ASCOM HASLER MAILING

SYST EMS, INC., P laintif f,
v. UNITED STAT ES POSTAL S ERVICE,

Defendan t. NEOPOST, INC., P laintif f,
v. UNITED STAT ES POSTAL S ERVICE,

Defendan t. UNITED STAT ES DIS TRICT COURT F OR THE DIS TRICT OF COLUM BIA

Civil Action No. 00-1401 (P LF/JM F )

Civil Ac tion N o. 00-2089 (P LF/JM F )

MEMORAN DUM OP INION These c onsolidated ca ses wer e re fer red to me f

or all pre -trial matter s, including f or the purpose of

issuing re ports and re commendations on any dispositi ve motions filed in these ca ses. Pending be fore me and r eady for r esolution is Defenda nt’s Motion to R ecuse Mag istrate Judge [#152] (“D ef. Mot.”)
. For the re asons stated he rein, de fenda nt’s motion will be denie d. 1 I. Background The longhistory

of this case is nece ssary

to understand the United States Postal S ervic e’s Also pendingbefor e me is plaintiff’s Consent Motion for Expedited Ruling on Motion to 1 Recuse a nd Motion to S et a He aringDate f or Dispositive Motions [ #177], which will be gr anted in part and de nied in part in the a ccompa nying O rder
.(“U SPS ”) pe nding motion.

The USPS has plenary

power over the “amount of postag e” a nd “the manne r in which it is to be paid.” 39 U.S.C. §§ 404(a) and (4)
. I t is also authorized “to provide and se ll postage 2 stamps.” I d. I n the 1960s, Pitney Bow es invented a

nd patented the Computerized Remote Meter Resetting Sy stem (“CMRS”), which it marke ted under the trade name “ Postage by Phone.” See Ascom Ha sler Mailing Sy s., I nc. v. U.S. Postal Serv., Nos. 00-CIV-1401 a nd 00-CI V-2089, 2007 WL 724896, at *1-2 (D .D.C. Mar. 6, 2007) ( citing Pitney Bow es, Inc. v. U.S. Postal Serv., 27 F. Supp. 2d 15, 17-18 (D.D.C. 1998)) . The sy stem allowed c ustomers to purcha se additional postag e by

phone. I d. Pitney

Bow es ente red into a Stateme nt of Under standing (“SOU” ) in 1978 with the USPS that allowed Pitney Bow es to operate the new sy stem. I d. Other postag e meter companies, known as re setting c ompanies, includingplaintiffs, wer e also a uthorized to use CMRS . I d. To operate, re g ulations require CMRS customers to adva nce pa y ments for postag e. I d. Be fore 1995, CMRS customers made the pay ments to the rese tting compa nies, which tra

nsfer red the pay ments to the USPS once the customers ha d used the postag e. I d. The re setting c ompanies held the customer s’ funds in banks, whe re the funds collec ted intere st until they wer e tra nsfer red to the USPS . I d. The re setting c ompanies re tained contr ol over the inter est. I d. In 1995, the USPS passed r egulations that no longe r allowe d customers to route the ir funds throug h the
rese tting compa

nies, but instead re quired them to make the adva nce pa y ments directly

to the USPS . See 39 C.F.R. § 501.15. The rese tting compa nies no long er r etained c ontrol over the

All refe renc es to the United States Code a nd Code of F eder al Regulations are to the e lectronic 2 versions in Westlaw or L exis
. 2interest made from these advanc e pay ments, and Pitney

Bow es filed suit ag ainst the USPS for various cla ims, including unjust enrichme nt and constitutional taking. See Pitney Bow es, 27 F.Supp.2d at 19. B efor e the c ase w ent to trial, the USPS and Pi tney Bow es settled the c ase f

or $51,750,000. Complaint [ #1], Ex . A. at 4. I presided ove r the c omplex settlement neg otiations. The USPS did not enter

into any settlement ag ree ments with any competitors of Pitney Bow es, includingplaintiffs in the instant case . Plaintiffs broug ht this case, alleg ing that: (1) they had contr acts, e x presse d or implied in fact, whic h provided that they would continue to re ceive the intere st on the trustee a ccounts a nd that the USPS breache d those contra cts when it promulg ated the 1995 r egulations; (2) they relied to their de triment on the USPS ’s promise that they would be per

