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M.K. METALS, INC. v. NATIONAL STEEL CORP.

United States District Court, Northern District of Illinois, E.D


September 5, 1984

M.K. METALS, INC., PLAINTIFF,
v.
NATIONAL STEEL CORP., DEFENDANT.

The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

M.K. Metals, Inc. ("M.K.") has asked that I recuse myself under 28 U.S.C. § 455 ("Section 455"). For the reasons set forth in this memorandum opinion and order, M.K.'s request is denied.

Facts

In response to one of the inquiries posed by this Court's form of final pretrial order, National Steel Corp. ("National") announced it would call as an expert witness Professor Dennis Carlton, a senior economist and principal at Lexecon, Inc. ("Lexecon") and an economist at the University of Chicago Law School. At the immediately ensuing pretrial conference I disclosed (in conformity with the Code of Judicial Conduct) that although I do not know Professor Carlton I have had the following connections with Lexecon:

    1. Before I joined this District Court in June
  1980, my then law firm and I represented Lexecon
  and two of its three principals, then Professor
  (now Circuit Judge) Richard Posner and Andrew
  Rosenfield (a non-practicing lawyer now in his
  early thirties). Because both those principals
  were lawyers and because Lexecon's regular
  business affairs did not involve the need for
  outside legal representation, what my law firm
  and I did for Lexecon was in discrete areas:
  formation of the corporation (done by others in
  the firm), obtaining an opinion from the ABA
  Committee on Professional Responsibility (handled
  by me) and negotiation of an office lease (also
  handled by me). My former firm no longer
  represents either Lexecon or its principals and
  has not done so for some time (because I have not
  kept in touch with either Lexecon or with the
  firm's activities, I do not know when the
  representation ceased).*fn1 Andrew Rosenfield is
  still a principal in Lexecon, and I assume Judge
  Posner is not.

    2. Though I did not detail to the parties my
  representation of Andrew Rosenfield individually,
  the facts are that during my last two years in
  the practice of law that consisted of my devoting
  something under five hours to conferring with him
  about tax and estate planning matters. During the
  latter part of that period my then law firm was
  also involved in some services in connection with
  an art gallery his wife (who has independent
  assets) was setting up.

    3. Maurice Rosenfield, father of Andrew and
  himself a non-practicing lawyer, has been and
  still is of counsel to my former law firm.

    4. Maurice Rosenfield and his wife Lois had
  established a number of family planning trusts
  many years ago,*fn2 under all of which Andrew
  and his brother were, and presumably still are,
  beneficiaries (either vested or contingent). In
  each instance Maurice Rosenfield and I were
  designated the original co-trustees. Andrew has
  no power to designate trustees, to draw down
  funds or to control the trusts' investment or
  management decisions. When I was appointed to the
  federal bench, consistent with the Code of
  Judicial Conduct I resigned all those
  trusteeships. Since that time I have had no
  knowledge of the trusts or any matters relating
  to them (with the exception of the
  collaterally-learned information referred to in
  Paragraph 5), and I do not know the identity of
  the present Trustee or Trustees (save that
  Maurice presumably is still serving, and under
  the trusts' provisions Andrew cannot now be
  serving, in that capacity).

    5. Both the Rosenfield family trusts referred
  to in Paragraph 4 (not Andrew individually) and I
  hold separate investments as limited partners in
  two limited partnerships. Under those
  partnerships the law requires (and the facts are)
  that the limited partners play no part in
  management at all. Like corporations, the limited
  partnerships are investment vehicles (indeed the
  voting rights of corporate shareholders are greater
  than any voting rights of the limited partners). In
  each instance I (or my wife and I collectively) own
  something less than a 2% interest in the investment
  limited partnership, while the Rosenfield family
  trusts hold a larger, but also minority,
  interest.*fn3

Shortly after the pretrial conference M.K. asked that I consider possible recusal. Then the parties requested deferral of the question while they negotiated a possible settlement. Now those discussions have not borne fruit, and M.K. has renewed its request for recusal.

