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May 16, 1990


The opinion of the court was delivered by: Weinstein, District Judge, and Helen E. Freedman, Supreme Court Justice.

  On January 30, 1990 Kenneth R. Feinberg, Esq. was appointed a federal Special Master and a state Referee by joint order of the United States District Court for the Eastern District of New York and the Supreme Court of the State of New York, respectively. See In re Joint Eastern and Southern Districts Asbestos Litigation; In re New York City Asbestos Litigation, 129 F.R.D. 434 (E.D.N.Y. & N.Y. Sup. Ct. 1990). Mr. Feinberg was to act as a settlement master-referee, mediating between the parties to avoid the necessity of extended trials in cases involving asbestos exposure at the Brooklyn Navy Yard. He was directed to attempt to settle the cases in four months, by June 1, 1990.

Owens-Illinois, Inc., one of the defendants in these cases, offered no objection during discussions with the court. Nevertheless, Owens-Illinois sought on April 24, 1990 by motion returnable May 15 to disqualify Mr. Feinberg. Its ground was that some years ago he and his law firm, Kaye, Scholer, Fierman, Hays & Handler, had acted on its behalf and that of other asbestos manufacturers in connection with public education and legislative efforts aimed at promoting alternative compensation systems to mass tort litigation.

The motion must be denied because: (1) the special position of a mediator renders inappropriate disqualification under the circumstances alleged by the moving party; (2) it has already been denied in connection with consolidated asbestos litigation pending in Maryland in which Mr. Feinberg was appointed as mediator; and (3) the motion is untimely.


Kenneth R. Feinberg, Esq. is a nationally recognized mediator of great skill whose services have been frequently utilized by private litigants and by courts. He has also taken a leading role in legislative, bar association and academic circles in connection with the development of important alternative dispute resolution (ADR) innovations. In addition to his duties as mediator in the Brooklyn Navy Yard cases, Mr. Feinberg was appointed to a similar position last year by the Baltimore Circuit Court for Baltimore City and charged with settling some 9000 consolidated asbestos personal injury cases in the state of Maryland. That litigation is currently pending. Mr. Feinberg, with the consent of the Maryland, New York and federal courts, continues to act simultaneously as a settlement master in both the Maryland and New York litigations.

From 1980 to 1983 Mr. Feinberg represented a group of asbestos manufacturers known as the Asbestos Compensation Coalition. The Coalition was formed to develop or respond to federal legislative proposals and to other governmental activities relating to alternative compensation systems for asbestos claimants. During the course of his representation of the Coalition Mr. Feinberg drafted legislative proposals for alternative compensation systems and worked with congressional personnel and representatives of other companies. Owens-Illinois, the moving party in the instant case, was not a member of the Coalition, although a number of the other defendants in the instant case — none of whom have joined in the motion to disqualify — were members.

In early 1983 the Coalition disbanded and in its place a number of asbestos companies, including Owens-Illinois, formed the Committee for Equitable Compensation, an organization with purposes similar to that of the Coalition. Mr. Feinberg personally represented the Committee through the end of 1983. Neither he nor his firm represented or advised the Committee or any of its individual members in the defense or settlement of asbestos claims brought under existing laws. Mr. Feinberg worked with Congress on behalf of the Committee looking towards federal legislation establishing a no-fault administrative compensation program for asbestos claimants to which the United States Government would contribute. He and his firm also undertook public education projects on the Committee's behalf and reacted to proposals for a uniform national product liability law. Although a number of the other defendants in the instant litigation were members of the Committee, none have joined Owens-Illinois' motion to disqualify.

Although his personal involvement had ceased by early 1984, Mr. Feinberg's law firm and in particular, his colleague, Lawrence Novey, continued to represent the Committee until mid-1987.

