FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 10-10338
Plaintiff-Appellee,
D.C. No.
v.
2:03-CR-00347-
DANIEL CHAPMAN, SEAN FLANAGAN, JCM (PAL)
and HERBERT JACOBI,
OPINION
Defendants-Appellants.
Appeal from the United States District Court
for the District of Nevada
James C. Mahan, District Judge, Presiding
Argued and Submitted
May 11, 2011—San Francisco, California
Filed June 27, 2011
Before: Betty B. Fletcher and Sidney R. Thomas,
Circuit Judges, and Lee H. Rosenthal, District Judge.*
Opinion by Judge Rosenthal
*The Honorable Lee H. Rosenthal, District Judge for the U.S. District
Court for Southern Texas, Houston, sitting by designation.
8701
UNITED STATES v. CHAPMAN 8703
COUNSEL
Daniel G. Chapman, pro se, for appellants Daniel G. Chap-
man, Sean P. Flanagan, and Herbert M. Jacobi.
Daniel G. Bogden, United States Attorney, Las Vegas,
Nevada; Robert L. Ellman, Assistant United States Attorney,
Las Vegas, Nevada, for appellee United States of America.
8704 UNITED STATES v. CHAPMAN
OPINION
ROSENTHAL, District Judge:
This is the second appeal arising from the failed prosecu-
tion 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).1 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 proce-
dural history, and because our prior opinion sets out the back-
1
The Hyde Amendment provides that in a privately defended criminal
case, the court “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 . . . .” Pub. L. No. 105-119, § 617, 111 Stat. 2440, 2519
(1997) (codified at 18 U.S.C. § 3006A Note).
UNITED STATES v. CHAPMAN 8705
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 fail-
ures were revealed during the aborted trial when the govern-
ment 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 docu-
ments, “some 650 pages [consisting] of rap sheets, plea agree-
ments, 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 dis-
missal 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
8706 UNITED STATES v. CHAPMAN
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 misrepresenta-
tions 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, consti-
tute a sufficient judgment on the merits to bestow a
defendant with “prevailing party” status. The legisla-
tive 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 excul-
patory information to which you are entitled.”). If
documents were intentionally withheld to bolster the
prosecution’s case, that misconduct would be rele-
vant to the defendant’s innocence in that it would
have a tendency to suggest weakness in the prosecu-
tion’s case. Accordingly, a dismissal on those
grounds could be a judgment on the merits for Hyde
Amendment purposes. Otherwise, minor discovery
violations would be relevant under the Hyde Amend-
ment, but major violations—those sufficient to
prompt dismissal of the indictment—would bar
relief. That question, however, is not squarely pres-
ented in this case, so we leave it for another day.
Id. at 1089 n.6.
The motion for relief under Rule 60(b)(3) at issue in the
present appeal is based on a memo the defendants received
UNITED STATES v. CHAPMAN 8707
from the IRS in response to a subpoena duces tecum issued
in a separate case. The memorandum was written by J. Wes-
ley Eddy, the Special Agent in Charge for the Las Vegas
office of the IRS’s Criminal Investigation Division, three days
after the district court dismissed the indictment against the
defendants (the “Eddy Memo”). The defendants contend that
the following language from the Eddy Memo shows that one
of the AUSAs intentionally withheld documents covered by
Brady or Giglio:
NCIC checks were done on the witnesses prior to the
original scheduled trial date, but the trial was contin-
ued and nothing turned over to the defense at that
point. Then, 2-3 days before the new trial date, the
decision was made that new NCIC runs needed to be
done so that they could be turned over to the
defense. This request was completed by the 2nd day
or so of the trial and turned over to AUSA Frayn.
At the start of the 2nd week of the trial, SA Payne
noticed that AUSA Frayn was still carrying around
the NCIC information. He asked her about this and
whether they had been turned over to the defense.
AUSA Frayn replied that AUSA Damm had decided
they weren’t going to be turned over, but that instead
the information they contained would be brought out
on the stand during direct. She added that she and
Damm had a disagreement about this decision.
The Eddy Memo also discusses other issues with the prosecu-
tion and trial and notes the conclusion by special agents
assigned to the case “that the underlying cause of these issues
was the failure of the AUSAs to devote sufficient time to trial
preparation.” The Eddy Memo was sent to the AUSA who
was the first-chair lawyer at the trial.
