United States v. Louis Manzo

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

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No. 12-2294

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UNITED STATES OF AMERICA

v.

LOUIS MANZO,

Appellant

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On Appeal from the United States District Court

for the District of New Jersey

(D.C. No. 09-cr-00759)

District Judge: Hon. Jose L. Linares

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Submitted Under Third Circuit LAR 34.1(a)

March 5, 2013

Before: SCIRICA, JORDAN, and ROTH, Circuit Judges.

(Filed: March 25, 2013)

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Louis Manzo

409 8th Avenue

Belmar, NJ 07719

Appellant, Pro Se

Mark E. Coyne, Esq.

Mark J. McCarren, Esq.

Office of United States Attorney

970 Broad Street – Rm. 700

Newark, NJ 07102

Glenn J. Moramarco, Esq.

Office of United States Attorney

Camden Federal Building

401 Market Street, Fourth Floor

Camden, New Jersey 08101

Counsel for Appellee

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OPINION OF THE COURT

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JORDAN, Circuit Judge.

Under a statutory provision known as the “Hyde

Amendment,” a district court in criminal cases “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.” Pub. L. No. 105-

119, § 617, 111 Stat. 2440, 2519 (1997), reprinted in 18

U.S.C. § 3006A, Statutory Note. Louis Manzo appeals a

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decision of the United States District Court for the District of

New Jersey denying him such relief. For the following

reasons, we will affirm.

I. Background

In October 2009, a grand jury returned a six-count

indictment against Manzo, charging him with four counts of

conspiring and attempting to commit extortion, in violation of

18 U.S.C. §§ 1951(a) & 2 (the “Hobbs Act”), and two counts

of traveling in interstate commerce to promote and facilitate

bribery, in violation of 18 U.S.C. §§ 1952(a)(3) & 2 (the

“Travel Act”). In pertinent part, the Hobbs Act defines

“extortion” as “the obtaining of property from another, with

his consent, induced … under color of official right.” Id.

§ 1951(b)(2). The relevant portions of the Travel Act

criminalize “travel[] in interstate … commerce … with intent

to … promote, manage, establish, carry on, or facilitate the

promotion, management, establishment, or carrying on, of

any unlawful activity.” Id. § 1952(a)(3). An “unlawful

activity” includes “bribery” as established by “the laws of the

State in which [the bribery is] committed.” Id. § 1952(b).

The government alleged that Manzo, while he was a

candidate for mayor of Jersey City, New Jersey, sought cash

payments and campaign contributions from Solomon Dwek,

who was posing as a real estate developer, and that, in

exchange, Manzo indicated he would help Dwek in the future

with matters involving Jersey City‟s government. According

to the indictment, Manzo and his brother, Ronald Manzo,

accepted as bribes three cash payments prior to the election,

totaling $27,500. The indictment also alleged that Dwek had

agreed to pay additional money after the election, assuming

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Manzo won (which he did not). Unbeknownst to the Manzo

brothers, Dwek was a government informant.

On May 18, 2010, following a motion to dismiss filed

by Manzo, the District Court dismissed each count alleging

that Manzo had violated the Hobbs Act. The Court held that

the alleged extortion did not constitute a violation of the Act

because Manzo was not a public official at the time of the

conduct and therefore could not have acted “„under color of

official right.‟” (Order on Motion in Limine at 24 (D.N.J.

May 18, 2010), ECF No. 33 (quoting 18 U.S.C. § 1951(a)).)

The Court did not dismiss the remaining Travel Act charges,

however, reasoning that “the plain reading of” New Jersey‟s

bribery statute (Supplemental App. at 166) – which provides

that “[i]t is no defense to prosecution … that a person whom

the actor sought to influence was not qualified to act in the

desired way whether because he had not yet assumed office

… or for any other reason,” N.J. Stat. Ann. § 2C:27-2 – “is

that it encompasses prosecutions where the person whom the

action was sought to influence was not yet qualified or [able]

to act” (Supplemental App. at 166).

