07-0715-cr(L)
USA v. Bell (Brumer)


 1                        UNITED STATES COURT OF APPEALS
 2
 3                            FOR THE SECOND CIRCUIT
 4
 5                              August Term, 2007
 6
 7
 8    (Argued: May 29, 2008                     Decided: June 10, 2008)
 9
10                Docket No. 07-0715-cr(L), 07-0716-cr(con)
11
12    - - - - - - - - - - - - - - - - - - - -X
13
14    UNITED STATES OF AMERICA,
15
16                Appellee,
17
18                - v.-
19
20    MICHAEL BRUMER AND LAWRENCE KLEIN
21             Defendants-Appellants
22
23    - - - - - - - - - - - - - - - - - - - -X
24

25          Before:    JACOBS, Chief Judge, CALABRESI and SACK,
26                     Circuit Judges.
27
28          Appeal from judgments of conviction following guilty

29    pleas.    Defendants argue that they are entitled to withdraw

30    their pleas because the government breached the plea

31    agreements and because of procedural defects in the

32    acceptance of the pleas.       Defendant Klein also argues that

33    he was denied his Sixth Amendment right to counsel when the

34    district court refused to allow him to substitute counsel.

35    For the following reasons, we affirm.
 1                              JOHN W. MITCHELL, New York, NY,
 2                              for Defendants-Appellants.
 3
 4                              ROBIN W. MOREY, Assistant United
 5                              States Attorney (Marcus A.
 6                              Asner, Celeste L. Koeleveld,
 7                              Assistant United States
 8                              Attorneys, on the brief), for
 9                              Michael J. Garcia, United States
10                              Attorney for the Southern
11                              District of New York, New York,
12                              NY, for Appellee.
13
14   PER CURIAM:

15       Michael Brumer and Lawrence Klein appeal from judgments

16   entered in the United States District Court for the Southern

17   District of New York (Wood, J.) on January 12, 2007,

18   convicting them, after guilty pleas, of conspiracy to commit

19   mail fraud, health care fraud and making false statements

20   relating to health care matters, in violation of 18 U.S.C.

21   §§ 371, 1341, 1347 and 1035; health care fraud, in violation

22   of 18 U.S.C. §§ 1347 and 2; and conspiracy to violate the

23   Medicare anti-kickback statute, 42 U.S.C. §§ 1320a-7b(b)(1)

24   and 1320a-7b(b)(2), in violation of 18 U.S.C. § 371.

25                                    I.

26       On appeal, defendants seek to withdraw their guilty

27   pleas principally on the ground that the government breached

28   the plea agreements’ provision requiring the parties to

29   forbear from offering certain sentencing arguments.    The

30   government argued for sentence enhancements based on

31   vulnerable victims and use of mass marketing, but claims it

                                  2
1    did so only in response to a breach by defendants, who

2    sought a Fatico hearing on the intended loss amount.       We

3    review plea agreements de novo and in accordance with

4    principles of contract law.     United States v. Griffin, 510

5    F.3d 354, 360 (2d Cir. 2007).       “To determine whether a plea

6    agreement has been breached, we ‘look[] to the reasonable

7    understanding of the parties as to the terms of the

8    agreement.’”   United States v. Riera, 298 F.3d 128, 133 (2d

9    Cir. 2002) (quoting United States v. Colon, 220 F.3d 48, 51

10   (2d Cir. 2000).   “When the Government breaches a plea

11   agreement, the defendant is entitled to either withdraw his

12   plea or have his agreement specifically performed.”       United

13   States v. Cimino, 381 F.3d 124, 127 (2d Cir. 2004).

14       The plea agreements provided that “neither party will

15   seek [a downward or an upward] departure or seek any

16   adjustment not set forth herein.       Nor will either party

17   suggest that the Probation Department consider such a

18   departure or adjustment, or suggest that the Court sua

19   sponte consider such a departure or adjustment.”       As a

20   result of developments arising out of the trial of Brumer’s

21   and Klein’s co-defendants, the government offered to reduce

22   the intended loss amount from the range set forth in

23   Brumer’s and Klein’s plea agreements ($10 million to $20

24   million) to $5 million to $10 million.       In so doing, the


                                     3
1    government conducted itself in a way that reflected a

2    commitment to a fair outcome; its offer to amend the plea

3    agreements to benefit defendants was not a material breach

4    of those agreements.    See New Windsor Volunteer Ambulance

5    Corps, Inc., v. Meyers, 442 F.3d 101, 117 (2d Cir. 2006)

6    (quoting Callanan v. Powers, 199 N.Y. 268, 284, 92 N.E. 747,

7    752 (1910), for the proposition that a breach is material

8    only if it is “‘so substantial and fundamental as to

9    strongly tend to defeat the object of the parties in making

10   the contract.”).

