United States v. Bowers , 847 F.3d 1280 ( 2017 )

FILED
United States Court of Appeals
Tenth Circuit
February 10, 2017
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 16-4008
DONALD BOWERS,
Defendant - Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
(D.C. No. 2:13-CR-00413-DB-BCW-2)
Submitted on the briefs:*
Stephen R. McCaughey, Attorney at Law, Salt Lake City, Utah, for Defendant-Appellant.
John W. Huber, United States Attorney, District of Utah; Jason R. Burt, Assistant United
States Attorney, Salt Lake City, Utah, for Plaintiff-Appellee.
Before BRISCOE, MATHESON and PHILLIPS, Circuit Judges.
BRISCOE, Circuit Judge.
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of this
appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is, therefore,
submitted without oral argument.
Defendant Donald Bowers was previously involved in a civil trade secret
misappropriation case that was litigated in the United States District Court for the District
of Utah. During the course of that litigation, Bowers willfully and repeatedly violated a
permanent injunction issued by the district court presiding over the case, and also refused
to purge himself of civil contempt. His actions resulted in findings of civil contempt
against him, judgments against him for the plaintiff’s attorneys’ fees, and, ultimately, a
criminal referral to the United States Attorney for the District of Utah. A federal grand
jury subsequently indicted Bowers on two counts of contempt, in violation of 18 U.S.C.
§ 401(3). The case proceeded to trial, where a jury found Bowers guilty of both counts.
Bowers was sentenced to a term of imprisonment of fifteen months, to be followed by a
thirty-six month term of supervised release. He was also directed, as a condition of
supervised release, to make monthly payments on the outstanding amount owed by him to
the plaintiff in the underlying civil case.
Bowers now appeals, arguing that the district court erred in (1) imposing a special
condition of supervised release requiring him to make monthly payments on the
outstanding judgments owed to the plaintiff in the civil case, (2) denying his motion for
disclosure of the criminal referral, and (3) sentencing him to a term of imprisonment that
exceeded six months. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm in
all respects.
I
This criminal case has roots in an earlier civil case, ClearOne Communications,
2
Inc. v. Bowers, 643 F.3d 735 (10th Cir. 2011) (Bowers I). The complete factual and
procedural history of that civil case is detailed in Bowers I and will not be repeated here.
Instead, we proceed to outline only the facts necessary to understand how the criminal
charges arose against Bowers.
The filing of ClearOne’s lawsuit against the WideBand defendants
In early 2007, ClearOne Communications, Inc. (ClearOne) filed suit in Utah state
court seeking relief for alleged misappropriation of its trade secrets. Those trade secrets,
which ClearOne put to use in audio teleconferencing equipment, “allegedly included an
acoustic echo cancellation algorithm and sub-algorithms, in both source and object code
form, nicknamed the Honeybee Code.” ClearOne Commc’ns, Inc. v. Bowers, 651 F.3d
1200, 1203 n.1 (10th Cir. 2011) (Bowers II). Ultimately named as defendants in the suit
were WideBand Solutions, Inc. (WideBand), which was a Massachusetts corporation, and
Andrew Chiang, Jun Yang, and Lonny Bowers (hereinafter Lonny), all of whom served
as officers of WideBand. Collectively, these defendants will be referred to as the
WideBand defendants. ClearOne’s lawsuit also named two additional corporations:
Versatile DSP, Inc., and Biamp Systems (Biamp). “Chiang, Yang and WideBand
removed the case to federal district court [in Utah] on the basis of diversity jurisdiction.”1
Bowers I, 643 F.3d at 744.
Donald Bowers’ initial involvement in the lawsuit
The defendant in the instant case, Bowers, is the father of Lonny. After ClearOne
1
The action was assigned the following case number: 2:07-cv-00037-TC.
3
initiated its lawsuit against the WideBand defendants, Bowers began “loaning money to
the WideBand defendants to pay a portion of the legal fees they were incurring.” Bowers
II, 651 F.3d at 1203. Further, in June 2008, “Bowers and a Georgia-based company he
founded called WideBand Solutions, Inc. (WideBand Georgia), entered into an agreement
with” the WideBand defendants “pursuant to which WideBand would transfer its assets to
WideBand Georgia.” Id. “ClearOne, upon learning of the asset transfer agreement, filed
a motion for a temporary restraining order (TRO) and preliminary injunction to prevent
any transfer of its alleged trade secrets.” Id. at 1204.
“The district court held a hearing on ClearOne’s motion on June 18, 2008, during
which attorney Randolph Frails appeared by telephone as the legal representative for . . .
