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Cooke v. U.S., 267 U.S. 517, 45 S.Ct. 390, 69 L.Ed. 767 (U.S.Tex.

Apr 13, 1925) Certiorari to the United States Circuit Court of Appeals for the Fifth Circuit. Clay Cooke was adjudged in contempt, and to review a judgment of the Circuit Court of Appeals ( 295 F. 292), affirming the judgment, he brings certiorari. Reversed and remanded, with directions. **390 Clay Cooke and J. L. Walker were each sentenced to 30 days' imprisonment for contempt by the United States District Court for the Northern District of Texas. The case was taken on error to the Circuit Court of Appeals for the Fifth Circuit, which affirmed the sentence of Cooke and reversed that of Walker. By certiorari, Cooke's sentence was brought here. Walker was defendant in a series of suits growing out of the bankruptcy of the Walker Grain Company. One of the cases, numbered 984, after a long jury trial resulted in a verdict against Walker of $56,000. The next **391 day, while the court was open and engaged in the trial of another cause, and during a 10 minutes' recess for rest and refreshments, Walker, by direction of Cooke, delivered to the District Judge in his chambers, adjoining the courtroom, and within a few feet of it, a letter marked Personal, as follows: Fort Worth, Texas, February 15, 1923. Hon. James C. Wilson, Judge U. S. District Court, Fort Worth, Texas-Dear Sir: In re No. 985, W. W. Wilkinson, Trustee, v. J. L. Walker; in re No. 986, W. W. Wilkinson, Trustee, v. Mass. Bonding Company et al.; in re 266, Equity, W. W. Wilkinson, Trustee v. J. L. Walker; in re 69, Equity, Southwestern Telegraph & Telephone Co. v. J. L. Walker; in re No. 1001, in Bankruptcy, Walker Grain Company. Referring to the above matters pending in the District Court of the United States for the Northern District of Texas, at Fort Worth, I beg personally, as a lawyer interested in the cause of justice and fairness in the trial of all litigated matters, and as a friend of the judge of this court, to suggest that the only order that I will consent to your honor's entering in any of the above-mentioned matters now pending in your honor's court is an order certifying your honor's disqualification on the ground of prejudice and bias to try said matters. You having, however, proceeded to enter judgment in the petition for review of the action of the referee on the summary orders against the Farmers' & Mechanics' National Bank and J. L. Walker and Mrs. M. M. Walker, you, of course, would have to pass upon the motion for a new trial in those matters, and also having tried 984, W. W. Wilkinson, Trustee, v. J. L. Walker, you will, of course, have to pass upon the motion for a new trial in said cause. I do not like to take the steps necessary to enforce the foregoing disqualification, which to my mind, as a lawyer and an honest man, is apparent. Therefore, in the interest of friendship and in the interest of fairness, I suggest that the only honorable thing for your honor to do in the above-styled matters is to note your honor's disqualification, or, your honor's qualification having been questioned, to exchange places and permit some judge in whom the defendant and counsel feel more confidence to try these particular matters. Prior to the trial of cause No. 984, which, as just concluded, I had believed that your honor was big enough and broad enough to overcome the personal prejudice against the defendant Walker, which I knew to exist, but I find that in this fond hope I was mistaken, also my client desired the privilege of laying the whole facts before your honor in an endeavor to overcome the effect of the slanders that have been filed in your honor's court against him personally, and which have been

whispered in your honor's ears against him, and in proof of which not one scintilla of evidence exists in any record ever made in your honor's court. My hopes in this respect having been rudely shattered, I am to your honor's dignity as a judge and sense of fairness as a letter requested, and please indicate to me at the earliest pleasure with respect to the matters herein presented, so that avoided. With very great respect, I beg to remain, Clay Cooke them to court. The following statement shows in substance what then occurred: Judge Wilson: At this time I will call the contempt matter against Clay Cooke and J. L. Walker, attachment having been issued for these respondents. I have requested Judge J. M. McCormick, of Dallas, to be present and act as a friend of the court in this proceeding, and have also requested the district attorney, it being in its nature a criminal matter, to act.' Mr. Clay Cooke said that he had not known of the attachment until that morning, that he would like time to prepare for trial and get witnesses for their defense, that there might be extenuating circumstances which would appeal to the court's sense of fairness and justice in fixing whatever penalty might be imposed and that he had attempted to secure counsel, but through illness or absence of those he sought he had failed up to that time. Judge Wilson intimated that he would not postpone the matter, and said: There is just this question involved, and, as stated by counsel representing the court, these facts are within the personal knowledge of this court. Did you deliver this letter to the judge of this court? **392 Mr. Clay Cooke: Is your honor asking me? Judge Wilson: I am stating the question-and does that under the law constitute contempt? If you have any defense, you have not suggested any. This court would be glad to give you ample time to file any pleadings pertinent and secure any evidence that might support or tend to support it, but unless you desire now to state that you have some defense you care to file and present, and indicate what that defense is to this charge, then I shall direct that this proceeding go forward, and you are fully protected, since the higher courts are open to you to correct any error, even to the Supreme Court, that the judge of this court might commit here. Now if you have any defense that is pertinent to this order, state what it is. Mr. Cooke began to dictate a statement to be filed by him, to the effect that he and Walker believed that they had a good defense, and that the matters of fact stated in the letter as to the bias and prejudice of the judge were true. The Court: That does not constitute any defense. Mr. Clay Cook: I'll state, then, something otherwise-Judge Wilson: Repeating the insult does not constitute any defense. Mr. Clay Cooke: I am not trying to repeat the insult, if your honor please. * * * I am now stating my good faith. Judge Wilson: I mean this, that the court is not permitting it stated-you may, if you regard that as proper, you may state it in your bill of exceptions in now appealing purely man to do as in this moment your honor's further steps may be

