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ASSOCIATION OF AMERICAN PHYSICIANS & SURGS.

December 18, 1997

ASSOCIATION OF AMERICAN PHYSICIANS AND SURGEONS, INC, et al., Plaintiffs,
v.
HILLARY RODHAM CLINTON, et al., Defendants.



The opinion of the court was delivered by: LAMBERTH

 This matter comes before the court for what is hopefully the final time, for a determination of sanctions and attorney's fees and costs sought by plaintiffs.

 There were three plaintiffs in this case. The Association of American Physicians and Surgeons, Inc. ("AAPS"), filed an application on January 5, 1995, for assessment of attorney's fees, costs, and sanctions, it had incurred pursuing this litigation in the amount of $ 374,070.14. AAPS noted, however, that $ 53,783.71 billed by previous counsel was still being disputed.

 AAPS claims to be the prevailing party in this litigation, and seeks fees and costs pursuant to the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412, arguing that the position of the United States was not substantially justified. EAJA sets a statutory cap on the hourly rate that the court may award in attorney's fees. AAPS also seeks fees and costs for what they allege is sanctionable bad faith conduct in this litigation by defendants and their counsel. The EAJA statutory hourly rate cap would not apply to fees awarded for bad faith conduct.

 Background of this Litigation

 This case was filed on February 24, 1993, regarding whether the President's Task Force on National Health Care Reform and its working groups were advisory committees for purposes of the Federal Advisory Committee Act. This court granted a preliminary injunction on March 10, 1993, finding that because the First Lady, Hillary Rodham Clinton, was not an officer or employee of the United States, the Task Force could not qualify for an exemption from the Federal Advisory Committee Act as an advisory group composed solely of "full-time officers or employees" of the government. As to the working group, this court concluded that it was engaged in fact-gathering and did not provide advice directly to the President, based on a sworn declaration dated March 3, 1993, by Ira C. Magaziner, Senior Advisor to President Clinton. See AAPS v. Clinton, 813 F. Supp. 82 (D.D.C. 1993). In response to an inquiry from the court in connection with the pending motion, defendants have advised the court that this Magaziner declaration was prepared by the White House Counsel's office, specifically by Stephen Neuwirth under guidance from Vincent Foster and Beth Nolan. The draft was revised, according to defendants, by Mr. Foster, Ms. Nolan, Mr. Magaziner and his staff at the White House. It was also reviewed by three attorneys in the Federal Programs Branch of the Justice Department's Civil Division, and by Associate Attorney General Webster Hubbell, before it was filed with this court, according to defendants.

 An expedited appeal was taken from this court's ruling, and the appeal was argued on April 30, 1993. On June 22, 1993, a majority of a panel of the Court of Appeals found that the First Lady is the "functional equivalent" of a full-time federal officer or employee and that the Task Force was therefore exempt from the Federal Advisory Committee Act. As to the working group, the Court of Appeals found the record insufficient to determine whether FACA applied, and remanded for further proceedings, including expedited discovery, regarding the working group. See AAPS v. Clinton, 302 U.S. App. D.C. 208, 997 F.2d 898 (D.C. Cir. 1993).

 Discovery thereafter was difficult, drawn-out, and contentious. In September, 1993, plaintiffs filed a motion to compel, which this court granted on November 9, 1993. This court found the government's discovery tactics were sanctionable, noting that certain responses were "preposterous," "incomplete," and "inadequate," and that defendants' objections were "meritless." Finding that defendants had "improperly thwarted plaintiffs' legitimate discovery requests," this court granted the motion to compel and ordered defendants to pay plaintiffs' costs and attorney's fees for the motion. See 837 F. Supp. 454 (D.D.C. 1993). The defendants thereafter produced a great deal of information, but they still took no steps to correct Mr. Magaziner's sworn declaration that all working group members were federal employees.