mitted to keep the intere st (“promissory estoppel”) and that they

are now entitled to it; (3) they

are entitled to the interest quantum mer uit or to prevent the U SPS ’s unjust enric hment; (4) they

wer e third-pa

rty benef iciarie s of the 1978 SOU betwe en Pitney Bow es and the USPS; (5) their

continued entitlement to the intere st was prope rty taken f rom them without just compensation; and (6) in se ttling with Pitney Bow es but not plaintiffs, the USPS breache d its constitutional obli g ation to treat similarly situated parties e qually . Ascom Ha sler Mailing Sy s., I nc., 2007 WL724896, at *1 -2. On June 16, 2006, J udg e F riedman r efe rre d these c onsolidated
case s to me for settlement discussions. See Or der of Refer ral [#104] (ava ilable on the 00-1401 docket r eport only

). I presided ove r settlement conf ere nces on Aug ust 15, 2006 and September 22, 2006 in my

chambe rs. On January

17, 2007, J udg e F riedman r efe rre d the consolidated c ases to me for mana g ement of a ll pre-tria l matters, including for the pur pose of issuing repor

ts and
rec ommendations on any dispositi ve motions filed in these ca ses. See Ref err al Orde r [#112]
. There was a

pendingmotion to di smiss all of plaintiffs’ claims. Iissued a re port and
3rec ommendation on the motion. J udg e F riedman issued a n order on September 27, 2007, g rantingthe motion to dis miss reg ardingplaintiffs’ third-pa rty benef iciary claim, but denying the motion on all other counts. I d. Ihave c ontinued to preside ove r pre -trial matter s, including numerous discove ry

disputes that have a

risen betwe en the pa

rties. Def endant now se eks my
rec usal from de ciding the merits of this action base d on my presidingover the settlement neg otiations in t he Pitney Bow es ca se and e arly

in this case. De f. Mot. at 1. II. Legal Stand ard Two statutes per

tain to the possible rec usal of a judg e. One , now codifie d as 28 U.S.C. § 144, speaks to a “ persona l bias or pre judice” a nd provides: Whenever

a par ty to any proce edingin a district court make s and files a timely

and suff icient af fidavit that the judg e bef

ore whom the matter is pendinghas a pe rsonal bias or pr ejudice e ither ag ainst him or in favor of

any adver se par

ty , such judg e shall proc eed no further there in, but another judg e shall be a ssigne d to hear such proce eding
. The a ffidavit shall state the f acts a nd the re asons for the belief tha t bias or pre

judice exists, and shall be filed not less than ten day s befor e the be g inning of

the term at which the proc eedingis to be hear d, or g ood cause shall be shown for failure to file it within such time. A party

may file only one such a ffidavit in any case . I t shall be ac companied by

a ce rtificate of counse l of rec ord stating that it is made in g ood faith. 28 U.S.C. § 144. The filingof the a ffidavit spec ified in the statute is sine qua non . Br otherhood of L ocomotive Fir emen & Eng inemen v. B ang or & Aroostook R. Co., 380 F.2d 570, 576 (D.C. Cir. 1967), ce rt. denied, 389 U .S. 327 (1967); United States v. Sammons, 918 F.2d 592, 598 (6th Cir. 1990). Since no a ffidavit wa s filed, this statute does not apply , and ther e is no impediment to my

4consideringthe def endant’ s motion. The only other a pplicable statute, the ref

ore, is 28 U.S.C. § 455, which re quires a judg e to disqualify himself when, inter alia , (a) his impartiality might re asonably

be questioned; (b) he has a pe rsonal bias or pr ejudice c oncer ning a party ; or (c) he has pe rsonal knowledg e of disputed evidentiar y fac ts conce rning the proc eeding
. See 28 U.S.C. § 455 (b)(1) . First, howe ver, the 3 motion mus t be timely

made. A. Tim eliness Whil e “se ction 455(a) contains no express timeliness provision, mostcirc uits considering the matter ha

ve conc luded that a litiga nt must raise the disqualification issue within a reasona ble time after the g rounds for it ar e known.” United States v. Ba rre tt, 111 F.3d 947, 951-52 (D .C. Cir. 1997) (citingI n re K ansas Pub. Emps. Ret. Sy s., 85 F.3d 1353, 1360 (8th Cir. 1996) ( “We have he ld in the past that even thoug h § 455 has no express timeliness require ments, claims under § 455 w ill not be considered unle ss timely made.” ) (c itations omi tted); United States v. Br inkworth, 68 F.3d 633, 639 ( 2d Cir. 1995) (“A lthough § 455 doe s not specify a time limit for application, a timeliness provision has be en judicially implied. A party

