IN RE: KENSINGTON INTERNATIONAL LIMITED and SPRINGFIELD ASSOCIATES, LLC, Petitioners; IN RE: D.K. ACQUISITION PARTNERS, L.P.; FERNWOOD ASSOCIATES, L.P. AND DEUTSCHE BANK TRUST COMPANY AMERICAS, Petitioners; IN RE: USG CORPORATION, Petitioner
No. 03-4212, No. 03-4526, No. 04-1468
United States Court of Appeals for the Third Circuit
May 17, 2004
2004 Decisions, Paper 659
FUENTES, SMITH and GARTH, Circuit Judges
2004 Decisions
Opinions of the United States Court of Appeals for the Third Circuit
5-17-2004
In Re: Kensington
Precedential or Non-Precedential: Precedential
Docket No. 03-4212
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Recommended Citation
“In Re: Kensington” (2004). 2004 Decisions. Paper 659. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/659
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No. 03-4212
IN RE: KENSINGTON INTERNATIONAL LIMITED and SPRINGFIELD ASSOCIATES, LLC, Petitioners
No. 03-4526
IN RE: D.K. ACQUISITION PARTNERS, L.P.; FERNWOOD ASSOCIATES, L.P. AND DEUTSCHE BANK TRUST COMPANY AMERICAS, Petitioners
No. 04-1468
IN RE: USG CORPORATION, Petitioner
On Petitions for Writs of Mandamus to the United States Bankruptcy Court for the District of Delaware (Related to Bankruptcy Nos. 00-03837, 01-01139 and 01-02094)
Argued on April 19, 2004
BEFORE: FUENTES, SMITH and GARTH, Circuit Judges
(Opinion Filed: May 17, 2004)
Roy T. Englert, Jr. (argued), Lawrence S. Robbins, Robbins, Russell, Englert, Orseck & Untereiner, 1801 K Street, N.W, Suite 411, Washington, DC 20006
John J. Gibbons, Gibbons, Del Deo, Dolan, Griffinger & Vecchione, One Riverfront Plaza, Newark, NJ 07102
Attorneys for Petitioners in 03-4212
Charles Fried (argued), 1545 Massachusetts Avenue, Cambridge, MA 02138
Richard Mancino, Marc Abrams, Willkie, Farr & Gallagher, 787 Seventh Avenue, New York, NY 10019-6099
Joanne B. Wills, Jennifer L. Scoliard, Klehr, Harrison, Harvey, Branzburg & Ellers, 919 North Market Street, Suite 1000, Wilmington, DE 19803
Stephen C. Neal (argued), Scott D. Devereaux, Cooley Godward, 3000 El Camino Real, 5 Palo Alto Square, Palo Alto, CA 94306
Daniel J. DeFranceschi, Paul N. Heath, Richards Layton & Finger, One Rodney Square, P.O. Box 551, Wilmington, DE 19899
David G. Heiman, Jones Day, North Point, 901 Lakeside Avenue, Cleveland, OH 44114-1190
Paul R. DeFilippo, Wollmuth, Maher & Deutsch, One Gateway Center, Newark, NJ 07102
Attorneys for Petitioner in No. 04-1468
Charles O. Monk, II (argued), Saul Ewing, 100 South Charles Street, Baltimore, MD 21201
Norman L. Pernick, J. Kate Stickles, Saul Ewing, 222 Delaware Avenue, P.O. Box 1266, Suite 1200, Wilmington, DE 19899
Richard E. Flamm, 2840 College Avenue, Suite A, Berkeley, CA 94705
Attorneys for Respondents Owens Corning, et al.
David M. Bernick (argued), Michelle H. Browdy, Janet S. Baer, Kirkland & Ellis, 200 East Randolph Drive, Suite 6500, Chicago, IL 60601
Christopher Landau, Ashley C. Parrish, Kirkland & Ellis, 655 Fifteenth Street, NW, Washington, DC 20005
Laura Davis Jones, David W. Carickhoff, Jr., Pachulski, Stang, Ziehl, Young, Jones & Weintraub, 919 North Market Street, 16th Floor, P.O. Box 8705, Wilmington, DE 19899
Elihu Inselbuch (argued), Peter Van N. Lockwood, Nathan D. Finch, Caplin & Drysdale, 399 Park Avenue, 27th Floor, New York, NY 10022
Marla R. Eskin, Mark T. Hurford, Campbell & Levine, 800 North King Street, Suite 300, Wilmington, DE 19801
Attorneys for Respondents Official Committee of Asbestos Claimants of Owens Corning, Official Committee of Asbestos Personal Injury Claimants of W.R. Grace and Official Committee of Asbestos Personal Injury Claimants of USG Corporation
Michael J. Crames (argued), Jane W. Parver, Aaron Stiefel, Edmund M. Emrich, Kaye Scholar, 425 Park Avenue, New York, NY 10022
Edwin J. Harron, Young, Conaway, Stargatt & Taylor, P.O. Box 391, 1000 West Street, Brandywine Building, 17th Floor, Wilmington, DE 19899
Attorneys for Respondents James J. McMonagle and Dean M. Trafelet
Daniel K. Hogan, Law Offices of Daniel K. Hogan, 1701 Shallcross Avenue, Suite C, Wilmington, DE 19806
Sander L. Esserman, Robert T. Brousseau, David J. Parsons, Stutzman, Bromberg, Esserman & Plifka, 2323 Bryan Street, Suite 2200, Dallas, TX 75201-2689
Attorneys for Respondent Baron & Budd Claimants
Jeffrey S. Trachtman, Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, 39th Floor, New York, NY 10022
Adam G. Landis, Rebecca L. Butcher, Landis, Rath & Cobb, 919 Market Street, Suite 600, P.O Box 2087, Wilmington, DE 19899
Attorneys for Respondent Credit Suisse First Boston Corp
Neal J. Levitsky, L. Jason Cornell, Fox Rothschild, 824 North Market Street, Suite 810, Wilmington, DE 19899-2323
Attorneys for Respondent Waters & Kraus
Edward L. Jacobs, 26 Audubon Place, P.O. Box 70, Fort Thomas, KY 41075
Armstrong World Industries, Inc., Kenneth Pasquale, Lewis Kruger, Stroock, Stroock & Lavan, 180 Maiden Lane, New York, NY 10038
Attorneys for Intervenor Official Committee оf Unsecured Creditors of USG Corporation
Roderick R. McKelvie, Fish & Neave, 1899 Pennsylvania Avenue, NW, Washington, DC 20006
Attorney for Respondent Harry Grau & Sons
Michael R. Lastowski, Duane Morris, 1100 North Market Street, Suite 1200, Wilmington, DE 19801
Attorney for Intervenor Official Committee of Unsecured Creditors of USG Corp.
Mark E. Felger, Jeffrey R. Waxman, Cozen & O‘Connor, 1201 Market Street, Suite 1400, Wilmington, DE 19801
Daniel J. Popeo, Richard A. Samp, Washington Legal Foundation, 2009 Massachusetts Avenue, N.W., Washington, DC 20036
Attorneys for Amicus Curiae Washington Legal Foundation
James L. Patton, Jr., Young, Conaway, Stargatt & Taylor, P.O. Box 391, 1000 West Street, Brandywine Building, 17th Floor, Wilmington, DE 19899
Attorney for Amicus Curiae Eric D. Green
Timothy K. Lewis, Schnader Harrison Segal & Lewis, 2001 Pennsylvania Avenue NW, Suite 300, Washington, DC 20006
Attorneys for Amicus Curiae American Insurance Association
Garth, Circuit Judge:
Approximately six months ago, two emergency petitions were filed in this Court asking us to issue Writs of Mandamus disqualifying Senior District Court Judge Alfred M. Wolin of the District of New Jersey from continuing to preside over two of five asbestos-related bankruptcies that this Court had assigned to him in December 2001 for coordinated case management. The five companies in bankruptcy are Owens Corning, W.R. Grace & Co., USG Corporation, Armstrong World Industries, Inc., and Federal-Mogul Global, Inc. (collectively, the “Five Asbestos Cases“).
The Petitions, which were brought by creditors of Owens Corning and W.R. Grace & Co., alleged that Judge Wolin had, through his association with certain consulting Advisors which he had appointed, created a perception that his impartiality “might reasonably be questioned” under
Following a hearing on December 12, 2003, we concluded that we should not reach the merits of the Mandamus Petitions. Our decision was “prompted by our overarching concern that we [did] not have an adequately developed evidentiary record before us.” In re Kensington Int‘l Ltd., 353 F.3d 211, 214 (3d Cir. 2003). “[R]eluctant to act in a complex situation such as this one, where so many vital interests are at stake, without a developed evidentiary record,” we remanded the proceedings to Judge Wolin while retaining jurisdiction. Id. at 223. We instructed Judge Wolin to vacate his order staying discovery and allow expedited discovery to proceed. We also directed that he issue an expedited ruling on all of the recusal motions pending before him. Id. USG Corp. by this time had also filed a recusal motion.
As noted, we retained jurisdiction over the Mаndamus Petitions. These Petitions were joined by USG Corp., the debtor in the USG Corp. bankruptcy. The Official Committee of Unsecured Creditors in the Armstrong World Industries, Inc. bankruptcy filed a fourth Petition, but due to its late filing we did not consolidate it with the other Petitions.
I.
Having exhaustively reviewed the now developed record, we have reached the following conclusions:
First, a reasonable person, knowing all of the relevant circumstances, would conclude that Judge Wolin‘s impartiality might reasonably be questioned in the Owens Corning, W.R. Grace & Co. and USG Corp. bankruptcies. Although the record does not demonstrate that Judge Wolin has done anything wrong or unethical or biased, he must be disqualified under
Second, we find that the motions for recusal in the Owens Corning and W.R. Grace & Co. bankruptcies were timely under
Fourth, we do not decide whether the ex parte communications between Judge Wolin, on the one hand, and the Advisors, parties, and attorneys, on the other, provide a separate ground for disqualification under
Fifth, we reach no decision on the Petition for Mandamus filed in the Armstrong World Industries, Inc. bankruptcy. As mentioned above, that Petition was not consolidated with the Petitions in Owens Corning, W.R. Grace & Co., and USG Corp. Rather than delay this opinion, and recognizing that our initial orders dated October 30, 2003 and November 3, 2003 stayed certain proceedings before the Bankruptcy Courts, we will set a separate date to hear argument on the Armstrong Petition and will render a decision in that case in due course.
