Opposition Brief — Riverdale Mills Corp. v. United States

No. 01-717

Jn the Supreme Court of the Gnited States

RIVERDALE MILLS CORPORATION, PETITIONER

@;

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

THEODORE B. OLSON

Solicitor General

Counsel of Record

JOHN C. CRUDEN

Acting Assistant Attorney

General

GREER S. GOLDMAN

JOHN L. SMELTZER

STEPHANIE TAI

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

QUESTION PRESENTED

Whether the court of appeals correctly held that the

United States had not engaged in a “vexatious” prose-

cution entitling petitioner to an award of attorneys’ fees

and expenses under the Hyde Amendment, Pub. L. No.

105-119, § 617, 111 Stat. 2519 (18 U.S.C. 3006A note

(Supp. V 1999)).

(1)

TABLE OF CONTENTS

Page

Opinions below 1

Jurisdiction 1

Statement 1

Argument 7

Conclusion 12

TABLE OF AUTHORITIES

Cases:

Cooter & Gell v. Hartmarx Corp., 496 U.S. 384

(1990) 11

1997 Grand Jury, In re, 215 F.3d 430 (4th Cir.

2000) , ae tk

Koon v. United States, 518 U.S. 81 (1996) 11

United States v. Adkinson, 247 F.3d 1289 (11th

Cir. 2001) 7,9

United States v. Beeks, 266 F.3d 880 (8th Cir. 2001) ...... 9

United States v. Gilbert, 198 F.3d 1298 (11th Cir.

1999) 2,7,8

United States v. Lindberg, 220 F.3d 1120 (9th Cir. |

2000) 2

United States v. One Parcel of Real Prop.,

960 F.2d 200 (1st Cir. 1992) 2

United States v. Sherburne, 249 F.3d 1121 (9th Cir.

2001) 7

United States v. True, 250 F.3d 410 (6th Cir.

2001) 7,8

United States v. Truesdale, 211 F.3d 898 (5th Cir.

2000) 3

(IIT)

IV

Statutes:

Clean Water Act, 33 U.S.C. 1319(c)(2)(a)

Equal Access to Justice Act, 28 U.S.C. 2412:

28 U.S.C. 2412(d)(1)(A)

28 U.S.C. 2412(d)(1(C(2)(B)

Hyde Amendment, Pub. L. No. 105-119, § 617, 111 Stat.

2519 (18 U.S.C. 3006A note (Supp. V 1999))

1-2

In the Supreme Court of the United States

No. 01-717

RIVERDALE MILLS CORPORATION, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-29a)

is reported at 256 F.3d 20. The opinion of the district

court (Pet. App. 30a-45a) is reported at 106 F- Supp. 2d

174.

JURISDICTION |

The judgment of the court of appeals was entered on

July 12, 2001. A petition for rehearing was denied on

August 24, 2001 (Pet. App. 47a-48a). The petition for a

writ of certiorari was filed on November 21, 2001. The

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

STATEMENT

1. The Hyde Amendment, Pub. L. No. 105-119,

§ 617, 111 Stat. 2519 (18 U.S.C. 3006A note (Supp. V

(1)

2

1999)), was enacted as part of the Department of

Justice appropriations bill for the fiscal year 1998, in

response to instances of perceived prosecutorial abuse.

See Pet. App. 12a; United States v. Gilbert, 198 F.3d

1293, 1299-1303 (11th Cir. 1999) (reviewing the amend-

ment’s legislative history). Under the Hyde Amend-

ment, a prevailing defendant in a federal criminal case

may recover attorneys’ fees and other litigation ex-

penses “where the court finds that the position of the

United States was vexatious, frivolous, or in bad faith.”

18 U.S.C. 3006A note (Supp. V 1999).

Although the Hyde Amendment was modeled after

the Equal Access to Justice Act (EAJA), 28 U.S.C.

2412(d)(1)(A), which governs fee awards against the

United States in civil actions, the Hyde Amendment

differs from EAJA in at least two significant respects.