must bring a disqualification motion ‘at the ea rliest possible moment after obta ining knowle dg e of f acts demonstratingthe basis for suc h a cla im.’”) ( internal quotations and c itations omi tted); E. & J
. Gallo Winery

v. Gallo Cattle Co., 967 F.2d 1280, 1295 (9th Cir. 1992) ( “It is well established in this circuit that a re cusal motion must be made in a timely fashion . . . While there is no per se rule that re cusal motions must be made at a fix ed point in order to be timely , such motions

There are other g rounds for r ecusa l in the statute (prior a ppear ance as counse l or a disqualifying 3 financ ial interest), but they are not releva

nt here
. 5‘should be filed w ith reasona ble promptness af

ter the ground for

such a motion is asce rtained.’ ”) (citations omitted); United States v. Owens, 902 F .2d 1154, 1156 (4th Cir. 1990) (“ Timeliness is
an esse ntial element of a

rec usal motion . . . I t is judi cially implied in § 455.”); United States v. Slay , 714 F.2d 1093, 1094 ( 11th Cir. 1983) (“A motion to disqualify a mag istrate under

§ 455(a) must be timely .”) ( citations omitt ed), c ert. de nied, 464 U.S. 1050 (1984); De lesdernie r v. Porterie, 666 F .2d 116, 121-22 (5th Cir. 1982), (c oncluding that “timeliness may not be disreg arde d in all case s reg ardingdisqualification under § 455(a) ” and that “the fa cts of the prese nt case are well suited to a timeliness require ment”), c ert. de nied, 459 U.S. 839 (1982))
. As just ex plained, def

endant se eks my

rec usal from de ciding the merits of the c ase, ba sed on my participation in settl ement discussions for both the instant ca se and the Pitney Bow es ca se. Def endant, howe ver, ha s waited ove r three and a ha lf y ear s since the c ase w as re fer red to me f

or pre- trial manag ement to ra ise this issue. J udg e F riedman’ s ref err al orde r wa s clea

r that I would decide dispositi ve motions by repor t and re commendation. See Re fer ral Or der [#112]. The ref err al orde r ca

me within months of my

presidingover se ttlement discussions in t his case, but defe ndant did not raise a

ny conce rns at that time. In fac t, Iwent on to make a repor t and
rec ommendation to J udg e F riedman on de fenda nt’s motion to di smiss, wit hout any objections made by defe ndant that I

should recuse my self fr om doing so ba sed on my participa tion in settlement discussions. I n light of this and e very other Circuit’s insistence that such a motion be made pr omptly

afte r the supposedly

disqualifying f

acts a re known, defe ndant’s motion first fails for not eve n coming close to that re quirement. B. Recusal Based on L ack of O bject ivity because I P resided Over Set tlem ent Discussions
. The Court of Appe als for the District of Columbia Circuit has applied an “ objective”
6standard f

or re viewinga re cusal soug ht under 28 U.S.C. § 455, indicating that “[r]ecusal is require d when a

rea sonable a

nd informed obse rver

would question the judg e’s impar tiality .” SEC v. L oving Spirit Found., 392 F .3d 486, 493 (D.C. Cir. 2004) (inter nal citations omitted). The fir st question presented is whe ther a rea sonable a

nd informed obse rver

would question my

impartiality

beca use I presided ove r the Pitney

Bow es settlement discussions, which resulted in a se ttlement, and the settlement discussions in this case, whic h did not. Def endant doe s not protest that its represe ntatives said or did somethingduringthose discussions that Iwill construe or use ag ainst it. I t has not filed, for e x ample, a submission in 4

came ra indicating what it said or did that supposedly had such a

profound influe nce on me that a
rea sonable pe rson would say that it would be impossibl e to me to be objec tive. In this case, that would be pure fanta sy . I t does not brea ch the c onfidentiality of those discussions to tell the parties what they

alre ady know. Not much happe ned duringthose discussions, and there was surely nothing sa id during them or to me in private se ssions that would make it imposs ible for me to be objec tive. To the contra ry , they wer e the kind of discussions I discussed in my