Sixth, we likewise do not rule on, or express an opinion as to, the fifth bankruptcy, Federal-Mogul Global, Inc., albeit for a different reason. None of the parties in Federal-Mogul has moved for Judge Wolin‘s recusal in the Bankruptcy Court or filed a Petition for Mandamus in our Court. Accordingly, we will not disturb Judge Wolin‘s assignment in dealing with the Federal-Mogul Global, Inc. bankruptcy.
II. BACKGROUND
In our earlier opinion, we described the parties, the allegations, the responses, the procedures, our standard of review, and our standards for disqualification under
After our December 12, 2003 hearing, which gave rise to the expedited discovery and Judge Wolin‘s expedited ruling on the recusal motions, we received two additional Petitions for a Writ of Mandamus in the USG Corp. and Armstrong World Industries, Inc.
Parties Seeking Recusal2 Kensington International Ltd, et al.; Credit Suisse First Boston, as agent for Owens Corning‘s pre-petition bank creditors; D.K. Acquisition Partners, L.P., et al.; USG Corp.; Official Committee of Unsecured Creditors of USG Corp.; Official Committee of Unsecured Creditors of Armstrong World Industries, Inc.
Parties Opposing Recusal3 Owens Corning; Baron & Budd Claimants; Legal Representative for Future Asbestos Personal Injury Claimants in Owens Corning & USG Corp.; W.R. Grace & Co.; Official Committee of Asbestos Personal Injury Claimants of W.R. Grace & Co.; Official Committee of Asbestos Personal Injury Claimants of USG Corp.
Essentially, the parties seeking disqualification assert that Judge Wolin had appointed five Advisors to assist him in the discharge of his functions. These Advisors were not selected from any judicial category (i.e., they were not federal magistrate judges, special masters, or law clerks4); they consisted of lawyers, retired state сourt judges, and professors with prior experience in asbestos litigation. The Petitioners claim that Judge Wolin, who has presided over the Five Asbestos Cases since December 2001, has through his appointment of the Advisors and his participation with them in administering the bankruptcies, created a perception in the mind of the reasonable person that his impartiality could be questioned, and this being so, that he must be disqualified.
The Petitions filed in the Owens Corning and W.R. Grace & Co. bankruptcies seek Judge Wolin‘s disqualification primarily pursuant to
After we scheduled the briefing and hearing dates for the Owens Corning and W.R. Grace & Co. Petitions, USG Corp. filed a third Petition for Mandamus. That Petition, while also seeking disqualification pursuant to
More recently, the Official Committee of Unsecured Creditors of Armstrong World Industries, Inc. (the “Armstrong Committee“) also filed a Petition for a Writ of Mandamus. That Petition neither seeks nor opposes Judge Wolin‘s disqualification. Instead, it asks that we extend to the Armstrong bankruptcy whatever relief, if any, we apply to the Owens Corning, W.R. Grace, and USG Corp. bankruptcies.
To complete our recital of the matters we must consider, we note that the parties in the Federal-Mogul Global, Inc. bankruptcy, which is the fifth asbestos-related bankruptcy under Judge Wolin‘s charge, have not participated in any of the proceedings which we review.5
Even though we described the facts in some detail in our earlier opinion, certain factual circumstances require further elaboration here because they bear directly on the merits and timeliness of the petitions.
A. The Parties
The first petition was filed by Kensington International Limitеd and Springfield Associates, LLC, two creditors of Owens Corning (collectively, “Kensington“). That petition was followed in short order by a second petition from D.K. Acquisition Partners,
B. Ex Parte Communications and the Advisors
On December 20, 2001, Judge Wolin held a case management conference for the Five Asbestos Cases. Although there is no official record of what was said at that conference, Judge Wolin produced a script (“talking points“) which reflects what he said to the parties. According to the script, Judge Wolin announced that “[i]n order to effectively case manage complex litigation, it is necessary for the judge to speak and/or meet with attorneys on an ex parte basis, without permission of adversary attorneys.” Judge Wolin further announced that “[a]ny objection to such ex parte communications is deemed waived,” but he assured the parties and attorneys that he would use his power to meet ex parte “sparingly.” None of the parties objected at that time.
A week later, Judge Wolin named five “Court Appointed Consultants” (the “Advisors“) to assist him in the Five Asbestos Cases. The five individuals he named were David Gross, Judson Hamlin, William Dreier, John Keefe, and Francis McGovern, all of whom had prior experience with asbestos or mass tort litigation either as state court judges, private practitioners, or academics. Pursuant to Judge Wolin‘s order, the Advisors were to “advise the Court and to undertake such responsibilities, including mediation of disputes, holding case management conferences, and consultation with counsel, as the Court may delegate to them individually.” The Advisors could also be delegated “certain authority to hear matters and to advise the Court on issues that may arise in these five large Chapter 11 cases.” Judge Wolin‘s order provided that he could, “without further notice, appoint any of the Court-Appointed Consultants to act as a Special Master to hear any disputed matter and to make a report and recommendation to the Court on the disposition of such matter.”
Over the next two years, Judge Wolin met repeatedly, on an ex parte basis, with the parties and their attorneys. Despite his prior assurance that he would do so “sparingly,” he acknowledged more recently that he met ex parte with interested parties “on innumerable occasions.” (Supp. Resp. dated Nov. 20, 2003). This is supported by the fee applications filed by the Advisors, which reveal more than 325 hours of ex parte meetings with the attorneys for various parties in the Five Asbestos Cases. Many of these meetings took place at restaurants over lunch or dinner or at law firms. During the proceedings on remand, Judge Wolin acknowledged that he received extra-judicial information at the ex parte conferences. (See Joint Appendix “JA” at 1165.)
One of these initial meetings was attended by Bob Komitor, a plaintiff‘s attorney. According to Advisor Dreier, Komitor described an expert, Dr. Peter Barrett, as “a charlatan” and criticized the chrysotile defense. Dr. Barrett had been previously engaged by USG Corp. While there is no official record of this meeting, notes taken by Advisor Gross suggest that some of the Advisors also expressed negative views about the positions taken by USG‘s expert and other USG Corp. defenses.
Following this series of initial meetings, Judge Wolin also held an ex parte meeting on November 19, 2002 with
Two days before the meeting, Owens Corning had distributed a draft plan of reorganization that was supported by Credit Suisse First Boston, as agent for the pre-petition creditors. The draft plan called for certain issues to be resolved prior to plan confirmation. At the November 19th meeting, the Advisors discussed some of the key issues contained in the proposed plan with Judge Wolin and explained their effects as well as what appear to be certain settlement figures that had been discussed with the parties.
At a conference held on November 21, 2002, Judge Wolin stated that he did not favor Owens Corning‘s proposed plan. In January 2003, Owens Corning filed a revised plan of reorganization that this time was supported by the tort claimants who had objected to the first draft plan.10
During the course of the Five Asbestos Cases, Advisor Hamlin prepared a draft opinion in each of thе Five Asbestos Cases, a role that Hamlin likened to that of a federal magistrate judge. At his deposition, Hamlin explained that he would normally receive a phone call from Judge Wolin‘s chambers informing him that an appeal had been taken from the Bankruptcy Court and that he was to prepare a draft opinion for Judge Wolin. The issues on which he drafted opinions included, among other things, bar dates for asbestos property claims, defenses by USG Corp. to asbestos personal injury claims, and proof of claim forms.
C. The G-I Holdings Bankruptcy
Two months before Judge Wolin appointed the Advisors in the Five Asbestos Cases, the Bankruptcy Court for the District of New Jersey (Chief Judge Rosemary Gambardella) had appointed Advisor Hamlin to serve as the “Legal Representative of Present and Future Holders of Asbestos-Related Demands” in still another asbestos-related bankruptcy case captioned In re G-I Holdings Inc. The G-I Holdings bankruptcy is not related to the Five Asbestos Cases, and Judge Wolin has played no role in the G-I Holdings proceedings. There is, however, a substantial likelihood and a tacit, if not express, agreement that some of the future claimants in G-I Holdings will also have claims against one or more of the debtors in the Five Asbestos Cases.
Less than one month after Judge
D. Kensington‘s Recusal Motion
Almost two years later, Kensington filed a motion in the Bankruptcy Court seeking to recuse Judge Wolin from further participation in the Owens Corning bankruptcy. Kensington asserted that Judge Wolin was precluded under
Three days later, the debtors in the W.R. Grace bankruptcy applied to Bankruptcy Judge Fitzgerald to appoint Mr. Hamlin as the Legal Representative for Future Asbestos Claimants of W.R. Grace & Co. The application disclosed that Mr. Hamlin was already serving as an Advisor to Judge Wolin in the Five Asbestos Cases, including, of course, the W.R. Grace bankruptcy. W.R. Grace & Co. ultimately withdrew its application after Judge Fitzgerald expressed her opinion that Hamlin could not serve as the Futures Representative in the W.R. Grace bankruptcy.
On October 23, 2003, Judge Wolin entered an order staying all discovery in connection with Kensington‘s recusal motion. That stay prompted Kensington to file a petition in our Court seeking a Writ of Mandamus directing Judge Wоlin either to disqualify himself or to withdraw his discovery stay.
E. The District Court‘s Responses
Judge Wolin submitted three written responses to Kensington‘s petition. In his first response, dated November 3, 2003, Judge Wolin announced that he would “judge the Motion to Recuse on the law and facts presented after all of the parties have been heard in full” and that he would seek to resolve the motion as quickly as possible.
In his second response, dated November 21, 2003, Judge Wolin answered the suggestion that his ex parte communications with the Advisors and various attorneys somehow required his recusal. Judge Wolin explained that the purpose of the ex parte communications “was to ensure that each committee or corporate constituency was afforded the opportunity to provide to the Court insights as to why, in the competition for limited dollars, its claim was just.” Judge Wolin also wrote that, “[g]iven that these meetings occurred on a regular basis without complaint and given that the December 20, 2001 case management conference alerted all concerned that ex parte meetings were part of the District Court‘s case management plan, it strikes a discordant note that the conduct of ex parte conferences would be the ground for
In his third response, dated December 5, 2003, Judge Wolin again defended his Case Management methods and, in particular, his decision to allow ex parte communications.
F. D.K. Acquisition Partners’ Mandamus Petition
Meanwhile, D.K. Acquisition Partners filed a motion in the W.R. Grace bankruptcy case seeking Judge Wolin‘s recusal. A week later, D.K. Acquisition Partners filed a petition in this Court seeking the same relief requested by Kensington. We consolidated D.K. Acquisition Partners’ Mandamus Petition with Kensington‘s Petition.
G. Remand
Following an extended hearing and after we had received briefs from the parties and amici, we remanded the proceedings to Judge Wolin with instructions that he allow expedited discovery to proceed. We also required that he rule on the pending recusal motions. We were motivated primarily by our concern that we did not have an adequately developed evidentiary record before us.