First, the Hyde Amendment sets a more stringent test

for an award of fees, authorizing payment only where

“the position of the United States was vexatious, frivo-

lous, or in bad faith,” 18 U.S.C. 3006A note (Supp. V

1999), rather than, as EAJA provides, in all cases where

the position of the United States was not “substantially

justified,” 28 U.S.C. 2412(d)(1)(A). Second, although

EAJA has been construed to place the burden of proof

on the United States, see, e.g., United States v. One

Parcel of Real Property, 960 F.2d 200, 208 (1st Cir.

1992), the Hyde Amendment places the burden of proof

on the moving defendant. See 18 U.S.C. 3006A note

(Supp. V 1999) (Hyde Amendment fee applications are

to be adjudicated “pursuant to the procedures and limi-

tations (but not the burden of proof) provided” by

EAJA); see also Gilbert, 198 F.3d at 1302; United States

v. Lindberg, 220 F.3d 1120, 1124 (9th Cir. 2000); In re

1997 Grand Jury, 215 F.3d 430, 4386 (4th Cir. 2000);

8

United States v. Truesdale, 211 F.3d 898, 907 (5th Cir.

2000).

2. On August 12, 1998, a grand jury in the District of

Massachusetts returned an indictment against peti-

tioner Riverdale Mills Corporation and its president

and chief executive officer, James M. Knott, Sr. Pet.

App. 6a, 38a. The indictment charged each of the two ~

defendants with two counts of knowingly violating the

Clean Water Act, 33 U.S.C. 1319(c)(2)(a), by discharg-

ing industrial wastewater into publicly owned treat-

ment works in violation of a national pretreatment

standard prohibiting the discharge of industrial wastes

with a pH below 5.0s.u. Pet. App. 6a, 33a.

The first count of the indictment charged a violation

occurring on or about October 21, 1997. On that date

the Environmental Protection Agency (EPA) con-

ducted a civil inspection of petitioner’s manufacturing

facility after receiving an anonymous tip, apparently

from one of petitioner’s employees, that petitioner’s

wastewater treatment system was not in operation.

The second count charged a violation occurring on or

about November 7, 1997, the date that one of two

criminal search warrants was executed at the same

facility. During that search, EPA agents observed that

the required pretreatment system at the facility was

largely inoperative, and they collected a number of

samples indicating that the facility’s wastewater was

above the permissible level of acidity. Pet. App. 3a-6a,

31a-33a.

The defendants filed a motion to suppress the evi-

dence obtained during the civil inspection and the sub-

sequent criminal searches. The district court granted

their motion in part, ruling that by engaging in certain

sampling activities, the EPA inspectors had exceeded

—the scope of Mr. Knott’s consent to the October 21

4

inspection. The court declined, however, to suppress

the evidence obtained on November 7 through the

execution of the criminal search warrant. Pet. App. 6a,

33a.

After receiving the district court’s ruling on the

motion to suppress, the government reevaluated its evi-

dence in the case. On April 23, 1999, the United States

sought leave to dismiss the indictment without preju-

dice. On May 6, 1999, the district court granted that

motion. Pet. App. 6a-7a, 33a-34a.

3. Petitioner and Mr. Knott then sought attorneys’

fees and expenses under the Hyde Amendment. The

district court granted the fee application with respect

to petitioner and denied it with respect to Mr. Knott.

Pet. App. 30a-45a.’

In awarding fees and expenses to petitioner, the

district court held that the gevernment’s conduct in the

case, “although not provably frivolous or in bad faith,

was clearly vexatious.” Pet. App. 42a. The court stated

that “(t]he government did not * * * have any

credible evidence to support th[e] accusation” that

petitioner had violated the Clean Water Act. Id. at 40a.