concluding the record. Mr. Clay Cooke: That affiant had heretofore been on friendly relations with said Judge James C. Wilson-Judge Wilson: That is a matter that is wholly immaterial here; it don't make any difference how friendly. Mr. Clay Cooke: I am stating my good faith in writing the letter. And affiant believed in writing said letter that he would relieve the said judge of the embarrassment of filing the necessary statutory affidavits of disqualification, and if said letter-Judge Wilson: Now the court is not caring anything about your suggesting the disqualification of the court; that is your right before these important trials, but you did not avail yourself of that privilege. You understood as a lawyer how to proceed in order to suggest the disqualification of the judge. Mr. Clay Cooke: I am going to state why I did not proceed-Judge Wilson: That does not constitute any defense to this contempt charge. Mr. Clay Cooke: Can I put that in about writing the letter? Can I put that in later? Judge Wilson: You may. Mr. Clay Cooke: That affiant wrote said letter without any intention on his part of incurring contempt proceedings, and without any thought of contempt, and believed that said letter would not be so construed; that affiant has the highest regard for this court as a judge; that affiant believed in good faith the court had heard things concerning-- Then Mr. McCormick, for the court, interposed an objection that there ought not to be an accentuation of the contempt in the letter by a repetition of innuendoes and reflections on the court or by including them in the record. Mr. Clay Cooke said he had dictated and sent the letter reputable counsel, who had read it and believed it proper. The letter itself was not carefully read by myself. Judge Wilson: I would like to know who said reputable counsel are. Mr. Clay Cooke said it was his partner, Mr. Dedmon. He said the letter was dictated, and was not read by his client, J. L. Walker; that he had not made the contents public, and intended it only for the judge's eye, to relieve him from embarrassment; that the purpose was most friendly. After repeating a desire for counsel and the investigation as to the law of contempt in its application to this case, Mr. Cooke referred to the statement he had been attempting to dictate, and asked that he might make it fuller, because of certain interruptions, and to put in anything relevant to his defense. You may add-I have not heard any defense suggested here yet, but you may add any, however, if you think of any later. Read the order, Mr. District Attorney. The district attorney then read the order for the arrest of the defendants set forth in the record in said cause; the defendants were directed to stand up and the court addressed them as follows: after advising with

Judge Wilson: The findings of fact, all of which are within the personal knowledge of this court, will be made in the order entered: Now, gentlemen, it is a matter almost of common knowledge that the court may be lawfully criticized, the same as any other branch of the government, and that it is not unlawful or a contempt of the court for any person, including newspapers, to pass criticisms upon the judiciary, including the federal courts and the judges, regardless of their truth or falsity, when those criticisms are concerning past matters not at the time pending in the courts. This law is based upon sound principle. Every branch of the government needs constructive criticism; when it is such, it is wholesome and helpful; no judge, I think, welcomes it more nor fears it less than the judge of this court. But it is altogether a different proposition, and is unlawful and clearly constitutes a contempt of court, for any litigant or attorney to pass such in the presence of the court, not in a respectful, but in a contemptuous and slanderous manner, concerning matters then pending and later to be disposed of by the court. And I have some more things I should like to remind you gentlemen of, your conduct and course as litigant and as an attorney of this court, in many respects, has been reprehensible. You have filled your pleadings with scandalous charges against trusted officials of this court. You have charged that the referee in bankruptcy, the attorneys for the petitioning creditors, and the trustee in bankruptcy entered into a corrupt conspiracy to do many unlawful things, all to deprive you, J. L. Walker, of your rights in this court. And not only that, but while the jury were deliberating in cause No. 984, and though in charge of the marshal of this court, you, both of you being a party to it, employed a private detective to follow and shadow them, with a view of reporting to you any corrupt conduct on their part; and you, J. L. Walker, after the jury had rendered its verdict of $56,000 against you, you employed this same detective, whose sworn statement I hold in my hand, to follow the foreman of the jury, Mr. E. G. Thomas, an honorable and respected citizen of Tarrant county, stating that you expected him to meet some one and be paid off-in other words, to receive bribe money for his verdict in said cause. And not only that, but you gave this same private detective to understand that another one of the jurors, an honorable citizen of Parker county, had been improperly approached and influenced as a juror in this case-Mr. J. L. Walker: Your honor, pardon me, but I would like to state that J. L. Walker did but what he is in position to prove and I have it in my pocket-Mr. Marshal, cause this man to desist. Mr. J. L. Walker: I beg your pardon; I thought I had the right to speak now. Judge Wilson: No; you haven't got a right. Your time to reply is passed. In view of all this, it is not surprising that you men would deliver this letter to the court with the utterly false statement in it that this court had permitted himself to be improperly influenced and whispered to by interested parties against a litigant in this court. It is a simple and easy matter to analyze the character of any man who is expecting every other man to act dishonestly and corruptly. Your whole course, as I say, has been contemptible, not only in this matter, and it is not surprising that you delivered this letter to the court, and is surprising that you did not state more in the letter, and of course you are in contempt; if you are not, you have your remedy; and you, J. L. Walker, I sentence to the Tarrant county jail for 30 days and the payment of a $500 fine-Mr. McCormick: I doubt whether your honor has the authority to assess both fine and imprisonment. The statute says you may punish by fine or imprisonment. I believe I would suggest that you visit such fine as you see fit, or such