The government filed an interlocutory appeal pursuant

to 18 U.S.C. § 3731 challenging the dismissal of the Hobbs

Act charges, and we affirmed. See United States v. Manzo,

636 F.3d 56 (3d Cir. 2011). Although we acknowledged that

whether the Hobbs Act applies to a candidate for public office

(as opposed to someone who is already in office) is “a

significant and novel question” that was “creatively framed

and well-presented by the government,” id. at 61, we

ultimately affirmed the holding of the District Court,

reasoning that, “[i]n accordance with the legislative history,

the congressional purpose underlying the Hobbs Act and

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centuries of interpretation of the phrase „under color of

official right,‟” Manzo and his brother “were not acting

„under color of official right,‟ as defined in the Hobbs Act,”

id. at 65.

With the dismissal of the Hobbs Act charges, the case

was remanded to the District Court. In the meantime, the

grand jury returned a second superseding indictment charging

Manzo with two counts of Travel Act violations, and one

count of misprision of a felony, in violation of 18 U.S.C. § 4.1

On February 17, 2012, however, the District Court reversed

its earlier position and held that the receipt of something of

value by an unsuccessful candidate for public office in

exchange for a promise of future official conduct does not

constitute bribery under the New Jersey bribery statute and

therefore does not qualify as an “unlawful activity” under the

Travel Act. The Court accordingly dismissed all remaining

charges against Manzo.2

1

That statute provides:

Whoever, having knowledge of the actual

commission of a felony cognizable by a court

of the United States, conceals and does not as

soon as possible make known the same to

some judge or other person in civil or

military authority under the United States,

shall be fined under this title or imprisoned

not more than three years, or both.

18 U.S.C. § 4.

2

The Court dismissed the misprision of a felony

charge because, given its dismissal of the Hobbs Act and

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After all of the charges against him had been

dismissed, Manzo filed a pro se petition on March 14, 2012,

seeking attorney fees pursuant to the Hyde Amendment,

which, as earlier quoted, permits an award of fees and

expenses to a party subjected to vexatious, frivolous, or bad

faith prosecution. Pub. L. No. 105-119, § 617, 111 Stat.

2440, 2519 (1997), reprinted in 18 U.S.C. § 3006A, Statutory

Note. The District Court denied that petition, holding that

Manzo had not borne his burden of demonstrating that the

prosecution in this case fits the criteria of the Hyde

Amendment. Manzo then filed this timely appeal of that

order.

II. Jurisdiction and Standard of Review

The District Court had jurisdiction under 18 U.S.C.

§ 3231, and we have jurisdiction under 28 U.S.C. § 1291. We

have not considered what standard of review applies to a

district court‟s denial of a defendant‟s request for attorney

fees under the Hyde Amendment, but all of the Courts of

Appeals that have considered the issue have concluded that

review is for abuse of discretion. See United States v. Lain,

640 F.3d 1134, 1137 (10th Cir. 2011); United States v. Beeks,

266 F.3d 880, 883 (8th Cir. 2001); United States v. Wade, 255

F.3d 833, 839 (D.C. Cir. 2001); United States v. True, 250

F.3d 410, 421-22 (6th Cir. 2001); United States v. Lindberg,

220 F.3d 1120, 1124 (9th Cir. 2000); In re 1997 Grand Jury,

215 F.3d 430, 436 (4th Cir. 2000); United States v. Truesdale,

Travel Act charges, neither Manzo nor his brother had

committed any “felony” that was “cognizable by a court of

the United States.” 18 U.S.C. § 4.

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211 F.3d 898, 905-06 (5th Cir. 2000); United States v.

Gilbert, 198 F.3d 1293, 1297-98 (11th Cir. 1999). We agree

and will review the District Court‟s order under that standard.

