# Dixon v. Comm'r > United States Tax Court · May 10, 2006 · 91 T.C.M. 1138 URL: https://www.frixlaw.com/law-library/cases/4335956 ## Case - **Full name:** JERRY AND PATRICIA A. DIXON, 1 v. COMMISSIONER OF INTERNAL REVENUE - **Court:** United States Tax Court - **Decided:** May 10, 2006 - **Citations:** 91 T.C.M. 1138; 2006 T.C. Memo. 97; 2006 Tax Ct. Memo LEXIS 98 - **Precedential status:** Unpublished - **Opinion:** Opinion - **Judges:** Beghe - **Cited by:** 2 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4335956 ## Opinion text T.C. Memo. 2006-97 UNITED STATES TAX COURT JERRY AND PATRICIA A. DIXON, ET AL.,1 Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket Nos. 9382-83, 15907-84, Filed May 10, 2006. 40159-84, 30979-85, 29643-86. Henry Binder and John A. Irvine, counsel for petitioners in docket Nos. 9382-83, 15907-84, 40159-84, and 30979-85. Michael Louis Minns and Enid M. Williams, counsel for petitioners in docket No. 29643-86. Henry E. O’Neill and Peter R. Hochman, counsel for respondent. 1 Cases of the following petitioners are consolidated herewith: Robert L. and Carolyn S. DuFresne, docket Nos. 15907-84 and 30979-85; Terry D. and Gloria K. Owens, docket No. 40159-84; and Richard and Fiorella Hongsermeier, docket No. 29643-86. - 2 - CONTENTS Page Background . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . 17 I. Introduction . . . . . . . . . . . . . . . . . . . . . . 17 A. Overview of Section 7430 . . . . . . . . . . . . . 17 B. Tax Court’s Authority To Award Appellate Fees Under Section 7430 . . . . . . . . . . . . . . 18 C. The Other Side of the Coin: Inapplicability of Section 6673(a)(2) and the Bad Faith Exception . . . . . . . . . . . . . . . . . . 22 II. Entitlement to Relief Under Section 7430 . . . . . . . . 25 A. Respondent’s Position . . . . . . . . . . . . . . . 25 B. Paid or Incurred Requirement . . . . . . . . . . . 25 1. Overview . . . . . . . . . . . . . . . . . . . 25 2. Real Parties in Interest . . . . . . . . . . . 26 C. Substantial Justification Defense . . . . . . . . . 29 1. Identifying “the Position of the United States in the Proceeding” . . . . . . . 29 2. Substantial Justification Analysis . . . . . . 31 D. Conclusion . . . . . . . . . . . . . . . . . . . . 33 III. Amount of Award . . . . . . . . . . . . . . . . . . . . 33 A. Respondent’s Position . . . . . . . . . . . . . . . 33 B. Applicability of Statutory Rate Cap . . . . . . . . 33 1. Limited Availability of Qualified Attorneys . 34 2. Local Availability of Tax Expertise . . . . . 36 3. Difficulty of the Issues . . . . . . . . . . . 36 4. Other Possible Special Factors . . . . . . . 37 a. In General . . . . . . . . . . . . . . . 37 b. The Government’s Misconduct . . . . . . 38 c. The Delay Factor . . . . . . . . . . . . 41 d. Test Case Status . . . . . . . . . . . . 44 5. Conclusion . . . . . . . . . . . . . . . . . . 45 C. Compensable Hours . . . . . . . . . . . . . . . . . 45 1. Respondent’s Objections . . . . . . . . . . . 45 a. Duplicative Fees Due to Change of Counsel . . . . . . . . . . . . . . . . . 45 b. Overstaffing . . . . . . . . . . . . . . 46 c. Porter & Hedges Client Conferences . . . 48 2. Additional Adjustments to Time Claimed for the Appeals . . . . . . . . . . . . . . . . . . . 49 a. Missing Minns Time Entries . . . . . . . 49 - 3 - b. Minns Hours Relating to Dispute With Committee . . . . . . . . . . . . . . . . 50 c. Additional Porter & Hedges Time Relating to Minns Dispute . . . . . . . . . . . . 50 d. Porter & Hedges Time Relating to Bill of Costs . . . . . . . . . . . . . . 51 e. Porter & Hedges Time Relating to Remand . 51 3. Adjustments to Porter & Hedges Time Relating to Fee Request . . . . . . . . . . . 51 a. Initial Research Time . . . . . . . . . . 51 b. Time Relating to Unsuccessful Claims . . 52 D. Computation of Potentially Compensable Fees . . . . 55 1. The Hongsermeiers--Work on the Appeal . . . . 55 a. 2001 . . . . . . . . . . . . . . . . . . 55 b. 2002 . . . . . . . . . . . . . . . . . . 56 c. Total . . . . . . . . . . . . . . . . . . 57 2. The Hongsermeiers--Work on the Fee Request 57 a. 2003 to 2005 . . . . . . . . . . . . . . 57 b. 2006 . . . . . . . . . . . . . . . . . . 57 c. Application of Limited Success Factor . . 57 3. The PH Petitioners . . . . . . . . . . . . . . 59 a. 2001 . . . . . . . . . . . . . . . . . . 59 b. 2002 to 2005 . . . . . . . . . . . . . . 60 c. 2006 . . . . . . . . . . . . . . . . . . 61 d. Total . . . . . . . . . . . . . . . . . . 61 E. Potentially Compensable Expenses . . . . . . . . . 62 F. Amounts Paid or Incurred by Eligible Persons . . . 62 1. Amounts Paid Through the Defense Fund . . . . 63 a. Minns Agreement . . . . . . . . . . . . . 63 b. Porter & Hedges Agreement . . . . . . . . 66 2. Amounts Paid Directly to Minns . . . . . . . 68 3. Amounts Incurred But Not Paid . . . . . . . . 68 4. Summary . . . . . . . . . . . . . . . . . . . 69 G. Final Figures . . . . . . . . . . . . . . . . . . . 69 IV. Interest . . . . . . . . . . . . . . . . . . . . . . . . 70 Appendix A--September 1, 2005 Order . . . . . . . . . . . . . 72 Appendix B--September 8, 2005 Order . . . . . . . . . . . . . 78 Appendix C--November 18, 2005 Order . . . . . . . . . . . . . 84 MEMORANDUM OPINION BEGHE, Judge: These cases are before the Court on separate remand from the Court of Appeals for the Ninth Circuit. In this opinion, we address petitioners’ requests for appellate - 4 - attorney’s fees and expenses under section 7430,2 originally filed with the Court of Appeals in the aftermath of Dixon v. Commissioner, 316 F.3d 1041 (9th Cir. 2003), revg. and remanding T.C. Memo. 1999-101. Background3 Petitioners (the Dixons, DuFresnes, Owenses, and Hongsermeiers) are, along with one other couple--the Youngs--the remaining test case petitioners in the Kersting tax shelter litigation. That litigation arose from respondent’s disallowance of interest deductions claimed by participants in various tax shelter programs promoted by Henry F.K. Kersting during the late 1970s through the 1980s. Under the test case procedure, most of the other Kersting program participants who had filed Tax Court petitions (“nontest case petitioners”) entered into “piggyback” agreements in which they agreed that their cases would be resolved in accordance with the Court’s opinion in the test cases.4 Eventually, more than 300 nontest case petitioners made 2 Unless otherwise indicated, section references are to the Internal Revenue Code of 1986, as amended, and Rule references are to the Tax Court Rules of Practice and Procedure. 3 The following background statement is based on the existing record and additional information submitted by the parties in connection with the appellate fee requests. We have not found it necessary to hold an evidentiary hearing. See Rule 232(a)(2). 4 Upon the final disposition of the test cases, the relatively few nontest case petitioners who did not enter into piggyback agreements will generally be ordered to show cause why their cases should not be decided in the same manner as the test cases. - 5 - periodic and/or lump sum contributions to a fund (hereafter, the “Defense Fund” or “Fund”) created to share the cost of the test case litigation.5 Following a 3-week trial, the Court sustained virtually all of respondent’s determinations in each of the test cases. See Dixon v. Commissioner, T.C. Memo. 1991-614 (Dixon II).6 Shortly thereafter, on June 9, 1992, respondent notified the Court that, prior to the trial of the test cases, respondent’s trial attorney, Kenneth W. McWade (McWade), and his supervisor, Honolulu District Counsel William A. Sims (Sims), had entered into contingent settlement agreements with two of the test case petitioners (the Thompsons and the Cravenses) and had failed to disclose those agreements to their superiors, to the Court, or to the other test case petitioners or their counsel. Respondent asked the Court to conduct an evidentiary hearing to determine whether the undisclosed agreements had affected the trial of the test cases or the opinion of the Court. The Court denied respondent’s request for an evidentiary hearing, entered decisions giving effect to the Thompson and Cravens settlements, and reentered or allowed to stand the decisions sustaining 5 The Defense Fund was initially known as the Don Belton Legal Defense Fund and subsequently became known as the Atlas Legal Defense Fund. 6 Prior to the trial of the test cases, the Court had issued an opinion rejecting the test case petitioners’ arguments that certain evidence should be suppressed and that the burden of proof should be shifted to respondent. See Dixon v. Commissioner, 90 T.C. 237 (1988) (Dixon I). - 6 - respondent’s determinations against the other test case petitioners. On appeal, the Court of Appeals for the Ninth Circuit, citing Arizona v. Fulminante, 499 U.S. 279, 309 (1991), stated: We cannot determine from this record whether the extent of misconduct rises to the level of a structural defect voiding the judgment as fundamentally unfair, or whether, despite the government’s misconduct, the judgment can be upheld as harmless error. [DuFresne v. Commissioner, 26 F.3d 105, 107 (9th Cir. 1994) (per curiam), vacating Dixon v. Commissioner, T.C. Memo. 1991-614.] The Court of Appeals vacated the Court’s decisions in the test cases (other than the Thompson and Cravens cases) and remanded them for “an evidentiary hearing to determine the full extent of the admitted wrong done by the government trial lawyers.” Id. In response to the direction of the Court of Appeals to consider on the merits all motions of intervention filed by interested parties, this Court ordered that the cases of 10 nontest case petitioners (hereafter, the participating nontest case petitioners) be consolidated with the remaining test cases for purposes of the evidentiary hearing. One of the participating nontest case petitioners was represented by Joe Alfred Izen, Jr. (Izen), who had represented the test case petitioners (other than the Thompsons and Cravenses) at the original trial; the others were represented by either Robert Alan Jones (Jones) or Robert Patrick Sticht (Sticht). On the basis of the record developed at the evidentiary hearing, the Court held that the misconduct of the Government - 7 - attorneys in the trial of the test cases did not constitute a structural defect in the trial but rather resulted in harmless error. See Dixon v. Commissioner, T.C. Memo. 1999-101 (Dixon III). However, the Court imposed sanctions against respondent, holding that Kersting program participants who had not had final decisions entered in their cases would be relieved of liability for (1) the interest component of the addition to tax for negligence under former section 6653(a), and (2) the incremental interest attributable to the increased rate prescribed in former section 6621(c). After the issuance of Dixon III, the remaining test case petitioners, all of whom were still represented by Izen, and some of the participating nontest case petitioners filed motions for attorney’s fees and costs (the initial fee requests), relying primarily on sections 7430 and 6673. The Court ordered the movants to submit documentation pertaining to fees and expenses incurred commencing June 10, 1992 (i.e., the day after the Court learned of the misconduct by the Government attorneys). In Dixon v. Commissioner, T.C. Memo. 2000-116 (Dixon IV), the Court rejected the initial fee requests insofar as they relied on section 7430, on the ground that the movants had not substantially prevailed on the merits as required by section 7430(c)(4)(A)(i). However, the Court awarded a portion of the claimed fees and expenses under section 6673(a)(2)(B) (relating - 8 - to misconduct of the Commissioner’s attorneys in Tax Court proceedings). The Court entered decisions in the remaining test cases and certified the cases of the participating nontest case petitioners for interlocutory appeal. Izen filed notices of appeal on behalf of the remaining test case petitioners, and he also filed an interlocutory appeal on behalf of Norman and Barbara Adair, the participating nontest case petitioners he represented.7 Izen purported to file his interlocutory appeal on behalf of not only the Adairs, but also on behalf of nontest case petitioners in more than 450 docketed cases who had not participated in the evidentiary hearing and therefore were not included in this Court’s certification order. In January 2001, the Defense Fund, acting through a five- person “steering committee”, retained attorney Michael Louis Minns (Minns) to replace Izen. Under the Minns retainer agreement, the Defense Fund agreed to pay Minns an up-front, nonrefundable fee of $110,000, while Minns agreed to a maximum fee for his firm of $150,000. The Fund also agreed to a $75,000 fee for Lawfinders Associates, Inc. (Lawfinders), a firm hired by Minns to assist in researching and writing his appellate briefs. Although Minns replaced Izen as counsel of record for the Dixons, 7 Jones and Sticht filed interlocutory appeals on behalf of the other participating nontest case petitioners. - 9 - DuFresnes, Owenses, and Hongsermeiers, Izen remained counsel of record for the Youngs, the only other remaining test case petitioners. In January and February 2001, the Hongsermeiers and 112 nontest case petitioners (hereafter, the group of 112) made contributions to the Defense Fund (all but two in the amount of $1,500) totaling $168,600 in connection with the hiring of Minns. In addition, from January 2001 through