11       Brumer and Klein rejected the offer to amend the plea

12   agreements, advised the district court that the intended

13   loss amount was in dispute, and thereafter requested (and

14   obtained) a Fatico hearing on that issue.    At the Fatico

15   hearing, the government lost the benefit of its bargain by

16   being put to its proof.    The result was a significantly

17   lower loss amount with a corresponding impact on the

18   ultimate sentence.     Defendants thus materially breached the

19   plea agreements, and having done so, relieved the government

20   of its obligations to comply with them.     See United States

21   v. Byrd, 413 F.3d 249, 251 (2d Cir. 2005) (per curiam)

22   (“When the defendant is the party in breach, the government

23   is entitled to specific performance of the plea agreement or

24   to be relieved of its obligations under it.”).


                                     4
1        The government was within its rights to treat the plea

2    agreements as unenforceable following the defendants’

3    material breach, and specifically to seek sentence

4    enhancements other than those stipulated.   See Cimino, 381

5    F.3d at 128 & n.3 (concluding that defendant’s breach of

6    sentence advocacy prohibition gave government the option of

7    canceling plea agreement or being excused from its

8    reciprocal obligations); see also United States v. El-Gheur,

9    201 F.3d 90, 93-94 (2d Cir. 2000) (holding that defendant’s

10   breach of cooperation agreement absolved the government of

11   obligation to move for downward departure pursuant to

12   U.S.S.G. § 5K1.1); United States v. Merritt, 988 F.2d 1298,

13   1313 (2d Cir. 1993) (“[A] defendant who materially breaches

14   a plea agreement may not claim its benefits.” (citations

15   omitted)).   Under the circumstances of this case, the

16   government’s sentence advocacy in contradiction of the plea

17   agreements did not entitle defendants to withdraw their

18   pleas.

19       The district court reached the same conclusion by a

20   different route.   The district court ruled that defendants’

21   request for a Fatico hearing was not a breach, and that the

22   government’s sentence advocacy, if in breach, was moot

23   because the court did not consider it.   As a result, the

24   district court imposed a sentence that relied on the lower


                                   5
1    loss amount established at the Fatico hearing.   The

2    government has not appealed the district court’s ruling on

3    breach, and therefore does not seek specific performance of

4    defendants’ obligations under the plea agreements.

5    Accordingly, although we disagree with the district court’s

6    ruling on breach, we affirm the convictions and sentences

7    imposed.

8                                     II

9        Brumer and Klein further argue they are entitled to

10   withdraw their pleas because of procedural defects in the

11   acceptance of their pleas, which were conducted by a

12   magistrate judge with defendants’ consent.

13       First, defendants argue that the district judge erred

14   when, outside their presence, she reviewed their plea

15   allocutions and signed the orders accepting those pleas.

16   Section 636(b)(3) of the Federal Magistrates Act permits

17   defendants to consent (as these defendant did) to entry of

18   their guilty pleas in front of a magistrate judge.     See 28

19   U.S.C. § 636(b)(3) (permitting assignment of “such

20   additional duties as are not inconsistent with the

21   Constitution and laws of the United States”); see also

22   United States v. Williams, 23 F.3d 629, 632-34 (2d Cir.

23   1994) (holding that Magistrates Act authorizes district

24   court to refer plea allocution to magistrate provided
                                  6
1    defendant consents).   Defendants do not dispute that the

2    magistrate judge’s conduct of their plea allocutions

3    satisfied the requirements of Fed. R. Crim. P. 11(c).

4    Having consented to this procedure, defendants were not

5    entitled to be present when the district judge reviewed the

6    allocution transcripts and signed the orders accepting the

7    pleas.   See United States v. Jones, 381 F.3d 114, 122 (2d

8    Cir. 2004) (right to be present “is triggered only when the

9    defendant’s ‘presence has a relation, reasonably

10   substantial, to the fullness of his opportunity to defend

11   against the charge,’ and there is no constitutional right to

12   be present ‘when presence would be useless, or the benefit

13   but a shadow’” (quoting Snyder v. Massachusetts, 291 U.S.

14   97, 105-07 (1934))).

15       Second, defendants argue that the district court

16   neglected the procedures of 28 U.S.C. § 636(b)(1) and

17   (b)(1)(C), which require, inter alia, filing of proposed

18   findings and recommendations with the court, mailing a copy

19   to all parties, and providing ten days for written

20   objections.   However, these requirements apply only to

21   delegations to a magistrate judge pursuant to § 636(b)(1).

22   There are no similar requirements set forth under

23   § 636(b)(3), and there is no basis for judicially engrafting

24   such requirements onto that subsection.   See Minetti v. Port
                                   7
1    of Seattle, 152 F.3d 1113, 1114 (9th Cir. 1998) (per curiam)

2    (holding that § 636(b)(3) “does not require the magistrate

3    judge to submit proposed findings and recommendations” and

4    “does not provide a party with ten days to file written

5    objections with the district court”).

