United States v. Brigham ( 2006 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA,  No. 03-30381
Plaintiff-Appellee,
v.  D.C. No.
CR-02-00220-ALH
CLEBURNE JR BRIGHAM,
OPINION
Defendant-Appellant.

Appeal from the United States District Court
for the District of Oregon
Ancer L. Haggerty, District Judge, Presiding
Argued and Submitted
November 2, 2004—Portland, Oregon
Filed May 5, 2006
Before: Warren J. Ferguson, Stephen S. Trott, and
Andrew J. Kleinfeld, Circuit Judges.
Opinion by Judge Kleinfeld;
Concurrence by Judge Ferguson
5069
UNITED STATES v. BRIGHAM 5071
COUNSEL
Brian Peterson (argued) and Jeffrey Schwartz, Attorneys at
Law, San Francisco, California, for Defendant-Appellant Cle-
burne JR Brigham.
Michael K. Atkinson (argued), United States Department of
Justice, Criminal Division, Fraud Section, Washington, D.C.,
and Karen J. Immergut, and Allan M. Garten, Office of the
United States Attorney, District of Oregon, for Plaintiff-
Appellee United States of America.
5072 UNITED STATES v. BRIGHAM
OPINION
KLEINFELD, Circuit Judge:
This is a sentence appeal. We affirm because Brigham did
not object to the claimed errors and because the errors do not
qualify as “plain.”
I.
FACTS
Brigham and others bought a successful restaurant in Port-
land. He looted it, and it failed. He also applied for a number
of loans totaling more than $1 million dollars, lied on his loan
applications, and got some of them. Hundreds of thousands of
dollars went into the restaurant and out to Brigham for various
improper purposes, including $88,520 for vehicle expenses
and $162,342 for personal expenses. Brigham even delayed
turning over tips to the restaurant employees for weeks after
they had earned them. Eventually, the restaurant went into
bankruptcy and the United States Trustee discovered what had
been going on.
Brigham’s indictment included three counts of making
false statements on a loan application,1 one count of making
false statements to the Small Business Administration,2 and
two counts of misusing a Social Security number.3 He had
lied in his loan applications about what his Social Security
number was, whether he had ever been charged with a crime,
whether he had been involved in bankruptcies, and what his
liabilities were. The loan applications in the indictment added
up to $1,232,570. The presentence report says he was refused
a $697,000 loan, but that he and his associates got $168,995
1
18 U.S.C. § 1014.
2
18 U.S.C. § 1001.
3
42 U.S.C. § 408(a)(7)(B).
UNITED STATES v. BRIGHAM 5073
to purchase and $30,000 to capitalize the restaurant, then
another $169,500 for the restaurant, and then Brigham got
$196,875 to buy a house. He and his associates pledged stock
to get the $168,995 loan. The lenders got some payments, but
wound up losing $308,732 on the fraudulently obtained loans.
He entered into a plea agreement and pleaded guilty to a six
count indictment, largely in return for the three-point early
acceptance of responsibility deduction4 and the government’s
agreement not to charge his wife. Brigham’s sentence was
higher than he or the government expected — 37 months
instead of 24 months — because his criminal history turned
out to be at level III instead of level I on the guidelines table.5
Brigham had previously been jailed for 60 days for criminal
contempt in state court. The contempt was for violating an
injunction against selling securities and was imposed after
Brigham fraudulently sold unregistered securities. He was still
on probation for that offense when he misused a Social Secur-
ity number in his indictment on the $196,875 loan application.
His total sentence in this case was 37 months in custody, 5
years of supervised release, $308,732 in restitution, and $600
in special assessments.
II.
ANALYSIS
Brigham appeals the district judge’s participation in a “sen-
tencing council,” use of the pledged stock to generate a two
point upward adjustment for violating a court order, and the
sentencing judge’s calculation of the loss.
4
See U.S.S.G. § 3E1.1 (1997).
5
See U.S.S.G. § 4A1.1 (1997); see also Sentencing Table, U.S.S.G. Ch.
5, Pt. A (1997).