In January 1990, some five months into Mr. Feinberg's tenure as settlement master in the Maryland asbestos litigation, Owens-Illinois moved to disqualify him in that litigation. The motion was denied by Judge Marshall A. Levin, who was supervising the Maryland asbestos litigation, in February 1990. See In re Asbestos Personal Injury Litigation, AMOF No. 87048500, (Balt. City Cir.Ct. Feb. 14, 1990) (Letter-Order) (attached as appendix A). The Owens-Illinois appeal was dismissed in April 1990 by the Maryland Court of Special Appeals. See Owens-Illinois, Inc. v. Kenneth R. Feinberg, PHC No. 93 (Ct. Special App. Apr. 19, 1990) (attached as appendix B). In April 1990, after Mr. Feinberg was moving towards a final critical phase of his mediation efforts in the Brooklyn Navy Yard cases, Owens-Illinois moved to disqualify him in the instant litigation. The Owens-Illinois papers are almost verbatim copies of its papers in the Maryland litigation.

                     ADVANCES AND PROPOSALS

Mediation in mass tort litigation such as the asbestos cases is of vital importance to the public, interested parties, the courts and the legal profession. The cost, both in specific outlays of the parties and the burdens these complex cases place on the courts by preventing or substantially delaying adjudication in criminal and other civil matters, as well as in high transactional costs that prevent claimants from obtaining reasonable awards promptly, warrants every effort to avoid expensive and unnecessary litigation. Without such mediation efforts by judges, magistrates and others our calendar system would break down. Many litigants would simply find the courthouse door closed.

Much the same position is taken when the court itself acts as a mediator in the large number of cases in which a judge or a magistrate works closely with the parties to assist them in settling pending cases. It is standard practice for the presiding judge or magistrate to meet separately with each of the parties for a candid discussion of strategy and the needs of the party. Sometimes these sessions will be attended by high officials of one of the parties in addition to the attorneys. Often insurance counsel will attend so that the judge can appreciate fully the difficulties faced and positions taken by each party and make helpful suggestions.

Thus the mediator, in the form of judge, magistrate, special master, referee or other privately appointed person, must be fully apprised if he or she is to take advantage of the special circumstances of each case. The role of the mediator is often that of the honest broker who must suggest a solution giving advantage to both sides and minimizing the price that each must pay. See generally W. Brazil, Effective Approaches to Settlement (1988); D. Provine, Settlement Strategies for Federal Judges (1986); R. Fisher and W. Vry, Getting to Yes (1981); H. Will, R. Merhige, Jr. and A. Rubin, The Role of the Judge in the Settlement Process (1977); F. Lacey, The Judge's Role in the Settlement of Civil Suits (1977); Lynch and Levine, The Settlement of Federal District Court Cases: A Judicial Perspective, 67 Or.L.Rev. 239 (1988); Galanter, The Emergence of the Judge as a Mediator in Civil Cases, 69 Judicature 256 (1986); Schuck, The Role of Judges in Settling Complex Cases: The Agent Orange Example, 53 U.Chi.L.Rev. 337 (1986). Examples of this technique are found in general litigation, mass torts, labor and elsewhere. See, e.g., Center for Public Resources Legal Program, ADR and the Courts: A Manual for Judges and Lawyers 11, 207-255 (E. Fine ed. 1987); A. Talbot, Settling Things (1983) (evaluating mediation of environmental disputes); Rowe, Study on Paths to a "Better Way": Litigation, Alternatives, and Accommodation, 89 Duke L.J. 824 (1989). A considerable amount of teaching in the law schools is now devoted to mediation and alternative dispute resolution. See, e.g., N. Rogers and C. McEwen, Mediation: Law, Policy, Practice (1989) (treatise); L. Riskin and J. Westbrook, Dispute Resolution and Lawyers (1987) (casebook); L. Kanowitz, Cases and Materials on ADR (1986) (casebook); Journal of Dispute Resolution (published since 1984 by the University of Missouri at Columbia School of Law).


A. Law

In general a special master or referee should be considered a judge for purposes of judicial ethics rules. See Code of Judicial Conduct For United States Judges, 69 F.R.D. 273, 286 (1975) (approved by Judicial Conference of the United States, April 1973 and amended) (Code of Judicial Conduct applicable to special masters); Standards Relating to Judicial Discipline and Disability Retirement, Rule 1.2, Comment (same). Accord Belfiore v. New York Times Co., 826 F.2d 177, 185 (2d Cir. 1987) (Code of Judicial Conduct For United States Judges applies to special masters), cert. denied, 484 U.S. 1067, 108 S.Ct. 1030, 98 L.Ed.2d 994 (1988). This conclusion is not undermined by the fact that the federal and state statutes governing the recusal of judges, justices or magistrates, see 28 U.S.C. § 455 and N YJud.Law § 14, do not by their terms cover special masters or referees.

