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Commodity Futures Trading Commission 

CEA CASES 

NAME: CARGILL, INCORPORATED, ERWIN E. KELM, H. ROBERT DIERCKS, WALTER B. 

SAUNDERS, AND BENJAMIN S. JAFFRAY 

CITATION: 23 Agric. Dec. 917 

DOCKET NUMBER: 120 

DATE: AUGUST 6, 1964 

DOCUMENT TYPE: RULING ON AFFIDAVIT OF DISQUALIFICATION OF REFEREE 

AGRICULTURE DECISIONS

BEFORE THE SECRETARY OF AGRICULTURE

UNITED STATES DEPARTMENT OF AGRICULTURE

(No. 9258) 

In re CARGILL, INCORPORATED, ERWIN E. KELM, H. ROBERT DIERCKS, WALTER B. 

SAUNDERS, AND BENJAMIN S. JAFFRAY. CEA Docket No. 120. Decided August 6, 1964. 

Ruling on Disqualification of Referee

The fact that the hearing examiner served as counsel for complainant prior to 

his appointment as hearing examiner and as counsel for complainant in a 

disciplinary proceeding against respondent corporation which terminated in a 

consent order in 1954 not grounds for disqualification of examiner and affidavit 

of disqualification is without merit. 

Decision by Thomas J. Flavin, Judicial Officer 

RULING ON AFFIDAVIT OF DISQUALIFICATION OF REFEREE

I 

On July 20, 1964, John G. Dorsey, one of the attorneys for respondent 

Cargill, Incorporated, in this disciplinary proceeding under the Commodity 

Exchange Act (7 U.S.C. § 1 et seq.) filed an "Affidavit of Disqualification" 

requesting that Hearing Examiner Benjamin Holstein be disqualified as referee n1 

in this proceeding. 

n1 Section 6(b) of the act (7 U.S.C. § 9) provides that a hearing upon 

alleged violations of the act may be held before a "referee" designated by 

the Secretary. 

The affidavit states that the affiant has reason to believe and does believe 

that respondents would not have a fair hearing in the proceeding before Examiner 

Holstein. The affidavit relates that Mr. Holstein, prior to becoming a hearing 

examiner, was a member for many years of the Office of General Counsel, United 

States Department of Agriculture, and in that capacity ". . . served repeatedly 

and successfully as counsel supporting the complaint in disciplinary proceedings 

for alleged violations of the Commodity Exchange Act." The affidavit goes on to 

state that because of Mr. Holstein's long experience and orientation as a 

prosecutor he cannot, despite his best efforts to the contrary, escape a measure 

of bias and prejudice in favor of the complainant and counsel supporting the 

complaint and against respondents. 

The affidavit also points out that Mr. Holstein once served as counsel for 

the complainant in a disciplinary proceeding under the act against the 

respondents in CEA Docket No. 58 which terminated in 1954 by means of a consent 
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order and which involved charges of manipulation and attempted manipulation of 

prices by Cargill. The affiant says that because of Mr. Holstein's position and 

experience in that case the affiant believes that it will be virtually 

impossible for Mr. Holstein to judge objectively and fairly in the pending 

proceeding. The pending proceeding concerns alleged manipulation of futures 

prices. 

The affidavit contains no reference to any acts or statements by Mr. Holstein 

indicating any personal bias or prejudice on his part toward respondents. 

§ 0.7(b) of the rules of practice (17 CFR 0.7(b)) under the act provides: 

"Disqualification of referee. Any party may file with the hearing clerk a 

timely affidavit of disqualification of the referee which shall set forth with 

particularity the grounds of alleged disqualification. After such investigation 

or hearing as the Secretary may deem necessary, he may find the affidavit 

without merit or may direct that another referee be assigned to the proceeding. 

Where the affidavit is found without merit, the affidavit, any record made 

thereon, and the finding and order of the Secretary shall be made a part of the 

record. 

A referee shall ask to be withdrawn from any proceeding in which he deems 

himself disqualified for any reason." 