Standards for Recusal

Section 455 defines the criteria for disqualification of judges. M.K. does not assert (nor could it) any of the specific grounds for recusal enumerated in Section 455(b) apply here. For example, I certainly have no "financial interest in the subject matter in controversy," nor do I have "any other interest that could be substantially affected by the outcome of the proceeding" (Section 455(b)(4)). M.K.'s request for recusal is novel because it invokes my relationship to a witness rather than a party. Thus any "interest" I even arguably have is extremely attenuated: It is neither an interest "in the subject matter" nor one capable of being "substantially affected by the outcome."

Accordingly M.K. focuses its recusal argument on the catch-all language of Section 455(a), which reads in its entirety:

  Any justice, judge, or magistrate of the United
  States shall disqualify himself in any proceeding
  in which his impartiality might reasonably be
  questioned.

Because Section 455(a) contains an objective standard, the issue is controlled neither by my own view of my ability to preside impartially over the case nor by the fact that M.K.'s principal has questioned my impartiality. In either case my impartiality must have been questioned reasonably.

In re United States, 666 F.2d 690, 694 (1st Cir. 1981) (citation omitted) states the competing policies in light of which my relationship to Lexecon must be considered:

  The first and most obvious policy is that courts
  must not only be, but must seem to be, free of
  bias or prejudice. To ensure

  that the proceedings appear to the public to be
  impartial and hence worthy of their confidence,
  the situation must be viewed through the eyes of
  the objective person. . . .

  A second and less obvious policy is that a judge
  once having drawn a case should not recuse
  himself on an unsupported, irrational, or highly
  tenuous speculation; were he or she to do so, the
  price of maintaining the purity of appearance
  would be the power of litigants or third parties
  to exercise a negative veto over the assignment
  of judges.

It then goes on to define the applicable objective standard (id. at 695, citation omitted, emphasis in original):

  [D]isqualification is appropriate only if the
  facts provide what an objective, knowledgeable
  member of the public would find to be a
  reasonable basis for doubting the judge's
  impartiality. Were less required, a judge could
  abdicate in difficult cases at the mere sound of
  controversy or a litigant could avoid adverse
  decisions by alleging the slightest of factual
  bases for bias. . . . This restricted mandate to
  disqualify is calculated to induce a judge to tread
  the narrow path between timidity and tenacity.

To evaluate the asserted grounds for recusal, I will examine each potential kind of bias I might conceivably harbor as a result of the relationship already described and ask whether that possibility would concern a reasonable person. Sources of potential bias that might concern M.K. comprise

(1) fiduciary loyalty to Lexecon and its principals,

(2) financial interest in Lexecon or its principals and

(3) friendship with Lexecon's principals.

1. Fiduciary Loyalty

All my legal representation of Lexecon and its principals, as well as my co-trusteeship of the trusts of which Andrew Rosenfield was a beneficiary, terminated over four years ago. Those matters do not separately or collectively present a realistic threat or appearance of partiality. See S.J. Groves & Sons v. International Brotherhood of Teamsters, etc., Local 627, 581 F.2d 1241, 1246-48 (7th Cir. 1978). In fact those past involvements with Lexecon and its principals would not necessarily require recusal even if Lexecon were a party to a suit before me, so long as the suit did not pertain to the same subject matter as did the representation. See Chitimacha Tribe of Louisiana v. Harry L. Laws Co., 690 F.2d 1157, 1166 (5th Cir. 1982). A fortiori an appearance by a Lexecon principal as a witness does not require recusal.

2. Financial Interest

Plainly I have no current financial stake in the financial well-being of Lexecon, any of its principals (such as Andrew Rosenfield) or any member of the immediate family of any of those principals (such as Maurice Rosenfield). My only present involvement with the Rosenfields' finances is the ownership of two investments in limited partnerships in which the Rosenfield family trusts also hold investments.

Even assuming my handling of this case will have an effect on the Rosenfields' finances (a tenuous assumption examined in greater detail below), no such effect could alter my own position in those partnerships. We are not, in any meaningful sense of the term, business partners such that an improvement in the Rosenfields' financial position could conceivably impact my own. Absent any financial interest whatever on my part in Lexecon or the Rosenfields, no legal discussion is necessary as to what types of financial interests would be impermissible.

