Opinion ID: 777327
Heading Depth: 2
Heading Rank: 2

Heading: Rosen and Ellman's Conduct

Text: 62 The sanctions imposed on Rosen and Ellman were based upon the following findings: (1) Rosen and Ellman failed to provide notice to all defendants that LaSalle was seeking a receivership; (2) the judge's law clerk told Rosen to supply a letter to chambers from defense counsel that the motion was unopposed; (3) the de Jong letter that Rosen provided only reflected the position of one defendant; and (4) with the exception of the aforementioned footnote in the Williams Certification, Rosen's papers did not disclose the simultaneous state court litigation. However, it seems clear to us that the district court's requisite finding of bad faith rests primarily, if not entirely, upon the court's conclusion that Rosen intentionally misrepresented that the receivership was unopposed in his discussions with the court's law clerk. Moreover, to the extent that the court's finding of bad faith does not rest solely on that factor, it certainly appears to have been colored by it. That conclusion, in turn, results from the judicial notice that the court took of what Rosen told the law clerk during his telephone discussions with her. Rosen insists that his discussions with the law clerk referred only to borrower's counsel, but the court took judicial notice and found as a matter of fact that he had deliberately and falsely stated that defense counsel did not object. 63 Federal Rule of Evidence 201(b) defines a judicially noticed fact as one that is not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. FED. R. EVID. 201(b). For all practical purposes, judicially noticing a fact is tantamount to directing a verdict against a party as to the noticed fact. See Werner v. Werner, 267 F.3d 288, 295 (3d Cir.2001), citing United States v. Jones, 29 F.3d 1549, 1553 (11th Cir.1994). 64 Here, there was clearly a disputed issue of fact as to whether Rosen referred to borrower's counsel or defense counsel in speaking to the judge's law clerk, and whether the clerk had requested a letter from borrower's counsel as opposed to defense counsel. As noted above, Rosen took the witness stand at the show cause hearing and testified under oath that he used the term borrower's counsel when speaking to the court's chambers. The record from that hearing shows that, without any contrary testimony whatsoever, the district court rejected Rosen's account and thereafter based a conclusion of bad faith under § 1927 upon a finding that Rosen's explanation was not credible. As noted above, the court explained its rejection of Rosen's account as follows:  I am telling you as a matter of fact, of which I take judicial notice, that [the de Jong letter] was produced by Mr. Rosen in response to an oral request from my chambers to produce either a certification or a letter from defense counsel stating that there was no opposition. A0300-0302 (emphasis added). 65 The court's finding of fact of the content of the disputed conversations between Rosen and the law clerk understandably colored the court's view of Rosen's conduct here. The court took judicial notice of those two conversations even though the court did not hear any part of the disputed conversations and had no way of knowing what was said other than asking the law clerk; the only participant other than Rosen. We must, therefore, conclude that the judge's certainty as to the substance of Rosen's communications with her chambers was based on private discussions she had with her law clerk — discussions that neither Rosen nor his attorney were privy to or informed of. 66 There is absolutely no way that the contents of Rosen's disputed conversations with the judge's law clerk even remotely satisfies the requirements for judicial notice in Rule 201(b). The contents of those conversations are certainly not a matter of common knowledge, nor are they easily provable from a source whose accuracy cannot reasonably be questioned. See e.g. Oran v. Stafford, 226 F.3d 275, 289 (3d Cir.2000) (taking judicial notice of the contents of properly authenticated public disclosure documents filed with the SEC); Policemen's Benevolent Ass'n v. Washington Township., 850 F.2d 133, 137 (3d Cir. 1988) (taking judicial notice of Township's police force regulations); Gov't of the Virgin Islands v. Testamark, 528 F.2d 742, 743 (3d Cir.1976) (upholding judicial notice of defendant's prior conviction). 67 We certainly understand that a judge would be most reluctant to allow his/her law clerk to be called to the witness stand and questioned under oath under the circumstances here. Moreover, we are not unsympathetic to the dilemma this created for the judge. However, that dilemma does not justify short circuiting the fact finding process by a mantra-like reliance on judicial notice. This is especially true in light of the severe consequences that flowed from the court's resolution of the factual dispute about the conversations with the law clerk. The court's conclusion regarding those conversations was a key factor in finding bad faith. Yet, Rosen was not able to confront the only witness who could possibly corroborate or dispute his version of the conversations. 7 Thus, not only was the court's resort to judicial notice improper, it also denied Rosen a meaningful opportunity to be heard. Fellheimer v. Charter Tech., 57 F.3d 1215, 1227 (3d Cir.1995). We have previously stated that: 68 Sanctions are not to be assessed without full and fair consideration by the court. They often entail a fine which may have more than a token effect upon an attorney's resources. More importantly, they act as a symbolic statement about the quality and integrity of an attorney's work — a statement which may have[a] tangible effect upon the attorney's career. 