5074 UNITED STATES v. BRIGHAM
A. The Sentencing Council
Oregon has a procedure — unusual to us but evidently long
established there — of regular sentencing council meetings
for the district judges. According to a 1981 Federal Judicial
Center study, sentencing councils of this sort were a reform
implemented in four districts, intended to reduce sentencing
disparity in that pre-guidelines period.6 But the study’s find-
ings showed that the councils increased disparity in about as
many categories as they reduced it, and mostly did not affect
disparity at all.7
Evidently sentencing councils are still used, or at least were
when Brigham was sentenced. They were no secret. At Brig-
ham’s sentencing hearing, the judge referred to the discus-
sions that he had participated in regarding Brigham’s case at
the sentencing council. For example, when Brigham’s lawyer
made a point regarding calculation of loss, the district judge
described the discussion he had participated in at the sentenc-
ing council regarding the cases that bore on the issue:
Well, I appreciate that. And this matter was dis-
cussed at sentencing council this morning, and it
would appear to a number of us that the case cited
by Mr. Ungar, the Shaw case, would lead one to this
finding and not the McCormick case that the govern-
ment relies upon, and it only slightly changes the
ultimate sentencing range. And, in fact, it probably
did not end up making a substantial difference in the
actual sentence that the court imposes.
Brigham did not object to the judge’s participation in the
sentencing council before the sentencing, nor did he object
during sentencing, even after the judge expressly described
6
See The Effects of Sentencing Councils on Sentencing Disparity at v,
(Federal Judicial Center 1981).
7
See id. at 1.
 UNITED STATES v. BRIGHAM 5075
the council’s participation in his case. It was only after Brig-
ham had been sentenced to a disappointing 37 months that he
raised any issue regarding the sentencing council. During a
motion for release pending appeal, Brigham argued that his
appeal was likely to succeed because the sentencing judge had
participated in a sentencing council. The judge expressed his
concern that Brigham had not previously objected and
described how the Oregon sentencing council works:
Well, as noted by the government at the time of the
sentencing, there was no objection to the fact that
this district still has what we still call a sentencing
council. And, had there been objection, the court
could easily have called witnesses to detail exactly
how the sentencing council operates. It’s just a mat-
ter of having the benefit of other judicial interpreta-
tions of the sentencing guidelines that aids the
sentencing court insofar as the appropriate sentence.
Sentencing council recommendations are not
binding upon the sentencing judge in any respect,
and oftentimes I’ve read the newspaper following a
sentencing council and said gees, did we discuss that
case or not, because the sentencing judge has total
discretion to totally ignore or follow the recommen-
dations. It just depends on what he or she believes is
the appropriate sentence to impose. Oftentimes the
guidelines issues are such that other judges over the
course of their experience have dealt with that partic-
ular guideline before and could give a newer judge
assistance in making the appropriate disposition.
On appeal, Brigham argues that the sentencing council is a
prohibited ex parte communication and that its use amounts
to plain error under a Seventh Circuit case, United States v.
Spudic.8
8
United States v. Spudic, 795 F.2d 1334 (7th Cir. 1986).
5076 UNITED STATES v. BRIGHAM
None of the authorities discussed by Brigham or by the
concurrence establish whether it is error to use the sort of sen-
tencing councils used in Oregon. The same phrase, “sentenc-
ing council,” meant something altogether different in Spudic.
There, it was a meeting of the judge with “a number of proba-
tion officers,”9 and the Seventh Circuit disapproved of the prac-
tice.10 Some of the reasons the Spudic court disapproved of
the sentencing council in that case would be relevant to the
Oregon sentencing council. Spudic says that the sentencing
judge might be tempted to abide by the institutional consensus
rather than his own judgment, and that the impact of the in-
court presentations might be unduly minimized.11 But other
reasons undergirding Spudic are irrelevant, such as a concern
that a probation officer who did not prepare the presentence
report might tell the judge something adverse about the defen-
dant that the defendant would never get a chance to challenge.12
Probation officers do not participate in the Oregon sentencing
council. Spudic does not even establish that a sentencing
council consisting of district judges would be error in the Sev-
enth Circuit. It is true that the views of other judges might
carry more weight than those of probation officers. On the
other hand, a judge might have a concern with staff morale if
he disregarded the views of a large group of probation offi-
cers, but not if he disregarded the views of other judges.
[1] The Fourth Circuit held in United States v. Johnson13
that an ex parte meeting of the sentencing judge with the two
probation officers who prepared the presentence report was
unobjectionable. We have also had some related cases. In
United States v. Davis, we held that it was “entirely proper”
for a judge to discuss the presentence report and sentence with
9
Id. at 1336.
10
See id. at 1343-44.
11
See id. at 1343.
12
See id.
13
United States v. Johnson, 935 F.2d 47, 51-52 (4th Cir. 1991).
