Unpublished Disposition, 852 F.2d 1291 (9th Cir. 1988)

No. 87-3060.

United States Court of Appeals, Ninth Circuit.

Before EUGENE A. WRIGHT and CANBY, Circuit Judges, and CHARLES A. LEGGE,^*  District Judge.

MEMORANDUM^** 

Defendant Richard Stockton, the owner of a meat packing and storage facility, appeals from his conviction (1) of causing meat foods to become adulterated by improper storage in violation of 21 U.S.C. § 610(d), and (2) of offering the adulterated meat for sale in violation of 21 U.S.C. § 610(c).

FACTS

In 1966 defendant purchased Cold Storage Lockers, the Seattle facility at which the meat food products at issue were stored and offered for sale. He rented lockers to others for the storage of frozen foods until 1972, when he sold the facility to Ray Johnson, who later sold his interest to D & A Meats. But in 1984 Johnson and D & A Meats defaulted on the contract, and defendant again became the owner.

A Ms. Finney moved her business, University Meats, into the facility in April of 1984. At that time, she entered into negotiations with defendant to purchase the facility from him. Defendant loaned her seed money and allowed her 90-120 days grace in rental payments to allow her business to become established. During its tenancy, University Meats never paid rent to defendant.

When Ms. Finney attempted to set up the meat distribution business in defendant's facility, an agent of the U.S. Department of Agriculture told her that the facility did not meet USDA standards. She was advised that it would cost $300,000 to bring the facility up to those standards. Ms. Finney told defendant of this fact, and offered to purchase the building from him. When he declined, she moved her business out.

Finney testified at trial that during the five month period that her business operated in defendant's facility, she had numerous problems with inadequate cooling, dripping water, and rat infestation. She stated that when she brought these problems to defendant's attention, he refused to acknowledge them.

Defendant ran the facility temporarily and then leased it to Reginald Beckham. Beckham had been employed as a janitor at a hotel owned by defendant. Beckham intended to operate both a locker rental and wholesale meat distribution business. He established his own bank accounts and acquired the necessary city licenses for his businesses, Cold Storage Lockers and R & I Horizons. Beckham testified that when he began his business no money changed hands, and no documents were signed. Because Beckham had no money, defendant loaned him operating money and deferred his rental payments to allow Beckham time to become established. Defendant also paid for the electricity, water, telephone, garbage, and refrigeration repair work at the facility. While managing the facility, Beckham received the same wages he had received as a janitor--four dollars an hour plus free room and board at defendant's hotel. Defendant claims he had no involvement in or control over Beckham's business.

Beckham received the meat involved in this case from Stilson Meats, Inc. of Lewiston, Idaho. Defendant owned Stilson Meats at the time. Stilson Meats had accumulated approximately ten thousand pounds of meat products for which there was no market in Idaho. The plant manager advised defendant to market the meat in the Seattle area. Defendant thought Beckham could sell the meat because, as a minority, Beckham would have access to ethnic markets not available to defendant.

Beckham testified that he spent about 30 percent of his time attempting to develop a market for the meat, and that he would meet with defendant at least an hour a day. Beckham eventually sold some of the meat to two Seattle restaurants and also entered into negotiations to sell some to others. Beckham never paid for the meat shipment.

The prosecution presented evidence of a failing physical facility dating as far back as 1981. The facility's refrigeration plant was subject to serious breakdowns, resulting in meat spoilage. In addition, rats found their way into the facility and the food stored there. In January 1985, an inspector from the State of Washington discovered that one of the lockers was overrun by rats. Defendant told the inspector that he would take care of the problem.

In August 1985, the cooling system at the facility broke down and ammonia leaked into the atmosphere, causing the temperature inside to get as high as 31 degrees. The Fire Department was called and the block was evacuated. Defendant came to the facility and again stated that he would take care of the problem. In November 1985 a second leak occurred. During that breakdown, inspectors discovered the Stilson meat. One inspector testified that he had never seen contamination of such magnitude. The meat was eventually embargoed by the State of Washington and destroyed. When inspectors attempted to present defendant with the embargo papers, he refused to sign them. He claims he told the inspectors that it was not his property. A federal agent testified that defendant told him that the Stilson meat was his, and that he had it under consignment to Beckham, who was managing the lockers at the facility for him.