November 2001 (the last full month during which the steering committee recognized Minns as the Fund’s counsel), the Hongsermeiers and 106 members of the group of 112 made smaller contributions to the Defense Fund totaling $99,600. Thus, total contributions to the Defense Fund by the Hongsermeiers and the group of 112 from January 2001 through November 2001 amounted to $268,200. The Fund paid the aforementioned fees of $110,000 and $75,000 to Minns and Lawfinders, respectively, in early 2001.8 The steering committee became dissatisfied with Minns, and by letter dated December 7, 2001, the Defense Fund formally requested Porter & Hedges, L.L.P. (Porter & Hedges) to take over the appeals and to represent the Fund in “the anticipated litigation involving our former attorney in this matter, Michael Minns.” The ensuing engagement letter confirms that Porter & 8 The Fund paid other amounts under the Minns agreement, including a $20,000 fee to an accounting firm, for which the Hongsermeiers do not seek recovery. - 10 - Hedges, in addition to the appellate work, would “represent the Committee with regard to counsel and assistance in terminating its relationship with its present lawyer, Michael Louis Minns, and * * * assist * * * in obtaining a refund of attorneys’ fees and expenses paid to Mr. Minns or at his direction”. The engagement is on an hourly fee basis, with the Defense Fund agreeing to advance $120,000 for application against expected billings. Three members of the steering committee--all nontest case petitioners--are jointly and severally liable for the Defense Fund’s obligations under the agreement, which are not limited by the $120,000 estimate and required advance. From December 12, 2001 to April 5, 2002, the Dixons and 43 nontest case petitioners (hereafter, the group of 43)--36 of whom are also part of the group of 112--made contributions to the Defense Fund (all but three in the amount of $1,500) totaling $66,050 in connection with the hiring of Porter & Hedges. In addition, from December 2001 through April 2002, 37 members of the group of 43 made smaller contributions to the Defense Fund totaling $18,150. Thus, total contributions to the Defense Fund from December 2001 through April 2002 by the Dixons and the group of 43 amounted to $84,200. Porter & Hedges has received only $60,000 from the Defense Fund to date, with the last payment occurring in April 2002. - 11 - Although Porter & Hedges attorneys Henry Binder (Binder) and John A. Irvine (Irvine) entered appearances in the Court of Appeals on behalf of the Dixons, DuFresnes, and Owenses, Minns remained counsel of record for the Hongsermeiers. Thus, three sets of counsel pursued the appeals of the test cases: Izen on behalf of the Youngs, Minns on behalf of the Hongsermeiers, and Porter & Hedges on behalf of the Dixons, DuFresnes, and Owenses (hereafter, the PH petitioners). The Court of Appeals reversed and remanded, holding that the misconduct of the Government attorneys in the trial of the test cases was a fraud on the court, for which no showing of prejudice is required. See Dixon v. Commissioner, 316 F.3d 1041 (9th Cir. 2003) (Dixon V); see also Dixon v. Commissioner, T.C. Memo. 2006- 90 (Dixon VI) (determining the parameters of the illicit Thompson settlement and extending the benefit thereof to all remaining Kersting project petitioners in accordance with the mandate of the Court of Appeals in Dixon V). After the issuance of Dixon V, a group comprising the Hongsermeiers and 38 nontest case petitioners--35 of whom are also part of the group of 112 and three of whom are part of the group of 112 and the group of 43-- retained Minns to continue representing their interests in post- appellate matters (including this fee litigation). The Hongsermeiers and each member of the group of 38 paid Minns a $3,500 retainer fee. - 12 - Shortly after the issuance of Dixon V, the Hongsermeiers and the PH petitioners filed separate requests with the Court of Appeals for attorney’s fees incurred on appeal. The Hongsermeiers’ request relates solely to services performed by Minns and Lawfinders, and the PH petitioners’ request relates solely to services performed by Porter & Hedges. As filed, both appellate fee requests relied exclusively on section 7430. Rather than filing a fee request with the Court of Appeals on behalf of the Youngs, Izen objected to petitioners’ fee requests.9 Izen’s primary objection was that petitioners had not paid or incurred the amounts requested: In actuality, Mr. Binder’s motion fails to reveal the true clients in interest who have paid him fees to represent their interests on appeal. These “real clients in interest” are the same clients represented by Joe Alfred Izen, Jr. in the appeal styled Barbara L. Adair, Et Al, v. Commissioner * * *. 9 Izen is not the only attorney in these proceedings who was, at least initially, hostile to petitioners’ appellate fee requests. In a filing relating to the evidentiary hearing required to implement the primary mandate of Dixon V, Jones (who would subsequently file his own appellate fee request on behalf of the participating nontest case petitioners he represents, see infra note 12) remarked: Test case counsel, exclusive of Mr. Izen, charged clients in excess of $500,000 to copy Mr. Izen’s, Mr. Jones’, and Mr. Sticht’s prior work from the evidentiary hearing [held in 1996 and 1997] without adding one new idea which had a substantial effect on the Dixon appeal. These taxpayers cannot afford to pay expensive lawyers by the hour in order to get the relief they so justly deserve. - 13 - Izen then filed a motion in the Adairs’ interlocutory appeal to transfer consideration of attorney’s fees on appeal to the Tax Court. See 9th Cir. R. 39-1.8. Although the Court of Appeals promptly granted the motion, Izen waited more than 2 years to file his appellate fee request with this Court. That fee request is currently pending and will be the subject of a later opinion. See infra note 12. On May 28, 2003, the Court of Appeals, acting through the panel that had decided Dixon V, issued the following order in response to petitioners’ appellate fee requests: Appellants’ request for attorneys’ fees on appeal is remanded to the Tax Court for a determination of entitlement and, if warranted, amount. Although not required by this order, an evidentiary hearing may aid the Tax Court in making this determination. The panel retains jurisdiction over all further proceedings that may arise. Thereafter, petitioners’ counsel attempted, unsuccessfully, to retrieve from the Court of Appeals the documents relative to the appellate fee requests. Petitioners’ counsel and respondent’s counsel eventually filed in this Court a Special Stipulation of Facts Concerning Appellants’ Request for Attorneys’ Fees on Appeal (the stipulation), stipulating the authenticity of the appellate fee requests and all related objections, oppositions, replies, and records attached as exhibits to the stipulation. Petitioners have largely pursued their appellate fee requests in this Court on a joint basis. - 14 - In considering the appellate fee requests, we solicited the parties’ views as to whether we were limited to section 7430, cited in their requests, or were instead free to proceed under section 6673(a)(2), on which we relied in Dixon IV.10 In a May 2005 order, we expressed the view that “there are substantial obstacles to awarding appellate fees and costs under section 6673(a)(2)”. Shortly thereafter, the Youngs filed a motion in this Court for attorney’s fees under section 6673 relating to services performed (and expenses incurred) by Izen on appeal. In August 2005, the PH petitioners amended their appellate fee request to assert entitlement under the “bad faith” exception to the so-called American rule (hereafter, the bad faith exception), while continuing to rely on section 7430 as an alternative ground.11 By the amendment, the PH petitioners also seek interest on the requested fees and expenses from January 17, 2003 (the date of the Court of Appeals’ Dixon V opinion). In an order dated September 1, 2005, which we incorporate by reference and reproduce as Appendix A, we concluded that “the 10 Sec. 7430 contains certain conditions and limitations that do not apply to fee awards under sec. 6673(a)(2). See infra Parts I.A., I.C. 11 The American rule generally prohibits a Federal court from awarding attorney’s fees in the absence of a statute or contract providing for a fee award. Chambers v. NASCO, Inc., 501 U.S. 32, 61 (1991) (Kennedy, J., dissenting) (citing Alyeska Pipeline Serv. Co. v. Wilderness Socy., 421 U.S. 240, 258-259 (1975)). - 15 - principles enunciated in Cooter & Gell v. Hartmarx Corp., [496 U.S. 384 (1990),] preclude us from awarding appellate fees and expenses under the bad faith exception to the American rule”. Having determined to proceed under section 7430, and with a nod to Izen’s previous objection, we ordered petitioners to submit net worth affidavits for all real parties in interest with respect to their appellate fee requests; namely, “those individuals who have made payments to Porter & Hedges or Michael Minns, P.L.C.--through contributions to the Atlas Legal Defense Fund or otherwise--or are liable to Porter & Hedges or Michael Minns, P.L.C. for the unpaid portion of the requested fees and expenses”. See Rule 231(b)(4); see also infra Part I.A. Meanwhile, in an order dated September 8, 2005, which we incorporate by reference and reproduce as Appendix B, we similarly rejected the Youngs’ reliance on section 6673 and ordered them to submit net worth affidavits for all real parties in interest.12 On November 7, 2005, the PH petitioners filed a motion for reconsideration of our September 1 order, as well as a separate 12 That order also pertains to a motion for appellate fees and expenses filed in this Court in July 2005 by the participating nontest case petitioners represented by Jones. We subsequently informed the parties that we would handle that motion and the Youngs’ appellate fee motion (filed by Izen) separately from petitioners’ appellate fee requests. To complete the story regarding appellate fee requests, the Court understands that Sticht and respondent are working on a comprehensive stipulation and submission regarding requests for fees by participating nontest case petitioners represented by Sticht. - 16 - motion for appellate attorney’s fees under section 6673. We denied the motion for reconsideration by order dated November 18, 2005, which we incorporate by reference and reproduce as Appendix C. We separately denied the PH petitioners’ motion for fees under section 6673 “[f]or the reasons discussed in our Order dated September 8, 2005” (App. B). The Hongsermeiers claim attorney’s fees of $276,434.75, based on (1) 930.32 hours devoted to the appeal and 278.75 hours devoted to the fee request,13 and (2) rates ranging from $50 to $300 per hour. They have not requested any expenses other than attorney’s fees. The PH petitioners claim attorney’s fees of $494,514.75, based on (1) 1,157.65 hours devoted to the appeal and 734.1 hours devoted to the fee request, and (2) rates ranging from $90 to $460 per hour.14 They also claim other expenses of $20,307.15. 13 Respondent does not dispute that fees relating to work on a fee request (“fees for fees” or “fees on fees”) are potentially recoverable under sec. 7430. See, e.g., Huffman v. Commissioner, 978 F.2d 1139, 1149 (9th Cir. 1992), affg. in part and revg. in part on other grounds T.C. Memo. 1991-144. 14 Both fee requests include legal assistant or paralegal fees. Although sec. 7430 does not specifically provide for the recovery of such fees, this Court has routinely awarded them, see, e.g., Foothill Ranch Co. Pship. v. Commissioner, 110 T.C. 94, 101-102 (1998), and we have no reason to believe that the Court of Appeals for the Ninth Circuit would take a different approach. Cf. Commissioner, INS v. Jean, 496 U.S. 154, 163 n.10 (1990) (Equal Access to Justice Act (EAJA) case; Court’s hypothetical refers to paralegal fees even though the EAJA, from which sec. 7430 derives, does not specifically refer to such fees); Sorenson v. Mink, 239 F.3d 1140, 1144 (9th Cir. 2001) (continued...) - 17 - Discussion I. Introduction A. Overview of Section 7430 Section 7430 provides that, subject to certain conditions, a taxpayer who prevails against the Government in any Federal tax proceeding (administrative or judicial) may recover reasonable costs, including attorney’s fees, paid or incurred in connection with such proceeding if the Government’s position in the proceeding was not substantially justified. Sec. 7430(a), (c)(1)(B)(iii), (c)(4)(A) and (B). In its report accompanying the bill in which section 7430 originated, the House Committee on Ways and Means contemplated that such fee awards “will enable individual taxpayers to vindicate their rights regardless of their economic circumstances.” H. Rept. 97-404, at 11 (1981). A taxpayer seeking litigation costs under section 7430 must have exhausted all available administrative remedies prior to litigation, must not have unreasonably protracted the proceedings, and, if an individual, must not have had a net worth in excess of $2 million as of the filing date of the suit. Sec. 7430(b)(1), (b)(3), (c)(4)(A)(ii); see 28 U.S.C. sec. 2412(d)(2)(B)(i) (1988) (individual net worth limitation 14 (...continued) (EAJA fee application included legal assistant fees; no discussion of the issue). Although legal assistant and paralegal fees do not fit neatly within the category of either “attorney’s fees” or “expenses”, we follow petitioners’ lead in grouping them with attorney’s fees. - 18 - contained in the Equal Access to Justice Act and incorporated by reference in sec. 7430(c)(4)(A)(ii)). Reasonable attorney’s fees may not exceed the rate of $125 per hour (as adjusted for inflation) unless “a special factor, such as the limited availability of qualified attorneys for such proceeding, the difficulty of the issues presented in the case, or the local availability of tax expertise, justifies a higher rate.” Sec. 7430(c)(1)(B)(iii).15 Respondent publishes the inflation-adjusted rate cap on an annual basis. The hourly rate cap for fees incurred in 2001 (the earliest year for which petitioners claim fees) is $140. Rev. Proc. 2001-13, 2001-1 C.B. 337, 341. The hourly rate cap for fees incurred between 2002 and 2005 is $150. Rev. Proc. 2001-59, 2001-2 C.B. 623, 628; Rev. Proc. 2002-70, 2002-2 C.B. 845, 850; Rev. Proc. 2003-85, 2003-2 C.B. 1184, 1190; Rev. Proc. 2004-71, 2004-2 C.B. 970, 976. The hourly rate cap for fees incurred in 2006 is $160. Rev. Proc. 2005-70, 2005-47 I.R.B. 979, 985. B. Tax Court’s Authority To Award Appellate Fees Under Section 7430 Before we evaluate petitioners’ appellate fee requests under section 7430, we address the threshold issue of our authority to 15 The latter two examples of special factors were added by the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3101(a)(2), 112 Stat. 727, effective for costs incurred after Jan. 18, 1999, id. sec. 3101(g), 112 Stat. 729. All of the costs sought by petitioners were incurred after Jan. 18, 1999. - 19 - award appellate fees under that section.16 We begin by observing that the Court of Appeals cannot independently empower us to make such an award. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 409 (1990) (reversing that portion of Court of Appeals’ judgment remanding the case to District Court for award of appellate attorney’s fees as part of Rule 1117 sanction; that rule does not authorize District Courts to award attorney’s fees incurred on appeal). Having said that, we are satisfied that section 7430, unlike the provision at issue in Cooter & Gell, authorizes trial courts (such as the Tax Court) to award litigation costs incurred on appeal. Our conclusion that we may award appellate fees under section 7430 ultimately rests on the distinction between (1) fee awards (such as those under section 7430) authorized under “fee- shifting rules that embody a substantive policy, such as a 16 We are hesitant to phrase the issue (i.e., whether we can award appellate litigation costs under sec. 7430) in terms of our “jurisdiction”. See Scarborough v. Principi, 541 U.S. 401, 414 (2004) (Equal Access to Justice Act does not describe what “classes of cases” the Court of Appeals for Veterans Claims is competent to adjudicate; rather, it relates only to postjudgment proceedings auxiliary to cases already within that court’s adjudicatory authority); see also Kafka & Cavanagh, Litigation of Federal Civil Tax Controversies, par. 2.01[5], at 2-8 (2d ed. 1997) (Tax Court’s “jurisdiction” to consider a motion for litigation costs is part and parcel of its jurisdiction over the underlying action); cf. Rule 270(c) (recognizing that the Tax Court’s jurisdiction to review an administrative denial of administrative costs derives from sec. 7430(f)(2)). 17 References to Rule 11 are to Rule 11 of the Federal Rules of Civil Procedure. - 20 - statute which permits a prevailing party in certain classes of litigation to recover fees”, Chambers v. NASCO, Inc., 501 U.S. 32, 52 (1991), and (2) fee awards (such as those under Rule 11, the bad faith exception, or section 6673(a)(2)) that serve as sanctions, the imposition of which “depends not on which party wins the lawsuit, but on how the parties conduct themselves during the litigation”, Chambers v. NASCO, Inc., supra at 53 (drawing the distinction in the context of the Erie doctrine as applied to the bad faith exception). See also Bus. Guides, Inc. v. Chromatic Commcns. Enters., Inc., 498 U.S. 533, 553 (1991) (Rule 11 sanctions, which “are not tied to the outcome of [the] litigation”, “do not constitute the kind of fee shifting at issue in Alyeska [Pipeline Serv. Co. v. Wilderness Socy., 421 U.S. 240 (1975)].”18 In Cooter & Gell v. Hartmarx Corp., supra at 409, the Supreme Court expressly recognized this distinction in the context of appellate fees: “As Rule 11 is not a fee-shifting statute, the policies for allowing district courts to require the losing party to pay appellate, as well as District Court attorney’s fees, are not applicable.” 18 The “kind of fee shifting at issue in Alyeska” involved the substantive policy of encouraging private parties “to bring suit to further broad public interests” such as protecting the environment, i.e., under the “private attorney general” theory. Wilderness Socy. v. Morton, 495 F.2d 1026, 1034 (D.C. Cir. 1974), revd. sub nom. Alyeska Pipeline Serv. Co. v. Wilderness Socy., 421 U.S. 240 (1975). - 21 - The foregoing dictum from Cooter & Gell regarding the authority of District Courts to award appellate attorney’s fees under fee-shifting statutes is consistent with the Supreme Court’s approach in Commissioner, INS v. Jean, 496 U.S. 154 (1990), issued 1 week prior to Cooter & Gell. In Jean, the Court held that the recipient of a fee award under the Equal Access to Justice Act (EAJA), the fee-shifting statute from which section 7430 derives, may recover fees incurred litigating the fee award without a separate showing that the Government’s opposition to the fee award was not substantially justified. See Commissioner, INS v. Jean, supra at 159 (“only one threshold [substantial justification] determination for the entire civil action is to be made”). In so holding, the Court observed that while “[a]ny given civil action can have numerous phases”, “the EAJA--like other fee-shifting statutes--favors treating a case as an inclusive whole”. Id. at 161-162.19 To interpret a fee-shifting statute such as the EAJA or section 7430 as not authorizing a trial court to award appellate attorney’s fees would be 19 The Court also noted that the EAJA “refers to an award of fees ‘in any civil action’ without any reference to separate parts of the litigation, such as discovery requests, fees, or appeals.” Commissioner, INS v. Jean, 496 U.S. at 159 (emphasis added). Similarly, sec. 7430(a)(2) refers to “costs incurred in connection with such [tax-related] court proceeding”, and sec. 7430(c)(6) defines “court proceeding” as “any civil action brought in a court of the United States” (including the Tax Court), without any reference to separate phases of the proceeding. - 22 - inconsistent with the unitary approach espoused by the Court in Jean.20 C. The Other Side of the Coin: Inapplicability of Section 6673(a)(2) and the Bad Faith Exception The distinction between fee-shifting provisions and fee sanctions also informs our prior refusals to evaluate petitioners’ appellate fee requests under either section 6673(a)(2) or the bad faith exception, each of which falls into the fee sanction category. See Apps. A, B, C. In contrast to the unitary approach adopted in the fee-shifting (EAJA) case of Commissioner, INS v. Jean, 496 U.S. at 159, under which “only one threshold [substantial justification] determination for the entire civil action is to be made”, the Supreme Court adopted a “direct causation” approach 1 week later in Cooter & Gell v. Hartmarx Corp., supra, a case involving a fee sanction under Rule 11. There, the Court rejected the argument that the reference in Rule 11 (as then in effect) to fees and expenses incurred “because of” the offending filing included fees incurred in defending a District Court’s Rule 11 sanction on appeal: “We 20 If the authority to award appellate fees under the EAJA or sec. 7430 resided exclusively in the appellate courts, then there would be two “substantial justification” determinations whenever an appellate court, applying the (deferential) abuse of discretion standard, see Pierce v. Underwood, 487 U.S. 552, 557- 563 (1988), upholds the trial court’s determination in that regard (i.e., with respect to an EAJA or sec. 7430 fee request pertaining to trial fees), but reaches the opposite conclusion in disposing of a similar request for appellate fees in the same case. - 23 - believe Rule 11 is more sensibly understood as permitting an award only of those expenses directly caused by the [sanctionable] filing, logically, those at the trial level.” Cooter & Gell v. Hartmarx Corp., 496 U.S. at 406. Thus, while Jean contemplates that the recipient of an EAJA fee award may recover fees incurred in defending the award on appeal without a separate showing that the Government’s appeal of the award was not substantially justified, the Court in Cooter & Gell concluded that a litigant defending a Rule 11 fee award on appeal may recover appellate expenses “only when those expenses are caused by a frivolous appeal, and not merely because a Rule 11 sanction upheld on appeal can ultimately be traced to a baseless filing in district court.” Id. at 407. The foregoing dichotomy suggests that a litigant who is entitled to attorney’s fees at the trial level on the basis of his opponent’s misconduct must, in the absence of additional sanctionable conduct at the appellate level, premise any claim for appellate fees on a fee-shifting (prevailing party) provision. Because some fee-shifting provisions impose restrictions (such as hourly rate caps) that may not apply to fee sanctions, such a litigant may find that his claims for attorney’s fees incurred during the trial and appellate phases, respectively, of the same litigation are subject to markedly different rules. That is the case here. Under section 6673(a)(2), we are authorized to sanction respondent for the - 24 - attorney misconduct that marred the test case trial by charging him the full amount of petitioners’ attorney’s fees relating to the Tax Court proceedings necessitated by that misconduct, subject only to the requirement that such amounts have been reasonably incurred.21 Because that misconduct did not extend to the appellate proceedings, petitioners are relegated to the applicable fee-shifting provision--section 7430, with its hourly rate cap and eligibility requirements--with regard to their appellate fee requests.22 Cf. Hutto v. Finney, 437 U.S. 678, 689 & n.13, 693 & n.21 (1978) (Court separately analyzes fee awards ordered by the District Court and the Court of Appeals, respectively; whereas the trial court’s award was adequately supported by its finding of bad faith, the appellate court’s award, not supported by any finding of bad faith at the appellate level, could only be sustained under the Civil Rights Attorneys 21 Specifically, sec. 6673(a)(2)(B) provides that, whenever respondent’s attorneys have unreasonably and vexatiously multiplied proceedings in this Court, the Court may require the United States to pay the excess attorney’s fees and other litigation costs reasonably incurred because of such conduct. Although we imposed substantial percentage reductions in our fee awards under sec. 6673(a)(2) in Dixon IV, those reductions were attributable to counsel’s various failures to substantiate their claims in their entirety. 22 We note further that (1) sec. 6673(a)(2) by its terms appears to be limited to Tax Court proceedings, and (2) inasmuch as petitioners filed their appellate fee requests with the Court of Appeals under sec. 7430, our evaluation of those requests under sec. 6673(a)(2) or the bad faith exception arguably would be outside the scope of the Court of Appeals’ mandate. Cf. Pollei v. Commissioner, 94 T.C. 595 (1990). - 25 - Fees Awards Act of 1976 (CRAFAA), see 42 U.S.C. sec. 1988 (2000), a fee-shifting statute designed to encourage private enforcement of civil rights laws). II. Entitlement to Relief Under Section 7430 A. Respondent’s Position Respondent contends that petitioners are not entitled to any relief under section 7430 because (1) they have failed to demonstrate that they “paid or incurred” the claimed fees and expenses, and (2) respondent’s position on appeal was substantially justified. B. Paid or Incurred Requirement 1. Overview Unlike certain other fee-shifting statutes, section 7430 generally allows the recovery of attorney’s fees only to the extent such amounts have been paid or incurred.23 Sec. 7430(a)(2), (c)(1)(B)(iii); see Frisch v. Commissioner, 87 T.C. 838, 844 (1986) (distinguishing CRAFAA, under which a court “may allow the prevailing party * * * a reasonable attorney’s fee”); cf. Blanchard v. Bergeron, 489 U.S. 87, 96 (1989) (fee award under CRAFAA is not limited to the amount the prevailing party owes his attorney pursuant to contingent fee agreement). For purposes of section 7430, fees are “incurred” when there is a legal obligation to pay them. E.g., Grigoraci v. Commissioner, 23 But see sec. 7430(c)(3)(B), providing an exception for pro bono services. - 26 - 122 T.C. 272, 277-278 (2004). In that regard, respondent notes that none of the steering committee members who are jointly and severally liable for the Defense Fund’s obligations to Porter & Hedges is a party to the PH petitioners’ fee request. Similarly, respondent asserts that “[t]he Hongsermeiers have failed to show that they, as opposed to the Atlas Legal Defense Fund and/or its Steering Committee members, are personally liable for” Minns’s fees. Respondent further