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Guardian Pipeline, L.L.C. v. 950.80 Acres of Land

May 8, 2008

GUARDIAN PIPELINE, L.L.C., PLAINTIFF-APPELLEE,
v.
950.80 ACRES OF LAND, ET AL., DEFENDANTS-APPELLANTS.



Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 01 C 4696-James B. Moran, Judge.

The opinion of the court was delivered by: Easterbrook, Chief Judge.

ARGUED APRIL 10, 2008

Before EASTERBROOK, Chief Judge, and ROVNER and SYKES, Circuit Judges.

Guardian Pipeline needed easements to build a natural-gas pipeline that the Federal Energy Regulatory Commission authorized it to construct. What it could not acquire by negotiation, it proposed to take by condemnation under 15 U.S.C. §717f(h). This action covers more than a hundred parcels of land in northeastern Illinois. The district court appointed a commission to receive evidence and propose findings under Fed. R. Civ. P. 71.1. (It was Rule 71A at the time; we cite the current version. No change material to this litigation has occurred.) The commission delivered a 277-page report, which the district court adopted as its own after de novo consideration. 486 F. Supp. 2d 741 (N.D. Ill. 2007). Most owners accepted Guardian's offer or the district court's decision, but three groups of owners have appealed to carry on the fight.

Appellants' principal argument is that Thomas M. Ewert, who served as chairman of the three-member commission, was disqualified under 28 U.S.C. §455. Ewert had been a state judge for 24 years before returning to practice in 2001, and when appointed to head this commission he had been in private life for less than a year. According to appellants, however, Ewert was ineligible to serve because the firm he joined (Spesia, Ayers & Ardaugh) has pipeline companies as clients, and Ewert himself did some work for pipeline companies during the three years of the commission's proceedings (though Ewert did not file an appearance on behalf of a pipeline company in any suit). Appellants contend that anyone in Ewert's position would have been tempted to skew the commission's proceedings in Guardian's favor in order to enhance his prospect of being hired to work for other pipeline companies in the future. That temptation disqualified him under §455(b) for actual conflict, as well as the more general standard of §455(a), appellants insist. They also contend that Ewert's law firm worked for Guardian itself, but the district court found otherwise, 486 F. Supp. 2d at 745--46; we say no more about that subject.

An unstated premise of appellants' position is that §455 applies to commissioners, even though the statute is addressed only to justices and judges of the United States. Other circuits have disagreed about the application of §455 to special masters and land commissioners. Compare Morgan v. Kerrigan, 530 F.2d 401 (1st Cir. 1976) (no), and Rios v. Enterprise Association Steamfitters, 860 F.2d 1168 (2d Cir. 1988) (no), with Jenkins v. Sterlacci, 849 F.2d 627, 630--32 (D.C. Cir. 1988) (yes), and United States v. Werner, 916 F.2d 175 (4th Cir. 1990) (yes). To resolve this conflict the Supreme Court amended Fed. R. Civ. P. 53(a)(2) in 2003 to subject special masters to the requirements of §455-but it left Rule 71.1 alone. It says that commissioners are covered by particular subsections of Rule 53. Those subsections are (c), (d), (e), and (f), which have nothing to do with §455. See Fed. R. Civ. P. 71.1(h)(2)(D), and its predecessor Fed. R. Civ. P. 71A(h). The subsection of Rule 53 that incorporates §455 for masters is not among those to which Rule 71.1 points.

Rule 71.1 treats commissioners more like jurors than like judicial officers. Parties may "examine" commissioners, see Rule 71.1(h)(2)(C) and ask the judge to excuse them for cause. This is consistent with the role commissioners play. Unlike masters, who act as surrogates for a district judge, commissioners hear evidence and make proposals to the court on disputed questions of fact. Judges then make independent decisions. Commissioners are supposed to bring expertise to that task, and they could not do so if the very knowledge and experience that made their views desirable also disqualified them. Nor would it be easy for courts to recruit lawyers to serve on commissions if that foreclosed continued legal practice in fields related to the condemnation proceeding. Since 2003, when the Civil Rules brought masters within §455 while leaving commissioners out, no court has held that §455 supplies the standards for members of commissions in condemnation proceedings.

Let us assume, however, that §455 applies. The parties have not contested this issue, so we lack the benefit of adversarial presentation. The subject may be left for another day, because the district court did not err in concluding that Ewert was eligible to serve.

