United States v. Manzo, 712 F.3d 805 (3d Cir. 2013):

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 decision of the United States District Court for the District of New Jersey denying him such relief. For the following reasons, we will affirm.***

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).***

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, 347 U.S. App. D.C. 105 (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, 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 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.

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, 98 S. Ct. 2674, 57 L. Ed. 2d 667 (1978) (defining bad faith in the law enforcement context to include "reckless 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.