complains that the appellate fee requests are devoid of any evidence regarding the existence or amounts of petitioners’ contributions to the Defense Fund.24 2. Real Parties in Interest Under the “real party in interest” approach we adopted in our September 1, 2005 order (App. A), the fact that petitioners have not, by and large, paid or incurred the claimed fees and expenses does not render those amounts unrecoverable under section 7430. As one commentator has recognized in the context of the EAJA, even though that statute “states plainly that the award is to be made to the ‘prevailing party’”, “[t]his is not to say that the party named in the lawsuit is invariably the true litigant to whom an award is due.” Sisk, “The Essentials of the 24 Petitioners subsequently submitted schedules prepared by the business manager of the Defense Fund indicating that the Hongsermeiers and the Dixons contributed $3,900 and $3,000, respectively, to the Defense Fund during the years 2000-2003. Respondent does not suggest that contributions to the Defense Fund cannot qualify as amounts paid for purposes of sec. 7430. Cf. Grason Elec. Co. v. NLRB, 951 F.2d 1100, 1106 (9th Cir. 1991) (suggesting that fees requested under EAJA may have been paid through contributions to multiemployer association). - 27 - Equal Access to Justice Act: Court Awards of Attorney’s Fees for Unreasonable Government Conduct (Part One),” 55 La. L. Rev. 217, 343 (1994); see, e.g., Grason Elec. Co. v. NLRB, 951 F.2d 1100 (9th Cir. 1991) (real parties in interest in EAJA case included all 48 members of multiemployer collective bargaining association who financed the litigation, not just the 6 members who were parties to the litigation). The case for looking beyond the named parties is particularly compelling in these proceedings, where similarly situated taxpayers not only shared the costs of the litigation but also “had rights at stake in the case on the merits”. Sisk, supra at 346 (arguing that one can be a real party in interest with respect to an EAJA fee request--and thereby potentially entitled to recover the requested fees--only by virtue of one’s status as a real party in interest in the underlying litigation on the merits; i.e., that financial responsibility for the claimed legal fees does not confer real party in interest status).25 We now hold that the real parties in interest in this litigation include not only the test case petitioners and participating nontest case petitioners, but also all other 25 Conversely, Professor Sisk reasons, a real party in interest who has no financial responsibility for legal fees cannot recover those fees under the EAJA for the simple reason that such person has not “incurred” any fees as required by the statute. Sisk, “The Essentials of the Equal Access to Justice Act: Court Awards of Attorney’s Fees for Unreasonable Government Conduct (Part One),” 55 La. L. Rev. 217, 346-347 (1994). - 28 - remaining nontest case petitioners.26 Accordingly, the relevant inquiry is not whether petitioners paid or incurred the claimed fees and expenses, but whether the real parties in interest who did pay or incur those amounts satisfy the net worth requirement 26 It could be argued that only those nontest case petitioners who are bound by the outcome of this litigation, i.e., those who entered into piggyback agreements, should be considered real parties in interest. Cf. Mearkle v. Commissioner, 90 T.C. 1256, 1261 & n.6 (1988) (refusing to fully reimburse petitioners’ claimed litigation costs when those costs clearly related to cases of similarly situated taxpayers--Amway distributors--as well; Court notes that “this case is not a ‘test case’ which the parties and the Court agree to litigate in order to resolve an issue affecting many other taxpayers who agree to be bound by the result therein”). (Emphasis added.) However, in Dixon v. Commissioner, T.C. Memo. 2006-90 (Dixon VI), we observe that “the parties have agreed--and properly so--that the sanction [imposed in Dixon VI] applies to benefit not only the test case petitioners, but also to nontest case petitioners in all remaining docketed cases in the Kersting project, whether or not they signed piggyback agreements.” (Emphasis added.) We similarly draw no distinction between piggybackers and non- piggybackers for purposes of our real party in interest analysis. - 29 - imposed by section 7430(c)(4)(A)(ii).27 We address that issue in Part III.F., infra. C. Substantial Justification Defense 1. Identifying “the Position of the United States in the Proceeding” Under section 7430(c)(4)(B)(i), it is “the position of the United States in the proceeding” that is evaluated under the substantial justification standard. Typically, the position of the United States in a judicial proceeding for purposes of section 7430 is set forth in the Commissioner’s answer to the petition. E.g., Maggie Mgmt. Co. v. Commissioner, 108 T.C. 430, 442 (1997). These proceedings, of course, are anything but typical. Although these cases originated with petitions and answers in a tax deficiency setting, the appellate fees at issue are not directly related to those initial pleadings or the ensuing litigation on the merits. Rather, the proceedings to 27 In Cobell v. Norton, 407 F. Supp. 2d 140, 148 (D.D.C. 2005), the court concluded that the net worth affidavits of the named plaintiffs in the underlying class action “amply satisfy the [net worth] requirements of the [EAJA] statute for the entire class.” We note that the referenced class includes more than 350,000 claimants. See id. at 145. Olenhouse v. Commodity Credit Corp., 922 F. Supp. 489 (D. Kan. 1996), the EAJA case cited by the Norton court for support, is similarly inapposite. The court in Olenhouse, while recognizing that “[e]ach party seeking an award must meet the relevant net worth cap”, id. at 492, concluded that the named plaintiffs, “i.e., those who prosecuted the claim”, id. at 493, were the ones seeking the EAJA award; accordingly, they alone were required to meet the net worth requirement. The court noted that the Government “has not shown that * * * unnamed members of the class were willing and able to bear the cost of the litigation.” Id. That is not the case here. - 30 - which these fees relate involve the legal and factual issues raised by the misconduct of IRS attorneys McWade and Sims in the original trial of the test cases. Accordingly, we look to the misconduct inquiry (as opposed to tax deficiency) phase of these proceedings to determine “the position of the United States in the proceeding”. While the parties are in general agreement that the relevant “position of the United States” derives from the misconduct inquiry phase of these proceedings, their respective submissions compel us to clarify exactly what it is we are testing against the substantial justification standard. Not surprisingly, petitioners repeatedly draw our attention to the odious character of the attorney misconduct. At the other end of the spectrum, respondent emphasizes the inherent reasonableness of defending a trial court victory on appeal. In our view, the issue is not whether the conduct of Sims and McWade was substantially justified (it obviously was not), nor whether respondent’s decision to defend his Dixon III victory against petitioners’ appeals (as opposed to simply rolling over) was substantially justified (it obviously was). Rather, our inquiry focuses on respondent’s litigating position regarding the legal effect of the attorney misconduct (i.e., that such misconduct amounted to harmless error and therefore did not invalidate the decisions entered against the test case petitioners following the issuance of Dixon II). - 31 - 2. Substantial Justification Analysis We turn now to the issue of whether respondent’s position, as identified above, was substantially justified.28 A position of the United States in a judicial proceeding is substantially justified if it has a reasonable basis in law and fact. E.g., Maggie Mgmt. Co. v. Commissioner, supra at 443. Common sense dictates that if the Government was able to prevail at trial (only to lose on appeal), its position ordinarily will have been reasonable. See H. Rept. 97-404, at 15 (1981) (stating that in such situation “the appellate court would not normally award attorney’s fees to the taxpayer since the trial court, by definition, had found the government’s position to be reasonable”); S. Comm. on Fin., Technical Explanation of Committee Amendment, 127 Cong. Rec. 32070, 32078 (1981) (same); see also Ness v. Commissioner, 73 AFTR 2d 94-1195, at 94-1196 (9th Cir. 1994) (fact that the Commissioner prevailed in the Tax Court, while “not dispositive”, is “significant”). On the other 28 In the case of proceedings commenced after July 30, 1996, the Government bears the burden of establishing that its position was substantially justified. Sec. 7430(c)(4)(B)(i); see Taxpayer Bill of Rights 2, Pub. L. 104-168, sec. 701(d), 110 Stat. 1463 (1996). In the case of proceedings commenced on or before that date, the taxpayer bears the burden of establishing that the Government’s position was not substantially justified. Sec. 7430(c)(4)(A)(i), prior to amendment by the Taxpayer Bill of Rights 2, supra. The parties apparently assume that the current rule applies to these cases. While our resolution of the substantial justification issue would be the same regardless of which rule applies, we are of the view that the relevant “proceedings” commenced prior to July 30, 1996. Cf. supra note 19. - 32 - hand, it is “not always * * * true” that trial courts “[act] on a soundly reasoned basis in every tax case.” Huckaby v. U.S. Dept. of Treasury, 804 F.2d 297, 299 (5th Cir. 1986); see also Henry v. Commissioner, 34 Fed. Appx. 342, 345 (9th Cir. 2002) (Court of Appeals had previously “found clear error in the Tax Court’s findings” on negligence issue, which “leads to the conclusion that the Commissioner’s position was not substantially justified”). As noted above, respondent took the position in Dixon III that the acknowledged attorney misconduct amounted to harmless error, and this Court agreed. While we would like to think that we “[acted] on a soundly reasoned basis” in adopting respondent’s position, the Court of Appeals in Dixon V could not have been more clear in expressing and emphasizing its view that our holding in Dixon III did not have a reasonable basis in law. The Court of Appeals began by stating: “We review the Tax Court’s refusal to grant a motion vacating a judgment on the basis of fraud on the court for abuse of discretion, mindful that only when this Court has a ‘definite and firm conviction that the Tax Court committed a clear error of judgment in the conclusion it reached’ is reversal appropriate.” Dixon v. Commissioner, 316 F.3d 1041, 1046 (9th Cir. 2003) (citations omitted). The Court of Appeals quickly concluded: “Because the Tax Court applied the wrong legal standard, it abused its discretion.” Id. Specifically, “[t]he Tax Court * * * applied the wrong law when - 33 - it imposed a requirement that taxpayers show prejudice as a result of the misconduct.” Id. Taking our cue from Henry v. Commissioner, supra, we conclude that, given the foregoing language of the Court of Appeals in Dixon V, respondent’s position in Dixon III was not substantially justified. Cf. Golembiewski v. Barnhart, 382 F.3d 721, 724 (7th Cir. 2004) (“Strong language against the government’s position in an opinion [of a reversing appellate court] discussing the merits of a key issue is evidence in support of an award of EAJA fees.”). D. Conclusion We conclude that petitioners are entitled to relief under section 7430. III. Amount of Award A. Respondent’s Position Respondent argues that, even if petitioners are entitled to relief under section 7430, we should determine the amounts of their awards by giving effect to section 7430’s hourly rate cap and by denying compensation for services respondent alleges are “redundant, excessive and unnecessary.”29 B. Applicability of Statutory Rate Cap The rate cap to which fee awards under section 7430 are generally subject applies “unless the court determines that * * * a special factor, such as the limited availability of qualified 29 Respondent does not quantify that argument in terms of noncompensable hours. - 34 - attorneys for such proceeding, the difficulty of the issues presented in the case, or the local availability of tax expertise, justifies a higher rate.” Sec. 7430(c)(1)(B)(iii). Not surprisingly, petitioners urge us to lift the rate cap, while respondent argues that we have no legal basis for doing so.30 We begin by examining the three examples of special factors in the statute and then discuss other factors that courts have taken into account in this context. 1. Limited Availability of Qualified Attorneys The Supreme Court has narrowly interpreted the “limited availability of qualified attorneys” factor in the context of the EAJA. See Pierce v. Underwood, 487 U.S. 552, 571-572 (1988), interpreting 28 U.S.C. sec. 2412(d)(2)(A)(ii).31 Specifically, the Court concluded that such language must refer to attorneys “qualified for the proceedings” in some specialized sense, rather than just in their general legal competence. We think it refers to attorneys having some distinctive knowledge or 30 The Hongsermeiers also argue that respondent’s calculation of the applicable rate caps, see supra Part I.A., is erroneous. They maintain that a 27.6-point increase in the relevant CPI figures (i.e., from 151.075 to 178.675) requires a 27.6-percent increase in the statutory rate cap. That argument is based on a misapprehension of the statutory adjustment formula; it is the relative difference between CPI figures (i.e., 27.6/151.075 = 18.27 percent)--not the arithmetic difference-- that determines the adjustment. See sec. 1(f)(3) (cross- referenced in flush language of sec. 7430(c)(1)). 