3. Friendship

Of course I am friendly toward Andrew Rosenfield. While in private practice I worked closely with Andrew's father Maurice for many years and served as a trustee for the Rosenfield family trusts, of which Andrew was a beneficiary. During the summer I see the senior Rosenfields regularly as part of the crowd attending the Ravinia concerts, and on occasion we are guests at the same social function.*fn4 Although I see Andrew much less frequently, both he and his then Lexecon colleague Professor (now Judge) Richard Posner were my clients at one time. On that basis M.K. argues not that I will promote my own self-interest in this litigation, but rather that I may confer indirect benefits on National's expert witness out of a sense of obligation to do good to my friends.

To my knowledge every federal court faced with arguments for recusal based on friendship has found recusal unnecessary. For example In re United States rejected the contention a district judge could not try a criminal defendant because that defendant had once done a favor for a close friend of the judge. As the Court of Appeals stated (666 F.2d at 696):

  Even, however, if one may assume the survival of
  some residue of gratitude after [15 years] . . .,
  it is beyond contemplation that such gratitude
  would be of the weight necessary to cause a judge
  to jettison his impartiality and, in open court
  day after day, to violate his deepest
  professional and ethical commitments as a judge.

It then explained why friendships and favors cannot serve as the basis for recusal (id. at 696-97):

  If the receipt by a judge's friend of a favor
  long ago from one who is a present litigant
  should disqualify the judge, judges could hope to
  preside without challenge solely in communities
  in which they are strangers. For when a judge
  presides in an area where he and his family have
  lived for one or more generations, the numbers of
  people who have, directly or indirectly, helped
  family members, relatives, close friends, and
  friends of friends would form a large and
  indeterminate community. So also are there bound
  to be indefinite numbers of people who have been
  critical of or been on opposite sides of
  controversies with families, relatives, and
  friends. Not only would the role of judges be
  severely constricted by requiring
  disqualification under these circumstances but
  the result would reflect a more jaundiced view as
  to when there should be a reasonable doubt about
  a judge's impartiality than accords with the
  public perception.

See also Parrish v. Board of Commissioners, 524 F.2d 98, 102 (5th Cir. 1975), and cases cited therein.

Even were it assumed friendship could provide a basis for recusal, any connection between Andrew's well-being and the credibility I might attach to Professor Carlton's testimony is far too attenuated to be cognizable in the current analysis.*fn5 M.K. argued for recusal based on that connection (January 17, 1984 Letter at 2):

  Lexecon's principal business activity is
  providing expert testimony in lawsuits such as
  this one. Its financial well-being (and, hence,
  the financial well-being of its owners) is
  plainly intimately related to its ability to
  persuade courts and juries of the rightness of
  the expert opinion testimony (as opposed to fact
  testimony) its owners give.

But stating the nature of Andrew's stake in the trial does not go far enough. M.K. also must indicate why it is reasonable to be concerned about my partiality as a result.

Apparently M.K.'s scenario contemplates that if Lexecon's witness were discredited by a jury in this case, other customers may leave or may fail to come to Lexecon in the first place. If Lexecon has fewer customers, Andrew's total income will drop or he will be forced to rely more heavily on other sources. M.K. apparently fears that to prevent such a result I will conduct myself in such a way that the jury believes I credit Professor Carlton's testimony, and that I will make evidentiary rulings with an eye toward presentation of that evidence in a favorable light.

Simply to state that concern discloses its objective unreasonableness, and no extended discussion should be required. Nonetheless, because it is M.K.'s most strongly presented argument for recusal, it may be appropriate to examine some persuasive precedent in the case law.

Chitimacha Tribe, 690 F.2d at 1166-67 considered and rejected an asserted fear of partiality similar to M.K.'s here. There plaintiffs argued on appeal that the district judge himself (not just his friend) would profit from a judgment in favor of one of the defendants (Texaco, Inc.) because he had a present investment interest in his former law firm, which occasionally provided legal services to that defendant. Chitimacha Tribe, 690 F.2d at 1166-67 characterized plaintiffs' argument:

  The Chitimachas assert that if Texaco suffers in
  this suit, the judge's former lawfirm might
  suffer indirectly. Texaco might suffer such an
  overwhelming financial loss that it will no
  longer be able to employ the judge's former firm.
  As a result, the firm will have less income and
  could be forced to cut back on the periodic
  payments it makes to the judge.