As we previously stated, on February 2, 2004, following expedited discovery, Judge Wolin issued a 102-page written opinion and order denying the motions for recusal. First, Judge Wolin found that the evidence failed to disclose that there was an appearance of impropriety under
III. JURISDICTION
We have jurisdiction to issue Writs of Mandamus under the All Writs Act,
IV. STANDARD OF REVIEW
When a Petition for a Writ of Mandamus challenges a district court judge‘s decision not to recuse himself, we normally review that decision for an abuse of discretion. Selkridge v. United of Omaha Life Ins. Co., 360 F.3d 155, 166 (3d Cir. 2004). But the mandamus petitions in Owens Corning and W.R. Grace & Co. are somewhat unique, from a procedural perspective, in that they arrived in our Court before the District Court ruled on the recusal motions. Had we reached the merits at that time instead of remanding to the District Court, we would have applied the “clear and indisputable” standard that governs Petitions for a Writ of Mandamus. See Kerr v. U.S. Dist. Ct., 426 U.S. 394, 403 (1976). The abuse of discretion standard, even though it may have led to the same result, would have had no application.
At oral argument, we asked the parties to submit supplemental letters addressing the appropriate standard of review where, as here, a Petition for Mandamus seeking to disqualify a district court judge precedes a ruling by the district court. Having reviewed the submissions made by the parties, we now hold that Judge Wolin‘s decision not to recuse himself must be reviewed for an abuse of discretion, as it is, in effect, no different than an appeal from a district court‘s order denying recusal. See S. Rep. 93-419 (1973), H. Rep. 93-1453 (1974) (explaining that the addition of subsection (a) to
V. DISCUSSION
A. Standard for Disqualification Under § 455(a)
Whenever a judge‘s impartiality “might reasonably be questioned” in a judicial proceeding,
“Under
§ 455(a) , if a reasonable man, were he to know all the circumstances, would harbor doubts about the judge‘s impartiality under the applicable standard, then the judge must recuse.” In re Prudential Ins. Co. of America Sales Practices Litigation, 148 F.3d 283, 343 (3d Cir. 1998) (internal quotations omitted); see Massachusetts School of Law at Andover, Inc. v. American Bar Ass‘n, 107 F.3d 1026, 1042 (3d Cir. 1997) (“The standard for recusal is whether an objective observer reasonably might question the judge‘s impartiality.“).
A party moving for disqualification under
B. Who is the Hypothetical Reasonable Person under § 455(a) ?
Judge Wolin‘s opinion of February 2, 2004 supporting his order denying the recusal motions held that the reasonable person under
To the best of our knowledge, Judge Wolin‘s gloss on
Judge Wolin distinguished School Asbestos on the ground that the appearance of impropriety in that case—the district court judge had attended a scientific conference organized by the plaintiffs’ counsel—“was simple enough for anyone to grasp.” Owens Corning, 305 B.R. at 190. Judge Wolin‘s characterization suggests that the perception of impropriety in the Five Asbestos Cases is, by comparison, too complex for the average person to comprehend. We cannot agree.
No one disputes that asbestos bankruptcies are complicated, but the alleged perception of impropriety is fairly straightforward in this case. The gravamen of the Petitions is that Judge Wolin was tainted by the involvement of two court-appointed advisors who, at the same time that they were supposed to be giving neutral advice in the Five Asbestos Cases, represented a class of tort claimants in another, unrelated asbestos-driven bankruptcy and espoused views therein on the same disputed issues that are at the core of the Five Asbestos Cases.13
We are confident that the average layperson could grasp this alleged impropriety and, after being fully informed of all the surrounding circumstances, could draw a conclusion about Judge Wolin‘s ability to render a fair and impartial decision. That being so, we perceive no reason to depart from the traditional “man on the street” standard. See Moran v. Clarke, 296 F.3d 638, 648 (8th Cir. 2002) (using “average person on the street” standard); Home Placement Serv., Inc. v. Providence Journal Co., 739 F.2d 671, 676 (1st Cir. 1984) (same); Potashnick v. Port City Constr. Co., 609 F.2d 1101, 1111 (5th Cir. 1980) (same).
Judge Wolin‘s definition of the hypothetical reasonable person is contrary
C. Did the Advisors have a Conflict of Interest?
Before we can decide whether the reasonable person might question Judge Wolin‘s impartiality, we must determine if his Advisors had a conflict of interest. If not, then our inquiry comes to an end because the Petitioners will have failed to show that they have a clear and indisputable right to disqualification. On the other hand, if there was a conflict, then we must reach the question of whether that conflict might be perceived by the reasonable person as having tainted Judge Wolin.
Aside from the timeliness of the recusal motions, the existence of a conflict of interest by the Advisors may be the most sharply contested issue in these proceedings. Judge Wolin explained in his written opinion that he was an asbestos “neophyte” when he assumed control of the Five Asbestos Cases, and that he brought the Advisors on board to “inform the Court of the vast landscape of asbestos related issues that would permit the Court to make reasoned case management decisions.” Owens Corning, 305 B.R. at 198.
We conclude that two of the Advisors, Gross and Hamlin, did, in fact, operate under a structural conflict of interests at the same time that they served as Judge Wolin‘s Advisors. This conflict arose from the dual roles they played in the Five Asbestos Cases and the G-I Holdings bankruptcy.
On the one hand, Gross and Hamlin clearly had a duty to remain neutral in the
We would be hard pressed to overstate the importance of the Advisors’ role in the Five Asbestos Cases. As a result of their appointment, the Advisors had a unique level of access to Judge Wolin. Indeed, Judge Wolin himself acknowledged in a fee allowance order that the Advisors “occup[ied] a unique position in the [Five Asbestos] cases not shared by other persons” and that they “function[ed] in a manner in all respects similar to examiners as provided in the Bankruptcy Code.” The Advisors also had a unique level of influence over Judge Wolin, given the role they played at the outset of the Five Asbestos Cases in educating Judge Wolin (a self-admitted neophyte) on all of the key asbestos-related issues.
On the other hand, Advisors Gross and Hamlin also had a duty to act as zealous advocates for the future asbestos claimants in the G-I Holdings bankruptcy. Hamlin was at all relevant times the legal representative of the present and future asbestos personal injury claimants in G-I Holdings and Gross served as his local counsel.14 In those roles, Gross and Hamlin owed the future asbestos claimants in G-I Holdings a fiduciary duty to advance their interests and to see that they received the greatest possible share of the bankruptcy estate.15 To achieve that end, the very Advisors who were advising Judge Wolin had to take positions in G-I Holdings and the Five Asbestos Cases that favored the future asbestos claimants. By their very position as representatives of the future asbestos claimants in G-I Holdings, Gross and Hamlin signaled to all that they
could not be non-partisan, benign, or neutral.Given their dual roles, we find that
Gross and Hamlin had a conflict of
interest. The structural conflict arose
primarily out of the close relationship
between the future asbestos claimants and
the issues in the Five Asbestos Cases and
G-I Holdings. In both proceedings, the
debtors were leading manufacturers of
asbestos products who were forced into
bankruptcy by a flood of asbestos-related
claims, including those of future claimants
not yet identified. Consequently, many of
the same legal issues (e.g., bar dates, proof
of claim forms, medical manifestations,
etc.) either have arisen or will arise in both
the Five Asbestos Cases and the G-I
Holdings bankruptcy. Both Judge Wolin
and Advisor Hamlin implicitly
acknowledge that there existed a conflict
of interest. Hamlin stated in his
deposition that “[i]f any issue or any
responsibility was sought from me [by
Judge Wolin] in regard to any issue that I
felt impinged on by G-I stuff, I would
have asked that assignment be given to
somebody else.” Specifically, Hamlin
stated that “I wouldn‘t have touched the
personal injury bar date issue . . .
[b]ecause that‘s what I‘m dealing with in
G-I.” While the parties opposing recusal
contend that this statement proves there
was no conflict of interest, it proves just
the opposite. Had there been no conflict,
Hamlin would have perceived no need to
reject any assignments in the Five
Asbestos Cases.
Despite his conclusion that “no conflict exists,” Judge Wolin nevertheless shares Hamlin‘s concerns. Recognizing that “[t]he core task of any futures representatives is to determine claim validity and claim valuation” for future claimants, Judge Wolin explains that no conflict materialized because “[t]he issues of claim valuation and future claimant versus present claimant equivalence have been neither briefed nor joined” in the Five Asbestos Cases. Owens Corning, 305 B.R. at 198. Judge Wolin‘s statements further demonstrate the tension between Hamlin‘s and Gross‘s dual roles as advisors to Judge Wolin in the Five Asbestos Cases and Futures Representatives in G-I Holdings.
If Gross and Hamlin were
precluded from addressing issues such as
bar dates and claim valuation, we cannot
understand how it could be appropriate for
them to discuss other issues of importance
to Futures Claimants in G-I Holdings. If
both Hamlin and Judge Wolin would
question the Advisors’ ability to remain
neutral with respect to bar dates, a
reasonable person certainly would be
suspicious of discussions with the
Advisors on potential affirmative defenses
to liability, the proper content of proof of
claims forms, or the processes for
estimating claims under
As discussed below in Section V-E,
these suspicions are heightened by the ex
A reasonable observer, understanding that certain issues were “off limits,” would be concerned by the absence of any mechanism to police those limits. Indeed, the record before the Court contains substantial evidence that these limits were, in fact, violated. Although Hamlin testified that a bar date was not discussed by the Advisors, and although Gross testified that he could not recall whether a bar date was discussed, the other three Advisors testified that the issue of whether and how to impose a bar date was discussed with Judge Wolin.
Moreover, there is a substantial likelihood that many of the future claimants in G-I Holdings will also be future claimants in the Five Asbestos Cases because it is not unusual for asbestos claimants to bring claims against different asbestos manufacturers.
As counsel for Kensington argued:
[I]t is our view that Judge Wolin has rendered a number of rulings favorable to tort claimants after discussions with the future— with the advisors who are Futures Representatives in G-I.
Do I have a signed, sealed confession, we urged this result on Judge Wolin and he then did it? No, I don‘t have that. But the problem here is a 455(a) problem.
* * *
But this much is undeniable.
On October 31st, 21 days
before that [Nov. 21] status
conference, Owens Corning
circulated a draft plan of
reorganization that was met,
in letters in the record
before you, with great
approval by the commercial
creditors and great
disapproval by the tort
creditors.
After the November 21st untranscribed hearing at which we recall Judge Wolin saying he did not like that plan, Owens Corning went back and formulated a brand-new plan that is so favorable to the tort claimants that they are coproponents of the plan. This is two days after meeting with Mr. Gross, a representative of future claimants. There are real appearance problems here, even if thеre are not certain types of smoking guns.