imprisonment, but not both. Judge Wilson: I assess a punishment of 30 days against each of these respondents. Mr. Cooke asked that a bond be fixed pending appeal. Mr. McCormick: An appeal does not lie in such a case. The evidence, gentlemen, if at all, must be reviewed by writ of error, if reviewed at all. Mr. Clay Cooke: The statement of the court is he will consider a writ of error or appeal. In this case we will have 60 days-Judge Wilson: Take these respondents to jail, Mr. Marshal. Mr. McCormick: If they are going to take the full 60 days on the matter-Judge Wilson: No; there is not going to be any 60 days; the higher court is going to pass upon this matter at once. * * * Mr. Dedmon: Did your honor fix the amount of the bond? Judge Wilson: One thousand dollars. I am not allowing them bond, not releasing the defendants. It is a writ of error bond. Mr. Dedmon: You mean you are not going to let them appeal from the order adjudging them to spend 30 days in jail? Judge Wilson: If they perfect this appeal, I might release them from jail-show that they are going to appeal it, and do it in a hurry. Whenever a party to any action or proceeding, civil or criminal, shall make and file an affidavit that the judge before whom the action or proceeding is to be tried or heard has a personal bias or prejudice either against him or in favor of any opposite party to the suit, such judge shall proceed no further therein, but another judge shall be designated in the manner prescribed in the section last *533 preceding, or chosen in the manner prescribed in section twenty-three, to hear such matter. Every such affidavit shall state the facts and the reasons for the behalf that such bias or prejudice exists, and shall be filed not less than ten days before the beginning of the term of the court, or good cause shall be shown for the failure to file it within such time. No party shall be entitled in any case to file more than one such affidavit; and no such affidavit shall be filed unless accompanied by a certificate of counsel of record that such affidavit and application are made in good faith. It is said that all that the petitioner intended to do by this letter was to advise the court of the desire of his client to have another judge try the four cases yet to be heard, and of his own desire to avoid the necessity of filing an affidavit of bias under the above section in those cases by inducing the regular judge voluntarily to withdraw. **394 Had the letter contained no more than this, we agree with the Circuit Court of Appeals that it would not have been improper. But we also agree with that court that the letter as written did more than this. The letter was written the morning after the verdict, in the heat of the petitioner's evident indignation at the judge's conduct of the case and the verdict. At least two weeks would elapse before it was necessary to file an affidavit of bias in the other cases.FN1The letter was written and delivered pending further necessary proceedings in the very case which aroused the writer's anger. While it was doubtless intended to notify the judge that he would not be allowed to sit in the other cases, its tenor shows that it was also written to gratify the writer's desire to characterize in severe language, personally *534 derogatory to

the judge, his conduct of the pending case. Though the writer addressed the judge throughout as your honor, this did not conceal, but emphasized, the personal reflection intended. The expression of disappointed hope that the judge was begenough and broad enough to overcome his personal prejudice against petitioner's client, and that the client would have the privilege of rebutting the whispered slanders to which the judge had lent his ear, and the declaration that his confidence in the judge had been rudely shattered, were personally condemnatory and were calculated to stir the judge's resentment and anger. Considering the circumstances and the fact that the case was still before the judge, but without intending to foreclose the right of the petitioner to be heard with witnesses and argument on this issue when given an opportunity, we agree with the Circuit Court of Appeals that the letter was contemptuous. But, while we reach this conclusion, we are far from approving the course of the judge in the procedure or absence of it adopted by him in sentencing the petitioner. He treated the case as if the objectionable words had been uttered against him in open court To preserve order in the courtroom for the proper conduct of business, the court must act instantly to suppress disturbance or violence or physical obstruction or disrespect to the court, when occurring in open court. There is no need of evidence or assistance of counsel before punishment, because the court has seen the offense. Such summary vindication of the court's dignity and authority is necessary. It has always been so in the courts of the common law, and the punishment imposed is due process of law. Such a case had great consideration in the decision of this court in Ex parte Terry, 128 U. S. 289, 9 S. Ct. 77, 32 L. Ed. 405.It was there held that a court of the United States, upon the commission of a contempt in open court, *535 might upon its own knowledge of the facts, without further proof, without issue or trial, and without hearing an explanation of the motives of the offender, immediately proceed to determine whether the facts justified punishment and to inflict such punishment as was fitting under the law. The important distinction between the Terry Case and the one at bar is that this contempt was not in open court. This is fully brought out in Savin, Petitioner, 131 U. S. 267, 9 S. Ct. 699, 33 L. Ed. 150.The contempt there was an effort to deter a witness in attendance upon a court of the United States in obedience to a subpoena, while he was in a waiting room for witnesses near the courtroom, from testifying and the offering him money in the hallway of the courthouse as an inducement. This was held to be misbehavior in the presence of the court, under section 725, R. S. (now section 268 of the Judicial Code [Comp. St. 1245]). The court, speaking by Mr. Justice Harlan, said (page 277 [ 9 S. Ct. 702]): We are of opinion that, within the meaning of the statute, the court, at least when in session, is present in every part of the place set apart for its own use, and for the use of its officers, jurors and witnesses, and misbehavior anywhere in such place is misbehavior in the presence of the court. It is true that the mode of proceeding for contempt is not the same in every case of such misbehavior. Where the contempt is committed directly under the eye or within the view of the court, it may proceed upon its own knowledge of the facts, and punish the offender, without further ther proof, and without issue or trial in any form (Ex parte Terry, 128 U. S. 289, 309); whereas, in cases of misbehavior of which the judge cannot have such personal knowledge, and is informed thereof only by the confession of the party, or by the testimony under oath of others, the proper practice is, by rule or other process, to require the offender to appear and show cause why he should not be punished. 4 Bl. Com. 286.' *536 This difference between the scope of the words of the statute in the presence of the court, on the one hand, and the meaning of the narrower phrase, under the eye or within the view of the court, or in open court, or in the face of the court, or in facie curiae, on the other, is thus clearly indicated, and is