31 “The reasoning employed by the courts under the attorney’s fees provision of the Equal Access to Justice Act applies equally to review under section 7430.” Huffman v. Commissioner, 978 F.2d at 1143. - 35 - specialized skill needful for the litigation in question--as opposed to an extraordinary level of the general lawyerly knowledge and ability useful in all litigation. Examples of the former would be an identifiable practice specialty such as patent law, or knowledge of foreign law or language. * * * [Id. at 572.] Applying that reasoning, and leaving aside for the moment the issue of tax expertise,32 we conclude that the general advocacy and case management skills of petitioners’ counsel, while undoubtedly “needful for the litigation”, do not justify a departure from the statutory rate cap under the “limited availability of qualified attorneys” exception, however extraordinary in degree and limited in supply those skills may be. Cf. Hyatt v. Barnhart, 315 F.3d 239, 251 (4th Cir. 2002) (“plaintiffs do not contend that expertise in class action enforcement and procedure is a ‘special factor’ warranting an increase in the statutory [EAJA] maximum rate”; such expertise “should certainly not be beyond that possessed or easily acquired by reasonably competent attorneys”); Animal Lovers Volunteer Association, Inc. v. Carlucci, 867 F.2d 1224, 1226-1227 (9th Cir. 1989) (rejecting claim that “considerable expertise in appellate 32 See infra Part III.B.2., discussing the “local availability of tax expertise” factor. We note that, prior to the addition of that factor to sec. 7430 in 1998, see supra note 15, courts applying sec. 7430 generally held that, inasmuch as the provision applies exclusively to tax cases, counsel’s tax expertise did not support the finding of a special factor. See, e.g., Huffman v. Commissioner, supra at 1150; Cassuto v. Commissioner, 936 F.2d 736, 743 (2d Cir. 1991), affg. in part and revg. in part on other grounds 93 T.C. 256 (1989); McWilliams v. Commissioner, T.C. Memo. 1995-111. - 36 - matters that would be necessary to successfully prosecute an appeal against the enormous resources of the federal government” is a special factor under the EAJA); Scarborough v. Nicholson, 19 Vet. App. 253, 264 (2005) (rejecting specialization in Supreme Court litigation as a special factor under the EAJA). 2. Local Availability of Tax Expertise Petitioners’ counsel do not fare any better with regard to this factor for the simple reason that tax expertise had little, if anything, to do with the misconduct inquiry phase of this litigation. Cf. Hyatt v. Barnhart, supra at 252 (even if counsel’s expertise in Social Security law could warrant a departure from the EAJA hourly rate cap, “there has been no satisfactory showing that such expertise was necessary to handle the dispute [interpretation of settlement agreement] that actually gave rise to the award of attorneys’ fees and costs currently at issue”). Thus, while we do not question counsel’s tax expertise, such expertise does not support the finding of a special factor under these circumstances. 3. Difficulty of the Issues Petitioners assert that the misconduct inquiry phase of these proceedings presented difficult issues relating to procedural due process, structural defect, “Footnote Nine” error,33 and standards of proof and review applicable to the doctrine of harmless error. Petitioners point to DuFresne v. 33 See Brecht v. Abrahamson, 507 U.S. 619, 638 n.9 (1993). - 37 - Commissioner, 26 F.3d at 107, in which the Court of Appeals framed the issue as one of structural defect versus harmless error, as giving rise to the need to address the specified difficult issues.34 The Court of Appeals, however, made no reference to any of those issues in its Dixon V opinion. Rather, the Court of Appeals focused solely on the issue of fraud on the court--specifically, whether fraud on the court requires a showing of prejudice (i.e., whether it is properly the subject of harmless error analysis). The court’s 1-paragraph (with accompanying footnote) disposition of that issue, see Dixon v. Commissioner, 316 F.3d at 1047 & n.9, belies petitioners’ assertion that the relevant issues in the case were sufficiently difficult to justify a departure from the statutory rate cap. Cf. Golembiewski v. Barnhart, 382 F.3d at 724 (rejecting the District Court’s contention that the complexity of the case warranted a finding of substantial justification under the EAJA; “our opinion does not reveal a complex case”). 4. Other Possible Special Factors a. In General In Pierce v. Underwood, 487 U.S. 552 (1988), the Supreme Court recognized that the language of the EAJA admits of other possible special factors in addition to the statutory example of 34 In fairness to petitioners, they took their cue from us in that regard; we framed our analysis in Dixon III in terms of structural defect versus harmless error in response to DuFresne. - 38 - limited availability of qualified attorneys. After narrowly interpreting that factor, the Court continued: For the same reason of the need to preserve the intended effectiveness of the [then applicable] $75 cap, we think the other “special factors” envisioned by the exception must be such as are not of broad and general application. * * * The “novelty and difficulty of issues,” “the undesirability of the case,” the “work and ability of counsel,” and “the results obtained,” are factors applicable to a broad spectrum of litigation; they are little more than routine reasons why market rates are what they are. The factor of “customary fees and awards in other cases,” is even worse; it is not even a routine reason for market rates, but rather a description of market rates. * * * [Id. at 573; citations to Pet. for Cert. omitted.] Although Congress subsequently amended section 7430 to include one of the factors specifically rejected by the Court in Pierce (i.e., the difficulty of the issues), see supra note 15, there is no indication in the relevant legislative history that the amending Congress intended any broader retreat from the general principles expressed in the foregoing excerpt in the context of section 7430. Thus, factors that are of “broad and general application” (including the undesirability of the case, work and ability of counsel, and results obtained) presumably remain insufficient justification for lifting the caps. b. The Government’s Misconduct It is certainly tempting to point to the attorney misconduct in this litigation as a special factor that justifies a departure from the hourly rate cap of section 7430. Support for that position may be found in Jean v. Nelson, 863 F.2d 759 (11th Cir. - 39 - 1988), affd. on other grounds sub nom. Commissioner, INS v. Jean, 496 U.S. 154 (1990), in which a divided panel of the Court of Appeals for the Eleventh Circuit concluded that the Government’s misconduct can be a special factor under the EAJA.35 The majority rejected the notion that the threshold “reasonableness” inquiry under the EAJA precludes any further consideration of the Government’s behavior: As the dissent points out, the EAJA already requires that the government’s position have no ‘reasonable basis in law and fact’ as a condition precedent to the recovery of fees. The EAJA does not, however, protect a litigant against potential government harassment. It is easy to imagine a situation where a position that is not ‘substantially justified’ is exacerbated by improper purposes in defending the lawsuit. * * * Thus, if the government in this case advanced litigation for any improper purpose such as harassment, unnecessary delay or increase in the plaintiffs’ expense, then consistent with Pierce, its action warrants the imposition of a special factor. [Id. at 776 n.13.] See also Pollgreen v. Morris, 911 F.2d 527, 537-538 (11th Cir. 1990). However, the Court of Appeals for the Fifth Circuit explicitly rejected the Jean analysis in Estate of Cervin v. Commissioner, 200 F.3d 351, 355-358 (5th Cir. 2000), affg. T.C. Memo. 1998-176, reasoning that the finding of a special factor under section 7430 based on the Government’s misconduct would amount to an impermissible award of punitive damages. Accord Cassuto v. Commissioner, 936 F.2d 736, 743-744 (2d Cir. 1991), 35 The Supreme Court’s affirmance of Jean is limited to the Court of Appeals’ holding that fees incurred in obtaining an EAJA fee award are recoverable regardless of whether the Government was substantially justified in opposing the initial fee request. - 40 - affg. in part and revg. in part on other grounds 93 T.C. 256 (1989); Fields v. Commissioner, T.C. Memo. 2002-320; see also In re Sealed Case 00-5116, 254 F.3d 233, 237 (D.C. Cir. 2001) (EAJA case). We agree with the majority view and conclude that disregarding the section 7430 rate cap on the basis of the attorney misconduct in this litigation would improperly add a punitive aspect to the fee award. Stated differently, such an approach would blur the distinction between fee-shifting provisions and punitive measures that the Supreme Court has drawn in cases such as Cooter & Gell v. Hartmarx Corp., 496 U.S. at 409, and Chambers v. NASCO, Inc., 501 U.S. at 51-55. See supra Part I.B. As the dissent in Jean v. Nelson, 863 F.2d at 782 (Kravitch, J., dissenting), observed in reasoning that Government misconduct should not be treated as a special factor under the EAJA: “Rule 11 sanctions are always available to compensate ‘a litigant whose opponent acts in bad faith in instituting or conducting litigation.’” Here, the acknowledged misdeeds of McWade and Sims have been the subject of sanctions under section 6673(a)(2)(B) with respect to proceedings at the trial level. See supra Part I.C. Such misconduct is relevant to our present task only in relation to the threshold issue under section 7430 of whether respondent’s position regarding the legal ramifications of the misconduct was substantially justified. See supra Part II.C. - 41 - c. The Delay Factor In Library of Congress v. Shaw, 478 U.S. 310 (1986), the Supreme Court held that a 30-percent increase in the lodestar amount of a Title VII fee award to account for the delay factor violated the “no-interest” rule, which prohibits the recovery of interest in a suit against the Government absent an express waiver of sovereign immunity with regard to interest. Two years later, the Court of Appeals for the D.C. Circuit concluded that the “special factor” provision of the EAJA provides the express waiver of sovereign immunity required by Shaw. Wilkett v. ICC, 844 F.2d 867, 876 (D.C. Cir. 1988). The court therefore concluded that Shaw is not inconsistent with the law of that circuit holding that delay may be regarded as a special factor under the EAJA. Id.; see also Masonry Masters, Inc. v. Nelson, 105 F.3d 708, 713-714 (D.C. Cir. 1997); Okla. Aerotronics, Inc. v. United States, 943 F.2d 1344, 1350 (D.C. Cir. 1991). The Courts of Appeals for the Fifth and Eleventh Circuits have sided with the D.C. Circuit on the delay issue in the context of the EAJA, while the Courts of Appeals for the Seventh and Federal Circuits have gone the other way. Compare Perales v. Casillas, 950 F.2d 1066, 1077 (5th Cir. 1992) (agreeing with the D.C. Circuit that “[e]ven after the Supreme Court’s sweeping prohibition in Shaw of interest awards against the United States”, “some forms of delay may justify enhancing the statutory - 42 - base rate under the EAJA”),36 and Pollgreen v. Morris, supra at 537-538 (citing Wilkett but not Shaw; delay can be a special factor under the EAJA if “the length of the delay was excessive”), with Marcus v. Shalala, 17 F.3d 1033, 1039 (7th Cir. 1994) (Wilkett, Okla. Aerotronics, and Perales “amount to an end run around the no-interest rule in Shaw because the statutory provision allowing for a higher fee where there is a special factor is not the kind of express, unambiguous statutory language sufficient to waive sovereign immunity”), and Chiu v. United States, 948 F.2d 711, 721 (Fed. Cir. 1991) (stating in dictum that the argument for delay as a special factor would not pass muster under Shaw).37 We agree with the Courts of Appeals for the Seventh and Federal Circuits that the Wilkett line of authority runs directly counter to Library of Congress v. Shaw, supra. See also Wilkett v. ICC, supra at 795 (Starr, J., dissenting from denial of rehg. 36 The Court of Appeals for the Fifth Circuit subsequently stated, without mentioning Perales or its special factor analysis, that Shaw precludes an award of interest on a sec. 7430 fee award. See Wilkerson v. United States, 67 F.3d 112, 120 n.15 (5th Cir. 1995). 