UNITED STATES of America, Plaintiff-Appellant, v. Daniel CHAPMAN; Sean Flanagan; Herbert Jacobi, Defendants-Appellees.
United States of America, Plaintiff-Appellee, v. Daniel Chapman; Sean Flanagan; Herbert Jacobi, Defendants-Appellants.
Before: DIARMUID F. O'SCANNLAIN, HAWKINS, and KIM McLANE WARDLAW, Circuit Judges. Steven W. Myhre, Acting United States Attorney; Robert L. Ellman, Appellate Chief and Assistant United States Attorney, District of NV, for the government-appellant-cross-appellee. Daniel G. Chapman, Las Vegas, Nevada (pro se); Sean P. Flanagan, Las Vegas, Nevada (pro se); James L. Sanders, McDermott Will & Emery LLP, Los Angeles, CA; and Maranda E. Fritz, Hinshaw & Culbertson LLP, New York, NY, for the defendants-appellees-cross-appellants.
The district court dismissed an indictment against Daniel Chapman, Sean Flanagan, and Herbert Jacobi (collectively “Defendants”) after the prosecution admitted that it had failed to meet its obligations to disclose over 650 pages of documents to the defense. We must decide whether the government's appeal of the dismissal is precluded by the Double Jeopardy Clause of the Fifth Amendment, see 18 U.S.C. § 3731, whether the dismissal was proper, and whether Defendants are entitled to fees and costs under the Hyde Amendment, Pub.L. No. 105-119, § 617, 111 Stat. 2440, 2519 (1997) (codified at 18 U.S.C. § 3006A Note). We conclude that the Double Jeopardy Clause does not bar the government's appeal under the circumstances presented here, and we affirm as to both the dismissal of the indictment and the denial of fees and costs.
On August 8, 2003, a grand jury in the District of Nevada returned a sixty-four-count indictment charging that Defendants, along with Shawn Hackman and James Farrell (who both pled guilty before trial), concocted a complex securities trading scheme known as a “box job,” where a small number of individuals secretly control a corporation's shares and manipulate the stock price through strawmen officers, directors, and shareholders.1 In this box job, Defendants allegedly created multiple shell corporations, back-dated corporate records to make their activities appear lawful, and named dummy directors and officers who had no actual control over the corporations and in some cases did not even know of their existence. According to the government, Defendants duped the National Association of Securities Dealers (“NASD”) and the Securities and Exchange Commission (“SEC”) into approving their corporations for listing on the Over-the-Counter Bulletin Board (“OTCBB”) stock exchange. OTCBB listing is a valuable asset, and these newly approved shell corporations could be merged with third-party business enterprises to create a public market in the shares of those enterprises. By selling and merging these shell corporations, Defendants allegedly made over $12 million, which they laundered through Flanagan and Chapman's law firm and various corporations that Jacobi had registered in the Bahamas.
On April 9, 2004, the government agreed that it would disclose various documents prior to trial, including (1) all “criminal history and other background information regarding Government witnesses that is material and reasonable,” (2) any evidence favorable to Defendants material to their guilt or innocence, as required by Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), (3) any promises, inducements, or threats made to witnesses to gain cooperation in the investigation or prosecution, as required by Giglio v. United States, 405 U.S. 150, 92 S.Ct. 763, 31 L.Ed.2d 104 (1972), and (4) any witness statements required to be disclosed under Jencks v. United States, 353 U.S. 657, 77 S.Ct. 1007, 1 L.Ed.2d 1103 (1957), and 18 U.S.C. § 3500. Over the next 22 months, the government claims to have turned over close to 400,000 pages of documents.
Other hints of discovery violations surfaced. On February 3, the AUSA elicited testimony from a prosecution witness, Lewis Eslick, about a prior conviction. Defendants objected that they had not received information from the government about that conviction and that this was the second time this had occurred (the day before, the AUSA had attempted to elicit information about a prior conviction from Doug Ansell on redirect examination, but the court sustained an objection that it was beyond the scope of the cross-examination). The district court struck the questioning as unduly prejudicial and reminded the AUSA of his obligation to disclose such material.
AUSA: Your Honor, if I could just advise the Court 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.
COURT: Well, but it's supposed to be turned over. It's not a matter of doing it now.
AUSA: Your Honor, we cannot find a record of making this information available to defense counsel. We believe, however, that we did or it was certainly our intention to do so.
COURT: But your belief isn't good enough. This stuff has to be disclosed to them.
AUSA: And we've disclosed it now, your Honor.
COURT: Well, I understand, but that's late. I'm [not] going to say it's to [o] late, but it's late.
AUSA: Your Honor, we apologize.
COURT: Okay, I want this stuff-this stuff is going to be produced or I'm going to start striking testimony or worse.
In response, the AUSA represented that much of the material under discussion had already been disclosed to the defense, but admitted that he could not prove what information had been disclosed because his office had not kept a log of what materials the government had turned over. He assured the district court, however, that he had made his best effort to comply with the government's obligations. The AUSA argued that neither a mistrial nor a dismissal of the indictment was the appropriate remedy. He urged that the court allow defense counsel sufficient time to review the documents and to recall as necessary any witnesses who had already testified.
The district court expressed frustration, lambasting the prosecutor's conduct as “unconscionable.” Based on the material contained in Hearing Exhibit 1, the judge stated, “I don't see any way this trial can go forward. We're in the third week of it, so I say that regrettably.” He noted that he was inclined to dismiss the indictment, but deferred ruling on the motion to dismiss until the parties had a chance to brief the issue. The district court then declared a mistrial, dismissed the jury, and ordered briefing on Defendants' motion to dismiss the second superseding indictment.
On February 27, the parties reconvened. Two new AUSAs appeared on behalf of the government to argue against dismissal. The district court listened to argument and then granted Defendants' motion to dismiss, finding that the original AUSA had acted “flagrantly, willfully, and in bad faith.” 2 The court noted that the government's case to date had been quite weak and that the defendants would suffer substantial prejudice if the case were retried because “the government and its witness[es] will not make [the same] mistake[s] again.” It concluded that the government should not be permitted “to try out its case identifying any problem area[s] and then correct those problems in a retrial.” It further concluded that the government's discovery violations “subvert[ed] the due process rights that the defendants are guaranteed by the Constitution” and also the “Sixth Amendment right to confront adverse witnesses.” Accordingly, the court granted Defendants' motion.
After the indictment was dismissed, the AUSAs asked to place into the record all 650 pages of the recently disclosed documents. On May 11, 2006, the court issued a written judgment of dismissal of the indictment. The government timely appeals.
Because dismissal of an indictment is a final decision of the district court, United States v. Simpson, 813 F.2d 1462, 1464 (9th Cir.1987), we generally have jurisdiction under 28 U.S.C. § 1291. However, we lack jurisdiction if permitting the government to appeal would violate the Double Jeopardy Clause of the Fifth Amendment. 18 U.S.C. § 3731; U.S. Const. amend. V.
The Criminal Appeals Act grants jurisdiction to the federal courts of appeals to entertain criminal appeals by the United States, except “where the double jeopardy clause of the United States Constitution prohibits further prosecution.” 18 U.S.C. § 3731. Appellees contend that the district court's sua sponte declaration of a mistrial bars any further prosecution of them, and that we therefore lack jurisdiction to hear this appeal. Because we conclude that, under the circumstances here, a new trial is not barred by the Double Jeopardy Clause, we have jurisdiction over the government's appeal.
