In Re Kensington International Ltd. , 368 F.3d 289 ( 2004 )

Opinions of the United
2004 Decisions 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Precedential or Non-Precedential: Precedential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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UNITED STATES COURT OF
APPEALS FOR THE THIRD CIRCUIT BEFORE: FUENTES, SMITH and
GARTH, Circuit Judges
___________
(Opinion Filed: May 17, 2004)
No. 03-4212
___________ Roy T. Englert, Jr. (argued)
Lawrence S. Robbins
IN RE: KENSINGTON Robbins, Russell, Englert, Orseck &
INTERNATIONAL LIMITED and Untereiner
SPRINGFIELD ASSOCIATES, LLC, 1801 K Street, N.W
Petitioners Suite 411
Washington, DC 20006
___________
John J. Gibbons
No. 03-4526 Gibbons, Del Deo, Dolan, Griffinger &
___________ Vecchione
One Riverfront Plaza
IN RE: D.K. ACQUISITION Newark, NJ 07102
PARTNERS, L.P.; FERNWOOD
ASSOCIATES, L.P. Attorneys for Petitioners in 03-4212
AND DEUTSCHE BANK TRUST
COMPANY AMERICAS, Petitioners Charles Fried (argued)
1545 Massachusetts Avenue
___________ Cambridge, MA 02138
No. 04-1468 Richard Mancino
___________ Marc Abrams
Willkie, Farr & Gallagher
IN RE: USG CORPORATION, 787 Seventh Avenue
Petitioner New York, NY 10019-6099
On Petitions for Writs of Mandamus Joanne B. Wills
to the United States Bankruptcy Court Jennifer L. Scoliard
for the District of Delaware Klehr, Harrison, Harvey, Branzburg &
(Related to Bankruptcy Nos. 00-03837, Ellers
01-01139 and 01-02094) 919 North Market Street
___________ Suite 1000
Wilmington, DE 19083
Argued on April 19, 2004
1
Attorneys for Petitioners in 03-4526
Stephen C. Neal (argued) 222 Delaware Avenue
Scott D. Devereaux P.O. Box 1266, Suite 1200
Cooley Godward Wilmington, DE 19899
3000 El Camino Real
5 Palo Alto Square Richard E. Flamm
Palo Alto, CA 94306 2840 College Avenue
Suite A
Daniel J. DeFranceschi Berkeley, CA 94705
Paul N. Heath
Richards Layton & Finger Attorneys for Respondents Owens
One Rodney Square Corning, et al.
P.O. Box 551
Wilmington, DE 19899 David M. Bernick (argued)
Michelle H. Browdy
David G. Heiman Janet S. Baer
Jones Day Kirkland & Ellis
North Point 200 East Randolph Drive
901 Lakeside Avenue Suite 6500
Cleveland, OH 44114-1190 Chicago, IL 60601
Paul R. DeFilippo Christopher Landau
Wollmuth, Maher & Deutsch Ashley C. Parrish
One Gateway Center Kirkland & Ellis
Newark, NJ 07102 655 Fifteenth Street, NW
Washington, DC 2005
Attorneys for Petitioner in No. 04-1468
Laura Davis Jones
Charles O. Monk, II (argued) David W. Carickhoff, Jr.
Saul Ewing Pachulski, Stang, Ziehl, Young, Jones &
100 South Charles Street Weintraub
Baltimore, MD 21201 919 North Market Street
16th Floor
Norman L. Pernick P.O. Box 8705
J. Kate Stickles Wilmington, DE 19899
Saul Ewing
2
Attorneys for Respondent W.R. Grace & McMonagle and Dean M. Trafelet
Co.
Daniel K. Hogan
Elihu Inselbuch (argued) Law Offices of Daniel K. Hogan
Peter Van N. Lockwood 1701 Shallcross Avenue
Nathan D. Finch Suite C
Caplin & Drysdale Wilmington, DE 19806
399 Park Avenue, 27th Floor
New York, NY 10022 Sander L. Esserman
Robert T. Brousseau
Marla R. Eskin David J. Parsons
Mark T. Hurford Stutzman, Bromberg, Esserman & Plifka
Campbell & Levine 2323 Bryan Street
800 North King Street Suite 2200
Suite 300 Dallas, TX 75201-2689
Wilmington, DE 19801
Attorneys for Respondent Baron & Budd
Attorneys for Respondents Official Claimants
Committee of Asbestos Claimants of
Owens Corning, Official Committee of Jeffrey S. Trachtman
Asbestos Personal Injury Claimants of Kramer, Levin, Naftalis & Frankel
W.R. Grace and Official Committee of 919 Third Avenue
Asbestos Personal Injury Claimants of 39th Floor
USG Corporation New York, NY 10022
Michael J. Crames (argued) Adam G. Landis
Jane W. Parver Rebecca L. Butcher
Aaron Stiefel Landis, Rath & Cobb
Edmund M. Emrich 919 Market Street
Kaye Scholar Suite 600, P.O Box 2087
425 Park Avenue Wilmington, DE 19899
New York, NY 10022
Attorneys for Respondent Credit Suisse
Edwin J. Harron First Boston Corp
Young, Conaway, Stargatt & Taylor
P.O. Box 391, 1000 West Street Neal J. Levitsky
Brandywine Building, 17th Floor L. Jason Cornell
Wilmington, DE 19899 Fox Rothschild
824 North Market Street
Attorneys for Respondents James J. Suite 810
3
Wilmington, DE 19899-2323 Armstrong World Industries, Inc.
Henry W. Simon Kenneth Pasquale
Robert A. Simon Lewis Kruger
Simon & Simon Stroock, Stroock & Lavan
3327 Winthrop Avenue 180 Maiden Lane
Suite 200 New York, NY 10038
Fort Worth, TX 76116
Attorneys for Intervenor Official
Attorneys for Respondent Waters & Committee of Unsecured Creditors of
Kraus USG Corporation
Edward L. Jacobs Roderick R. McKelvie
26 Audubon Place Fish & Neave
P.O. Box 70 1899 Pennsylvania Avenue, NW
Fort Thomas, KY 41075 Washington, DC 20006
Attorney for Respondent Harry Grau &
Sons
Daniel J. Popeo
Michael R. Lastowski Richard A. Samp
Duane Morris Washington Legal Foundation
1100 North Market Street 2009 Massachusetts Avenue, N.W.
Suite 1200 Washington, DC 20036
Wilmington, DE 19801
Attorneys for Amicus Curiae Washington
Attorney for Intervenor Official Legal Foundation
Committee of Unsecured Creditors of
USG Corp. James L. Patton, Jr.
Young, Conaway, Stargatt & Taylor
Mark E. Felger P.O. Box 391, 1000 West Street
Jeffrey R. Waxman Brandywine Building, 17th Floor
Cozen & O’Connor Wilmington, DE 19899
1201 Market Street
Suite 1400 Attorney for Amicus Curiae Eric D.
Wilmington, DE 19801 Green
Attorneys for Intervenor Official Timothy K. Lewis
Committee of Unsecured Creditors of Schnader Harrison Segal & Lewis
4
2001 Pennsylvania Avenue NW questioned” under 28 U.S.C. § 455(a).
Suite 300 The Petitions asserted that disqualification
Washington, DC 20006 was also wa r r a n te d u nder
28 U.S.C. § 455(b)(1) as a result of ex
Craig Berrington parte communications among Judge
Lynda S. Mounts Wolin and his advisors, the parties, and
American Insurance Association the attorneys.1
1130 Connecticut Avenue, NW
Suite 1000 Following a hearing on December
Washington, DC 20015 12, 2003, we concluded that we should
not reach the merits of the Mandamus
Attorneys for Amicus Curiae American Petitions. Our decision was “prompted by
Insurance Association our overarching concern that we [did] not
have an adequately developed evidentiary
record before us.” In re Kensington Int’l
Garth, Circuit Judge: Ltd., 353 F.3d 211, 214 (3d Cir. 2003).
“[R]eluctant to act in a complex situation
Approximately six months ago, two such as this one, where so many vital
emergency petitions were filed in this interests are at stake, without a developed
Court asking us to issue Writs of evidentiary record,” we remanded the
Mandamus disqualifying Senior District proceedings to Judge Wolin while
Court Judge Alfred M. Wolin of the retaining jurisdiction. Id. at 223. We
District of New Jersey from continuing to instructed Judge Wolin to vacate his order
preside over two of five asbestos-related staying discovery and allow expedited
bankruptcies that this Court had assigned discovery to proceed. We also directed
to him in December 2001 for coordinated that he issue an expedited ruling on all of
case management. The five companies in the recusal motions pending before him.
bankruptcy are Owens Corning, W.R. Id. USG Corp. by this time had also filed
Grace & Co., USG Corporation, a recusal motion.
Armstrong World Industries, Inc., and
Federal-Mogul Global, Inc. (collectively,
the “Five Asbestos Cases”). 1
The Petitioners had originally
moved for recusal in the Bankruptcy
The Petitions, which were brought Court, but filed Petitions for Writs of
by creditors of Owens Corning and W.R. Mandamus in this Court after Judge Wolin
Grace & Co., alleged that Judge Wolin withdrew the recusal motions from the
had, through his association with certain Bankruptcy Court and stayed the
consulting Advisors which he had corresponding discovery. At the time that
appointed, created a perception that his the Petitions were filed, Judge Wolin had
impartiality “might reasonably be not ruled on the recusal motions.
5
On remand, Judge Wolin and the from further presiding over those three
parties faithfully followed our instructions. bankruptcies. See Alexander v. Primerica
Under stringent time restrictions and Holdings, Inc., 10 F.3d 155, 162 (3d Cir.
Judge Wolin’s effective oversight, the 1993) (“For purposes of § 455(a)
parties conducted extensive discovery into disqualification, it does not matter whether
the facts surrounding the recusal motions. the district court judge actually harbors
Following an additional round of briefing, any bias against a party or the party’s
Judge Wolin issued a comprehensive counsel.”). We emphasize that our review
written opinion and order on February 2, of the record has not revealed the slightest
2004 denying the recusal motions both on hint of any actual bias or partisanship by
the merits and on timeliness grounds. See Judge Wolin. On the contrary, Judge
generally In re Owens Corning, 305 B.R. Wolin has throughout his stewardship
175 (D. Del. 2004). over the Five Asbestos Cases exhibited all
of the judicial qualities, ethical conduct,
As noted, we retained jurisdiction and characteristics emblematic of the most
over the Mandamus Petitions. These experienced, competent, and distinguished
Petitions were joined by USG Corp., the Article III jurists. But the test for
debtor in the USG Corp. bankruptcy. The disqualification under § 455(a) is not
Official Committee of Unsecured actual bias; it is the perception of bias.
Creditors in the Armstrong World See id.
Industries, Inc. bankruptcy filed a fourth
Petition, but due to its late filing we did Second, we find that the motions
not consolidate it with the other Petitions. for recusal in the Owens Corning and
W.R. Grace & Co. bankruptcies were
I. timely under 28 U.S.C. § 455(a). In
reaching that conclusion, we disagree with
Having exhaustively reviewed the Judge Wolin that it was appropriate, in
now developed record, we have reached this case, to impute knowledge of the
the following conclusions: grounds for disqualification to the
Petitioners. The evil that a timeliness
First, a reasonable person, knowing r e q u i r e me n t is i n t e n d e d to
all of the relevant circumstances, would prevent—namely, holding in reserve a
conclude that Judge Wolin’s impartiality recusal demand until such time that a party
might reasonably be questioned in the perceives a strategic advantage—is served
Owens Corning, W.R. Grace & Co. and by requiring actual knowledge. Because
USG Corp. bankruptcies. Although the the Petitioners did not themselves learn
record does not demonstrate that Judge about the Advisors’ conflict of interest
Wolin has done anything wrong or (discussed infra) until shortly before they
unethical or biased, he must be moved for disqualification, their motions
disqualified under 28 U.S.C. § 455(a) were timely.
6
Third, USG Corp. stands on a November 3, 2003 stayed certain
different footing. The record discloses proceedings before the Bankruptcy
that the USG debtors and Unsecured Courts, we will set a separate date to hear
Creditors Committee knew as early as argument on the Armstrong Petition and
January 2002 about the Advisors’ conflict. will render a decision in that case in due
However, other factors come into play as course.
to USG Corp. (which we discuss infra)
requiring Judge Wolin’s disqualification. Sixth, we likewise do not rule on, or
express an opinion as to, the fifth
Fourth, we do not decide whether bankruptcy, Federal-Mogul Global, Inc.,
the ex parte communications between albeit for a different reason. None of the
Judge Wolin, on the one hand, and the parties in Federal-Mogul has moved for
Advisors, parties, and attorneys, on the Judge Wolin’s recusal in the Bankruptcy
other, provide a separate ground for Court or filed a Petition for Mandamus in
disqualification under 28 U.S.C. our Court. Accordingly, we will not
§ 455(b)(1). Nor do we decide whether disturb Judge Wolin’s assignment in
those motions are timely. We feel dealing with the Federal-Mogul Global,
constrained, however, to note that we look Inc. bankruptcy.
with disfavor upon both the extent to
which, and manner in which, Judge Wolin II. BACKGROUND
engaged in ex parte communications.
Whatever value the ex parte meetings may In our earlier opinion, we described
have had in moving the Five Asbestos the parties, the allegations, the responses,
Cases along or creating a settlement- the procedures, our standard of review,
friendly atmosphere was outweighed by and our standards for disqualification
the attendant risks and problems, which under 28 U.S.C. § 455(a) and (b)(1). See
are catalogued in some detail in the Kensington, 353 F.3d at 214-22. We
Petitioners’ briefs. See also Code of perceive no need to repeat these matters in
Conduct for U.S. Judges Canon 3 § A(4) detail, but we will refer to those that are
(2003). particularly relevant here, as well as the
supplemental concerns and facts that have
Fifth, we reach no decision on the come to our attention.
Petition for Mandamus filed in the
Armstrong World Industries, Inc. After our December 12, 2003
bankruptcy. As mentioned above, that hearing, which gave rise to the expedited
Petition was not consolidated with the discovery and Judge Wolin’s expedited
Petitions in Owens Corning, W.R. Grace ruling on the recusal motions, we received
& Co., and USG Corp. Rather than delay two additional Petitions for a Writ of
this opinion, and recognizing that our Mandamus in the USG Corp. and
initial orders dated October 30, 2003 and Armstrong World Industries, Inc.
7
bankruptcies. Accordingly, we list the in the discharge of his functions. These
parties now seeking Judge Wolin’s Advisors were not selected from any
disqualification and those opposing it: judicial category (i.e., they were not
federal magistrate judges, special masters,
Parties Seeking Recusal2 or law clerks4 ); they consisted of lawyers,
Kensington International Ltd, et al.; Credit retired state court judges, and professors
Suisse First Boston, as agent for Owens with prior experience in asbestos
Corning’s pre-petition bank creditors; litigation. The Petitioners claim that
D.K. Acquisition Partners, L.P., et al.; Judge Wolin, who has presided over the
USG Corp.; Official Committee of Five Asbestos Cases since December
Unsecured Creditors of USG Corp.; 2001, has through his appointment of the
Official Committee of Unsecured Advisors and his participation with them
Creditors of Armstrong World Industries, in administering the bankruptcies, created
Inc. a perception in the mind of the reasonable
person that his impartiality could be
Parties Opposing Recusal3 questioned, and this being so, that he must
Owens Corning; Baron & Budd be disqualified.
Claimants; Legal Representative for
Future Asbestos Personal Injury Claimants The Petitions filed in the Owens
in Owens Corning & USG Corp.; W.R. Corning and W.R. Grace & Co.
