United States District Court, Southern District of New York
February 6, 2003
SIX WEST RETAIL ACQUISITION, INC., PLAINTIFF,
SONY THEATRE MANAGEMENT CORPORATION, ET AL., DEFENDANTS
The opinion of the court was delivered by: Loretta A. Preska, District Judge.
MEMORANDUM AND ORDER
Plaintiff in this antitrust case has moved for recusal under 28 U.S.C. § 455. For the reasons stated below, the motion is denied.
I. Facts Disclosed in the Motion Papers
This case was assigned to me on September 25, 2000, following the death of the Honorable David N. Edelstein. (See Notice of Reassignment, Docket No. 54). On September 28, 2000, I issued a Memorandum ("the Memorandum") which stated: "The parties are hereby informed that the law firm in which my husband is a partner, Cahill Gordon & Reindel, from time to time represents Sony Music Entertainment Inc. and Sony Computer Entertainment Inc. and that he works on those matters." (Docket No. 55).*fn1 The Memorandum was docketed and quoted in full on the Southern District's PACER ("Public Access to Court Electronic Records") system on September 29, 2000. (See id.).
In June of 2002, plaintiff changed counsel. (See Order dated June 27, 2002, Docket No. 84 (substituting Crowell & Moring for Boies Schiller & Flexner as counsel for plaintiff)). In an effort to gather a complete record of the case, plaintiff's present counsel reviewed the docket sheet on PACER and, on June 3, 2002, ordered copies of certain documents missing from the files of previous counsel, Boies Schiller & Flexner, including the Memorandum. (See Declaration of Stephanie E. DiCaprio, sworn to on August 19, 2002 ("DiCaprio Decl."), Ex. C to the Declaration of Jeffrey H. Howard, sworn to on October 17, 2002 ("Howard Decl.")). Crowell & Moring received a hard copy of the Memorandum on June 5, 2002. (Howard Decl. ¶ 4).
Plaintiff first raised the issue of recusal some two months after counsel received the Memorandum and nearly two years after the Memorandum was docketed. It did so in a letter to the Court dated August 19, 2002 requesting a pre-motion conference. (Ex. C to Howard Decl.). During the discussion of the timeliness of the proposed recusal motion at that conference and after hearing plaintiff's counsel's representation that the Boies Schiller firm had not previously been aware of the Memorandum, I noted, in substance, that the timeliness requirement for a recusal motion mandated that, at a minimum, someone at the firm declare that it was not the firm's practice to review the court's docket sheet in matters in which the firm appeared and that the firm had not done so in this action.*fn2 Nevertheless, permission to file the recusal motion was granted.
In support of the motion, plaintiff submitted numerous affidavits from Boies Schiller lawyers, including David Boies who had appeared in this action for plaintiff, attesting to that firm's lack of knowledge of the Memorandum, (see Ex. D to Howard Decl.), but, not surprisingly, no affidavit stating that it is not the firm's practice to review the docket sheet. Sheldon H. Solow, President of plaintiff Six West, disavowed any "actual knowledge" of the Memorandum until August 15, 2002. (See Declaration of Sheldon H. Solow, sworn to on August 19, 2002, ¶¶ 1, 4).
II. Other Facts
On or about November 29, 2001, with the consent of the parties, I held a settlement conference in Bridgewater Operating Corporation et al. v. Feldstein et al., No. 01 Civ. 3102. The conference was attended by, among others, Mr. Solow, a counterclaim defendant there, and his attorney in that action, David Boies of the Boies Schiller firm. No settlement was reached, and the parties proceeded to brief the issues of res judicata, collateral estoppel, lack of jurisdiction and the like. On August 16, 2002, a Judgment and Order of Permanent Injunction was issued in that case that can fairly be characterized as adverse to Mr. Solow's interests. (See Civil Docket Sheet for Case No. 01 Civ. 3102, Docket No. 43). Mr. Solow and others filed a notice of appeal on September 18, 2002. (Id., Docket No. 44). Plaintiff here, a company of which Mr. Solow is President, first raised the issue of recusal three days after the ruling adverse to Mr. Solow in 01 Civ. 3102. (See Ex. C to Howard Decl.).
I. Judicial Disqualification under 28 U.S.C. § 455
Section 455 of Title 28 provides in relevant part as follows:
(a) Any justice, judge, or magistrate of the United
States shall disqualify himself in any proceeding in
which his impartiality might reasonably be
(b) He shall also disqualify himself in the following
(4) He knows that he, individually or as a fiduciary,
or his spouse or minor child residing in his
household, has a financial interest in the subject
matter in controversy or in a party to the
proceeding, or any other interest that could be
substantially affected by the outcome of the
proceeding. . . .