UNITED STATES v. BRIGHAM 5077
the probation officer who prepared the report outside the
defendant’s presence.14 In United States v. Gonzales, the most
relevant of the cases cited by the parties, the defendant
brought a Due Process challenge against the use of the Ore-
gon sentencing council and a discussion between the sentenc-
ing judge and the probation officer who prepared the
presentence report.15 The defendant in Gonzales sought an
evidentiary hearing to find out what was said about his case
at the sentencing council and what was said between the judge
and the probation officer.16 We held that the defendant was
not entitled to the evidentiary hearing and accepted the sen-
tencing judge’s record statement that the probation officer had
disclosed no new facts to him in the ex parte conversation.17
[2] In the face of these authorities, there is no way that the
use of a sentencing council could fairly be called “plain
error,” regardless of whether its use is error. Plain error is “(1)
error, (2) that is plain, and (3) that affects substantial rights.”18
For error to qualify as “plain,” it must be “so clear-cut, so
obvious, [that] a competent district judge should be able to
avoid it without benefit of objection.”19 If an error is not
“clear” or “obvious” from the record, the defendant’s failure
to object is fatal.20 Brigham’s failure to object is important
because, if he had objected, the sentencing judge could have
developed a record as he explained in the post sentencing dis-
cussion. Or the sentencing judge could have decided not to
participate in a sentencing council in Brigham’s case. Or he
could have reconsidered the sentence without regard to what
14
United States v. Davis, 527 F.2d 1110, 1112 (9th Cir. 1975).
15
United States v. Gonzales, 765 F.2d 1393, 1396 (9th Cir. 1985).
16
See id. at 1398.
17
See id. at 1396.
18
United States v. Cotton, 535 U.S. 625, 631 (2002); see also United
States v. Ameline, 409 F.3d 1073, 1078 (9th Cir. 2005) (en banc).
19
United States v. Smith, 424 F.3d 992, 1002 (9th Cir. 2005).
20
United States v. Olano, 507 U.S. 725, 734 (1993).
5078 UNITED STATES v. BRIGHAM
the other judges had said at the council. A canny defendant
facing a tough sentencing judge might purposely withhold
objections for tactical reasons in the hope that the sentencing
council would hold the harsh judge down, saving his objec-
tion for later in case the sentencing turned out worse than
expected.
[3] None of the cases we have been directed to suggests
that using a sentencing council like the one used in this case
is error. Because the error in using the Oregon sentencing
council was not “plain,” we do not have occasion in this case
to decide whether it was error at all. This is where we part
ways with Judge Ferguson’s concurrence. We do not hold that
the Oregon sentencing council procedure is error, and we do
not hold that it is not error. We only hold that it is not “plain”
error.
B. The Pledge of Stock and Calculation of Loss
[4] Brigham next argues that the district court erred in find-
ing that Brigham violated a judicial order and imposing the
consequent two-level enhancement under Sentencing Guide-
lines § 2F1.1(b)(3)(B).21 He claims that the order he violated
only prohibited “selling or offering to sell” stocks, not pledg-
ing them as collateral. The state court injunction he was held
in criminal contempt for violating prohibited him from
directly or indirectly selling or offering to sell any security in
Oregon. The evidence at sentencing demonstrated that he
directed another to pledge stock as collateral and argues that
pledging stock as collateral does not amount to “selling or
offering to sell.” We have rejected the argument that pledging
stock is not a sale. Following the Supreme Court’s decision
in Rubin v. United States,22 we held that a pledge of stock is
a sale in United States v. Kendrick.23
21
See U.S.S.G. § 2F1.1(b)(3)(B) (1997).
22
See Rubin v. United States, 449 U.S. 424, 431 (1981) (Holding that
a pledge of stock is an offer or sale).
23
See United States v. Kendrick, 692 F.2d 1262, 1265 (9th Cir. 1982)
(Pledge of stock is a sale).
UNITED STATES v. BRIGHAM 5079
[5] Brigham also argues that there was not enough evidence
for the district court’s calculation of the amount of loss. The
calculation of loss relied heavily on the probation officer’s
analysis in the presentence report and the United States Trust-
ee’s report, a seven page, single-spaced, detailed analysis
accompanied by 13 pages of attachments. These documents
are sufficiently detailed to provide an ample basis for the cal-
culation the district court made. Brigham has identified no
particular error, but argues that he “would need to comb
through hundreds of boxes of documents in order to refute it.”
He does not claim lack of access to the documents, by which
he evidently means the records from his own restaurant.
Rather, he is not inclined to search them in the hope that an
error might be found. Neither are we.