The Double Jeopardy Clause mandates that no person shall “be subject for the same offence to be twice put in jeopardy of life or limb.” U.S. Const. amend. V. “Criminal defendants have a right to have the jury first impaneled to try them reach a verdict.” United States v. Bates, 917 F.2d 388, 392 (9th Cir.1990). When an initial prosecution ends in mistrial, a subsequent retrial will increase the emotional and financial burden imposed on the defendant, and may give the state an unfair opportunity to tailor its case based on what it learned the first time around. Arizona v. Washington, 434 U.S. 497, 503-04 & n. 14, 98 S.Ct. 824, 54 L.Ed.2d 717 (1978). “Consequently, as a general rule, the prosecutor is entitled to one, and only one, opportunity to require an accused to stand trial.” Id. at 505, 98 S.Ct. 824.
“If a case is dismissed after jeopardy attaches but before the jury reaches a verdict, a defendant may be tried again for the same crime only in two circumstances: (1) if he consents to the dismissal; or (2) if the district court determines that the dismissal was required by ‘manifest necessity.’ ” United States v. Bonas, 344 F.3d 945, 948 (9th Cir.2003). The “manifest necessity” exception applies whenever the judge believes to a “high degree” that a new trial is needed, Washington, 434 U.S. at 505-06, 98 S.Ct. 824, although the “classic basis for a proper mistrial” under this exception is a deadlocked jury, id. at 509, 98 S.Ct. 824. Because we hold that the “manifest necessity” exception applies in this case, we need not consider whether Defendants “impliedly consented” to the mistrial. See Bates, 917 F.2d at 392.
The basis for the trial judge's mistrial order is adequately disclosed by the record, which includes the extensive argument of counsel prior to the judge's ruling. The state trial judge's mistrial declaration is not subject to collateral attack in a federal court simply because he failed to find “manifest necessity” in those words or to articulate on the record all the factors which informed the deliberate exercise of his discretion.
Washington, 434 U.S. at 517, 98 S.Ct. 824. Noting that the trial court was institutionally best positioned to judge the impact of the error on the jury, the Court held that the mistrial declaration did not bar retrial. Id. at 513-14, 517, 98 S.Ct. 824.
A judicial determination of manifest necessity is reviewed for abuse of discretion, but the level of deference varies according to the circumstances in each case. Bonas, 344 F.3d at 948. Where there is evidence that the prosecution sought the mistrial for tactical advantage, a judicial determination of “manifest necessity” is reviewed with “the strictest scrutiny.” Washington, 434 U.S. at 508, 98 S.Ct. 824. In contrast, where the judge's determination is based on his or her own observations and personal assessment that a fair trial would be impossible, that view must be given special deference. See id. at 510-11, 98 S.Ct. 824 (giving “special respect” to judge's determination of manifest necessity when based on jury bias). Here, the prosecution strenuously objected to the judge's declaration of a mistrial, and we do not believe the government's Brady and Giglio violations were committed as part of an effort to retry the case before a different jury. We therefore review the district court's ruling under the more deferential standard.
Under this deferential standard of review, we must ensure that the lower court exercised “sound discretion.” Bates, 917 F.2d at 394. A determination of manifest necessity may be upheld even if other reasonable trial judges might have proceeded with the trial despite the error. Washington, 434 U.S. at 511, 98 S.Ct. 824. Our review should weed out “irrational or irresponsible behavior by the trial judge,” Bates, 917 F.2d at 395, and accordingly we focus on the procedures employed by the judge in reaching his determination. We consider whether the district court “(1) heard the opinions of the parties about the propriety of the mistrial, (2) considered the alternatives to a mistrial and chose[ ] the alternative least harmful to a defendant's rights, [and/or] (3) acted deliberately instead of abruptly․” Id. at 396 (rejecting district court's determination of manifest necessity where the judge acted abruptly, without a hearing, and without considering plausible alternatives).3 Finally, the district court's judgment must be based on evidence presented in the record. Bonas, 344 F.3d at 948-51 (rejecting a district court's judgment of manifest necessity that was based on private conversations between the judge and jurors).
Here, as in Washington, the district judge did not make an explicit finding of “manifest necessity,” but he made clear that he believed the trial could not continue. The judge held a hearing to determine the appropriate sanction, at the conclusion of which he said, “All right. I don't see any way this trial can go forward. We're in the third week of it, so I say that regrettably.” Later, he repeated: “I'll be candid with the parties because there's no way this can go on. There's no way this trial can go on.” Finally, when dismissing the jury, the judge said “I do this with a good deal of regret, but I feel the Court simply has no other alternative. So I'm going to declare a mistrial․” These statements clearly demonstrate that the judge believed a fair verdict was impossible and that a mistrial was required to at least a “high degree” of necessity. See Washington, 434 U.S. at 506, 98 S.Ct. 824. We therefore review this finding of manifest necessity for abuse of discretion, asking whether it was “one that a rational jurist could have made based on the record presented to him.” Bonas, 344 F.3d at 948.
The record demonstrates that the district judge understood, and considered, a wide range of alternative remedies to mistrial. When the defense first claimed that Jencks materials for witness Michael Payne had been withheld, the judge took the AUSA at his word that the information had been turned over, but noted that if Payne “tries to testify, and there's material that [the prosecution] hasn't turned over, then his testimony will be stricken.” When the government first admitted that it had no record of certain documents being disclosed to the defense, the judge demanded that “this stuff ․ be produced or I'm going to start striking testimony or worse.” Finally, when the full scope of the government's discovery violations was uncovered and the district court held a hearing to discuss the appropriate remedy, the AUSA proposed two lesser alternatives to mistrial: (1) granting a continuance to give the defense time to review the newly disclosed documents, and (2) allowing the defense to recall government witnesses that had already testified if it wished to impeach them with newly disclosed evidence.
The court's determination that the jury's attention span could not withstand such delay must be given substantial deference. See Washington, 434 U.S. at 514, 98 S.Ct. 824 (noting that the trial judge is “most familiar with the evidence and the background of the case on trial” and “is far more conversant with the factors relevant to the determination than any reviewing court can possibly be.” (internal quotation marks omitted)). Moreover, the record contains numerous arguments by defense counsel demonstrating how the Defendants were prejudiced by the discovery violations and how alternative remedies would have been inadequate to remedy such prejudice. One attorney noted that she would have opened the case differently had she known about the impeaching information. Another explained that if he called back witnesses who had already left the stand in order to present the impeaching information, the jury would likely view it as “browbeating.” As Washington makes clear, a manifest necessity determination can be upheld based on attorneys' arguments in the record even when the trial judge did not explicitly reference those arguments. Id. at 517, 98 S.Ct. 824 (upholding a determination of manifest necessity given with no explicit reasoning, because “[t]he basis for the trial judge's mistrial order is adequately disclosed by the record, which includes the extensive argument of counsel prior to the judge's ruling”).
Just as in Washington, “[t]he basis for the trial judge's mistrial order is adequately disclosed by the record.” Id. at 517, 98 S.Ct. 824. The district court did not abuse its discretion in finding that the trial could not continue. Because the mistrial was supported by a valid determination of manifest necessity, it does not prohibit retrial under the double jeopardy clause and we therefore have jurisdiction to hear this appeal.
[First, a] district court may dismiss an indictment on the ground of outrageous government conduct if the conduct amounts to a due process violation. [Second, i]f the conduct does not rise to the level of a due process violation, the court may nonetheless dismiss under its supervisory powers.
