Court Opinion

ID: 9686028
Source: CourtListenerOpinion
Date Created: 2023-08-24 15:16:58.032346+00
Date Added: 2024-06-11T18:18:12.890029
License: Public Domain

MARKELL, Bankruptcy Judge,
concurring.
I reluctantly concur. My reluctance stems not from a disagreement with the majority over its analysis of the case; I cannot fault that. It does not derive from concerns over the scope or import of the majority’s words; those also are beyond any serious objection.
Instead, my reluctance comes from discomfort with our long-established rule that, unless changed by a higher court or Congress, we must follow our own precedent, regardless of how flawed it may be. Concannon v. Imperial Cap. Bank (In re Concannon), 338 B.R. 90, 95 (9th Cir. BAP 2006); Salomon N. Am. v. Knupfer (In re Wind N’ Wave), 328 B.R. 176, 181 (9th Cir. BAP 2005); Ball v. Payco-Gen. Am. Credits (In re Ball), 185 B.R. 595, 597 (9th Cir. BAP 1995).
Adherence to that rule decides this case. Taken together, Price v. Lehtinen (In re Lehtinen), 332 B.R. 404, 416-17 (9th Cir. BAP 2005) and Peugeot v. United States Trustee (In re Crayton), 192 B.R. 970, 980 (9th Cir. BAP 1996) require a bankruptcy court to expressly and overtly consider the American Bar Association standards for attorney sanctions.20 There is no doubt that the bankruptcy court did not cite the ABA standards in its decision. Our prior precedent thus requires reversal.
But blindly applying Lehtinen and Crayton to the facts of this case leads, I believe, to a result that should offend those who care about how courts operate, or who wish courts to operate rationally. My belief rests on two arguments.
First, Lehtinen and Crayton are discordant with the agreed standard of review. As the majority correctly states, we review all aspects of a bankruptcy court’s decision to impose Rule 9011 sanctions for abuse of discretion. Valley Nat’l Bank v. Needler (In re Grantham Bros.), 922 F.2d 1438, 1441 (9th Cir.1991). This means that a bankruptcy court’s decision that conduct is sanctionable is not disturbed unless discretion was abused. More importantly, however, and as also recognized by the majority, this high level of review also applies to the bankruptcy court’s choice of sanction. U.S. Dist. Ct. for E.D. Wash. v. Sandlin, 12 F.3d 861, 865 (9th Cir.1993). See also Chambers v. NASCO, Inc., 501 U.S. 32, 44-45, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (in discussing a court’s discretionary use of its inherent powers, stating that “[a] primary aspect of that discretion is the ability to fashion an appropriate sanction for conduct which abuses the judicial process.”).
As a consequence, there can be no quibble that we must give great deference to *255the bankruptcy court’s decision that specified conduct is sanctionable, as well as to its decision as to what corrective action to take. And that is how it should be. Bankruptcy judges, along with all other federal judges, possess the inherent power to run the type of courtroom that they believe best serves justice, see Chambers, 501 U.S. at 43-44, 111 S.Ct. 2123, and that power historically has included the power to suspend attorneys from practice. E.g., Ex parte Burr, 22 U.S. (9 Wheat.) 529, 531, 6 L.Ed. 152 (1824).
Despite this standard of review, Lehti-nen and Crayton require that bankruptcy courts mechanically recite and consult the ABA standards. We do not give the bankruptcy court the benefit of the doubt that it consulted but did not mention the standards, nor do we undertake a review of the sanctions imposed to see if we independently conclude that the sanction is within those standards. Such a formulaic review is the antithesis of a review based upon the abuse of discretion standard.