Grace & Co.; Official Committee of bankruptcies seek Judge Wolin’s
Asbestos Personal Injury Claimants of disqualification primarily pursuant to 28
W.R. Grace & Co.; Official Committee of U.S.C. § 455(a), which reads: “Any
Asbestos Personal Injury Claimants of justice, judge, or magistrate judge of the
USG Corp. United States shall disqualify himself in
any proceeding in which his impartiality
Essentially, the parties seeking might reasonably be questioned.” As we
disqualification assert that Judge Wolin stated in our earlier opinion, “[t]he test for
had appointed five Advisors to assist him recusal under § 455(a) is whether a
reasonable person, with knowledge of all
2
the facts, would conclude that the judge’s
The following amicus curiae
supported the recusal petitions: American
Insurance Partners and Washington Legal
4
Foundation. As a matter of historical interest,
then-District Court Judge Sarokin was
3
Amicus curiae Eric Green, Legal assisted in an action involving the
Representative for Future Asbestos Tobacco Industry by a Magistrate Judge
Personal Injury Claimants in Federal and a Special Master. See Haines v.
Mogul Global, Inc., supported the entities Liggett Group Inc., 975 F.2d 81 (3d Cir.
opposing recusal. 1992).
8
impartiality might reasonably be bankruptcy whatever relief, if any, we
questioned.” Kensington, 353 F.3d at 220 apply to the Owens Corning, W.R. Grace,
(citing Edelstein v. Wilentz, 812 F.2d 128 and USG Corp. bankruptcies.
(3d Cir. 1987)). While this test is
acknowledged to be the standard for To complete our recital of the
disqualification under § 455(a), the matters we must consider, we note that the
interpretation of what constitutes a parties in the Federal-Mogul Global, Inc.
reasonable person has been contested here. bankruptcy, which is the fifth asbestos-
We will discuss that issue later in this related bankruptcy under Judge Wolin’s
opinion. charge, have not participated in any of the
proceedings which we review.5
After we scheduled the briefing and
hearing dates for the Owens Corning and Even though we described the facts
W.R. Grace & Co. Petitions, USG Corp. in some detail in our earlier opinion,
filed a third Petition for Mandamus. That certain factual circumstances require
Petition, while also seekin g further elaboration here because they bear
disqualification pursuant to § 455(a), directly on the merits and timeliness of the
focused primarily on the standard of petitions.
disqualification found in § 455(b)(1).
That particular subsection requires a A. The Parties
justice, judge, or magistrate judge to
disqualify himself only if “he has a The first petition was filed by
personal bias or prejudice concerning a Kensington International Limited and
party, or personal knowledge of disputed Springfield Associates, LLC, two creditors
evidentiary facts concerning the of Owens Corning (collectively,
proceeding.” 28 U.S.C. § 455(b)(1). The “Kensington”). That petition was
thrust of USG Corp.’s Petition is that followed in short order by a second
Judge Wolin acquired personal knowledge petition from D.K. Acquisition Partners,
of disputed evidentiary facts by
conducting ex parte meetings with the
Advisors, parties, and attorneys. 5
An amicus curiae brief was filed
by Eric D. Green, who is the
More recently, the Official representative for future asbestos
Committee of Unsecured Creditors of personal-injury claimants in the Federal-
Armstrong World Industries, Inc. (the Mogul bankruptcy. See note 3 supra. An
“Armstrong Committee”) also filed a amicus curiae brief does not trigger our
Petition for a Writ of Mandamus. That jurisdiction and we lack the authority to
Petition neither seeks nor opposes Judge issue a writ of mandamus to non-parties.
Wolin’s disqualification. Instead, it asks See In re School Asbestos Litig., 977 F.2d
that we extend to the Armstrong 764, 798 (3d Cir. 1992).
9
L.P., Fernwood Associates, L.P., and private practitioners, or academics.
Deutsche Bank Trust Company Americas, Pursuant to Judge Wolin’s order, the
three creditors of W.R. Grace & Co. Advisors were to “advise the Court and to
(c ol le ct iv el y, “D.K. A cquisitio n undertake such responsibilities, including
Partners”). The third petition was filed . . . mediation of disputes, holding case
more recently by USG Corporation, the m a n a g e me n t c o n f e r e n c e s , a n d
debtor in the USG bankruptcy. consultation with counsel, as the Court
may delegate to them individually.” The
B. Ex Parte Communications and the Advisors could also be delegated “certain
Advisors authority to hear matters and to advise the
Court on issues that may arise in these five
On December 20, 2001, Judge large Chapter 11 cases.” Judge Wolin’s
Wolin held a case management conference order provided that he could, “without
for the Five Asbestos Cases. Although further notice, appoint any of the
there is no official record of what was said Court-Appointed Consultants to act as a
at that conference, Judge Wolin produced Special Master to hear any disputed matter
a script (“talking points”) which reflects and to make a report and recommendation
what he said to the parties. According to to the Court on the disposition of such
the script, Judge Wolin announced that matter.”
“[i]n order to effectively case manage
complex litigation, it is necessary for the Over the next two years, Judge
judge to speak and/or meet with attorneys Wolin met repeatedly, on an ex parte
on an ex parte basis, without permission basis, with the parties and their attorneys.
of adversary attorneys.” Judge Wolin Despite his prior assurance that he would
further announced that “[a]ny objection to do so “sparingly,” he acknowledged more
such ex parte communications is deemed recently that he met ex parte with
waived,” but he assured the parties and interested parties “on innumerable
attorneys that he would use his power to occasions.” (Supp. Resp. dated Nov. 20,
meet ex parte “sparingly.” None of the 2003). This is supported by the fee
parties objected at that time. applications filed by the Advisors, which
reveal more than 325 hours of ex parte
A week later, Judge Wolin named meetings with the attorneys for various
five “Court Appointed Consultants” (the parties in the Five Asbestos Cases. Many
“Advisors”) to assist him in the Five of these meetings took place at restaurants
Asbestos Cases. The five individuals he over lunch or dinner or at law firms.
named were David Gross, Judson Hamlin, During the proceedings on remand, Judge
William Dreier, John Keefe, and Francis Wolin acknowledged that he received
McGovern, all of whom had prior extra-judicial information at the ex parte
experience with asbestos or mass tort conferences. (See Joint Appendix “JA” at
litigation either as state court judges, 1165.)
10
The ex parte meetings were not 11 U.S.C. § 502(c),8 the tensions between
limited to the parties and their attorneys. various creditor classes, and Rule 706
In the first half of 2002, Judge Wolin and panels.9 These issues are highly relevant
the Advisors held a series of four ex parte concerns in asbestos litigation. The
meetings at which they discussed, in primary purpose of these meetings was to
Advisor McGovern’s words, “[j]ust educate Judge Wolin on the issues likely
whatever issue you can think of,” to arise in the Five Asbestos Cases or, as
including claims bar dates, the chrysotile Advisor Gross put it, “to assist Judge
defense,6 proof of claim forms, pleural Wolin . . . in becoming more conversant
plaques,7 the pros and cons of various with the details of the asbestos litigation.”
approaches to estimation under
One of these initial meetings was
6
attended by Bob Komitor, a plaintiff’s
“Of the three basic kinds of attorney. According to Advisor Dreier,
asbestos fibers—amosite, crocidolite, and Komitor described an expert, Dr. Peter
chrysotile—the straight, solid amosite and Barrett, as “a charlatan” and criticized the
crocidolite fibers are less likely to break chrysotile defense. Dr. Barrett had been
up in the lungs and more likely to cause previously engaged by USG Corp. While
mesothelioma than are the curly, hollow there is no official record of this meeting,
chrysotile fibers.” Menne v. Celotex notes taken by Advisor Gross suggest that
Corp., 861 F.2d 1453, 1456 (10th Cir. some of the Advisors also expressed
1988). Thus, asbestos manufacturers negative views about the positions taken
sometimes raise a so-called “chrysotile by USG’s expert and other USG Corp.
defense” when sued by asbestos victims. defenses.
We have stated, however, that “[t]he
absence or presence of chrysotile in Following this series of initial
asbestos products is not an affirmative meetings, Judge Wolin also held an ex
defense which would require the parte meeting on November 19, 2002 with
presentation of any evidence . . . .”
Blancha v. Raymark Indus., 972 F.2d 507,
8
514 (3d Cir. 1992). 11 U.S.C. § 502(c) states:
“[t]here shall be estimated for purpose of
7
Pleural plaques is a medical allowance under this section . . . any
condition that consists of extensive pleural contingent or unliquidated claim, the
thickening on the exterior of the lungs. fixing or liquidation of which, as the case
See Dunn v. HOVIC, 1 F.3d 1362, 1365 may be, would unduly delay the
(3d Cir. 1993). Pleural plaques are administration of the case.”
“frequently seen in people who have been
9
exposed to significant doses of asbestos.” Rule 706 of the Federal Rules of
Rogers v. Raymark Indus., 922 F.2d 1426, Evidence permits the court to appoint an
1428 (9th Cir. 1991). independent panel of expert witnesses.
11
Advisors Gross, McGovern and Dreier to During the course of the Five
discuss certain issues in the Owens Asbestos Cases, Advisor Hamlin prepared
Corning bankruptcy. There is no official a draft opinion in each of the Five
transcript of this meeting, but Advisor Asbestos Cases, a role that Hamlin likened
Dreier took notes. On remand, Judge to that of a federal magistrate judge. At
Wolin rejected inquiries concerning this his deposition, Hamlin explained that he
meeting on the ground that it included would normally receive a phone call from
settlement discussions. As a result, Judge Wolin’s chambers informing him
Advisor Dreier’s notes were filed under that an appeal had been taken from the
seal both in the District Court and by us. Bankruptcy Court and that he was to
prepare a draft opinion for Judge Wolin.
Two days before the meeting, The issues on which he drafted opinions
Owens Corning had distributed a draft included, among other things, bar dates for
plan of reorganization that was supported asbestos property claims, defenses by
by Credit Suisse First Boston, as agent for USG Corp. to asbestos personal injury
the pre-petition creditors. The draft plan claims, and proof of claim forms.
called for certain issues to be resolved
prior to plan confirmation. At the C. The G-I Holdings Bankruptcy
November 19th meeting, the Advisors
discussed some of the key issues contained Two months before Judge Wolin
in the proposed plan with Judge Wolin appointed the Advisors in the Five
and explained their effects as well as what Asbestos Cases, the Bankruptcy Court for
appear to be certain settlement figures that the District of New Jersey (Chief Judge
had been discussed with the parties. Rosemary Gambardella) had appointed
Advisor Hamlin to serve as the “Legal
At a conference held on November Representative of Present and Future
21, 2002, Judge Wolin stated that he did Holders of Asbestos-Related Demands” in
not favor Owens Corning’s proposed plan. still another asbestos-related bankruptcy
In January 2003, Owens Corning filed a case captioned In re G-I Holdings Inc.
revised plan of reorganization that this The G-I Holdings bankruptcy is not
time was supported by the tort claimants related to the Five Asbestos Cases, and
who had objected to the first draft plan.10 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
10
The Petitioners argue that a claimants in G-I Holdings will also have
reasonable person could perceive that claims against one or more of the debtors
Judge Wolin’s impartiality could in the Five Asbestos Cases.
reasonably be questioned in this sequence
of events. Less than one month after Judge
12
Wolin appointed the five Advisors, motion. That stay prompted Kensington
Hamlin filed an application in G-I to file a petition in our Court seeking a
Holdings to engage Advisor Gross as his Writ of Mandamus directing Judge Wolin
local counsel. Chief Judge Gambardella either to disqualify himself or to withdraw
approved Gross as Hamlin’s local counsel. his discovery stay.
D. Kensington’s Recusal Motion E. The District Court’s Responses
Almost two years later, Kensington Judge Wolin submitted three
filed a motion in the Bankruptcy Court written responses to Kensington’s petition.
seeking to recuse Judge Wolin from In his first response, dated November 3,
further participation in the Owens Corning 2003, Judge Wolin announced that he
bankruptcy. Kensington asserted that would “judge the Motion to Recuse on the
Judge Wolin was precluded under 28 law and facts presented after all of the
U.S.C. § 455(a) from continuing to parties have been heard in full” and that he
preside over the Owens Corning would seek to resolve the motion as
bankruptcy because two of his Advisors quickly as possible.
(Gross and Hamlin) allegedly had a
conflict of interest as a result of their In his second response, dated
participation in G-I Holdings. November 21, 2003, Judge Wolin
answered the suggestion that his ex parte
Three days later, the debtors in the communications with the Advisors and
W.R. Grace bankruptcy applied to various attorneys somehow required his
Bankruptcy Judge Fitzgerald to appoint recusal. Judge Wolin explained that the
Mr. Hamlin as the Legal Representative purpose of the ex parte communications
for Future Asbestos Claimants of W.R. “was to ensure that each committee or
Grace & Co. The application disclosed corporate constituency was afforded the
that Mr. Hamlin was already serving as an opportunity to provide to the Court
Advisor to Judge Wolin in the Five insights as to why, in the competition for
Asbestos Cases, including, of course, the limited dollars, its claim was just.” Judge
W.R. Grace bankruptcy. W.R. Grace & Wolin also wrote that, “[g]iven that these
Co. ultimately withdrew its application meetings occurred on a regular basis
after Judge Fitzgerald expressed her without complaint and given that the
opinion that Hamlin could not serve as the December 20, 2001 case management
Futures Representative in the W.R. Grace conference alerted all concerned that ex
bankruptcy. parte meetings were part of the District
Court’s case management plan, it strikes a
On October 23, 2003, Judge Wolin discordant note that the conduct of ex
entered an order staying all discovery in parte conferences would be the ground for
connection with Kensington’s recusal
13
a recusal motion.”11 instructions that he allow expedited
discovery to proceed. We also required
In his third response, dated that he rule on the pending recusal
December 5, 2003, Judge Wolin again motions. We were motivated primarily by
defended his Case Management methods our concern that we did not have an
and, in particular, his decision to allow ex adequately developed evidentiary record
parte communications. before us.
F. D.K. Acquisition Partners’ As we previously stated, on
Mandamus Petition February 2, 2004, following expedited
discovery, Judge Wolin issued a 102-page
Meanwhile, D.K. Acquisition written opinion and order denying the
Partners filed a motion in the W.R. Grace motions for recusal. First, Judge Wolin
bankruptcy case seeking Judge Wolin’s found that the evidence failed to disclose
recusal. A week later, D.K. Acquisition that there was an appearance of
Partners filed a petition in this Court impropriety under § 455(a) or that his ex
seeking the same relief requested by parte communications required his recusal
Kensington. We consolidated D.K. under § 455(b)(1). Second, Judge Wolin
Acquisition Partners’ Mandamus Petition determined that the motions were not
with Kensington’s Petition. timely because the parties seeking his
recusal either had actual or imputed
G. Remand knowledge of the facts giving rise to the
recusal motions long before the motions
Following an extended hearing and were filed. He also charged that the
after we had received briefs from the Petitions were prompted by strategic,
parties and amici, we remanded the rather than ethical, motivations.
proceedings to Judge Wolin with
III. JURISDICTION
11
Around the same time that Judge We have jurisdiction to issue Writs
Wolin filed his second response, USG of Mandamus under the All Writs Act, 28
Corporation filed a motion in the U.S.C. § 1651(a), which provides that
Bankruptcy Court seeking his recusal. “[t]he Supreme Court and all courts
USG Corporation argued that the established by Act of Congress may issue
extensive ex parte communications all writs necessary or appropriate in aid of
between Judge Wolin and the Advisors (as their respective jurisdictions and agreeable
well as other persons) provided an to the usages and principles of law.” We
independent basis for Judge Wolin’s also retained jurisdiction when we
disqualification under both 28 U.S.C. remanded the proceedings to Judge Wolin
§ 455(a) and (b)(1). for discovery and his ruling. See
14
Kensington, 353 F.3d at 214 (“We will court’s order denying recusal. See S. Rep.
retain jurisdiction over any further 93-419 (1973), H. Rep. 93-1453 (1974)
proceedings . . . .”). (explaining that the addition of
subsection (a) to § 455 was not intended
IV. STANDARD OF REVIEW to alter the abuse of discretion standard of
review). “When the need for a writ of
When a Petition for a Writ of mandamus is determined by this court to
Mandamus challenges a district court be ‘clear and indisputable,’ a district
judge’s decision not to recuse himself, we judge’s decision not to recuse himself or
normally review that decision for an abuse herself necessarily also will have been an
of discretion. Selkridge v. United of abuse of discretion or a clear legal error.” 12
Omaha Life Ins. Co., 360 F.3d 155, 166
(3d Cir. 2004). But the mandamus
petitions in Owens Corning and W.R. 12
It is somewhat strange to speak in
Grace & Co. are somewhat unique, from a terms of an abuse of discretion where the
procedural perspective, in that they arrived underlying statute, 28 U.S.C. § 455, states
in our Court before the District Court that a judge “shall” disqualify himself or
ruled on the recusal motions. Had we herself if certain grounds are present. The
reached the merits at that time instead of abuse of discretion standard may be an
remanding to the District Court, we would anachronistic vestige of an earlier version
have applied the “clear and indisputable” of § 455. Prior to 1974, § 455 provided in
standard that governs Petitions for a Writ its entirety that a judge had to “disqualify
of Mandamus. See Kerr v. U.S. Dist. Ct., himself in any case in which he has a
426 U.S. 394, 403 (1976). The abuse of substantial interest, has been of counsel, is
discretion standard, even though it may or has been a material witness, or is so
have led to the same result, would have related to or connected with any party or
had no application. his attorney as to render it improper, in his
opinion, for him to sit on the trial, appeal,
At oral argument, we asked the or other proceeding therein.” 28 U.S.C. §
parties to submit supplemental letters 455 (amended 1974) (emphasis added).
addressing the appropriate standard of Under that version, a judge had broad
review where, as here, a Petition for discretion to deny a recusal request even if
Mandamus seeking to disqualify a district the grounds for recusal were present. To
court judge precedes a ruling by the the extent judges continue to retain any
district court. Having reviewed the discretion under the post-1974 version of
submissions made by the parties, we now § 455, it is only to determine if the “facts
hold that Judge Wolin’s decision not to asserted as comprising bias, a forbidden
recuse himself must be reviewed for an financial interest, kinship, or the
abuse of discretion, as it is, in effect, no appearance of partiality bring the trial
different than an appeal from a district court judge within the disqualifying
15
Alexander, 10 F.3d at 163 n.9. American Bar Ass’n, 107
F.3d 1026, 1042 (3d Cir.