decision in Blac k v. Kendig , 227 F. Supp. 2d 153, 155 (D.D .C. 2002). We had what I call “the traditional para de of the bull elephants,” in whic h eac h side trumpeted that it was g oing to win ha nds down, and told me that settlement wa s impossi ble. We then went on to other things. To throwme off this case, a fter a ll these y ear s and my familiarity

with the case and the leg al issues, is truly to cut one’s throat on a g ood rug
. Def endant’ s absolute rule that a mag istrate judg e must be re cused wheneve r she pr esides
At my ag e, I am flatter ed that the de fenda nt thinks m y

memory so g ood; the Pitney

Bow es ca se 4 settlement occ urre d about ten ye ars ago . 7over se ttlement discussions also ignore s the long tradition in this C ourt that is to the prec ise

contra ry . The mag istrate judg es in this Court are ofte n called upon to try a ca se af ter they have presided ove r settlement discussions. Def endant a sserts that L ocal Civil Rule 84.9 prohibits a magistrate judg e who ha s participated in prior mediation or se ttlement discussions from decidingthe merits of a case , based on he r par

ticipation in those discussions. I nstead, Rule 84.9 is a rule reg arding confide ntiality

in the mediation prog ram that is administered by the Circuit Court. I t does not say
a wor d about mag istrate judg es, let alone purport to disqualify them from try

ing a case when a District Court judge , independe nt of the Circuit Court’s mediation program, re fer s settlement discussions to magistrate judge s who there afte r try the ca se. Simpl y put, there is no author ity any wher e that could support the a ssertion that mag istrate judge s must recuse the mselves from c ases they have tr ied to settle unsucce ssfully mere ly beca use they have pr esided ove r settlement conf ere nces. N o rea sonably

well-infor

med observe r could possibly rea ch the c onclusion that mag istrate judg es ca n never be fa ir and impartial in try ing a
case beca use they presided ove r settlement discussions, particula rly when ther e is not even a prete nse that a pa

rty said any thing dur ing those discussions that could possibly aff ect the mag istrate judg e’s judg ment.

C. Bias Based on Bias or P ersonal K now ledge As explained, a judg e must also disqualify himself “whe re he has a pe rsonal bias or prejudice conce rning a par ty , or per sonal knowledg e of disputed e videntiary fac ts conce rningthe proce eding .” 28 U.S.C. § 455(b)(1) . The Court of Appe als has found that only persona l knowledg e of disputed f

acts g ained in an e x trajudicial c apac ity is gr ounds for re cusal. See
8United States v. Pollard, 959 F.2d 1011, 1031 ( D.C. Cir. 1992) (interna l citations omit ted).

Thus, knowledg e g ained f rom direc t participation in the ca se is not gr ounds for re cusal. I d.; see also Bla ck, 227 F . Supp. 2d at 155. Thus, the knowledg e the judg e g ained f rom presidingover settlement discussions does not requirethe re cusal of a judge who then pre sides over the case for trial. Bla ck, 227 F . Supp. 2d at 155 (citing Fr anks v. Nimmo, 796 F.2d 1230, 1235 (10th Cir. 1986); Bilello v. Abbott L ab., 825 F . Supp. 475, 478-79 (E.D.N.Y . 1993); Gene va Assura nce Sy ndicate, I nc. v. Med. Eme rg ency

Serv. Assoc., 92- CI V-1652, 1993 WL384566, at *3 (N.D
. I ll. Sept. 28, 1993); United St ates v. Conserva tion Chem. Co., 106 F.R.D. 210, 234-35 (W.D. Mo. 1985)). I f that is true whe n a judg e g ains knowledg e fr om presiding over se ttlement discussions, then a fortiori , it must be true when, a s here , a judg e pre sides over se ttlement discussions and lear ns nothing he did not alrea dy know. Finally , the “c ourts have de veloped r ules and pre sumptions t hat ena ble the most eff

icient use of limited judicial resour ces while at the same time protectingthe var ious parties’ r ights to have the ir claims and a

rguments hear d and dec ided by an impartial de cision-maker .” Clifford v. United States, 136 F.3d 144, 149 ( D.C. Cir. 1998). “[A] j udg e may have pe rsonal experienc e with particular