III. Discussion

Manzo contends that the District Court abused its

discretion in denying him “a reasonable attorney‟s fee and

other litigation expenses” for what he claims was a

“vexatious, frivolous, or … bad faith” prosecution by the

government. Pub. L. No. 105-119, § 617, 111 Stat. 2440,

2519 (1997). Although we have not interpreted the Hyde

Amendment, many of our sister circuits have. According to

those courts, the Hyde Amendment “places a daunting

obstacle before defendants who seek to obtain attorney fees

and costs from the government following a successful defense

of criminal charges.” United v. Isaiah, 434 F.3d 513, 519

(6th Cir. 2006) (internal quotation marks omitted). In

particular, a “defendant must show that the government‟s

position underlying the prosecution amounts to prosecutorial

misconduct – a prosecution brought vexatiously, in bad faith,

or so utterly without foundation in law or fact as to be

frivolous.” United States v. Gilbert, 198 F.3d 1293, 1299

(11th Cir. 1999). “The defendant bears the burden of meeting

any one of the three grounds under the statute, and acquittal

by itself does not suffice.” Isaiah, 434 F.3d at 519; see also

United States v. Shaygan, 652 F.3d 1297, 1311-12 (11th Cir.

2011) (“[T]he Hyde Amendment place[s] the burden” of

showing that a prosecution is “vexatious, frivolous, or in bad

faith” on “the defendant, not on the government” (internal

quotation marks omitted)); United States v. Capener, 608

F.3d 392, 401 (9th Cir. 2010) (noting that “the burden is on

the defendant” (internal quotation marks omitted)); United

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States v. Knott, 256 F.3d 20, 28 (1st Cir. 2001) (“[T]he Hyde

Amendment places the burden of proof on the defendant to

demonstrate that the government‟s position was vexatious,

frivolous, or in bad faith.” (internal quotation marks

omitted)).

That burden is made more difficult by the approach

courts take in assessing the government‟s litigation position.

In determining whether a position is vexatious, frivolous or in

bad faith, courts “make only one finding, which should be

based on the case as an inclusive whole. A count-by-count

analysis is inconsistent with this approach.” United States v.

Heavrin, 330 F.3d 723, 730 (6th Cir. 2003) (citation and

internal quotation marks omitted). In addition, when the legal

issue is one of first impression, a court should be wary of

awarding fees and costs so as not to “chill the ardor of

prosecutors and prevent them from prosecuting with

earnestness and vigor. The Hyde Amendment was not

intended to do that.” Gilbert, 198 F.3d at 1303.

With respect to the three grounds for relief under the

statute, courts have held that a “vexatious” position is one that

is “without reasonable or probable cause or excuse.” Id.

1298-99 (internal quotation marks omitted); see also United

States v. Lain, 640 F.3d 1134, 1137 (10th Cir. 2011) (same);

United States v. Monson, 636 F.3d 435, 439 (8th Cir. 2011)

(same). To establish that the government‟s prosecution was

“vexatious,” a petitioner must show “both … that the criminal

case was objectively deficient, in that it lacked either legal

merit or factual foundation, and … that the government‟s

conduct, when viewed objectively, manifests maliciousness

or an intent to harass or annoy.” Knott, 256 F.3d at 29.

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Courts have interpreted a “frivolous” action as one that

is “groundless[,] with little prospect of success.” Gilbert, 198

F.3d at 1299 (alteration and internal quotation marks

omitted); see also Heavrin, 330 F.3d at 728 (adopting the

Gilbert court‟s definition of “frivolous”); United States v.

Braunstein, 281 F.3d 982, 995 (9th Cir. 2002) (same); In re

1997 Grand Jury, 215 F.3d 430, 436 (4th Cir. 2000) (same).

“[A] case is frivolous when the government‟s position was

foreclosed by binding precedent or [is] obviously wrong … .”

Capener, 608 F.3d at 401 (first alteration in original) (internal

quotation marks omitted). “Just because the government

lacks „precedent‟ does not automatically mean that its

position is frivolous.” Heavrin, 330 F.3d at 729. “The

government should be allowed to base a prosecution on a

novel argument, so long as it is a reasonable one, without fear

that it might be setting itself up for liability under the Hyde

Amendment.” Id. Thus, “[a] frivolous position is one lacking

a reasonable legal basis or where the government lacks a

reasonable expectation of attaining sufficient material

evidence by the time of trial.” Id. A “frivolous” position can

be distinguished from a “vexatious” one in that “the term

„vexatious‟ embraces the distinct concept of being brought for

the purpose of irritating, annoying, or tormenting the

opposing party.” Id.

Finally, “bad faith” means “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.” Gilbert, 198 F.3d at 1299

(omission in original) (internal quotation marks omitted); cf.