further elaborated in the opinion. We think the distinction finds its reason, not any more in the ability of the judge to see and hear what happens in the open court than in the danger that, unless such an open threat to the orderly procedure of the court and such a flagrant defiance of the person and presence of the judge before the public in the very hallowed place of justice, as **395 Blackstone has it, is not instantly suppressed and punished, demoralization of the court's authority will follow. Punishment without issue or trial was so contrary to the usual and ordinarily indispensable hearing before judgment constituting due process that the assumption that the court saw everything that went on in open court was required to justify the exception; but the need for immediate penal vindication of the dignity of the court created it. When the contempt is not in open court, however, there is no such right or reason in dispensing with the necessity of charges and the opportunity of the accused to present his defense by witnesses and argument. The exact form of the procedure in the prosecution of such contempts is not important. The court, in Randall v. Brigham, 7 Wall. 523, 540 (19 L. Ed. 285), in speaking of what was necessary in proceedings against an attorney at law for malpractice, said: All that is requisite to their validity is that, when not taken for matters occurring in open court, in the presence of the judges, notice should be given to the attorney of the charges made and opportunity afforded him for explanation and defence. The manner in which the proceeding shall be conducted, so that it be without oppression or unfairness, is a matter of judicial regulation. *537 The court in Savin, Petitioner, 131 U. S. 267, 9 S. Ct. 699, 33 L. Ed. 150, applied this rule to proceedings for contempt. Due process of law, therefore, in the prosecution of contempt, except of that committed in open court, requires that the accused should be advised of the charges and have a reasonable opportunity to meet them by way of defense or explanation. We think this includes the assistance of counsel, if requested, and the right to call witnesses to give testimony, relevant either to the issue of complete exculpation or in extenuation of the offense and in mitigation of the penalty to be imposed. See Hollingsworth v. Duane, 12 Fed. Cas. 359, 360; In re Stewart, 118 La. 827, 43 So. 455; Ex parte Clark, 208 Mo. 121, 106 S. W. 990, 15 L. R. A. (N. S.) 389. The proceeding in this case was not conducted in accordance with the foregoing principles. We have set out at great length in the statement which precedes this opinion the substance of what took place before, at, and after the sentence. The first step by the court was an order of attachment and the arrest of the petitioner. It is not shown that the writ of attachment contained a copy of the order of the court, and we are not advised that the petitioner had an exact idea of the purport of the charges until the order was read. In such a case, and after so long a delay, it would seem to have been proper practice, as laid down by Blackstone (4 Commentaries, 286), to issue a rule to show cause. The rule should have contained enough to inform the defendant of the nature of the contempt charged. See Hollingsworth v. Duane, 12 Fed. Cas. 367, 369.Without any ground shown for supposing that a rule would not have brought in the alleged contemnors, it was harsh under the circumstances to order the arrest. After the court elicited from the petitioner the admission that he had written the letter, the court refused him time to secure and consult counsel, prepare his defense, and call witnesses, and this, although the court itself *538 had taken time to call in counsel as a friend of the court. The presence of the United States district attorney also was secured by the court on the ground that it was a criminal case. The court proceeded on the theory that the admission that the petitioner had

written the letter foreclosed evidence or argument. In cases like this, where the intention with which acts of contempt have been committed must necessarily and properly have an important bearing on the degree of guilt and the penalty which should be imposed, the court cannot exclude evidence in mitigation. It is a proper part of the defense. There was a suggestion in one of the remarks of the petitioner to the court that, while he had dictated the letter, he had not read it carefully, and that he had trusted to the advice of his partner in sending it; **but he was not given a chance to call witnesses or to make a full statement on this point. He was interrupted by the court, or the counsel of the court, in every attempted explanation. On the other hand, when the court came to pronounce sentence, it commented on the conduct of both the petitioner and his client in making scandalous charges in the pleadings against officials of the court, and charges of a corrupt conspiracy against the trustee and referee in bankruptcy, and of employing a detective to shadow jurymen while in charge of the marshal, and afterwards to detect bribery of them, in proof of which the court referred to a sworn statement of the detective in its hands, which had not been submitted to the petitioner or his client. When Walker questioned this, the court directed the marshal to prevent further interruption. It was quite clear that the court considered the facts thus announced as in aggravation of the contempt. Yet no opportunity had been given to the contemnors even to hear these new charges of the court, much less to meet or explain them before the sentence. **We think the procedure pursued was unfair and oppressive to the petitioner. *539 Another feature of this case seems to call for remark. The power of contempt which a judge must have and exercise in protecting the due and orderly administration of justice, and in maintaining the authority **396 and dignity of the court, is most important and indispensable. But its exercise is a delicate one, and care is needed to avoid arbitrary or oppressive conclusions. This rule of caution is more mandatory where the contempt charged has in it the element of personal criticism or attack upon the judge. The judge must banish the slightest personal impulse to reprisal, but he should not bend backward, and injure the authority of the court by too great leniency. The substitution of another judge would avoid either tendency, but it is not always possible. Of course, where acts of contempt are palpably aggravated by a personal attack upon the judge, in order to drive the judge out of the case for ulterior reasons, the scheme should not be permitted to succeed. But attempts of this kind are rare. All of such cases, however, present difficult questions for the judge. All we can say upon the whole matter is that, where conditions do not make it impracticable, or where the delay may not injure public or private right, a judge, called upon to act in a case of contempt by personal attack upon him, may, without flinching from his duty, properly ask that one of his fellow judges take his place. Cornish v. United States (C. C. A.) 299 F. 283, 285; Toledo Co. v. United States, 237 F. 986, 988, 150 C. C. A. 636. The case before us is one in which the issue between the judge and the parties had come to involve marked personal feeling that did not make for an impartial and calm judicial consideration and conclusion, as the statement of the proceedings abundantly shows. We think, therefore, that when this case again reaches the District Court, to which it must be remanded, the judge who imposed the sentence herein should invite the senior Circuit Judge of the circuit to assign another judge to sit in the second hearing of the charge against the petitioner First Western Development Corp. v. Superior Court, 212 Cal.App.3d 860, 261 Cal.Rptr. 116 (Cal.App. 2 Dist. Jul 31, 1989) SUMMARY Defendants in an action for abuse of process, negligence, emotional distress, and numerous other intentional torts, petitioned the Court of Appeal for a writ of