28 U.S.C. § 455(a)-(b)(4).
This motion for recusal is fully within my authority to hear and decide. See In re Drexel Burnham Lambert Inc., 861 F.2d 1307, 1312 (2d Cir. 1988) ("Discretion is confided in the district judge in the first instance to determine whether to disqualify himself."). In deciding this motion, I must "weigh the policy of promoting public confidence in the judiciary against the possibility that those questioning [my] impartiality might be seeking to avoid the adverse consequences of [my] presiding over their case." Id.; see also H.R. Rep. No. 1453, 93d Cong., 2d Sess., reprinted in 1974 U.S. Code Cong. & Admin. News 6351, 6355 ("Litigants ought not to have to face a judge where there is a reasonable question of impartiality, but they are not entitled to judges of their own choice.").
II. Timeliness of Plaintiff's Motion
Before turning to the merits, I will first consider the timeliness of plaintiff's recusal motion. Although Section 455 does not contain an explicit provision regarding timeliness, the 5 Court of Appeals has evolved such a requirement, and "[i]t is well-settled that a party must raise its claim of a district court's disqualification at the earliest possible moment after obtaining knowledge of facts demonstrating the basis for such a claim." See Apple v. Jewish Hospital and Medical Ctr., 829 F.2d 326, 333 (2d Cir. 1987). However, the actual time elapsed between a plaintiff's knowledge of the facts giving rise to a recusal motion and that plaintiff's actual filing of the motion, although compelling evidence of untimeliness in this case, is not dispositive. Rather, the Court of Appeals has instructed that I must consider a number of factors in deciding the timeliness question, including whether: "(1) the movant has participated in a substantial manner in trial or pre-trial proceedings; (2) granting the motion would represent a waste of judicial resources; (3) the motion was made after the entry of judgment; and (4) the movant can demonstrate good cause for delay." Id. at 334 (citations omitted). The third factor is not relevant here, but the remaining factors all weigh in favor of finding plaintiff's motion untimely.
Plaintiff has been an active participant in pre-trial proceedings since I issued the Memorandum. The discovery stage of the case has been ongoing since that time, and the parties have enlisted the attention of the Court both at conferences and through written communications regarding extending discovery, timing of depositions and the like. Plaintiff has also engaged in a series of meetings and written communications with defendants regarding that process. (See Declaration of Phillip A. Geraci, sworn to on October 31, 2002 ("Geraci Decl.") ¶ 9, Ex. 9 to the Declaration of Jamie A. Forman, sworn to on October 31, 2002 ("Forman Decl.")). Plaintiff has served three sets of interrogatories, noticed ten depositions, taken six depositions, demanded the production of documents pursuant to written document requests, and stipulated to an order concerning those document requests. (Id.; see also Ex. 6 to Forman Decl. (Letter dated May 17, 2002 to the Court from Kent A. Gardiner of Crowell & Moring listing items plaintiff wished to raise with the Court)). Since June of 2002, the time when plaintiff's new counsel admits receiving a copy of the Memorandum, plaintiff has filed briefs in support of its motion for leave to file a second amended complaint and brought several discovery issues before both this Court and the Magistrate Judge. (See, e.g., Docket Nos. 74-76, 78, 87 (entries relating to plaintiff's motion for leave to file a second amended complaint); 86, 88, 92, 94, 95, 101, 102, 104, 105, 107, 110, 113-116 (entries relating to discovery disputes)). Given these facts, plaintiff has certainly actively participated in pre-trial proceedings before this Court, both since the docketing of the Memorandum and since counsel's admitted actual knowledge of the contents of the Memorandum.
As mentioned above, this case was reassigned to me more than two years ago, following the death of Judge Edelstein. Since that time, I have familiarized myself with this far-from-simple case and expended considerable time and attention in responding to the parties' concerns during the discovery period. Plaintiff's motion for leave to file an amended complaint is currently pending, and I have listened to counsel's views on that topic at a pre-motion conference. To reassign the case for a second time would be a waste of judicial resources because yet another district court judge would have to familiarize himself or herself with this complex and long-lived action. Also, yet another reassignment will result in more delay.*fn3
Plaintiff offers no adequate reason for the delay in filing its motion for recusal. Plaintiff's present counsel admits receiving a copy of the Memorandum on June 5, 2002, but did not raise the issue of recusal for over two months. Counsel argues that he "did not appreciate that this two-year-old filing was not `old news'" at that time, (Howard Decl. ¶ 4), but nowhere explains how a supposedly unwaivable conflict could be anything other than "hot news." In support of this contention, plaintiff has submitted numerous affidavits from its previous counsel, attesting to Mr. Boies' and the Boies Schiller firm's lack of knowledge of the Memorandum. (See Ex. D to Howard Decl.). What these affidavits do not address — and what I instructed plaintiff to address at the pre-motion conference on September 12, 2002 — is why plaintiff's then-counsel of record did not keep themselves apprised of developments in the case as reflected on the court's docket sheet, either through the PACER system or any of the other numerous services available to lawyers. (See Geraci Decl. ¶¶ 4-8). Indeed, the Boies Schiller firm has acknowledged that it did use PACER on at least one other occasion during this action to confirm that the firm's motion to withdraw as counsel for plaintiff had been granted. (See Declaration of Alan Vickery, sworn to on October 4, 2002, Ex. D to Howard Decl.).