(Transcript of April 19, 2003 Oral Argument at 47-48, 52-53.) Whether or not we reach the same conclusions that counsel did, the fact remains that the matters set forth in the depositions which we ordered, which are too voluminous to duplicate here but which we have studied, do reflect that counsel‘s view of the § 455(a) problem is indeed accurate.
D. Did the Advisors’ Conflict Taint Judge Wolin?
We turn now to the question of whether Gross‘s and Hamlin‘s conflict of interest irreversibly tainted Judge Wolin. We obviously do not equate this “taint” of Judge Wolin with any wrongdoing or bias on his part. We are fully aware that the § 455(a) standard asks only if a reasonable person knowing all the circumstances might question Judge Wolin‘s impartiality.
Judge Wolin stated in his opinion that he met with the Advisors as a group on only four occasions for a total of eighteen hours and that, after May 2002, “the Advisors as a group became functionally obsolete despite their de jure existence.” Owens Corning, 305 B.R. at 200. Judge Wolin also emphasized that his meetings with the Advisors consisted merely of discussions, which he defined as “consideration of a subject by a group; an earnest conversation,” and that he never received any advice, which he defined as an “opinion about what could or should be done about a situation or problem.” Id. at 198 (citing American Heritage College Dictionary 397, 20 (3d ed. 1993)).
Judge Wolin‘s distinction between
discussions and advice cuts too fine a line.
As Kensington points out, “[i]t is hard to
fathom why Judge Wolin wanted [a] crash
course in asbestos litigation if not to assist
him in deciding ‘the merits’ of ‘disputed’
issues that he could expect to face.”
Indeed, the four meetings in early 2002
between Judge Wolin and the Advisors
covered almost all of the major issues in
asbestos litigation, including the Rule 706
panel, claims bar date, claim forms,
pleural registries, fraudulent conveyance
claims, various defenses, claims
estimation, trust distribution procedures,
tensions among the creditor classes, and
the asbestos claimants’ veto power under
In deciding whether Gross and
Hamlin‘s involvement in the Five
Asbestos Cases and interactions with
On appeal to the Fifth Circuit, the court reversed and entered an order disqualifying the judge. In reaching that decision, the court remarked that the goal of § 455(a) “is to exact the appearance of impartiality” and therefore it was, in the court‘s opinion, immaterial “[w]hether or not the law clerk actually affected the judge‘s decision.” Id. at 179. The court also emphasized that law clerks hold a special position of trust and influence insofar that they are “sounding boards for tentative opinions and legal researchers who seek the authorities that affect the judge‘s decision.”16 Id.
The same factors that required recusal in Hall apply here. Although Gross and Hamlin were not law clerks per se, they were in some respects the substantial equivalent of law clerks.17 Hamlin, for example, drafted legal opinions in each of the Five Asbestos Cases for Judge Wolin. Thus, not only was Hamlin the “legal researcher[] who [sought] the authorities that affect[ed] the judge‘s decision,” but he was also the scrivener who, in the first instance, tried his hand at crafting the decision that, if accepted by Judge Wolin, would dispose of an appeal taken from the Bankruptcy Court in one of the Five Asbestos Cases. See id. Moreover, Gross and Hamlin held a special position of trust and influence because they, together with the other three Advisors, were perceived by Judge Wolin
There is, of course, nothing inherently wrong with appointing a panel of experts. But when ex parte discussions between the judge and the panel veer into the merits, recusal may follow. For example, in Edgar v. K.L., 93 F.3d 256 (7th Cir. 1996), a district court judge appointed, with the parties’ consent, a panel of experts. Although the parties were aware that the panel had ex parte meetings with the judge from time to time to discuss administrative matters, the parties only discovered later that one of the meetings involved a discussion of the merits and possibly a preview of the panel‘s final report. Id. at 257-58. When the parties moved to disqualify the judge, he blocked discovery and denied the motion. A petition for a writ of mandamus in the Seventh Circuit Court of Appeals followed. Id. at 257.
The Seventh Circuit issued a writ of mandamus disqualifying the judge. As to § 455(a), the court held: “A thoughtful observer aware of all the facts . . . would conclude that a preview of evidence by a panel of experts who had become partisans cаrries an unacceptable potential for compromising impartiality.” Id. at 259-60 (citations omitted). The court also noted that “[e]xperts appointed and supervised by a court carry special weight because of their presumed neutrality,” and that the panel of experts appointed by the district court judge were not truly neutral because they had been influenced by submissions from advocacy groups and counsel supporting plaintiffs in other lawsuits against the defendant.18 Id. at 261-62.
The Edgar decision, like the Hall
decision, is instructive in that the Seventh
Circuit Court of Appeals did not hesitate
to disqualify the district court judge under
Some of the parties opposing Judge Wolin‘s disqualification attempt to distinguish the Hall and Edgar decisions on the ground that the Five Asbestos Cases do not involve a district court‘s relationship with its law clerks or court- appointed experts. The Respondents contend that court-appointed “Advisors,” such as Gross and Hamlin, are mere consultants, of whom pure neutrality is not required.
While the Respondents’ attempt to distinguish Hall and Edgar has some superficial appeal, we believe their approach values form over substance and relies too heavily on overly-technical categorizations. More importantly, it fails to take into account the underlying considerations that drove the courts’ decisions in Hall and Edgar. The primary concern in both Hall and Edgar is that a party which held a special position of trust and influence over the judge was found to be not truly disinterested in the outcome of the proceedings. The same can be said here. As court-appointed Advisors to Judge Wolin, Gross and Hamlin were given very broad powers. The order appointing them provided, among other things, that they could advise Judge Wolin, mediate disputes, hold case management conferences, and consult with the attorneys. Hamlin himself likened the powers that he exercised to those of a magistrate judge. Given these wide-ranging powers, surely the five Court-Appointed Advisors were under a duty to maintain at least the degree of neutrality normally required of law clerks or court-appointed experts. However, that neutrality was seriously compromised by virtue of their participation in G-I Holdings, a bankruptcy involving many of the same issues present in the bankruptcies assigned to Judge Wolin, many of the same creditors, and possibly some of the same asbestos claimants.
We also nоte that Kensington‘s Reply Brief emphasizes that over a 22- month period Judge Wolin received substantive information from:
- two Advisors (Gross and Hamlin), who had a fiduciary duty in G-I Holdings to advance the interests of the future asbestos claimants (Joint Appendix (“JA“) 1545);
- two Advisors (Gross and Hamlin), who had an incentive to make helpful precedent in the Five Asbestos Cases, which they could then rely on (and did rely on) in G-I Holdings in support of the future claimants (JA 1621, 978B, 980, 2728);
- three Advisors (Gross, Hamlin
and McGovern) who met on multiple
occasions with the future representatives
in a wide range of asbestos-related cases (including the Five Asbestos Cases), to develop a common strategy with respect to pending asbestos legislation and to discuss common issues (JA 1645); and - two Advisors (Gross and McGovern) who allegedly breached their duties as mediators by disclosing to Judge Wolin substantive positions of the mediating parties (JA 1393, 1409, 1412, 1432).19
Given the unique level of access and influence that Gross and Hamlin had, the length of their appointment, and the overlapping issues and clients, we find that the reasonable person, with familiarity of these circumstances, would conclude that their conflict of interest tainted Judge Wolin.
E. The Ex Parte Communications Contributing to Taint
The extensive ex parte communications between Judge Wolin, on the one hand, and the Advisors and parties, on the other, further support disqualification under § 455(a). See United States v. Furst, 886 F.2d 558, 583 (3d Cir. 1989) (disqualifying judge under § 455(a) because of ex parte communications). We have previously described ex parte communications as “anathema in our system of justice.” School Asbestos, 977 F.2d at 789. One leading reason is that ex parte meetings are often, as they were here, unrecorded. Consequently, there is no official record of what was said during those meetings. Of even greater concern is the argument urged upon us by the Petitioners who, without knowledge of what was discussed at these meetings, contended that they could not respond to these “silent” facts. As we explained in City of Pittsburgh v. Simmons, 729 F.2d 953 (3d Cir. 1984):
The record taken by a certified court reporter is always the best evidence of what has been said, what actions have been taken, and what rulings have been made. “Meaningful review requires that the reviewing tribunal must be able to review a decision of a trial court . . . to determine its correctness and if necessary control the course of the litigation whether by appeal or by use of a writ . . . .” Wood v. Zapata Corp., 482 F.2d 350, 358 (3d Cir. 1973) (Biggs, J., dissenting). Without a record of the proceedings “[w]e are left with conflicting statements of
counsel which cannot be reconciled and, in any event, are not part of the record and therefore cannot serve as a basis for adjudication.” Id. . . . Indeed, the best protection for the litigants, the bar, and the bench at trial and on appeal is a verbatim record. Rather than having to speculate upon what was said and the manner in which an argument was madе, the court then has before it, when a record is taken, the exact words of counsel and the exact words and rulings of the court. Thus, there is no need for characterization in affidavits or for reconstruction at a later date of what the parties or court thought each said or meant or what each intended.
The other problem is that ex parte communications run contrary to our adversarial trial system. The adversary process plays an indispensable role in our system of justice because a debate between adversaries is often essential to the truth-seeking function of trials. See Polk County v. Dodson, 454 U.S. 312, 318 (1981) (“The system assumes that adversarial testing will ultimately advance the public interest in truth and fairness“). If judges engage in ex parte conversations with the parties or outside experts, the adversary process is not allowed to function properly and there is an increased risk of an incorrect result.
Attuned to that concern, the Code of Conduct for United States Judges cautions that a judge should “neither initiate nor consider ex parte communications on the merits, or procedures affecting the merits, of a pending or impending proceeding.” Code of Conduct for U.S. Judges Canon 3 § A(4) (2003). The rule is designed to prevent all of the evils of ex parte communications: “bias, prejudice, coercion, and exploitation.” Jeffrey M. Shaman et al., Judicial Conduct and Ethics § 5.03 (3d ed. 2000). The Code provides for only two narrow exceptions. First, “[a] judge may . . . obtain the advice of a disinterested expert on the law applicable to a proceeding before the judge if the judge gives notice to the parties of the person consulted and the substance of the advice, and affords the parties reasonable opportunity to respond.” Code of Conduct for U.S. Judges Canon 3 § A(4) (2003). Second, “[a] judge may, with consent of the parties, confer separately with the parties and their counsel in an effort to mediate or settle pending matters.” Id.