The court also stated that “the EPA’s collection of evi-

dence in support of the government’s charges is sus-

pect,” ibid.; that “(t]he defendants’ humiliation at being

criminally prosecuted was intensified” by a government

press release announcing the indictment, id. at 41a; and

that the court was “troubled by the government’s

1 The district court held that Mr. Knott’s net worth exceeded

the eligibility limit set forth in EAJA, 28 U.S.C. 2412(d\(1)(C)(2)(B),

and that the EAJA limitation was applicable to Hyde Amendment

cases. Pet. App. 37a-38a. The court of appeals affirmed that rul-

: ing. Id. at 9a-12a. Mr. Knott has not sought review of that deter-

mination. See Pet. iii & n.1.

: 5

unnecessary harassment of defendants and their

employees during the November search,” ibid.

4. The court of appeals reversed the award of fees to

petitioner. Pet. App. 1a-29a.

After analyzing the text and history of the Hyde

Amendment, as well as relevant decisions of other

circuits, the court of appeals held that

a determination that a prosecution was “vexatious”

for the purposes of the Hyde Amendment requires

both a showing that the criminal case was objec-

tively deficient, in that it lacked either legal merit or

factual foundation, and a showing that the govern-

ment’s conduct, when viewed objectively, manifests

maliciousness or an intent to harass or annoy.

Pet. App. 15a. The court rejected petitioner’s conten-

tion “that ‘vexatious’ conduct can be shown simply by

showing that the charges brought by the United States

were ultimately determined to be without either

evidentiary or legal foundation.” Jbid. The court

acknowledged that a defendant might be entitled to a

Hyde Amendment award “if the government pursued a

position so obviously-wrong that no reasonable prosecu-

tor could have supported it.” Ibid. The court stated,

however, that “[w]ithout a finding of bad faith or

improper motive, * * * sucha prosecution would more

appropriately be deemed ‘frivolous’ than ‘vexatious.’”

Id. at 15a-16a. .

In this case, the court of appeals considered the

instances of alleged prosecutorial overreaching dis-

cussed by the district court and found that the evidence

did not support an inference of governmental malice or

intent to harass or annoy. Pet. App. 18a-24a. The court

further held that the district court had committed

“clear error” in finding that the government lacked

6 x

“credible evidence” of a Clean Water Act violation. Id.

at 24a. The court explained that “(t]he EPA had ample

reason to initiate an investigation” in light of the

anonymous tip it had received. Ibid. The court added

that the evidence obtained in the course of the

investigation “confirmed that the pretreatment system

had been out of operation for several months and that

Knott was aware that it was not functioning.” Id. at

24a-25a. The court also found that “in concluding that

the prosecution lacked ‘any credible evidence [of a

Clean Water Act violation],’ the district court errone-

ously discounted all the evidence that it had sup-

pressed.” Jd. at 27a. The court explained that “[t]he

government was entitled to rely on its evidence so long

as it had a good-faith basis for contending that the

evidence was admissible,” and that “(t]he suppression

issue presented here was not so clear cut as to deprive

the prosecution of a reasonable basis for believing that

its evidence was admissible.” Jbid. Finally, the court

observed that “even after the suppression ruling, there

remained an adequate evidentiary foundation for the

prosecution, at least as concerns the second count,”

based on the evidence obtained during the November 7

search. Ibid.; see id. at 28a (“Although the EPA ulti-

mately concluded that it would not proceed, there

remained credible evidence to support a stharmonerr ”),

The court of appeals concluded:

Since the EPA had a reasonably sufficient eviden-

tiary basis upon which to pursue charges against the

defendants, both before and even after the

suppression ruling, and absent any finding or reason

to believe that the government acted either out of

malice or with any intent to harass or annoy, the fee

7

award to [petitioner] constituted an abuse of dis-

cretion.

Pet. App. 28a.

- ARGUMENT

Petitioner. contends (Pet. 8-18) that the courts of

appeals are in conflict on the meaning c* the term

“vexatious” in the Hyde Amendment, and that the

court of appeals’ application of the Hyde Amendment in

this case warrants this Court’s review. Although the

courts of appeals have articulated somewhat different

standards in defining the Hyde Amendment term

“vexatious,” those verbal distinctions are unlikely to

affect the outcome of a significant number of cases. The

court of appeals correctly declined to award fees here,

and there is no reason to believe that petitioner would

have been awarded fees if this case had arisen in

another circuit. Further review is not warranted.

