Source: https://law.justia.com/cases/federal/appellate-courts/F2/557/110/272957/
Timestamp: 2019-07-23 00:29:11
Document Index: 52259762

Matched Legal Cases: ['§ 455', '§ 455', '§ 455', '§ 455', '§ 455', '§ 455', '§ 455', '§ 455', '§ 455', '§ 455', '§ 455', '§ 455']

Sca Services, Inc., Petitioner, v. Hon. Robert D. Morgan, Judge, United States District Courtfor the Southern District of Illinois, et al., Respondents, 557 F.2d 110 (7th Cir. 1977) :: Justia
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Sca Services, Inc., Petitioner, v. Hon. Robert D. Morgan, Judge, United States District Courtfor the Southern District of Illinois, et al., Respondents, 557 F.2d 110 (7th Cir. 1977)
US Court of Appeals for the Seventh Circuit - 557 F.2d 110 (7th Cir. 1977)
Submitted May 20, 1977. Decided June 17, 1977
The petitioner, SCA Services, Inc. (SCA) is the plaintiff in SCA Services, Inc. v. Lucky Stores, Inc., a civil action pending in the District Court for the Southern District of Illinois, Northern Division, before Judge Robert D. Morgan.1 In October, 1976, SCA filed a "Motion to Disqualify", supported by affidavits, seeking the disqualification of Judge Morgan pursuant to 28 U.S.C. § 455, as amended in 1974, on three separate grounds: (1) the judge's brother is acting as a lawyer in the proceeding (id. § 455(b) (5) (ii)); (2) the judge's brother has an interest which could be substantially affected by the outcome of the proceeding (id. § 455(b) (5) (iii)); and (3) the judge's impartiality might reasonably be questioned under all the particular facts and circumstances of the case (id. § 455(a)). The motion to disqualify did not allege actual bias or prejudice on the part of Judge Morgan, but was based solely on the statutory grounds contained in section 455, which the petitioner believes require mandatory disqualification.
The new statute contains the general, all-inclusive objective standard of the 1972 Judicial Code: a judge "shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned." 28 U.S.C. § 455(a). In addition, subsections (b) (1), (2), (3), (4) and (5) provide for the mandatory disqualification of a judge in certain specific circumstances, such as where family or financial interests are involved.
In the underlying case none of the parties disputes that Donald A. Morgan is Judge Morgan's brother and that he is a senior partner in Davis & Morgan, the firm which has entered a general appearance for one of the parties in the district court litigation.9 The parties dispute, however, whether or not this relationship mandates Judge Morgan's disqualification pursuant to 28 U.S.C. § 455(b) (5) (ii). SCA posits that when general principles of agency and partnership are applied in the factual setting of a law firm, Donald A. Morgan is "acting as a lawyer" regardless of his involvement or non-involvement in this case. Contrariwise, respondents urge that this position is specious because Donald A. Morgan has not performed any professional duties in this case since its initiation over one-and-a-half years ago. They are supported in their argument by Judge Morgan's own findings, after "specific inquiry," that Donald Morgan was not acting as lawyer in this case. (Petitioner's App. at D-3.)
Having decided that Donald A. Morgan is an attorney in this action by virtue of his relationship with the firm of Davis & Morgan is not to decide, however, that he is "acting as a lawyer" within the language and intent of § 455(b) (5) (ii). Although the statute on its face mandates recusal where "near relatives" are involved, the Senate hearings suggest disqualification was not intended to be automatic.10 Rather, it was indicated that the limitations which had been recommended in the Commentary to Canon 3C of the Judicial Code and adopted by the 1973 Judicial Conference should continue to guide the judiciary when "near relatives" were involved.11 The Commentary accompanying that section provides:
"The fact that a lawyer in a proceeding is affiliated with a law firm with which a lawyer-relative of the judge is affiliated does not of itself disqualify the judge. Under appropriate circumstances, the fact that 'his impartiality might reasonably be questioned' under Canon 3C(1), or that the lawyer-relative is known by the judge to have an interest in the law firm that could be 'substantially affected by the outcome of the proceeding' under Canon 3C(1) (d) (iii) may require his disqualification."