Generally, “[f]indings of fact underlying the dismissal are reviewed under the clearly erroneous standard.” Id. at 1091. The government, however, argues that we should review the record de novo. In support, it cites Fonseca v. Sysco Food Services of Arizona, Inc., 374 F.3d 840 (9th Cir.2004), a civil case in which the district court excluded a witness who had not been disclosed in a timely fashion. Id. at 846. We reviewed the propriety of the sanctions de novo because the district court had failed to make factual findings as to whether the late disclosure was “substantially justified” or “harmless” under Federal Rule of Civil Procedure 37(c)(1). Id. at 845-46. Here, the government argues that “the district court failed to examine any evidence or make any findings of fact attendant to its dismissal of the indictment” and that de novo review therefore applies.
This argument fails because it is unsupported by the record. The district court did make specific factual findings, based on the totality of the proceedings before it, that “the Assistant U.S. Attorney acted flagrantly, willfully, and in bad faith”; that he had made “affirmative misrepresentation [s] to the court”; that the defendants would be prejudiced by a new trial; and that no lesser sanction could adequately remedy the harm done. It made these findings after reviewing the 34 pages of undisclosed materials admitted into evidence as “Hearing Exhibit 1” and after witnessing firsthand the AUSA's misrepresentations. While it is true that the district court did not review all 650 pages of undisclosed documents, such a review was unnecessary in light of the government's own concession that these were “all materials that we should have turned over.” Accordingly, we reject the government's suggestion that the de novo standard of review is applicable, and we hold that the district court's findings were not clearly erroneous.
We agree with the government that accidental or merely negligent governmental conduct is insufficient to establish flagrant misbehavior. See United States v. Kearns, 5 F.3d 1251, 1255 (9th Cir.1993) (holding that even though the government's conduct “may have been negligent, or even grossly negligent,” it did not rise to the level of flagrant misconduct). We have never suggested, however, that “flagrant misbehavior” does not embrace reckless disregard for the prosecution's constitutional obligations. Here, although the case involved hundreds of thousands of pages of discovery, the AUSA failed to keep a log indicating disclosed and nondisclosed materials. The AUSA repeatedly represented to the court that he had fully complied with Brady and Giglio, when he knew full well that he could not verify these claims. When the district court finally asked the AUSA to produce verification of the required disclosures, he attempted to paper over his mistake, offering “in an abundance of caution” to make new copies “rather than find the record of what we turned over.” Only when the court insisted on proof of disclosure did the AUSA acknowledge that no record of compliance even existed. Finally, the dates on many of the subsequently disclosed documents post-date the beginning of trial, so the government eventually had to concede that it had failed to disclose material documents relevant to impeachment of witnesses who had already testified. In this case, the failure to produce documents and to record what had or had not been disclosed, along with the affirmative misrepresentations to the court of full compliance, support the district court's finding of “flagrant” prosecutorial misconduct even if the documents themselves were not intentionally withheld from the defense. We note as particularly relevant the fact that the government received several indications, both before and during trial, that there were problems with its discovery production and yet it did nothing to ensure it had provided full disclosure until the trial court insisted it produce verification of such after numerous complaints from the defense.
The government misrelies upon United States v. Cadet, 727 F.2d 1453 (9th Cir.1984), and United States v. Gatto, 763 F.2d 1040 (9th Cir.1985), to argue that Brady/Giglio violations, no matter how flagrant, can never justify dismissing an indictment. In Cadet, the district court dismissed the indictment after the government failed to comply with an overly broad discovery order. 727 F.2d at 1470. We first held that “significant portions of the [district court's] order were invalid.” Id. at 1454-55. “Because we ․ determined that the court abused its discretion in ordering the government to comply with an order which is partially invalid, we ․ vacate[d] the judgment dismissing this action as a disproportionate sanction for the lack of good faith compliance by the government.” Id. at 1470. In Gatto, the district court excluded certain incriminating evidence that it found had not been disclosed pursuant to Rule 16 of the Federal Rules of Criminal Procedure. 763 F.2d at 1043. The prosecution appealed the exclusionary sanction pursuant to 18 U.S.C. § 3731, but the district court insisted that the trial go forward despite the interlocutory appeal. Id. at 1044. The government refused to proceed until the appeal was decided, and the district court dismissed the indictment for the government's “ ‘flagrant refusal to abide by [the court's] previous orders.’ ” Id. We reversed the order excluding evidence, holding that the prosecution's late disclosure did not violate Rule 16 or any “constitutional provision, federal statute, [or] specific discovery order.” Id. at 1046-49. We similarly reversed the dismissal, noting that the government had not in fact violated the court's discovery order. Id. at 1050.
Neither Cadet nor Gatto suggests that a Brady/Giglio violation can never justify dismissing an indictment. Indeed, we have explicitly suggested to the contrary. See United States v. Blanco, 392 F.3d 382, 395 (9th Cir.2004); United States v. Kojayan, 8 F.3d 1315, 1325 (9th Cir.1993). In Kojayan, the government failed to disclose an agreement it had made with a co-conspirator whose statements were introduced at trial. Id. at 1317. We held that the failure to disclose this agreement violated Brady. Id. at 1322. Based on this violation, the prosecutor's misleading statements at trial, and the government's failure to accept responsibility for its wrongdoing, id. at 1322-23, we reversed the convictions and “remand[ed] for the district court to determine whether to retry the defendants or dismiss the indictment with prejudice as a sanction for the government's misbehavior,” id. at 1325. In Blanco, the government failed to disclose “highly relevant impeachment material” about a confidential informant and we found it “obvious” that the material “should have been turned over to Blanco under Brady and Giglio.” 392 F.3d at 392. We remanded to the district court for further factfinding to determine the full extent of the Brady/Giglio violations, id. at 394, and noted that, on remand, “[a] range of options will be available to the court, including, at one extreme, dismissal of the indictment for governmental misconduct,” id. at 395 (citing Barrera-Moreno, 951 F.2d at 1091). Kojayan and Blanco make clear that Brady violations are just like other constitutional violations. Although the appropriate remedy will usually be a new trial, see Giglio, 405 U.S. at 153-54, 92 S.Ct. 763 (explaining when the suppression of material evidence or the solicitation of false testimony justifies a new trial), a district court may dismiss the indictment when the prosecution's actions rise, as they did here, to the level of flagrant prosecutorial misconduct. Because the district court did not clearly err in finding that the government recklessly violated its discovery obligations and made flagrant misrepresentations to the court, we hold that the dismissal was not an abuse of discretion.
If this case were to be retried, the government and its witness will not make that mistake again, and that's the advantage that the government gains by its actions here. It gets a chance to try out its case[,] identify[ ] any problem area[s], and then correct those problems in a retrial, and that's an advantage the government should not be permitted to enjoy.
Now, I have to think that Peter Berney was supposed to be a strong witness against the defendants. ․ I guarantee you next time he would be a stronger witness. That would be true of all of them. They would all be better witnesses.
The district court is in the best position to evaluate the strength of the prosecution's case and to gauge the prejudicial effect of a retrial. Cf. United States v. Hagege, 437 F.3d 943, 953 (9th Cir.2006) (“Having presided over the entire proceedings ․, the district court [i]s uniquely positioned to evaluate the prosecutor's conduct.”). Here, the case as originally prosecuted appeared to the district court to have been faltering. Therefore, the district court did not abuse its discretion in concluding that a dismissal was the only means of avoiding prejudice to the Defendants.