Bowers.” Id. “Frails represented during the hearing that the language of the asset
transfer agreement excluded the trade secrets that the WideBand defendants had
purportedly misappropriated from ClearOne.” Id. “Nevertheless, the district court
ordered Frails and . . . Bowers to provide counsel for ClearOne and the WideBand
defendants with copies of the asset transfer agreement.” Id.
On “June 19, 2008, ClearOne filed a renewed motion for a TRO and preliminary
injunction alleging that, contrary to Frails’ representations, the terms of the asset transfer
agreement included WideBand’s intellectual property, most notably the Honeybee Code.”
Id. “ClearOne that same day also filed with the district court a separate lawsuit against
WideBand Georgia and . . . Bowers alleging fraudulent transfer.” Id. (citing ClearOne
Commc’ns, Inc. v. WideBand Sols., Inc., No. 2:08–CV–00474–TS (D. Utah June 19,
4
2008)).
On June 26, 2008, the district court held a hearing “to address the asset transfer
agreement.” Id. “Frails again appeared by telephone on behalf of . . . Bowers and
WideBand Georgia.” Id. “During the hearing, the district court issued a TRO prohibiting
the WideBand defendants from transferring the Honeybee Code.” Id. The district court
also, as part of its TRO, “expressly prohibited the transfer of any related items, including
all of the various codes that Yang had allegedly derived from the Honeybee Code while
working for WideBand, and it directed the WideBand defendants to make a full
disclosure and production of all documents relating to the asset transfer agreement.” Id.
“On July 10, 2008, the district court, prompted by another TRO motion filed by
ClearOne, held a . . . hearing concerning the asset transfer agreement.” Id. Frails
appeared by telephone on behalf of Bowers and WideBand Georgia, and stated that the
asset purchase agreement had been rescinded because Bowers “felt that he was buying
nothing.” Id. (internal quotation marks omitted). “Frails argued that ClearOne’s TRO
motion was moot because no assets had been transferred and the asset transfer agreement
had been rescinded.” Id. The district court, relying on Frails’ representations, “denied
ClearOne’s TRO motion as moot.” Id.
“In October 2008, the district court granted . . . Bowers’ motion to dismiss
ClearOne’s case against him and WideBand Georgia without prejudice on the basis that
the claims, all of which concerned the purportedly rescinded asset transfer agreement,
were moot.” Id. at 1205.
5
The trial of ClearOne’s case against the WideBand defendants
ClearOne’s case against the WideBand defendants ultimately proceeded to trial in
October 2008. “After hearing eleven days of evidence, the jury returned a special verdict
finding in favor of ClearOne on each of its claims against the defendants.” Bowers I, 643
F.3d at 745. The verdict included substantial compensatory damages against all of the
defendants, as well as punitive damages against Chiang and Yang. Id. (detailing the
damages award).
Donald Bowers’ reemergence in the case
“On January 16, 2009, ClearOne filed a motion for an order to show cause why the
WideBand defendants and . . . Bowers should not be held in contempt of the district
court’s June 26, 2008 TRO.” Bowers II, 651 F.3d at 1205. In support of its motion,
ClearOne alleged that on November 6, 2008, the day after the jury returned its verdict in
ClearOne’s case against the WideBand defendants, Bowers filed a statement in
Massachusetts purporting to perfect a security interest in all of WideBand’s assets,
including all of its software and intellectual property, pursuant to Article 9 of the Uniform
Commercial Code. Id.
“On January 26, 2009, the district court issued an order to show cause directing the
WideBand defendants and . . . Bowers to appear before the court on February 10, 2009,
and show cause why they should not be held in contempt for the reasons alleged in
ClearOne’s motion.” Id. Although the evidence indicated that Bowers was properly
served with the district court’s show cause order, he “failed to appear at the February 10,
6
2009 show cause hearing.” Id.
On February 24, 2009, the district court issued a written order concluding that
Bowers was effectively subject to the district court’s June 26, 2008 TRO because he had
acted in concert or participation with the WideBand defendants. Id. The district court
also found that on November 6, 2008, Bowers had filed a UCC statement in
Massachusetts listing WideBand as a debtor and describing the relevant collateral as all of
WideBand’s assets, including its intellectual property. Id. Despite these findings and
conclusions, however, the district court “‘continued’ the issue of whether Bowers should
be held in contempt of the district court’s June 26, 2008 TRO, and directed Bowers to
appear in person before the court on March 13, 2009, ‘to show cause why [he] should not
be held in contempt for violating the June 26, 2008 Order.’” Id. (citation omitted). “On
March 5, 2009, the district court vacated its February 24, 2009 show cause order and
ordered that a show cause hearing regarding . . . Bowers would be rescheduled at a future
date.” Id.