[6] We AFFIRM, except that we grant a limited
REMAND to allow the district court to answer the question
whether it would have imposed a different sentence had the
Guidelines been viewed as advisory.24
FERGUSON, Circuit Judge, concurring in the judgment:
I concur in the majority’s remand in light of United States
v. Ameline, 409 F.3d 1073 (9th Cir. 2005) (en banc). I write
separately, however, to disagree with the majority’s accep-
tance of the use of a sentencing council in determining Brig-
ham’s sentence. Brigham entered into a plea agreement with
the Government for a sentence of twenty-four months. After
meeting with a sentencing council, the District Judge
increased Brigham’s sentence to thirty-seven months. Neither
Brigham nor the public will ever know what impact the coun-
cil had on Brigham’s increased sentence because neither party
in the case was allowed to attend the sentencing council meet-
24
See United States v. Ameline, 409 F.3d 1073, 1079 (9th Cir. 2005) (en
banc).
5080 UNITED STATES v. BRIGHAM
ing, and a record of the exchange was not disclosed. Brig-
ham’s mere knowledge that a sentencing council was used in
his case does not remedy this harm.
The majority underestimates the “potential for abuse,” the
“doubtful appearance, and the possible misunderstanding” of
sentencing council proceedings that take place outside the
defendant’s presence. United States v. Spudic, 795 F.2d 1334,
1344 (7th Cir. 1986). In Spudic, for example, the Seventh Cir-
cuit held that, while a judge may confer with his particular
probation officer, the use of a sentencing council made up of
several probation officers could not be sanctioned regardless
of its supposed benefits. Id. Even though Spudic dealt with a
sentencing council made up of probation officers, and this
case deals with a sentencing council consisting of judges, the
same principle prohibiting ex parte communications between
the sentencing judge and outside parties applies to either form
of sentencing council. See id. at 1343-44 (describing proba-
tion officer sentencing council as an ex parte conference).
Canon 3 of the Judicial Code of Conduct, which dictates pro-
tocol for federal judges, explicitly requires that a bench offi-
cer “neither initiate [n]or consider ex parte or other
communications concerning a pending or impending proceed-
ing.” See FED. R. DECISIONS, CANON 3(4). When a judge relies
on secret discussions with other judges to make a decision in
his case, the judge necessarily initiates ex parte communica-
tions.
In this case, the Government contends that Brigham was
not harmed by these ex parte communications because the
District Judge only discussed case law that was favorable to
the defendant with the council. Even if that is true, “we are
concerned with the institutionalized use of this sentencing
council procedure because of the concern and doubts which
it can understandably foster in the minds of defendants, their
counsel, and the public.” Spudic, 795 F.2d at 1343. Because
the council meets ex parte, the full extent of any possible
harm caused by the sentencing council will never be known
UNITED STATES v. BRIGHAM 5081
by either party unless the District Court chooses to disclose it.
Faith in the integrity of sentencing judges leads me to agree
that a judge should normally not need to defend or explain
every element he relies on in his sentencing decision. See id.
at 1344. Such integrity, however, must be bolstered by trans-
parent procedural safeguards, such as public hearings that do
not require the parties and the public “to accept the sentencing
council deliberations on faith.” Id. Secret sentencing councils,
rather than being justified by a judge’s integrity, may call it
into question. This is the harm caused by ex parte communi-
cations.
The majority notes that United States v. Gonzales, 765 F.2d
1393, 1398-99 (9th Cir. 1985), does not disapprove of Ore-
gon’s sentencing councils. However, Gonzales also does not
expressly approve of such councils; this Court’s analysis was
directed at whether communications between the sentencing
judge and the probation officer during the sentencing process
were improper. Id. (rejecting defendant’s claim that probation
officer acted improperly by engaging in “ex parte advocacy”).
This Court previously established in United States v. Davis,
527 F.2d 1110, 1112 (9th Cir. 1975), cert. denied, 425 U.S.
953 (1976), that a judge can discuss the presentence report
and sentence with the probation officer outside the defen-
dant’s presence. Gonzalez adopted the Davis holding. 765
F.2d at 1398. This Court has not yet directed its analysis at
sentencing councils, such as Brigham’s, that are comprised
exclusively of judges. Yet, the reasoning of Spudic demon-
strates use of such a council, consisting of either probation
officers or judges, is an error.
In addition to constituting a troubling ex parte communica-
tion, the use of a sentencing council erodes the well-
established principle that federal judges should be indepen-
dent and insulated from group pressures. Article III of the
Constitution provides life tenure and undiminished due com-
pensation to federal judges to preserve their autonomy.
