Opinion ID: 2514970
Heading Depth: 3
Heading Rank: 4

Heading: We Remand for Further Consideration of Judicial Disqualification.

Text: By letter dated July 27, 2006, Mitchell's counsel advised Second Judicial District Presiding Judge Michael I. Jeffery and Judge Erlich that it had recently come to [his] attention that Judge Erlich may have a conflict and probably should disqualify himself from the case under Alaska Code of Judicial Conduct Canon 3 E(1)(c)(i). [38] Specifically, counsel referenced Judge Erlich's wife's ownership of NANA stock and Reich v. Cominco Alaska, Inc. [39] In Reich, we upheld a trial court's decision to exclude NANA stockholders as jurors in an employment discrimination case against Teck Cominco because NANA had a direct financial interest in the outcome of the case that could be imputed to its shareholders, even though NANA was not a party to the case. [40] Former Alaska Civil Rule 47(c)(12) [41] permitted challenges for cause for jurors with a financial interest ... in the outcome of the case. We adopted a per se rule disqualifying as jurors shareholders of a non-party corporation that has a financial interest in the outcome of the litigation. [42] In Mitchell's case, Judge Erlich held a hearing on August 2, 2006, and indicated that he would consider the letter as a motion for disqualification. He later denied the motion in a written order. Judge Erlich noted that his wife owned two hundred shares of NANA stock and received a dividend of between $200 and $300 per year, but that she was not a director or officer or employed by [NANA]. Judge Erlich stated that his wife was otherwise employed and received a salary in the range of $60,000 to $70,000 per year. Judge Erlich's salary as a superior court judge is in excess of $152,760 per year. [43] Thus, the impact of the NANA dividends on the Erlich family annual income was perhaps one-tenth of one percent of the Erlichs' salaries. Judge Erlich first determined that his wife's interest was de minimis under the Code of Judicial Conduct. He then considered whether he should be disqualified under the Code's mandate that he disqualify himself if his impartiality could be reasonably questioned or under AS 22.20.020(a)(9), which prohibits a judicial officer from acting in a matter when he or she feels a fair and impartial decision cannot be given. He determined that he could be both objectively and subjectively impartial. Pursuant to AS 22.20.020(c), Judge Jeffery was appointed to review Judge Erlich's decision. Judge Jeffery agreed that the NANA dividends were de minimis under the Code of Judicial Conduct and that Judge Erlich could be, and could be seen as, impartial. But he also considered AS 22.20.020(a)(4) as another possible basis for Judge Erlich's disqualification. Subsection .020(a)(4) provides that a judicial officer may not act in a matter in which the judicial officer or his or her spouse has a direct financial interest in the matter. [44] Judge Jeffery decided that the Code of Judicial Conduct's de minimis exception was an appropriate limitation on subsection.020(a)(4) and did not infringe on the substantive right to have a judicial officer who is actually impartial and who also appears to be impartial. Judge Jeffery distinguished Reich on the basis that the court rule for juror disqualification does not have a de minimis exception, while the Code of Judicial Conduct does. Judge Jeffery affirmed Judge Erlich's decision. Mitchell argues to this court that subsection.020(a)(4) requires Judge Erlich's disqualification in his case, relying chiefly on federal cases construing the federal judicial disqualification statute to require recusal even when the judge's interest is extremely small. Mitchell's reliance on federal cases is misplaced. The federal counterpart to subsection.020(a)(4) has stricter language than does the Alaska statutethe federal law requires disqualification when the judicial officer or spouse has a financial interest, however small, in the subject matter of the litigation or in a party to the proceeding. [45] Because the federal statute explicitly states that any financial interest is reason for disqualification and the Alaska statute does not, the federal cases are not truly analogous. The Alaska Code of Judicial Conduct establishes standards for ethical conduct of judges and provides a structure for regulating conduct through disciplinary agencies. [46] It is to be applied consistently with constitutional requirements, statutes, other court rules and decisional law and in the context of all relevant circumstances. [47] Because a de minimis financial interest does not conflict with the right to have a judicial officer who is actually unbiased and who appears unbiased, [48] we agree with Judge Jeffery and hold that AS 22.20.020(a)(4) does not impose a more stringent standard for disqualification than does the Code when a judicial officer or spouse has a de minimis financial interest in the matter before the court. Teck Cominco argues that nothing in the record supports the proposition that the relationship between NANA and Teck Cominco is the same now as it was at the time of Reich and, therefore, that Mitchell's allegations of financial conflict cannot be sustained. This argument is moot in light of our resolution of the recusal issue. [49] However, we take judicial notice of a January 2007 affidavit by the vice-president and general counsel of NANA in connection with another case [50] that has reached this court. [51] This affidavit describes the relationship between NANA and Teck Cominco in the same manner reflected in Reich and notes the significant employment and related financial impact of the Mine on NANA shareholders and the Northwest Arctic Borough. The affidavit further provides that (1) Mine royalties to NANA for 2008 are projected to exceed $250 million, over four times the 2007 royalties, although (2) sixty-two percent of the royalties are shared with other entities under the Alaska Native Claims Settlement Act. This suggests that the future stream of NANA shareholder dividends, as well as the value of NANA stock (notwithstanding current restrictions on transfer [52] ), may increase substantially as a direct result of NANA's investment in the Mine. Canon 3 E(1) requires disqualification when the judge's impartiality might reasonably be questioned. . . . While this requires disqualification when a judge or spouse has more than a de minimis interest in the outcome of a case, financial or otherwise, [53] that does not mean that such a de minimis interest can never give rise to a reasonable question about a judge's impartiality. In light of the information about greatly increased royalties from the Mine and the Mine's significant financial impact on NANA shareholders and the Northwest Arctic Borough, we remand for Judge Erlich's renewed consideration of Mitchell's request that he disqualify himself from this case. On remand Judge Erlich should consider and indicate whether his wife's ownership of NANA stock has a financial or other impact on the Erlich household, de minimis or not, that would reasonably call into question his ability to serve as the trial judge in this case. [54]