1. As petitioner points out (Pet. 1 courts of

appeals in discussing the Hyde Amendment standard

have quoted a dictionary definition of “vexatious” as

“without reasonable or probable cause or excuse.” See

United States v. True, 250 F.3d 410, 423 (6th Cir. 2001);

United States v. Adkinson, 247 F.3d 1289, 1291 (11th

Cir. 2001); In re 1997 Grand Jury, 215 F.3d 4380, 486

(4th Cir. 2000); United States v. Gilbert, 198 F.3d 1293,

1298 (11th Cir. 1999).? The court of appeals in this case

2 Petitioner also cites (Pet. 11-12) United States v. Sherburne,

249 F.3d 1121 (9th Cir. 2001), as adopting a “subjective malice stan-

dard” that the court of appeals in this case rejected. The court of

appeals in this case did “reject the approach of Sherburne to the

extent it suggests that such attention to subjective motivations is

required,” Pet. App. 17a, and instead framed the issue as “whether

the government’s conduct, when viewed objectively, manifests, or

8

concluded that “something more than simply an inade-

quate evidentiary foundation is required to demon-

strate that the prosecution was ‘vexatious’ within the

meaning of the Hyde Amendment—that is, some

finding of malice or improper motivation is required.”

Pet. App. 16a-17a.* For at least three related reasons,

however, that difference in the articulation of the

governing standard does not warrant this Court’s

review. |

a. In none of the cases on which petitioner relies did

the definition of “vexatious” dictate the result. In three

of the cases, the courts of appeals affirmed district

court judgments denying fees under the Hyde Amend-

ment. See True, 250 F.3d at 426; In re 1997 Grand

Jury, 215 F.3d at 437; Gilbert, 198 F.3d at 1305. And, as

the court of appeals noted in this case, the Gilbert court

assessed the prosecution’s conduct “in light of all three

elements that would support a Hyde Amendment

award simultaneously, so it is not entirely clear how the

court would apply ‘vexatious’ in isolation.” Pet. App.

is tantamount to, malice or an intent to harass or annoy,” ibid.

Since subjective intent is often proved inferentially from objective

circumstances, it is not clear that the approaches of the Ninth

Circuit and the First Circuit would differ in practice. In any event,

petitioner does not contend that it would benefit from application

of the Sherburne test, so this case would not be an appropriate

vehicle to resolve any differences on that score.

8 The court of appeals in this case relied in part on the same

source—Black’s Law Dictionary—from which the Sixth, Fourth,

and Eleventh Circuits had drawn their definition of the word

“vexatious.” The court of appeals noted, however, that in addition

to “without reasonable or probable cause or excuse,” Black’s Law

Dictionary includes “harassing” and “annoying” within its basic

definition of “vexatious,” and that it specifically defines the term

“vexatious suit” to mean a “lawsuit instituted maliciously and

without good cause.” Pet. App. 13a-14a.

9

16a n.5. The court in the fourth case concluded 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

precedent. The government’s litigating position in this

case was vexatious, frivolous, and taken in bad faith.”

Adkinson, 247 F.3d at 1298. Petitioner cites no case in

which an award of fees under the Hyde Amendment

has been based on a finding of “vexatious[ness]” alone.‘

b. The court of appeals in this case acknowledged

that “[i}t may be that if the government pursued a posi-

tion so obviously wrong that no reasonable prosecutor

could have supported it, the defendant would be

entitled to a fee award under the Hyde Amendment.”

Pet. App. 15a. The court explained, however, that

“(without a finding of bad faith or improper motive,

* * * such a prosecution would more appropriately be

deemed ‘frivolous’ than ‘vexatious.’” Jd. at 15a-16a. In

light of the First Circuit’s recognition that a prosecu-

tion’s entire lack of legal or factual merit may be a

sufficient basis for a Hyde Amendment fee award,

without regard to the motives of the prosecutor, the

question whether such a prosecution is “vexatious” as

well as “frivolous” is unlikely to have any meaningful

practical significance.

