Opinion ID: 72909
Heading Depth: 2
Heading Rank: 5

Heading: the directed verdict on counts iv and v

Text: At the start of the trial in this case, the district court had already granted summary judgment against most of the plaintiffs on most of their claims. As a result, the only claims that proceeded to trial were Karns’ shareholder derivative claim under Count IV of the complaint, and the civil conspiracy claim of Konstand, Karns, and Malick in Count V of the 24 complaint. At the close of the plaintiffs’ case, the district court directed a verdict in favor of the defendants on all of those claims. 1. Karns’ Shareholder Derivative Claim (Count IV) At trial, Karns presented no evidence that he was a BCI shareholder. The Florida statute authorizing derivative suits makes it clear that ownership of stock at the time of the alleged unlawful activity is a necessary element of the claim. See Fla. Stat. § 607.07401(1) (“A person may not commence a proceeding in the right of a domestic or foreign corporation unless the person was a shareholder of the corporation when the transaction complained of occurred.”). Therefore, proof of Karns’ status as a shareholder was an essential element of his shareholder derivative claim. See Schilling v. Belcher, 582 F.2d 995, 996 (5th Cir. 1978). Given his failure to offer any proof of that, the district court properly granted a directed verdict against Karns on his shareholder derivative claim. 2. Konstand, Karns, and Malick’s Civil Conspiracy Claims (Count V) At trial, plaintiffs sought to demonstrate that the defendants conspired to defraud the hotel of profits from Winnie’s, a popular disco club at the hotel. Plaintiffs contended that defendants were skimming revenues from cover charges and the drink prices that patrons paid, and that the defendants reported much lower revenue figures than the club actually made. Although the plaintiffs presented circumstantial evidence showing that something suspicious was going on at Winnie's, that showing of “suspiciousness” was not enough to save their conspiracy claims. Taken in the light most favorable to the plaintiffs, the evidence adduced at trial showed that during the disco craze of the late 1970's, Winnie’s was one of 25 the most popular dance clubs in Gainesville. It also showed that Winnie’s had a five dollar cover charge and a two-to-five dollar range for drinks. Finally, the evidence showed that despite prices and crowd sizes similar to those of its competitors, Winnie’s reported substantially lower revenues than its competitors. An action for civil conspiracy ordinarily requires proof of an agreement between two or more people to achieve an illegal objective, an overt act in furtherance of that illegal objective, and a resulting injury to the plaintiff. See Ambrister v. Roland Int'l Corp., 667 F. Supp. 802, 809 (M.D. Fla. 1987). None of the evidence plaintiffs adduced at trial supports an inference that an agreement existed among the defendants to defraud the hotel of profits. Furthermore, the plaintiffs’ evidence failed to tie the defendants to the alleged skimming., and that failure to connect the alleged wrongdoing to the alleged wrongdoers is fatal to their civil conspiracy claim. See Menendez v. Beech Acceptance Corp., 521 So.2d 178, 180 (Fla. Dist. Ct. App. 1988) (granting summary judgment where plaintiff failed to establish connection between wrongdoing and alleged wrongdoer). Accordingly, the district court’s grant of a directed verdict on the civil conspiracy count was proper. VII. THE DISTRICT COURT’S DENIAL OF POSTJUDGMENT RELIEF While the parties were briefing this appeal, plaintiffs filed a motion for postjudgment relief requesting a new trial and the disqualification of Judge Moore. The district court entered an order denying the motion. On appeal, plaintiffs contend that Judge Moore abused his discretion by refusing to recuse himself. 26 Plaintiffs argue that 28 U.S.C. § 455(a) requires the disqualification of Judge Moore. It provides that: Any justice, judge, or magistrate of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned. Id. The test for determining whether a judge's impartiality might reasonably be questioned is an objective one, and requires asking whether a disinterested observer fully informed of the facts would entertain a significant doubt as to the judge's impartiality. See Diversified Numismatics, 949 F.2d at 385; Parker v. Connors Steel Co., 855 F.2d 1510, 1524 (11th Cir. 1988). In their motion before the district court and on appeal, plaintiffs identify two sources of partiality they claim require a new trial and the recusal of Judge Moore.