The permanent injunction
“On April 9, 2009, the district court issued a permanent injunction against all of
the defendants.” Bowers I, 643 F.3d at 745. The injunction permanently enjoined the
WideBand defendants from disclosing, using or transferring in any way ClearOne’s trade
secret Honeybee Code, as well as “product development documentation for the Honeybee
Code or any other documentation that reveal[ed] the contents of the Honeybee Code.” Id.
(internal quotation marks omitted). The injunction also prohibited the WideBand
7
defendants from marketing, selling, manufacturing, developing, modifying, duplicating,
transporting or delivering any technology that contained the Honeybee Code or any
product that was substantially derived from the Honeybee Code. Id. at 745–46.
Continued contempt proceedings against Donald Bowers
“On April 28, 2009, the district court issued an order rescheduling for June 3,
2009, the show cause hearing regarding . . . Bowers.” Bowers II, 651 F.3d at 1206. “In
its order, the district court directed both . . . Bowers and . . . Frails to appear and testify by
telephone at the June 3, 2009 hearing.” Id. Both men “appeared by telephone at the June
3, 2009 hearing.” Id. At the conclusion of the hearing, the district court “took the matter
of . . . Bowers’ contempt under advisement.” Id.
Three months later, on September 3, 2009, the district court issued a memorandum
decision and order of contempt based on the evidence presented at the June 3, 2009 show
cause hearing. Id. at 1207. The district court specifically found “Bowers in contempt for
the post-verdict act of filing a UCC financing statement encumbering WideBand’s assets,
as well as for failing to appear at the February 10, 2009 contempt hearing.” Id. “Based
on these findings, the district court directed . . . Bowers to take actions to assure the court
that he had removed any encumbrances he had placed on WideBand’s assets and to pay
ClearOne’s attorneys’ fees and costs associated with the contempt proceedings against
him.” Id.
“On September 17, 2009, . . . Bowers filed a personal Chapter 7 bankruptcy
petition in Georgia.” Id. “The automatic stay entered in connection with the filing of that
8
bankruptcy petition prevented ClearOne from collecting on the contempt judgment for
fees and costs and prevented, for a period of time, the district court’s consideration of
ClearOne’s subsequent allegations that . . . Bowers was committing additional
contemptuous acts.” Id.
Violation of the permanent injunction and issuance of a TRO
“On July 16, 2009, ClearOne moved to enforce the permanent injunction and for
contempt.” Bowers I, 643 F.3d at 746–47. In support of its motion, ClearOne alleged
that the defendants had transferred the assets of WideBand to a new, sham company
called DialHD, Inc. (DialHD). Id. at 747. According to ClearOne, DialHD was
registered to Bowers, was operating out of the same Connecticut office that WideBand
previously occupied, and was continuing the same business as WideBand, including
selling products that incorporated the Honeybee Code. Id. ClearOne also alleged that the
defendants, Bowers, “and WideBand employee David Sullivan ha[d] conspired and
transferred, hidden, and claimed to destroy, the very Wide[B]and assets that th[e] Court
ordered to be preserved in at least three orders, in addition to the Permanent Injunction.”
Id. (internal quotation marks omitted) (brackets in original).
On July 17, 2009, the district court issued a show cause order directing the
WideBand defendants, Bowers, DialHD, and David Sullivan to appear before the court on
July 31, 2009. At the show cause hearing, the WideBand defendants and Bowers
appeared on their own behalf by telephone. The district court heard testimony from three
ClearOne witnesses and received exhibits submitted by ClearOne. At the conclusion of
9
the hearing, the district court issued a TRO in favor of ClearOne.
On August 5, 2009, the district court issued a written TRO memorializing its
findings and conclusions. The district court found that ClearOne had established a
substantial likelihood of success on the merits of its claim that certain DialHD products
illegally utilized the Honeybee Code. Id. at 747–48. Accordingly, the district court held
that the DialHD infringing products would be subject to the same restrictions as set forth
in the permanent injunction order regarding WideBand’s infringing products. Id. at 748.
The district court also ordered Bowers and DialHD not to transfer, encumber, pledge,
alienate, or try to dispose of or hide any DialHD assets until further order of the court. Id.
Violation of the TRO and issuance of a contempt order
“On October 22, 2009, ClearOne moved for an order to show cause for violation of
the August 5, 2009 TRO.” Bowers II, 651 F.3d at 1207. ClearOne alleged in its motion
that the WideBand defendants, DialHD, Sullivan and Bowers “had failed to remove from
the market certain offending products, and that a sham Chinese company was utilizing the
Honeybee Code to manufacture offending products for DialHD.” Id.