In the district court, the defendants urged the Eddy Memo
as the basis of their Rule 60(b)(3) motion to reopen the Hyde
8708 UNITED STATES v. CHAPMAN
Amendment fee and cost request. The defendants argued that
the Eddy Memo showed that the United States had committed
a fraud on the court by defending its failures to disclose as
unintentional. The defendants also argued that they should be
“deemed a prevailing party” because, in light of the Eddy
Memo, the dismissal of the indictment was a “judgment on
the merits” for the purpose of the Hyde Amendment claim.2
After a hearing, the district court denied the defendants’
motion. The district court found that the Eddy Memo simply
reaffirmed its prior conclusion about the nature and extent of
the prosecutorial misconduct. Considering the Eddy Memo
with the prior record, the district court stated that the govern-
ment’s discovery misconduct had been “sloppy” and “care-
less, negligent.” The court also stated that “[i]t certainly
wasn’t just innocent. It didn’t happen just innocently, but it
wasn’t intentional either, and I just don’t see this as fraud on
the court. I think it takes something more, something like—
and the Ninth Circuit alluded to this a little bit . . . we are not
going to turn over this evidence in order to gain some sort of
technical advantage, and I just don’t see that the Eddy
[M]emo establishes that.” The district court reached the same
conclusion it had reached before the Eddy Memo: the Brady
violations were “prosecutorial misconduct at the highest level,
but do not “go[ ] to the level of the defendants’ innocence.”
On this appeal, the defendants argue that the district court
abused its discretion in denying their motion to reopen under
Rule 60(b)(3).
2
The defendants emphasize the following representations during the
previous Hyde Amendment litigation: one AUSA told the district court
that “[the AUSA named in the Eddy Memo], in acting in this case did not
act intentionally, that his conduct does not rise to the level of being fla-
grant”; the government’s brief during the initial appeal characterized the
failures to meet discovery obligations as “not done intentionally”; and the
AUSA who had been sent the Eddy Memo stated during oral argument
that the failures to disclose were unintentional.
UNITED STATES v. CHAPMAN 8709
II. Analysis
[1] Rule 60(b)(3) allows a court, “on motion and just
terms,” to relieve a party . . . from a final judgment . . . for
the following reasons: fraud (whether previously called intrin-
sic or extrinsic), misrepresentation, or misconduct by an
opposing party.”3 Independent actions under Rule 60(b) are
available “only to prevent grave miscarriages of justice.”
United States v. Beggarly, 524 U.S. 38, 47 (1998). “Courts
possess the inherent power to vacate or amend a judgment
obtained by fraud on the court.” Dixon v. Comm’r, 316 F.3d
1041, 1046 (9th Cir. 2003) (citing Toscano v. Comm’r, 441
F.2d 930, 933 (9th Cir. 1971)). “[T]hat power is narrowly
construed, applying only to fraud that defiles the court or is
perpetrated by officers of the court. When we conclude that
the integrity of the judicial process has been harmed, how-
ever, and the fraud rises to the level of ‘an unconscionable
plan or scheme which is designed to improperly influence the
court in its decision,’ we not only can act, we should.” Id.
(quoting England v. Doyle, 281 F.2d 304, 309 (9th Cir.
1960)). We review a district court’s denial of a Rule 60(b)(3)
motion for abuse of discretion. De Saracho v. Custom Food
Machinery, Inc., 206 F.3d 874, 880 (9th Cir. 2000).
[2] The district court acted within its discretion in finding
that the Eddy Memo did not show fraud on the court or pro-
vide a basis to reopen the case to allow discovery into that
issue. Contrary to the defendants’ argument, the Eddy Memo
is not a revelation of new information about the discovery
misconduct during the trial or about the government’s subse-
quent statements about that misconduct. The district court
3
“A motion under Rule 60(b) must be made within a reasonable time—
and for reasons (1), (2), and (3) no more than a year after the entry of the
judgment.” FED. R. CIV. P. 60(d). Chapman filed his motion more than a
year after final judgment. However, Rule 60(d)(3) states that Rule 60 does
not limit a court’s power to “set aside judgment for fraud on the court.”
FED. R. CIV. P. 60(d)(3).
8710 UNITED STATES v. CHAPMAN
gave what it described as the “Reader’s Digest Version” of
the Eddy Memo: “This hasn’t been turned over, what are we
going to do? And [one of the AUSAs] says, we’ll handle it on
direct.” The Eddy Memo shows that one AUSA involved in
the case made an intentional decision to delay disclosing cer-
tain impeachment information to the defendants, and that
other AUSAs disagreed.4 The Eddy Memo also states that the
prosecution had been marred by carelessness and disorganiza-
tion. The district court did not abuse its discretion in conclud-
ing that the Eddy Memo was consistent with the court’s prior
conclusion that the government’s misconduct during trial was
a mixture of intentional and negligent pretrial and trial acts
and omissions. See Dixon, 316 F.3d at 1046 (“[The court’s
inherent power to vacate a judgment] is narrowly construed,
applying only to fraud that defiles the court or is perpetrated
by officers of the court.”).