[F]or over two weeks of trial, the prosecutor consistently claimed that he had disclosed the required material to the defendants․ And I accepted that, I accepted [the AUSA's] statement as an officer of the Court and overruled the objection on several occasions․ Only after I excoriated the Assistant U.S. Attorney in the strongest terms did he then offer an apology to the Court, not a heartfelt apology, but simply a response to me. And finally I said, be quiet and listen to me because he was just saying, yeah, I'm sorry, I'm sorry, I'm sorry, and not really meaning it.
The prosecutor has a “sworn duty ․ to assure that the defendant has a fair and impartial trial,” and his “interest in a particular case is not necessarily to win, but to do justice.” N. Mariana Islands v. Bowie, 236 F.3d 1083, 1089 (9th Cir.2001) (internal quotation marks omitted). In this case, the district court was clearly troubled by the government's conduct and its failure to own up to its actions. We are similarly troubled, both by the AUSA's actions at trial and by the government's lack of contrition on appeal. The government attorneys who appeared in the original AUSA's stead on the critical day of the hearing on the motion to dismiss the indictment told the trial court that they “took this matter extremely seriously” and conceded that the government made a “very serious mistake in terms of [its] discovery obligations.” Before us, however, these same attorneys have attempted to minimize the extent of the prosecutorial misconduct, completely disregarding the AUSA's repeated misrepresentations to the court and the failure to obtain and prepare many of the critical documents until after the trial was underway. Instead, they claim for the first time on appeal that none of the 650 pages were required disclosures under Brady/Giglio. When the district court first indicated that it was inclined to dismiss the indictment, it noted that it was “concerned [that] any lesser sanction [would be] like endorsing [the AUSA's conduct].” See Barrera-Moreno, 951 F.2d at 1091 (noting that the court's supervisory powers can be used “to deter future illegal conduct”). The government's tactics on appeal only reinforce our conclusion that it still has failed to grasp the severity of the prosecutorial misconduct involved here, as well as the importance of its constitutionally imposed discovery obligations. Accordingly, although dismissal of the indictment was the most severe sanction available to the district court, it was not an abuse of discretion.
After the district court dismissed the indictment, Defendants moved for an award of fees and costs under the Hyde Amendment, Pub.L. No. 105-119, § 617, 111 Stat. 2440, 2519 (1997) (codified at 18 U.S.C. § 3006A Note). 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 ․” The district court denied the motion on two grounds: (1) Defendants were not “prevailing parties” because the dismissal was not a judgment on the merits, and (2) although the discovery violations were conducted with bad faith, the entire case was not “vexatious, frivolous, or in bad faith.” Defendants timely cross-appeal this ruling.
“We review a district court's denial of a Hyde Amendment motion for abuse of discretion. An abuse of discretion is an error of law or a determination based on a clearly erroneous finding of fact.” United States v. Manchester Farming P'ship, 315 F.3d 1176, 1181 (9th Cir.2003) (footnote omitted).
The district court correctly determined that Defendants were not “prevailing parties” under the Hyde Amendment. Although the amendment does not explicitly define the term, we have interpreted “prevailing party” to mean “one who has gained by judgment or consent decree a material alteration of the legal relationship of the parties.” Perez-Arellano v. Smith, 279 F.3d 791, 794 (9th Cir.2002) (defining the term under the Equal Access to Justice Act) (internal quotation marks omitted); United States v. Campbell, 291 F.3d 1169, 1172 (9th Cir.2002) (extending the Perez-Arrellano definition to the Hyde Amendment). There can be no doubt that a dismissal with prejudice materially alters the legal relationship of the parties, as it precludes the government from bringing a prosecution that it otherwise would be entitled to bring. However, our cases have also required a prevailing party to have “ ‘receive[d] at least some relief on the merits of his claim.’ ” Campbell, 291 F.3d at 1172 (quoting Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of Health and Human Res., 532 U.S. 598, 603, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001)) (alteration in original) (emphasis added). In Campbell, for example, the defendant's charges were dismissed through his participation in a pre-trial diversion program. Id. at 1171. We held that this did not constitute relief “on the merits of his claim” and hence Campbell was not a “prevailing party” under the Hyde Amendment. Id. at 1172.
The district court did not abuse its discretion in dismissing the indictment. The government egregiously failed to meet its constitutional obligations under Brady and Giglio. It failed to even make inquiry as to conviction records, plea bargains, and other discoverable materials concerning key witnesses until after trial began. It repeatedly misrepresented to the district court that all such documents had been disclosed prior to trial. The government did not admit to the court that it failed to disclose Brady/ Giglio material until after many of the key witnesses had testified and been released. Even then, it failed to turn over some 650 documents until the day the district court declared a mistrial and submitted those documents to the court only after the indictment had been dismissed. This is prosecutorial misconduct in its highest form; conduct in flagrant disregard of the United States Constitution; and conduct which should be deterred by the strongest sanction available. Under these facts, the district court did not abuse its discretion in characterizing these actions as flagrant prosecutorial misconduct justifying dismissal. Nor did it abuse its discretion in determining that a retrial-the only lesser remedy ever proposed by the government-would substantially prejudice the defendants.
1. A superseding indictment, naming only Chapman, Farrell, Flanagan, and Jacobi as defendants, was filed on May 18, 2004. A second superseding indictment, which added various “Sentencing Allegations,” was filed on July 27, 2004.
3. Bates also provides a fourth potential consideration: whether the judge “properly determined that the defendant would benefit from the declaration of mistrial.” 917 F.2d at 396. It is difficult to assess how this factor should be weighted in light of the Supreme Court's somewhat conflicting discussions of this issue. Compare Gori v. United States, 367 U.S. 364, 369, 81 S.Ct. 1523, 6 L.Ed.2d 901 (1961), with Illinois v. Somerville, 410 U.S. 458, 471, 93 S.Ct. 1066, 35 L.Ed.2d 425 (1973), and United States v. Jorn, 400 U.S. 470, 483, 91 S.Ct. 547, 27 L.Ed.2d 543 (1971) (plurality opinion). We need not resolve this apparent conflict here, however, because our analysis under the first three Bates factors convinces us that the trial judge did not abuse his discretion in finding that a mistrial was manifestly necessary. Because the fourth Bates factor would only bolster this conclusion, we feel comfortable bypassing it.
4. The district court's order states only that the superseding indictment “is dismissed by the court,” but it is clear from the record that the district court intended to dismiss the indictment with prejudice. The court had already granted a mistrial, and the only remaining question was whether the government would be entitled to retry Defendants. Accordingly, we interpret the district court's decision as a dismissal with prejudice. See United States v. Brown, 425 F.3d 681, 682 (9th Cir.2005) (per curiam) (clarifying that an unspecified dismissal was “with prejudice” when that was the clear intent).
5. In granting Defendants' motion to dismiss, the district court applied the legal standard relevant to its discretionary supervisory powers, but also found that the government's errors “subvert[ed] the due process rights that the defendants are guaranteed by the Constitution.” Because the district court did not abuse its discretion in dismissing the indictment under its supervisory powers, we need not consider whether the dismissal was also justified by the government's violation of Defendants' due process rights.
6. 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 discovery violations would be relevant under the Hyde Amendment, but major violations-those sufficient to prompt dismissal of the indictment-would bar relief. That question, however, is not squarely presented in this case, so we leave it for another day.