mandate to compel the trial court to vacate its order denying defendants' motion to require plaintiff tenant to post security as a litigant under Code Civ. Proc., 391 et seq. The instant action arose out of plaintiff's apparent dissatisfaction with the Court of Appeal's denial of a writ of mandate to vacate an interlocutory order of the trial court awarding possession to one of the defendants in an unlawful detainer action against plaintiff and another, and with its denial of plaintiff's motion to disqualify itself, which rulings the Supreme Court declined to review. Despite this final disposition of the matter, and the imposition of sanctions for maintaining a frivolous appeal, plaintiff had nevertheless filed a multiplicity of new actions against defendants based upon the same facts and issues raised in the earlier suit and had filed writ petitions and appeals from practically every order of the trial court. **In addition to the instant action, plaintiff had filed a separate lawsuit against the justices of the Court of Appeal and others, alleging a conspiracy to discriminate against him, and on that basis moved to disqualify it. The Court of Appeal granted the writ. It held that it was not required to recuse itself or to grant plaintiff's motion to disqualify the panel of appellate judges, based on plaintiff's filing of the separate lawsuit against them, since that action was an obvious ploy to cause the Court of Appeal to recuse itself. It also held that, based on the evidence, plaintiff was a vexatious litigant pursuant to Code Civ. Proc., 391, subd. (b)(2), by repeatedly attempting to relitigate issues already finally determined. Accordingly, it directed the trial court to require plaintiff to post an appropriate bond as security for defendant's costs. (Opinion by The Court.) HEADNOTES Classified to California Digest of Official Reports (1) Appellate Review 20--Decisions Appealable--Interlocutory Orders-- Treatment of Purported Appeal as Petition for Writ of Mandate. A purported appeal from a nonappealable interlocutory order may be treated as a petition for a writ of mandate. The procedure is a well-recognized and routine method of accepting review jurisdiction. (2) Judgments 5--Finality--Exhaustion of All Avenues for Direct Review. When all avenues for direct review of a judgment have been exhausted, the judgment is final for all purposes. Thus, the denial by the Court of Appeal of a litigant's motion to disqualify it on grounds of alleged bias was final, and could not thereafter be further challenged, where the litigant sought review in the Supreme Court, which then denied the petition for review. (3a, 3b) Judges 11--Disqualification--Grounds--Judge Named as Adverse Party to Litigant in Separate Suit--Vexatious Litigant. On a petition for a writ of mandate to order that a vexatious litigant post security in accordance with the provisions of Code Civ. Proc., 391 et seq., the Court of Appeal was not required to recuse itself or grant the litigant's motion to disqualify the panel of judges, based on the filing of a separate lawsuit against the panel and others by the litigant alleging a conspiracy to discriminate against him. Courts cannot permit a litigant to shop for judges through the device of filing a lawsuit against those judges who enter rulings adverse to the litigant, in order to cause that court to become disqualified. (4) Judges 18--Disqualification--Appellate Judges--Individual Decisions. The rule relating to disqualification of an appellate judge is that each appellate judge himself decides whether recusal is required. (5) Costs 4--Security for Costs--Vexatious Litigants--Purpose. The purpose of the vexatious litigant statutes (Code Civ. Proc., 391 et seq.), requiring a person found to be a vexatious litigant to post security for the

reasonable expenses of a defendant who becomes the target of that person, is to deal with the problem created by the persistent and obsessive litigant who constantly has pending a number of groundless actions, and to thereby prevent abuse of the judicial process. (6) Costs 4--Security for Costs--Vexatious Litigants--Constitutionality of Statutes. The vexatious litigant statutes (Code Civ. Proc., 391 et seq.), requiring a person found to be a vexatious litigant to put up security for the reasonable expenses of a defendant who becomes the target of the litigant, are constitutional. The statutes do not unlawfully discriminate against litigants proceeding in propria persona, they do not operate to deprive a litigant of due process of law, and the requirement that security must be furnished if there is no reasonable probability the vexatious litigant will prevail is not vague or uncertain. (7) Costs 4--Security for Costs--Vexatious Litigants--Circumstances Warranting. Plaintiff, in an action against his former landlord for abuse of process, negligence, emotional distress, and numerous other intentional torts, arising out of plaintiff's dissatisfaction with a judgment against him in the landlord's earlier unlawful detainer action which had already proceeded to final judgment, was a vexatious litigant required to post security in accordance with the provisions of Code Civ. Proc., 391 et seq. The evidence indicated that plaintiff had repeatedly attempted to relitigate issues which were already finally determined, filing a multiplicity of new actions against the landlord based upon the same facts and issues previously raised and decided, and by filing writ petitions and appeals from practically every order of the trial court. The court had a duty to protect the target of the repeated litigation attempts from such vexatious litigation. [See Cal.Jur.3d (Rev), Costs, 40 et seq.; Am.Jur.2d, Costs, 37 et seq.] THE COURT.
FN*