37 The courts in Marcus v. Shalala, 17 F.3d at 1039, and Chiu v. United States, 948 F.2d at 721, also contended that Wilkett runs afoul of the Supreme Court’s subsequent admonition in Pierce v. Underwood, 487 U.S. at 573, that special factors under the EAJA cannot be of “broad and general application”. The Court of Appeals for the D.C. Circuit attempted to reconcile its holding in Wilkett with Pierce in Okla. Aerotronics, Inc. v. United States, 943 F.2d 1344, 1350 (D.C. Cir. 1991) (clarifying that “what makes the factor ‘special’ is not simple delay, but unusual delay”). - 43 - en banc) (“the panel’s decision is incompatible with the teachings of” Shaw); Okla. Aerotronics, Inc. v. United States, supra at 1353 (Williams, J., concurring and dissenting) (finding Wilkett’s rationale “far from clear”); Masonry Masters, Inc. v. Nelson, supra at 714 (Henderson, J., concurring) (asserting that, because the EAJA lacks the express waiver contemplated in Shaw, fees awarded thereunder “can never be enhanced for delay as a matter of law”). In Shaw, the Supreme Court rejected the argument that language in Title VII making the Government liable for costs (including a reasonable attorney’s fee) “the same as a private person” operated as an express waiver of sovereign immunity with respect to interest, even though interest on attorney’s fees may be recovered in a Title VII suit against a private employer. In our view, the case for waiver was stronger under the version of Title VII at issue in Shaw38 than it is under the EAJA or, by extension, section 7430. See Wilkerson v. United States, 67 F.3d 112, 120 n.15 (5th Cir. 1995) (“Nothing in § 7430 indicates that Congress intended to waive its immunity from interest awards”); Miller v. Alamo, 992 F.2d 766, 767 (8th Cir. 1993) (same); Austin v. Commissioner, T.C. Memo. 1997-157 (same); see also Intl. Woodworkers of Am., AFL-CIO, Local 3-98 v. Donovan, 792 F.2d 762, 766-767 (9th Cir. 1985) (pre-Shaw; no 38 Title VII has since been amended to expressly allow the recovery of interest against the Government in Title VII actions. See 42 U.S.C. sec. 2000e-16(d) (2000); Landgraf v. USI Film Prods., 511 U.S. 244, 251 (1994). - 44 - interest on EAJA fee award since no statutory provision expressly authorizes such interest). d. Test Case Status One aspect of this litigation that is certainly “not of broad and general application” (and therefore potentially supports the finding of a special factor) is its test case status. Undoubtedly, counsel’s efforts have beneficially affected hundreds of nontest case petitioners. At least one court, however, has explicitly rejected the notion that such widespread benefit may be treated as a special factor under the EAJA. See Pollgreen v. Morris, 911 F.2d 527 (11th Cir. 1990). Pollgreen involved an EAJA fee award to plaintiffs who had successfully challenged fines and property seizures stemming from their participation in the “Freedom Flotilla” of Cuban refugees in 1980. The District Court had doubled the statutory rate, in part because the litigation benefited “not only * * * the Plaintiffs herein but a class of people, including over 1,000 vessel owners.” Id. at 537; see also Lyden v. Howerton, 731 F. Supp. 1545, 1556 (S.D. Fla. 1990) (same language in another “Freedom Flotilla” case). The Court of Appeals concluded that the District Court’s “consideration of the litigation’s benefit to a broad class of people is foreclosed by Pierce’s prohibition on considering ‘the results obtained’”. Pollgreen v. Morris, - 45 - supra at 537.39 In that regard, we deem it noteworthy that Pierce itself involved a class action in which plaintiffs’ counsel secured a $60 million settlement against the Department of Housing and Urban Development that was paid to more than 150,000 low-income tenants of federally subsidized housing projects. See Underwood v. Pierce, 547 F. Supp. 256, 258 (C.D. Cal. 1982). 5. Conclusion For the reasons discussed above, we conclude that we are constrained to apply the statutory rate caps in determining the respective amounts of petitioners’ fee awards under section 7430. C. Compensable Hours 1. Respondent’s Objections a. Duplicative Fees Due to Change of Counsel Respondent argues that any fee award should exclude “duplicative attorneys’ fees associated with two sets of appellate counsel having to read the same record and learn the same case.” While the inefficiencies associated with a change in counsel may, in some instances, warrant a reduced fee award, see, e.g., Spell v. McDaniel, 852 F.2d 762, 768 (4th Cir. 1988), we conclude that such a reduction would be inappropriate here. As noted above, more than 300 nontest case petitioners have financed the test case litigation through contributions to the Defense 39 The court also cited Jean v. Nelson, 863 F.2d at 775, a class action involving Haitian refugee claims, in which it had rejected “vindication of public rights” as a special factor under the EAJA. - 46 - Fund. It is hardly surprising that this group, faced with the largely unfavorable outcome of Dixon III, would fracture over the issue of legal representation going forward. Indeed, given the number of contributors to the Defense Fund, three sets of appellate counsel (i.e., Izen, Minns, and Porter & Hedges) does not seem unreasonable.40 Therefore, we shall not reduce the number of compensable hours merely to account for the fact that Minns and Porter & Hedges had to “read the same record and learn the same case” with which Izen was already familiar. b. Overstaffing Respondent also asserts that “it is apparent that these cases have been overstaffed by both Mr. Minns and Porter and Hedges and that the number of hours charged by those firms for the appeal is excessive and outside the realm of reason.” In evaluating the reasonableness of the hours claimed, we are aided by the fact that, taking into account Izen’s appellate fee request, we have before us three separate fee applications relating to the same appellate proceedings.41 Each of those applications contains a breakdown of hours devoted to various tasks as delineated in the Ninth Circuit’s Form 9. Regarding 40 We note that three sets of counsel participated in the evidentiary hearing underlying our opinion in Dixon III as well: Izen, Jones, and Sticht. 41 Although Jones has also filed a motion in this Court for appellate fees and expenses, see supra note 12, he did not directly participate in the appeals of the test cases as did Izen. - 47 - what we deem to be the four “core” categories (obtaining and reviewing records, legal research, preparing briefs, and preparing for and attending oral argument), Izen claims 676.65 hours, Minns claims 779.18 hours (including Lawfinders’ time), and Porter & Hedges claims 1,013.9 hours. While it may be somewhat presumptuous for this Court to judge the relative merits of the appellate briefs,42 we see no obvious justification for the significantly greater number of hours claimed by Porter & Hedges in these categories. Assuming for these purposes that the subject hours claimed by Izen and Minns represent the low end and the midpoint, respectively, of the range of reasonableness, we reduce the Porter & Hedges figure by 130 hours so that the 42 We do observe that it was Izen who hewed to the line that the misconduct of respondent’s attorneys was a fraud on the Court, and that the primary relief to which all eligible petitioners should be entitled is the benefit of the Thompson settlement. Binder and Minns argued primarily for the complete vacatur of this Court’s decisions, which would result in a complete win--no deficiencies--for the petitioners (although Binder did suggest the Thompson settlement as an alternative). In the light of hindsight, Izen’s approach has been vindicated; the Court of Appeals in Dixon V adopted both his diagnosis and his prescription without reservation. Having said that, we do not mean to imply that all of Izen’s appellate time was well spent. He was the only attorney who continued to argue that the Kersting tax shelters created valid tax deductions, a position not only contrary to the holdings of this Court in Dixon II and Dixon III, but also contrary to that of the Court of Appeals for the Ninth Circuit in the related promoter penalty case. See Kersting v. United States, 206 F.3d 817 (9th Cir. 2000). We also have the impression that considerable time was wasted at the appellate level in dealing with Izen’s unsuccessful and unnecessary attempts to include hundreds of nontest cases in the Adairs’ interlocutory appeal. - 48 - resulting figure (883.9 hours) for these categories is in line with the high end of the range of reasonableness. c. Porter & Hedges Client Conferences Respondent alleges that the PH petitioners have failed to demonstrate the reasonableness of “charges for numerous conferences with various unidentified individuals, apparently members of the Steering Committee.” Our concern lies with the lack of subject matter descriptions for many of those conferences and other client communications such as e-mail correspondence. As discussed above, the committee hired Porter & Hedges not only to replace Minns but also to recover amounts previously paid to him. We do not intend to hold the Government responsible for fees attributable to the latter task. In that regard, the parties’ submissions indicate that Binder assumed primary responsibility for the Porter & Hedges briefs, while Irvine dealt with the Minns situation and client relations, in addition to overseeing work on the briefs. Most of the generic references to client contacts appear in Irvine’s time entries, and common experience suggests that such contacts were more likely related to the Minns dispute or client relations than, say, appellate strategy. Nevertheless, in the absence of subject matter descriptions, we assume that the time Irvine spent consulting with Defense Fund representatives was divided equally between matters relating to the Minns dispute and client relations on the one hand, and matters relating to the appeal, on the other. - 49 - 2. Additional Adjustments to Time Claimed for the Appeals a. Missing Minns Time Entries Although Minns claims 577.42 hours of attorney and legal assistant time for his firm (i.e., not including the Lawfinders time) in the Hongsermeiers’ initial appellate fee request, the accompanying time entries for Minns and his in-house staff cover only 462.56 hours. Inasmuch as those time entries run only through January 22, 2002, they do not cover the final preparation of the brief (apparently mailed on January 25, 2002), the preparation of the reply brief, or the oral argument.43 While we are not inclined to provide Minns the opportunity to “prove up” his firm’s undocumented efforts at this late date, we likewise are not prepared to disregard those efforts altogether. Accordingly, we shall credit Minns with the 66-hour block of time he categorized as “preparing for and attending oral argument” in his submission to the Court of Appeals and disallow the remaining 48.86 undocumented hours.44 43 We note that there is no corresponding break in the Bates numbering of the documents accompanying the parties’ special stipulation of facts (filed in this Court) regarding the appellate fee requests. 44 Only 11.5 of those 48.86 hours are attributable to Minns; the balance is attributable to his associate attorney and his legal assistant. - 50 - b. Minns Hours Relating to Dispute With Committee As stated above, we will not hold the Government responsible for fees attributable to the dispute between the steering committee and Minns. Following the approach used above with regard to Irvine’s time, we assume that, absent subject matter descriptions to the contrary, the time Minns and his staff spent during December 2001 and January 2002 communicating with clients was divided equally between damage control and matters relating to the appeal. Similarly, we assume that time spent communicating with Irvine during this contentious period was devoted to “self defense” and to coordination efforts in equal measure. c. Additional Porter & Hedges Time Relating to Minns Dispute We have previously dealt with Irvine’s nondescriptive time entries relating to client communications. We add here that, consistent with our treatment of Minns, we assume, absent subject matter descriptions to the contrary, that time spent by Irvine communicating with Minns and his staff was divided equally between matters relating to the Minns dispute and matters relating to the appeal. We also disallow the relatively small amount of time Irvine devoted to “review of contracts”, as that task is clearly identifiable with his firm’s engagement by the steering committee to handle its dispute with Minns. - 51 - d. Porter & Hedges Time Relating to Bill of Costs Porter & Hedges claims approximately 33 hours of attorney time (most of it Binder’s) relating to a bill of costs in the amount of $5,663.40.45 See Fed. R. App. P. 39. We see no justification for the devotion of that much time to a task normally considered ministerial. In that regard, we note that Minns has not claimed any time relating to the bill of costs he filed on behalf of the Hongsermeiers. We disallow all but 5 hours of attorney time relating to the PH petitioners’ bill of costs. e. Porter & Hedges Time Relating to Remand A few of Binder’s time entries describe time spent analyzing the illicit Thompson settlement shortly after the Court of Appeals’ issuance of Dixon V. As those entries relate to the ensuing remand proceedings in this Court, they are not properly the subject of an appellate fee request. See supra text accompanying note 21. 