In Connecticut, employees who engage in public sector collective bargaining with a board of education employer, fall into two categories: (1) those covered by the Teacher Negotiation Act (“TNA”), i.e., teachers and administrators; and (2) those covered by the Municipal Employee Relations Act (“MERA”), i.e., all other bargaining units. Both the TNA and the MERA collective bargaining laws culminate in last best offer (“LBO”) final and binding arbitration. One distinction that existed prior to the Supreme Court’s recent case, Gould v. Freedom of Information Commission (SC 18966) (released December 16, 2014), was the perception that TNA arbitration panels were required to conduct bifurcated hearings. In Glastonbury Education Association v. FOIC, 234 Conn. 704 (1995), the Supreme Court determined that the presentation of last best offers could take place in closed session because it constituted “strategy or negotiations with respect to collective bargaining,” therefore, it did not fall within the definition of “meeting” set forth in Connecticut General Statutes §1-200(2). Whether the evidentiary portion of the arbitration hearing was similarly beyond the dictates of the FOIA has been an open question for the past decade. The Gould decision has now answered that question – the entire arbitration hearing can take place in closed session.
Gould v. FOIC arose out of an interest arbitration case involving the Torrington Board of Education and the Torrington Education Association. The panel of three arbitrators made up of Larry Foy, Victor Schoen, and Martin Gould convened the arbitration hearing on January 30, 2010. The panel, treating their assembly as a meeting, adjourned to what it designated to be an executive session, closed to the public. Apparently mindful of the Supreme Court’s 1995 decision in the Glastonbury Education Association case, a Waterbury Republican reporter challenged the panel’s decision to conduct the evidentiary portion of the arbitration proceeding in private. After a careful and thoughtful analysis of the law (but not without multiple dissents), the Supreme Court determined that the entire arbitration proceeding could take place in private because the arbitration panel was not a public agency, as defined in Connecticut General Statutes §1-200(1). Since the dictates of the FOIA only apply to public agencies, the requirements of the FOIA were inapplicable.
How Does This Case Effect You ?
The entire collective bargaining process between teacher or administrator groups and boards of education may now take place in private. Negotiation, mediation, and the exchange of last best offers have been regarded as being within the “strategy or negotiations” exception to the FOIA for some time. With the recent Gould v. FOIC decision, the evidentiary portion of the last best offer arbitration hearing, indeed, the entire hearing, is outside the scope of the open meeting law requirements. In keeping with the underlying legislative intent, the parties are now clearly permitted to present their cases in LBO arbitration, without the added distraction of considering how it all may appear on the local cable channel.
Collective bargaining under MERA has been operating in private, but for a different reason. Like the TNA, negotiation and mediation are considered “strategy or negotiations,” thus, those gatherings are not “meetings.” However, the LBO arbitration panels assembled under MERA have not been subject to the open meeting requirements of the FOIA because Connecticut General Statutes §31-100 requires the State Board of Mediation and Arbitration, the agency that oversees these interest arbitration proceedings, to “hold confidential all information submitted to it by any party to a labor dispute.” See also State Board of Labor Relations v. FOIC, 244 Conn. 487 (1998).
As an aside, public evidentiary hearings are still required of boards of education when, for example, they conduct a grievance hearing, even though a grievance arbitration may take place in private. Typically, public sector grievance procedures involve multiple steps, including a hearing before the agency/employer, which step precedes advancement to an optional arbitration stage. Reading Glastonbury Education Association together with Waterbury Teachers Association v. FOIC, 240 Conn. 835 (1997), it would appear that boards of education (or committees of such boards), that convene to hear a grievance must comply with the open meeting requirements of the FOIA, at least with regard to the evidentiary portion of the grievance hearing. Whether deliberation by the board after it has heard the evidence is also outside the scope of the open meeting dictates of the FOIA, may depend upon the circumstances. Compare Waterbury Teachers Association v. FOIC, supra, (deliberations viewed to be “strategy or negotiations with respect to collective bargaining”) with O’Riley v. Chairman, Board of Education, Regional School District No. 1, # FIC 2010-766 (July 13, 2011). Finally, the board may be entitled to enter into executive session for the deliberation phase of a grievance hearing, if its discussion concerns an executive session eligible matter under the FOIA. Discussion of an employee’s employment or performance (subject to the grieving employee’s right to require that such discussion take place in public), is one such example. See C.G.S. §1-200(6)(A).


In April 2016, the Department of Labor (DOL) issued the “Fiduciary Duty Rule” which greatly expanded the number of financial and insurance professionals that were defined as fiduciaries. Although the Fiduciary Duty Rule was not fully implemented, many individuals and firms began preparing for the new regulatory regime. This new duty would have opened the door to potential liability, increased compliance costs, and changed the market for investment and retirement services. Critics of the Fiduciary Duty Rule may no longer have to worry after the U.S. Court of Appeals for the Fitch Circuit vacated the rule entirely in a recent decision: Chamber of Commerce of United States of Am. v. United States Dep’t of Labor, 885 F.3d 360 (5th Cir. 2018).
Before the Fiduciary Duty Rule was issued, many financial professionals, brokerdealers, and insurance agents were not considered fiduciaries under the definition in the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code. Pursuant to a 1975 rule, the DOL implemented a five-part test considering a person to be an investment-advice fiduciary under ERISA and the Code if that person (1) renders advice or makes recommendations on investing, purchasing, or selling securities or other property; (2) on a regular basis; (3) according to mutual agreement between the person and the plan; the advice (4) serves as a primary basis for investment decisions with respect to plan assets; and (5) is individualized based on the particular needs of the plan. 29 C.F.R. § 2510.3-21(c)(1) (2015). This test was intended to incorporate the common law concept that a fiduciary duty exists when there is a special relationship of trust and confidence between the fiduciary and the client. In doing so, the 1975 rule drew a line between financial professionals and investment advisors (often fee-based advisors) that regularly provided advice to the client for investment decisions and those financial professionals, like broker-dealers, whose advice was only incidental to investment decisions or involved one-time transactions like IRA rollovers.
In an effort to protect consumers, the Fiduciary Duty Rule removed the “regular basis” and “primary basis” criteria used in the five-part test articulated in the 1975 rule. With some exceptions, the Fiduciary Duty Rule meant that virtually all financial and insurance professionals who did business with ERISA plans and IRA accounts were fiduciaries even in one-time, commission- based transactions. Professionals who previously were required to make “suitable” investment recommendations were held to the higher standard to act in the “best interest” of their clients.
The Fifth Circuit recently vacated the Fiduciary Duty Rule in a March 15, 2018, decision. Chamber of Commerce, 885 F.3d at 388. In a 2-1 decision, the Fifth Circuit held the DOL’s expansion of the definition of “fiduciary” was not authorized under ERISA. Although the 10th Circuit upheld the Fiduciary Duty Rule on more narrow grounds just two days before the Fifth Circuit’s decision, the 10th Circuit’s ruling did not address the legality of the DOL’s interpretation of the definition of fiduciary. Mkt. Synergy Grp., Inc. v. United States Dep’t of Labor, 885 F.3d 676, 681 (10th Cir. 2018). Despite this apparent circuit split, the Fifth Circuit’s vacatur may have nationwide effect because courts have the authority to “set aside agency actions.” 5 U.S.C. § 706(2). Further, a vacatur prevents a ruling or judgment from “spawning any legal consequences.” Kelso v. U.S. Dep’t of State, 13 F. Supp. 2d 12, 17 (D.D.C. 1998) (quoting United States v. Munsingwear, Inc., 340 U.S. 36, 41 (1950)).