At trial, defendant did not challenge the government's allegations that the food had become adulterated at the facility as a result of the physical conditions there. He claimed, however, that he was not criminally liable because his tenant Beckham was responsible for storage of the meat. The government's theory was that defendant, in order to avoid liability for the conditions at the facility, had set Beckham up as a "strawman" to appear to run the business.

A jury convicted defendant on both counts. He was sentenced to six months confinement on the first count, and received a $10,000 fine on the second count.

INEFFECTIVE ASSISTANCE OF COUNSEL

Defendant contends that he was denied the right to effective assistance of counsel due to his attorney's conflict of interest. He claims that his trial counsel represented both defendant and Beckham. And he claims that the dual representation resulted in his counsel's failure to introduce into evidence documents showing: (a) that it was Beckham's, not defendant's contractual responsibility to maintain the facility, and (b) that in giving cash advances to Beckham, defendant was dealing with Beckham in the same manner as he had dealt with earlier tenants--that is, he advanced money to allow his tenants time to get established.

Joint representation does not per se violate constitutional guarantees of effective assistance of counsel. Holloway v. Arkansas, 435 U.S. 475, 482 (1978); United States v. Sutton, 794 F.2d 1415, 1419 (9th Cir. 1986). "In order to establish a violation of the Sixth Amendment, a defendant who raised no objection at trial must demonstrate that an actual conflict of interest adversely affected his lawyer's performance." Cuyler v. Sullivan, 446 U.S. 335, 348 (1980); Sutton, 794 F.2d at 1419. " [A] defendant who shows that a conflict of interest actually affected the adequacy of his representation need not demonstrate prejudice in order to obtain relief." Id., at 349-50; Sutton, 794 F.2d at 1419.

To prevail on his conflict of interest claim, defendant has the burden of establishing that there was joint representation, and that the joint representation created a conflict of interest. Willis v. United States, 614 F.2d 1200, 1202 (9th Cir. 1978). The parties dispute whether there was joint representation, and, if so, whether the joint representation created a conflict of interest. The only evidence before this court regarding the issue of joint representation is the following dialogue that took place after jury voir dire:

MR. HAMILTON [prosecuting attorney]: I have been advised by Mr. Kane that he represents Mr. Beckham and he does not wish me to talk to Mr. Beckham, who is going to be about our third or fourth witness in this trial.

I've tried to explain to Mr. Kane that he has a real conflict if he represents Mr. Stockton, because that will put him in a position of cross-examining his own client. I've told him that I intend to go over Mr. Beckham's testimony with him today and that he cannot represent both people.

I think he disagrees with me, so I bring that to the Court's attention.

MR. KANE: If I might reply, Your Honor, I've known Mr. Beckham and Mr. Stockton for many, many years. When this incident first came up I went down to the hotel at their request and went over all the incidents that took place and at that time I understood and Mr. Beckham understood that I was his counsel.

Subsequent to that the United States Attorney calls him on the telephone and tells him that he wants him to come up here and talk to one of the judges and incriminate Mr. Stockton and then they got in touch with me immediately.

Subsequent to that, the United States Attorney subpoenas Reggie Beckham as his witness. Now, I thought he was my client and I think if we ask Reggie who's his counsel he's going to say I am and a person should have the right to choose his own counsel, Your Honor.

So I'll leave it--

THE COURT: No, that's not enough, counsel. Your statement completely misses the point. The government has the right to subpoena this individual and the individual has the right to make the determination whether he wants to testify for the government or not. That decision has already been made. The government has subpoenaed him. He has decided to comply with the subpoena. He is prepared to testify here today.

Now, the fact that you are his counsel has no bearing on this, other than to create a problem, and I don't know quite how we're going to resolve it because you're both from the same firm, aren't you?

MR. MEYERS: That's correct, Your Honor.

THE COURT: So even if Mr. Kane withdrew as counsel, I don't know that the problem is overcome or not, Mr. Hamilton. I don't understand how--I just don't understand how it can be resolved at all. I just don't understand how it can be resolved if Mr. Kane represents Mr. Beckham. I mean, even if Mr. Kane didn't participate in this case, I'm not sure that Mr. Meyers can go ahead anyway.

MR. MEYERS: Your Honor, if I may speak, I think at this particular point, at least in the United States District Court, there are no charges against Mr. Beckham, there has been no legal representation--formal representation of him. I think how this matter can be resolved is simply by having our offices precluded from representing Mr. Beckham because so far, to date, we have only been involved with Mr. Stockton.