V. DISCUSSION 1997) (“The standard for
recusal is whether an
A. Standard for Disqualification Under objective observer
§ 455(a) reasonably might question
the judge’s impartiality.”).
Whenever a judge’s impartiality
“might reasonably be questioned” in a Selkridge, 360 F.3d at 167.
judicial proceeding, 28 U.S.C. § 455(a)
requires that the judge disqualify himself. A party moving for disqualification
The test for recusal under § 455(a) is under § 455(a) need not show actual bias
whether a reasonable person, with because § 455(a) “concerns not only
knowledge of all the facts, would fairness to individual litigants, but, equally
conclude that the judge’s impartiality important, it concerns ‘the public’s
might reasonably be questioned. confidence in the judiciary, which may be
Alexander, 10 F.3d at 164. irreparably harmed if a case is allowed to
proceed before a judge who appears to be
“Under § 455(a), if a tainted.’” Alexander, 10 F.3d at 162
reasonable man, were he to (quoting School Asbestos, 977 F.2d at
know all the circumstances, 776).
would harbor doubts about
the judge’s impartiality B. Who is the Hypothetical Reasonable
under the applicable Person under § 455(a)?
standard, then the judge
must recuse.” In re Judge Wolin’s opinion of February
Prudential Ins. Co. of 2, 2004 supporting his order denying the
America Sales Practices recusal motions held that the reasonable
Litigation, 148 F.3d 283, person under § 455(a) is someone “with
343 (3d Cir. 1998) (internal the professional skills and experience in
quotations omitted); see mass-tort [asbestos-related] bankruptcies
Massachusetts School of sufficient to understand the import of the
Law at Andover, Inc. v. facts presented,” thus excluding
“laypersons or attorneys not conversant
with the basics of mass-tort bankruptcy
definition.” 2 Steven Alan Childress & practice.” Owens Corning, 305 B.R. at
Martha S. Davis, Federal Standards of 190. In reaching that conclusion, Judge
Review § 12.05 (3d ed. 1999). If the Wolin reasoned that, “where proceedings
answer to that inquiry is “yes,” are by their nature inscrutable to outsiders,
disqualification must follow. the wider world must rely upon those
16
persons actually involved to report on straightforward in this case. The
those proceedings’ capacity to produce a gravamen of the Petitions is that Judge
fair result.” Id. Wolin was tainted by the involvement of
two court-appointed advisors who, at the
To the best of our knowledge, same time that they were supposed to be
Judge Wolin’s gloss on § 455(a)’s giving neutral advice in the Five Asbestos
“reasonable person” standard has no Cases, represented a class of tort claimants
precedent. It also appears to be in tension in another, unrelated asbestos-driven
with our observation in School Asbestos bankruptcy and espoused views therein on
that § 455(a) was enacted by Congress the same disputed issues that are at the
because “‘people who have not served on core of the Five Asbestos Cases.13
the bench are often all too willing to
indulge suspicions and doubts concerning We are confident that the average
the integrity of judges.’” School layperson could grasp this alleged
Asbestos, 977 F.2d at 782 (quoting impropriety and, after being fully
Liljeberg v. Health Servs. Acquisition informed of all the surrounding
Corp., 486 U.S. 847, 864-65 (1988)). circumstances, could draw a conclusion
Notably, the School Asbestos lawsuit was about Judge Wolin’s ability to render a
precisely the sort of complex, mass-tort fair and impartial decision. That being so,
litigation that Judge Wolin believed we perceive no reason to depart from the
required a more nuanced definition of the traditional “man on the street” standard.
reasonable person. See Moran v. Clarke, 296 F.3d 638, 648
(8th Cir. 2002) (using “average person on
Judge Wolin distinguished School the street” standard); Home Placement
Asbestos on the ground that the Serv., Inc. v. Providence Journal Co., 739
appearance of impropriety in that F.2d 671, 676 (1st Cir. 1984) (same);
case—the district court judge had attended Potashnick v. Port City Constr. Co., 609
a scientific conference organized by the F.2d 1101, 1111 (5th Cir. 1980) (same).
plaintiffs’ counsel—“was simple enough
for anyone to grasp.” Owens Corning, Judge Wolin’s definition of the
305 B.R. at 190. Judge Wolin’s hypothetical reasonable person is contrary
characterization suggests that the
perception of impropriety in the Five
Asbestos Cases is, by comparison, too 13
The Petitions also assert that
complex for the average person to Judge Wolin should be recused because of
comprehend. We cannot agree. his ex parte communications with the
Advisors and the parties, but that is
No one disputes that asbestos grounded primarily in § 455(b)(1), which
bankruptcies are complicated, but the does not employ a reasonable person
alleged perception of impropriety is fairly “perception” standard.
17
to the goal of § 455(a). An attorney Before we can decide whether the
familiar with asbestos bankruptcies reasonable person might question Judge
presumably would have a higher threshold Wolin’s impartiality, we must determine if
for conflicts and alleged improprieties his Advisors had a conflict of interest. If
than the average layperson. This not, then our inquiry comes to an end
contravenes the purpose of § 455, which is because the Petitioners will have failed to
“to promote public confidence in the show that they have a clear and
integrity of the judicial process.” indisputable right to disqualification. On
Liljeberg, 486 U.S. at 860 (citing S. Rep. the other hand, if there was a conflict, then
No. 93-419, p. 5 (1973); H.R. Rep. No. we must reach the question of whether that
93-1453, p. 5 (1974)). Accordingly, we conflict might be perceived by the
agree with the Fourth Circuit Court of reasonable person as having tainted Judge
Appeals that the hypothetical reasonable Wolin.
person under § 455(a) must be someone
outside the judicial system because Aside from the timeliness of the
judicial insiders, “accustomed to the recusal motions, the existence of a conflict
process of dispassionate decision making of interest by the Advisors may be the
and keenly aware of their Constitutional most sharply contested issue in these
and ethical obligations to decide matters proceedings. Judge Wolin explained in
solely on the merits, may regard asserted his written opinion that he was an asbestos
conflicts to be more innocuous than an “neophyte” when he assumed control of
outsider would.” United States v. the Five Asbestos Cases, and that he
DeTemple, 162 F.3d 279, 287 (4th Cir. brought the Advisors on board to “inform
1998); see also United States v. Jordan, the Court of the vast landscape of asbestos
49 F.3d 152, 156-57 (5th Cir. 1995) related issues that would permit the Court
(remarking that average person on street to make reasoned case management
“is less likely to credit judges’ impartiality decisions.” Owens Corning, 305 B.R. at
than the judiciary”); In re Mason, 916 198.
F.2d 384, 386 (7th Cir. 1990) (noting that
lay observer is less inclined to presume We conclude that two of the
judge’s impartiality than members of Advisors, Gross and Hamlin, did, in fact,
judiciary). Thus, we hold that the operate under a structural conflict of
appearance of impropriety must be viewed interests at the same time that they served
from the perspective of the objective, as Judge Wolin’s Advisors. This conflict
reasonable layperson, who is not arose from the dual roles they played in
necessarily familiar with asbestos the Five Asbestos Cases and the G-I
bankruptcies and litigation. Holdings bankruptcy.
C. Did the Advisors have a Conflict of On the one hand, Gross and Hamlin
Interest? clearly had a duty to remain neutral in the
18
Five Asbestos Cases and to provide counsel.14 In those roles, Gross and
objective, unbiased information to Judge Hamlin owed the future asbestos claimants
Wolin. As Judge Wolin stated in his in G-I Holdings a fiduciary duty to
original appointment order, the Advisors’ advance their interests and to see that they
role “was to advise the Court and to received the greatest possible share of the
undertake [certain] responsibilities, bankruptcy estate.15 To achieve that end,
including by way of example and not the very Advisors who were advising
limitation, mediation of disputes, holding Judge Wolin had to take positions in G-I
case management conference, and Holdings and the Five Asbestos Cases that
consultation with counsel . . . .” favored the future asbestos claimants. By
their very position as representatives of the
We would be hard pressed to future asbestos claimants in G-I Holdings,
overstate the importance of the Advisors’ Gross and Hamlin signaled to all that they
role in the Five Asbestos Cases. As a
result of their appointment, the Advisors 14
had a unique level of access to Judge As we noted earlier, W.R. Grace
Wolin. Indeed, Judge Wolin himself & Co.’s motion to appoint Hamlin as a
acknowledged in a fee allowance order Futures Representative was withdrawn in
that the Advisors “occup[ied] a unique light of Bankruptcy Judge Fitzgerald’s
position in the [Five Asbestos] cases not reaction.
shared by other persons” and that they 15
Some of the parties opposing
“function[ed] in a manner in all respects Judge Wolin’s disqualification have
similar to examiners as provided in the emphasized that the future claimants in G-
Bankruptcy Code.” The Advisors also I Holdings are, as yet, unidentified
had a unique level of influence over Judge individuals because they have not yet
Wolin, given the role they played at the developed any outward medical symptoms
outset of the Five Asbestos Cases in as a result of their exposure to asbestos.
educating Judge Wolin (a self-admitted We are not persuaded that this is a
neophyte) on all of the key asbestos- mitigating factor. Although the future
related issues. claimants are, by definition, a group of
unknown individuals, their interests in
On the other hand, Advisors Gross pursuing claims against the asbestos
and Hamlin also had a duty to act as manufacturers are clearly identifiable and,
zealous advocates for the future asbestos as such, Hamlin and Gross were duty-
claimants in the G-I Holdings bankruptcy. bound to further the claimants’ collective
Hamlin was at all relevant times the legal interests. In this sense, Hamlin and
representative of the present and future Gross’s role could be likened to that of a
asbestos personal injury claimants in G-I class representative and his attorney at the
Holdings and Gross served as his local inception of a class action lawsuit, before
the class members are identified.
19
could not be non-partisan, benign, or Despite his conclusion that “no
neutral. conflict exists,” Judge Wolin nevertheless
shares Hamlin’s concerns. Recognizing
Given their dual roles, we find that that “[t]he core task of any futures
Gross and Hamlin had a conflict of representatives is to determine claim
interest. The structural conflict arose validity and claim valuation” for future
primarily out of the close relationship claimants, Judge Wolin explains that no
between the future asbestos claimants and conflict materialized because “[t]he issues
the issues in the Five Asbestos Cases and of claim valuation and future claimant
G-I Holdings. In both proceedings, the versus present claimant equivalence have
debtors were leading manufacturers of been neither briefed nor joined” in the
asbestos products who were forced into Five Asbestos Cases. Owens Corning,
bankruptcy by a flood of asbestos-related 305 B.R. at 198. Judge Wolin’s
claims, including those of future claimants statements further demonstrate the tension
not yet identified. Consequently, many of between Hamlin’s and Gross’s dual roles
the same legal issues (e.g., bar dates, proof as advisors to Judge Wolin in the Five
of claim forms, medical manifestations, Asbestos Cases and Futures
etc.) either have arisen or will arise in both Representatives in G-I Holdings.
the Five Asbestos Cases and the G-I
Holdings bankruptcy. Both Judge Wolin If Gross and Hamlin were
and Advisor H amlin implicitly precluded from addressing issues such as
acknowledge that there existed a conflict bar dates and claim valuation, we cannot
of interest. Hamlin stated in his understand how it could be appropriate for
deposition that “[i]f any issue or any them to discuss other issues of importance
responsibility was sought from me [by to Futures Claimants in G-I Holdings. If
Judge Wolin] in regard to any issue that I both Hamlin and Judge Wolin would
felt impinged on by G-I stuff, I would question the Advisors’ ability to remain
have asked that assignment be given to neutral with respect to bar dates, a
somebody else.” Specifically, Hamlin reasonable person certainly would be
stated that “I wouldn’t have touched the suspicious of discussions with the
personal injury bar date issue . . . Advisors on potential affirmative defenses
[b]ecause that’s what I’m dealing with in to liability, the proper content of proof of
G-I.” While the parties opposing recusal claims forms, or the processes for
contend that this statement proves there estimating claims under 11 U.S.C. §
was no conflict of interest, it proves just 502(c). See supra at 10 (discussing the
the opposite. Had there been no conflict, subjects addressed in Judge Wolin’s ex
Hamlin would have perceived no need to parte meetings with the Advisors).
reject any assignments in the Five
Asbestos Cases. As discussed below in Section V-E,
these suspicions are heightened by the ex
20
parte nature of the communications Moreover, there is a substantial likelihood
between Judge Wolin and his Advisors. that many of the future claimants in G-I
We do not hold that ex parte Holdings will also be future claimants in
communications alone—in the absence of the Five Asbestos Cases because it is not
any conflict of interest—require recusal. unusual for asbestos claimants to bring
We emphasize that it is the conflict of claims against different asbestos
interest and not the particular specialty of manufacturers.
the neutral expert or advisor that concerns
us. A judge may engage an expert or As counsel for Kensington argued:
someone to assist him who has no conflict
and is “disinterested.” Here, however, we [I]t is our view that Judge
have concluded that the Advisors were Wolin has rendered a
conflicted and were not disinterested. number of rulings favorable
Hence, any decision by us that would to tort claimants after
preclude a judge from obtaining assistance discussions with the future -
from a non-conflicted advisor would - with the advisors who are
unnecessarily restrict a judge’s ability to Futures Representatives in
communicate with neutral experts. G-I.
Indeed, a judge may consult ex parte with
a disinterested expert provided that the Do I have a signed, sealed
judge “gives notice to the parties of the confession, we urged this
person consulted and the substance of the result on Judge Wolin and
advice, and affords the parties reasonable he then did it? No, I don’t
opportunity to respond.” Code of Conduct have that. But the problem
for U.S. Judges Canon 3 § A(4) (2003). here is a 455(a) problem.
A reasonable observer, * * *
understanding that certain issues were “off
limits,” would be concerned by the But this much is undeniable.
absence of any mechanism to police those On October 31st, 21 days
limits. Indeed, the record before the Court before that [Nov. 21] status
contains substantial evidence that these conference, Owens Corning
limits were, in fact, violated. Although circulated a draft plan of
Hamlin testified that a bar date was not reorganization that was met,
discussed by the Advisors, and although in letters in the record
Gross testified that he could not recall before you, with great
whether a bar date was discussed, the approval by the commercial
other three Advisors testified that the issue creditors and great
of whether and how to impose a bar date disapproval by the tort
was discussed with Judge Wolin. creditors.