3. Adjustments to Porter & Hedges Time Relating to Fee Request a. Initial Research Time According to the Porter & Hedges time entries, four attorneys spent 85.2 hours researching section 7430 and attorney’s fees issues (and memorializing that research) before 45 The Court of Appeals ultimately allowed $3,808.50 of such costs. - 52 - work on the actual fee request even began. That seems excessive to us, and we accordingly reduce those hours by 50 percent. b. Time Relating to Unsuccessful Claims All of the adjustments we have made thus far relate to either (1) documentation or (2) what may be termed the efficiency aspect of the reasonableness standard incorporated into section 7430. In Hensley v. Eckerhart, 461 U.S. 424, 436 (1983), a case involving CRAFAA (the general civil rights fee-shifting statute),46 the Supreme Court addressed another aspect of reasonableness in this context: If * * * a plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount.* * * * * * That the plaintiff is a “prevailing party” therefore may say little about whether the expenditure of counsel’s time was reasonable in relation to the success achieved. * * * Professor Sisk sometimes refers to this aspect of the reasonableness standard as the limited success factor. Sisk, “The Essentials of the Equal Access to Justice Act: Court Awards of Attorney’s Fees for Unreasonable Government Conduct (Part Two),” 56 La. L. Rev. 1, 119 (1995). The Supreme Court subsequently referred to the limited success factor in the context of “fees for fees” (i.e., fees 46 “The standards set forth in this opinion are generally applicable in all cases in which Congress has authorized an award of fees to a ‘prevailing party.’” Hensley v. Eckerhart, 461 U.S. 424, 433 n.7 (1983). - 53 - incurred in obtaining a fee award) in Commissioner, INS v. Jean, 496 U.S. 154 (1990). As discussed in Part I.B., supra, the Court in Jean held that fees for fees are recoverable under the EAJA without a separate showing that the Government’s opposition to the fee award was not substantially justified. In response to the Government’s argument that such a holding would have the effect of allowing “an automatic award of ‘fees for fees’”, id. at 162, the Court stated: Because Hensley v. Eckerhart, 461 U.S. 424, 437 (1983), requires the district court to consider the relationship between the amount of the fee awarded and the results obtained, fees [claimed] for fee litigation should be excluded [from the award] to the extent that the applicant ultimately fails to prevail in such litigation. For example, if the Government’s challenge to a requested rate for paralegal time resulted in the court’s recalculating and reducing the award for paralegal time from the requested amount, then the applicant should not receive fees for the time spent defending the higher rate. [Id. at 163 n.10.] The Court of Appeals for the Ninth Circuit has expressly held that “the legal principles for recovering attorney’s fees laid out in Hensley [citation omitted] apply to requests for fees-on- fees”. Thompson v. Gomez, 45 F.3d 1365, 1367 (9th Cir. 1995); see also Atkins v. Apfel, 154 F.3d 986, 990 (9th Cir. 1998). While it is often difficult to allocate attorney time between successful and unsuccessful issues and claims, “denial of a particular form or aspect of relief occasionally may be attributable to a discrete motion or proceeding, thus allowing the limited success factor to be measured by hours devoted to - 54 - that effort.” Sisk, 56 La. L. Rev. at 119; see also Hensley v. Eckerhart, supra at 436 (one way a court can give effect to the limited success factor is by “attempt[ing] to identify specific hours that should be eliminated”). That is the case with regard to our rejection of the PH petitioners’ attempts (1) to avoid the section 7430 rate cap by asserting entitlement under the bad faith exception and section 6673, and (2) to obtain interest on their fee award (see infra Part IV). Specifically, the PH petitioners’ August 2005 amendment of their fee request (and the prerequisite motion for leave to amend), their motion for reconsideration of our September 1, 2005 order, and their November 2005 request for appellate fees under section 6673 pertain exclusively to those unsuccessful claims. We therefore disallow the 123.7 hours Porter & Hedges devoted to those filings.47 Cf. Anthony v. Sullivan, 982 F.2d 586 (D.C. Cir. 1993) (plaintiff initially sought recovery of fees under both the Title VII fee provision, which contains no rate cap, and the EAJA; after Court of Appeals overturned the Title VII award, plaintiff established entitlement to EAJA award on remand; held, Hensley dictates that plaintiff’s EAJA award not include any fees incurred in the unsuccessful defense of the Title VII award on appeal). 47 We do not intend to suggest thereby that the positions taken in those filings are in any way frivolous. See Hensley v. Eckerhart, supra at 436 (partial or limited success must be taken into account even though the unsuccessful claims are nonfrivolous and raised in good faith). - 55 - D. Computation of Potentially Compensable Fees We now determine the amount of claimed fees that, to the extent paid or incurred by real parties in interest who satisfy section 7430’s net worth requirement (hereafter, eligible persons), see infra Part III.F., are compensable under section 7430. Where the fee requests reflect the use of “block billing” (i.e., the assignment of multiple discrete tasks to a single block of time), we use our best judgment to allocate the aggregate amount of time among the various tasks. 1. The Hongsermeiers--Work on the Appeal48 a. 2001 Taking into account the $140 rate cap in effect for 2001, the Hongsermeiers claim 377.17 hours at $140 per hour, 31 hours at $100 per hour, and 17.69 hours at $50 per hour. Regarding the 50-percent reduction for time deemed attributable to both the dispute with the steering committee and the appeal, we have assigned 16.4 hours in December to client communications (Minns: 8.5 hours; associate attorney: 4.5 hours; legal assistant: 3.4 hours). We therefore (1) reduce the $140 (Minns) time by 4.25 hours (50% of 8.5 = 4.25), leaving 372.92 hours; (2) reduce the $100 (associate) time by 2.25 hours (50% of 4.5 = 2.25), leaving 48 Because the Defense Fund retained Minns to pursue the appeal and a separate group subsequently retained him to pursue appellate fees, we compute the potentially compensable fees with respect to those two engagements separately. The Hongsermeiers claim $220,201 for work on the appeal and $56,233.75 for work on the fee request. - 56 - 28.75 hours; and (3) reduce the $50 (legal assistant) time by 1.7 hours (50% of 3.4 = 1.7), leaving 15.99 hours. The resulting amount is $55,883.30, determined as follows: [(372.92 X $140) + (28.75 X $100) + (15.99 X $50)] = ($52,208.80 + $2,875 + $799.50) = $55,883.30. b. 2002 Taking into account the $150 rate cap in effect for 2002, the Hongsermeiers claim 446.95 hours at $150 per hour, 34.4 hours at $100 per hour, and 23.11 hours at $50 per hour. Of the 48.86 hours disallowed due to missing time entries, 11.5 hours relate to $150 time, 20.8 hours relate to $100 time, and 16.56 hours relate to $50 time. Regarding the 50-percent reduction for January 2002 time deemed attributable to both the rift with the steering committee and the appeal, we have assigned 6.9 hours to client communications (Minns: 5.1 hours; legal assistant: 1.8 hours) and 2.9 hours to Irvine communications (Minns: 1.9 hours; legal assistant: 1 hour). We therefore reduce the $150 (Minns) time by an additional 3.5 hours (5.1 + 1.9 = 7; 50% of 7 = 3.5) and reduce the $50 (legal assistant) time by an additional 1.4 hours (1.8 + 1 = 2.8; 50% of 2.8 = 1.4). That leaves 431.95 hours of $150 time (446.95 - 11.5 - 3.5 = 431.95), 13.6 hours of $100 time (34.4 - 20.8 = 13.6), and 5.15 hours of $50 time (23.11 - 16.56 - 1.4 = 5.15). The resulting amount is $66,410, determined as follows: [(431.95 X $150) + (13.6 X $100) + (5.15 X $50)] = ($64,792.50 + $1,360 + $257.50) = $66,410. - 57 - c. Total The total amount of potentially compensable fees with respect to the Hongsermeiers’ fee request for work on the appeal is $122,293.30 ($55,883.30 for 2001 and $66,410 for 2002). 2. The Hongsermeiers–Work on the Fee Request a. 2003 to 2005 Taking into account the $150 rate cap in effect during the years 2003 through 2005, the Hongsermeiers claim 177.85 hours at $150 per hour, 92.75 hours at $125 per hour, 2.4 hours at $75 per hour, and 2.65 hours at $50 per hour. The resulting amount is $38,583.75, determined as follows: [(177.85 X $150) + (92.75 X $125) + (2.4 X $75) + (2.65 X $50)] = ($26,677.50 + $11,593.75 + $180 + $132.50) = $38,583.75. b. 2006 Taking into account the $160 rate cap in effect for 2006, the Hongsermeiers claim 0.5 hours at $160 per hour, 0.9 hours at $125 per hour, and 1.7 hours at $50 per hour. The resulting amount is $277.50, determined as follows: [(0.5 X $160) + (0.9 X $125) + (1.7 X $50)] = ($80 + $112.50 + $85) = $277.50. c. Application of Limited Success Factor While the Hongsermeiers did not join in the PH petitioners’ unsuccessful fee request claims discussed in Part III.C.3.b., supra, that does not mean that Hensley’s limited success factor has no application to their claim for fees on fees. As Professor Sisk observes: “Because ordinarily it is difficult to precisely - 58 - link a certain segment of legal services to the denial of particular relief, the limited success factor typically is addressed at a separate stage through a percentage downward adjustment of the lodestar.” Sisk, 56 La. L. Rev. at 119; see also Hensley v. Eckerhart, 461 U.S. at 436-437 (in applying the limited success factor, a court “may attempt to identify specific hours that should be eliminated, or it may simply reduce the award to account for the limited success”). Here, the lodestar for the Hongsermeiers’ fees on fees is $38,861.25 ($38,583.75 for 2003 through 2005, and $277.50 for 2006). In determining the degree of success they achieved with regard to their fee request, we compare the number of “merits hours” they claimed (i.e., hours relating to the appeal--930.32) with the number of merits hours we have allowed (868.36).49 See Thompson v. Gomez, 45 F.3d 1365 (9th Cir. 1995) (upholding District Court’s award of 87.2 percent of requested fees on fees to reflect the parties’ 87.2-percent settlement with regard to requested “merits fees”); Harris v. McCarthy, 790 F.2d 753, 759 (9th Cir. 1986) (upholding District Court’s award of 11.5 percent of requested fees on fees to reflect its award of 11.5 percent of requested merits fees). The 49 See supra Parts III.D.1.a. and III.D.1.b. (372.92 + 28.75 + 15.99 + 431.95 + 13.6 + 5.15 = 868.36). We compare merits hours claimed to merits hours allowed rather than merits fees claimed to merits fees awarded because much of the difference between the merits fees claimed and the merits fees awarded in this case is attributable to sec. 7430’s rate cap, the effect of which is already reflected in the fees on fees lodestar amount of $38,861.25. - 59 - resulting success ratio (868.36/930.32) is 93.33 percent, which we apply to the aforementioned lodestar to obtain the amount of potentially compensable fees on fees with respect to the Hongsermeiers’ fee request: $36,269.20.50 3. The PH Petitioners a. 2001 Taking into account the $140 rate cap in effect for 2001, the PH petitioners claim 112.15 hours at $140 per hour, 3.25 hours at $105 per hour, and 0.5 hours at $90 per hour. We begin by allocating to 2001 a portion of the 130-hour “overstaffing” reduction discussed above. Based on the Porter & Hedges time entries, we estimate that 10 percent of the hours devoted to tasks described in the “core” categories of the Ninth Circuit’s Form 9, see supra Part III.C.1.b., are attributable to services performed in 2001. Accordingly, we reduce the time claimed for 2001 by 13 hours (10% of 130 = 13). Since more than 96 percent of the time claimed for 2001 falls into the $140 category, we further allocate the entire 13-hour reduction to the $140 time. Next, we apply the 50-percent reduction to Irvine’s 2001 time deemed attributable to both the Minns dispute and the appeal. In 50 We note here that, even though petitioners did not receive all the relief they requested on appeal, see supra note 42, we see no need to reduce their “merits fees” awards by applying a success ratio. See Hensley v. Eckerhart, 461 U.S. at 435 & n.11 (where plaintiff obtains “excellent results”, fee award will normally encompass all hours reasonably expended on the litigation; fact that such plaintiff did not receive all the relief requested is not necessarily significant). - 60 - that regard, we have assigned 10.5 hours to generic client communications and 1.5 hours to Minns communications. We therefore reduce the $140 time by an additional 6 hours (10.5 + 1.5 = 12; 50% of 12 = 6). Finally, we have assigned 0.75 hours to Irvine’s review of contracts and further reduce the $140 time by that amount. The end result is a 19.75-hour reduction in the $140 time (13 + 6 + .75 = 19.75), leaving 92.4 hours of $140 time. The resulting amount is $13,322.25, determined as follows: [(92.4 X $140) + (3.25 X $105) + (0.5 X $90)] = ($12,936 + $341.25 + $45) = $13,322.25. b. 2002 to 2005 Taking into account the $150 statutory rate cap in effect during the years 2002 through 2005, the PH petitioners claim 1,683.85 hours at $150 per hour, 1 hour at $140 per hour, 0.7 hours at $130 per hour, 1.4 hours at $120 per hour, 2 hours at $105 per hour, 1 hour at $100 per hour, and 15.5 hours at $90 per hour. We adjust the $150 time to reflect the following reductions: (1) Remainder of the 130-hour overstaffing reduction- -117 hours; (2) Irvine’s time deemed attributable to the Minns dispute--7.8 hours;51 (3) excessive time pertaining to the bill of costs--28 hours; (4) work attributable to the