Franks v. Delaware, 438 U.S. 154, 171 (1978) (defining bad

faith in the law enforcement context to include “reckless

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disregard for the truth”). Courts engage in an objective

inquiry when determining whether a prosecution was pursued

in “bad faith.” See Shaygan, 652 F.3d at 1313-14.

Against that legal background, we examine each of

Manzo‟s arguments.

A. Continued Prosecution After Dismissal of

Hobbs Act Charges

Manzo contends that his prosecution was either

vexatious or frivolous because, even after we affirmed the

District Court‟s dismissal of the Hobbs Act charges, the

government continued to pursue him on the remaining Travel

Act and misprision of a felony charges. Manzo insists that,

by nonetheless proceeding with its prosecution, the

government “was nothing less th[a]n defiant, and the second

superseding indictment no longer supported a position of first

impression.” (Manzo‟s Opening Br. at 19.)

That charge fails to establish an abuse of discretion.

The District Court dismissed the Hobbs Act charges because,

during the time of the alleged conduct, Manzo was only a

candidate for public office and therefore did not act “„under

color of official right.‟” (Order on Motion in Limine at 24

(D.N.J. May 18, 2010), ECF No. 33 (quoting 18 U.S.C.

§ 1951(a)).) At the same time, however, the Court declined

to dismiss the Travel Act charges and expressly rejected

Manzo‟s argument that, because he was “merely a candidate

and not one that was at least elected,” his conduct did not fall

within New Jersey‟s bribery statute. (Supplemental App. at

166.) The Court opined that, under a “plain reading,” the

bribery statute “encompasses prosecutions where the person

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whom the action was sought to influence was not yet

qualified or [able] to act in a desired way for any reason.”

(Supplemental App. at 166.) As noted earlier, we affirmed on

interlocutory appeal the dismissal of the Hobbs Act charges.

It was only then that, upon reconsideration, the District Court

dismissed the Travel Act charges because it concluded that

New Jersey‟s bribery statute does not criminalize bribes to

candidates for public office (as opposed to officeholders).

Given the District Court‟s original ruling on the

applicability of the New Jersey bribery statute, the

government‟s continued prosecution of Manzo under the

remaining Travel Act charges was clearly not vexatious, since

it was not “objectively deficient.” Knott, 256 F.3d at 29. Nor

was it frivolous. “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.”

Gilbert, 198 F.3d at 1304. In fact, the District Court‟s

original ruling on the applicability of the New Jersey bribery

statute left the government with an objectively reasonable

belief that its legal position would prevail. We accordingly

reject Manzo‟s argument that the government‟s continued

prosecution was vexatious or frivolous.

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B. Manzo’s Claim that the Government Knew that

Its Factual Allegations Were False

Manzo also argues that the allegations in the

indictment were “blatantly false,” that the government knew

they were false, and that the government‟s prosecution was

therefore in bad faith, as well as being vexatious and

frivolous. (Manzo‟s Opening Br. at 6.) Those assertions rely

primarily on the fact that, when he testified in a separate

corruption trial, Ronald Manzo said he never physically gave

his brother $10,000 in cash that he had received from Dwek.

That testimony does not conclusively prove that the

government‟s accusations were false, much less that they

were knowingly false. Nor does the testimony prove that the

District Court abused its discretion. As the Court noted,

despite Ronald‟s testimony, the government was prepared to

present recordings “during which both Ronald Manzo and

[Louis Manzo] acknowledged that [Louis Manzo] had

received money from Mr. Dwek.” (Supplemental App. at

14.) In addition, even if Ronald‟s testimony were true, the

charges against Manzo did not require the government to

prove that he physically received a cash bribe, only that he

traveled in interstate commerce with the intent to “promote,

manage, establish, carry on, or facilitate the promotion,

management, establishment, or carrying on of” a bribe, 18

U.S.C. § 1952(a)(3), which, under New Jersey law,

encompasses the “indirect[]” acceptance of “[a]ny benefit as

consideration for a decision, opinion, recommendation, vote

or exercise of discretion of a public servant,” N.J. Stat. Ann.

§ 2C:27-2. The recordings would have allowed the

12

government to plausibly argue that Manzo was aware of the

cash payment to his brother and played a role in facilitating it.