Section 7(a) of the Administrative Procedure Act (5 U.S.C. 1006(a)) says in 

part: 

". . . The functions of all presiding officers and of officers participating 

in decisions in conformity with section 8 shall be conducted in an impartial 

manner. Any such officer may at any time withdraw if he deems himself 

disqualified; and, upon the filing in good faith of a timely and sufficient 

affidavit of personal bias or disqualification, of any such officer, the agency 

shall determine the matter as a part of the record and decision in the case." 

Mr. Holstein has not withdrawn as referee in the proceeding and he has not 

asked that he be withdrawn. Without comment, he has referred the affidavit to 

the Judicial Officer for disposition. Accordingly he does not agree with the 

affiant's allegations that he cannot judge fairly and impartially in the 

proceeding. 

II 

We are unaware of any policy or practice generally in which a judge is 

disqualified from presiding at a criminal trial because, before ascending the 

bench, he had been engaged in a career as prosecuting attorney. Nor do we 

observe that a judge at a civil trial is disqualified because his years of 

practice at the bar may have been largely on behalf of either plaintiffs or 

defendants in civil cases. With respect to hearing examiners in administrative 

proceedings we see no reason why experience in prosecuting cases should 

disqualify a hearing examiner any more than experience as counsel for 

respondents in such proceedings should do so. On the contrary candidates for 

hearing examiner positions in some 

Federal agencies are not qualified unless they have had experience in the 

proceedings coming before the agency. See United States Civil Service 

Commission's Announcement No. 318, an announcement of examination for the 

filling of hearing examiner positions. 

Besides, Mr. Holstein spent many years representing the complainant in 

disciplinary proceedings under the Packers and Stockyards Act (7 U.S.C. 181 et 

seq.) as well as under the Commodity Exchange Act. We have seen no signs of 

bias or prejudice against respondents in the proceedings under that act in which 

he has been hearing examiner. For example, in P&S Docket No. 2612-A, a major 

proceeding under the Packers and Stockyards Act, he recommended dismissal of the 

complaint against two of the respondents following presentation of the 
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complainant's case. In re James Allan & Sons, et al., 22 Agric. Dec. 1101 (22 

A.D. 1101) (1963). See also In re Lester Murtha, 21 Agric. Dec. 1213 (21 A.D. 

1213) (1962), in which a ruling made by Mr. Holstein in favor of a respondent in 

another proceeding under that act was reversed by the Judicial Officer. 

The fact that Mr. Holstein once represented the Commodity Exchange Authority 

in a disciplinary proceeding against respondents does not compel his 

disqualification as referee in this proceeding. There is no problem by virtue 

of that part of section 5(c) of the Administrative Procedure Act (5 U.S.C. 

1004(c)) which prohibits participation in the decision in any case by any 

officer, employee or agent engaged in the performance of investigative or 

prosecuting functions in that case or a factually-related case. The Cargill 

proceeding of ten years ago is a completely different case from the present 

proceeding. Moreover, it ended in a consent order without a hearing. We are 

not aware of any precedents which require disqualification of judges under such 

circumstances. See generally, Frank, Disqualification of Judges, 56 Yale L. 

Journal 605 (1947). Practically all the reported cases in this area dealing with 

the disqualification of judges concern the prior connection of the judge with 

the case, or with the facts in the case, as a prosecutor or investigator rather 

than the matter of the judge once having prosecuted the defendant in an earlier 

case. In at least one case, however, it has been held that a judge is not 

disqualified in a criminal trial because he had been a prosecutor of the accused 

for violating the same law in a previous case Trinkle v. State 127 S.W. 1060, 59 

Tex. Cr. 257 (1910). 

In summary, we think that hearing examiners are entitled to at least the same 

presumptions of freedom from bias and prejudice 

as judges are accorded. Too, under our practice, the referee makes only 

recommended findings of fact, conclusions and orders. The entire record of 

evidence and argument is the basis for the final decision and order. Of course 

respondents may raise for consideration before final decision any objections to 

anything said or done by the referee during the proceeding which they claim 

constitutes bias or prejudice against them. 

The affidavit is found without merit and another referee will not be assigned 

the proceeding. 

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