United States v. Bove

888 F.3d 606

UNITED STATES of America, Appellee,

v.Gerald E. BOVE, Defendant-Appellant,Carl A. Larson, Michael J. Caggiano, Jeffrey C. Lennon, Gerald H. Franz, Jr., James L. Minter, III, Jeffrey A. Peterson, Kenneth Edbauer, George Dewald, Michael J. Eddy, Thomas Freedenberg, Mark N. Kirsch, Defendants.

No. 16-3848-cr

August Term 2017

United States Court of Appeals, Second Circuit.

Argued: December 6, 2017

Decided: April 26, 2018

Mary E. Fleming, Assistant United States Attorney (for James P. Kennedy, Jr., Acting United States Attorney), United States Attorney’s Office, Buffalo, NY, for Appellee.

Mark J. Mahoney, Harrington & Mahoney, Buffalo, NY, for Defendant-Appellant.

Before: Cabranes, Livingston, and Carney, Circuit Judges.

José A. Cabranes, Circuit Judge:

The question in this case is whether the United States District Court for the Western District of New York (William M. Skretny, Judge ) properly denied Defendant-Appellant’s motion for attorney’s fees and other litigation expenses pursuant to the Hyde Amendment of 1997. We answer the question in the affirmative and therefore AFFIRM the District Court’s Decision and Order of November 7, 2016.

I. BACKGROUND

Defendant-Appellant Gerald E. Bove ("Bove") appeals the District Court’s Decision and Order of November 7, 2016 denying his application for reimbursement of attorney’s fees and other litigation expenses pursuant to the Hyde Amendment. Bove submitted his application after being acquitted by a jury of one count of attempted Hobbs Act extortion and one count of Hobbs Act extortion conspiracy in violation of 18 U.S.C. § 1951(a).

II. DISCUSSION

A. Standard of Review

Our Circuit has not yet decided the standard of review for Hyde Amendment appeals. Virtually all other circuits have held that the applicable standard is "abuse of discretion."¹

We join our sister circuits in holding that the standard of review applicable to the appeal of a district court’s denial of a defendant’s application for attorney’s fees and other litigation expenses pursuant to the Hyde Amendment is indeed abuse of discretion. We do so for the reasons given by the Fifth Circuit in United States v. Truesdale , 211 F.3d 898, 905–06 (5th Cir. 2000).

B. Merits

1. Law

The Hyde Amendment provides that a district court "may award to a prevailing [criminal defendant] ... 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."² Hyde Amendment 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."³

To construe the Hyde Amendment properly, we consider the ordinary meaning in context of "vexatious," "frivolous," and "in bad faith."⁴ We can look to the standard dictionaries for general orientation.⁵

• Vexatious : In a legal context, "vexatious" is used to describe an action "instituted without sufficient grounds for the purpose of causing trouble or annoyance to the defendant."⁶

• Frivolous : The word "frivolous," used to describe pleadings, is defined as "[m]anifestly insufficient or futile"⁷ —in other words, obviously lacking a "basis in law or fact."⁸

• In bad faith : An act is "in bad faith" if it is intentionally deceptive or dishonest. The Oxford English Dictionary refers to "faithlessness" and "treachery" in defining the term.⁹

These words are all used in the Hyde Amendment to qualify another term: "the position of the United States." We understand "position" to mean here the government’s general litigation stance: its reasons for bringing a prosecution, its characterization of the facts, and its legal arguments.¹⁰

Using these definitions, we can sketch out a provisional construction of the phrase "vexatious, frivolous, or in bad faith" along the following lines.¹¹ For the government’s position to be "vexatious, frivolous, or in bad faith," the prosecution must have been brought (a) to hector or intimidate the defendant on shaky factual or legal grounds (vexatious); (b) without even a reasonably arguable factual and legal basis (frivolous); or (c) with an element of intentional deceit or dishonesty (in bad faith).¹²

2. Analysis

Bove’s principal arguments in support of his application, all of which the District Court rejected, can be summarized under three headings: (a) that the legal theory of the prosecution was clearly erroneous; (b) that the prosecution’s evidence was insufficient; and (c) that the government committed misconduct.