5082 UNITED STATES v. BRIGHAM
Indeed, early constitutional debates in this country underscore
the importance of judicial independence and insulation:
[The] independence of . . . judges is equally requisite
to guard the Constitution and the rights of individu-
als from the effects of those ill humors, which . . .
the influence of particular conjunctures . . . some-
times disseminate among the people themselves, and
. . . have a tendency, in the meantime, to occasion
dangerous innovations in the government, and seri-
ous oppressions of the minor party in the commu-
nity.
The Federalist No. 78 (Alexander Hamilton). Sentencing
councils require judges to be privately inter-dependent, which
makes the judicial process dangerously susceptible to
improper communal pressure.
A judge, of course, is not prohibited from consulting other
judges. See FED. R. DECISIONS, CANON 3(4) Commentary. But
when proceedings are carried out in secret, it is not possible
to determine whether a decision was the result of permissible
consultation or impermissible pressure. One of the original
purposes of sentencing councils was to reduce sentencing dis-
parity by placing “group pressure [on judges] to conform.”
FEDERAL JUDICIAL CENTER, THE EFFECTS OF SENTENCING COUN-
CILS ON SENTENCING DISPARITY 1 (1981). In Spudic, the Seventh
Circuit described this potential for group pressure and misun-
derstanding:
The sentencing council may have an unrecognized
influence on the sentencing judge causing the judge
to abide by the council consensus. That could lead to
the further concern that the impact of what is subse-
quently presented in open court at sentencing will be
minimized, that the sentence will be largely foreor-
dained, and that the judge therefore enters the actual
sentencing hearing without an open mind.
UNITED STATES v. BRIGHAM 5083
795 F.2d at 1343 (emphasis added). Because the sentencing
council met in secret and may have had “an unrecognized
influence on the sentencing judge,” it is not possible to know
if the increase in Brigham’s sentence was the result of imper-
missible group pressure. Id. We lack basic proof—a record.
The fact that the sentencing council in Spudic consisted of
probation officers and Brigham’s council consisted of judges
makes little difference to this analysis. The peer pressure
exerted by fellow judges, with whom the sentencing judge
must interact on a regular basis both formally and informally,
is likely to have a greater impact than any concern for the
staff morale of probation officers. Judges are also just as
likely to share “additional pertinent adverse information about
the defendant” with the sentencing judge as are probation
officers who did not participate in the preparation of the pre-
sentence report. See id. Therefore, a sentencing council con-
sisting of judges, as opposed to probation officers, is as much
if not more damaging to the interest of the defendant in being
sentenced in an individualized, transparent manner.
Apart from the injustice that results from ex parte commu-
nications, sentencing councils should be abolished because
they are unnecessary. To the extent that the Sentencing
Guidelines still play a role in a judge’s determination of a sen-
tence, sentencing councils frustrate any transparency provided
by the advisory use of the Sentencing Guidelines. United
States v. Booker, 543 U.S. 220, 259 (2005) (finding that
“[w]ithout the ‘mandatory’ provision, the [Sentencing Reform
Act] nonetheless requires judges to take account of the Guide-
lines together with other sentencing goals”). The Sentencing
Reform Act of 1984 and the United States Sentencing Com-
mission both operate to reduce sentencing disparities, sup-
planting the original purpose of sentencing councils.
S. REP. NO. 98-225, at 52 (1983), reprinted in U.S.C.C.A.N.
3182, 3236 (explaining how a primary goal of sentencing
reform is the elimination of unwarranted sentencing dispar-
ity). In fact, when Congress created the Sentencing Guide-
5084 UNITED STATES v. BRIGHAM
lines, only presentence reports, not sentencing councils, were
meant to supplement the Guidelines. Id. at 53. Congress’s
ultimate goal was to allow “each participant in the system . . .
[knowledge as to] what purpose [was being] achieved by the
sentence in each . . . case.” Id. at 59. Each time a secret sen-
tencing council convenes to assist a judge in rendering a deci-
sion, this goal is frustrated.
The use of sentencing councils is even more troubling in
light of the new, advisory nature of the Sentencing Guide-
lines. Booker, 543 U.S. at 226. Judges now have greater dis-
cretion to impose sentences based on specific facts not
enumerated in the Guidelines. What now protects a defendant
from having outside, undisclosed information influence the
deliberations of the council and, subsequently, the judge’s dis-
cretionary sentence?
Sentencing councils promulgate decisions that are suscepti-
ble to impermissible group pressure. An informed judge,
when conducting sentencing, need only use the Sentencing
Guidelines, the presentence report, and arguments and evi-
dence produced in open court to arrive at a decision grounded
in law. We should no longer tolerate these secret ex parte pro-
ceedings.