United States v. William Michael Adkinson

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED

U.S. COURT OF APPEALS

________________________ ELEVENTH CIRCUIT

APR 19, 2001

THOMAS K. KAHN

No. 00-14100 CLERK

Non-Argument Calendar

________________________

D.C. Docket No. 91-03052-CR-RV-3

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

WILLIAM MICHAEL ADKINSON,

DANIEL A. KISTLER, et al.

Defendants-Appellants.

__________________________

Appeals from the United States District Court for the

Northern District of Florida

_________________________

(April 19, 2001)

Before TJOFLAT, BLACK and BARKETT, Circuit Judges.

PER CURIAM:

Robert L. Collins and Daniel D. Kistler, each appearing pro se, and William

Michael Adkinson and Ann Powell Minks, counseled, appeal the district court’s

denial of their applications, pursuant to the Hyde Amendment. See 18 U.S.C. §

30006A (statutory note), Pub.L.No. 105-119, § 617, 111 Stat. 2440, 2519 (1997),

for reasonable attorney’s fees and other litigation expenses incurred in their

criminal trial. The appellants argue, inter alia, that the district court abused its

discretion in denying their Hyde Amendment applications by failing to apply the

proper legal standard and procedures, and by making clearly erroneous factual

findings.

The Hyde Amendment provides that an award of reasonable attorney’s fees

shall be granted to a prevailing criminal defendant, pursuant to the Equal Access to

Justice Act, 28 U.S.C. § 2412 (“EAJA”), if the defendant establishes that the

government’s prosecution was “vexatious, frivolous, or in bad faith.” United

States v. Gilbert, 198 F.3d 1293, 1296 (11th Cir. 1999). Under EAJA, a denial of

attorney’s fees is reviewed for an abuse of discretion. Id. An abuse of discretion

occurs “if the judge fails to apply the proper legal standard or to follow proper

procedures in making the determination, or bases an award [or a denial] upon

findings of fact that are clearly erroneous.” Id. at 1297-98 (citations and internal

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quotations omitted). Upon review of the record in the district court, the briefs of

the parties, and other pertinent documents, we conclude that the district court

abused its discretion in denying the application under the facts of this case.

We base our conclusions on the facts meticulously recounted previously in

United States v. Adkinson, 135 F.3d 1363 (11th Cir. 1998) (“Adkinson I”), and

United States v. Adkinson, 158 F.3d 1147 (11th Cir. 1998) (“Adkinson II”). After

Adkinson II was decided, the appellants filed Hyde Amendment applications to

recover attorney’s fees and other litigation expenses incurred as a result of their

criminal prosecution. The district court denied the applications and this appeal

followed.

The Hyde Amendment1 “provides for the award of attorney’s fees and

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The full text of the Hyde Amendment reads as follows:

During fiscal year 1998 and in any fiscal year thereafter, the court, in any

criminal case (other than a case in which the defendant is represented by

assigned counsel paid for by the public) pending on or after the date of the

enactment of this Act, may award to a prevailing party, other than the

United States, a reasonable attorney's fee and other litigation expenses,

where the court finds that the position of the United States was vexatious,

frivolous, or in bad faith, unless the court finds that special circumstances

make such an award unjust. Such awards shall be granted pursuant to the

procedures and limitations (but not the burden of proof) provided for an

award under section 2412 of title 28, United States Code. To determine

whether or not to award fees and costs under this section, the court, for

good cause shown, may receive evidence ex parte and in camera (which

shall include the submission of classified evidence or evidence that reveals

or might reveal the identity of an informant or undercover agent or matters

occurring before a grand jury) and evidence or testimony so received shall

be kept under seal. Fees and other expenses awarded under this provision

to a party shall be paid by the agency over which the party prevails from

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[related litigation] costs to a prevailing criminal defendant who establishes that the

position the government took in prosecuting him was vexatious, frivolous, or in

bad faith.” United States v. Gilbert, 198 F.3d 1293, 1296 (11th Cir. 1999). The

criminal defendant bears the burden of proving this by a preponderance of the

evidence, as well as establishing that he is otherwise qualified for the award under

the law. See id.2

In Gilbert, this Court began its analysis of the Hyde Amendment with the

words of the statute themselves, to wit:

“Vexatious” means “without reasonable or probable cause or excuse.”