6                                       III

7        Klein argues that his Sixth Amendment right to counsel

8    was violated when the district court refused to allow him to

9    substitute retained counsel.

10       “While a defendant has a right to counsel of his choice

11   under the Sixth Amendment, it is not an absolute right.

12   Absent a conflict of interest, a defendant in a criminal

13   case does not have the unfettered right to retain new

14   counsel . . . .”   United States v. Paone, 782 F.2d 386, 392

15   (2d Cir. 1986) (citations omitted).      “In determining whether

16   to allow a defendant to retain new counsel, the court must

17   consider . . . the risks and problems associated with the

18   delay, and whether substitutions would disrupt the

19   proceedings and the administration of justice.”     Id.; see

20   United States v. Llanes, 374 F.2d 712, 717 (2d Cir. 1967)

21   ("Judges must be vigilant that requests for appointment of a

22   new attorney . . . should not become a vehicle for achieving

23   delay.").

24       In May 2006--six years after the indictment in this
                                    8
1    case and four years after the guilty pleas--Klein sought to

2    replace his sixth attorney with a seventh.    The district

3    court properly weighed the delay and inefficiency that might

4    ensue and disallowed formal substitution, while permitting

5    new counsel to participate in the proceedings.   In

6    particular, the district court was concerned that without

7    the involvement of previous counsel, a new lawyer would seek

8    to extend the briefing schedule and would repeat arguments

9    previously heard and rejected.    We affirm that the district

10   court’s ruling was well within its discretion.   See United

11   States v. Simeonov, 252 F.3d 238, 241 (2d Cir. 2001)

12   (reviewing denial of request to substitute for abuse of

13   discretion).

14       Klein contends on appeal that the district court erred

15   by referencing a four-factor test from United States v. John

16   Doe No. 1, 272 F.3d 116, 122-23 (2d Cir. 2001), which he

17   argues applies only to substitutions of appointed counsel,

18   no personally retained counsel.   From our reading of the

19   transcript, however, it is clear that the district court

20   looked to the John Doe No. 1 factors only after determining

21   that allowing the substitution would cause substantial delay

22   and inefficiency.   Thus, only as a secondary inquiry did the

23   district court assess whether the conflict between Klein and

24   his then-current counsel “was so great that it resulted in a
                                   9
1    total lack of communication preventing an adequate defense,”

2    id. at 122 (internal quotation marks omitted), to ensure

3    that any conflict was not interfering with effective

4    representation.   Although delay is generally a valid reason

5    to deny a motion to substitute counsel, it is not

6    necessarily valid where counsel is shown to be providing

7    constitutionally ineffective representation.   Cf. Daniels v.

8    Woodford, 428 F.3d 1181, 1200 (9th Cir. 2005) (“Even if the

9    trial court becomes aware of a conflict on the eve of trial,

10   a motion to substitute counsel is timely if the conflict is

11   serious enough to justify the delay.”).

12       We also conclude that United States v. Gonzalez-Lopez,

13   548 U.S. 140 (2006), does not require a different result.

14   In that case, the government conceded that the district

15   court erred in refusing to allow the defendant to substitute

16   counsel, and in barring the proposed new counsel from any

17   contact with the defendant.   At issue was only whether the

18   ruling violated the defendant’s Sixth Amendment right to

19   counsel in the absence of a finding of ineffectiveness, or

20   prejudice to the defendant.   The Court held that “[w]here

21   the right to be assisted by counsel of one’s choice is

22   wrongly denied, . . . it is unnecessary to conduct an

23   ineffectiveness or prejudice inquiry to establish a Sixth

24   Amendment violation.”   Id. at 148.
                                   10
1        At the same time, the Supreme Court cautioned that the

2    right to counsel of choice is not absolute, and is limited

3    by “the authority of trial courts to establish criteria for

4    admitting lawyers to argue before them.”   Id. at 151.    The

5    Court “recognized a trial court’s wide latitude in balancing

6    the right to counsel of choice against the needs of

7    fairness, and against the demands of its calender,” id. at

8    152, and upheld a trial court’s “power to enforce rules or

9    adhere to practices that determine which attorneys may

10   appear before it, or to make scheduling and other decisions

11   that effectively exclude a defendant’s first choice of

12   counsel,” id..   The district court here did not exceed the

13   latitude afforded it under Gonzalez-Lopez when the court

14   struck the balance in favor of retaining Klein’s sixth

15   lawyer while permitting the seventh to participate.

16

17       For the foregoing reasons, the order of the district

18   court is affirmed.   The mandate shall issue forthwith.




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