Judge Wolin apparently recognized
the dangers of ex parte meetings, but
relied on two “safeguards” to minimize the
risk. First, Judge Wolin explained that all
Unfortunately, we do not share Judge Wolin‘s confidence that these safeguards adequately minimized the risks. Obviously Judge Wolin is correct when he states that he is “no babe in arms,” but the same could be sаid of the overwhelming majority of Article III judges. Moreover, the Code of Judicial Conduct does not draw a distinction between newly- appointed and veteran judges; the general prohibition against ex parte communications on the merits applies to all judges.
As for the second safeguard, we must first assume that all parties took equal advantage of Judge Wolin‘s invitation to participate in ex parte meetings, even though experience informs us that certain parties may be more aggressive than others. But even if all parties met for the same amount of time with Judge Wolin, there was no way for them to adequately respond to or counter facts presented by their adversaries because they had no way of knowing what was said during those unrecorded meetings. Thus, the risk of an incorrect result was still present. This would be of little consequence if the ex parte meetings had been limited to procedural matters, but Judge Wolin himself explained that “[t]he purpose of the ex parte meetings was to ensure that each committee or corporate constituency was afforded the opportunity to provide to the Court insights as to why, in the competition for limited dollars, its claim was just.” (Supp. Resp. at 3.) In other words, the ex parte meetings went to the very heart of the proceedings.
The ex parte meetings with the
parties are flawed because, as we have
explained, no opportunity existed for their
adversaries to know precisely what was
said, when it was said, by whom, and what
effect could be drawn from their offerings.
On the one hand, although all parties may
at one time or another have been invited to
an ex parte meeting with Judge Wolin, the
probability of “slippage” and omission in
the content of the material discussed,
whether procedural or substantive, was
evident. As we have stated, no one could
know what had been said or proffered. On
the other hand, Judge Wolin‘s ex parte
meetings with the Advisors presented an
even more egregious problem. The instant
record reveals a conflict as to what the
Advisors brought to the meetings from
their extrajudicial experience and, in the
case of Hamlin and Gross, from their
advocate roles in G-I Holdings, and the
extent of their influence on the entire
process. We know, for instance, that
someone at one of the meetings
disparaged a possible expert witness and
We have previously discussed the distinction between our holding, that conflicted advisors who participate or influence a judge requires the judge‘s disqualification, as distinct from an expert or other assistant to the judge who is disinterested and non-conflicted. It should be understood that we do not hold that a judge may not or should not have ex parte meetings or communications with the parties or their counsel appearing before him. However, the hallmark of such meetings or communications requires the consent of the parties. We have pointed out in this section that the Code of Conduct for United States Judges proscribes ex parte communications except where the judge has entered into them with the consent of all the parties.
It will be recalled that Judge Wolin stated at the December 2001 Case Management Conference that:
In order to effectively case manage complex litigation, it is necessary for the judge to speak and/or meet with attorneys on an ex parte basis, without permission of adversary attorneys. Any objection to such ex parte communications is deemed waived.
While we have no record of any objections being registered at that time, we cannot regard the silence that accompanied the preemptive statement that “[a]ny objection to such ex parte communications is deemed waived” as manifesting consent. To fulfill the principles and objectives of Canon 3 of the Code of Conduct, which proscribes ex parte communications except with consent, affirmative consent is dictated. The record reveals no such consent was ever given.
Given all of these considerations,
we are confident that the reasonable
person would be troubled by the fact that
so many communications between Judge
Wolin and Gross or Hamlin took place
outside the presence of the parties. If the
structural conflict of interests gave Gross
and Hamlin a motive to give Judge Wolin
less-than-neutral advice, it was the ex
parte meetings that gave them the
opportunity. In the absence of the parties,
Gross and Hamlin were in a position to
influence Judge Wolin without concern
about judicial constraints or independent
challenges from those individuals or
entities with a stake in the outcome of the
F. Were the Recusal Motions Timely Under § 455(a)?
Notwithstanding that § 455 does not contain an express timeliness requirement, the Courts of Appeals cases that have addressed the issue have concluded that parties seeking disqualification under § 455(a) should do so in a timely manner. See, e.g., In re IBM Corp., 45 F.3d 641, 643 (2d Cir. 1995); In re Apex Oil Co., 981 F.2d 302, 304 (8th Cir. 1992). The reason most often given for applying a timeliness requirement to recusal motions is that “[t]he judicial process can hardly tolerate the practice of a litigant with knowledge of circumstances suggesting possible bias or prejudice holding back, while calling upon the court for hopefully favorable rulings, and then seeking recusal when they are not forthcoming.” Smith v. Danyo, 585 F.2d 83, 86 (3d Cir. 1978). Yet timeliness, as the Court in Danyo stated, is but one of the factors which engages a court‘s discretion in determining whether a judge shall be relieved from its assignment. Id.
On remand, Judge Wolin concluded
that the motions seeking his recusal were
untimely under § 455(a). In reaching that
holding, Judge Wolin charged that the
Petitioners either knew or should have
known about Gross and Hamlin‘s
participation in G-I Holdings long ago, but
waited until October 2003 to act on that
information. Judge Wolin also questioned
the Petitioners’ true motivations for filing
the recusal motions, claiming that they
were not based on ethical considerations
but were strategic maneuvers by the
Petitioners calculated to gain a larger
percentage of the bankruptcy estates,
Judge Wolin and the parties opposing recusal have focused primarily on Mark Brodsky, the senior portfolio manager at Elliot Management, which provides services to Kensington‘s parent companies. Brodsky testified that he first learned about Gross and Hamlin‘s participation in G-I Holdings on September 24, 2003, a little more than two weeks before Kensington filed the first of the recusal motions. Brodsky testified that he acquired this knowledge from another Owens Corning creditor who brought to his attention an opinion issued in the G-I Holdings bankruptcy. While reviewing that opinion, Brodsky noticed that Advisor Gross was listed as the counsel for the Futures Representative. This, in turn, prompted an investigation by Brodsky which disclosed Hamlin‘s role in G-I Holdings. Brodsky‘s claim that this was the first time he learned of Gross and Hamlin‘s participation in G-I Holdings is corroborated by a September 24, 2003 e- mail in which Brodsky expresses shock at Gross‘s involvement in G-I Holdings.
It is not surprising, therefore, that Judge Wolin in his written opinion found that Brodsky (or, for that matter, D.K. Acquisition Partners) did not have actual knowledge of Gross or Hamlin‘s participation in G-I Holdings prior to September 2003.22 He did conclude, however, that they either had constructive or imputed knowledge prior to September 2003.
As we understand the phrase,
constructive knowledge is “knowledge
that one using reasonable care or diligence
should have, and therefore that is
attributed by law to a given person.”
Black‘s Law Dictionary 876 (7th ed.
1999). Judge Wolin implied that Brodsky
had constructive knowledge of the
Advisors’ conflict because: (a) Hamlin‘s
We believe Judge Wolin improperly placed the burden on the Petitioners to uncover Gross and Hamlin‘s participation in G-I Holdings. Such a requirement does not further the purpose of § 455(a), which “mandates, at a minimum, the appearance of neutrality and impartiality in the administration of justice.” Alexander, 10 F.3d at 157. In the recusal context, we are satisfied that if there is to be a burden of disclosure, that burden is to be placed on the judge to disclose possible grounds for disqualification. See United States v. Bosch, 951 F.2d 1546, 1555 n.6 (9th Cir. 1991) (noting that § 455(a) “has a de facto disclosure requirement.“); see also Parker v. Connors Steel Co., 855 F.2d 1510, 1525 (11th Cir. 1988) (recognizing that recusal motion could have been avoided if judge had disclosed grounds for recusal to parties).
As we stated in United States v. Schreiber, 599 F.2d 534, 537 (3d Cir. 1979), “sound public policy considerations . . . militate for the adoption of a . . . rule that the parties should be apprised of any possible ground for disqualification known privately to the judge.” The most compelling of these public policy considerations is that the judge is in the best position to know of the circumstances supporting a recusal motion. The Five Asbestos Cases are no exception.
The record in this case demonstrates that Judge Wolin knew about Gross and Hamlin‘s participation in G-I Holdings from or near the inception of Hamlin‘s appointment as the Futures Representative.23 Moreover, at least one of the parties (USG Corp.) brought Hamlin‘s potential conflict to Judge Wolin‘s attention in February 2002, more than one-and-one-half years before Kensington filed its recusal motion.24 It is
undisputed, however, that Judge Wolin never disclosed to the parties, either on or off the record, that Gross and Hamlin were actively participating as zealous advocates in G-I Holdings.
There may be instances in which constructive knowledge is so pervasive that it is tantamount to actual knowledge, but this is not one of those instances. See, e.g., Nat‘l Auto Brokers Corp. v. Gen. Motors Corp., 572 F.2d 953, 958-59 (2d Cir. 1978) (finding that parties had constructive knowledge of judge‘s former affiliation with a large law firm located in same community); Universal City Studios v. Reimerdes, 104 F. Supp. 2d 334, 353 (S.D.N.Y. 2000) (same).25 The parties’ access to a burgeoning stream of information in the Five Asbestos cases does not naturally lead to the conclusion that they should have known about the participation of Hamlin and Gross in G-I Holdings. We are persuaded that nothing short of actual knowledge of the facts giving rise to the recusal motions and the Petitions for Mandamus would satisfy the § 455(a) timeliness factor here.
In addition to relying on constructive knowledge, Judge Wolin found that the Petitioners had imputed knowledge of Gross and Hamlin‘s participation in G-I Holdings. “Imputed knowledge” means that knowledge attributed to one person may be deemed to give notice to another party.
We agree with Judge Wolin that
imputed knowledge can, under limited
circumstances, render a recusal motion
untimely. For example, when a party‘s
attorney is aware of the grounds
supporting recusal, but fails to act until the
judge issues an adverse ruling, the recusal
motion is not timely See, e.g., E. & J.
Gallo Winery v. Gallo Cattle Co., 967
F.2d 1280, 1295 (9th Cir. 1992) (denying
as untimely motion for disqualification
where party‘s attorney knew about alleged
conflict but did not file motion until after
judgment was entered against him). Aside
from the fact that the attorney is only one
step removed from the client, the attorney
and client have an agency relationship and
We do not, however, agree with Judge Wolin that the recusal motions in the Five Asbestos Cases present an appropriate avenue for imputing knowledge to the Petitioners. There are simply “too many dots that must be connected” before the Petitioners can be deemed to have known about Gross and Hamlin‘s participation in G-I Holdings. For example, Judge Wolin determined that knowledge could be imputed to Kensington through the law firm of Davis Polk & Wardwell, which is lead counsel for the Unsecured Creditors Committee in the Owens Corning bankruptcy. A Davis Polk partner testified that he received an e- mail in October 2001 disclosing Hamlin‘s appointment in G-I Holdings. Judge Wolin concluded that this constituted notice to the Petitioners in Owens Corning because the Unsecured Creditors Committee and Davis Polk owed a fiduciary duty directly to Kensington.