A “frivolous action” is one that is “groundless . . . with little prospect

of success; often brought to embarrass or annoy the defendant.”

Finally, “bad faith” “is not simply bad judgment or negligence, but

rather it implies the conscious doing of a wrong because of dishonest

purpose or moral obliquity; . . . it contemplates a state of mind

affirmatively operating with furtive design or ill will.”

Id. at 1298-99 (citations omitted). In Gilbert, the defendant’s conviction in the

underlying criminal case had been reversed because the statute of limitations had

any funds made available to the agency by appropriation. No new

appropriations shall be made as a result of this provision.

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We recognize that recovery under the Hyde Amendment is allowed under only limited

circumstances, and is subject to the restrictions and procedures articulated by the language of the

law and its legislative history. See Gilbert, 198 F.3d at 1304. A criminal defendant must show, for

example, that (1) his trial had been in progress during fiscal year 1998 or a subsequent year, (2) his

net worth was less than two million dollars, (3) he had been a “prevailing party” in his criminal case,

even though subject to possible retrial upon remand; (4) that his legal representation was not the

result of court-appointment; and (5) his attorney’s fees and costs are “reasonable.” See Hyde

Amendment, 18 U.S.C. § 30006A; 28 U.S.C. § 2412. Appellants assert that they meet each of these

requirements. Appellant Collin’s Brief at 17.

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expired prior to his indictment. Id. at 1297. However, at that time, the issue of

when the limitations period began to run for the charged offense was one of first

impression not only in this Court, but also, with respect to the specific factual

situation involved, in the country as a whole. This Court declined to hold “that

prosecutors act in bad faith when they fail to anticipate how a court will decide an

issue of first impression.” Id. at 1303. At the same time, this Court made the

following statement:

A defendant seeking Hyde Amendment fees and costs on the basis of

a legal position the government took in prosecuting him must

establish that the position was foreclosed by binding precedent or so

obviously wrong as to be frivolous. Gilbert has not established that

and he can not establish it. He is effectively foreclosed from doing so

not only because a legal issue of first impression in this circuit was

involved, but also by the fact that the district judge who presided at

his trial accepted the government's statute of limitations position, the

same position this Court later rejected in Gilbert I. Once a district

court judge accepts the government's legal position it will be

extremely difficult to persuade us that the issue was not debatable

among reasonable lawyers and jurists, i.e., that it was frivolous.

Id. at 1304 (footnote omitted).

Here, in Adkinson I, this Court has already found that the government,

“[w]ith full knowledge that it was contrary to recent and controlling precedent, . . .

induced the grand jury” to charge in objectives 2-5 of Count I of the indictment

that a bank-fraud conspiracy violated 18 U.S.C. § 371. Adkinson I, 135 F.3d at

1374 (emphasis added). It further persuaded the district court to deny the

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Appellants’ motion to dismiss the indictment which did not allege any crime under

the existing law. The government did so on the future hope that this court would

reverse the then existing precedent during the Appellants’ trial, and willfully

ignored Appellants’ rights. In urging the trial court not to dismiss the indictment

which concededly did not charge a crime, the government stated that the trial court

should take:

the bold, high level, high risk approach, and that is to simply leave the

indictment as is and if Hope [the controlling case] is sustained let

them take it up on appeal and have it reversed. (emphasis added).

Id. at 1368-69.

Unlike our finding in Gilbert, this was not a case where the law was unclear and

the district court accepted a viable legal argument on an “issue ...debatable among

reasonable lawyers and jurists.” 198 F.3d at 1304. The district court in this case

knew that controlling precedent precluded prosecution.

