Blixseth v. Yellowstone Mountain Club, LLC
2014 U.S. App. LEXIS 2934
| 9th Cir. | 2014Background
- Timothy Blixseth co-founded Yellowstone Mountain Club, which later filed for bankruptcy after large loans and alleged misappropriation of funds.
- Bankruptcy court found Blixseth diverted club funds, assessed $40 million in damages, and approved a reorganization Plan; district court issued limited reversal on notice and exculpation language.
- On remand, Blixseth moved to recuse the bankruptcy judge, alleging ex parte communications, rulings denying due process, and biased statements; the bankruptcy judge denied recusal and the district court affirmed.
- Blixseth appealed the denial of recusal to the Ninth Circuit.
- The Ninth Circuit reviewed for abuse of discretion and evaluated whether a reasonable, informed person would question the judge’s impartiality.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether recusal was required under the appearance-of-impropriety standard | Judge met privately with debtor/bidders and communicated ex parte, creating appearance of bias | Meetings were not ex parte as Blixseth lacked a right to attend; communications were routine and administrative | Denied: no reasonable person would conclude impartiality was reasonably questioned |
| Whether alleged ex parte emails and clerk contacts required recusal | Emails and clerk calls show coordination and bias against Blixseth | Emails concerned administrative matters; clerk calls were harmless or unrelated; no evidentiary support for conspiracy | Denied: communications were innocuous and insufficient to show bias |
| Whether judicial rulings deprived Blixseth of due process or show extrajudicial bias | Judge ruled before replies, relied on facts from related proceedings, and made adverse rulings showing antagonism | Rulings alone do not establish bias; taking judicial notice of related proceedings is proper; errors are appealable, not recusal bases | Denied: rulings don’t demonstrate extrajudicial knowledge or extreme favoritism/antagonism |
| Whether judge’s remarks during proceedings were so biased to require recusal | Selected comments and requests (e.g., about counsel’s reputation) reveal hostility or favoritism | Remarks sought clarification of briefs and addressed litigation conduct; isolated remarks insufficient | Denied: remarks do not show a high degree of antagonism making fair judgment impossible |
Key Cases Cited
- Pesnell v. Arsenault, 543 F.3d 1038 (9th Cir. 2008) (appearance-of-impartiality standard for recusal)
- Liteky v. United States, 510 U.S. 540 (1994) (judicial rulings ordinarily do not require recusal absent extrajudicial source or extreme bias)
- Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847 (1988) (appearance of impropriety can warrant recusal)
- In re Marshall, 721 F.3d 1032 (9th Cir. 2013) (abuse-of-discretion review of recusal denials)
- United States v. Holland, 519 F.3d 909 (9th Cir. 2008) (use of a reasonable-person standard, not a hypersensitive one)
- United States v. Van Griffin, 874 F.2d 634 (9th Cir. 1989) (ex parte communications discouraged but not always improper)
- Reed v. Rhodes, 179 F.3d 453 (6th Cir. 1999) (context matters for evaluating ex parte contacts)
- United States v. Wecht, 484 F.3d 194 (3d Cir. 2007) (ex parte contacts can be improper if they create reasonable doubt about impartiality)