While it is true that the Unsecured Creditors Committee in Owens Corning represented Kensington‘s interests in the Owens Corning bankruptcy, it is established that a Creditors Committee owes a fiduciary duty to the unsecured creditors as a whole, not to the individual members. See Drexel Burnham Lambert Group, 138 B.R. 717, 722 (Bankr. S.D.N.Y. 1992) (“The duty [of the committee and its counsel] extends to the class as a whole, not to its individual members.“); In re Levy, 54 B.R. 805, 807 (Bankr. S.D.N.Y. 1985) (“Counsel for the creditors’ committee do not represent any individual creditor‘s interest in this case; they [are] retained to represent the entire unsecured creditor class.“). So while the Committee had a duty to represent the collective interests of the unsecured creditors, it did not have the authority to bind each individual creditor. This stands in stark contrast to the attorney-client relationship we discussed above.
In looking at the issue of timeliness
through the lens of imputed knowledge,
we find that the record in this case
discloses facts that are too far removed
and far too attenuated from the concept of
knowledge that would cause a party to
take action to vindicate their interest. We
have pursued the trail of imputed
knowledge that the record has laid out
before us, and we are satisfied that the
knowledge allegedly imputed could not
have led any of the participants to the
point where they could be deemed to have
“known” about the conflict of the
Advisors. If connecting the dots could not
have led to such a conclusion, then it is
evident to us that in order to sustain the
principles of § 455(a), where a judge‘s
impartiality may appear to be questioned,
we must require actual knowledge (or its
undeniable equivalent) to be shown.
Because the Petitioners in Owens Corning
and W.R. Grace & Co. did not have actual
knowledge of the conflict of the Advisors
G. Disqualification Under § 455(b)(1)
We express no view on the timeliness of the motions for disqualification under § 455(b)(1). As mentioned above, the Petitioners also seek Judge Wolin‘s disqualification under § 455(b)(1) on the basis of his ex parte communications with the Advisors, parties, and attorneys. Because we have determined that Judge Wolin must be disqualified under § 455(a), there is no need to reach the issues of timeliness or the merits of § 455(b)(1). See School Asbestos, 977 F.2d at 781 (declining to reach § 455(b)(1) issue where disqualification was warranted under § 455(a)). Section 455(b)(1) is embraced within the perception that a reasonable person might entertain that the judge‘s impartiality might reasonably be questioned.26
VI. USG Debtors and the Official Committee of Unsecured Creditors (collectively, “USG“)
As we previously indicated, USG stands in a different posture than does Kensington or D.K. Acquisition Partners insofar as Judge Wolin‘s disqualification is concerned. The record reveals, with no uncertainty, that Kensington and D.K. Acquisition Partners did not have actual knowledge of the Advisors’ conflict until September and October 2003, respectively, and that they filed motions seeking Judge Wolin‘s disqualification weeks later.
On the other hand, USG became aware of the Advisors’ conflict in January 2002. See Note 25, supra. It did not take any action, hоwever, until after the motions filed by Kensington and D.K. Acquisition gave rise to a similar motion by USG. We assume this is the reason why USG‘s motion (and ensuing Petitions for Mandamus) focused principally on § 455(b)(1) and the ex parte communications that Judge Wolin had with the Advisors, the parties, the attorneys, and others. We will not speculate, however, on this score because USG‘s Petitions were also couched in terms of § 455(a) and dealt as well with the Advisors’ conflict which we have discussed in connection with the Kensington and D.K. Acquisition Partners Petitions.
If timeliness turned solely on
“actual knowledge” and constituted the
only factor we could consider in deciding
whether to reach the merits of a recusal
motion, we might well have second
thoughts about relieving Judge Wolin of
his assignment over the USG Corp.
As the Danyo Court noted and as we have recounted, “[t]he judicial process can hardly tolerate the practice of a litigant with knowledge of circumstances suggesting possible bias or prejudice holding back, while calling upon the court for hopefully favorable rulings, and then seeking recusal when they are not forthcoming.” Id. at 86. The Danyo Court went on to caution circumspection by stating “[b]ut especially when the circumstances giving rise to the charge of bias occur or are discovered after the case has commenced, timeliness should be measured not in some absolute and arbitrary manner from the date of discovery, but with respect to the future stages of the case.” Id. at 86 (emphasis added). Danyo then instructs us that we are to consider an appropriate accommodation between the competing institutional interest in avoiding the appearance of impropriety, on the one hand, and avoiding the abuse of § 455(a) procedure, on the other. Cf. id.
The record informs us that the USG debtors had one meeting with Judge Wolin in early 2002. At the time that it filed its motion to recuse Judge Wolin, it had received but one ruling in all the intervening time, and that ruling was a decision that favored it.27 As USG‘s Unsecured Creditors Committee has argued, § 455(a) contains no explicit timeliness requirement and “the seriousness of the grounds for recusal that exist on this record far outweighs any significance that might exist on the date the Motion was filed.”28 If, as USG claims, public policy is the polestar to which we must look, it is these concerns of public policy that are implicated in USG‘s Pеtitions.
First, Judge Wolin had issued just
one adverse ruling at the time that USG‘s
motion was filed and, as mentioned, this
ruling was favorable to USG. As both the
USG Committee and USG Debtors have
taken pains to point out, Judge Wolin has
issued no substantive rulings in their case
at all, other than the one ruling which we
have just recounted. Moreover, the
Motions to Recuse filed by USG were
filed only after the Owens Corning
USG seeks Judge Wolin‘s recusal because, as we have been made aware during the discovery that took place after our first hearing, the Advisors billed their fees equally to each of the Five Asbestos Cases on the theory that the issues concerned each case equally. There is, therefore, some logic in USG‘s argument that it should be entitled to the same remedy which we have decided is necessary in Owens Corning and W.R. Grace.
We are not disposed to have the issue of timeliness trump what we have concluded are the principles of § 455(a), even though the record discusses no improper acts by Judge Wolin. In light of the record that has been developed, and in light of the factors which have been outlined in Danyo, supra, and their application to USG, we are satisfied that, in the unique context of this case, it is appropriate for us to disqualify Judge Wolin from administering the USG bankruptcy, just as we have disqualified him from administering the Owens Corning and W.R. Grace bankruptcies.
VII.
We would be remiss if we did not close this opinion, which concerns Senior District Judge Alfred M. Wolin, with thoughts that were so ably expressed years ago by our colleague, Senior Judge Ruggero J. Aldisert. Judge Aldisert wrote for the Court in Haines v. Liggett Group, Inc., 975 F.2d 81, 98 (3d Cir. 1992), a case which required the reassignment of another distinguished District Court Judge. The Court held in Haines that Judge Sarokin, the district court judge who had to be reassigned, had exhibited the “appearance of partiality” in presiding over an action against the Tobacco Industry. We take the liberty of repeating verbatim Judge Aldisert‘s words as they appeared in the Haines opinion because they are so appropriate and relevant here:
The right to trial by an impartial judge “is a basic requirement of due process.” In re Murchison, 349 U.S. 133, 136, 75 S. Ct. 623, 625, 99 L. Ed. 942 (1955). To fulfill this requirement—and to avoid both bias and the appearance of bias—this court has supervisory authority to order cases reassigned to another district court judge. Lewis v. Curtis, 671 F.2d 779, 789 (3d Cir.), cert. denied, 459 U.S. 880, 103 S. Ct. 176, 74 L. Ed.2d 144 (1982). Therein we stated:
Impartiality and the appearance of impartiality in a judicial оfficer are the sine qua non of the American legal system. In Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 89 S. Ct. 337, 340, 21 L. Ed.2d 301 (1968), the United States Supreme Court stated: “[A]ny tribunal permitted by law to try cases and controversies not only must be unbiased but also must avoid even the appearance of bias.”
671 F.2d at 789. See also Nicodemus v. Chrysler Corp., 596 F.2d 152, 157 (6th Cir. 1979); United States v. Robin, 553 F.2d 8, 10-11 (2d Cir. 1977) (en banc) (per curiam). Reassignment is appropriate to “preserve not only the reality but also the appearance of the proper functioning of the judiciary as a neutral, impartial administrator of justice.” United States v. Torkington, 874 F.2d 1441, 1447 (11th Cir. 1989).
The district judge in this case has been a distinguished member of the federal judiciary for almost 15 years29 and is no stranger to this court; he is well known and respected for magnificent abilities and outstanding jurisprudential and judicial temperament. On the basis of our collective experience, we would not agree that he is incapable of discharging judicial duties free from bias or prejudice. Unfortunately, that is not the test. It is not our subjective impressions of his impartiality gleaned after reviewing his decisions these many years; rather, the polestar is “[i]mpartiality and the appearance of impartiality.”
VIII. CONCLUSION
We conclude as follows:
The Kensington, D.K. Acquisition
Partners, and USG Corp. Petitioners have
demonstrated a clear and indisputable
right to have the Writs of Mandamus
As to Kensington, D.K. Acquisition Partners, and USG Corp., who have asked us to issue a Writ of Mandamus disqualifying Judge Wolin from further presiding over the Owens Corning, W.R. Grace & Co. and USG Corp. bankruptcies, we will grant their request.
We will take no action at this time with respect to the Armstrong World Industries, Inc. bankruptcy, but will schedule appropriate briefing and argument on the Petition for Mandamus filed by the Official Committee of Unsecured Creditors of Armstrong World Industries, Inc.
We will take no action in the Federal-Mogul Global, Inc. bankruptcy, leaving its administration with Judge Wolin.
We will vacate any and all stays that we previously imposed on the District Court and Bankruptcy Court proceedings, so that the matters pending or to be brought before the District and Bankruptcy Courts may be resumed.
Because Judge Wolin, a United
States District Court Judge from the
District of New Jersey, was appointed in
the District of Delaware as Coordinator of
Case Management for the Five Asbestos
Cases by the then-Chief Judge of this
Court (Senior Judge Edward R. Becker),
we deem it appropriate to file this Opinion
and Writ of Mandamus with the present
Chief Judge of this Court (Judge Anthony
J. Scirica) for either appointment or
reassignment of the Owens Corning, W.R.
Grace & Co. and USG Corp. bankruptcies
to another judge within the Third Circuit
pursuant to
In re Kensington Int‘l Ltd.
Nos. 03-4212, et al.