The trial lasted five months; 115 witnesses generated more than 85

volumes, 17,500 pages of transcript and 1,447 exhibits. During these five

months, defendants continuously objected to a mass of evidence on the grounds

that it was all related to the non-crime with which they had been charged. “The

district court, again upon the government's assurance that all the evidence was

"inextricably intertwined" with the bank fraud conspiracy, allowed it under the

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government's "high risk" strategy.” Adkinson I at 1369. As a result of these

charges, during the government’s case-in-chief, “[m]ountains of detail relevant

only tangentially, if at all, to the ultimately charged scheme to defraud the IRS

certainly must have confused the jury. Furthermore, under the circumstances of

this case, this evidence obviously invited the jury to convict for conduct not,

ultimately, even alleged to be a crime.” Id. at 1372 (emphasis added). This Court

also noted that the general rule that “misjoinder will not be found after the

dismissal of a count in an indictment during trial” did not apply

where the count justifying the joinder was not alleged by the

government in good faith, i.e., with the reasonable expectation that

sufficient proof will be forthcoming at trial. Since the government in

this case knew at the time the Indictment was obtained that no amount

of evidence at trial would be sufficient to convict defendants of a

Section 371 bank fraud conspiracy, these defendants were misjoined

insofar as the joinder was predicated upon that conspiracy.

This misjoinder was not harmless. In a trial of this duration and size,

guilt by association is always a threat. The only way all of these

defendants were tied together at all in this far-flung series of events

was by the allegation of a violation of Section 371 through a bank

fraud conspiracy which no amount of evidence at trial could establish.

Prejudice resulted from the spill over effect of the massive amount of

testimony and exhibits which came in against all defendants under the

“inextricably intertwined” theory. This is bad faith joinder and was

seriously prejudicial to these defendants.

Id. at 1374 (citations and footnotes omitted) (emphasis added).

It is beyond cavil that the government’s prosecutorial position was

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“foreclosed by [the] binding precedent” not only when the government brought the

indictment, but also throughout the presentation of its case-in-chief leading this

Court to overturn all of the defendants’ convictions in order “to serve the system

which protects us all.” Adkinson II, 158 F.3d at 1164.

We do not repeat here this Court’s previous extensive discussion of the “bad

faith” exercised by the government in bringing the charges against the appellants in

the underlying criminal case. Adkinson I, 135 F.3d at 1375 See id. at 1374 (“This

is a bad faith joinder and was seriously prejudicial to these defendants.”) (emphasis

added). That discussion, however, reflects the correct legal standard which the

district court should have applied. Prosecuting appellants in defiance of

controlling authority constitutes “vexatious”, “frivolous”, and “bad faith”

prosecutions. In the instant case, the government’s prosecutorial position was

“foreclosed by [the] binding precedent,” not only when the government brought the

indictment, but also throughout the presentation of its case-in-chief, tainting the

entire proceedings.

Based on all of the circumstances of this case, we conclude that the district

court abused its discretion in denying the awards and in making a clearly erroneous

finding that the government did not prosecute the appellants in bad faith on charges

that the government knew not to be crimes, as established by this Court’s binding

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precedent. The government’s litigating position in this case was vexatious,

frivolous, and taken in bad faith, justifying an award of “a reasonable attorney’s

fee and other litigation expenses” under the Hyde Amendment. Although the

government argued to the district court that there were “special circumstances”

making such an award unjust, it has abandoned that argument here. See Malowney

v. Federal Collection Deposit Group, 193 F.3d 1342, 1345 (11th Cir. 1999) (issues

not argued on appeal are considered abandoned), cert. denied, 529 U.S. 1055

(2000).

We reverse the district court’s ruling and remand for a determination of the

amount of fees and expenses to which Collins, Kistler, and Adkinson are entitled

under the Hyde Amendment. Since it is unclear from the record on appeal whether

Minks filed a timely Hyde Amendment application, or whether the district court

issued a final appealable order with respect to such an application, the district

court, on remand, should clarify its ruling with respect to Minks’ application, if

such an application is still properly before it.

REVERSED AND REMANDED.

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