Neither Ewert nor his law firm has had Guardian as a client, but Ewert and the law firm represent other pipeline operators. Ewert has never filed an appearance on behalf of a pipeline operator in litigation, and the matters on which he represents pipelines are unrelated to land condemnation. According to appellants, however, representation of any firm in the industry, on any legal issue (contracts with customers or suppliers, rate filings with the FERC, torts, securities, ERISA, tax, or labor issues), is enough to make Ewert a partisan of every firm in the business, on every legal issue. If that's the rule for lawyers who represent pipelines, it must be equally disqualifying for a lawyer to represent any property owner on any issue. And as almost every client owns property and wants to maximize its value . . . .

Appellants rely on §455(b)(1), (b)(4), and (b)(5)(iii). Subsection (b)(1) says that "personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding", is disqualifying. Ewert is not alleged to know any fact material to this proceeding or to have had any dealings with Guardian or any of the landowners. So subsection (b)(1) is not remotely applicable. One might as well say that someone who becomes a judge following a career as a prosecutor is disqualified in all criminal cases, not just those on which he worked, because prosecutors are partisans and all partisans favor the causes they have espoused. Likewise Justice Goldberg, who came to the Supreme Court (via the Department of Labor) from a law firm that represented unions in contests with management, could not have adjudicated a suit in which labor and management disagreed. That is not, however, what §455 provides. Disqualification is case-specific; the statute does not put a whole subject matter out of bounds to a judge with no concrete interest in a particular dispute. A lawyer's role as an advocate in one dispute does not disqualify him from serving as a neutral in another, even if the subject matter overlaps.

Subsection (b)(4) disqualifies a person who "has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding". Subsection (b)(5)(iii) is materially identical. Ewert does not own stock in Guardian, and neither he nor any close relative has an ownership interest, direct or indirect, in any of the parcels under (or even near) Guardian's pipeline. According to appellants, Ewert's "interest" is his hope that pipelines will hire him or his law firm in the future if this proceeding ends favorably. No judicial decision or advisory opinion of the Committee on Codes of Conduct reads the word "interest" that broadly. See Federal Judicial Center, Recusal: Analysis of Case Law 10--15 (2002).

"Interest" means an investment or other asset whose value depends on the outcome, or some other concrete financial effect (such as how much property tax a judge pays). See In re Virginia Electric & Power Co., 539 F.2d 357, 366--67 (4th Cir. 1976). Extending the word to cover things that might or might not happen in the future would mean that no lawyer, appraiser, or engineer could serve on a commission, because it is always possible that whichever side prevails later could hire the person who made the decision. One could say the same about any arbitrator, or indeed any judge (for federal judges may engage in private practice after resignation or retirement). Lawyers frequently serve as arbitrators, even though they practice law in the same field as the arbitration, without being disqualified for partiality. See, e.g., Sphere Drake Insurance Ltd. v. All American Life Insurance Co., 307 F.3d 617 (7th Cir. 2002). The expertise accumulated during practice may be why they are chosen to serve as arbitrators; the same is true for commissioners.

This leads appellants to invoke §455(a), the catch-all section dealing with appearance of impropriety. We need not decide whether a fully informed person would find a problem using the objective standard that applies under §455(a), see Liteky v. United States, 510 U.S. 540 (1994); Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847 (1988), because the owners did not raise this subject until after the commission had made its decision. United States v. Balistrieri, 779 F.2d 1191, 1204--05 (7th Cir. 1985), holds that arguments under §455(a) must be presented early in the proceeding; a problem of appearances is not a reason to set aside a decision that was unaffected by any actual bias. See also, e.g., United States v. Murphy, 768 F.2d 1518, 1540 (7th Cir. 1985). Appellants say that their delay is justifiable because Ewert did not spontaneously reveal his law firm's book of business, but then he did not have a duty to do so. Rule 71.1(h)(2)(C) provides that litigants may examine a proposed commissioner at the outset; a litigant who lets this opportunity pass, then looks up the commissioners in Martindale-Hubbell after the proceedings have concluded, has no one to blame but himself.

One member of this court has argued that Balistrieri should be overruled and belated challenges under §455(a) entertained. See United States v. Boyd, 208 F.3d 638, 649--52 (7th Cir. 2000) (Ripple, J., dissenting). Appellants have not asked us to reconsider Balistrieri-nor would this be a good occasion to do so, not only because it is an open question whether ยง455 applies, but also because commissioners in condemnation proceedings make recommendations rather than decisions. An Article III judge whose impartiality is beyond question reviewed the commission's recommendation and found its conclusions sound. It would be pointless to empanel another commission to make a fresh recommendation, when the judge has already ruled on the merits. Judges deal with slanted recommendations all the time; lawyers are advocates, to ...


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