FN* Before Klein, P. J., Danielson, J., Arabian, J., and Croskey, J. Upon review of a petition for writ of mandate in which First Western Development Corp. (FWDC), a California corporation, is seeking to have Albert Andrisani declared a vexatious litigant, we have *863 determined that Andrisani is repeatedly attempting to relitigate issues finally and conclusively determined in an unpublished opinion of this court. In denying the motion re vexatious litigant as premature, the respondent court failed to give consideration to the final and conclusive determination of the issues raised in First Western Development Corp. v. Andrisani (Jan. 9, 1989) B031357 [nonpub. opn.] (FWDC I). FN1 Andrisani is a vexatious litigant insofar as this action is based on issues determined in FWDC I. Accordingly, we grant the petition. FN1 FWDC refers to First Western Development Corp.; FWDC I refers to our opinion in the underlying unlawful detainer case. Factual and Procedural Background In FWDC I, we reviewed the contentions raised by Samuel Andrisani and Albert Andrisani in a purported appeal after trial of an unlawful detainer action awarding possession of real property to FWDC. (1) We treated the purported appeal from a nonappealable interlocutory order as a petition for writ of mandate. FN2(FWDC I, supra.) FN2 The contention that our decision was improperly rendered because we treated the purported appeal as a writ of mandate is frivolous in nature. The procedure is a well-recognized and routine method of accepting review

jurisdiction. (See Olson v. Cory (1983) 35 Cal.3d 390, 400-401 [ 197 Cal.Rptr. 843, 673 P.2d 720]; County of Tulare v. Ybarra (1983) 143 Cal.App.3d 580, 584 [ 192 Cal.Rptr. 49]; Poe v. Diamond (1987) 191 Cal.App.3d 1394, 1398 [ 237 Cal.Rptr. 80], and other cases too numerous to list here.) We further emphasize that it was Andrisani who invoked the jurisdiction of this court by filing the purported appeal. In our decision we disposed of numerous contentions raised by the Andrisanis, including the contention that FWDC contravened the summary nature of the unlawful detainer proceedings by fomenting delay. (FWDC I, supra.)We found the Andrisanis' argument that they were prejudiced by the delay unpersuasive as the delay largely resulted from the Andrisanis' conduct during the action.(FWDC I, supra.)Further, and in any event, the Andrisanis continued to enjoy possession for the duration, and were required to pay rent at the usual rate as long as they remained in possession, irrespective of the existence of the unlawful detainer action. In addition, in that opinion we imposed sanctions against the Andrisanis for filing a frivolous appeal taken solely for delay. (Code Civ. Proc., 907; FN3 Cal. Rules of Court, rule 26(a); FWDC I, supra.) FN3 All statutory references are to the Code of Civil Procedure. After oral argument in FWDC I the Andrisanis filed a motion to disqualify this court asserting that the order to show cause re sanctions for the filing of a frivolous appeal was a prejudgment of the issues raised and revealed the court's bias against them. After our denial of the motion to disqualify and *864 the filing of our opinion in FWDC I, the Andrisanis sought review in the Supreme Court which denied the petition for review. (2) When, as here, all avenues for direct review have been exhausted, the judgment is final for all purposes. The only issues remaining in the unlawful detainer case were those issues connected with an accounting as to rents due from the Andrisanis to FWDC. Thereafter, Albert Andrisani initiated several lawsuits: 1. NVC 19092, filed November 23, 1988, in which Andrisani alleged claims against FWDC and various officers and employees of FWDC, alleging causes of action for false arrest, false imprisonment, destruction and confiscation of property, emotional distress and trespass, apparently in connection with the enforcement of the order granting possession of real property to FWDC. In that action the superior court found Andrisani to be a vexatious litigant and ordered the posting of a $45,000 bond. When Andrisani failed to post the bond the action was dismissed. Andrisani filed an appeal of the order of dismissal. 2. LASC 657407, filed May 16, 1988, Andrisani together with his brother Samuel, who was a codefendant in the unlawful detainer action, filed a lawsuit against FWDC, officers and employees of FWDC, TMC Escrow Co., Lincoln Title Co., and others, alleging 13 causes of action arising from the unlawful detainer case. A summary judgment was entered against the Andrisanis on December 13, 1988, as to all claims raised. 3. NVC 20269, filed March 3, 1989, a complaint naming FWDC as a defendant, alleging malice in proceeding with the unlawful detainer action. Andrisani, on June 16, 1989, was found a vexatious litigant and ordered to post a bond. 4. NVC 20449, filed March 22, 1989, in which Andrisani alleges harassment, fright, emotional and physical distress arising from the unlawful detainer action. FWDC, counsel for FWDC, and an employee of FWDC are named defendants. On June 16, 1989, Andrisani was found a vexatious litigant and ordered to post a bond. 5. C719704, filed April 5, 1989, in which Andrisani alleged causes of action for abuse of process, negligence, malicious prosecution, defense expenditures,

emotional and physical distress against FWDC, various officers of FWDC, the attorney and law firm which represented FWDC in the unlawful detainer action, the State Bar of California and the Los Angeles County Bar Association The basis of the claims asserted in this action is that FWDC, its officers, and legal representatives delayed the fast paced proceedings of unlawful detainer for ulterior motives. The claims against the state and county bar associations are based on allegations the associations *865 failed properly to supervise the legal organization, thereby allowing the delay of the unlawful detainer action. It is this action which is the subject of the present writ proceeding. When FWDC was served with yet another complaint arising from the unlawful detainer action, it filed a motion for order requiring Andrisani to post security under the vexatious litigant statutes. ( 391 et seq.) FN4 After that motion was denied without prejudice as premature, FWDC sought a writ petition in this court. We issued a stay and notified the parties on May 26, 1989, that we were considering the issuance of a peremptory writ of mandate in the first instance as required by Palma v. U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171 [ 203 Cal.Rptr. 626, 681 P.2d 893].
FN5

FN4 In pertinent Section 391.

part,

the

vexatious

litigants

statutes

are

as

follows:

As used in this title, the following terms have the following meanings: (a) 'Litigation' means any civil action or proceeding, commenced, maintained or pending in any court of this state. (b) 'Vexatious litigant' means any person: (1) Who, in the immediately preceding seven-year period has commenced, prosecuted or maintained in propria persona at least five litigations other than in a small claims court that have been (i) finally determined adversely to the person; or (ii) unjustifiably permitted to remain pending at least two years without having been brought to trial or hearing; or (2) Who, after a litigation has been finally determined against the person, repeatedly relitigates or attempts to relitigate, in propria persona, either (i) the validity of the determination against the same defendant or defendants as to whom the litigation was finally determined or (ii) the cause of action, claim, controversy, or any of the issues of fact or law, determined or concluded by the final determination against the same defendant or defendants as to whom the litigation was finally determined. FN5 After receiving the notice, in an apparent attempt to avoid the issuance of a writ, Andrisani, on May 31, 1989, filed yet another lawsuit (Super. Ct. L.A. County, No. NVC 21326). In the latest action, Andrisani alleged violations of due process and equal protection against FWDC, FWDC's attorneys, and various judicial officers, including all four members of this division, the California Women's Lawyers Association and Women Lawyers Association of Los Angeles. The allegations are based upon Andrisani's displeasure with adverse rulings entered by the court in the unlawful detainer action. In response to our notice that we were considering the issuance of a peremptory writ, Andrisani claims **(1) this court was disqualified in November 1988 prior to our decision in FWDC I; (2) unlawful detainer proceedings adjudicate only possession, not abuse of process or malicious prosecution; (3) the opinion in FWDC I is not a final or conclusive determination as to the delay in the unlawful detainer action, because it was a writ petition, not an appeal; and (4) a conspiracy by women lawyers and judges against Andrisani, a male, deprived him of

his due process and equal protection rights. I. Disqualification A. The November 1988 Motion to Disqualify Is Final. Andrisani's contention relating to disqualification of this court arises from a November 1988 attempt to disqualify the panel after we advised the parties we were considering the imposition of sanctions in FWDC I because the appeal appeared both frivolous and taken solely for delay. After we heard oral argument both on the merits of the Andrisanis' contentions and on the sanctions issue in FWDC I, Andrisani filed a motion to disqualify this court. He does not choose to understand that our denial of that motion to disqualify in November 1988 is final and may not now be challenged. FN6 FN6 In three companion cases (Super. Ct. L.A. County, Nos. 634378, NVC 20269 & NVC 20449) Andrisani is attempting to assert that he disqualified this court in November 1988. The contention arises in connection with an order to show cause as to whether Andrisani is entitled to a waiver of court fees and costs. In attempting to avoid the evidentiary hearing, Andrisani attempted to file in federal court a lawsuit against both this court and the trial court. The United States District Court denied Andrisani's application for fee waiver by checking the space on a standardized form marked patently frivolous. Andrisani has appealed that ruling to the Ninth Circuit Court of Appeals. B. The June 1989 Attempt to Disqualify Judges Who Have Entered Rulings Adverse to Andrisani Is Frivolous. Andrisani, in connection with the instant petition, again attempted to obtain a disqualification of this court, filing a separate lawsuit naming the members of this panel as defendants, together with other judges and court officers who allegedly are engaged in a conspiracy to discriminate against Andrisani. Since the lawsuit was filed six days after we sent notice to *867 Andrisani and all other parties that we were considering the issuance of a peremptory writ of mandate, the lawsuit is an obvious ploy to cause us to recuse ourselves. (3a) The courts of this state cannot permit a litigant to shop for a judge through the device of filing a lawsuit against those judges who enter rulings adverse to the litigant. Such procedure would make it possible for a litigant who obtains an unfavorable decision from a trial court or from an appellate court to cause that court to become disqualified or to recuse itself merely by filing a lawsuit naming the judicial officers as defendants. Such an obvious attempt to manipulate the legal system will not be condoned. **(4) Further, the rule relating to disqualification of an appellate judge is that each appellate judge himself decides whether recusal is required. ( Kaufman v. Court of Appeal (1982) 31 Cal.3d 933, 937-940 [ 184 Cal.Rptr. 302, 647 P.2d 1081].) (3b) Because we can conceive of only one purpose, i.e., judge-shopping, for Andrisani's attempt to disqualify this court and/or to cause this court to recuse itself, we individually and as a unit denied Andrisani's motion to disqualify this panel from proceeding in this matter. **We are confident that review by a higher court will reveal no bias or prejudice against Andrisani but will reveal a decision based solely upon the law and the facts relevant to a determination of the legal issues. (7) B. Andrisani Is a Vexatious Litigant Pursuant to Section 391, Subdivision (b) (2). One lawsuit has been found insufficient to satisfy the requirement that a vexatious

litigant is one who, 'after a litigation has been finally determined *869 against him, repeatedly relitigates or attempts to relitigate, in propria persona ... the cause of action, claim, controversy, or any of the issues of fact or law, determined or concluded by such final determination ....' ( Roston v. Edwards (1982) 127 Cal.App.3d 842, 847 [ 179 Cal.Rptr. 830].) (Italics added.) Andrisani, as discussed above, has filed five lawsuits against FWDC, its officers, and attorneys. A review of the respective complaints in three of the lawsuits FN7 reveals Andrisani is attempting to relitigate the issues previously raised in the unlawful detainer action with a strong emphasis on allegations of prejudice arising from the lengthy unlawful detainer proceedings. When we rejected the identical argument made by Andrisani in FWDC I and held the delay of that action resulted in large part from the conduct of the Andrisanis, the delay issue was conclusively determined. That decision, now final, precludes Andrisani from relitigating the delay issue under the guise of claims of malicious prosecution, abuse of process, and other claims made in the subsequent actions. Andrisani has chosen to ignore or to misconstrue the fact that he has received an adverse final and conclusive judgment on the primary issue on which he bases the claims made in the instant action FN9 Andrisani's conduct during these lawsuits is reprehensible. For example, Andrisani has filed more than 40 motions and petitions in the unlawful detainer action since the entry of the adverse judgment in that action. In attempting to determine the amount of rent owed by the Andrisanis to FWDC, the court in the unlawful detainer case, on February 28, 1989, entered a minute order in which that court found: Every piece of paper filed by defendants [Andrisanis] since the case has been before this court has been false in whole or substantial part and has been filed soley [sic] to delay resolution of this case. Defendants' claims have been absolutely, totally and indisputably without merit. **Moreover, their declarations under penalty of perjury are patently false ....