Despite the availability of the Memorandum on PACER, plaintiff argues that it cannot be charged with "actual knowledge" of the Memorandum until August 15, 2002. (Reply Memorandum in Support of Plaintiff's Motion for Reassignment at 2). I find this assertion incredible, first, because plaintiff's counsel, its agent, has admitted actual knowledge of the Memorandum, based on receipt of a copy thereof, in early June 2002. (See DiCaprio Decl. ¶ 5). Second, I am not convinced that plaintiff's "actual knowledge" of the facts giving rise to the motion — whenever it occurred — is the proper measure here. Under 28 U.S.C. § 144, which is to be construed in pari materia with § 455, see Apple, 829 F.2d at 333, a party "is charged with knowledge of all facts known or knowable, if true, with due diligence from the public record or otherwise," Universal City Studios, Inc. v. Reimerdes, 104 F. Supp.2d 334, 349 (S.D.N.Y. 2000) (citation and internal quotation marks omitted). Here, where the Memorandum was available to both plaintiff and plaintiff's counsel through the public docket, through PACER and a variety of similar services, plaintiff should be charged with knowledge of its existence at some point well in advance of August 2002. Even in the context of a motion to vacate a judgment or for relief from an order pursuant to Federal Rules of Civil Procedure 60(b) and 77(d), "the clerk of court's failure to give notice . . . is not a ground, by itself, for a finding of excusable neglect." Yeates v. Marsden, No. 4:98-CV-685-E, 2001 U.S. Dist. LEXIS 21202, at *7 (N.D.Tex. Dec. 19, 2001) (citing Zurich Ins. Co. v. Wheeler, 838 F.2d 338, 340 (9th Cir. 1988)); see Fed.R.Civ.P. 77(d) ("Lack of notice of the entry [of an order] by the clerk does not affect the time to appeal or relieve or authorize the court to relieve a party for failure to appeal within the time allowed"). At bottom, the chief "consideration is whether counsel has fulfilled his responsibility to monitor proceedings with some degree of diligence." Yeates, 2001 U.S. Dist. LEXIS 21202, at *7; see also 10 Prior Prods., Inc. v. Southwest Wheel-NCL Co., 805 F.2d 543, 546 (5th Cir. 1986) ("Failure to comply with scheduled time targets as a result of inadequate monitoring [by counsel] will only be excused when justified by something more than alleged neglect on the part of the clerk."). Ultimately, plaintiff's counsel, like any other business entity, "bears responsibility for having adequate systems in place to ensure that legal notices and other communications reach the appropriate parts of its . . . empire." In re Drexel Burnham Lambert Group, 129 B.R. 22, 24 (S.D.N.Y. 1991). Otherwise, intentional ignorance would be rewarded. On these facts, plaintiff is unable to demonstrate good cause for the delay.
Accordingly, I find plaintiff's motion for recusal untimely.
III. The Merits
Plaintiff moves for disqualification under both Section 455(a) and Section 455(b)(4). I will discuss each basis for the motion in turn.
A. Section 455(a)
With respect to disqualification under Section 455(a), the Court of Appeals has cautioned that "the grounds asserted in a recusal motion must be scrutinized with care, and judges should not recuse themselves solely because a party claims an appearance of partiality." In re Aguinda, 241 F.3d 194, 201 (2d Cir. 2001). The test to be applied is an objective one: whether a reasonable person, who knows and understands all the relevant facts, would conclude that the court's impartiality might reasonably be questioned. See United States v. Lovaglia, 954 F.2d 811, 815 (2d Cir. 1992) (citing Apple, 829 F.2d at 333) (emphasis added). "Where a case, by contrast, involves remote, contingent, indirect or speculative interests, disqualification is not required." Id. The statute "does not compel disqualification `simply on unfounded innuendo concerning the possible partiality of the presiding judge.'" Canino v. Barclays Bank, No. 94 Civ. 6314, 1998 U.S. Dist. LEXIS 53, at *8 (S.D.N.Y. Jan. 7, 1998) (quoting El Fenix de Puerto Rico v. M/Y Johanny, 36 F.3d 136, 140 (1st Cir. 1994)). Furthermore, "[a] judge is as much obliged not to recuse himself when it is not called for as he is obliged to when it is." In re Drexel Burnham Lambert Inc., 861 F.2d at 1312 (citation omitted).
