see In re
Madison Guar. Sav. & Loan (Marceca Fee Application), 366
F.3d 922, 929 (D.C. Cir., Spec. Div., 2004) (per curiam), and we
will do so here, reducing the amount by $75.00.
Total deductions for expenses: $1280.91 + $75.00 =
$1355.91.

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In sum, Needle has requested that his attorneys’ fees be
reimbursed in the amount of $23,746.77. Subtracting $1355.91
in expenses leaves a remainder of $22,390.86.
Conclusion
In light of the foregoing discussion, Martin Needle shall be
reimbursed for attorneys’ fees and expenses in the amount of
$22,390.86.

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