Even before the Fifth Circuit’s decision in Chamber of Commerce, President Trump put the future of the Fiduciary Duty Rule in doubt. In a Feb. 3, 2017, memorandum to the Secretary of Labor, President Trump directed the DOL to review the Fiduciary Duty Rule and examine “whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice” because it may be inconsistent with his policies. Since the ruling in Chamber of Commerce, the DOL has indicated in a statement to CNBC that, pending further review, DOL will not be enforcing the Fiduciary Duty Rule.
Pete McElligott is an attorney with Anthony Ostlund Baer & Louwagie P.A. While his litigation practice spans many different substantive areas, Pete has significant experience on cases involving fiduciary duty issues. He co-authored a chapter on Fiduciary Duty Litigation in Federal Court in the Fourth Edition of the Business and Commercial Litigation Federal Courts. Pete also regularly represents individuals and broker-dealers in FINRA arbitrations. For more information, visit anthonyostlund.com.


Adam Leitman Bailey and Dov Treiman discuss the recent landmark Housing Court case ‘Altman v. 285 West Fourth LLC’ where the Court of Appeals reversed the Appellate Division, First Department and deregulated thousands of New York City apartments.
On April 26, 2018, the Court of Appeals in Altman v. 285 West Fourth LLC, unanimously reversed the Appellate Division, First Department and deregulated tens of thousands of New York City apartments whose rents had crossed the monetary deregulation threshold between April 1, 1997 and June 16, 2011.
For apartments involuntarily placed under rent regulation in New York City, those regulations are removed when a vacant apartment crosses a certain rent level. However, previously unresolved in the case law was whether, in order to effect deregulation, that rent level had to be reached during the tenancy of the last tenant prior to vacancy, or could be reached through implementation of various increases allowed to owners between two actual tenancies. Before the Court of Appeals was the question as to the necessary circumstances for these increases to qualify under so-called “luxury decontrol” [Rent Stabilization Law (NYC Administrative Code) §26-504.2(a)] to lift the apartment out of rent regulation.
In the First Department’s decision in Altman, unanimously reversed by the Court of Appeals, the court had ruled that the deregulation only took place if the rent had risen above the then-effective $2,000 threshold during the tenancy of the immediate pre-vacancy tenant. Under the current version of the luxury decontrol law, the Rent Guidelines Board effectively raises and lowers the threshold each October to take effect the ensuing January. While practitioners assume that the threshold can only go up, for reasons beyond the scope of this article, it can actually be reduced.
The First Department ruling gave rise to what practitioners in the industry call a “buffer tenant,” meaning “a tenant whose rent at the inception of the tenancy is at a rental above luxury deregulation, but will remain subject to regulation, with the owner’s intent that the next tenancy will be unregulated.” As “buffer tenants” are an understanding in the industry and not of the statutory or common law, the definition here given is our own.
Thus, conversations in the industry centered on whether a buffer tenant is necessary and how to see to it that the buffer tenant occupies the apartment for as little time as possible. While the immediate critics of the Court of Appeals decision in Altman are focused on the deregulation of a large number of units in New York City, none has thus far paid attention to the removal of buffer tenants as particular targets for landlords’ efforts to unseat tenancies. However, the 2015 amendments do deny deregulation when “The landlord…engaged in any course of conduct…intended to interfere with or disturb the comfort, repose, peace or quiet of the tenant….” For examples of such conduct, see NYC Administrative Code §27-2004(48).
For practitioners, the more burning question was whether or not buffer tenants are necessary. This, the court answered by way of discussing whether the between-tenant increases count toward deregulation.
Other issues, not reached by the court, but still needing decision, include whether owners need buffer tenants for tenancies that arose after June 16, 2011 and whether treble damages for overcharge are appropriately awarded when an owner honestly follows the universal understanding of what it is entitled to under the rent laws, but thereafter judicially determined not to be appropriate. Indeed, numerous law firms in New York City have been making a brisk trade of pursuing treble damages innocently incurred by landlords following established practice, now equally innocently vaporized by Altman.
The Court of Appeals introduces Altman with the statement that it must determine “whether the 20 percent vacancy increase should be included.” By this, the court was determining whether that increase is in time to have the effect of deregulation and indeed it was not only the 20 percent that was in question, but the bundle of various between-tenancies increases the law allows owners. The Court of Appeals specifically cites to the bill jacket speaking of “vacancy bonuses and owner improvements.” (emphasis adjusted from the original).
Limiting the impact of this Altman decision is that it explicitly declined to “address the effect of the 2015 amendments to the statute” (L 2015, ch 20, pt A, §10). We note, however, that such amendments refer to “a legal regulated rent that was two thousand seven hundred dollars or more per month at any time on or after the effective date of the rent act of 2015, which becomes vacant after the effective date of the rent act of 2015.” (emphasis supplied). This would seem to mean that the timing of the rent increase has become irrelevant and that under the 2015 amendments, there is, in fact, no need for a buffer tenant. Under such a reading of the 2015 law taken now with this Altman, there never was a need for a buffer tenant and there is no such need now.
In the Appellate Division ruling on Altman (143 A.D.3d 415, 38 N.Y.S.3d 173), the Appellate Division paid no attention to the universal practice in the industry of applying the rent increases and deregulation both prior to the Appellate Division’s decision and now subsequent to it. The standard for treble damages in rent overcharge cases being “willfulness,” the Appellate Division ignored the fact that the owner before it was following universally accepted industry practice and imposed treble damages.
Because the Court of Appeals found no basis for imposing damages at all, unfortunately, it did not address the propriety of trebling them when the Owner has a good faith belief in the correctness of the rent charge. This left standing as good law, the Appellate Division’s award of trebling of damages in spite of the universal acceptance of the industry’s understanding of the law.
However, in 72A Realty Assocs. v. Lucas, 32 Misc.3d 47, 929 N.Y.S.2d 349 (2011), the Appellate Term for the First Department had set forth the principle that when a landlord acts in conformity with general industry practice and nearly universal understanding of the law, the reversal of that understanding of the law can give rise to single damages for overcharge, but not for treble damages. That court also invited the Legislature to codify a “good faith reliance” exception to treble damages, but the Legislature declined to accept the invitation.
By declining to discuss it, the Court of Appeals left standing the Appellate Division’s failure to make allowance for “good faith” as an exemption from the treble damages. As to the aspect of treble damages, the Appellate Division report of Altman shall remain “reversed for other reasons.” Even dicta either accepting or rejecting 72A Realty’s “good faith reliance” would have provided useful guidance for the approximately one million rent stabilized apartments in New York City any time an owner acts in accord with standard industry practice, but disallowed by a subsequent judicial decision.
Altman, by focusing on the 20 percent increase, answered the question burning through the housing industry as to whether buffer tenants are necessary. Altman however, while applicable to tens of thousands of apartments that crossed such threshold in an approximate 14-year period and to all tenants subsequent to those crossings, does not directly offer guidance as to whether landlords need subsequent to that 14-year period to be using buffer tenants. However, a fair reading of the 2015 Amendments Altman did not address also seems to eliminate the need for buffer tenants.
Adam Leitman Bailey is the founding partner of Adam Leitman Bailey, P.C. Dov A. Treiman is a partner at the firm.