THE COURT: That's not what Mr. Kane just said. Mr. Kane said that he represents Mr. Beckham now and if that's true--I mean, if you represented Mr. Beckham in the sense that he was an employee of Mr. Stockton and he came in and spoke to you, but didn't personally represent him, then I think there is no problem, but Mr. Kane isn't saying that. He's saying he's Mr. Beckham's lawyer, he has represented him, he does represent him now. If so, I don't see how you can represent Mr. Stockton. I don't see how we can go forward with this trial.

Now, you and Mr. Kane may want to discuss this.

MR. MEYERS: We have, Your Honor.

MR. KANE: I only object, Your Honor, to the United States Attorney questioning during the lunch hour Mr. Beckham unless I was present.

THE COURT: Mr. Kane, if you represent Mr. Beckham this trial cannot go forward. Do you understand that? If you are Mr. Beckham's attorney, then you and Mr. Meyers must withdraw from representing Mr. Stockton. You cannot put yourself in that position. You cannot cross-examine your own client. You understand that?

MR. KANE: I am not going to cross-examine him. I'm not going to call him as a witness. I just want to be present in the interrogation.

THE COURT: Mr. Meyers, you're going to have to explain this to Mr. Kane, I don't think he's understanding this Court.

MR. MEYERS: If I may have a moment, Your Honor.

* * *

* * *

MR. MEYERS: Good morning again, Your Honor. I have discussed the potential problem with Mr. Kane and to clarify things for the Court, Mr. Kane's representations to the Court regarding representation of Mr. Beckham was based upon his interviews of Mr. Beckham when this--when Mr. Beckham and Mr. Stockton were originally apprised that there was a problem that could possibly result in charges in Court here.

Mr. Kane has not represented Mr. Beckham in any proceeding in the past, nor is he to be representing Mr. Beckham in any future proceedings. I have discussed this with the government's counsel and I've also discussed this with my client and my client is willing on the record to waive any objection or issue as to the possible conflict of interests in our office representing him.

THE COURT: Well, there either is or isn't a conflict. I think from what you've said to me there isn't a conflict. The only other matter we might want to do to make this absolutely clear on the record is ask Mr. Beckham if he considers himself to be--to have retained either you or Mr. Kane.

MR. MEYERS: He will not be here until about 1:30, Your Honor.

THE COURT: Well, that's fine. Why don't we just go ahead and assume that counsel feels he is not retained or doesn't represent Mr. Beckham. Mr. Beckham will confirm that and that will be the end of the matter. Meanwhile, we will go ahead with opening statements, okay? (Emphasis added.)

The record does not disclose that either counsel or the court inquired of Beckham whether he thought that Mr. Kane was his counsel. Nor does the record indicate whether they inquired of defendant whether he was willing to waive any potential conflict of interest. Both Beckham and defendant did testify at the trial.

The record establishes that there was at least some representation of Beckham by defendant's counsel. Kane stated that he had known Beckham and Stockton for several years, that after they became aware of this prosecution he interviewed both Beckham and Stockton jointly regarding potential liability, that he thought Beckham was his client, and that Beckham thought he was Beckham's attorney. Further, the issue of possible conflict was brought to the court's attention because Kane did not want the prosecution to speak with Beckham, on the ground that he was Beckham's attorney.

The government argues that, based on Meyer's statement that Kane had not represented Beckham "in any proceeding in the past, nor is he representing Mr. Beckham in any future proceedings," there was no joint representation creating a conflict of interest. However, that alone does not resolve the problem. The reported cases do not limit joint representation and conflicts of interest to situations where there is formal representation in a proceeding. The existence of a conflict only requires an adverse relationship in related cases, not representation in the same proceeding. See, e.g., Trone v. Smith, 621 F.2d 994, 998-99 (9th Cir. 1980) ("In successive representation, conflicts of interest arise if an attorney reveals privileged communications of the former client, or otherwise divides his loyalties so that he is incapable of diligently representing his client").