21
After the November 21st Judge Wolin stated in his opinion
untranscribed hearing at that he met with the Advisors as a group
which we recall Judge on only four occasions for a total of
Wolin saying he did not like eighteen hours and that, after May 2002,
that plan, Owens Corning “the Advisors as a group became
went back and formulated a functionally obsolete despite their de jure
brand-new plan that is so existence.” Owens Corning, 305 B.R. at
favorable to the tort 200. Judge Wolin also emphasized that
claimants that they are his meetings with the Advisors consisted
coproponents of the plan. merely of discussions, which he defined as
This is two days after “consideration of a subject by a group; an
meeting with Mr. Gross, a earnest conversation,” and that he never
representative of future received any advice, which he defined as
claimants. There are real an “opinion about what could or should be
appearance problems here, done about a situation or problem.” Id. at
even if there are not certain 198 (citing American Heritage College
types of smoking guns. Dictionary 397, 20 (3d ed. 1993)).
(Transcript of April 19, 2003 Oral Judge Wolin’s distinction between
Argument at 47-48, 52-53.) Whether or discussions and advice cuts too fine a line.
not we reach the same conclusions that As Kensington points out, “[i]t is hard to
counsel did, the fact remains that the fathom why Judge Wolin wanted [a] crash
matters set forth in the depositions which course in asbestos litigation if not to assist
we ordered, which are too voluminous to him in deciding ‘the merits’ of ‘disputed’
duplicate here but which we have studied, issues that he could expect to face.”
do reflect that counsel’s view of the Indeed, the four meetings in early 2002
§ 455(a) problem is indeed accurate. between Judge Wolin and the Advisors
covered almost all of the major issues in
D. Did the Advisors’ Conflict Taint asbestos litigation, including the Rule 706
Judge Wolin? panel, claims bar date, claim forms,
pleural registries, fraudulent conveyance
We turn now to the question of claims, various defenses, claims
whether Gross’s and Hamlin’s conflict of estimation, trust distribution procedures,
interest irreversibly tainted Judge Wolin. tensions among the creditor classes, and
We obviously do not equate this “taint” of the asbestos claimants’ veto power under
Judge Wolin with any wrongdoing or bias 11 U.S.C. § 524(g).
on his part. We are fully aware that the
§ 455(a) standard asks only if a reasonable In deciding whether Gross and
person knowing all the circumstances Hamlin’s involvement in the Five
might question Judge Wolin’s impartiality. Asbestos Cases and interactions with
22
Judge Wolin leads to disqualification The same factors that required
under § 455(a), we find instructive the recusal in Hall apply here. Although
Fifth Circuit Court of Appeals’ decision in Gross and Hamlin were not law clerks per
Hall v. Small Business Administration, se, they were in some respects the
695 F.2d 175 (5th Cir. 1983). In that case, substantial equivalent of law clerks.17
the losing party moved after trial to Hamlin, for example, drafted legal
disqualify the judge and to vacate the opinions in each of the Five Asbestos
judgment because it came to light that the Cases for Judge Wolin. Thus, not only
judge’s law clerk had, among other things, was Hamlin the “legal researcher[] who
accepted, prior to the judgment being [sought] the authorities that affect[ed] the
entered, an offer to join the law firm judge’s decision,” but he was also the
which represented the winning party. Id. scrivener who, in the first instance, tried
at 178. The judge denied the motion on his hand at crafting the decision that, if
the ground that the law clerk had never accepted by Judge Wolin, would dispose
expressed an opinion to him about the of an appeal taken from the Bankruptcy
winning party and because the law clerk Court in one of the Five Asbestos Cases.
had accepted the offer of employment only See id. Moreover, Gross and Hamlin held
after the judge had made up his mind a special position of trust and influence
about the case and had written a rough because they, together with the other three
draft of the opinion. Id. Advisors, were perceived by Judge Wolin
On appeal to the Fifth Circuit, the
court reversed and entered an order recusal in First Interstate Bank of Arizona
disqualifying the judge. In reaching that v. Murphy, Weir & Butler, 210 F.3d 983
decision, the court remarked that the goal (9th Cir. 2000). There, a bankruptcy
of § 455(a) “is to exact the appearance of judge recused herself because her law
impartiality” and therefore it was, in the clerk had continued to have some contact
court’s opinion, immaterial “[w]hether or with a Chapter 11 bankruptcy proceeding
not the law clerk actually affected the after the law clerk accepted an offer to
judge’s decision.” Id. at 179. The court join the law firm representing the
also emphasized that law clerks hold a creditors. Id. at 985.
special position of trust and influence 17
The “hybrid” status of the
insofar that they are “sounding boards for Advisors has given us considerable
tentative opinions and legal researchers concern. That concern is expressed in
who seek the authorities that affect the note 20, infra. As counsel for Respondent
judge’s decision.”16 Id. Owens Corning admitted at our first
hearing, he had no knowledge of such a
hybrid status or of individuals having
16
The Ninth Circuit Court of assumed that status being asked to assist a
Appeals discussed a similar motion for judge.
23
as being experts in the asbestos litigation because they had been influenced by
field and depended on them to educate submissions from advocacy groups and
him on all the relevant issues. counsel supporting plaintiffs in other
lawsuits against the defendant.18 Id. at
There is, of course, nothing 261-62.
inherently wrong with appointing a panel
of experts. But when ex parte discussions The Edgar decision, like the Hall
between the judge and the panel veer into decision, is instructive in that the Seventh
the merits, recusal may follow. For Circuit Court of Appeals did not hesitate
example, in Edgar v. K.L., 93 F.3d 256 to disqualify the district court judge under
(7th Cir. 1996), a district court judge
appointed, with the parties’ consent, a
panel of experts. Although the parties 18
The Edgar court held that the
were aware that the panel had ex parte district court judge had acquired
meetings with the judge from time to time “personal” knowledge from the panel of
to discuss administrative matters, the experts, which is another way of saying
parties only discovered later that one of that the judge acquired information from
the meetings involved a discussion of the an extrajudicial source. Edgar, 93 F.3d at
merits and possibly a preview of the 259. The extrajudicial source doctrine, as
panel’s final report. Id. at 257-58. When it is commonly known, provided at one
the parties moved to disqualify the judge, time that recusal was not warranted unless
he blocked discovery and denied the the grounds for recusal emanated from an
motion. A petition for a writ of extrajudicial source (i.e., a source outside
mandamus in the Seventh Circuit Court of of the judicial proceedings at hand). See
Appeals followed. Id. at 257. Liteky v. United States, 510 U.S. 540, 544-
545 (1994). In Liteky, the Supreme Court
The Seventh Circuit issued a writ held that the extrajudicial source also
of mandamus disqualifying the judge. As applied to § 455(a), but it tempered its
to § 455(a), the court held: “A thoughtful effect by explaining that it was merely a
observer aware of all the facts . . . would factor and not a prerequisite for
conclude that a preview of evidence by a disqualification. Id. We agree with the
panel of experts who had become Edgar court that off-the-record
partisans carries an unacceptable potential discussions on substantive issues in
for compromising impartiality.” Id. at chambers constitute “personal” or
259-60 (citations omitted). The court also “extrajudicial” knowledge in the sense
noted that “[e]xperts appointed and that the information conveyed to the judge
supervised by a court carry special weight leaves no trace in the record and cannot
because of their presumed neutrality,” and “be controverted or tested by the tools of
that the panel of experts appointed by the the adversary process.” Edgar, 93 F.3d at
district court judge were not truly neutral 259.
24
§ 455(a) even though there was no Wolin, mediate disputes, hold case
evidence of actual bias. The theme management conferences, and consult
running through both Edgar and Hall is with the attorneys. Hamlin himself
that there is an almost irrebutable likened the powers that he exercised to
presumption that a judge is “tainted” and those of a magistrate judge. Given these
must be disqualified where, as here, he wide-ranging powers, surely the five
surrounds himself with individuals who Court-Appointed Advisors were under a
may not be truly disinterested. duty to maintain at least the degree of
neutrality normally required of law clerks
Some of the parties opposing Judge or court-appointed experts. However, that
Wolin’s disqualification attempt to neutrality was seriously compromised by
distinguish the Hall and Edgar decisions virtue of their participation in G-I
on the ground that the Five Asbestos Holdings, a bankruptcy involving many of
Cases do not involve a district court’s the same issues present in the bankruptcies
relationship with its law clerks or court- assigned to Judge Wolin, many of the
appointed experts. The Respondents same creditors, and possibly some of the
contend that court-appointed “Advisors,” same asbestos claimants.
such as Gross and Hamlin, are mere
consultants, of whom pure neutrality is not We also note that Kensington’s
required. Reply Brief emphasizes that over a 22-
month period Judge Wolin received
While the Respondents’ attempt to substantive information from:
distinguish Hall and Edgar has some
superficial appeal, we believe their • two Advisors (Gross and
approach values form over substance and Hamlin), who had a fiduciary duty in G-I
relies too heavily on overly-technical Holdings to advance the interests of the
categorizations. More importantly, it fails future asbestos claimants (Joint Appendix
to take into account the underlying (“JA”) 1545);
considerations that drove the courts’
decisions in Hall and Edgar. The primary • two Advisors (Gross and
concern in both Hall and Edgar is that a Hamlin), who had an incentive to make
party which held a special position of trust helpful precedent in the Five Asbestos
and influence over the judge was found to Cases, which they could then rely on (and
be not truly disinterested in the outcome of did rely on) in G-I Holdings in support of
the proceedings. The same can be said the future claimants (JA 1621, 978B, 980,
here. As court-appointed Advisors to 2728);
Judge Wolin, Gross and Hamlin were
given very broad powers. The order • three Advisors (Gross, Hamlin
appointing them provided, among other and McGovern) who met on multiple
things, that they could advise Judge occasions with the future representatives
25
in a wide range of asbestos-related cases (3d Cir. 1989) (disqualifying judge under
(including the Five Asbestos Cases), to § 455(a) because of ex parte
develop a common strategy with respect to communications). We have previously
pending asbestos legislation and to discuss described ex parte communications as
common issues (JA 1645); and “anathema in our system of justice.”
School Asbestos, 977 F.2d at 789. One
• two Advisors (Gross and leading reason is that ex parte meetings
McGovern) who allegedly breached their are often, as they were here, unrecorded.
duties as mediators by disclosing to Judge Consequently, there is no official record of
Wolin substantive positions of the what was said during those meetings. Of
mediating parties (JA 1393, 1409, 1412, even greater concern is the argument
1432).19 urged upon us by the Petitioners who,
without knowledge of what was discussed
Given the unique level of access at these meetings, contended that they
and influence that Gross and Hamlin had, could not respond to these “silent” facts.
the length of their appointment, and the As we explained in City of Pittsburgh v.
overlapping issues and clients, we find Simmons, 729 F.2d 953 (3d Cir. 1984):
that the reasonable person, with familiarity
of these circumstances, would conclude The record taken by a
that their conflict of interest tainted Judge certified court reporter is
Wolin. always the best evidence of
what has been said, what
E. The Ex Parte Communications actions have been taken,
Contributing to Taint and what rulings have been
made. “Meaningful review
The extensive ex part e requires that the reviewing
communications between Judge Wolin, on tribunal must be able to
the one hand, and the Advisors and review a decision of a trial
parties, on the other, further support court . . . to determine its
disqualification under § 455(a). See correctness and if necessary
United States v. Furst, 886 F.2d 558, 583 control the course of the
litigation whether by appeal
or by use of a writ . . . .”
19
Kensington alleges that Advisors Wood v. Zapata Corp., 482
Gross and McGovern, who served as F.2d 350, 358 (3d Cir.
mediators in the Owens Corning 1973) (Biggs, J.,
bankruptcy, improperly shared with Judge dissenting). Without a
Wolin information that they had gained record of the proceedings
from the parties during the course of “[w]e are left with
mediation. conflicting statements of
26
counsel which cannot be the public interest in truth and fairness”).
reconciled and, in any If judges engage in ex parte conversations
event, are not part of the with the parties or outside experts, the
record and therefore cannot adversary process is not allowed to
serve as a basis for function properly and there is an increased
adjudication.” Id. risk of an incorrect result.
. . . Indeed, the best Attuned to that concern, the Code
protection for the litigants, of Conduct for United States Judges
the bar, and the bench at cautions that a judge should “neither
trial and on appeal is a initiate nor consider ex parte
verbatim record. Rather communications on the merits, or
than having to speculate procedures affecting the merits, of a
upon what was said and the pending or impending proceeding.” Code
manner in which an of Conduct for U.S. Judges Canon 3 §
argument was made, the A(4) (2003). The rule is designed to
court then has before it, prevent all of the evils of ex parte
when a record is taken, the communications: “bias, prejudice,
exact words of counsel and coercion, and exploitation.” Jeffrey M.
the exact words and rulings Shaman et al., Judicial Conduct and
of the court. Thus, there is Ethics § 5.03 (3d ed. 2000). The Code
no need for characterization provides for only two narrow exceptions.
in affidavits or for First, “[a] judge may . . . obtain the advice
reconstruction at a later date of a disinterested expert on the law
of what the parties or court applicable to a proceeding before the
thought each said or meant judge if the judge gives notice to the
or what each intended. parties of the person consulted and the
substance of the advice, and affords the
Id. at 955-56. parties reasonable opportunity to
respond.” Code of Conduct for U.S.
The other problem is that ex parte Judges Canon 3 § A(4) (2003). Second,
communications run contrary to our “[a] judge may, with consent of the
adversarial trial system. The adversary parties, confer separately with the parties
process plays an indispensable role in our and their counsel in an effort to mediate or
system of justice because a debate settle pending matters.” Id.
between adversaries is often essential to
the truth-seeking function of trials. See Judge Wolin apparently recognized
Polk County v. Dodson, 454 U.S. 312, 318 the dangers of ex parte meetings, but
(1981) (“The system assumes that relied on two “safeguards” to minimize the
adversarial testing will ultimately advance risk. First, Judge Wolin explained that all
27
parties were welcome to participate in the meetings. Thus, the risk of an incorrect
ex parte meetings and “as one party left result was still present. This would be of
chambers, the next would arrive ready to little consequence if the ex parte meetings
debunk the ‘falsehood s’ of its had been limited to procedural matters, but
predecessor.” Owens Corning, 305 B.R. Judge Wolin himself explained that “[t]he
at 206. Second, Judge Wolin explained purpose of the ex parte meetings was to
that he was “no babe in arms.” Id. This ensure that each committee or corporate
characterization, which finds expression in constituency was afforded the opportunity
Judge Wolin’s February 2, 2004 opinion, to provide to the Court insights as to why,
is obviously in tension with his earlier in the competition for limited dollars, its
self-characterization as an asbestos claim was just.” (Supp. Resp. at 3.) In
“neophyte.” other words, the ex parte meetings went to
the very heart of the proceedings.
