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In re National Union Fire Insurance Co.

decided: February 5, 1988.


Petition for a writ of mandamus to the United States District Court for the Northern District of Illinois.

Wood, Jr., Cudahy, and Easterbrook, Circuit Judges.

Author: Easterbrook

EASTERBROOK, Circuit Judge.

The financial troubles of Continental Illinois National Bank have produced a number of suits against the Bank and its officers. Three of Continental's insurers have sought declaratory judgments concerning the scope of their coverage. These declaratory judgment actions are before a fourth judge, the first three having recused themselves. Judge Shadur has declined to follow suit. Two of the three insurers have asked us to remove him from the case on the ground that his "impartiality might reasonably be questioned", 28 U.S.C. § 455(a). Mandamus is the insurers' proper remedy, SCA Services, Inc. v. Morgan, 557 F.2d 110 (7th Cir. 1977); Pepsico, Inc. v. McMillen, 764 F.2d 458 (7th Cir. 1985); New York City Housing Development Corp. v. Hart, 796 F.2d 976 (7th Cir. 1986); indeed it is their only remedy, United States v. Balistrieri 779 F.2d 1191, 1204-05 (7th Cir. 1985). Contra, In re City of Detroit, 828 F.2d 1160, 1165-67 (6th Cir. 1987) (review available only after entry of final judgment).

Judge Shadur's son Robert is a lawyer. In February 1987 Continental hired Robert Shadur to represent it in a $5 million revolving credit transaction with the beneficial interest in a voting trust as security. Continental chose Robert Shadur at the debtor's request because he had recently represented Chemical Bank, a longstanding client, in a similar transaction with the same collateral. The debtor, which was to pay Continental's legal costs, wanted to avoid the time and expense of educating Continental's regular counsel about an unusual transaction. Robert Shadur advised his father of the retention. Judge Shadur immediately informed counsel and asked for their views:

Without in any way abdicating my responsibility [to decide whether my "impartiality might reasonably be questioned"], I believe it would be useful to obtain the observations of counsel to make certain that I will have taken into account all possible considerations bearing on that standard.

At the same time, under no circumstances do I intend to create a situation in which anyone feels constrained from commenting because I may, after full consideration, conclude that the cases should properly be kept on my calendar (with counsel therefore having to be concerned lest any comments suggesting possible recusal might redound to their disadvantage). Accordingly, I am designating plaintiffs' counsel to be responsible for (1) receiving all comments and then (2) transmitting them in redacted form that excludes all identification of the parties or lawyers involved.

Twenty law firms submitted responses in March 1987. Nineteen saw no reason why Judge Shadur could not continue to preside. One firm, representing two insurers, objected on the ground that Robert Shadur's work for Continental created an appearance of impropriety. This firm, Keck, Mahin & Cate, attached its name to the objection, despite Judge Shadur's instructions. Continental's response described the circumstances of Robert Shadur's retention and representation in some detail; because such a response could not be anonymous, Continental also identified itself.

In open court Judge Shadur said that "my own look at the authorities does not suggest to me that the standard of 455(a) has been approached let alone met." Still concerned lest he overlook something, Judge Shadur solicited an opinion of the Advisory Committee on Codes of Conduct of the Judicial Conference. While waiting for the Committee's response, Judge Shadur continued to preside. The Committee's reply stated:

Recusal is appropriate in the circumstances you have outlined. Remittal of disqualification, as provided by Canon 3D, is available only where a judge has already determined that under the circumstances the judge's impartiality might reasonably be questioned. . . . If impartiality may not reasonably be questioned, the judge is not disqualified and ought not to initiate the remittal procedure.

However, once a judge initiates the remittal procedure, whether or not there was a sufficient basis to do so, recusal is warranted whenever waivers are not obtained from all parties and all counsel. In such circumstances the parties and counsel are entitled to conclude that the remittal was sought only because the judge did believe that the judge's impartiality might reasonably be questioned. Moreover, in the circumstances you have outlined, recusal is additionally warranted because you have become aware of the identity of the counsel who declined to agree to your remaining in the case.

The committee notes Canon 3D's provision for lawyers agreeing "independently of the judge's participation" as indicating a need to arrange matters so that the judge will not learn who did, and who did not, consent to the waiver. See also Resolution L, Judicial Conference of the United States, October, 1971.

After receiving this letter, Judge Shadur issued an opinion on August 31, 1987, declining to recuse himself. He concluded that the Committee misunderstood the procedure he had employed to seek the views of counsel. He had not sought a "remittal of disqualification" under Canon 3D of the Code of Judicial Conduct; he had sought factual information and legal advice about the application of § 455(a). Judge Shadur then held that as an original matter he is not disqualified. A judge's impartiality might "reasonably be questioned" only when a well-informed observer would doubt the judge's objectivity and disinterest. Judge Shadur thought that his son's representation of Continental would not occasion such a doubt. Four months later, the two insurers filed this petition for mandamus, asking us to remove ...

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