The Court of Appeals for the Second Circuit appears not to have explicitly addressed the question of whether the same standard governing disqualification of a judge should apply to special masters. See Rios v. Enterprise Ass'n of Steamfitters Local 638, 860 F.2d 1168, 1173-74 (2d Cir. 1988) (observing that federal case law is ambivalent regarding whether special masters should be held to same standards of impartiality as judges). Other federal courts have required special masters to meet the same ethical standards as judges. See, e.g., Jenkins v. Sterlacci, 849 F.2d 627, 630 n. 1, 631-32 (D.C. Cir. 1988) ("[I]nsofar as special masters perform duties functionally equivalent to those performed by a judge, they must be held to the same standards as judges for purposes of disqualification."); United States v. Conservation Chemical Co., 106 F.R.D. 210, 234 (W.D.Mo. 1985) (same). But see Morgan v. Kerrigan, 530 F.2d 401, 426 (1st Cir.) (applying lower standard of impartiality to masters than to judges), cert. denied, 426 U.S. 935, 96 S.Ct. 2648, 49 L.Ed.2d 386 (1976).

Section 4301 of the New York Civil Practice Law and Rules provides that a referee appointed to determine an issue or perform an act "shall have all of the powers of a court in performing a like function." Impliedly, then, the standards of judicial conduct applicable to judges also apply to a referee. See, e.g., Moers v. Gilbert, 175 Misc. 733, 25 N.Y.S.2d 114, 118 (Sup.Ct.), aff'd, 261 A.D. 957, 27 N.Y.S.2d 425 (1st Dep't 1941) (holding that the provisions of New York judicial disqualification statute apply to court-appointed referees).

For purposes of deciding this motion we accept the movant's proposition that special masters and referees should be held to the same standards as judges. We see no need to distinguish between state or federal appointees. Both should be held to equally high standards. Both should be above suspicion. Since the use of special masters for purposes of settlement is more prevalent in the federal courts, the statutory and case precedents are primarily federal.

Under federal law, a judge may be disqualified in two situations that are relevant to the instant motion: 1) where "impartiality might reasonably be questioned," 28 U.S.C. § 455(a), and 2) where there is "a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding." Id. § 455(b)(1). Section 455(a) "sets out an objective standard for recusal, creating the so-called `appearance of justice' rule." DeLuca v. Long Island Lighting Co., 862 F.2d 427, 428 (2d Cir. 1988) (citation omitted).

The federal test of impartiality "is what a reasonable person, knowing and understanding all the facts and circumstances, would believe." In re Drexel Burnham Lambert Inc., 861 F.2d 1307, 1309 (2d Cir. 1988). As the legislative history of the 1974 amendments to section 455 emphasizes when explaining subsection (a):

  [d]isqualification for lack of impartiality must
  have a reasonable basis. Nothing in this proposed
  legislation should be read to warrant the
  transformation of a litigant's fear that a judge
  may decide a question against him into a
  "reasonable fear" that the judge will not be

H.R.Rep. No. 1453, 93d Cong., 2d Sess. 4-5, reprinted in 1974 U.S.Code Cong. & Admin.News 6351, 6354-55.

With regard to § 455(b)(1), any "alleged bias and prejudice to be disqualifying must stem from an extrajudicial source and result in an opinion on the merits on some basis other than what the judge learned from his participation in the case." United States v. Grinnell Corp., 384 U.S. 563, 583, 86 S.Ct. 1698, 1710, 16 L.Ed.2d 778 (1966). Accord People v. Moreno, 70 N Y2d 403, 407, 521 N.Y.S.2d 663, 666, 516 N.E.2d 200, 202-03 (1987) (holding New York State judges to same disqualification standard) (citing Grinnell, 384 U.S. at 583, 86 S.Ct. at 1710).