FUENTES, Circuit Judge, dissenting.
In November 2001, then-Chief
Judge Becker of this Court ordered the
consolidation of the Five Asbestos Cases
on the grounds that “these bankruptcy
cases, which carry with them tens of
thousands asbestos claims, need to be
consolidated before a single judge so that
a coordinated plan for management can be developed and implemented.” JA at 191. Judge Becker stressed the magnitude of this task, noting that because “a significant portion of the asbestos cases in this country are proceeding under the aegis of this litigation, I deem this assignment and consolidation critically important to the administration of justice.” Id. at 191-92. Judge Wolin accepted this Court‘s mandate and immediately set himself to the task of managing this unprecedentedly large asbestos bankruptcy litigation. My colleagues, disapproving of the manner in which Judge Wolin executed his mandate, have decided that he must be recused.
I disagree with this conclusion for several reasons. First, I cannot concur that a reasonable observer would perceive any appearance of partiality on the part of Judge Wolin: specifically, I do not agree that the Advisors labored under any sort of conflict, nor do I perceive Judge Wolin‘s practice of ex parte communications to warrant his recusal. I find it telling that Petitioners have not asked, and the majority has not seen a need, for any of Judge Wolin‘s prior rulings to be disturbed. In my view, this fact belies the seriousness of the taint that Petitioners have sought to ascribe to Judge Wolin‘s court. Second, the petitions for recusal in this case are clearly untimely, and should be rejected on that basis alone. Accordingly, I must respectfully dissent from my colleagues’ decision to recuse Judge Wolin.
I.
First, I must disagree with my colleagues’ conclusion that Gross and Hamlin had a conflict of interest. The majority discerns that “Gross and Hamlin, did, in fact, operate under a structural conflict of interest” arising “from the dual roles they played in the Five Asbestos Cases and the G-I Holdings bankruptcy.” Maj. Op. at 18. The majority agrees with Petitioners that Gross and Hamlin are conflicted by their futures representative roles because the issues in G-I overlap to such a great degree with those in the Five Asbestos Cases. Specifically, the majority writes: “By their very position as representatives of the future asbestos claimants in G-I Holdings, Gross and Hamlin signaled to all that they could not be non-partisan, benign or neutral.” Maj. Op. at 19.
There is no doubt, as the Supreme Court recognized long ago, that “[c]ourts have (at least in the absence of legislation to the contrary) inherent power to provide themselves with appropriate instruments required for the performance of their duties. This power includes authority to appoint persons unconnected with the court to aid judges in the performance of specific judicial duties, as they may arise in the progress of a cause.” In re Peterson, 253 U.S. 300, 312 (1920) (Brandeis, J.) (internal citations omitted). Although “there is no statute which expressly authorizes” the appointment of the Advisors in this case, “the court possesses the inherent power to supply itself with this instrument for the administration of
To see why this is true, one need only look at the role of a futures representative in asbestos bankruptcy litigation. In an asbestos bankruptcy proceeding, all present and future asbestos claims are steered away from the bankrupt debtor and applied to a properly funded trust approved by the bankruptcy court. Present asbestos litigants are those who suffer asbestos-related injury before the debtor-defendant‘s
Consequently, Gross and Hamlin do not have any clients in G-I, nor will they have any clients by the point at which their job in G-I is finished: their duty is to promote the collective interest of those parties that will have future claims against the G-I post-confirmation trust. In other words, Gross and Hamlin are charged with safeguarding future claimants’ “cut” of the G-I trust. This duty does not place Gross and Hamlin in a materially adverse position to the estates in the Five Asbestos Cases, nor does it give them a direct interest in manipulating those estates in any way. See In re Marvel Entertainment Group, Inc., 140 F.3d 463, 476 (3d Cir. 1998) (“one is a ‘disinterested person’ only if he has no interest that is materially adverse to a party in interest in the bankruptcy“).
Petitioners’ failure to point out any interest held by Gross or Hamlin is unsurprising, given that they do not represent any of the parties in the Five Asbestos Cases. While there may be some overlap among those who eventually share in the money set aside for future claimants in the Five Asbestos Cases and those who share in the money set aside for future claimants in G-I, the “parties” themselves—the future claimant interests—are distinct. The clear distinction between the futures claimants in G-I and those in the Five Asbestos Cases is highlighted by the facts that future claimants in the Five Asbestos Cases could be present claimants in G-I or vice versa, and that Gross and Hamlin will not even know which claimants fall into which category until their roles are concluded.
Moreover, the subject matters of the cases are entirely different. As observed before, the G-I litigation is a dispute over how to divide the assets of the G-I trust. Similarly, each of the Five Asbestos Cases is a dispute over how to divide the assets of the trust of one of the five debtors. In other words, the money at stake in G-I has no relation whatsoever to the money at stake in any of the Five Asbestos Cases, and the responsibility held by Gross and Hamlin to maximize future G-I asbestos claimants’ share of the G-I trust presents no duty with respect to the division of the trusts in the Five Asbestos Cases.
Despite the total lack of commonality among the parties and subject matter in G-I and the Five Asbestos Cases, the majority perceives the appearance of a conflict because, as an asbestos bankruptcy case, G-I contains similar issues to those in the Five Asbestos Cases.32 In my view, this simply cannot constitute grounds for a reasonable, fully informed observer to perceive a conflict, and the majority does not explain why it would constitute such grounds. It is true that decisions from Judge Wolin benefitting future claimants in the Five Asbestos Cases might benefit the G-I future claimants, but this does not make Gross and Hamlin non-neutral as Judge Wolin‘s Advisors. Any person with expertise in a given field invariably forms opinions about that field. For example, judges are empowered to appoint attorneys as experts. It is almost certain that an expert attorney will have opinions about
In short, there is no colorable basis for perceiving Gross and Hamlin to be “non-neutral.” They do not represent any parties in the Five Asbestos Cases, they do not directly represent any interest materially adverse to any of those parties, and the subject matter of their representation is wholly separate from the subject matter of the Five Asbestos Cases. At most, Petitioners have shown that Gross and Hamlin have opinions about the subject matter in front of them as a result of their knowledge of asbestos litigation, but strong opinions about the law are to be expected in any well-educated and well-informed judicial advisor (or judge). The majority gleans an appearance of conflict from the mere existence of similarities between the Five Asbestos Cases and G-I, but a reasonable observer with knowledge of all relevant facts33 would easily pierce through these superficial similarities and conclude that there is no conflict.
B.
Because I find that Gross and Hamlin were not conflicted by their roles in G-I, I find it necessary to briefly discuss Petitioners’ other allegations of conflict. The second purported conflict is the attendаnce by Gross, Hamlin and McGovern at the futures representatives’ meetings. Petitioners assert that because the meetings included futures
In Bonds, the criminal defendants appealed a conviction based largely on challenged DNA evidence, and then moved for rehearing en banc after losing the appeal. Id. at 1328. The defendants unsuccessfully sought the recusal of an appellate judge from the en banc panel because that judge had attended a scholarly conference in which the speakers vigorously defended the FBI‘s DNA methods and denigrated defense counsel challenging those methods. Id. at 1329. In refusing to grant the recusal motion, the Bonds court specifically distinguished In re School Asbestos Litig., 977 F.2d 764, 782 (3d Cir. 1992), on the grounds that the conference in the latter case was actually funded by the judge in that case, and provided a pre-screening of the plaintiffs’ case on the actual facts of the case. 18 F.3d at 1330-31. This case has neither of these salient attributes, as there is no evidence that the actual facts of the Five
Petitioners’ final three grounds of conflict are also unpersuasive. First, Petitioners’ argument that Gross‘s advocacy for the Keene Creditors Trust created a conflict fails for the same reasons that he and Hamlin were not conflicted by their roles in G-I. Second, Petitioners allege that after Gross and McGovern acted as mediators, they divulged confidential information gathered in that capacity from the parties to Judge Wolin, and that this constituted an ethical breach of their mediator duties. The record indicates that Gross made some reports of his mediation discussions to Judge Wolin, and that McGovern did, in fact, report to the Advisors and Judge Wolin that the parties to an earlier mediation in Owens Corning disagreed on the extent of Owens Corning‘s tort liability, estimating it to be anywhere from $6 to 20 billion.34 Furthermore, McGovern has testified that disclosures of the mediation‘s substance, even to the decisionmaker in the case, are an ethical breach.
At most, Petitioners have shown that McGovern and Gross may have breached their ethical duties as mediators;
Finally, Petitioners contend that Hamlin‘s nomination as a futures representative in Grace created a conflict, and that Hamlin admitted as much. Hamlin, of course, merely observed that if he became the futures representative in Grace, he would have to leave his Advisor position. Hamlin‘s observation, in fact, highlights why his role in G-I did not create a conflict here: as a Grace futures representative, he would be fighting with other creditors of Grace over the proper distribution of the Grace estate. As a G-I futures representative, in contrast, he has no direct interest in the division of the Grace estate. In conclusion, for the reasons stated above, none of Petitioners’ arguments that a conflict existed is persuasive.
C.
The majority also comments that Judge Wolin‘s practice of ex parte communications contributed to an appearance of partiality: “If the structural conflicts of interest gave Gross and Hamlin a motive to give Judge Wolin less-than-neutral advice, it was the ex parte meetings that gave them the opportunity.” Maj. Op. at 29. Of course, if there were no conflict to begin with, then Judge Wolin‘s ex parte conferences with his Advisors were no more objectionable than any judge‘s ex parte communications with his or her law clerks. Thus, the ex parte communications with the Advisors clearly did not provide any independent grounds for recusal.
While I share my colleagues’ wariness of the scope of Judge Wolin‘s ex parte contacts with the parties, I do not find those contacts disturbing to the point of requiring his recusal under
Indeed, contrary to USG‘s arguments, cases ordering recusal on the basis of ex parte contacts did so based on the contacts’ specific circumstances, not as part of some general rule against ex parte contacts. In United States v. Kelly, 888 F.2d 732, 745 (11th Cir. 1989), for example, the Eleventh Circuit recused the judge in question because the judge communicated ex parte with a friend‘s wife regarding the friend‘s decision to testify; indeed, the judge himself conceded the appearance of impropriety. Similarly, the School Asbestos court recused a trial judge who, in his personal capacity, had unwittingly attended a conference sponsored by the plaintiffs in his case on the very topics central to his case, funded by money he had approved for plaintiffs’ fund. School Asbestos, 977 F.2d at 781-82. In that case, we ruled that all of those facts in concert, combined with the judge‘s own recognition of a possible taint, warranted recusal. Id. at 782-83. In other words, the ex parte contacts in those cases possessed attributes that made them specifically vulnerable to allegations of bias.