The government next argues that because it told Beckham before he testified that it did not intend to prosecute him there was no conflict of interest problem. However, regardless of whether a witness/client was immunized or otherwise resolved his own difficulties with the prosecution, a conflict of interest can remain. See, e.g., United States v. Vargas-Martinez, 569 F.2d 1102, 1104 (9th Cir. 1978) (where codefendant agreed to be prosecution witness, court properly ordered substitution of counsel because of possibility of disclosure of confidential communications and fact that dual representation created inescapable conflict of interest). Further, at oral argument, the government stated that no formal immunity had been given to Beckham. Thus, at the time of defendant's trial, it may still have been possible for Beckham to be prosecuted. And even apart from any issue of Beckham's exposure to criminal prosecution, there could still be a conflict of interest because Beckham may have been exposed to potential civil liability.

Beckham and Stockton had conflicting interests. At trial it was conceded that the meat had become adulterated. It was in defendant's interest, in fact his only defense, to establish that Beckham ran the business, was responsible for maintenance of the facility, and was therefore responsible for the meat's adulteration. That defense was clearly contrary to Beckham's interests.

Further, the record does not establish that the conflict of interest problem was resolved. Although the court expressed an intent to do so, neither defendant nor Beckham was asked whether there was a conflict of interest, or whether either was willing to waive any conflict. Defense counsel told the court that defendant was willing to waive any conflict, but it is not enough to rely upon counsel's statements regarding waiver. See United States v. Lawriw, 568 F.2d 98, 104 (8th Cir. 1977), cert. denied, 435 U.S. 969 (1978).

The state of the record is that the question of conflict of interest was raised, that the issue was material, but that it was not resolved.

Defendant must also show that the conflict adversely affected his counsel's performance. Cuyler, 446 U.S. at 348. That is, defendant must identify an actual lapse in representation. Id. at 1421; Sutton, 794 F.2d at 1421. Under Strickland v. Washington, 466 U.S. 668, 687-88 (1984), defendant must show that his counsel's representation fell below an objective standard of reasonableness. Sutton, 794 F.2d at 1421.

Defendant first claims that his trial counsel erred in failing to introduce into evidence a handwritten lease signed by Beckham and defendant. Defendant argues that the lease should have been used to impeach Beckham when he testified that he did not sign any documents. The lease might also have been useful to defendant in that it stated that Beckham was to "maintain [the] building and land in a good, safe manner," and thus could be evidence that Beckham assumed responsibility for the facility.

Trial counsel did not introduce documents establishing that previous tenants had similarly agreed to assume responsibility for maintenance. For example, a proposed lease with Ms. Finney provided that all expenses for maintenance and utilities would be paid by the tenant. Counsel did not use that document even though it might have demonstrated defendant's claim of requiring occupants to assume responsibility for the physical conditions of the facility.

At trial the government argued that defendant's culpability, and his use of Beckham as a strawman, was reflected in Stilson's sale of meat to Beckham. Defense counsel had documents showing that Stilson had also sold meat to previous tenants, including D & A and University Meats, but did not introduce them into evidence to rebut the government's theory. Further, when Stilson's sales manager testified that Stilson had not sold to three previous tenants, counsel did not impeach that witness with the Stilson sales records, which showed that Stilson had sold to them.

The acts of defendant's counsel could have been tactical decisions made for defendant's benefit and in his best interests. However, they could have been due to defense counsel's conflict in representing both defendant and Beckham. Because there is a showing of conflict of interest, and because his counsel made some decisions arguably against his interests, defendant need not show that he was prejudiced by his counsel's conduct. Cuyler, 446 U.S. at 349-50.

The government argues that the issue of conflict of interest was not presented to the trial court and therefore cannot be raised on appeal. The policy underlying the rule that only matters brought to the attention of the trial court may be raised on appeal is that it would be unfair to surprise litigants on appeal by requesting final decision of issues on which they did not have an opportunity to introduce evidence. United States v. Whitten, 706 F.2d 1000, 1012 (9th Cir. 1983), cert. denied, 465 U.S. 1000 (1984). Here, however, the issue of conflict of interest was presented to the trial court, and the prosecutor had an opportunity to and did address the issue. Further, it would be unfair to deny defendant an appeal on his claim of ineffective assistance of counsel solely because his counsel failed to object at trial to his own error.

Accordingly, this court concludes that defendant has shown a conflict of interest that denied him the effective assistance of counsel. His conviction is therefore reversed and this case is remanded to the district court for a new trial.

REVERSED and REMANDED.