The sole statutory authority for disqualification of a judge under New York State law is Section 14 of the Judiciary Law. That provision states that a judge may not take part in a proceeding involving either the judge or the judge's relatives up to the sixth degree of consanguinity or in a proceeding in which the judge or relatives have a direct interest in the litigation. The New York Court of Appeals has held that "absent a legal disqualification under Judiciary Law § 14, a Trial Judge is the sole arbiter of recusal." People v. Moreno, 70 N Y2d 403, 405, 521 N.Y.S.2d 663, 665, 516 N.E.2d 200, 201 (1987).

There are also rules governing judicial conduct which are made binding upon New York State Judges by the Rules of the Chief Administrator of the Courts. See 22 N.Y.C.R.R. § 100.1 et seq. These rules follow the language of the Code of Judicial Conduct promulgated by the American Bar Association, adopted by the New York State Bar Association and codified in Book 29 of McKinney's Consolidated Laws of New York. Under the heading "avoiding impropriety and the appearance of impropriety," Rule 100.2 of the New York Code of Rules and Regulations states that a judge should "conduct himself or herself at all times in a manner that promotes public confidence in the integrity and impartiality of the Judiciary."

In defining avoidance of the appearance of impropriety, Rule 100.3 states a judge should disqualify himself or herself "in a proceeding in which his or her impartiality might reasonably be questioned" including situations in which "the judge served as a lawyer in the matter in controversy. . . ." The determination of impropriety in any given situation, however, remains within the discretion of the judge. See People v. Moreno, 70 N.Y.2d 403, 407, 521 N.Y.S.2d 663, 666, 516 N.E.2d 200, 202-03 (1987) (absent statutory disqualification, standard of review is abuse of discretion); Johnson v. Hornblass, 93 A.D.2d 732, 461 N.Y.S.2d 277, 279 (1st Dep't 1983).

Owens-Illinois raises an additional issue concerning the appointment of a referee under New York law, claiming that consent of the parties is a prerequisite. While consent is necessary for a referee appointed to hear and determine a controversy pursuant to CPLR § 4317(a), it is not necessary for an appointment under CPLR § 4311 or CPLR § 4320(a). The order appointing Mr. Feinberg in no way authorizes him to hear and determine controversies. Rather his position is to "assist the parties and the courts in promptly settling these cases subject to the further order of the courts." In re Joint Eastern and Southern Districts Asbestos Litigation; In re New York City Asbestos Litigation, 129 F.R.D. 434, 435 (E.D.N.Y. & N.Y. Sup. Ct. 1990).

This is the same role that Mr. Feinberg has played in Maryland. If the settlement process is not successful, all parties retain the right to a jury trial. Therefore, the limitations imposed by CPLR § 4317 are irrelevant.

The issue of whether a judge should be disqualified requires careful examination of the particular setting of the dispute to determine whether the charge could reasonably be construed as bringing into question the trier's impartiality. See In re Drexel Burnham Lambert Inc., 861 F.2d 1307, 1309 (2d Cir. 1988).

Examination of the context is particularly important in the case of mediators, where the courts have recognized that it is inevitable that special masters — like court-appointed experts, but unlike judges — will often be chosen from the ranks of practicing attorneys who themselves have prior expertise in the subject matter and prior association with experts in the field. See Rios v. Enterprise Ass'n of Steamfitters Local 638, 860 F.2d 1168, 1174-75 (2d Cir. 1988). Cf. Scott v. Spanjer Bros., Inc., 298 F.2d 928, 931-32 (2d Cir. 1962) (finding that medical expert appointed by court to assist court and jury need not be disqualified because he allegedly had a great deal of experience as "plaintiff's doctor"). In light of this inevitability, the Court of Appeals for the Second Circuit has found as a "general `rule that disqualification [of a special master] is a matter for the exercise of discretion by the district judge, unless actual bias has been demonstrated.'" Rios v. Enterprise Ass'n of Steamfitters Local 638, 860 F.2d 1168, 1174 (2d Cir. 1988). Cf. Lipton v. Lipton, 128 Misc.2d 528, 489 N.Y.S.2d 994, 1000 (Sup.Ct. 1985) ("[A] referee should be removed only for good and substantial reasons.")

As an officer of the court the special master remains bound to respect the confidentiality of and refrain from using to Owens-Illinois' disadvantage any information imparted to him under seal of confidentiality by that company in the course of his legislative or mediation ...

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