Unfortunately, we do not share
Judge Wolin’s confidence that these The ex parte meetings with the
safeguards adequately minimized the risks. parties are flawed because, as we have
Obviously Judge Wolin is correct when he explained, no opportunity existed for their
states that he is “no babe in arms,” but the adversaries to know precisely what was
same could be said of the overwhelming said, when it was said, by whom, and what
majority of Article III judges. Moreover, effect could be drawn from their offerings.
the Code of Judicial Conduct does not On the one hand, although all parties may
draw a distinction between newly- at one time or another have been invited to
appointed and veteran judges; the general an ex parte meeting with Judge Wolin, the
p r o h i b i t io n a g a i n st e x p a r t e probability of “slippage” and omission in
communications on the merits applies to the content of the material discussed,
all judges. whether procedural or substantive, was
evident. As we have stated, no one could
As for the second safeguard, we know what had been said or proffered. On
must first assume that all parties took the other hand, Judge Wolin’s ex parte
equal advantage of Judge Wolin’s meetings with the Advisors presented an
invitation to participate in ex parte even more egregious problem. The instant
meetings, even though experience informs record reveals a conflict as to what the
us that certain parties may be more Advisors brought to the meetings from
aggressive than others. But even if all their extrajudicial experience and, in the
parties met for the same amount of time case of Hamlin and Gross, from their
with Judge Wolin, there was no way for advocate roles in G-I Holdings, and the
them to adequately respond to or counter extent of their influence on the entire
facts presented by their adversaries process. We know, for instance, that
because they had no way of knowing what someone at one of the meetings
was said during those unrecorded disparaged a possible expert witness and
28
criticized a defense. Of equal concern is attorneys on an ex parte
the record’s disclosure that at a November basis, without permission of
19, 2002 meeting attended by Advisors adversary attorneys. Any
Gross, McGovern, and Dreier, matters of objection to such ex parte
substance were discussed, but we have no communications is deemed
knowledge about their content. The waived.
record is silent in this respect. Advisor
Dreier made notes in handwriting which While we have no record of any
are under seal and we find difficult to objections being registered at that time, we
comprehend. No discovery of that cannot regard the silence that
meeting was permitted by Judge Wolin. accompanied the preemptive statement
that “[a]ny objection to such ex parte
We have previously discussed the communications is deemed waived” as
distinction between our holding, that manifesting consent. To fulfill the
conflicted advisors who participate or principles and objectives of Canon 3 of
influence a judge requires the judge’s the Code of Conduct, which proscribes ex
disqualification, as distinct from an expert parte communications except with
or other assistant to the judge who is consent, affirmative consent is dictated.
disinterested and non-conflicted. It should The record reveals no such consent was
be understood that we do not hold that a ever given.
judge may not or should not have ex parte
meetings or communications with the Given all of these considerations,
parties or their counsel appearing before we are confident that the reasonable
him. However, the hallmark of such person would be troubled by the fact that
meetings or communications requires the so many communications between Judge
consent of the parties. We have pointed Wolin and Gross or Hamlin took place
out in this section that the Code of outside the presence of the parties. If the
Conduct for United States Judges structural conflict of interests gave Gross
proscribes ex parte communications and Hamlin a motive to give Judge Wolin
except where the judge has entered into less-than-neutral advice, it was the ex
them with the consent of all the parties. parte meetings that gave them the
opportunity. In the absence of the parties,
It will be recalled that Judge Wolin Gross and Hamlin were in a position to
stated at the December 2001 Case influence Judge Wolin without concern
Management Conference that: about judicial constraints or independent
challenges from those individuals or
In order to effectively case entities with a stake in the outcome of the
manage complex litigation,
it is necessary for the judge
to speak and/or meet with
29
Five Asbestos Cases.20 Notwithstanding that § 455 does
not contain an express timeliness
F. Were the Recusal Motions Timely requirement, the Courts of Appeals cases
Under § 455(a)? that have addressed the issue have
concluded that parties seeking
disqualification under § 455(a) should do
20
We have previously noted that so in a timely manner. See, e.g., In re IBM
the Advisors chosen by Judge Wolin were Corp., 45 F.3d 641, 643 (2d Cir. 1995); In
not of the judicial family in the sense that re Apex Oil Co., 981 F.2d 302, 304 (8th
they were neither magistrate judges, law Cir. 1992). The reason most often given
clerks, or special masters. As such, the for applying a timeliness requirement to
Advisors were not subject to the recusal motions is that “[t]he judicial
constraints imposed upon judicial process can hardly tolerate the practice of
personnel, either through the Code of a litigant with knowledge of circumstances
Conduct for United States Judges, the suggesting possible bias or prejudice
Code of Conduct for Judicial Employees, holding back, while calling upon the court
or Bankruptcy Rule 9003 (“Prohibition of for hopefully favorable rulings, and then
Ex Parte Contacts”). We do not imply that seeking recusal when they are not
because of their hybrid status as Advisors, forthcoming.” Smith v. Danyo, 585 F.2d
that the Advisors breached any of the rules 83, 86 (3d Cir. 1978). Yet timeliness, as
by which judicial personnel are bound. the Court in Danyo stated, is but one of
We cannot help but point out, however, the factors which engages a court’s
that judicial personnel could not have discretion in determining whether a judge
undertaken or been engaged in positions shall be relieved from its assignment. Id.
or other functions at odds with their
judicial position. We are obliged to look On remand, Judge Wolin concluded
with disfavor upon appointment of that the motions seeking his recusal were
personnel who have the access and untimely under § 455(a). In reaching that
influence with the judiciary that the holding, Judge Wolin charged that the
Advisors had and yet are not constrained Petitioners either knew or should have
from accepting positions that conflict with known about Gross and Hamlin’s
their advisory duties. See Code of participation in G-I Holdings long ago, but
Conduct for United States Judges Canon 3 waited until October 2003 to act on that
§ (B)(2) (stating that “[a] judge should information. Judge Wolin also questioned
require court officials, staff, and others the Petitioners’ true motivations for filing
subject to the judge’s direction and the recusal motions, claiming that they
control, to observe the same standards of were not based on ethical considerations
fidelity and diligence applicable to the but were strategic maneuvers by the
judge”) (emphasis added); see also Notes Petitioners calculated to gain a larger
4 and 18, supra. percentage of the bankruptcy estates,
30
either through a legislative solution or Holdings bankruptcy. While reviewing
through delay.21 that opinion, Brodsky noticed that Advisor
Gross was listed as the counsel for the
Judge Wolin and the parties Futures Representative. This, in turn,
opposing recusal have focused primarily prompted an investigation by Brodsky
on Mark Brodsky, the senior portfolio which disclosed Hamlin’s role in G-I
manager at Elliot Management, which Holdings. Brodsky’s claim that this was
provides services to Kensington’s parent the first time he learned of Gross and
companies. Brodsky testified that he first Hamlin’s participation in G-I Holdings is
learned about Gross and Hamlin’s corroborated by a September 24, 2003 e-
participation in G-I Holdings on mail in which Brodsky expresses shock at
September 24, 2003, a little more than two Gross’s involvement in G-I Holdings.
weeks before Kensington filed the first of
the recusal motions. Brodsky testified that It is not surprising, therefore, that
he acquired this knowledge from another Judge Wolin in his written opinion found
Owens Corning creditor who brought to that Brodsky (or, for that matter, D.K.
his attention an opinion issued in the G-I Acquisition Partners) did not have actual
knowledge of Gross or Hamlin’s
participation in G-I Holdings prior to
21
Congress has recently undertaken September 2003.22 He did conclude,
an attempt to improve the current asbestos however, that they either had constructive
litigation system. See 150 Cong. Rec. or imputed knowledge prior to September
S4103-S4114 (daily ed. Apr. 20, 2004). 2003.
Senator Hatch, Chairman of the Senate
Judiciary Committee, has introduced As we understand the phrase,
Senate Bill 1125, the Fairness in Asbestos constructive knowledge is “knowledge
Injury Resolution Act (“FAIR” Act), that one using reasonable care or diligence
which is designed to bring compensatory should have, and therefore that is
relief to those su ffering from attributed by law to a given person.”
mesothelioma and asbestosis. If enacted Black’s Law Dictionary 876 (7th ed.
in its current form, the bill would create 1999). Judge Wolin implied that Brodsky
for the benefit of asbestos victims a $114 had constructive knowledge of the
billion fund under the auspices of a Advisors’ conflict because: (a) Hamlin’s
streamlined no-fault system. See id.
Senator Frist has described this proposal
22
as “a substantially better means of At the hearing which Judge
obtaining compensation than through Wolin held in January 2004, he stated,
bankruptcy trusts.” Id. at S4105. Insurers when questioned if he disbelieved
and defendant companies for the most part Brodsky, “I don’t disbelieve Mr. Brodsky
support the bill. as a matter of fact.”
31
appointment as the Futures Representative Schreiber, 599 F.2d 534, 537 (3d Cir.
and Gross’s selection as local counsel in 1979), “sound p ublic policy
G-I Holdings was a matter of public considerations . . . militate for the
record; (b) asbestos-related trade adoption of a . . . rule that the parties
periodicals reported Hamlin and Gross’s should be apprised of any possible ground
involvement in G-I Holdings; and (c) for disqualification known privately to the
many of the attorneys involved in the Five judge.” The most compelling of these
Asbestos Cases knew about Hamlin or public policy considerations is that the
Gross’s involvement in G-I Holdings. As judge is in the best position to know of the
Judge Wolin explained it, “Brodsky circumstances supporting a recusal
surrounded himself with a coterie of motion. The Five Asbestos Cases are no
experienced and sophisticated lawyers exception.
who through even a modicum of effort
would have unearthed Hamlin’s and The record in this case
Gross’s G-1 appointments.” demonstrates that Judge Wolin knew
about Gross and Hamlin’s participation in
We believe Judge Wolin G-I Holdings from or near the inception of
improperly placed the burden on the Hamlin’s appointment as the Futures
Petitioners to uncover Gross and Hamlin’s Representative.23 Moreover, at least one
participation in G-I Holdings. Such a of the parties (USG Corp.) brought
requirement does not further the purpose Hamlin’s potential conflict to Judge
of § 455(a), which “mandates, at a Wolin’s attention in February 2002, more
minimum, the appearance of neutrality and than one-and-one-half years before
impartiality in the administration of Kensington filed its recusal motion.24 It is
justice.” Alexander, 10 F.3d at 157. In
the recusal context, we are satisfied that if 23
there is to be a burden of disclosure, that Gross submitted an affidavit
burden is to be placed on the judge to which declared: “At all relevant times,
disclose possi b l e g r o un d s f or Judge Wolin was aware of my
disqualification. See United States v. representation of Mr. Hamlin in G-I
Bosch, 951 F.2d 1546, 1555 n.6 (9th Cir. Holdings.” This was corroborated by
1991) (noting that § 455(a) “has a de facto Hamlin, who testified at his deposition
disclosure requirement.”); see also Parker that he informed Judge Wolin at the outset
v. Connors Steel Co., 855 F.2d 1510, 1525 that he was the Futures Representative in
(11th Cir. 1988) (recognizing that recusal G-I Holdings.
motion could have been avoided if judge 24
The record contains a stipulation
had disclosed grounds for recusal to signed by USG Corp.’s counsel which
parties). unequivocally states that USG Corp.
learned in January 2002 about Hamlin’s
As we stated in United States v. appointment in G-I Holdings. That same
32
undisputed, however, that Judge Wolin access to a burgeoning stream of
never disclosed to the parties, either on or information in the Five Asbestos cases
off the record, that Gross and Hamlin were does not naturally lead to the conclusion
actively participating as zealous advocates that they should have known about the
in G-I Holdings. participation of Hamlin and Gross in G-I
Holdings. We are persuaded that nothing
There may be instances in which short of actual knowledge of the facts
constructive knowledge is so pervasive giving rise to the recusal motions and the
that it is tantamount to actual knowledge, Petitions for Mandamus would satisfy the
but this is not one of those instances. See, § 455(a) timeliness factor here.
e.g., Nat’l Auto Brokers Corp. v. Gen.
Motors Corp., 572 F.2d 953, 958-59 (2d In addition to relying on
Cir. 1978) (finding that parties had constructive knowledge, Judge Wolin
constructive knowledge of judge’s former found that the Petitioners had imputed
affiliation with a large law firm located in knowledge of Gross and Hamlin’s
same community); Universal City Studios participation in G-I Holdings. “Imputed
v. Reimerdes, 104 F. Supp. 2d 334, 353 knowledge” means that knowledge
(S.D.N.Y. 2000) (same).25 The parties’ attributed to one person may be deemed to
give notice to another party.
month, Judge Wolin issued an order We agree with Judge Wolin that
appointing Hamlin to serve as a Special imputed knowledge can, under limited
Master in the USG Corp. bankruptcy. circumstances, render a recusal motion
Although USG Corp. acquiesced to that untimely. For example, when a party’s
appointment, it wrote Judge Wolin a letter attorney is aware of the grounds
expressing its concern that “an unsatisfied supporting recusal, but fails to act until the
party” might later try to overturn an judge issues an adverse ruling, the recusal
approved plan of reorganization by motion is not timely See, e.g., E. & J.
claiming that Hamlin was conflicted. Gallo Winery v. Gallo Cattle Co., 967
25
The parties opposing recusal F.2d 1280, 1295 (9th Cir. 1992) (denying
have directed our attention to In re Allied- as untimely motion for disqualification
Signal, Inc., 891 F.2d 967 (1st Cir. 1989), where party’s attorney knew about alleged
wherein the Court of Appeals for the First conflict but did not file motion until after
Circuit affirmed a district court judge’s judgment was entered against him). Aside
decision not to recuse himself based in from the fact that the attorney is only one
part on constructive knowledge. It is step removed from the client, the attorney
important to note, however, that this and client have an agency relationship and
observation was not made in the context
of a timeliness determination under §
455(a), but rather on assessment of the merits.
33
therefore any facts known by the attorney S.D.N.Y. 1992) (“The duty [of the
may generally be imputed to the client. committee and its counsel] extends to the
See Restatement (Second) of Agency § class as a whole, not to its individual
9(3) (1958) (“A person has notice of a fact members.”); In re Levy, 54 B.R. 805, 807
if his agent has knowledge of the fact . . . (Bankr. S.D.N.Y. 1985) (“Counsel for the
.”). creditors’ committee do not represent any
individual creditor’s interest in this case;
We do not, however, agree with they [are] retained to represent the entire
Judge Wolin that the recusal motions in unsecured creditor class.”). So while the
the Five Asbestos Cases present an Committee had a duty to represent the
appropriate avenue for imputing collective interests of the unsecured
knowledge to the Petitioners. There are creditors, it did not have the authority to
simply “too many dots that must be bind each individual creditor. This stands
connected” before the Petitioners can be in stark contrast to the attorney-client
deemed to have known about Gross and relationship we discussed above.
Hamlin’s participation in G-I Holdings.
For example, Judge Wolin determined that In looking at the issue of timeliness
knowledge could be imputed to through the lens of imputed knowledge,
Kensington through the law firm of Davis we find that the record in this case
Polk & Wardwell, which is lead counsel discloses facts that are too far removed
for the Unsecured Creditors Committee in and far too attenuated from the concept of
the Owens Corning bankruptcy. A Davis knowledge that would cause a party to
Polk partner testified that he received an e- take action to vindicate their interest. We
mail in October 2001 disclosing Hamlin’s have pursued the trail of imputed
appointment in G-I Holdings. Judge knowledge that the record has laid out
Wolin concluded that this constituted before us, and we are satisfied that the
notice to the Petitioners in Owens Corning knowledge allegedly imputed could not
because the Unsecured Creditors have led any of the participants to the
Committee and Davis Polk owed a point where they could be deemed to have
fiduciary duty directly to Kensington. “known” about the conflict of the
Advisors. If connecting the dots could not
While it is true that the Unsecured have led to such a conclusion, then it is
Creditors Committee in Owens Corning evident to us that in order to sustain the
represented Kensington’s interests in the principles of § 455(a), where a judge’s
Owens Corning bankruptcy, it is impartiality may appear to be questioned,
established that a Creditors Committee we must require actual knowledge (or its
owes a fiduciary duty to the unsecured undeniable equivalent) to be shown.
creditors as a whole, not to the individual Because the Petitioners in Owens Corning
members. See Drexel Burnham Lambert and W.R. Grace & Co. did not have actual
Group, 138 B.R. 717, 722 (Bankr. knowledge of the conflict of the Advisors
34
which we have discussed and which the stands in a different posture than does
record discloses, we hold that the motions Kensington or D.K. Acquisition Partners
seeking Judge Wolin’s recusal under § insofar as Judge Wolin’s disqualification
455(a) were timely. is concerned. The record reveals, with no
uncertainty, that Kensington and D.K.
G. Disqualification Under § 455(b)(1) Acquisition Partners did not have actual
knowledge of the Advisors’ conflict until
We express no view on the S eptember a n d O c t o b e r 2 0 0 3 ,
timeliness of the motions for respectively, and that they filed motions
disqualification under § 455(b)(1). As seeking Judge Wolin’s disqualification
mentioned above, the Petitioners also seek weeks later.
