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For the second time in little more than a month, the 9th U.S. Circuit Court of Appeals has knocked the U.S. Attorney’s Office in San Francisco for being overly zealous in court. In a Monday decision, a divided three-judge panel held the office liable for $57,000 in fees for pursuing a forfeiture action when it should have known it had no case — even though it took a reversal by an earlier 9th Circuit panel for the government to lose. “In light of … well-established principles, from the time of the foreclosure on the government’s position was without merit and not substantially justified,” wrote Judge Diarmuid O’Scannlain. He was joined by 7th Circuit Senior Judge Harlington Wood Jr., sitting by designation. In dissent, Judge Alex Kozinski said U.S. v. 2659 Roundhill Drive, 02 C.D.O.S. 2456, makes it more likely that the government will be writing a check every time it loses. “After today’s ruling, it’s hard to imagine a case where the government will not have to pay fees after losing. The district court adopted the government’s position, and we reversed only after noting that there was no case directly on point,” Kozinski wrote. “If that’s not substantial justification, what is?” The government had prevailed in the case once, before U.S. District Judge D. Lowell Jensen of the Northern District of California. After the 9th Circuit reversed him, Jensen awarded the defendants their attorney fees under the Equal Access to Justice Act, prompting the second appeal. Under the act, prosecutors can be held liable for defense fees when they pursue cases without “substantial justification.” Monday’s case stems from what is called the “arrest” — akin to a seizure — of an Alamo, Calif., home the government alleged was bought with drug money. At one point, the owners of the home had taken out a loan using the house as collateral. The government gave the bank permission to conduct a foreclosure sale, and in 1995 a group of investors bought the house during an auction on the steps of a Contra Costa County, Calif., courthouse. But the U.S. Attorney’s Office claimed it still had an interest in the house. In the earlier 9th Circuit case, the court held that under California law, the title given the new owners dates back to the date of the bank loan, wiping out any claim the government had on the property. On remand, the investors, represented by Oakland, Calif., solo Dena Thaler, asked Jensen for attorney fees, which he granted. She argued that under U.S. Supreme Court precedent, state law applies in forfeiture actions and that California law is unambiguous on the merits of the case. “It was always our position that [the prosecutors] were not substantially justified,” Thaler said. Last month, the 9th Circuit overturned a conviction after ruling that a federal prosecutor overstepped his bounds during closing arguments.

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