a. Erroneous Legal Theory

Bove argues that the government’s case against him was "frivolous and vexatious"¹³ because the prosecution’s theory of the Hobbs Act was "contrary to clear law and [the District Court’s] rulings in the same case."¹⁴

The Hobbs Act prescribes criminal punishment for "[w]hoever ... obstructs, delays, or affects commerce ... by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section."¹⁵ Extortion, under the Hobbs Act, is "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right."¹⁶ In cases involving union activity, the conduct proscribed by the Hobbs Act includes the use of extortion "to exact ‘wage’ payments from employers in return for imposed, unwanted, superfluous and fictitious services of workers."¹⁷

The government’s unsuccessful prosecution of Bove relied on a novel theory of the Hobbs Act, derived mainly from language in United States v. Mulder .¹⁸ According to this theory, "unwanted, superfluous and fictitious" labor includes labor that an employer wants to be performed—and that is therefore not "superfluous"—but that he wants performed by nonunion workers instead of union workers. A person can thus violate the Hobbs Act under this theory by using extortion to "replac[e] non-union workers with union workers,"¹⁹ even when the labor at issue is not "unwanted, superfluous," or "fictitious."

The government’s position cannot have been vexatious. Vexatiousness requires some wrongful, harassing purpose; nothing in the record suggests to us that prosecutors adopted the theory for the purpose of vexing or harassing Bove.

Nor was the theory so baseless as to make the government’s position frivolous. No precedent had expressly adopted the government’s theory. But no precedent in our Circuit definitely foreclosed the theory either. A cursory reading of this Court’s opinion in Mulder arguably lends some support to the theory; the opinion discusses the replacement of some workers by others at the instigation of a labor organization.²⁰ The essential difference between Mulder and this case, however, is that in Mulder the employer had not wanted to hire either the original workers or their replacements. None of the workers in question was performing labor that the employer actually needed performed.

Bove is admittedly correct that the District Court eventually held the government’s theory to be an erroneous interpretation of the Hobbs Act. But the District Court drew this conclusion only in 2015, several years after the failed prosecution of Bove, in a decision concerning one of Bove’s codefendants.²¹ During the proceedings against Bove, the District Court instead considered and denied Bove’s motion to dismiss the indictment on the ground that the government’s theory was erroneous.²²

We note, furthermore, the District Court’s finding that the government’s theory was approved both by superiors within the United States Attorney’s Office for the Western District of New York and by labor racketeering experts at the Criminal Division of the United States Department of Justice.²³

Under these circumstances—no controlling precedent definitely foreclosed the government’s theory, and some language in our case law arguably supported it;²⁴ the District Court considered and originally rejected a challenge to the theory; and the prosecution consulted with informed superiors, including with experts in the relevant area of law—the theory of prosecution cannot have made the government’s position frivolous. An arguable theory is not a frivolous theory.

b. Insufficient Evidence

Bove also argues that the government’s position was in "bad faith"²⁵ because the prosecution’s evidence was insufficient. The government’s "only"²⁶ evidence against him, he says, was the grand jury testimony of witness Phillip Hale that contradicted Hale’s earlier statements to investigators. According to Bove, the government thus knew or should have known that that testimony was "not credible."²⁷

We held in United States v. Schneider that a prosecution is not vexatious, frivolous, or in bad faith simply because a witness whose testimony directly inculpates the defendant is arguably not credible.²⁸ This case falls under that holding. Hale’s credibility was a matter for the jury. To support his claim that Hale’s testimony was not credible, Bove alleged in the District Court that Hale had made two earlier statements that contradicted his grand jury testimony. The government, for its part, opposed the Hyde Amendment motion; it submitted an affidavit contesting Bove’s assertions that Hale’s testimony was inherently unreliable and that the testimony was the only evidence of Bove’s guilt.²⁹ Judged in light of Schneider , the District Court did not "abuse its discretion" by rejecting Bove’s claim on this point.³⁰

c. Prosecutorial Misconduct

Bove further argues that the government’s position was in "bad faith"³¹ and "vexatious"³² because of several alleged instances of prosecutorial misconduct.

One alleged instance is the government’s decision not to inform the grand jury of certain of Hale’s earlier statements that Bove says contradicted Hale’s grand jury testimony and...