Plaintiff's argument for recusal on the basis of Section 455(a) cannot succeed because plaintiff fails to acknowledge, indeed, attempts to obfuscate, a key fact of which the reasonable person under the applicable standard would be aware: the Sony defendants in this case and the Sony entities represented by my husband's firm are not the same parties. In fact, they are merely two of many separate, although related, corporations bearing the Sony name.*fn4 The Memorandum upon which plaintiff bases this motion informed the parties that my husband's law firm "from time to time represents Sony Music Entertainment Inc. and Sony Computer Entertainment Inc. . . ." (Docket No. 55). The defendants in this case are Sony Corporation, Sony Pictures Entertainment Inc., and Sony Corporation of America. Plaintiff refers to my husband's representation of "Sony," (Plaintiff's Memorandum in Support of Motion for Reassignment ("Pl.'s Memo.") at 14), without mention that, in fact, the entities represented by his firm and the Sony entities that are defendants in this case are not one and the same. With knowledge of this fact, no reasonable person would conclude that my impartiality might reasonably be questioned on the basis of my husband's representation of particular corporations, not parties to this case.
B. Section 455(b)(4)
Plaintiff also moves for disqualification under Section 455(b)(4), which provides that a judge shall disqualify herself if she knows that her spouse "has a financial interest in the subject matter in controversy or in a party to the proceeding. . . ." 28 U.S.C. § 455(b)(4) (emphasis added). Here, the representation of specific Sony entities by my husband and his firm does not fall within the scope of Section 455(b)(4) because (1) such representation does not qualify as a financial interest in the subject matter of this controversy and (2) my husband's firm's clients are not parties to this proceeding.
The statute defines a "financial interest" as "a relationship as director, advisor, or other active participant in the affairs of the party. . . ." 28 U.S.C. § 455(d)(4). Plaintiff argues that "advisor" is a synonym for lawyer,*fn5 but as defendants point out, the term "lawyer," which appears throughout Section 455, is noticeably absent from subsection (d)(4). See, e.g., 28 U.S.C. § 455(b)(2) (judge shall disqualify himself "where in private practice he served as lawyer in the matter in controversy") (emphasis added); § 455(b)(5)(ii) (judge shall disqualify himself when "he or his spouse . . . is acting as a lawyer in the proceeding") (emphasis added). That Congress did not include the term "lawyer" as part of the definition of "advisor" demonstrates that Congress did not intend Section 455(b)(4) to encompass the relationship of outside counsel. See Sullivan v. Chesapeake and Ohio Ry. Co., Nos. 90-1136, 90-1412, 1991 U.S. App. LEXIS 26040, at *15 (6th Cir. 1991) ("we are not convinced that the term `advisor' in section 455(4)(d) was also intended to cover [the lawyer-client] relationship"); see also Barnhart v. Sigmon Coal Co., 534 U.S. 438, 452 (2002) ("it is a general principle of statutory construction that when Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion") (citation and internal quotation marks omitted).
Furthermore, even if Congress did intend the "financial interest" of Section 455(b)(4) to cover the relationship of outside counsel, such a relationship would be relevant only if outside counsel represented "a party to the proceeding," and, even then, recusal is not necessarily required. See Diversifoods, Inc. v. Diversifoods, Inc., 595 F. Supp. 133 (N.D. Ill. 1984) (motion for recusal denied even though the law firm of 15 presiding judge's husband presently represents defendant in other matters and had some prior connection with the events underlying the litigation before the presiding judge). I also note that for conflict purposes, representation of one corporate affiliate does not necessarily constitute representation of that entity's parent, subsidiary or sister corporation. See ABA Standing Committee on Ethics and Professional Responsibility, Formal Opinion 95-930 (January 25, 1995) ("The fact of corporate affiliation, without more, does not make all of a corporate client's affiliates into clients as well."). As stated above, the defendants in this case are Sony Corporation, Sony Pictures Entertainment Inc., and Sony Corporation of America. My husband and his firm do not represent these entities. I find plaintiff's repeated use of the general term "Sony" in this motion to describe the defendants in this case as well as plaintiff's argument that the entities in this case are one and the same as those represented by my husband's firm to be disingenuous. (See Pl.'s Memo. at 7 ("reassignment [is] required where, as here, the spouse's firm actively and substantially continues to represent the party [before the Court], and where, as here the spouse is personally actively and substantially representing the party [before the Court]")(emphasis added); 14 (stating that my husband 16 personally represents "Sony" and that the defendant in this case is "Sony")).*fn6
Plaintiff points out that in my answers to the United States Senate Questionnaire for Judicial Nominees, I stated that I expected to recuse myself "with respect to clients for whom my husband does a significant amount of work." Confirmation Hearings on Federal Appointments: Hearings before the United States Senate Committee on the Judiciary, 102d Cong., 2d Sess. 331 (1992) (Exhibit E to Howard Decl.). Plaintiff argues that reassignment of this case is "fully consistent" with this statement. (Pl.'s Memo. at 2). Again, plaintiff deliberately confuses the defendants in this case with the Sony entities represented by my husband's firm. No clients of my husband's firm are parties to this proceeding, and thus, my decision not to recuse myself in this case is fully consistent with my answers to the Senate.
