Chen C. Wang Victoria R. Wang Eic Group, Inc., and United States of America v. James Horio

The issue before us is whether the government was substantially justified in taking the position that an undercover informant was not an employee.

I. FACTS

The United States challenges the award of attorney’s fees granted to Horio under the Equal Access to Justice Act, 28 U.S.C. § 2412 , for a petition for certification as a government employee brought under the Westfall Act, 28 U.S.C. § 2679 (d)(3).

Chen and Victoria Wang hired Horio as a financial consultant. During his employment he formed the opinion that the Wangs were violating tax laws. Horio approached a neighbor who worked for the Internal Revenue Service and offered his services as an informant. The IRS accepted, and on several occasions wired Horio so he could secretly tape conversations with the Wangs.

Horio’s principal contact at the IRS repeatedly told Horio that he was in no way considered a government employee. Horio was not compensated for any of the information given. But Horio’s IRS contact spoke with him several times each week. The IRS agent told Horio what questions to ask the Wangs, wired him with concealed devices to tape his conversations with the Wangs, and told Horio when and where to meet the…