69 Id. (emphasis added). The sanctions here were not based upon full and fair consideration. Given the importance of the factual finding arising from that hearing, and the sanctions that followed, we hold that the court's resort to judicial notice to resolve what was said in the conversations between the sanctioned attorney and the court's law clerk simply can not withstand scrutiny. 70 We are aware, or course, that the court's finding of bad faith could also have been influenced by the circumstantial evidence relating to the language the court added to the receivership order, as well as the court's concern with the veiled reference to the state court proceedings that Rosen had arguably buried in the single footnote of the Williams Certification. However, we doubt that that evidence alone would have caused the court to so readily conclude that Rosen was acting in bad faith absent the court's belief that Rosen had made misrepresentations to its law clerk. Moreover, the fact that Ellman orally notified the Hellring firm of the receivership before Rosen filed the papers, and the fact that Rosen made copies of the papers available to the Hellring firm after the receivership Order was entered could very well have precluded a finding of bad faith absent the court's belief about the substance of Rosen's conversations with the law clerk. Similarly, we believe that the court's reaction to Rosen's disclosure of the state court litigation in a footnote in the Williams Certification may have been affected, at least in part, by the court's view of Rosen's credibility. 8 Inasmuch as the court's conclusion regarding bad faith under § 1927 can not be divorced from the judicial notice of the two conversations, we conclude that the sanctions that were imposed were an abuse of discretion. 71 The July 11 Order sanctioning the Zeichner firm was equally an abuse of discretion. A law firm can only speak and act through its agents. See In re Am. Biomaterials Corp., 954 F.2d 919, 923 (3d Cir.1992) (noting that a corporation can act only through its agents and employees). Here, the Zeichner firm acted through Rosen and Ellman. The July 11 Order relied upon the same findings of fact as the August 22 Order. Inasmuch as the court's improper reliance upon judicial notice was the underpinning for both Orders, neither can stand. 72 We are aware that this disposition allows for the possibility of further hearings to determine what Rosen said to Judge Hochberg's law clerk. We have already commented upon the awkwardness of any judge being placed in a position of making credibility determinations regarding his/her law clerk's testimony in an adversarial setting. Moreover, if § 1927 sanctions are to be pursued, opposing counsel would be placed in the untenable position that we noted above of having to cross examine the judge's law clerk and possibly attack her credibility. This extremely difficult scenario is exacerbated because the judge has already made a finding of fact as to the contents of the disputed conversations between Rosen and her law clerk. Having already made that finding, it will be difficult for Judge Hochberg to maintain the appearance of objectivity if she reimposes sanctions on remand. This holds true even if she objectively concludes that sanctions are warranted without considering Rosen's communications with her chambers. 73 [P]ublic confidence in the judicial system mandates, at a minimum, the appearance of neutrality and impartiality in the administration of justice. Alexander v. Primerica Holdings, Inc., 10 F.3d 155, 157 (3d Cir.1993); see also In re School Asbestos Litigation, 977 F.2d 764, 776 (3d Cir.1992). When the judge is the actual trier of fact, the need to preserve the appearance of impartiality is especially pronounced. Primerica Holdings, 10 F.3d at 166. 74 [J]ustice must satisfy the appearance of justice. Offutt v. United States, 348 U.S. 11, 14, 75 S.Ct. 11, 99 L.Ed. 11 (1954). Thus, in Haines v. Liggett Group, 975 F.2d 81 (3d Cir.1992), we stated that the polestar of a judge's decision is [i]mpartiality and the appearance of impartiality, inasmuch as they are the sine qua non of the American legal system. Haines, 975 F.2d at 98. Therefore, despite the reservations we always have when reassigning a case from an excellent and dedicated jurist, we nevertheless have a responsibility to exercise our supervisory authority and will do so in an appropriate case. We conclude that such reassignment is appropriate here under either the All Writs Act, 28 U.S.C. § 1651(a), or 28 U.S.C. § 2106. See Primerica Holdings, 10 F.3d at 167, citing United States v. Torkington, 874 F.2d 1441, 1446 (11th Cir.1989). 75 Accordingly, we will direct the Chief Judge of the United States District Court for the District of New Jersey to order the Clerk of that court to reassign this case to another judge in that district for any further proceedings in this case. 76 Before closing we pause to note that, in reversing these Orders, we do not in any way intend to minimize the importance of an attorney's candor with the court, or the court's staff. Nor do we intend to limit a court's ability to respond appropriately when an attorney's bad faith burdens judicial proceedings. As an officer of the court, an attorney must comport himself/herself with integrity and honesty when making representations regarding a matter in litigation. An attorney's obligation to the court is one that is unique and must be discharged with candor and with great care. The court and all parties before the court rely upon representations made by counsel. We believe without qualification that an attorney's word is his bond. Baker Industr., 764 F.2d at 212. However, the record before us does not support the district court's conclusion that Rosen, Ellman, or the Zeichner firm breached that duty here and we therefore conclude that the court abused its discretion in imposing sanctions under § 1927.