 Once discovery was completed, plaintiffs filed a motion for summary judgment on March 23, 1994. They listed the names of several hundred individuals they claimed were members of the working group who were not government employees. The defendants filed a cross-motion for summary judgment on May 4, 1994, and as the United States Attorney later pointed out, the government said in a footnote, for the first time since the remand from the Court of Appeals, that it was not relying on the all-employee exception to the Federal Advisory Committee Act. The defendants then argued that the working group was so massive, fluid, and disorganized, that it lacked the structure, organization, and fixed membership that are essential to a FACA committee.

 Plaintiffs responded with a motion on May 16, 1994, for sanctions and for contempt against Ira Magaziner.

 On July 25, 1994, after a hearing, this court reserved ruling on the motion for contempt, and denied both motions for summary judgment and set the case for trial.

 After settlement efforts failed, the defendants decided to moot the case by voluntarily releasing to the public all of the working group documents. Eventually, by Order of December 21, 1994, this court declared the case moot, and found the question of civil contempt of Mr. Magaziner to also be moot.

 The court, however, indicated that the question of whether Mr. Magaziner should be held in criminal contempt of court for possible perjury and/or making a false statement when he signed his sworn declaration to this court on March 3, 1993, should be investigated by the United States Attorney for the District of Columbia.

 On January 25, 1995, this court stayed consideration of attorney's fees and sanctions in this case pending resolution of the criminal contempt referral to the United States Attorney.

 The United States Attorney's Report

 United States Attorney Eric H. Holder, Jr., reported to the court that his investigation, carried out with the assistance of the Federal Bureau of Investigation, had included interviews of 35 witnesses, including former Associate Attorney General Webster Hubbell, former White House Counsel Bernard Nussbaum, and other current and former attorneys and others from the White House, the Department of Justice, and the working group, as well as the review of thousands of documents from the White House, the Justice Department, and elsewhere. The United States Attorney also conducted a five-hour interview of Mr. Magaziner, and reviewed a written submission by Mr. Magaziner's attorney, Charles F. C. Ruff.

 The court filed the United States Attorney's report on August 4, 1995, and announced that the criminal investigation initiated by the court was now closed. The court vacated its stay of consideration of attorney's fees and sanctions, and set a status conference to schedule further proceedings. At the status conference, the court raised a number of questions which it directed the defendants to address, and defendants did so by memorandum filed October 5, 1995. In the meantime, by letter dated August 30, 1995, the United States Attorney sought to "clarify" his earlier letter, and this letter was filed by the court on September 1, 1995.

 The United States Attorney noted the court's observation at the status conference that the thrust of his prior letter had been that "the government and the government's lawyers have misled or misrepresented facts to the court." The United States Attorney sought to clarify that he had not intended to imply that he had found a willful or deliberate attempt to mislead the court. (Emphasis supplied). He stated that "several mistakes or missteps by government counsel, coupled with certain aggressive or strained positions taken during discovery, led to the problems and concerns surrounding Mr. Magaziner's declaration." He noted that any misleading of the court "was the result not of any design to mislead the court, but rather of a combination of oversights, tactical misjudgments, and aggressive -- perhaps, in hind sight, overly so -- advocacy in the context of a hard-fought civil litigation." He went on to note that the key words in the Magaziner declaration -- such as "member," "consultant," and "special government employee" -- were not the sort of terms that could be proven true or false, or that could support a perjury prosecution. Nevertheless, as the United States Attorney recognized, the court must make its own determination regarding the appropriateness of sanctions. While the evidence need not include proof beyond a reasonable doubt, the court finds clear and convincing evidence that sanctions should be imposed because of the government's misconduct in this case.

 On the question of the truthfulness of the Magaziner declaration, the United States Attorney reported that the "declaration as drafted clearly implies that consultants are a category completely distinct from that of special government employees." He further observed that the "terms used in the declaration were used loosely and inconsistently among and between the different agencies, and not everyone agreed in their definitions." The court concludes that Mr. Magaziner and his staff and the government's lawyers were not so blind and uninformed that they did not know those facts when the declaration was filed with the court. As the United States Attorney found, "There were people from outside the government doing what appeared to be volunteer work and filling out no employment paperwork, yet being classified as employees for purposes of the litigation." It is beyond a "strained interpretation," it is dishonest to argue to this court that people are employees when there was never a piece of paper created that said they were employees -- with or without pay.