Instead of crediting that argument with serious analysis the court simply stated (id. at 1167):

  At best, this speculation is remote and
  unrealistic. It does not justify
  disqualification.

While of course Chitimacha Tribe can be distinguished, the distinguishing factors really cut against rather than for M.K.'s position. Plaintiffs' argument for recusal there was actually stronger than M.K.'s here in two respects:

    1. In Chitimacha Tribe the district judge was
  assertedly connected to a party through a third
  party (his former law firm); here I am assertedly
  connected to a witness through a third party
  (Lexecon). While the judge in Chitimacha Tribe
  could provide a direct and material benefit to the
  entity with which he supposedly was associated, I
  cannot affect Lexecon except through the operation
  of some "seamless web" theory of societal
  interrelationship.

    2. Chitimacha Tribe was really a financial
  interest case, not a friendship case, because
  plaintiffs argued there was some possibility the
  judge himself would actually profit in some
  indirect way from his ruling. Here the worst an
  allegedly partial judge could do is to benefit his
  friends, not himself.

In short, friendship between judges and trial actors other than parties, untainted by any financial interests, should not generally justify recusal. Even if that rule were to be altered to include egregious cases of apparent partiality toward witnesses, this is not such a case. As for the actual witness, I do not know Professor Carlton. As for his employer, even were I to abandon my ethical responsibilities,
*fn6 nothing I could do would help or hurt Andrew Rosenfield in any significant way. Accordingly any such questioning of my impartiality on M.K.'s part is simply not reasonable.

So much then for the individual asserted sources of potential bias. And the calculus would be no different if those considerations are viewed "as a whole" rather than one at a time. As Miller Industries v. Caterpillar Tractor Co., 516 F. Supp. 84, 87 (S.D.Ala. 1980) put it:

  In determining the necessity for
  disqualification, all circumstances bearing upon
  it should be considered. But that does not mean
  that various circumstances, each insufficient
  standing alone, mandate sufficiency in totality.
  Under the factual situation here presented,
  holding that these various circumstances in
  combination require disqualification would be
  tantamount to holding that adding several

  zeroes together would produce something more than
  zero.

None of this Court's "connections" provides any foundation whatever for disqualification. Accordingly their sum total also provides no basis for recusal.

Conclusion

It must be remembered the propriety of recusal should be ascertained objectively, without reference either (1) to my perceptions of my own ability to maintain impartiality or (2) to the concerns of the parties — in each instance as opposed to the concerns of the hypothetical "reasonable man." M.K.'s counsel briefly strayed into the latter subject when he reported (January 17, 1984 Letter at 2):

  By way of background, I think it important to
  bring to the Court's attention that the principal
  officer of my client, Mr. Knezevich, is a
  naturalized citizen who came to the United States
  as a refugee from Yugoslavia. As a consequence,
  he has had first-hand familiarity with the
  Yugoslavian legal system which he believes to be
  unfair and not impartial. Therefore, he has
  sensitivity to matters of fairness which although
  perhaps not directly applicable to the
  circumstances at hand, nonetheless exists.

That statement prompts me to add a brief non-legal comment to this legal analysis.

It may be understandable Mr. Knezevich, having experienced a court system he believes to be unfair, was alarmed to receive a letter from me outlining my out-of-court connection (however attenuated) to a witness in this litigation. Perhaps in another justice system a litigant would learn of such matters only through unofficial channels (if at all) — and then in a less-than-open manner. That might trigger the assumption (perhaps justifiable) that the information received was only the "tip of the iceberg," and that in reality the judge was more closely connected to a litigant, perhaps having a direct financial interest in that litigant.

Here however no such assumption is justifiable. Our court system required, and M.K. has received, not only full disclosure but also the careful consideration of M.K.'s request for recusal reflected in this opinion. Whether or not Mr. Knezevich agrees, that disclosure and consideration reflect the fairness, not the unfairness, of our justice system.

In any event, I am honor bound to preside at the trial of this case in a manner that both appears to be and is in fact impartial. In re United States, 666 F.2d at 694, 695 teaches our District Court's random assignment system should not be subverted by any granting of ill-founded disqualification motions. M.K.'s. request for recusal is denied.


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