In trying to analogize to these cases, USG makes much of the large number of ex parte contacts in this case, but does not cite to any caselaw that indicates that the quantity of contacts is a factor in determining recusal. Rather, as indicated above, courts ordering recusal examined
D.
Because I would reject Petitioners’
As discussed above, case law in this Court casts doubt on Petitioners’ sweeping indictment of ex parte communications. See In re Prudential, 278 F.3d at 182, n. 5. Furthermore, other Circuits unanimously support Respondents’ contention that
The Circuits also seem to agree with Respondents that recusal is only appropriate under
Petitioners’ attempts to establish a per se rule requiring recusal for ex parte communications are unavailing. For example, they cite to Price Bros. Co. v. Philadelphia Gear Corp., 629 F.2d 444, 446 (6th Cir. 1980), but that case was not a recusal case, and dealt with a judge whose law clerk gathered facts through first-hand observation of the allegedly defective pipe at the heart of the lawsuit; in other words, the judge gained extrajudicial knowledge regarding a disputed fact at the heart of the litigation. The Price Bros. court explicitly stated, however, that “not every ex parte communication to the trial court” is impermissible. Id. Similarly, United States v. Craven, 239 F.3d 91 (1st Cir. 2001), cited by USG, is not a recusal case either, and also stated “that not every ex parte contact between a judge and a court-appointed expert” is improper. Id. at 103, n. 3. Petitioners do cite a recusal case, Hathcock v. Navistar Int‘l Transp. Co., 53 F.3d 36, 41 (4th Cir. 1995), but in that case the judge was recused on
The precedent most strongly urged by Petitioners as persuasive in this case is Edgar v. K.L., 93 F.3d 256 (7th Cir. 1996), but even that case does not stand for the
Petitioners’ final attempt to create an unconditional nexus between ex parte communications and recusal lies in a reference to the Code of Judicial Conduct, which cautions against ex parte communications. Code of Conduct for United States Judges, 175 F.R.D. 363, Canon 3(A)(4). However, the Code tellingly leaves out ex parte communications in its listing of grounds for disqualification, refuting Petitioners’ claim that the Code endorses recusal based on ex parte contacts. Id. at Canon 3(C). Furthermore, although the Code was largely codified in
Petitioners fail to show that Judge Wolin gained any “personal” knowledge from outside judicial proceedings, as all of the ex parte contacts in this case were conducted within the context of Judge Wolin‘s management of the case, as announced in December 2001. Petitioners rely on Judge Wolin‘s statement that he learned information that was “extra-judicial,” but Judge Wolin‘s opinion rejected the allegation that he learned any information that was “extra-judicial” in the sense prohibited by
II.
Even if I believed that any of Petitioners’ recusal arguments had merit, I would deny Petitioners’ motion as untimely.
A.
Most troubling in this case is the conduct of Petitioners USG and the USG Unsecured Creditors. As the majority recognizes, both of these Petitioners knew of the Advisors’ alleged conflict in January 2002. Furthermore, it is undisputed that all parties knew of the ex parte scheme in December 2001, at the inception of Judge Wolin‘s control of the Five Asbestos Cases. It is also undisputed that no motion for recusal was made until October 2003. This Circuit has joined others in imposing a timeliness requirement on recusal motions. E.g., United States v. Rosenberg, 806 F.2d 1169, 1173 (3d Cir. 1986). In determining whether a request for recusal is timely, the Court considers the time elapsed between the complained-of conduct and the motion, the timeline of the case between the conduct and the motion, and the effect of recusal on the case going forward. Smith v. Danyo, 585 F.2d 83, 86 (3d Cir. 1978); Apple v. Jewish Hosp. and Med. Ctr., 829 F.2d 326, 334 (2d Cir. 1987). These factors, taken together, effectively
USG and the USG Unsecured Creditors perfectly fit the Smith court‘s description of the “sneak attack” litigant. Astonishingly, these two Petitioners kept silent about the matters underlying their motions for over 20 months. USG tries to minimize the appearance of delay by observing that Judge Wolin‘s December 2001 statement only disclosed that he would “sparingly” resort to ex parte communications, and alleging that it did not know of the actual scope of the ex parte communications until late 2003. As mentioned above, however, the quantity of ex parte communications is irrelevant to USG‘s claim: it is undisputed that USG knew that Judge Wolin was (allegedly improperly) engaging in ex parte communications to some extent for almost two years before it brought its motion to recuse, and that is the relevant measure of the time elapsed. USG cites to Edgar, 93 F.3d at 257, but in that case a one-year delay in bringing the recusal motion was justified because the movants had only recently discovered the objectionable qualitative nature of the ex parte contacts at issue.
USG and the USG Unsecured Creditors also try to excuse their delay by arguing that they did not feel empowered to object to the ex parte communications
The majority seems to recognize that USG and the USG Unsecured Creditors have no excuse for their dilatory conduct, but then proceeds to excuse that conduct anyway on the grounds that USG had no improper motive for its recusal motion. Specifically, the majority observes that the timeliness requirement was crafted largely to prevent parties from
Of course, as USG has itself observed in its argument that it suffered prejudice from the ex parte contacts, the District Court eventually refused to enforce that Case Management Order, meaning that, in effect, the District Court ruled against USG‘s wishes. USG cannot, on the one hand, claim in support of its recusal argument that it has perceived Judge Wolin‘s ex parte contacts as predisposing him against USG, and then on the other hand, claim that Judge Wolin has shown no predisposition against USG to bolster its timeliness claim. In any event, even if USG had not suffered any adverse rulings yet, it does not change the fact that USG has no justification for its delay in bringing its motion to recuse, as well as the fact that the delаy to this case that will result from recusal will erase two years of case management. As this Court has previously noted, delay in this case could be catastrophic to many of the constituencies involved, and that issue looms especially large in this timeliness inquiry. Kensington, 353 F.3d at 224-25.
Accordingly, I would reject the
B.
Although I do not find the conduct of the Petitioners in Owens Corning and Grace as clearly inexcusable as that of the Petitioners in USG, I would still find their recusal motions untimely as well. The recusal motion on ex parte grounds is clearly untimely for the reasons stated earlier: namely, that all parties knew of Judge Wolin‘s plan for ex parte communications in December 2001. The recusal motion on conflict grounds,
It is uncontroverted that the firms of Davis Polk & Wardwell and Stroock & Stroock & Lavan, counsels for the Owens Corning and W.R. Grace Unsecured Creditors Committees respectively, learned of the alleged conflicts no later than January 2002. A party, of course, is charged with the knowledge of its counsel. E.g., Veal v. Geraci, 23 F.3d 722, 725 (2d Cir. 1994). Therefore, both of the Unsecured Creditors Committees knew of the alleged conflicts. The Unsecured Creditors Committees are fiduciaries of all unsecured creditors, including Kensington and the Grace Creditors. Woods v. City Nat‘l Bank & Trust Co., 312 U.S. 262, 268 (1941); In re Mountain States Power Co., 118 F.2d 405, 407 (3d Cir. 1941). Accordingly, notice to the Unsecured Creditors Committees is the equivalent of notice to Kensington and the Grace Creditors. In re Harris Management Co., Inc., 791 F.2d 1412, 1415 (9th Cir. 1986) (notice to creditors’ committee constituted notice to individual creditors).
Imputing the Unsecured Creditors Committees’ knowledge to creditors makes sense. As a parallel example, Respondents point out that the Asbestos Claimants Committee is presumed to speak for all claimants; it would be staggeringly onerous to require notice of relevant events to be given to all 200,000+ asbestos claimants rather than the Committee, which represents their collective interest. There is no reason why unsecured creditors should be given any different treatment than their asbestos claimant counterparts; to the contrary, given that in bankruptcy cases creditors within each constituency change on a regular basis, the necessity of using the Unsecured Creditors Committee as a conduit of notice to unsecured creditors is even more manifest. Indeed, the streamlining function of these Committees is largely their reason for existing in the first place. Finally, imputing knowledge from the Committees to individual creditors would safeguard the interests behind the timeliness requirement. In particular, this rule would prevent Creditors Committees from strategically preserving recusal claims by insulating those claims from individual creditors, and would encourage Creditors Committees to execute their duties to creditors more vigilantly.
Kensington and the Grace Creditors cite authority purportedly against this rule, but the cited cases do not contradict the rule of imputing notice. In re Levy, 54 B.R. 805, 806-07 (Bankr. S.D.N.Y. 1985), merely states the truism that a Committee represents the collective interest of its members, rather than any member‘s individual interest. Kunica v. St. Jean Fin., Inc., 63 F.Supp.2d 342, 347 (S.D.N.Y. 1999), simply quotes the underlying bankruptcy opinion, which in turn made its decision not to impute notice on the grounds that the notice to the Committee in that case was oral and informal. Kunica v. St. Jean Fin., Inc., 233 B.R. 46, 57 (S.D.N.Y. 1999). Here, in contrast, Davis Polk and Stroock received written notice of the alleged conflicts. In In re Masters, Inc., 149 B.R. 289, 292-93 (E.D.N.Y. 1992), Petitioners’ next cited case, the court held that actual notice to individual creditors was required in the specific context of
It is worth noting that although Judge Wolin has not yet made any significant rulings in Owens Corning or Grace, he was, at the time the recusal petitions were filed, on the cusp of issuing a ruling on the issue of “substantive consolidation.” After much debate, Owens Corning had submitted a reorganization plan that incorporated substantive
Second, recusal would lead to months if not years of delay in Owens Corning, as it would at the very least require a retrial of the extremely contentious substantive consolidation issue, and threatens to nullify over two years of case management. See Kensington, 353 F.3d at 224, n. 14 (“assigning another judge to the Owens Corning bankruptcy would set the proceedings in Owens Corning back at least one year“). As this Court noted in its earlier opinion, the brunt of this delay falls upon the claimants themselves, who wait for the conclusion of this bankruptcy proceeding for resolution of their claims. See id. at 224, n. 13.
III.
Pursuant to a mandate from this Court, Judge Wolin took admittedly extraordinary measures to manage an unprecedentedly large and complex asbestos bankruptcy proceeding. Although his methods were unconventional, none of them would inspire within the reasonable and informed observer legitimate questions regarding Judge Wolin‘s impartiality. I fear that in moving for Judge Wolin‘s recusal, Petitioners have employed a guerrilla tactic timed to serve their own economic interests in this case, rather than the interests of justice and judicial integrity. In the end, putting the stamp of judicial approval on this kind of litigious gamesmanship threatens to undermine the integrity of our judicial proceedings far more than any techniques employed by Judge Wolin. I must respectfully dissent.