The district court held a hearing on ClearOne’s motion on November 9, 2009. Id.
Ten days later, on November 19, 2009, the district court issued an order finding Lonny
Bowers, Yang, WideBand and DialHD in contempt of court for selling a WideBand
offending product in the guise of two DialHD products, and that all of these products
contained the Honeybee Code. Id. The district court’s order did not include Bowers
because, at that time, the automatic stay issued in connection with his Chapter 7
10
bankruptcy proceedings had not yet been lifted.
The district court also, in pertinent part, (a) expanded its TRO and permanent
injunction to include the offending DialHD products using the Honeybee Code, (b)
directed DialHD and all those working in connection with it to immediately halt all
development, sale and marketing of all DialHD products, including in China, and (c)
directed the contemnors to arrange for delivery to ClearOne of all code and other design
materials and intellectual property covered by the permanent injunction and TRO.
Bowers I, 643 F.3d at 749.
Additional contempt proceedings
“On February 11, 2010, ClearOne filed an ex parte motion for the addition of
. . . Bowers to the district court’s November 19, 2009 contempt order and amended
permanent injunction.” Id. ClearOne alleged in support “that on December 29, 2009, the
bankruptcy court overseeing . . . Bowers’ Chapter 7 bankruptcy proceedings ‘lifted the
automatic stay, specifically to allow the contempt proceedings against . . . Bowers to go
forward.’” Id. (citation omitted). “The district court denied ClearOne’s motion, but
issued a show cause order on April 7, 2010 directing . . . Bowers to ‘appear personally or
through counsel before the court on . . . May 27, 2010[,] . . . to show cause . . . why he
should not be held in contempt of the court’s August 5, 2009 TRO.” Id.
The district court held the scheduled show cause hearing on May 27, 2010. Id.
Bowers appeared by counsel at the hearing, but did not personally attend. Id. The district
court subsequently issued a memorandum decision and civil contempt order on August
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13, 2010. Id. The district court found “Bowers ‘in contempt of court for his acts
violating the court’s prohibition on possession, disclosure, use, marketing, or selling
products containing ClearOne’s stolen trade secrets and the court’s prohibition on
diversion of Defendant WideBand[’s] . . . assets.’” Id. (citation omitted) “More
specifically, the district court found that . . . Bowers ‘surreptitiously re-packag[ed] and
s[old] products containing the stolen trade secret’ and ‘participated in the diversion of
WideBand[’s] . . . assets in an attempt to avoid the WideBand Defendants’ obligation to
pay a multi-million dollar judgment to ClearOne.’” Id. (citation omitted). The district
court also “found that . . . Bowers ‘ha[d] committed fraud on the court by making false
statements to the court and withholding material information from the court in a manner
obstructing the court’s ability to enforce its orders and final judgment against the
WideBand Defendants.’” Id. at 750 (citation omitted).
Based upon these findings, the district court (a) expanded its August 5, 2009 TRO
to expressly include Bowers, (b) modified its amended permanent injunction to reflect
these findings, (c) directed Bowers, and all those working in active concert or
participation with him, to immediately halt all development, sales, and/or marketing of all
DialHD products, including in China, (d) directed Bowers to deliver to ClearOne or its
designated agent all code and other design materials and intellectual property covered by
the amended permanent injunction, (e) directed Bowers to self-surrender to the court on
October 13, 2010, for incarceration unless and until he proved that he had complied with
the court’s directives, and (f) directed Bowers to pay ClearOne’s reasonable attorneys’
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fees and costs in pursuing the contempt order against him. Id.
“On that same date, August 13, 2010, the district court also issued a second
amended permanent injunction against all of the defendants in the case, as well as
. . . Bowers.” Id. The injunction prohibited Bowers and the defendants
from disclosing, using or transferring in any way the . . . Honeybee Code
(including its unique algorithms or sub-algorithms that [we]re not in the
public domain), whether in the form of source code, object code, or any
other form, and any code or product substantially derived from the
Honeybee Code, as well as from disclosing, using, or transferring in any
way the product development documentation for the Honeybee Code or any
other documentation that reveal[ed] the contents of the Honeybee Code.
Id. (quotation marks omitted).
“On October 13, 2010, the district court held a hearing to determine whether
. . . Bowers ‘had purged himself of contempt by disclosing and providing [the] specified
information and infringing products.’” Id. (citation omitted). Bowers did not appear at
the hearing despite being ordered to do so by the district court. At the conclusion of the
hearing, “the district court found ‘that . . . Bowers ha[d] not purged himself of contempt
and [wa]s subject to arrest and incarceration in an attempt to coerce his compliance with
the court’s Contempt Order.’” Id. (citation omitted). “Consequently, that same day the
district court issued a bench warrant for . . . Bowers for failure to appear before the
court.” Id.