Judge Wolin’s disqualification under §
455(b)(1) on the basis of his ex parte On the other hand, USG became
communications with the Advisors, aware of the Advisors’ conflict in January
parties, and attorneys. Because we have 2002. See Note 25, supra. It did not take
determined that Judge Wolin must be any action, however, until after the
disqualified under § 455(a), there is no motions filed by Kensington and D.K.
need to reach the issues of timeliness or Acquisition gave rise to a similar motion
the merits of § 455(b)(1). See School by USG. We assume this is the reason
Asbestos, 977 F.2d at 781 (declining to why USG’s motion (and ensuing Petitions
reach § 455(b)(1) issue where for Mandamus) focused principally on
disqualification was warranted under § § 455(b)(1) and the ex parte
455(a)). Section 455(b)(1) is embraced communications that Judge Wolin had
within the perception that a reasonable with the Advisors, the parties, the
person might entertain that the judge’s attorneys, and others. We will not
impartiality might reasonably be speculate, however, on this score because
questioned.26 USG’s Petitions were also couched in
terms of § 455(a) and dealt as well with
VI. USG Debtors and the Official the Advisors’ conflict which we have
Committee of Unsecured Creditors discussed in connection with the
(collectively, “USG”) Kensington and D.K. Acquisition Partners
Petitions.
As we previously indicated, USG
If timeliness turned solely on
“actual knowledge” and constituted the
26
Because we are not addressing only factor we could consider in deciding
disqualification under § 455(b)(1), we whether to reach the merits of a recusal
express no view as to whether the claims motion, we might well have second
made by the Petitioners relying on § thoughts about relieving Judge Wolin of
455(b)(1) require disqualification. his assignment over the USG Corp.
35
bankruptcy. But as we explained earlier in decision that favored it.27 As USG’s
this opinion, timeliness is just one of the Unsecured Creditors Committee has
factors—albeit a significant one—which argued, § 455(a) contains no explicit
engages our discretion in determining timeliness requirement and “the
whether another judge should be assigned seriousness of the grounds for recusal that
to oversee the USG Corp. bankruptcy. See exist on this record far outweighs any
Danyo, 585 F.2d at 86. significance that might exist on the date
the Motion was filed.”28 If, as USG
As the Danyo Court noted and as claims, public policy is the polestar to
we have recounted, “[t]he judicial process which we must look, it is these concerns
can hardly tolerate the practice of a litigant of public policy that are implicated in
with knowledge of circumstances USG’s Petitions.
suggesting possible bias or prejudice
holding back, while calling upon the court First, Judge Wolin had issued just
for hopefully favorable rulings, and then one adverse ruling at the time that USG’s
seeking recusal when they are not motion was filed and, as mentioned, this
forthcoming.” Id. at 86. The Danyo ruling was favorable to USG. As both the
Court went on to caution circumspection USG Committee and USG Debtors have
by stating “[b]ut especially when the taken pains to point out, Judge Wolin has
circumstances giving rise to the charge of issued no substantive rulings in their case
bias occur or are discovered after the case at all, other than the one ruling which we
has commenced, timeliness should be have just recounted. Moreover, the
measured not in some absolute and Motions to Recuse filed by USG were
arbitrary manner from the date of filed only after the Owens Corning
discovery, but with respect to the future
stages of the case.” Id. at 86 (emphasis 27
added). Danyo then instructs us that we On February 19, 2003, Judge
are to consider an appropriate Wolin issued a case management order
accommodation between the competing instructing the USG Debtor to propose a
institutional interest in avoiding the bar date for asbestos cancer claimants and
appearance of impropriety, on the one proof of claim form. This ruling had been
hand, and avoiding the abuse of § 455(a) opposed by the asbestos claimants.
procedure, on the other. Cf. id. 28
Brief of Petitioner the Official
Committee of Unsecured Creditors of
The record informs us that the USG USG Corporation, et al. in Support of
debtors had one meeting with Judge Wolin Petitions for a Writ of Mandamus (citing
in early 2002. At the time that it filed its In re Edgar, 93 F.3d at 257 (noting that
motion to recuse Judge Wolin, it had “passage of time is not conclusive if the
received but one ruling in all the justification for disqualification is
intervening time, and that ruling was a compelling”)).
36
Petitioners and the W.R. Grace Petitioners We would be remiss if we did not
had filed theirs. It is of interest to note close this opinion, which concerns Senior
that insofar as the Petitions seeking District Judge Alfred M. Wolin, with
disqualification of Judge Wolin, none of thoughts that were so ably expressed years
them seeks to overturn any of his prior ago by our colleague, Senior Judge
rulings. Rather, the recusal proceedings Ruggero J. Aldisert. Judge Aldisert wrote
are concerned only with his continuing for the Court in Haines v. Liggett Group,
into the “future stages”of these cases. Inc., 975 F.2d 81, 98 (3d Cir. 1992), a
case which required the reassignment of
USG seeks Judge Wolin’s recusal another distinguished District Court
because, as we have been made aware Judge. The Court held in Haines that
during the discovery that took place after Judge Sarokin, the district court judge
our first hearing, the Advisors billed their who had to be reassigned, had exhibited
fees equally to each of the Five Asbestos the “appearance of partiality” in presiding
Cases on the theory that the issues over an action against the Tobacco
concerned each case equally. There is, Industry. We take the liberty of repeating
therefore, some logic in USG’s argument verbatim Judge Aldisert’s words as they
that it should be entitled to the same appeared in the Haines opinion because
remedy which we have decided is they are so appropriate and relevant here:
necessary in Owens Corning and W.R.
Grace. The right to trial by an
impartial judge “is a basic
We are not disposed to have the requirement of due
issue of timeliness trump what we have process.” In re Murchison,
concluded are the principles of § 455(a), 349 U.S. 133, 136, 75 S. Ct.
even though the record discusses no 623, 625, 99 L. Ed. 942
improper acts by Judge Wolin. In light of (1955). To fulfill this
the record that has been developed, and in requirement—and to avoid
light of the factors which have been both bias and th e
outlined in Danyo, supra, and their appearance of bias—this
application to USG, we are satisfied that, court has supervisory
in the unique context of this case, it is authority to order cases
appropriate for us to disqualify Judge reassigned to another
Wolin from administering the USG district court judge. Lewis
bankruptcy, just as we have disqualified v. Curtis, 671 F.2d 779, 789
him from administering the Owens (3d Cir.), cert. denied, 459
Corning and W.R. Grace bankruptcies. U.S. 880, 103 S. Ct. 176, 74
L. Ed. 2d 144 (1982).
VII. Therein we stated:
37
I mp a r t i a l i t y a n d t h e 15 years29 and is no stranger
appearance of impartiality to this court; he is well
in a judicial officer are the known and respected for
sine qua non of the magnificent abilities and
American legal system. In outstanding jurisprudential
Commonwealth Coatings and judicial temperament.
Corp. v. Continental On the basis of our
Casualty Co., 393 U.S. 145, collective experience, we
89 S. Ct. 337, 340, 21 L. would not agree that he is
Ed.2d 301 (1968), the incapable of discharging
United States Supreme judicial duties free from
Court stated: “[A]ny bias or prejudice.
tribunal permitted by law to Unfortunately, that is not
try cases and controversies the test. It is not our
not only must be unbiased subjective impressions of
but also must avoid even the his impartiality gleaned
appearance of bias.” after reviewing his
decisions these many years;
671 F.2d at 789. See also rather, the polestar is
Nicodemus v. Chrysler “[i]mpartiality and the
Corp., 596 F.2d 152, 157 appearance of impartiality.”
(6th Cir. 1979); United
States v. Robin, 553 F.2d 8, Haines, 975 F.2d at 98.
10-11 (2d Cir. 1977) (en
b a n c ) (per curi am) . VIII. CONCLUSION
Reassignment is appropriate
to “preserve not only the We conclude as follows:
reality but also the
appearance of the proper The Kensington, D.K. Acquisition
functioning of the judiciary Partners, and USG Corp. Petitioners have
as a neutral, impartial demonstrated a clear and indisputable
administrator of justice.” right to have the Writs of Mandamus
United States v. Torkington,
874 F.2d 1441, 1447 (11th
Cir. 1989). 29
Judge Wolin has been a federal
district court judge for seventeen years.
The district judge in Prior to joining the federal judiciary, he
this case has been a served as a judge on the County District
distinguished member of the Court and Superior Court of New Jersey
federal judiciary for almost for seven years.
38
issue. The record reveals that the Because Judge Wolin, a United
Advisors’ conflict, which cannot at this States District Court Judge from the
stage be disassociated from Judge Wolin District of New Jersey, was appointed in
as well as the ex parte meetings that the the District of Delaware as Coordinator of
Advisors and Judge Wolin participated in, Case Management for the Five Asbestos
reveal an abuse of discretion that requires Cases by the then-Chief Judge of this
disqualification. If these circumstances Court (Senior Judge Edward R. Becker),
were revealed to a reasonable person, it we deem it appropriate to file this Opinion
would undoubtedly lead to a perception and Writ of Mandamus with the present
that Judge Wolin’s impartiality might be Chief Judge of this Court (Judge Anthony
seriously questioned. J. Scirica) for either appointment or
reassignment of the Owens Corning, W.R.
As to Kensington, D.K. Acquisition Grace & Co. and USG Corp. bankruptcies
Partners, and USG Corp., who have asked to another judge within the Third Circuit
us to issue a Writ of Mandamus pursuant to 28 U.S.C. § 292(b).30
disqualifying Judge Wolin from further
presiding over the Owens Corning, W.R.
Grace & Co. and USG Corp. bankruptcies,
we will grant their request. In re Kensington Int’l Ltd.
Nos. 03-4212, et al.
We will take no action at this time
with respect to the Armstrong World
Industries, Inc. bankruptcy, but will
FUENTES, Circuit Judge, dissenting.
schedule appropriate briefing and
argument on the Petition for Mandamus In November 2001, then-Chief
filed by the Official Committee of Judge Becker of this Court ordered the
Unsecured Creditors of Armstrong World consolidation of the Five Asbestos Cases
Industries, Inc. on the grounds that “these bankruptcy
cases, which carry with them tens of
We will take no action in the thousands asbestos claims, need to be
Federal-Mogul Global, Inc. bankruptcy, consolidated before a single judge so that
leaving its administration with Judge
Wolin.
30
28 U.S.C. § 292(b) provides:
We will vacate any and all stays “The chief judge of a circuit may, in the
that we previously imposed on the District public interest, designate and assign
Court and Bankruptcy Court proceedings, temporarily any district judge of the circuit
so that the matters pending or to be to hold a district court in any district
brought before the District and within the circuit.”
Bankruptcy Courts may be resumed.
39
a coordinated plan for management can be A.
developed and implemented.” JA at 191.
First, I must disagree with my
Judge Becker stressed the magnitude of
colleagues’ conclusion that Gross and
this task, noting that because “a significant
Hamlin had a conflict of interest. The
portion of the asbestos cases in this
majority discerns that “Gross and Hamlin,
country are proceeding under the aegis of
did, in fact, operate under a structural
this litigation, I deem this assignment and
conflict of interest” arising “from the dual
consolidation critically important to the
roles they played in the Five Asbestos
administration of justice.” Id. at 191-92.
Cases and the G-I Holdings bankruptcy.”
Judge Wolin accepted this Court’s
Maj. Op. at 18. The majority agrees with
mandate and immediately set himself to
Petitioners that Gross and Hamlin are
the task of managing this unprecedentedly
conflicted by their futures representative
large asbestos bankruptcy litigation. My
roles because the issues in G-I overlap to
colleagues, disapproving of the manner in
such a great degree with those in the Five
which Judge Wolin executed his mandate,
Asbestos Cases. Specifically, the majority
have decided that he must be recused.
writes: “By their very position as
I disagree with this conclusion for representatives of the future asbestos
several reasons. First, I cannot concur that claimants in G-I Holdings, Gross and
a reasonable observer would perceive any Hamlin signaled to all that they could not
appearance of partiality on the part of be non-partisan, benign or neutral.” Maj.
Judge Wolin: specifically, I do not agree Op. at 19.
that the Advisors labored under any sort of
There is no doubt, as the Supreme
conflict, nor do I perceive Judge Wolin’s
Court recognized long ago, that “[c]ourts
practice of ex parte communications to
have (at least in the absence of legislation
warrant his recusal. I find it telling that
to the contrary) inherent power to provide
Petitioners have not asked, and the
themselves with appropriate instruments
majority has not seen a need, for any of
required for the performance of their
Judge Wolin’s prior rulings to be
duties. This power includes authority to
disturbed. In my view, this fact belies the
appoint persons unconnected with the
seriousness of the taint that Petitioners
court to aid judges in the performance of
have sought to ascribe to Judge Wolin’s
specific judicial duties, as they may arise
court. Second, the petitions for recusal in
in the progress of a cause.” In re Peterson,
this case are clearly untimely, and should
253 U.S. 300, 312 (1920) (Brandeis, J.)
be rejected on that basis alone.
(internal citations omitted). Although
Accordingly, I must respectfully dissent
“there is no statute which expressly
from my colleagues’ decision to recuse
authorizes” the appointment of the
Judge Wolin.
Advisors in this case, “the court possesses
I. the inherent power to supply itself with
this instrument for the administration of
40
justice when deemed by it essential.” 31 Id. d e b t o r -d e f e n d a n t ’ s C h a p t e r 1 1
The Advisors may well have been reorganization plan is confirmed, while
e x t r a o r d i n a r y a n d unp reced ente d future claimants are those who do not
appointments in this asbestos bankruptcy manifest any injury until after the plan is
proceeding, but this is a case of confirmed. Because asbestosis symptoms
e x t r a o r d i n ary a n d u n p r e c e d e n te d can take an extremely long time to
complexity and magnitude. In that light, I manifest themselves, and because the
cannot agree that a reasonable observer, whole point of Chapter 11 proceedings is
with knowledge of all of the relevant facts, to give the debtor finality as to pre-
would discern their role as creating any bankruptcy liabilities, future claimants are
appearance of partiality. given their own “futures representative.”
This representative is charged with
To see why this is true, one need
representing the interests of future
only look at the role of a futures
claimants, i.e., by maximizing their share
representative in asbestos bankruptcy
of the trust corpus. Much like unnamed
litigation. In an asbestos bankruptcy
class members are bound to the results of
proceeding, all present and future asbestos
a class action, a future claimant is bound
claims are steered away from the bankrupt
by the resolution to which his or her
debtor and applied to a properly funded
representative agrees. By definition,
trust approved by the bankruptcy court.
future claimants are unidentified during
Present asbestos litigants are those who
the plan process, so the futures
suffer asbestos-related injury before the
representative does not have any concrete
clients, only a nebulous “client” comprised
31 of latent future interests.
The Advisors appointed by Judge
Wolin were: 1) William Dreier, a retired Consequently, Gross and Hamlin do
New Jersey appellate judge and products not have any clients in G-I, nor will they
liability expert; 2) David Gross, a New have any clients by the point at which their
Jersey lawyer and mediator who had job in G-I is finished: their duty is to
previously served as counsel for both promote the collective interest of those
asbestos plaintiffs and defendants; 3) C. parties that will have future claims against
Judson Hamlin, a retired New Jersey the G-I post-confirmation trust. In other
Superior Court judge who had managed all words, Gross and Hamlin are charged with
asbestos litigation in New Jersey for a safeguarding future claimants’ “cut” of the
number of years; 4) John Keefe, a retired G-I trust. This duty does not place Gross
New Jersey appellate judge who had and Hamlin in a materially adverse
managed all asbestos litigation in New position to the estates in the Five Asbestos
Jersey for a different period of time; and 5) Cases, nor does it give them a direct
Francis McGovern, a Duke University law interest in manipulating those estates in
professor with his area of expertise in mass any way. See In re Marvel Entertainment
tort litigation.