Thus, Ronald‟s testimony that Manzo never received the cash

payments, even if we assume it to be true, is insufficient to

show that the government‟s prosecution in light of that

testimony was vexatious, frivolous, or in bad faith.

C. Conflicts of Interest

Manzo avers that the prosecutors in his case operated

under “overbearing conflicts of interest” and should have

recused themselves under “numerous” Department of Justice

guidelines. (Manzo‟s Opening Br. at 14.) Specifically, he

asserts that, while running for governor of New Jersey, then-

United States Attorney Chris Christie lauded his office‟s anti-

corruption prosecutions and publicly proclaimed that, as

Governor, he would hire several Assistant United States

Attorneys who had played a role in prosecuting over 40

individuals for corruption in Hudson County, New Jersey,

including Manzo. According to Manzo, shortly after

candidate Christie made that statement, a number of

prosecutors donated to Christie‟s campaign. Despite those

donations and Christie‟s public statement that he would hire

them, the prosecutors, according to Manzo, “failed to recuse

themselves from an investigation and prosecution that

ultimately benefitted Christie‟s election, and by so doing,

enhanced their employment prospects for the jobs that they

were promised.” (Manzo‟s Opening Br. at 14.) Manzo

insists that the prosecutors‟ supposed failure to adhere to

recusal guidelines constitutes “bad faith.”

The government vigorously denies that any of the

prosecutors violated recusal guidelines, which may well be

13

correct, but we need not address the issue. As already noted,

“Congress created an objective standard of bad faith to

govern an award of attorney‟s fees and costs under the Hyde

Amendment.” Shaygan, 652 F.3d at 1313. We accordingly

should not “read the Hyde Amendment to license judicial

second-guessing of prosecutions that are objectively

reasonable.” Id. at 1314. Thus, rather than attempting to

delve into the minds and motivations of individual

prosecutors when making political contributions or career

moves, the proper inquiry into a challenged prosecution is an

objective one. Here, in a wide-ranging undercover

investigation, the FBI obtained recorded conversations in

which Manzo, a candidate for political office, agreed to

accept money in exchange for a promise of future official

action if elected. Under those circumstances, it was not

objectively unreasonable for the government to attempt to

prosecute him under the Hobbs Act and the Travel Act. At

the time of the indictment, there was no binding case law

holding that such prosecutions were improper, and it was

entirely legitimate for the government to initiate a federal

prosecution based on the underlying facts. The District Court

therefore did not abuse its discretion in rejecting Manzo‟s

conflict-of-interest argument.

D. Manzo’s Remaining Allegations of

Prosecutorial Misconduct

Manzo‟s remaining miscellaneous allegations of bad

faith are also unavailing. He claims that the government

failed to present exculpatory evidence to the grand jury and

failed to preserve the instructions given to Dwek by the FBI

prior to his covert meetings with the Manzos. The District

Court rejected those claims, holding that Manzo had not

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borne his burden of proof on them. But even if he had, those

failures would at most constitute prosecutorial errors, rather

than a basis to conclude that the prosecution was undertaken

and pursued in bad faith. “Sloppy work alone does not

support a claim of vexatiousness, frivolousness, or bad faith”

sufficient to justify attorney fees under the Hyde Amendment.

Lain, 640 F.3d at 1139. Moreover, as the District Court

noted, the second superseding indictment against Manzo was

dismissed prior to trial, and the Jencks Act requires

production of documents relied on by a government witness

only “[a]fter [the] witness called by the United States has

testified on direct examination” at trial. 18 U.S.C. § 3500(b).

Manzo also argues that Dwek was not authorized

under Department of Justice guidelines to engage in

undercover activities with Manzo because Manzo was not yet

a public official. Whether that is correct is irrelevant, for,

even assuming that the government mishandled Dwek in

some respects, the alleged errors would not demonstrate that

the government‟s prosecution of Manzo was vexatious,

frivolous, or in bad faith, which is the standard that Manzo

must meet for an award of attorney fees. We find no abuse of

discretion in the District Court‟s decision.

IV. Conclusion

For the foregoing reasons, we will affirm the order of

the District Court.

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