Bowers’ civil appeals
In Bowers I, Bowers challenged the district court’s exercise of personal
jurisdiction over him. More specifically, he argued “that the district court could not have
13
properly exerted personal jurisdiction over [hi]m at the July 31, 2009 contempt hearing
because ClearOne had never filed ‘an actual complaint’ against [hi]m.” Id. at 775. This
court rejected that argument, concluding that Bowers was “subject to the district court’s
orders because [he] had actual notice of the district court’s original permanent injunction
and wa[s] found by the district court to have acted in concert with the WideBand
defendants in violating that injunction.” Id. at 776.
In Bowers II, Bowers appealed from the district court’s contempt orders, arguing
that the district court erred (1) in holding him in contempt of its injunctive orders, (2) in
determining that it could exercise personal jurisdiction over him, (3) in directing him to
appear in person at the July 31, 2009 show cause hearing, and in turn denying him the
opportunity to present evidence and cross-examine ClearOne’s witnesses due to his
failure to appear at that hearing, and (4) in refusing to recuse itself from the case filed by
ClearOne. This court rejected Bowers’ arguments and affirmed the district court’s
contempt orders. Bowers II, 651 F.3d at 1203, 1219.
Summary of the civil judgments entered against Donald Bowers
On April 21, 2010, the district court entered a civil judgment ordering Bowers to
pay ClearOne $57,188.61 in attorneys’ fees. This judgment was the result of the district
court’s September 3, 2009 order holding Bowers in civil contempt for violating its pretrial
order enjoining the encumbrance or transfer of the Honeybee Code.
On December 8, 2011, the district court entered a civil judgment ordering Bowers
to pay ClearOne costs and fees totaling $207,250.40 (of this amount, Bowers was
14
personally liable for $22,743.88 and jointly and severally liable with other civil case
defendants for $184,506.52). This judgment was the result of the district court’s August
13, 2010 order finding Bowers in civil contempt for his role in violating the permanent
injunction prohibiting any further use of the Honeybee Code and products that unlawfully
incorporated the Honeybee Code.
On May 13, 2013, the district court entered a civil judgment ordering Bowers to
pay ClearOne $8,648 in appellate attorneys’ fees in connection with the appeal in
Bowers I.
According to the record in this case, those judgments remain unpaid.
The criminal referral
On December 2, 2010, the district court judge who presided over the civil
proceedings sent to the United States Attorney for the District of Utah a memo titled
“Referral of Criminal Contempt Proceedings Against Lonny Bowers, Donald Bowers,
and Jun Yang under Fed. R. Crim. P. 42.” Supp. ROA, Vol. 3 (Memo at 1). The memo
outlined what had transpired in the civil case and asserted that the conduct of Bowers,
Lonny and Yang had prevented the district court from providing effective relief to
ClearOne and threatened to undermine the autonomy and effectiveness of the federal
court system. The memo outlined the elements of a criminal contempt charge and
expressed the district judge’s belief that those elements were satisfied. Ultimately,
however, the memo acknowledged that the decision whether to criminally prosecute the
three individuals was a discretionary one to be made solely by the United States
15
Attorney’s office.
II
The criminal proceedings at issue in this appeal were initiated on June 5, 2013,
when a federal grand jury returned a four-count indictment against Bowers, Lonny
Bowers, and Yang. As relevant to this appeal, Count 1 of the indictment charged all three
defendants with willfully disobeying the district court’s April 2009 permanent injunction
order, in violation of 18 U.S.C. § 401(3). Count 4 of the indictment charged Bowers with
willfully disobeying the district court’s August 13, 2010 civil contempt order, also in
violation of 18 U.S.C. § 401(3).
On March 13, 2015, Bowers, through counsel, filed a motion asking the district
court to compel the government to provide him with “a copy of the criminal referral”
made by the district court judge who presided over the civil proceedings. ROA, Vol. 4 at
81. On June 12, 2015, Bowers filed a similar pleading again seeking disclosure of the
criminal referral. Bowers argued in that pleading that “the criminal referral [wa]s in the
nature of a police report or written complaint and [he] [wa]s entitled to a copy of that
referral.” ROA, Vol. 5 at 74. Bowers also argued that “[d]ue process and fundamental
fairness require[d] that [he] receive a copy of that referral.” Id. The district court denied
Bowers’ motions in an oral ruling issued on June 18, 2015. On July 13, 2015, the district
court issued a written order memorializing its ruling.