remand proceedings- 51 We have assigned 15.6 hours of Irvine’s 2002 time to generic client communications (10.9 hours) and Minns communications (4.7 hours). As we deem 50 percent of that time to be attributable to the Minns dispute, the resulting reduction is 7.8 hours (50% of 15.6 = 7.8). - 61 - -7.9 hours; (5) excessive preliminary research regarding section 7430 and attorney’s fees issues--42.6 hours (85.2 X 50% = 42.6); and (6) time devoted to unsuccessful fee request claims--123.7 hours (119.2 hours of Binder’s time and 4.5 hours of Irvine’s time). The end result is a 327-hour reduction in the $150 time (117 + 7.8 + 28 + 7.9 + 42.6 + 123.7 = 327), leaving 1,356.85 hours of $150 time. The resulting amount is $205,631.50, determined as follows: [(1,356.85 X 150) + (1 X $140) + (0.7 X $130) + (1.4 X $120) + (2 X $105) + (1 X $100) + (15.5 X $90] = ($203,527.50 + $140 + $91 + $168 + $210 + $100 + $1,395) = $205,631.50. c. 2006 Taking into account the $160 rate cap in effect for 2006, the PH petitioners claim 67.9 hours at $160 per hour and 2.5 hours at $140 per hour.52 The resulting amount is $11,214, determined as follows: [(67.9 X $160) + (2.5 X $140)] = ($10,864 + $350) = $11,214. d. Total The total amount of potentially compensable fees with respect to the PH petitioners’ fee request is $230,167.75 52 In their final submission of fees and expenses, the PH petitioners seek to recover an additional $4,865 that Porter & Hedges estimates it will incur in pursuing the fee request “until this Court rules on this motion”. We are not aware of any authority supporting such a request, nor do we see the need for such additional fees and expenses under the circumstances. - 62 - ($13,322.25 for 2001, $205,631.50 for 2002 through 2005, and $11,214 for 2006). E. Potentially Compensable Expenses The PH petitioners claim additional costs in the amount of $20,307.18. We reduce that amount by $2,425.66 as follows: Delivery charges: $105.11 (2 overnight deliveries to/from persons with no identifiable connection to the litigation-- $26.86; extra charges for a Saturday package pickup--$75.25; discrepancy between claimed courier charge and computer backup--$3) Computer research: $444.39 (difference between amounts charged by provider and amounts reflected in billing records--$226.31; unidentified research sessions--$218.08) Secretarial overtime: $1,083.90 Double-counted charges: $751.26 (3/10/03 to 4/30/03) Miscellaneous: $41 (“various tips”--$16; unidentified parking charge--$25) The amount of potentially compensable expenses with respect to the PH petitioners’ fee request is therefore $17,881.52. As indicated above, the Hongsermeiers have not requested any expenses other than attorney’s fees. F. Amounts Paid or Incurred by Eligible Persons We now determine the extent to which eligible persons paid or incurred the potentially compensable fees and expenses with respect to the fee requests. - 63 - 1. Amounts Paid Through the Defense Fund a. Minns Agreement The Defense Fund paid $185,000 in legal fees under the Minns agreement. Of the $220,201 claimed by the Hongsermeiers for the corresponding legal services, see supra note 48, $122,293.30 is potentially compensable, see supra Part III.D.1., meaning that $97,907.70 is noncompensable ($220,201 - $122,293.30 = $97,907.70). Given the fungibility of money, a case can be made for allocating the Fund’s $185,000 expenditure between the potentially compensable fees and the noncompensable fees on a pro rata basis. We are not aware of any authority requiring us to do so, and we think such an approach would run counter to the remedial purpose of section 7430. Accordingly, we allocate the first $122,293.30 of the $185,000 expenditure to the potentially compensable fees and the remaining $62,706.70 ($185,000 - $122,293.30 = $62,706.70) to the noncompensable fees. Next, we must identify the contributions to the Defense Fund from which the Fund’s $185,000 expenditure derived. Owing again to the fungibility of money, any methodology we use will be somewhat arbitrary. Nevertheless, we believe it is reasonable to treat the $185,000 expenditure as having derived from the $268,200 contributed to the Fund by the Hongsermeiers and the group of 112 from January 2001 through November 2001. The following table lists the persons described in the preceding paragraph (i.e., the Hongsermeiers and the group of - 64 - 112) for whom we have received net worth affidavits, together with the amount contributed by each such person to the Defense Fund during the relevant period: Name Amt. Contributed Arbuckle $2,400 Asmus $2,500 Baccitich $2,400 Bakos $2,400 Beecher $2,300 Berger $3,500 Boettger $2,300 Bowersox $2,600 Branch $2,400 Bremner $2,300 Brown $2,400 Bruckner $2,400 Croft $2,700 Doyle $2,300 Ellis $2,400 Evans $2,100 Flatter $2,600 Fraser $2,500 Fruchnicht $3,000 Fusakio $1,500 Gaubert $1,500 Gavagan $2,700 Geisler $2,400 Graham $2,500 Hague $1,800 Hannan $2,400 Hartigan $2,000 Hatcher $2,400 Heintz $2,500 Hendrickson $2,300 Hillen $2,300 Hinrich $2,000 Hongsermeier $2,600 Howell $2,300 Humphries $2,200 Hunt $2,900 Jensen, John $2,400 Jensen, Steen $2,300 Johnson, Marvin $1,500 Jurewicz $2,400 Keadle $2,500 - 65 - Kelley $2,500 Klasch $2,500 Krassner $2,700 Layman $1,700 Leslie $1,700 Maeda $2,600 McNamee $2,300 Meyners $2,500 Michaelson $2,400 Miller, Dale $2,400 Miller, R.B. $2,800 Millon $3,000 Muckle $2,300 Myers $2,500 Norrell $2,500 Oakes $2,400 Oyler $2,700 Pistoll $2,500 Porter $2,300 Proctor $2,200 Pylate $1,500 Richmond $2,400 Satterfield $2,400 Sheasley $2,500 St. John $1,900 Tice $2,600 Toman $2,700 Tynan $2,700 Villines $2,400 Watkins $2,300 Whittlesey $2,500 Wiater $2,400 Wilson $2,400 $176,100 Thus, at least $176,100 of the $268,200 contributed to the Defense Fund by the Hongsermeiers and the group of 112 between January 2001 and November 2001 derives from eligible persons (we refer to such contributions as eligible contributions). Here, too, a case can be made for allocating the eligible contributions between the Defense Fund’s $122,293.30 payment for potentially compensable fees and its $62,706.70 payment for noncompensable - 66 - fees on a pro rata basis. Again, we are not aware of any authority requiring us to do so, and we think such an approach would run counter to the remedial purpose of section 7430. Accordingly, we allocate the eligible contributions first to the Defense Fund’s $122,293.30 payment for potentially compensable fees. It follows that eligible persons paid all of those potentially compensable fees. b. Porter & Hedges Agreement We take a similar approach with regard to the $60,000 the Defense Fund paid to Porter & Hedges. Of the $514,821.90 claimed by the PH petitioners in their appellate fee request, $248,049.27 is potentially compensable. See supra Parts III.D.3., III.E. First, we allocate the entire $60,000 expenditure to the potentially compensable fees and expenses. Next, we identify the contributions to the Defense Fund from which the Fund’s $60,000 expenditure derived. We believe it is reasonable to treat the $60,000 expenditure as having derived from the $84,200 contributed to the Defense Fund by the Dixons and the group of 43 from December 2001 through April 2002. The following table lists the persons described in the preceding paragraph (i.e., the Dixons and the group of 43) for whom we have received net worth affidavits, together with the amount contributed by each such person to the Defense Fund during the relevant period: - 67 - Name Amt. Contributed Asmus $2,000 Bakos $2,200 Beecher $2,100 Brown $2,000 Bruckner $2,000 Croft $2,100 Dixon $1,500 Ellis $2,000 Gomes $1,000 Grippo $2,500 Hague $2,000 Hartigan $1,500 Hatcher $2,000 Heintz $1,700 Hillen $2,000 Hunt $2,400 Ingals $2,100 Johnson, Marvin $1,500 Johnson, M.P. $1,500 Jurewicz $2,000 Keadle $1,800 Klasch $2,000 Leslie $2,000 McNamee $2,000 Meyners $2,100 Miller, R.B. $1,800 Moore, L. $1,700 Norrell $1,800 Oyler $1,500 Pistoll $2,000 Porter $2,000 Pylate $ 900 Richmond $2,000 Satterfield $2,000 St. John $1,500 Tice $2,000 Tynan $2,200 Villines $2,000 Whittaker $1,900 Whittlesey $2,000 $75,300 Thus, at least $75,300 of the $84,200 contributed to the Defense Fund by the Dixons and the group of 43 between December 2001 and April 2002 derives from eligible persons. Again, we allocate the - 68 - eligible contributions first to the Fund’s $60,000 payment for potentially compensable fees and expenses. It follows that eligible persons paid $60,000 of the potentially compensable amount of $248,049.27. 2. Amounts Paid Directly to Minns The Hongsermeiers and each member of the group of 38 paid Minns a $3,500 retainer fee for continued representation of their interests in post-appellate matters, including services relating to the Hongsermeiers’ appellate fee request. We have received net worth affidavits for all but five of those persons. Thus, at least $119,000 of the $136,500 initially paid by this group to Minns derives from eligible persons. We allocate that $119,000 first to the $56,233.75 claimed by the Hongsermeiers for services relating to the fee request. See supra note 48. It follows that eligible persons paid the entire portion of the claimed amount that is potentially compensable--$36,269.20. See supra Part III.D.2. 3. Amounts Incurred But Not Paid While eligible persons have paid all the potentially compensable fees with respect to the Hongsermeiers’ fee request (thus obviating the need to determine whether eligible persons are liable for any unpaid amounts), eligible persons have paid only $60,000 of the $248,049.27 that is potentially compensable with respect to the PH petitioners’ fee request. Under the terms of the Defense Fund’s agreement with Porter & Hedges, nontest - 69 - case petitioners Darrell Hatcher (now deceased), Robert Norrell, and Don Hunt are jointly and severally liable for the Fund’s obligations under the agreement, which would include the remaining potentially compensable fees and expenses of $188,049.27 ($248,049.27 - $60,000 = $188,049.27). Since we have received net worth affidavits for Messrs. Norrell and Hunt, it follows that eligible persons are liable for, and therefore incurred, the remaining potentially compensable fees and expenses of $188,049.27.53 4. Summary Eligible persons have paid or incurred all the potentially compensable amounts with respect to the appellate fee requests. G. Final Figures We shall award (1) attorney’s fees in the amount of $158,562.50 ($122,293.30 paid through the Defense Fund and $36,269.20 paid outside the Defense Fund) in respect of the Hongsermeiers’ appellate fee request, and (2) attorney’s fees and 53 Respondent does not suggest, nor do we have any reason to believe, that the disproportionate liability of Messrs. Norrell and Hunt is not bona fide. Cf. Sisk, “The Essentials of the Equal Access to Justice Act: Court Awards of Attorney’s Fees for Unreasonable Government Conduct (Part One),” 55 La. L. Rev. 217, 337-341 (1994) (discussing the potential for manipulation of the EAJA eligibility requirements when counsel represents both eligible and ineligible parties). - 70 - expenses in the amount of $248,049.27 in respect of the PH petitioners’ appellate fee request.54 IV. Interest The PH petitioners seek interest on their fee award from January 17, 2003 (the date of the Court of Appeals’ Dixon V opinion). As discussed in Part III.B.4.c., supra, the “no- interest” rule prohibits the recovery of interest in a suit against the Government absent an express waiver of sovereign immunity from an award of interest. Library of Congress v. Shaw, 478 U.S. at 311. Section 7430 contains no such express waiver, see Wilkerson v. United States, 67 F.3d at 120 n.15; Miller v. Alamo, 992 F.2d at 767; Austin v. Commissioner, T.C. Memo. 1997- 157, and petitioners do not point to any other provision that might fit the bill. Cf. Miller v. Alamo, supra at 767 (rejecting the argument that 28 U.S.C. sec. 1961(c)(1) operates as an express waiver of sovereign immunity from interest on a section 7430 fee award). Accordingly, we deny the PH petitioners’ request for interest on their fee award.55 54 We shall address the manner in which the awards are to be administered in a separate order or orders implementing this opinion. In that regard, we note that some nontest case petitioners who contributed to the Defense Fund during the relevant period have not been asked to submit net worth affidavits and therefore have not had the opportunity to establish their right to share in the awards. 55 We recognize that in Dixon IV we granted postjudgment interest on petitioners’ sec. 6673(a)(2) fee award. We did so sua sponte on the basis of “this Court’s inherent power to protect its own proceedings from abuse, oppression, and (continued...) - 71 - To reflect the foregoing, Appropriate orders will be issued. 55 (...continued) injustice”, without the benefit of briefs on the subject. Whatever one’s views may be on the interrelationship between the doctrines of inherent authority and sovereign immunity, compare United States v. Horn, 29 F.3d 754, 764 (1st Cir. 1994), with United States v. Woodley, 9 F.3d 774, 782 (9th Cir. 1993), that issue is not presented here. -72- Appendix A--September 1, 2005 Order -73- -74- -75- -76- -77- -78- Appendix B--September 8, 2005 Order -79- -80- -81- -82- -83- -84- Appendix C--November 18, 2005 Order -85- -86- -87- -88- -89- -90- -91- -92- -93- -94- -95- -96- --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4335956. Public record. Not legal advice.