Petitioner's second contention is that the position of the judge's brother as a senior partner in Davis & Morgan makes disqualification mandatory under § 455(b) (5) (iii). SCA claims that Donald A. Morgan has an interest in the firm which is clearly a financial interest within the definition of 28 U.S.C. § 455(d) (4). As defined in that statute:
Because the underlying case from which this action arises involves claims and counterclaims of millions of dollars, it is arguable that Morgan's firm will earn substantial legal fees in this matter, a percentage of which will accrue to Donald A. Morgan. To respond to this argument, as did Judge Morgan, that if Bret S. Babcock, the attorney involved herein, was not working on this case, "he would be working productively on something else, so that any income differences based on the outcome of this case would clearly not be substantial" (Petitioner's App. D-4), sidesteps the issue. Attorney Babcock, a member of Morgan's firm, is working on this case, not another one, and therefore, he and his firm will be remunerated for his efforts. All parties involved quite clearly have a present financial interest in the litigation and a resort to a hypothetical situation cannot eliminate the realities of the situation. Moreover, although the record does not include any direct evidence as to degree of financial benefit to the Davis & Morgan firm, it is undisputed that at least 35 days have been spent in pretrial discovery. Even though this case was not taken by Davis & Morgan on a contingent fee basis, a favorable outcome would obviously justify a higher fee. Taking judicial notice of reasonable attorney's fees in Illinois and applying to "substantially affected" the standard for having "an interest in the outcome" as described in In re Murchison, 349 U.S. 133, 75 S. Ct. 623, 99 L. Ed. 942 (1955),13 it is apparent that Morgan's interest could be "substantially affected" and would be so known by the judge.
It is also arguable that Donald A. Morgan has other non-pecuniary interests in this litigation, for example, his interest in his and his firm's reputation and goodwill. The language of the amended statute, in contrast to its predecessor,14 does not require that the interest be financial. Although the Reporters's Notes to the Code suggest that it is only "economic interests" which specifically require disqualification,15 the Congressional drafters recognized that non-economic interests may affect a judge's bias or prejudice.16 Public Utilities Commission v. Pollak, 343 U.S. 451, 72 S. Ct. 813, 96 L. Ed. 1068 (1952), presents a classic example. In that case Justice Frankfurter disqualified himself because he considered his emotions "so strongly engaged as a victim of the practice (of hearing radio programs broadcast on buses)". Id. at, 467, 72 S. Ct. at 823.
Without deciding that non-economic interests which can be considered as disqualifying under § 455(b) (4) were intended to be encompassed in § 455(b) (5) (iii), we do note that the possibility exists,17 and under the facts of this case such interests are clearly apparent and to the judge's knowledge.
Pursuant to section 455(a) and (b) (5) (iii), we hold that Judge Morgan should have granted the plaintiff's "Motion to Disqualify" and reassigned this case to the district judge for the Southern Division of his district or to a visiting judge. While we are indeed sympathetic to the practical reasons given by Judge Morgan for declining disqualification, Congress has chosen the other path.21
SCA Services v. Lucky Stores, Inc., No. 75-0033-RI (S.D. Ill., filed Nov. 18, 1975)
See Note, Disqualification of Judges & Justices in the Federal Courts, 86 Harv. L. Rev. 736 (1973)
In In re Murchison, supra at 136, 75 S. Ct. at 625, the Court stated:
"That interest (in the outcome) cannot be defined with precision. Circumstances and relationships must be considered. This Court has said, however, that 'every procedure which would offer a possible temptation to the average man as a judge * * * not to hold the balance nice, clear and true between the State and the accused, denies the latter due process of law.' Tumey v. Ohio, 273 U.S. 510, 532 (47 S. Ct. 437, 444, 71 L. Ed. 749). Such a stringent rule may sometimes bar trial by judges who have no actual bias and who would do their very best to weigh the scales of justice equally between contending parties. But to perform its high function in the best way 'justice must satisfy the appearance of justice.' Offutt v. United States, 348 U.S. 11, 14 (75 S. Ct. 11, 13, 99 L. Ed. 11)."
Senate Hearings on S. 1064, supra, note 6, at 41-52, 106-08. In this instance, the drafters were specifically concerned with § 455(b) (4)
Because we leave open the question whether Donald A. Morgan was "acting like a lawyer" here, Kesselhaut v. United States, 555 F.2d 791 (U.S. Ct. Cls.1977), involving a law firm's possible disqualification, is not pertinent