Our position also leads to further unnecessary delay. Once we detect that the ABA standards have not been cited, we simply stop our analysis and send the matter back. Given the deference we admit is due to the bankruptcy court, however, a good case can be made that we should affirm, regardless of whether the court slavishly intoned that the applicable standards were consulted, at least if we can determine that the sanction imposed is consistent with the ABA standards. And if we don’t believe that the sanction is consistent with the ABA standards, we should reverse, thereby resolving the issue once and for all. But for Mr. Smyth, those determinations are for another day; sending the case back in its current status resolves nothing. The upshot of this dithering is that while we say we apply the abuse of discretion standard, we act inconsistently with its purpose and rationale.
My second argument builds on these points: adherence to Lehtinen and Cray-ton requires us knowingly to apply precedent that, while binding, doesn’t fit the facts or the context of this appeal. Put another way, Crayton and Lehtinen require, in my view, the use of standards ill-adapted to federal bankruptcy proceedings.
This point is made by the subject matter of this appeal. It involves the imposition of sanctions under federal Rule 9011 and Section 105 of the federal Bankruptcy Code. By contrast, the ABA standards were drafted primarily for use in nonbank-ruptcy civil litigation under the ABA’s Model Rules of Professional Conduct. ABA standards ¶ 1.3.21
The ABA Model Rules, however, appear not to apply in this case. Attorneys in the Northern District of California must “comply with the standards of professional conduct required of members of the State Bar of California.” N.D. Cal. Looal Civ. R. 11-4(a), incorporated by N.D. Cal. Local Bankr.R. 1001-2(a). While these state rules are similar to the ABA Model Rules, they differ in several respects.22 This calls *256into doubt the wisdom of requiring consultation with the ABA standards in all cases, without consideration of the scope of the standards in the first instance.
Further, review and revision of these standards are not in the hands of either Congress or the courts. In addition, there is no showing that the ABA considered bankruptcy’s distinctive context when drafting the standards. Given this, it strikes me as incongruous to require that, before a bankruptcy court can impose sanctions under a federal rule, it must recite that it considered standards developed primarily for nonfederal courts by unelected and nonjudicial parties. This is especially troubling when some districts, such as the Northern District of California, have procedures already in place to consider the propriety of suspending an attorney from practice, and those procedures do not require consideration of the ABA standards. N.D. Cal. Local Civ. R. 11-6, incorporated by N.D. Cal. Local Bankr.R. 1001—2(a).23
The main problem, of course, is our rigid view that we cannot change or alter our prior precedent, even if we think it dead wrong. Although adherence to precedent is a venerable ideal,24 experience shows that it is unwise to enshrine precedent and never reconsider it.25 I submit that this is *257a case in which we should take the opportunity to reform or reject Crayton and Lehtinen’s troublesome and potentially irrelevant holdings.
But the odd composition of this court26 and the lack of any procedure, such as an en banc rule, to reconsider our prior decisions effectively ensconce our precedents as if they were infallible.27 This itself is wrong- — as John Maynard Keynes once remarked, “When the facts change, I change my mind. What do you do, sir?”28
But as we have bound ourselves to follow such a procedure, I cannot fault the majority when it faithfully implements it. I thus concur.