The case proceeded to trial on September 21, 2015. The jury, after hearing three
days of testimony, found Bowers guilty of Counts 1 and 4 as charged in the indictment.
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On December 10, 2015, the district court sentenced Bowers to a term of
imprisonment of fifteen months, to be followed by a three-year term of supervised
release. The district court also ordered Bowers, as a condition of his term of supervised
release, to make monthly payments to ClearOne on the outstanding civil judgments, with
the monthly payment amount subject to review by the probation office.
The district court entered final judgment on January 11, 2016. The final judgment
memorialized and effectively revised the special condition of supervised release imposed
by the district court:
The defendant shall pay any civil obligations to ClearOne . . . as ordered in
civil case 2:07-cv-00037[–]TC at a minimum rate of $200 a month or as
directed by the probation officer.
ROA, Vol. 6 at 584. Bowers filed a notice of appeal on January 12, 2016.
On March 28, 2016, the district court entered an amended judgment in order to
remove an entry in the original judgment that erroneously directed Bowers to pay a
certain amount of restitution to ClearOne. On April 1, 2016, Bowers filed an objection to
the amended judgment, arguing for the first time that the district court lacked “jurisdiction
to order [him] to pay obligations owed to Clear One stemming from civil case 2:07-cv-
00037[–]TC, in that he was not a party to that case and that there [wa]s no other basis to
require [him] to pay the money ordered.” Supp. ROA, Vol. 1 at 1. Bowers asked the
district court to delete this special condition of supervised release from the amended
judgment. Bowers also filed an amended notice of appeal on April 8, 2016.
On June 21, 2016, the district court issued an order overruling Bowers’ objection
17
to the amended judgment. In its order, the district court noted that at the time of
sentencing it “explained that . . . Bowers would be required to pay down his civil
judgment as a condition of his supervised release.” Supp. ROA, Vol. 2 at 1. The district
court also noted that the probation office “received the specific amount relating to . . .
Bowers’ outstanding judgments owed to ClearOne based on his conduct during the [civil]
litigation.” Id. Lastly, the district court noted that it exercised its discretion to require
Bowers “to pay those judgments, at the rate of $200 a month, as a special condition of
supervised release,” and that “[t]his special condition did not involve a greater
deprivation of liberty than reasonably necessary, . . . was consistent with pertinent policy
statements of the Sentencing Commission, and was reasonably related to the factors
outlined in 18 U.S.C. §§ 3553(a) and 3583(d).” Id. at 2.
III
Bowers asserts three issues in this appeal. First, he argues that the district court
abused its discretion by ordering him, as a special condition of supervised release, to
make monthly payments to ClearOne. Second, he argues that the district court abused its
discretion by denying his motion to compel the government to disclose the criminal
referral. Third, he argues that his sentence is illegal because 18 U.S.C. § 402 limits
sentences for crimes such as those he committed to no more than six months. As we
discuss in greater detail below, all of these issues lack merit.
Challenge to condition of supervised release
In his first issue on appeal, Bowers challenges the special condition of supervised
18
release imposed by the district court that requires him to pay any civil obligations to
ClearOne at a rate of $200 per month or as otherwise directed by his probation officer.
According to Bowers, “it appears that the district court was under the mistaken belief that
there was a ‘verdict’ and a judgment in the underlying civil case against Donald Bowers
that he ‘needed to pay.’” Aplt. Br. at 20. Although Bowers concedes that it is
“appropriate for a court to order, as part of a condition for supervised release, that a
defendant make payments as ordered by another court,” he argues that “the problem here
is that [he] was not a litigant in the underlying civil case and there was never any civil
verdict or judgment against him.” Id. at 20–21. In sum, Bowers argues that he “was
never a party to the [civil] matter, the court ordered no civil obligations to be paid by him,
and therefore, it is inappropriate for the district court [in this case] to now order [him] . . .
to pay on a civil obligation for which he was not found liable or been otherwise ordered
[to pay].” Id.
We review the imposition of a special condition of supervised release for an abuse
of discretion. United States v. Munoz, 812 F.3d 809, 817 (10th Cir. 2016). Notably, we
have held that “[d]istrict courts have broad discretion to impose special conditions of
supervised release.” United States v. Bear, 769 F.3d 1221, 1226 (10th Cir. 2014). As we
noted In Bear,
[t]he limits of that discretion are prescribed by 18 U.S.C. § 3583(d), which
requires the conditions (1) be reasonably related to the nature and
circumstances of the offense, the defendant’s history and characteristics, the
deterrence of criminal conduct, the protection of the public from further
crimes of the defendant, or the defendant’s educational, vocational,
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medical, or other correctional needs; (2) involve no greater deprivation of
liberty than is reasonably necessary to achieve the purpose of deterring
criminal activity, protecting the public, and promoting the defendant’s
rehabilitation; and (3) be consistent with any pertinent policy statements
issued by the Sentencing Commission.
