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United States of America v. Daniel Chapman

June 27, 2011

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
DANIEL CHAPMAN, SEAN FLANAGAN, AND HERBERT JACOBI, DEFENDANTS-APPELLANTS.



Appeal from the United States District Court for the District of Nevada James C. Mahan, District Judge, Presiding D.C. No. 2:03-CR-00347-JCM (PAL)

The opinion of the court was delivered by: Rosenthal, District Judge:

FOR PUBLICATION

OPINION

Argued and Submitted May 11, 2011-San Francisco, California

Before: Betty B. Fletcher and Sidney R. Thomas, Circuit Judges, and Lee H. Rosenthal, District Judge.*fn1

Opinion by Judge Rosenthal

OPINION

This is the second appeal arising from the failed prosecution of Daniel Chapman, Sean Flanagan, and Herbert Jacobi for securities and investment fraud. We previously upheld the district court's dismissal of the indictment with prejudice as a sanction for the government's failure to meet its disclosure obligations under Brady v. Maryland, 373 U.S. 83 (1963) and Giglio v. United States, 405 U.S. 150 (1972). In the previous appeal, we also affirmed the district court's refusal to award the defendants their attorneys' fees and costs under the Hyde Amendment. United States v. Chapman, 524 F.3d 1073, 1089 (9th Cir. 2008).*fn2 The Hyde Amendment issue is again before us.

The defendants moved in the district court to reopen under Federal Rule of Civil Procedure 60(b)(3). The motion is based on an internal government memorandum written shortly after the district court dismissed the indictment. The defendants obtained the memorandum after we decided the prior appeal. The district court denied the motion to reopen and this appeal followed. We conclude that the district court did not abuse its discretion in denying the appellants' Rule 60(b)(3) motion and affirm.

I. Background

Because the parties are familiar with the factual and procedural history, and because our prior opinion sets out the back- ground facts in detail, they are not repeated here. As the district court's rulings and our prior opinion make clear, the government's failures to meet its Brady and Giglio disclosure obligations amounted to flagrant prosecutorial misconduct that merited the sanction of dismissal with prejudice. The failures were revealed during the aborted trial when the government questioned prosecution witnesses about undisclosed prior convictions. The government initially contended that it had produced documents relating to the prior convictions, but, when the district court asked for evidence of such production, the government "abruptly changed course" and stated that "in an abundance of caution rather than find the record of what we turned over, we'll make another copy of everything right now and provide it to the defense counsel immediately." Chapman, 524 F.3d at 1078. The next day, the defendants' counsel alerted the district court that the government had just delivered hundreds of pages of previously undisclosed documents, "some 650 pages [consisting] of rap sheets, plea agreements, cooperation agreements, and other information related to numerous government witnesses, including at least three important witnesses whose testimony was already complete." Id. at 1079. After a hearing, the district court declared a mis-trial and dismissed the indictment with prejudice, stating that the government had acted "flagrantly, willfully, and in bad faith" in withholding impeachment documents. Id. at 1080. The district court denied the defendants' motion for fees and costs on the grounds that the defendants were not "prevailing parties" under the Hyde Amendment and there was no basis to conclude that the entire case against the defendants was "vexatious, frivolous, or in bad faith." Id. at 1088-89.

We affirmed both the dismissal and the denial of relief under the Hyde Amendment. We reasoned that although a dismissal with prejudice "materially alters the legal relationship of the parties . . . our cases have also required a prevailing party to have 'receive[d] at least some relief on the merits of his claim.' " Id. at 1089 (quoting United States v. Campbell, 291 F.3d 1169, 1172 (9th Cir. 2002)). Because the district court "never suggested that this prosecutorial misconduct was relevant to Defendants' guilt or innocence," and the dismissal "was purely intended to sanction the government's flagrant Brady/Giglio and procedural violations and the misrepresentations used to conceal those violations," we found that the defendants had not received relief on the merits and were not "prevailing parties" as required under the Hyde Amendment. Id. In a footnote, we added:

This is not to suggest that a dismissal for flagrant discovery violations could not, in other cases, constitute a sufficient judgment on the merits to bestow a defendant with "prevailing party" status. The legislative history of the Hyde Amendment makes clear that it was intended to protect against some types of disclosure violations. See 143 Cong. Rec. H7786, H7791 (daily ed. Sept. 24, 1997) (statement of Rep. Hyde) (noting that the amendment would apply when prosecutors "keep information from you that the law says they must disclose," when they "hide information," and when they "do not disclose exculpatory information to which you are entitled."). If documents were intentionally withheld to bolster the prosecution's case, that misconduct would be relevant to the defendant's innocence in that it would have a tendency to suggest weakness in the prosecution's case. Accordingly, a dismissal on those grounds could be a judgment on the merits for Hyde Amendment purposes. Otherwise, minor ...


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