* Petitioner errs in suggesting (Pet. 12) that United States v.

Beeks, 266 F.3d 880, 883 (8th Cir. 2001) (per curiam), adopted

Gilbert's definition of “vexatious.” Beeks not only held that the

defendant there was ineligible for a fee award because he was not a

“prevailing party,” but also held that the defendant “is not able to

satisfy the three-pronged ‘vexatious, frivolous, or in bad faith’

standard, however defined.” Ibid. (emphasis added); id. at 883-884

(finding no “presecutorial misconduct” of any variety).

10

c. The court of appeals’ conclusion that “something

more than simply an inadequate evidentiary foundation

is required to demonstrate that the prosecution was

‘vexatious’” (Pet. App. 16a) was not essential to the

court’s ultimate disposition of the case. The court also

held that “the district court’s finding that there was no

‘credible evidence’ upon which to pursue charges was

clear error.” Jd. at 24a. The court of appeals explained

that in assessing the initial decision to bring criminal

- charges, the district court had erroneously failed to

consider evidence that the government reasonably

believed at that time to be admissible but that was

subsequently suppressed. Jd. at 27a. The court of

appeals further explained that “even after the suppres-

sion ruling, there remained an adequate evidentiary

foundation for the prosecution, at least as concerns the

second count.” Jbid. Because the court of appeals held

that petitioner was not entitled to a Hyde Amendment

award even under petitioner’s own proposed legal

standard, this case is an unsuitable vehicle for resolving

the interpretive question on which petitioner seeks

review.

2. Petitioner contends (Pet. 13-16) that the court of

appeals erred by reviewing the district court’s fee

award de novo rather than for abuse of discretion. That

claim lacks merit. The court of appeals concluded that

“the fee award to [petitioner] constituted an abuse of

discretion.” Pet. App. 28a. In support of its decision,

the court of appeals explained that (a) the district court

had employed a legally erroneous standard of “vexa-

tious[ness]}” (id. at 15a), and (b) “the district court’s

finding that there was no ‘credible evidence’ upon

which to pursue charges was clear error” (id. at 24a).

Contrary to petitioner’s suggestion (Pet. 16), the latter

determination did not rest on disagreement with any

11

“factual finding” of the district court. Rather, the court

of appeals explained that in various respects the district

court had misapprehended the legal significance of the

record evidence. See Pet. App. 24a-28a. The court’s

analysis was fully consistent with the applicable abuse-

of-discretion standard. Cf. Koon v. United States, 518

U.S. 81, 100 (1996) (“A district court by definition

abuses its discretion when it makes an error of law.”);

Cooter & Gell v. Hartmarz Corp., 496 U.S. 384, 405

(1990) (“A district court would necessarily abuse its

discretion if it based its ruling on an erroneous view of

the law or on a clearly erroneous assessment of the

evidence.”).

8. The court of appeals held that a criminal prosecu-

tion is “vexatious” within the meaning of the Hyde

Amendment only if “the criminal case was objectively

deficient, in that it lacked either legal merit or factual

foundation, and * * * the government’s conduct, when

viewed objectively, manifests maliciousness or an

intent to harass or annoy.” Pet. App. 15a. Petitioner

contends (Pet. 16-18) that the court of appeals should

have remanded the case to afford the district court an

opportunity to determine whether the second prong of

that test—#.e., proof of governmental malice or intent to

harass or annoy—is satisfied here. A remand to ad-

dress that issue would have been pointless, however, in

light of petitioner’s “failure to meet the first part of the

test of vexatiousness: that the government’s suit lacked

either legal merit or factual foundation.” Pet. App. 24a;

see id. at 24a-28a. The court of appeals therefore acted

properly in directing the district court to dismiss

petitioner’s fee application. See id. at 28a.

12

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

THEODORE B. OLSON

Solicitor General

JOHN C. CRUDEN

Acting Assistant Attorney

General

GREER S. GOLDMAN

JOHN L. SMELTZER

STEPHANIE TAI

Attorneys

DECEMBER 2001