. The ABA standards are more formally cited as Joint Committee on Professional Sanctions, Standards for Imposing Lawyer Sanctions. They were originally adopted in 1986 and amended' in 1992, and the current version bears a copyright date of 2005. The standards can be found at: h ttp://www.abanet. org/cpr/regulation/standards_s anctions.pdf.

. It is true that the standards expressly indicate that they also may be applied to ascertain appropriate sanctions for violations of "applicable standards under the laws of the jurisdiction where the proceeding is brought.” ABA standards § 1.3. But the bulk of the citations in the standards are to the ABA’s own rules, not to any variations adopted by individual jurisdictions.

. A leading treatise states that because "the [California] rules of discipline follow the format of neither the Code or the Model Rules, but borrow considerable substance from each,” and are layered with “significant statutory regulation ... [this makes] it even more difficult properly to characterize the situation there.” 1 Geoffrey C. Hazard, Jr, W. William *256Hodes & Peter R. Jarvis, The Law Of Lawyering § 1.15, at p. 1-26 n. 1 (3d ed.2008).

.The relevant text of the N.D. Cal. Local Rule on discipline follows:
11-6. Discipline.
(a) General. In the event that a Judge has cause to believe that an attorney has engaged in unprofessional conduct, the Judge may do any or all of the following:
(1) Initiate proceedings for civil or criminal contempt under Title 18 of the United States Code and Rule 42 of the Federal Rules of Criminal Procedure;
(2) Impose other appropriate sanctions;
(3) Refer the matter to the appropriate disciplinary authority of the state or jurisdiction in which the attorney is licensed to practice;
(4) Refer the matter to the Court's Standing Committee on Professional Conduct; or
(5) Refer the matter to the Chief Judge for her or him to consider whether to issue an order to show cause under Civ. L.R. 11-7.
(c) Standing Committee on Professional Conduct. The Court will appoint as Special Masters for Disciplinary Proceedings pending before the Court, a Standing Committee on Professional Conduct consisting of seven members of the bar and designate one of the members to serve as Chair of the Committee. The members of the Committee shall continue in office for a period of 4 years. Members shall serve staggered terms, with four of the first appointees serving for 2 years and three members serving for 4 years.
(d) Discipline Oversight Committee. The Chief Judge shall appoint three (3) or more Judges to a Discipline Oversight Committee which shall oversee the administration of this Local Rule.

. “For the habit of lightly changing the laws is an evil, and, when the advantage is small some errors both of lawgivers and rules had better be left; the citizen will not gain so much by making the change as he will lose by the habit of disobedience." Aristotle, Politics, Book II, ch. 8, reprinted in The Basic Works of Aristotle 1164 (Richard McKeon ed., 1941). The text can also be found on-line at http://clas sics.mit.edu/Aristotle/politics.2.two.html.

. The English House of Lords once held such a view, but jettisoned it after it proved unworkable and unjust. Starting roughly in 1898, the House of Lords declared itself absolutely bound by its prior precedents, and without the ability to decline to follow an admittedly applicable precedent. See London St. Tramways Co. v. London County Council, [1898] A.C. 375, 381 (H.L.) (appeal taken from Eng.) (U.K.). See also Beamish v. Beamish, (1861) 9 H.L.C. 274, 11 Eng. Rep. 735 (H.L.)(appeal taken from Ir.)(U.K.). In 1966, the House of Lords changed its mind, and did so by way of a simple statement, unconnected with any pending case. Practice Statement (Judicial Precedent), [1966] 1 W.L.R. 1234, *2571234 (H.L.) (stating that "too rigid adherence to precedent may lead to injustice in a particular case” and asserting ability to "depart from a previous decision when it appears right to do so.”).

. By statute, we are a "bankruptcy appellate panel service,” a phrase that does not contain the word "court.” 28 U.S.C. § 158(b)(1). But the six judges who are appointed to this service assuredly are a court for purposes of considering the wisdom of prior precedent. The relevant statute requires this service to be staffed by "bankruptcy judges of the districts in the circuit who are appointed by the judicial council” and then gives those judges— that is, the entire panel — the power "to hear and determine, with the consent of all the parties, appeals....” Id.
The power to hear such appeals and then to enter binding judgments vests in us judicial power. That power is the essence of being a court. Indeed, if we did not have any judicial power or were not a court, our collective adoption of court-developed rules, such as the rule that we cannot overturn prior precedent, would have no recognized rationale.
For a good recent examination of the constitutional status of bankruptcy judges, see Tuan Samahon, Are Bankruptcy Judges Unconstitutional? An Appointments Clause Challenge, 60 Hastings L.J. 233 (2008).

. I obviously refer only to precedents of this court; we do not have the power or authority to ignore binding Ninth Circuit or Supreme Court precedent. Hart v. Massanari, 266 F.3d 1155, 1170 (9th Cir.2001) ("A district judge may not respectfully (or disrespectfully) disagree with his learned colleagues on his own court of appeals who have ruled on a controlling legal issue, or with Supreme Court Justices writing for a majority of the Court.... Binding authority must be followed unless and until overruled by a body competent to do so.”). See also IRS v. Osborne (In re Osborne), 76 F.3d 306, 309 (9th Cir.1996).

. This remark reportedly was in response to criticism that he had changed his mind on monetary policy during the Depression. Alfred L. Malabre, Lost Prophets: An Insider’s History of the Modern Economists 220 (1994).