41
Group, Inc., 140 F.3d 463, 476 (3d Cir. division of the trusts in the Five Asbestos
1998) (“one is a ‘disinterested person’ only Cases.
if he has no interest that is materially
Despite the total lack of
adverse to a party in interest in the
commonality among the parties and
bankruptcy”).
subject matter in G-I and the Five
Petitioners’ failure to point out any Asbestos Cases, the majority perceives the
interest held by Gross or Hamlin is appearance of a conflict because, as an
unsurprising, given that they do not asbestos bankruptcy case, G-I contains
represent any of the parties in the Five similar issues to those in the Five Asbestos
Asbestos Cases. While there may be some Cases. 32 In my view, this simply cannot
overlap among those who eventually share constitute grounds for a reasonable, fully
in the money set aside for future claimants informed observer to perceive a conflict,
in the Five Asbestos Cases and those who and the majority does not explain why it
share in the money set aside for future would constitute such grounds. It is true
claim ants in G-I , the “partie s” that decisions from Judg e W olin
t h e m s e l v es — t h e f u t u r e c l ai m a n t benefitting future claimants in the Five
interests—are distinct. The clear Asbestos Cases might benefit the G-I
distinction between the futures claimants future claimants, but this does not make
in G-I and those in the Five Asbestos Gross and Hamlin non-neutral as Judge
Cases is highlighted by the facts that future Wolin’s Advisors. Any person with
claimants in the Five Asbestos Cases could expertise in a given field invariably forms
be present claimants in G-I or vice versa, opinions about that field. For example,
and that Gross and Hamlin will not even judges are empowered to appoint attorneys
know which claimants fall into which as experts. It is almost certain that an
category until their roles are concluded. expert attorney will have opinions about
Moreover, the subject matters of
the cases are entirely different. As 32
The majority contends that
observed before, the G-I litigation is a
Hamlin and Judge Wolin implicitly
dispute over how to divide the assets of the
conceded a conflict when they stated that
G-I trust. Similarly, each of the Five
Hamlin would have had to recuse himself
Asbestos Cases is a dispute over how to
from any assignment in the Five Asbestos
divide the assets of the trust of one of the
Cases dealing too closely with G-I. Maj.
five debtors. In other words, the money at
Op. at 19. A reasonable observer,
stake in G-I has no relation whatsoever to
however, would not view Hamlin’s and
the money at stake in any of the Five
Judge Wolin’s cautious statement about
Asbestos Cases, and the responsibility held
self-recusal in hypothetical situations as an
by Gross and Hamlin to maximize future
admission that a structural conflict actually
G-I asbestos claimants’ share of the G-I
existed, or even that recusal would be
trust presents no duty with respect to the
mandatory in those hypothetical situations.
42
the matters within his or her expertise. informed judicial advisor (or judge). The
Accordingly, it is possible, if not probable, majority gleans an appearance of conflict
that the attorney will have opinions about from the mere existence of similarities
the merits of the case for which he or she between the Five Asbestos Cases and G-I,
is called. Furthermore, it is also possible, but a reasonable observer with knowledge
if not probable, that the practice upon of all relevant facts33 would easily pierce
which the attorney built his or her through these superficial similarities and
expertise will contain clients that would be conclude that there is no conflict.
benefitted by the judge’s ruling in a certain
B.
way. These are just natural consequences
of the attorney being an expert in his or her Because I find that Gross and
field, but would not cause the reasonable Hamlin were not conflicted by their roles
observer to demand the judge’s recusal in G-I, I find it necessary to briefly discuss
because the attorney is “conflicted.” Petitioners’ other allegations of conflict.
Similarly, a judge would obviously not The second purported conflict is the
have to recuse himself from all criminal attendance by Gross, Hamlin and
cases if his law clerk was committed to McGovern at the futures representatives’
working for the Federal Defender after his meetings. Petitioners assert that because
or her clerkship. Although the law clerk t h e m e e t i n g s in c l u d e d f u t u r e s
would arguably have an incentive to
promote pro-defendant precedent, no
reasonable observer would demand that 33
The majority correctly observes
the judge screen off the law clerk from all
that the reasonable person envisioned by §
criminal cases.
455(a) is a lay person, not a member of the
In short, there is no colorable basis asbestos bar. However, even if the District
for perceiving Gross and Hamlin to be Court’s description of the reasonable
“non-neutral.” They do not represent any person was technically wrong, the practical
parties in the Five Asbestos Cases, they do import of this mistake was minimal. As
not directly represent any interest respondents observe, the “reasonable
materially adverse to any of those parties, observer” in recusal cases must still have
and the subject matter of their “knowledge of all the facts.” In re
representation is wholly separate from the Kensington Int’l Ltd., 353 F.3d 211, 220
subject matter of the Five Asbestos Cases. (3d Cir. 2003) (emphasis added). Thus,
At most, Petitioners have shown that Gross although the reasonable person is a lay
and Hamlin have opinions about the person, the observer with which the Court
subject matter in front of them as a result is concerned is a lay person with complete
of their knowledge of asbestos litigation, knowledge of the demands and intricacies
but strong opinions about the law are to be of asbestos bankruptcy litigation, as well
expected in any well-educated and well- as the actual events that transpired in the
District Court.
43
representatives for the Five Asbestos Asbestos Cases were spun in any particular
Cases and had as their goal the promotion light to the Advisors. This case is
of future claimants’ interests in the therefore more like Bonds than School
planning of upcoming legislation, the Asbestos.
neutrality of the three Advisors was
Petitioners’ final three grounds of
compromised. Attendance at a conference
conflict are also unpersuasive. First,
or meeting where a particular point of
Petitioners’ argument that Gross’s
view is advocated or dominates the
advocacy for the Keene Creditors Trust
discussion, however, does not by itself
created a conflict fails for the same
create a reasonable question as to a judge’s
reasons that he and Hamlin were not
impartiality. United States v. Bonds, 18
conflicted by their roles in G-I. Second,
F.3d 1327, 1330-31 (6th Cir. 1994).
Petitioners allege that after Gross and
Going to such a conference creates no
McGovern acted as mediators, they
more of an appearance of bias than reading
divulged confidential information gathered
a law review article or book with the same
in that capacity from the parties to Judge
viewpoint. Id. at 1330-32.
Wolin, and that this constituted an ethical
In Bonds, the criminal defendants breach of their mediator duties. The
appealed a conviction based largely on record indicates that Gross made some
challenged DNA evidence, and then reports of his mediation discussions to
moved for rehearing en banc after losing Judge Wolin, and that McGovern did, in
the appeal. Id. at 1328. The defendants fact, report to the Advisors and Judge
unsuccessfully sought the recusal of an Wolin that the parties to an earlier
appellate judge from the en banc panel mediation in Owens Corning disagreed on
because that judge had attended a scholarly the extent of Owens Corning’s tort
conference in which the speakers liability, estimating it to be anywhere from
vigorously defended the FBI’s DNA $6 to 20 billion.34 Furthermore,
methods and denigrated defense counsel McGovern has testified that disclosures of
challenging those methods. Id. at 1329. In the mediation’s substance, even to the
refusing to grant the recusal motion, the decisionmaker in the case, are an ethical
Bonds court specifically distinguished In breach.
re School Asbestos Litig., 977 F.2d 764,
At most, Petitioners have shown
782 (3d Cir. 1992), on the grounds that the
that McGovern and Gross may have
conference in the latter case was actually
breached their ethical duties as mediators;
funded by the judge in that case, and
provided a pre-screening of the plaintiffs’
case on the actual facts of the case. 18
34
F.3d at 1330-31. This case has neither of Petitioners contend that this
these salient attributes, as there is no account is verified by Dreier’s notes, but
evidence that the actual facts of the Five Dr e ier’s pe nma nship ma ke s th is
impossible to confirm. JA at 3122-35.
44
however, Petitioners have not shown any Judge Wolin’s practice of ex parte
way in which this purported breach would communications contributed to an
actually constitute a conflict or an appearance of partiality: “If the structural
appearance of partiality on Judge Wolin’s conflicts of interest gave Gross and
part. Petitioners have no evidence that the Hamlin a motive to give Judge Wolin less-
mediations’ substance was conveyed to than-neutral advice, it was the ex parte
Judge Wolin in a manner that would bias meetings that gave them the opportunity.”
him in the Five Asbestos Cases. Indeed, Maj. Op. at 29. Of course, if there were no
as Judge Wolin has pointed out in his conflict to begin with, then Judge W olin’s
opinion, the total amount of Owens ex parte conferences with his Advisors
Corning’s liability was not the key were no more objectionable than any
settlement issue in the case; rather, judge’s ex parte communications with his
because the bankruptcy dispute is over the or her law clerks. Thus, the ex parte
distribution of the pie rather than its size, communications with the Advisors clearly
the truly sensitive information in this case did not provide any independent grounds
would be the parties complicated claims as for recusal.
to their shares of the estate.
While I share my colleagues’
Finally, Petitioners contend that wariness of the scope of Judge Wolin’s ex
Hamlin’s nomination as a futures parte contacts with the parties, I do not
representative in Grace created a conflict, find those contacts disturbing to the point
and that Hamlin admitted as much. of requiring his recusal under § 455(a).
Hamlin, of course, merely observed that if Petitioner USG’s brief implies that ex
he became the futures representative in parte contacts in themselves cause a
Grace, he would have to leave his Advisor judge’s impartiality to be reasonably
position. Hamlin’s observation, in fact, questioned. This blanket indictment of ex
highlights why his role in G-I did parte communications is belied by caselaw
not create a conflict here: as a Grace in both this Circuit and others. In re
futures representative, he would be Prudential Ins. Co. Am. Sales Practices
fighting with other creditors of Grace over Litig. Agent Actions, 278 F.3d 175, 182, n.
the proper distribution of the Grace estate. 5 (3d Cir. 2002) (stating that “any
As a G-I futures representative, in contrast, r e ason able a ttorn e y w o u l d h a ve
he has no direct interest in the division of understood that Judge Wolin could
the Grace estate. In conclusion, for the permissib ly engage in ex parte
reasons stated above, none of Petitioners’ communication in a complex class action”
arguments that a conflict existed is and noting recusal movant’s concession
persuasive. that premising his motion on Judge
Wolin’s ex parte contacts was baseless)
C.
(internal quotations omitted); Aiken
The majority also comments that County v. BSP Div. of Envirotech Corp.,
45
866 F.2d 661, 679 (4th Cir. 1989) (recusal the qualitative circumstances of the
inquiry based on ex parte contacts must contacts and their consequences in making
take all circumstances of contact into their decisions. In this case, Judge W olin
account). made his practice of using ex parte
communications widely known at the
Indeed, contrary to USG’s
outset of the bankruptcy proceedings, and
arguments, cases ordering recusal on the
the record indicates that while every single
basis of ex parte contacts did so based on
party did not participate, there was no
the contacts’ specific circumstances, not as
favoritism given to any particular bloc of
part of some general rule against ex parte
interests. JA at 1854-70. The only
contacts. In United States v. Kelly, 888
suspicious circumstance alleged by USG is
F.2d 732, 745 (11th Cir. 1989), for
that Judge Wolin issued a Case
example, the Eleventh Circuit recused the
Management Order favoring USG’s
judge in question because the judge
position on setting a bar date, had
communicated ex parte with a friend’s
numerous ex parte contacts with asbestos
wife regarding the friend’s decision to
claimants’ counsel, and then “retreated”
testify; indeed, the judge himself conceded
from enforcing the Case Management
the appearance of impropriety. Similarly,
Order. However, the Case Management
the School Asbestos court recused a trial
Order itself was not binding, but explicitly
judge who, in his personal capacity, had
described itself as a proposal that was
unwittingly attended a conference
subject to comment by all interested
sponsored by the plaintiffs in his case on
parties, after which it might not be
the very topics central to his case, funded
executed. JA at 286. In conclusion, there
by money he had approved for plaintiffs’
is noth ing ab out t he ex parte
fund. School Asbestos, 977 F.2d at 781-
communications in this case to warrant
82. In that case, we ruled that all of those
recusal.
facts in concert, combined with the judge’s
own recognition of a possible taint, D.
warranted recusal. Id. at 782-83. In other
Because I would reject Petitioners’
words, the ex parte contacts in those cases
§ 455(a) challenge, I reach the §455(b)(1)
possessed attributes that made them
challenge as well, and conclude that the ex
specifically vulnerable to allegations of
parte communications here do not warrant
bias.
recusal under § 455(b)(1). In relevant part,
In trying to analogize to these cases, 28 U.S.C. § 455(b)(1) demands a judge’s
USG makes much of the large number of recusal when “he has . . . personal
ex parte contacts in this case, but does not knowledge of disputed evidentiary facts
cite to any caselaw that indicates that the concerning the proceeding.” Accord
quantity of contacts is a factor in Kensington, 353 F.3d at 219, n. 6.
determining recusal. Rather, as indicated Canvassing caselaw from various
above, courts ordering recusal examined jurisdictions, Judge Wolin held that the
46
proscribed knowledge in § 455(b)(1) does 1322, 1329 (8th Cir. 1985) (same); United
not include information gained ex parte States v. Bailey, 175 F.3d 966, 969 (11th
within a judicial proceeding, generally Cir. 1999) (same); In re Beard, 811 F.2d
known facts, opinions on broad topics 818, 829, n. 16 (4th Cir. 1987) (knowledge
formed outside the courtroom, or acquired by judge through ex parte
irrelevant facts. Rather, the District Court communication did not fall under §
concluded, § 455(b)(1) mandates recusal if 455(b)(1) because it was acquired during
and only if “a specific, disputed fact at “the course of his judicial duties”); United
issue in the case was within the judge’s States v. Yousef, 327 F.3d 56, 170 (2d Cir.
prior, non-judicially acquired knowledge.” 2003) (same); United States v. Flowers,
JA at 104. Petitioners argue that ex parte 818 F.2d 464, 468-69 (6th Cir. 1987)
contacts are almost entirely forbidden by (recusal not warranted where “all the
§455(b)(1). Respondents counter that the information the judge acquired about the
District Court’s standard was basically case arose from his association with the
correct, and that § 455(b)(1) recusal is only proceeding”); In re Grand Jury 95–1, 118
triggered if a judge gains information on a F.3d 1433, 1438 (10th Cir. 1997)
disputed evidentiary fact outside of (information must be obtained outside
judicial proceedings, or if he shows actual course of judicial proceeding, such as “by
bias. witnessing the events at issue in the
proceeding”) (internal quotations omitted).
