United States v. Bell, No. 07-0715-cr (2d Cir. June 10, 2008) (Jacobs, Calabresi, Sack, CJJ) (per curiam)
In this case, the circuit had to sift through competing claims as to which party breached the plea agreement.
Defendants Brumer and Klein pled guilty to various offenses relating to healthcare fraud. Their agreements with the government stipulated to a loss amount, and specified that neither party would seek a departure or adjustment other than those contained in the agreement. Based on the proof at a related trial, however, the government offered to amend the agreement and reduce the loss amount. The defendants rejected this offer, and instead sought a Fatico hearing, after which the court held them accountable for a significantly lower loss amount. In exchange, the government sought adjustments for mass marketing and vulnerable victims that were not part of the plea agreement.
So who breached first? The defendants. According to the court of appeals, the government’s original offer to reduce the loss amount, which would have benefited the defendants, was not a material breach. Rather, the defendants breached the agreement by seeking a Fatico hearing and putting the government to its proof, causing it to lose the benefit of its bargain. Accordingly, since the defendants breached first, the government was entitled to treat the agreements as unenforceable and to seek the additional sentencing enhancements.
This decision also contains an interesting discussion of some issues relating to the increasingly common practice of having of magistrate judges preside over felony guilty plea allocutions. First, the court held that defendants do not have the right to be present when the district judge reviews the transcript of the allocutions and signs an order accepting the plea. The court also held that the provisions of 28 U.S.C. § 636(b)(1) and (b)(1)(C), which require the filing of proposed findings and recommendations of the court, do not apply to Rule 11 proceedings.
Finally, the court rejected Klein’s argument that he was denied his Sixth Amendment right to the counsel of his choice when the district court refused to allow him to substitute retained counsel. The request came six years after the indictment and four years after the guilty pleas, and would have meant replacing Klein’s sixth attorney with a seventh. Under the circumstances, the court’s refusal to allow the change was not an abuse of discretion.