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PEOPLE OF THE PHILIPPINES, APPELLEE, VS. RODOLFO RAMOS Y ENRIQUEZ, APPELLANT.
On appeal is the Decision dated May 21, 1996 of the Court of Appeals finding appellant Rodolfo Ramos y Enriquez guilty of the crime of murder and sentencing him to suffer the penalty of reclusion perpetua.
That on or about October 6, 1991, in the City of Manila, Philippines, the said accused, did then and there willfully, unlawfully and feloniously with intent to kill and with treachery and evident premeditation, attack, assault and use personal violence upon one ERWIN PUNZALAN Y MERCADO, by then and there stabbing the latter with a bladed weapon on the different parts of his body, thereby inflicting upon him mortal stab wounds which were the direct and immediate cause of his death thereafter.
In his arraignment on February 26, 1992, appellant, assisted by counsel, pleaded not guilty to the charge of murder.
Appellant’s conviction was principally based on the testimony of a sole eyewitness, Rigor Almodovar.
On October 13, 1991, Rigor Almodovar voluntarily reported to the Homicide Division of the Western Police District (WPD), disclosing his knowledge of a stabbing incident he witnessed on the night of October 6, 1991. He executed a sworn statement wherein he related that at around 11:00 p.m. of the same date, he was riding his bike on his way home when he noticed a man being stabbed in front of Alhambra Cigarette Factory at the corner of Tayuman and Juan Luna Streets. He witnessed the assailant stab the victim three times with a bladed weapon. He was unable to get a close look at the victim, but was able to describe the assailant as 5’5” to 5’7” in height, with burly built, fair complexion and wavy hair. He narrated therein that the assailant kept stabbing the victim even as the latter was running away. It was only when the victim fell down to the ground that the assailant fled towards Tayuman Street. Almodovar further stated that his sleepless nights spent thinking that he could suffer the same fate had prompted him to volunteer information on the incident. He was thereafter asked by the police investigator to look at the detainees at the station. Upon seeing appellant as one of the detainees lined up, Almodovar pointed to him as the assailant.
On the witness stand, Almodovar testified that from a distance of 3 meters, and with the light coming from the electric post, he was able to observe that the victim, then surrounded by four men, was facing appellant when the stabbing occurred. He recalled seeing appellant use a knife with a 6-inch blade. He saw blood coming out of the victim’s body, but was unable to recognize the latter’s face. He declared that he did not have personal knowledge of the victim’s identity and only learned thereof when he saw the incident reported in the newspapers. Neither was he acquainted with appellant. He also stated that he never talked to anyone about what he witnessed until two weeks after, when he reported to the police out of his own volition. On cross-examination, he stated that he did not mention in his sworn statement that the assailant was accompanied by three other men because appellant was the only one he recognized.
David Mercado, the victim’s uncle, testified on the medical and funeral expenses he incurred, the receipts of which were allegedly kept by the victim’s mother who resides abroad.
PO3 Rafael Melencio, police officer from the WPD, was initially assigned as the investigator of the case. He testified that at 11:35 p.m. of the night in question, he received information that an unidentified person was found dead along Tayuman Street in front of Alhambra Cigarette Factory. He proceeded to the crime scene and found the victim’s lifeless body with stab wounds on the chest and hand. No eyewitness surfaced, but he gathered from his investigation that the victim just came from the house of the latter’s girlfriend who resided 30 meters away. He prepared an Advance Information Report, which the prosecution submitted as documentary evidence.
Pfc. Alfredo Salazar, an investigator of the WPD, Homicide Division, testified that on October 13, 1991, a witness by the name of Rigor Almodovar personally came to their office to volunteer information on the stabbing of Erwin Punzalan. Salazar took Almodovar’s statement, prepared the Progress Report, and presented the witness to the Inquest Prosecutor, who charged appellant with murder. He thereafter prepared the Booking Sheet and Arrest Report of appellant, who was then already being detained for a separate charge.
Sr. Inspector Florante Baltazar, Medico-Legal Officer of the Philippine National Police, conducted an autopsy on the cadaver of the victim. He testified on his findings as indicated in the Autopsy Sketch and Medico-Legal Report he submitted. His examination disclosed that the victim suffered two fatal stab wounds on the chest and one stab wound on the left hand, which he opines to be a defense injury. Finding no injuries at the back of the victim, he stated that the relative position of the victim and the assailant was more likely to be frontal.
As the sole witness for the defense, appellant Rodolfo Ramos interposed the defense of alibi. He declared that on October 6, 1991, from 8:00 a.m. until 11:30 p.m., he was in the company of his four friends in his residence at Franco Street, Tondo, Manila, arranging T-shirts for sale. About five to seven days later, while selling at the Pritil Market, he was picked up by the police authorities and was brought to the police station. He claimed that the police officers attempted to extract a confession from him by beating him up at the police station, as a result of which his dentures got broken and he sustained contusions and abrasions on different parts of his body. He further testified that there was no police line-up during the investigation, for he was then standing alone outside the detention cell when he was identified by the witness Almodovar.
WHEREFORE, and in view of all of the foregoing considerations, the accused RODOLFO RAMOS Y ENRIQUEZ alias Dupong, is hereby found guilty beyond reasonable doubt of the crime of MURDER defined and penalized under paragraph 1 of Article 248 of the Revised Penal Code, it appearing that even as the victim was already attempting to run away, the accused pursued him and continued to stab him until he fell on the ground. Consequently, the accused is hereby sentenced to suffer the penalty of imprisonment from TWELVE (12) YEARS and ONE (1) DAY to SEVENTEEN (17) YEARS and FOUR (4) MONTHS of reclusion temporal, and to pay the heirs of the victim the sum of P15,000.00 for funeral expenses, P10,000.00 for medical expenses and the sum of P50,000.00 for the life of Erwin Punzalan y Mercado, which the accused snuffed out from him.
WHEREFORE, the decision appealed from is hereby AFFIRMED with the MODIFICATION that the penalty imposed upon accused-appellant, RODOLFO RAMOS y ENRIQUEZ, should be raised to, as he is hereby sentenced to suffer, the penalty of reclusion perpetua, and the award of P10,000.00 for medical expenses is deleted.
After the lapse of the period for filing a motion for reconsideration, the Division Clerk of this Court, following Section 13, Rule 124, Revised Rules of Court, is hereby ordered to desist from entering judgment; instead she should elevate this case with its complete records to the Supreme Court for review.
THE TRIAL COURT GRAVELY ERRED IN FINDING THE ACCUSED GUILTY OF THE CRIME OF MURDER DESPITE FAILURE OF THE PROSECUTION TO PROVE POSITIVE IDENTIFICATION THAT ACCUSED WAS THE ASSAILANT.
THE TRIAL COURT GRAVELY ERRED IN DISREGARDING THE DEFENSE OF ALIBI INTERPOSED BY THE ACCUSED.
In addition, appellant in his supplemental brief contests his conviction of murder despite the prosecution’s failure to prove the attendance of treachery.
How were you made to identify the accused at the Homicide Section?
I was told to describe and then they pointed to me.
Why[,] where was the accused at that time when you gave your statement?
He was already at the Homicide Section.
While giving your statement all along you can see the accused from the detention cell?
After giving that statement you were brought to the detention cell?
Or the accused [was] brought out from the detention cell?
They were asked to line up inside the prison cell and I was asked to point.