As discussed above, case law in this
Court casts doubt on Petitioners’ sweeping The Circuits also seem to agree
indictment of ex parte communications. with Respondents that recusal is only
See In re Prudential, 278 F.3d at 182, n. 5. appropriate under § 455(b)(1) when the
Furthermore, other Circuits unanimously knowledge gained is pertinent to a specific
support Respondents’ contention that disputed fact at issue in the case before the
§455(b)(1) recusal requires the “personal judge. United States v. DeTemple, 162
knowledge” to have its source outside of F.3d 279, 285 (4th Cir. 1998) (judge’s
the matter over which the judge is kno wle d g e o f f a c t s g ai n e d b y
presiding. Bogosian v. Woloohojian, 158 representation of one of defendant’s prior
F.3d 1, 11 (1st Cir. 1998) (information creditors did not require recusal because
gained by judge “acting in a judicial none of those facts was “a disputed
capacity . . . was not ‘personal’ knowledge evidentiary fact in the criminal trial”);
raising a recusal question”); Conkling v. United States v. Smith, 210 F.3d 760, 764
Turner, 138 F.3d 577, 592-93 (5th Cir. (7th Cir. 2000) (judge’s extrajudicial
1998) (same); Lac du Flambeau Band of knowledge that anhydrous ammonia is a
Lake Superior Chippewa Indians v. Stop dangerous substance did not justify recusal
Treaty Abuse–Wisc., Inc., 991 F.2d 1249, from sentencing defendant even though
1255-56 (7th Cir. 1993) (same); Hale v. danger posed by anhydrous ammonia was
Firestone Tire & Rubber Co., 756 F.2d material fact at issue because danger posed
47
was not in dispute). This Court has agreed broad proposition that any information
that the “disputed evidentiary facts” gained by the judge outside the adversarial
described in § 455(b)(1) are “matters process (i.e., ex parte) mandates recusal.
underlying the cause of action.” Plechner Rather, in Edgar the recused judge sent a
v. Widener College, Inc., 569 F.2d 1250, panel of appointed experts to personally
1263 (3d Cir. 1977). inspect the conditions of an Illinois mental
health facility that was found to be
Petitioners’ attempts to establish a
constitutionally infirm. Id. at 257. In
per se rule requiring recusal for ex parte
other words, the Edgar judge’s officers
communications are unavailing. For
obtained first-hand knowledge of disputed
example, they cite to Price Bros. Co. v.
evidentiary facts at the heart of the case,
Philadelphia Gear Corp., 629 F.2d 444,
and that circumstance squarely fits within
446 (6th Cir. 1980), but that case was not
the requirements for recusal outlined by
a recusal case, and dealt with a judge
Judge W olin in his opinion.
whose law clerk gathered facts through
first-hand observation of the allegedly Petitioners’ final attempt to create
defective pipe at the heart of the lawsuit; an unconditional nexus between ex parte
in other words, the judge gained communications and recusal lies in a
extrajudicial knowledge regarding a reference to the Code of Judicial Conduct,
disputed fact at the heart of the litigation. wh ich cautio ns ag ainst ex parte
The Price Bros. court explicitly stated, communications. Code of Conduct for
however, that “not every ex parte United States Judges, 175 F.R.D. 363,
communication to the trial court” is Canon 3(A)(4). However, the Code
impermissible. Id. Similarly, United tellingly leaves out ex parte
States v. Craven, 239 F.3d 91 (1st Cir. communications in its listing of grounds
2001), cited by USG, is not a recusal case for disqualification, refuting Petitioners’
either, and also stated “that not every ex claim that the Code endorses recusal based
parte contact between a judge and a court- on ex parte contacts. Id. at Canon 3(C).
appointed expert” is improper. Id. at 103, Furthermore, although the Code was
n. 3. Petitioners do cite a recusal case, largely codified in 28 U.S.C. § 455, see
Hathcock v. Navistar Int’l Transp. Co., 53 Ausherman v. Bank of Am. Corp., 216
F.3d 36, 41 (4th Cir. 1995), but in that F.Supp.2d 530, 531 (D. Md. 2002),
case the judge was recused on § 455(a) “violations of the Code do not necessarily
grounds because he had plaintiff’s counsel give rise to a violation of” that statute.
draft an opinion for him without informing Andrade v. Chojnacki, 338 F.3d 448, 459
opposing counsel. (5th Cir. 2003). Indeed, as Respondents
point out, the fact that Congress codified
The precedent most strongly urged
so much of the Code but did not codify the
by Petitioners as persuasive in this case is
prohibition on ex parte communications
Edgar v. K.L., 93 F.3d 256 (7th Cir. 1996),
evinces a Congressional judgment that ex
but even that case does not stand for the
48
parte communications do not warrant warrants recusal if the judge or an
recusal per se. In short, ex parte attendant officer could become a direct
communications must give the judge witness in the case. Because Petitioners
information on a specific disputed material cannot demonstrate such circumstances in
fact gleaned from outside the judiciary this case in regard to Judge W olin, his
process to warrant recusal under § recusal is not warranted under § 455(b)(1).
455(b)(1). 35
II.
Petitioners fail to show that Judge
Even if I believed that any of
Wolin gained any “personal” knowledge
Petitioners’ recusal arguments had merit, I
from outside judicial proceedings, as all of
would deny Petitioners’ motion as
the ex parte contacts in this case were
untimely.
conducted within the context of Judge
Wolin’s management of the case, as A.
announced in December 2001. Petitioners
Most troubling in this case is the
rely on Judge W olin’s statement that he
conduct of Petitioners USG and the USG
learned information that was “extra-
Unsecured Creditors. As the majority
judicial,” but Judge Wolin’s opinion
recognizes, both of these Petitioners knew
rejected the allegation that he learned any
of the Advisors’ alleged conflict in
information that was “extra-judicial” in the
January 2002. Furthermore, it is
sense prohibited by § 455(b)(1). USG also
undisputed that all parties knew of the ex
argues that if the ex parte communications
parte scheme in December 2001, at the
at issue in this case are not deemed
inception of Judge W olin’s control of the
e xtrajud icial, then no ex par te
Five Asbestos Cases. It is also undisputed
communication can ever justify recusal.
that no motion for recusal was made until
USG’s argument is overstated: ex parte
October 2003. This Circuit has joined
contacts are extrajudicial if they are
others in imposing a timeliness
received by a judicial officer in his
requirement on recusal motions. E.g.,
“personal” capacity, i.e., through first-hand
United States v. Rosenberg, 806 F.2d
perception of disputed matters such as in
1169, 1173 (3d Cir. 1986). In determining
Edgar. Put another way, § 455(b)(1)
whether a request for recusal is timely, the
Court considers the time elapsed between
the complained-of conduct and the motion,
35 the timeline of the case between the
Kensington also cites to Flamm,
conduct and the motion, and the effect of
Judicial Disqualification § 14.1, which in
recusal on the case going forward. Smith
turn cites to state law cases for the
v. Danyo, 585 F.2d 83, 86 (3d Cir. 1978);
proposition that ex parte contacts
Apple v. Jewish Hosp. and Med. Ctr., 829
demand recusal; § 455(b)(1), a federal
F.2d 326, 334 (2d Cir. 1987). These
statute, is clearly not implicated by these
factors, taken together, effectively
citations.
49
disallow recusal motions by “a litigant because Judge Wolin announced that all
with know ledge of c ircumstances objections would be deemed waived. I do
suggesting possible bias or prejudice not believe that a responsible attorney
holding back, while calling upon the court would have reasonably reacted to Judge
for hopefully favorable rulings, and then Wolin’s instruction in that manner. First,
seeking recusal when they are not Judge Wolin’s statement most naturally
forthcoming.” Smith, 585 F.2d at 86. indicates that under his announced
practice, any objections to any particular
USG and the USG Unsecured
ex parte communication would be waived,
Creditors perfectly fit the Smith court’s
not that parties could not voice their
description of the “sneak attack” litigant.
objections to the practice itself. Second,
Astonishingly, these two Petitioners kept
even if USG and the USG Unsecured
silent about the matters underlying their
Creditors felt that their objection would
motions for over 20 months. USG tries to
fail before Judge Wolin, attorneys
minimize the appearance of delay by
routinely make seemingly futile objections
observing that Judge Wolin’s December
for the purpose of preserving their
2001 statement only disclosed that he
objection on the record. See Lightning
would “sparingly” resort to ex parte
Lube, Inc. v. Witco Corp., 4 F.3d 1153,
communications, and alleging that it did
1181, n. 16 (3d Cir. 1993) (attorney’s
not know of the actual scope of the ex
failure to object not excused by belief that
parte communications until late 2003. As
objection would be futile). Third, even if
mentioned above, however, the quantity of
USG and the USG Unsecured Creditors
ex parte communications is irrelevant to
felt that objection would be futile, they had
USG’s claim: it is undisputed that USG
the available remedy that they have chosen
knew that Judge Wolin was (allegedly
to exercise now, two years later: a motion
improperly) engaging in ex parte
for recusal. In short, USG and the USG
communications to some extent for almost
Unsecured Creditors have no colorable
two years before it brought its motion to
excuse for why they did not proceed for
recuse, and that is the relevant measure of
more than 20 months with their efforts to
the time elapsed. USG cites to Edgar, 93
recuse Judge Wolin.
F.3d at 257, but in that case a one-year
delay in bringing the recusal motion was The majority seems to recognize
justified because the movants had only that USG and the USG Unsecured
recently discovered the objectionable Creditors have no excuse for their dilatory
qualitative nature of the ex parte contacts conduct, but then proceeds to excuse that
at issue. conduct anyway on the grounds that USG
had no improper motive for its recusal
USG and the USG Unsecured
motion. Specifically, the majority
Creditors also try to excuse their delay by
observes that the timeliness requirement
arguing that they did not feel empowered
was crafted largely to prevent parties from
to object to the ex parte communications
50
trying to recuse a judge once they felt that Accordingly, I would reject the § 455(a)
they were losing their case. The majority challenge to Judge Wolin’s ex parte
then accepts USG’s allegation that the only practice on timeliness grounds with respect
ruling made by Judge Wolin so far has to USG.36
been in its favor: the aforementioned
B.
February 2003 Case Management Order.
The majority concludes that, because USG Although I do not find the conduct
had not yet suffered any adverse ruling, it of the Petitioners in Owens Corning and
did not have the fear of losing that lays at Grace as clearly inexcusable as that of the
the heart of the timeliness requirement, Petitioners in USG, I would still find their
and that there is therefore no need to recusal motions untimely as well. The
enforce the timeliness requirement against recusal motion on ex parte grounds is
USG. clearly untimely for the reasons stated
earlier: namely, that all parties knew of
Of course, as USG has itself
Judge Wolin’s plan for ex parte
observed in its argument that it suffered
communications in December 2001. The
prejudice from the ex parte contacts, the
recusal motion on conflict grounds,
District Court eventually refused to
enforce that Case M anagement Order,
meaning that, in effect, the District Court
36
ruled against USG’s wishes. USG cannot, I would also find Petitioners’ §
on the one hand, claim in support of its 455(b)(1) claim untimely. Although no
recusal argument that it has perceived published decision from this Court has
Judge Wolin’s ex parte contacts as decided whether § 455(b) has a timeliness
predisposing him against USG, and then requirement, it is worth noting that almost
on the other hand, claim that Judge Wolin every other Circuit that has considered the
has shown no predisposition against USG question has implicitly or explicitly
to bolster its timeliness claim. In any recognized such a requirement. Apple,
event, even if USG had not suffered any 829 F.2d at 334 (applying requirement to
adverse rulings yet, it does not change the § 455(b) motion); Oglala Sioux Tribe of
fact that USG has no justification for its Pine Ridge Indian Reservation v.
delay in bringing its motion to recuse, as Homestake Mining Co., 722 F.2d 1407,
well as the fact that the delay to this case 1414 (8th Cir. 1983) (same); E. & J. Gallo
that will result from recusal will erase two Winery v. Gallo Cattle Co., 967 F.2d 1280,
years of case management. As this Court 1295 (9th Cir. 1992) (same); Summers v.
has previously noted, delay in this case Singletary, 119 F.3d 917, 920-21 (11th
could be catastrophic to many of the Cir. 1997) (explicitly rejecting argument
constituencies involved, and that issue that timeliness requirement applies only to
looms especially large in this timeliness § 455(a) motions and not § 455(b)
inquiry. Kensington, 353 F.3d at 224-25. motions); United States v. York, 888 F.2d
1050, 1054-55 (5th Cir. 1989) (same).
51
however, requires further discussion with (notice to creditors’ committee constituted
respect to the Owens Corning and Grace notice to individual creditors).
Petitioners. These Petitioners contend that
Imputing the Unsecured Creditors
their motion is timely because they did not
Committees’ knowledge to creditors
actually know of the alleged conflict until
makes sense. As a parallel example,
September 2003. I agree with the majority
Respondents point out that the Asbestos
that constructive knowledge is not
Claimants Committee is presumed to
sufficient to trigger timeliness concerns,
speak for all claimants; it would be
but that imputed knowledge can
staggeringly onerous to require notice of
sometimes be sufficient. However, I
relevant events to be given to all 200,000+
disagree with the majority’s conclusion
asbestos claimants rather than the
that we should not impute the Owens
Committee, which represents their
Corning and Grace Unsecured Creditors
collective interest. There is no reason why
Committees’ knowledge of the alleged
unsecured creditors should be given any
conflicts to the Owens Corning and Grace
different treatment than their asbestos
Petitioners.
claimant counterparts; to the contrary,
It is uncontroverted that the firms of given that in bankruptcy cases creditors
Davis Polk & Wardwell and Stroock & within each constituency change on a
Stroock & Lavan, counsels for the Owens regular basis, the necessity of using the
Corning and W.R. Grace Unsecured Unsecured Creditors Committee as a
Creditors Committees respectively, learned conduit of notice to unsecured creditors is
of the alleged conflicts no later than even more manifest. Indeed, the
January 2002. A party, of course, is streamlining function of these Committees
charged with the knowledge of its counsel. is largely their reason for existing in the
E.g., Veal v. Geraci, 23 F.3d 722, 725 (2d first place. Finally, imputing knowledge
Cir. 1994). Therefore, both of the from the Committees to individual
Unsecured Creditors Committees knew of creditors would safeguard the interests
the alleged conflicts. The Unsecured behind the timeliness requirement. In
Creditors Committees are fiduciaries of all particular, this rule would prevent
unsecured creditors, including Kensington Creditors Committees from strategically
and the Grace Creditors. Woods v. City preserving recusal claims by insulating
Nat’l Bank & Trust Co., 312 U.S. 262, 268 those claims from individual creditors, and
(1941); In re Mountain States Power Co., would encourage Creditors Committees to
118 F.2d 405, 407 (3d Cir. 1941). execute their duties to creditors more
Accordingly, notice to the Unsecured vigilantly.
Creditors Committees is the equivalent of
Kensington and the Grace Creditors
notice to Kensington and the Grace
cite authority purportedly against this rule,
Creditors. In re Harris Management Co.,
but the cited cases do not contradict the
Inc., 791 F.2d 1412, 1415 (9th Cir. 1986)
rule of imputing notice. In re Levy, 54
52
B.R. 805, 806-07 (Bankr. S.D.N.Y. 1985), consolidation, which was opposed by the
merely states the truism that a Committee bank creditors. Under the status quo, the
represents the collective interest of its bank creditors would get almost a full
members, rather than any member’s return on their credits; on the other hand,
individual interest. Kunica v. St. Jean under substantive consolidation, the debts
Fin., Inc., 63 F. Supp. 2d 342, 347 of all subsidiaries would be thrown into a
(S.D.N.Y. 1999), simply quotes the single bankruptcy estate with that of
underlying bankruptcy opinion, which in Owens Corning, putting the bank creditors
turn made its decision not to impute notice on an equal footing with all other creditors
on the grounds that the notice to the of Owens Corning. According to Judge
Committee in that case was oral and Wolin, the effect of consolidation on the
informal. Kunica v. St. Jean Fin., Inc., 233 banks would be to eliminate more than $1
B.R. 46, 57 (S.D.N.Y. 1999). Here, in billion in debt guaranteed by the Owens
contrast, Davis Polk and Stroock received Corning subsidiaries. The District Court
written notice of the alleged conflicts. In held a hearing in April 2003 on the
In re Masters, Inc., 149 B.R. 289, 292-93 substantive consolidation issue, and an
(E.D.N.Y. 1992), Petitioners’ next cited opinion was pending on that matter when
case, the court held that actual notice to Kensington asked for Judge W olin’s
individual creditors was required in the recusal. This set of facts and
specific context of Bankr. R. 9019(a). circumsta nc e s le a ds me to tw o
Finally, Petitioners cite to Maldonado v. conclusions. First, Kensington had an
Ramirez, 757 F.2d 48 (3d Cir. 1985), but incentive to seek Judge Wolin’s recusal: in
that case does not deal with creditors its moving papers, Kensington has
committees at all and is therefore indicated its belief that Judge Wolin has
inapposite. In conclusion, Stroock’s and implicitly promoted this claimant-friendly
Davis Polk’s knowledge of the alleged plan, and whether Kensington is correct or
conflicts should count as knowledge on the not, it has clearly shown that it finds Judge
parts of the Grace Creditors and Wolin to be ill-disposed to its interests.37
Kensington, and the motion to recuse on
conflict grounds is therefore untimely.
37
It is worth noting that although As for the Grace Petitioners,
Judge Wolin has not yet made any Judge Wolin observed that they were also
significant rulings in Owens Corning or holders of bank debt, and so they might
Grace, he was, at the time the recusal reasonably have feared a fate similar to
petitions were filed, on the cusp of issuing that anticipated by Kensington in Owens
a ruling on the issue of “substantive Corning. Furthermore, two of the Grace
consolidation.” After much debate, Owens Petitioners are themselves holders of
Corning had submitted a reorganization Owens Corning’s bank debt, meaning that
plan that incorp orated substantive they have the same interest in Owens
Corning that Kensington does.
53
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 tw o 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 regard ing Judge W olin’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.
54