Plaintiffs’ first contention is that because the defendants' lead counsel was a former law clerk, the judge had an impermissible conflict of interest. Three months before trial, plaintiffs learned that the defendants' lead counsel, Paul Perez, had clerked for Judge Moore during the 1984-85 term. Perez had become the lead defense counsel after leaving the U.S. Attorney’s office in 1993. This case had been filed in 1983, which means Perez was a clerk for Judge Moore while this case was before him. Furthermore, this case was one of the cases for which Perez was responsible during his clerkship, and many of the defendants’ motions to dismiss were filed and pending while Perez was clerking for Judge Moore. Judge Moore did not rule on those motions until two years later, at which time Perez was no longer his law clerk. 27 The Middle District of Florida has expressly incorporated Florida’s ethical rules into its local rules. See M.D.Fla. R. 2.04(c). Florida Rule of Professional Conduct 4-1.12(e) prohibits a former law clerk from participating as an advocate in any case in which he had substantial participation as a law clerk, unless all of the parties consent after full disclosure. It is not clear, however, whether Perez had “substantial involvement” with this case. Perez was the law clerk to whom the case was assigned, and motions to dismiss were filed during his tenure as a clerk, so it is possible that he was privy to Judge Moore's thoughts concerning the case. On the other hand, the motions to dismiss were not decided until after Perez had moved on to another job, and in his sworn affidavit Perez states that he had little involvement with the case. The former Fifth Circuit has held that when a former law clerk who has been exposed to the judge's “innermost thoughts” concerning a particular case becomes part of the counsel team for a party to that litigation, the judge must recuse himself. See Fredonia Broadcasting Corp. v. RCA Corp., 569 F.2d 251, 255 (5th Cir. 1978). However, it is not necessary to decide whether Perez was exposed to Judge Moore’s “innermost thoughts” so as to necessitate Judge Moore’s recusal. Even if § 455 ordinarily would require recusal in this situation, plaintiffs have waived this issue. Although a literal reading of § 455 places the duty to recognize the conflict on the judge, this Court has held that a motion to disqualify must be timely. See, e.g., United States v. Slay, 714 F.2d 1093, 1094 (11th Cir. 1983). In Slay, the defendant became aware of a potential conflict warranting recusal under § 455. Nevertheless, the defendant waited until after the judge ruled unfavorably on his motion to 28 suppress before raising the § 455 issue. This Court refused to consider the recusal issue, holding that the defendant had waived the issue by not raising it at the first available opportunity. Plaintiffs’ attorneys were aware a full three months before this case went to trial that Judge Moore had employed Perez as a law clerk while the case was pending before him. They recognized the recusal issue from the start of that three-month period. Yet they made a strategic decision not to raise the issue until they saw how the trial came out. They explain that they decided to keep this issue in their pocket because the case was twelve years old, the remaining plaintiffs were seventy years old, and they thought that they would prevail at trial anyway. In other words, they made a carefully thought out, coldly calculated, eyes open decision not to raise the issue and instead to gamble on winning anyway. The recusal provision was intended to be a shield, not a sword. An issue involving recusal cannot be used as an insurance policy to be cashed in if a party’s assessment of his litigation risks turns out to be off and a loss occurs. Plaintiffs waived the issue.6
Plaintiffs also contend that Judge Moore's rulings and comments throughout the case illustrate a lack of impartiality that warrants a new trial and his disqualification from participation in further proceedings. They assert that, at trial, Judge Moore showed 6 Of course, we do not condone Perez’s apparent failure to disclose fully and in a timely fashion his role in connection with the case as a former law clerk for Judge Moore. Nor do we mean to intimate any view on whether his failure to do so might be subject to sanction in another forum. 29 impermissible bias against the plaintiffs, often acting as advocate for the defense in front of the jury.7 Plaintiffs also contend that Judge Moore showed antipathy towards “Miami lawyers.”8 Bias sufficient to disqualify a judge normally must stem from extrajudicial sources and must be focused against a party to the proceeding. See Hamm v. Board of Regents, 708 F.2d 647, 651 (11th Cir. 1983). None of the statements that plaintiffs have offered meet that standard. While the negative comments about “Miami lawyers” may be inappropriate, they do not require recusal. Cf. Philips v. Joint Legislative Com., 637 F.2d 1014, 1020 (5th Cir. Unit A Feb. 1981) (holding recusal not necessary despite improper remarks to parties in previous cases). A party may establish bias sufficient to disqualify a judge by demonstrating “such pervasive bias and prejudice that it constitutes bias against a party.” Id. After reviewing the trial record, we conclude that Judge Moore’s comments at trial fail even to approach that level. Therefore, he did not abuse his discretion in refusing to recuse himself from further proceedings. 7 When plaintiffs’ counsel attempted to inquire about a former bank employee’s statement that the hotel mortgage was “in an amount far in excess of the value of the hotel,” Judge Moore interjected, stating, “I don’t think he said ‘far in excess.’” Although plaintiffs point to other comments that Judge Moore made during the trial, such as his statement, “Counsel, we don’t need all of this background,” none of these comments reasonably could be construed as indicating to the jury how they should view the evidence. Therefore, we fail to see how making the comments amounted to acting as an advocate. 8 The most critical statement that Judge Moore made at trial occurred when he admonished plaintiffs’ counsel for referring to Perez as the “bank’s lawyer.” Judge Moore stated, “[Y]ou sure remind me of my days in Broward County fifteen years ago when the Miami lawyers came up there. I don’t appreciate snide remarks that are being made. . . .” 30