 The court accepts the United States Attorney's determination that there is not proof beyond a reasonable doubt that Mr. Magaziner intended to mislead the court when he signed his declaration on March 3, 1993. Nevertheless, the court is convinced that Mr. Magaziner, and the drafters of his declaration, in an effort to avoid discovery and block live testimony, improperly represented as a fact that all "members" of the working group were federal employees. That "fact" was not true, then or later, by any reasonable definition of the word "member". The basic problem that defendants still fail to recognize is that defendants never sought to correct or change this factual representation to the court until the summary judgment briefing. To say that the government did not really rely on that "fact", when it presented that "fact" to the court and never timely corrected it, is simply dishonest. Indeed, the government never sought to timely advise this court that it was not making the "all-employee" argument attributed to the government by the Court of Appeals and by plaintiffs. Indeed, as the United States Attorney reported, the government itself in its response to the contempt motion stated that it had in fact made the "all-employee" argument a year earlier, and then never corrected this alleged error in which it conceded that it had made the argument that it now claims it never made. Defendants now lamely claim that these were new government counsel who incorrectly conceded this. The court concludes that fresh government counsel looked at the record and concluded exactly what this court had concluded -- along with plaintiffs' counsel and the Court of Appeals -- and exactly what defendants had wanted this court to conclude all along, that the government was seeking the "all-employee" exemption for the working group.

 The United States Attorney noted that the "government's papers in the District Court and in its reply brief in the circuit contains a few references to the working group being comprised solely of federal employees. In neither forum, however, did the government expressly argue that the working group was a body that should be exempt from the Advisory Committee Act based solely on the all-employee exception." This court cannot accept that distinction. The government provided the all-employee facts to the court as a truthful statement of fact. It cannot now hide and say it never expressly argued that a consequence of that fact was that the all-employee exemption applied. After all, what was the point in providing that factual information to the court if it was not to have the court accept it as true and apply thereto the applicable law?

 The court also notes that in its discovery opinion issued on November 9, 1993, this court stated that one of the tasks it faced was to inquire into the "truth of the government's claim that all members of the working group are full-time officers or employees of the government." 837 F. Supp. at 456. Defendants never contemporaneously told this court that they had made no such claim. The government therefore cannot be said to have dealt with this court in good faith.

 The United States Attorney noted that when the government advised the court and plaintiffs for the first time in a footnote to their May 4, 1994, summary judgment memorandum, that they were not relying on the "all-employee" exemption, that the government viewed this as simply a tactical litigation judgment. They made no effort to correct or supplement any earlier filings with the court. The United States Attorney reported that the "confusion generated by the terms used in the [Magaziner] declaration was exacerbated by positions taken by the government during discovery." Significantly, the United States Attorney found that "attorneys in the White House, however, appear to have been reluctant to file a supplemental declaration, or anything else that might suggest that the declaration, although accurate when filed, was no longer a complete description of the working group process." This failure to correct the record is clear evidence of the government's lack of good faith in dealing with the court and with plaintiffs' counsel. Indeed, the United States Attorney reported that the government then "persisted in an attempt to go back after the fact and make everyone who had been involved in the working group 'fit' into the original categories of the declaration." As the United States Attorney correctly concluded, this only led to the "strained interpretations" that were "ultimately unconvincing." This court finds they were more than unconvincing, they were untrue.

 The United States Attorney noted that in a criminal case the government would have to prove beyond a reasonable doubt that Mr. Magaziner knew that the statements in his March 3, 1993, declaration were false when he made them, and that he intended to deceive the court. It is clear that Mr. Magaziner relied upon the advice of White House attorneys -- including Vincent Foster, who is deceased and could not now testify as to any advice -- and Associate Attorney General Webster Hubbell -- now a convicted felon, whose credibility could be impeached. So the court cannot disagree with the assessment of the United States Attorney about the likelihood of a successful criminal prosecution. But the most outrageous conduct by the government in this case ...


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