This Court sees no indication of suggestive identification from the foregoing testimony. The policemen had asked Almodovar to identify the assailant from among the detainees lined up, without suggesting to the witness whom to point to. As correctly found by the Court of Appeals, he had already given a detailed description of the assailant before he was brought near the detention cell to view the detainees lined up.
Further, it bears stressing that appellant gave no proof of ill-motive for Almodovar to testify falsely against him. Appellant himself admitted in court that he met the witness for the first time only during the investigation. Absent any ill-motive, this Court can only conclude that his act in imputing the responsibility for the crime on appellant stemmed from a legitimate desire to bring the perpetrator to justice. As held in numerous decisions, when there is no evidence that the principal witness for the prosecution is moved by improper motives, such witness is entitled to full faith and credit.
Against the positive identification by the eyewitness, appellant offered nothing but the lame defense of alibi. Alibi is the weakest of defenses, as it is easy to contrive and difficult to disprove. To merit serious consideration, this defense must be supported by credible corroboration, preferably from disinterested witnesses. In the present case, not one of appellant’s four friends who were allegedly with him on the night of the incident came forward to corroborate his alibi.
Moreover, for the defense of alibi to prosper, it is not enough to show that the accused was somewhere else when the crime was committed. He must further demonstrate that it was physically impossible for him to have been at the scene of the crime at the time of the commission thereof. Appellant, who was allegedly in his residence within the area, glaringly failed in this regard. His unsubstantiated defense of alibi therefore fails to overturn the prosecution’s evidence proving his guilt.
Although the prosecution sufficiently established that appellant inflicted the fatal stab wounds on the victim, this Court holds that there was insufficient proof of treachery to qualify the crime to murder. Treachery is never presumed. Like any other qualifying circumstance, it must be proven with equal certainty and clearness as the crime itself. The prosecution has the burden to prove that at the time of the attack, the victim was not in a position to defend himself, and that the offender consciously and deliberately adopted the particular means, method and forms of attack employed by him.
While on your way home, do you recall any unusual incident, Mr. Witness?
Yes sir. When I was passing [by] Alhambra Cigarette Factory, I saw 4 men.
Upon seeing these 4 person[s], what else transpired?
I saw that there was a commotion, so I stopped to a distance of 3 meters.
What happened when you stopped?
When I saw the 4 men, one of them stabbed the victim.
How many times did you see that person stab the victim?
You said that you saw the man stab the victim 3 times, [were] you able to see if the victim was hit by that stab?
I saw blood coming from the victim’s body.
After you saw the accused stab the victim for 3 times, what else happened?
I stopped, but when I saw the incident, I ran away.
By the way, what was the relative position of the accused to the victim when the latter was stabbed by him?
They were facing each other.
The foregoing readily shows that all he testified to was seeing the assailant stab the victim three times while the two were facing each other. Noticeably, he omitted to describe how the assailant purportedly kept stabbing the victim while the latter was running away, as what is stated in his affidavit. As a rule, testimonial evidence or oral testimony commands greater weight than a mere affidavit. The omission of this important detail hence weakened the prosecution’s proof of treachery.
It is moreover noted from the foregoing testimony that Almodovar witnessed only the moment when appellant stabbed the victim. No evidence was presented to establish the circumstances prior to the very moment of aggression. It has been held that where the lone witness did not see the commencement of the assault, treachery cannot be considered.
More importantly, this Court observes that the allegedly treacherous manner of the attack as the witness declared in his sworn statement fails to draw support from the prosecution’s physical evidence. The autopsy report disclosed that the victim sustained all injuries at the front, and none at the back. It further showed a stab wound on the victim’s left hand, which the Medico-Legal found to be a defensive wound. Clearly, there were indications that the victim had the opportunity to resist appellant’s attack, thereby negating the existence of treachery.
For failure of the prosecution to prove treachery or any other circumstance which would qualify the killing to murder, appellant should only be held liable for the crime of homicide. Article 249 of the Revised Penal Code imposes the penalty of reclusion temporal for homicide. Considering that there was neither mitigating nor aggravating circumstance present in the commission of the crime, the penalty has to be imposed in the medium period. Applying the Indeterminate Sentence Law, appellant should therefore be sentenced to suffer the penalty of eight years and one day of prision mayor medium, as minimum, to fourteen years and eight months of reclusion temporal medium, as maximum.
Coming now to the award of damages, the P50,000 civil indemnity was correctly awarded. The Court finds the award of actual damages for the funeral expenses unwarranted for lack of supporting receipts. However, in lieu thereof, temperate damages in the amount of P25,000 are awardable in line with the ruling in People v. Abrazaldo. Furthermore, jurisprudence dictates the grant of moral damages in the amount of P50,000 to the victim’s heirs in recognition of the latter’s emotional suffering brought about by the violent death of their loved one.
WHEREFORE, the appealed Decision is hereby MODIFIED. Appellant is found GUILTY beyond reasonable doubt of homicide and, consequently, he is sentenced to suffer an indeterminate penalty of eight years and one day of prision mayor medium, as minimum, to fourteen years and eight months of reclusion temporal medium, as maximum. He is further ordered to pay the heirs of the victim the amounts of P50,000 as civil indemnity, P50,000 as moral damages, and P25,000 as temperate damages in lieu of the award for the funeral expenses which is deleted. Costs de oficio.
Davide, Jr., C.J., (Chairman), Panganiban, Ynares-Santiago, and Carpio, JJ., concur.
 TSN, May 18, 1992, pp. 2-16.
 TSN, July 1, 1992, pp. 2-6.
 TSN, October 14, 1992, pp. 2-6.
 TSN, February 10, 1993, pp. 1-9.
 TSN, April 28, 1993, pp. 1-7.
 TSN, August 2, 1993, pp. 1-14.
 TSN, May 18, 1992, p. 14.
 TSN, August 2, 1993, pp. 12-13.
 People v. Baltazar, G.R. No. 143126, July 31, 2003.
 People v. Villanueva, G.R. No. 139177, August 11, 2003.
 People v. Visperas, Jr., 395 SCRA 128 (2003).
 People v. Colonia, G.R. No. 138541, June 12, 2003.
 People v. Tumanon, 351 SCRA 676 (2001).
 People v. Colonia, supra, note 25.
 People v. Visperas, Jr., supra, note 24.
 People v. Castillano, G.R. No.139412, April 2, 2003.
 TSN, May 18, 1992, pp. 3-7.
 People v. Mandao, 393 SCRA 292 (2002), citing People v. Milliam, 324 SCRA 155 (2000).
 People v. Simon, 209 SCRA 148 (1992).
 TSN, April 28, 1993, p. 7.
 People v. Bates, G.R. No. 139907, March 28, 2003.
 Luces v. People, G.R. No. 149492, January 20, 2003.
 People v. Baltazar ,supra, note 22.

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Fundamental changes occurred in all branches of the Russian oil industry during the late 19th century. In extraction, simple wells gave way to oil shafts with the subsequent transition to mechanical drilling. In processing, new apparata for continuous refining and distillation appeared. In addition to kerosene, the Russian oil industry developed production of mineral oil on the initiative of V. I. Ragozin. The growing industry required a serious modernization of oil transport. The first oil pipeline was built by A. V. Bari firm for the Nobel brothers’ consortium in 1878. Russia developed its tanker fleet for the Caspian Sea and barges for the river transportation of oil products, designed by V. G. Shukhov. These new components of the oil industry infrastructure helped Russia emerge as a major oil producing power.
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