Id.
The central premise of Bowers’ challenge to the special condition imposed upon
him—that the district court in the civil action never ordered any civil obligations to be
paid by him—is patently false. In fact, the district court in the civil action (Case No.
2:07-cv-00037-TC) entered three separate judgments against Bowers and in favor of
ClearOne: (1) the April 21, 2010 judgment for $57,188.61; (2) the December 8, 2011
judgment for $207,250.40; and (3) the May 13, 2013 judgment for $8,648.00. The
purpose of all three judgments was to direct Bowers to reimburse ClearOne for attorneys’
fees and costs expended in connection with the civil contempt proceedings and related
appeal. All three of the judgments are now final and, according to the record on appeal,
remain unpaid.2
Moreover, we conclude that this special condition of supervised release otherwise
satisfies the requirements of 18 U.S.C. § 3583(d). To begin with, the special condition is
reasonably related to the nature and circumstances of Bowers’ offenses of conviction
because it seeks to remedy the expenses that were incurred by ClearOne as a direct result
2
ClearOne’s CEO, Zee Hakimoglu, appeared at the sentencing proceeding and
gave a statement to the district court. In particular, Hakimoglu stated that Bowers had not
returned the Honeybee Code to ClearOne and had not paid “a penny” to ClearOne on the
outstanding judgments. ROA, Vol. 8 at 1080.
20
of Bowers’ contemptuous conduct. It is also reasonably related to Bowers’ history and
characteristics because the monthly amount directed to be paid was specifically tied to
Bowers’ financial circumstances. And, we note, it effectively affords the probation
officer with discretion to review that amount as necessary. Further, the special condition
does not impose any deprivation of liberty upon Bowers because it simply requires him to
make payments on already existing legal obligations. See United States v. Mitchell, 429
F.3d 952, 952–53 (10th Cir. 2005) (“[B]ecause Ms. Mitchell was already legally
obligated to pay the restitution from her previous convictions, the challenged condition of
supervised release” requiring her to remain current on her restitution payments “is not a
‘deprivation of liberty.’”). Lastly, there is no assertion by Bowers that the special
condition is inconsistent with any pertinent policy statements issued by the United States
Sentencing Commission.
In sum, we conclude that the district court did not abuse its discretion in requiring
Bowers, as a special condition of supervised release, to pay a set minimum monthly
amount towards the judgments entered against him and in favor of ClearOne in the
underlying civil action.
Denial of motion to disclose the criminal referral
In his second issue on appeal, Bowers challenges the district court’s denial of his
motion to disclose the criminal referral. We review for abuse of discretion the denial of a
motion for discovery in a criminal case. United States v. Apperson, 441 F.3d 1162, 1191
(10th Cir. 2006).
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After examining the record on appeal, including the criminal referral filed under
seal, we conclude that the district court did not abuse its discretion in denying Bowers’
motion to disclose the criminal referral. To begin with, nothing in the criminal referral
rendered it discoverable under Federal Rule of Criminal Procedure 16. More specifically,
the criminal referral did not include oral or written statements made by Bowers, reports of
examinations or tests, or any expert witness testimony or opinions. Fed. R. Crim. P.
16(A), (B), (F), (G). Further, nothing therein was “material to preparing the defense,”
used in the government’s case-in-chief, or “obtained from or belong[ed] to” Bowers. Fed.
R. Crim. P. 16(E).
Nor did Brady v. Maryland, 373 U.S. 83 (1963) (requiring prosecution to disclose
material exculpatory evidence to the defendant), or Giglio v. United States, 405 U.S. 150
(1972) (holding that prosecution is obligated to disclose information bearing on a
witness’s credibility where that evidence may be material to the defendant’s guilt or
punishment) require disclosure of any part of the criminal referral. That is because
nothing in the referral was exculpatory in nature, nor did anything therein concern the
credibility of any witness who appeared at trial.
Finally, the Jencks Act, 18 U.S.C. § 3500, which requires the government to
disclose to criminal defendants any statement made by a government witness that is in the
possession of the United States once that witnesses has testified, is inapplicable. That is
because the criminal referral contained only information from the district court judge who
presided over the civil proceedings, and that judge did not testify as a witness at Bowers’
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criminal trial.