[3] The government’s statements in the briefs and argu-
ment presented in the prior appeal similarly reflected the mix
of what the district court described as “not unintentional,”
“not innocent,” and “negligent, sloppy” discovery misconduct
in the failed prosecution. This circuit’s precedent contem-
plates a higher level of culpability than that found by the dis-
trict court found and reflected by the record of the prior
appeal. See Latshaw v. Trainer Wortham & Co., 452 F.3d
1097, 1104 (9th Cir. 2006) (describing fraud on the court as
“ ‘fraud perpetrated by officers of the court’ ” that prevents
the “ ‘judicial machinery’ ” from “ ‘perform[ing] . . . its
impartial task of adjudging cases that are presented for adjudi-
cation’ ” (quoting Alexander v. Robertson, 882 F.2d 421, 424
(9th Cir. 1988))).
Both parties discuss our decision in Dixon v. Commis-
sioner, 316 F.3d 1041 (9th Cir. 2003). In Dixon, tax test-case
petitioners entered into secret settlement agreements with
4
The impeachment information described in the Eddy Memo was dis-
closed before the dismissal.
UNITED STATES v. CHAPMAN 8711
opposing IRS counsel before trial in the Tax Court. Before
and during trial, the IRS attorneys deceived the court to pre-
vent it from learning about the agreements. Because these
test-case petitioners had already settled their claims and had
no stake in the outcome, the trial was a “charade fraught with
concealed motives, hidden payments, and false testimony.”
Id. at 1047. When the test-case petitioners attempted to
enforce their secret agreements, senior IRS officials became
aware of the scheme and informed the court. We overturned
the lower court’s finding that there was no fraud on the court
because no party was prejudiced by the fraud. Noting that
“[p]rejudice is not an element of fraud on the court,” we
emphasized that the IRS attorneys’ conduct “was clearly
designed to defile the court itself” and “violated the rights of
the test case petitioners and the more than 1,300 taxpayers
who agreed to be bound by the outcome of the Tax Court pro-
ceeding.” Id. at 1046-47.
[4] Dixon does not support the defendants’ argument that
the district court abused its discretion in finding no fraud on
the court. The Eddy Memo confirms what the district court
already knew when it first denied the defendants’ motion for
fees and costs under the Hyde Amendment—that the govern-
ment had affirmatively misrepresented its compliance with its
disclosure obligations, both before and after the misconduct
was revealed. But as the district court found at that time, and
found again in response to the motion now on appeal, the mis-
representations did not “ris[e] to the level of a fraud on the
court,” amount to a “clear attempt to defile the court,” or
cause “a charade fraught with concealed” motives. Dixon, 316
F.3d at 1047. Denying the motion on that basis was consistent
with our precedents and within the district court’s discretion.
[5] The defendants’ argument that the Eddy Memo entitles
them to reopen the Hyde Amendment issue because it shows
that they were prevailing parties is similarly unavailing.
Because the Eddy Memo reinforces the earlier determination
made by the district court and upheld on appeal, the Memo
8712 UNITED STATES v. CHAPMAN
does not provide a basis to find that the dismissal as a sanc-
tion for prosecutorial misconduct made the defendants pre-
vailing parties under the Hyde Amendment. The defendants
emphasize that footnote 6 to our decision in Chapman noted
that “[i]f 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 sug-
gest weakness in the prosecution’s case.” Chapman, 524 F.3d
at 1089 n.6. But the district court, though thoroughly familiar
with the withheld information and the trial evidence, and
though afforded several opportunities to decide whether the
information went to the merits of the government’s case, con-
sistently concluded otherwise. The Eddy Memo does not pro-
vide a sufficient basis to conclude that the government’s
failure to disclose impeachment evidence suggested substan-
tive weakness in the merits of the case that made the failure
to disclose relevant to innocence. To the contrary, the district
court was clear that the dismissal with prejudice was a sanc-
tion for discovery misconduct and not a judgment on the mer-
its that could render the defendants prevailing parties under
the Hyde Amendment. The record, including the Eddy Memo,
does not provide a basis to find that the district court’s refusal
to reopen that decision was an abuse of discretion.
AFFIRMED.