parties who ha

ve appe are d befor e her

in previous ca ses, or she ma y have le arne d about under ly ing e vents by presidingover r elated tr ials.” United States v. Cowden, 545 F .2d 257, 265-66 (1st Cir. 1976), ce rt. denied, 430 U .S. 909 (1977). The c ourt of appe als has found that such prior know ledg e does not, in itself, ra ise questions about the fa irness of a judge , beca

use a 5 See Clifford, 136 F .3d at 148-149 (c iting L iteky v. United States, 510 U.S. 540, 550-51, 555 5 (1994); United States v. Roac h, 108 F.3d 1477, 1484 ( D.C. Cir. 1997), cer t. denied, 522 U.S. 983 (1997); Para dis v. Arave , 20 F.3d 950, 956- 57 (9th Cir. 1994), ce rt. denied, 513 U .S. 1117 9judge is ex pecte d “to compar tmentalize the information they rec eive a nd only rely on evidenc e rele vant for a

particula r dec ision.” Clifford, 136 F.3d at 149 (citing Har ris v. Rivera, 454 U.S. 339, 346 (1981); United States v. Menk, 406 F .2d 124, 126-27 (7th Cir. 1968), c ert. de nied, 395 U.S. 946 (1969); In re M.D.J., 346 A.2d 733, 736 (D.C. 1975)). Such pr ior knowledg e does not, by itself, g ener ally

raise que stions about the fairne ss of a judg e. I must recuse my self whe re suc h knowledg e rises to the le vel wher e it cre ates the a ppear ance of bias or pr ejudice; howe ver, that is not objectively

so in this case. While defenda nt points t o statements I

have ma de in cour

t, such as “I ’m very

familiar with this case , and I ’m familiar w ith it because of my work on the [Pitney Bow es] case,” as evide nce of my impartiality , they

do not “display

a dee p-seated favoritism or antag onism that would make fair judgme nt impossi ble.” L iteky , 510 U.S. at 555. No par tiality exis ts, and no rea sonable pe rson could doubt my impartiality . Fur

ther, a lthough the sta

ndard is objective, a s Ihave a lrea dy pointed out, Ican hone stly say that Ihave no r ecollec tion of any statement eve r made by

defe ndant, whethe r in the Pitney Bow es settlement discussions, the settlement discussions in thi s case , or at a ny other time, that wa s or could be c onstrued as a
conce ssion of liabilit y , or that would or c ould be used by me ag ainst the defe ndant in my further work in this case
. Finally , let me put to rest a bit of silliness that has rec ently emer g ed. Dur ing the most
rec ent status confe renc e, I expressed the viewthat a trial wa s unlikely beca use there was no re al dispute that the USPS had issued the r egulations it di d, which had the conseque nces a bout which plaintiff complained. T ransc ript of Marc h 24, 2010 [#213] [1: 00-CI V-01401-PL F- J MF doc ket only ] at 4. Ialso indicated that once the dispositive motions were r esolved, ther e would have to (1995))
. 10be an e videntiary hear ing on da

mag es. I d. at 8. A re prese ntative of Asc om, who was in cour t, wrote a letter to the USPS ex pressinghis view that my

statements indicated that Idid not ag ree with USPS that there was no leg al basis for plaintiffs’ cla im. Pl aintiffs’ Opposition to Defe ndant’s Motion to Recuse Mag istrate Judge, Ex hibit 1. Accordingto defe ndant, this letter “de monstrates that not eve n Plaintiffs perce ive the Mag istrate Judge a s an impartial adjudica tor.” I d. at 9-10. First, I am not responsible for

how other pe ople construe what I say . Second, the defe ndant forg ets that its counsel ag ree d with the utterly innocuous things I

said, that no one is contesting that the USPS i ssued the re g ulation it is sued, and that, if plaintiffs’ ca se survives the defe ndant’s motion for summary judgme nt, the next phase of the ca se will be a he aringon damag es. See Tr anscr ipt at 9. Defe ndant ca nnot be seriously

sug g esting that either state ment establishes that I

have a disqualifying bia s ag ainst it that is premised on some ext rajudicia l source of information. IV. Conclusion For the re asons stated he rein, de fenda nt’s motion for my

rec usal will be denied. A separ ate Or der a ccompa

nies this Memorandum Opinion.

__________________________________ J OHN M. F ACCI OL A UNI TED STATES MAGI STRATE J UDGE

11