In Re: Allen W. Bird, II , 353 F.3d 636 ( 2003 )

PER CURIAM.

Mien W. Bird II was the trustee of three corporate bankruptcy estates in Arkansas. After conducting a lengthy hearing, the bankruptcy court found Bird breached his fiduciary duty to the debtors’ estates and committed fraud on the bankruptcy court. The court imposed sanctions, ordered Bird to disgorge his fees, and charged him the fees of other attorneys. Bird appealed, and the district court affirmed. The bankruptcy court then referred the matter to the Arkansas federal district courts for appropriate disciplinary action. Based on the findings of the Bankruptcy Court and on the District Court’s memorandum and affirming order, the Chief Judges of the district courts¹ issued show cause orders citing violations of the Model Federal Rules of Disciplinary Enforcement, which the district courts had adopted to govern cases of attorney discipline. Bird responded. Acting apparently for all of the district judges of both districts, the Chief Judges then issued a joint order concluding Bird had violated Model Rule of Professional Conduct 8.4(c) and revoking Bird’s privilege to practice law in Arkansas federal district courts.

Bird filed two notices of appeal from the joint order, asserting the district courts committed error in failing to give him the procedural protections available under the Model Federal Rules of Disciplinary Enforcement. Specifically, the relevant aspects of the Model Rules provide (1) the district court shall refer allegations of attorney misconduct to counsel for investigation, (2) after investigation, counsel shall file a recommendation with the district court, (3) if disciplinary proceedings are warranted, the district court shall issue a show cause order giving the accused attorney thirty days to respond, and (4) the district court shall conduct a hearing if the accused attorney wishes to dispute facts or to be heard in mitigation.

We agree with Bird that the district courts failed to follow precisely the four provisions noted above. We further agree with Bird that, having adopted procedural rules governing attorney discipline, the district courts should have followed them. See Weissman v. Quail Lodge, Inc., 179 F.3d 1194, 1198-99 (9th Cir.1999); In re Thalheim, 853 F.2d 383, 386 (5th Cir.1988); In re Abrams, 521 F.2d 1094, 1104 (3rd Cir.), cert. denied, 423 U.S. 1038, 96 S.Ct. 574, 46 L.Ed.2d 413 (1975). However, we conclude the district courts’ deviation from the Model Rules was harmless in this case.

Bird’s procedural challenges were lodged with the district courts, discussed and argued by his counsel in a reported telephone hearing with the Chief Judges, and rejected by them. The district courts, relying on their own precedent, noted the Model Federal Rules of Disciplinary Enforcement do not require in all instances a referral for investigation and prosecution of a formal disciplinary proceeding in cases of alleged misconduct. In re Starr, 986 F.Supp. 1144, 1149 (E.D.Ark.1997).

The district courts found Bird had received adequate procedural protection and there was no need to refer the matter to counsel for investigation and prosecution. The bankruptcy court had conducted a lengthy ten-day hearing, during which Bird testified, and that record was available. Bird also appeared personally and through counsel at a hearing on his appeal from the bankruptcy court’s order. Further, after the district courts issued the show cause order, Bird agreed there were no mitigating factors or facts that had not been presented to the bankruptcy court, and he substantially agreed with the bankruptcy court’s findings of fact. Bird’s defense was that although he agreed he had committed the acts found by the bankruptcy court, he did so inadvertently or negligently, not with the mens rea necessary to rise to the level of professional misconduct. In these circumstances, the district courts concluded Bird had adequate notice and an opportunity to be heard in a meaningful time and in a meaningful manner, and it was necessary neither to refer the matter to counsel for investigation and prosecution nor to conduct a new evidentiary hearing because there were no material facts in dispute.

Although the district courts should not have disregarded the Model Rules’ referral and hearing requirements, Bird was not prejudiced because he was only challenging the legal conclusions to be drawn from undisputed facts, and he was heard through his counsel on those matters. Accordingly, we affirm.

1 . The Honorable Susan Webber Wright, Chief Judge, United States District Court for the Eastern District of Arkansas, and the Honorable Jimm Larry Hendren, Chief Judge, United States District Court for the Western District of Arkansas.