I also reject plaintiff's assertion that my husband's firm's representation of other clients who have interests adverse to Mr. Solow in completely unrelated matters would influence my impartiality in this case. (See Pl.'s Memo. at 2 n. 1). As the Court of Appeals has noted, "it would simply be unrealistic to assume . . . that partners in today's law firms invariably have an interest that could be substantially affected by the outcome of any case in which the other partner is involved." Pashaian v. Eccelston Properties, Ltd., 88 F.3d 77, 83 (2d Cir. 1996). "All of the courts that have addressed this issue have held that § 455(b)(4) does not compel disqualification under these circumstances." Canino, 1998 U.S. Dist. LEXIS 53, at *11 (collecting cases). The fact that my husband's law firm from time to time may represent interests adverse to the plaintiff's in matters unrelated to the one before me here is a "remote, contingent, indirect or speculative" concern that does not compel recusal. Lovaglia, 954 F.2d at 815.
Finally, I register my great concern that plaintiff's motion is an exercise in "judge-shopping." First, I am concerned that plaintiff's new counsel may be seeking a second bite at the apple regarding some of my prior rulings in this action. After the hiatus in discovery sought by plaintiff (on the eve of certain difficult-to-schedule depositions) to permit the parties to pursue the possibility of settlement, plaintiff has argued for a longer, rather than shorter, discovery schedule and more, rather than less, discovery. I have disagreed with plaintiff's arguments and ordered discovery to proceed expeditiously as previously noticed. (See, e.g., Orders dated July 31, 2001 and 18 July 9, 2002, Docket Nos. 68, 86). Through its new counsel, plaintiff has requested leave to amend its complaint to add brand new claims requiring additional discovery. (See Docket No. 74). If a new judge is assigned, plaintiff is assured of at least some of the delay it apparently wants and a second bite at the extension of discovery apple. Permitting a party to obtain a do-over through recusal is unfair to the other parties and undermines public confidence in the judicial system.
Second, I am concerned that plaintiff is shopping for a new judge because of my ruling against his interests in an unrelated case. As noted above, Mr. Solow, plaintiff's president, appeared before me as a counterclaim defendant in a case in which I conducted a settlement conference attended by Messrs. Solow and Boies (with consent of all parties). There was no settlement, and, following briefing on issues such as res judicata, collateral estoppel and abstention, I thereafter issued a Judgment and Order of Permanent Injunction adverse to Mr. Solow's interests on August 16, 2002. (See Civil Docket for Case No. 01 Civ. 3102, Docket No. 43). As noted above, plaintiff's counsel first raised the issue of recusal three days later. The timing of the instant motion in relation to my decision in Mr. Solow's previous case strongly suggests that the true explanation for plaintiff's tardy motion is judge-shopping.
My concern on this second aspect of judge-shopping is heightened by Mr. Solow's track record in this regard. Mr. Solow admitted in his deposition in this case that he and his counsel, the Boies Schiller firm, appearing through David Boies, were fined over $46,000 by the Supreme Court of the State of New York, County of New York, for seeking disqualification of Justice Greenfield of that court in bad faith. (See Deposition of Sheldon H. Solow at 157-58, Ex. 1 to Forman Decl.; Order dated May 25, 2000, Index Nos. 5802/81, 31422/91, 116385/95 (Sup.Ct. N.Y. County) (Crane, J.), Ex. 3 to Forman Decl.). This factor weighs heavily against recusal.
Accordingly, I find plaintiff's motion for recusal under § 455(a) and § 455(b)(4) to be without merit.
For the foregoing reasons, plaintiff's motion for recusal is denied.