In sum, nothing in the criminal referral rendered it discoverable by Bowers.
Legality of his sentence
In his appellate reply brief, Bowers argues for the first time that his fifteen-month
term of imprisonment is “illegal” under 18 U.S.C. § 402. Aplt. Reply Br. at 3. Where, as
here, “an appellant raises an issue for the first time in his reply brief, we generally deem it
waived.” United States v. Henry, 839 F.3d 1271, 1275 n.1 (10th Cir. 2016); But see
United States v. Courtney, 816 F.3d 681, 684 (10th Cir. 2016) (“[W]hen an error is
obvious enough and satisfies Rule 52(b), an appellate court, in its discretion, may
recognize the error notwithstanding briefing deficiencies.”).
Even if we were to exercise our discretion and review the issue under the plain
error standard, it is clear that Bowers is not entitled to relief. As we have noted, Bowers
was charged with and convicted of violating 18 U.S.C. § 401(3). That statute provides:
A court of the United States shall have the power to punish by fine or
imprisonment, or both, at its discretion, such contempt of its authority, and
none other, as––
***
(3) Disobedience or resistance to its lawful writ, process, order, rule, decree,
or command.
Id. As the Seventh Circuit recently noted, one of the “unusual feature[s]” of § 401 is that
it “carries no statutorily authorized maximum punishment.” United States v. Trudeau,
812 F.3d 578, 585 (7th Cir. 2016) (affirming ten-year term of imprisonment imposed for
conviction under § 401(3)); see United States v. Halliday, 665 F.3d 1219, 1226 (10th Cir.
23
2011) (affirming ten-month term of imprisonment imposed for criminal contempt
conviction under § 401 arising out of defendant’s refusal to testify before a grand jury);
United States v. Voss, 82 F.3d 1521, 1527–28 (10th Cir. 1996) (affirming sentences
ranging from twelve to twenty-four months’ imprisonment imposed on three defendants
convicted of violating § 401(3) for refusing to produce subpoenaed documents). Notably,
the revised presentence report (PSR) in this case properly advised Bowers of this fact and
Bowers made no objection to the revised PSR. See ROA, Vol. 7 at 844 (stating that “18
U.S.C. § 401(3) does not contain a statutory maximum penalty”).
The statute that Bowers now cites in his appellate reply brief, § 402, is entitled
“Contempts constituting crimes” and provides, in pertinent part:
Any person, corporation or association willfully disobeying any lawful writ,
process, order, rule, decree, or command of any district court of the United
States or any court of the District of Columbia, by doing any act or thing
therein, or thereby forbidden, if the act or thing so done be of such character
as to constitute also a criminal offense under any statute of the United
States or under the laws of any State in which the act was committed, shall
be prosecuted for such contempt as provided in section 3691 of this title and
shall be punished by a fine under this title or imprisonment, or both.
Such fine shall be paid to the United States or to the complainant or other
party injured by the act constituting the contempt, or may, where more than
one is so damaged, be divided or apportioned among them as the court may
direct, but in no case shall the fine to be paid to the United States exceed, in
case the accused is a natural person, the sum of $1,000, nor shall such
imprisonment exceed the term of six months.
This section shall not be construed to relate to contempts committed in the
presence of the court, or so near thereto as to obstruct the administration of
justice, nor to contempts committed in disobedience of any lawful writ,
process, order, rule, decree, or command entered in any suit or action
brought or prosecuted in the name of, or on behalf of, the United States, but
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the same, and all other cases of contempt not specifically embraced in this
section may be punished in conformity to the prevailing usages at law.
18 U.S.C. § 402.
Bowers argues that § 402 “proscribes the penalties for contempts” and thus
prohibited the district court in this case from sentencing him to a term of imprisonment
greater than six months. Aplt. Reply Br. at 5. We disagree. By its plain language, § 402
governs only those acts of contempt that are “of such character as to constitute also a
criminal offense under any statute of the United States or under the laws of any State in
which the act was committed.” 18 U.S.C. § 402. This point is confirmed by the very last
line of the statute, which states that “all other cases of contempt not specifically embraced
in this section may be punished in conformity to the prevailing usages at law.” Id.
Bowers was not charged with or convicted of violating § 402, and there is no
allegation that the acts of disobedience that he committed were “of such character as to
constitute also a criminal offense under any statute of the United States or under the laws
of any State.” Id. Instead, Bowers was charged with and convicted of violating § 401(3).
All of which means that the penalty provisions of § 402 are inapplicable to Bowers’ case,
and the district court was not otherwise bound by any statutory maximum sentence.
IV
The judgment of the district court is AFFIRMED.
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