See fair and impartial tribunal.doc


25 A.L.R.3d 1331 Disqualification of judge because of his or another's holding or owning stock in corporation involved in litigation A. L. Schwartz. The following statements illustrate the way the courts have applied the above rule to particular factual situations. A judge owning oil company stock was required to disqualify himself in a suit brought against another oil company, where the suit was brought to obtain a ruling upon the naked legal question of possible shareholder liability for the value of extraction from various oil lands, including lands owned by the corporation in which the judge owned stock, held the court in Re Honolulu Consol. Oil Co. (1917, CA9 Cal) 243 F 348, stating that it would not be astute in making nice distinctions as to the words "concerned in interest" within the federal disqualification statute generally providing for the disqualification of a judge "in any way concerned in interest" in any suit pending in his court. A judge's refusal to sit was affirmed in adams v Minor 121 Cal 372, 53 P 815, where an issue was raised as to the validity of certain bonds, including those held by a nonparty bank in which the judge owned stock, the court stating that "interest" within the disqualification statute meant any direct, certain, pecuniary or property interest, however small or trifling. Where the judge was a mere "holder" of corporate stock as trustee, his judgment in favor of the corporate defendant on the issue of liability in a personal injury case was vacated by the court in Tatum v Southern Pacific Co. (1967) 250 Cal App 2d 40, 58 Cal Rptr 238, 25 ALR3d 1325, because the statutory disqualification for interest was cast in absolute form by providing that no justice or judge shall sit

or act in any action or proceeding in which he is interested as a holder or owner of any capital stock of a corporation, the court stating that it was immaterial that neither the judge nor the parties were aware during the trial that the corpus of the trust contained stock of the corporate party, and that the actual danger of judicial impartiality was remote, since the judge's interest as trustee could hardly be affected substantially by the outcome of the case. In Vallejo v Superior Court of Napa county ( 1926) 199 Cal 408, 249 P 1084, 48 ALR 610, the court held that a judge, as stockholder in a bank holding an overdue deed of trust on the property sought to be condemned, was disqualified from sitting in the condemnation proceeding, since the bank had a present proprietary interest in any determination as a creditor who would be entitled to have any condemnation award applied to its claim. CUMULATIVE SUPPLEMENT Cases: Judge who had acted as litigation counsel for corporation for 12 year period and who possessed several hundred shares of its stock, acquired during course of his association with corporation, was required to disqualify himself from all further matters in case where corporation, although not a party, had financial interest in its outcome. California v Kleppe (1977, DC Cal) 431 F Supp 1344 U.S. v. Claiborne, 727 F.2d 842 (9th Cir.(Nev.),Mar 05, 1984) Defendant, a federal judge, filed motion to quash indictment against him and to dismiss proceedings against him. The United States District Court for the District of Nevada, Walter E. Hoffman, Senior District Judge, denied motion, and defendant filed interlocutory appeal. The Court of Appeals held that: (1) Court of Appeals had jurisdiction to review defendant's noncertified interlocutory appeal from district court's dismissal of claim that sitting federal judge is immune from criminal prosecution prior to his removal from office by impeachment process; (2) Constitution does not immunize sitting federal judge from criminal prosecution prior to his removal from office by the impeachment process; (3) defendant was not entitled to pretrial evidentiary hearings to determine whether executive's prosecution was improperly motivated; and (4) because Court of Appeals determined that defendant's asserted right not to be tried claim lacked merit, trial court's continuation of pretrial hearings while interlocutory appeal was taken was harmless. Order accordingly. [5] Judges 227 38

227 Judges 227III Rights, Powers, Duties, and Liabilities 227k38 k. Criminal Responsibility. Most Cited Cases Constitution does not immunize sitting federal judge from criminal prosecution prior to his removal from office by the impeachment process. U.S.C.A. Const. Art. 1, 3, cl. 7; Art. 3, 1 et seq.

At p. 845,
[5] Identical immunity claims were squarely faced and rejected in United States v. Hastings, 681 F.2d 706, 709-11 (11th Cir.), stay denied, 459 U.S. 1203, 103 S.Ct. 1188, 75 L.Ed.2d 434 (1982) and United States v. Isaacs, 493 F.2d 1124, 11411144 (7th Cir.), cert. denied, 417 U.S. 976, 94 S.Ct. 3184, 41 L.Ed.2d 1146 (1974).FN4 Both Hastings and Isaacs held that the Constitution does not immunize a sitting federal judge from the processes of criminal law. The sentiment underlying these holdings is that: no man in this country is so high that he is above the law

.... A judge no less than any other man is subject to the processes of the criminal law. Hastings, 681 F.2d at 711; Isaacs, 493 F.2d at 1133. We wholeheartedly agree with Hastings and Isaacs and are substantially guided by them in disposing of Claiborne's arguments. FN4. Hastings and judge has claimed Two other active neither raised the Isaacs are the only two cases where an indicted federal immunity from criminal prosecution prior to impeachment. federal judges were indicted on criminal charges, but immunity issue. See Hastings, 681 F.2d at 706 n. 7.

At p. 849,
The Supreme Court has stated that the trial judge's bias is presumed only where the judge has a personal or financial stake in the outcome or has been the target of personal abuse or criticism. See Withrow v. Larkin, 421 U.S. 35, 47, 95 S.Ct. 1456, 1464, 43 L.Ed.2d 712 (1975); Taylor v. Hayes, 418 U.S. 488, 501-03, 94 S.Ct. 2697, 2704-05, 41 L.Ed.2d 897 (1974); see also S.Rep. No. 419, 93d Cong. 1st Sess. 5 (1973). (The appearance of impartiality test of 28 U.S.C. 455(a) was not intended to warrant the transformation of a litigant's fear that a judge may decide a question against him into a reasonable fear that the judge will not be impartial.)

The Supreme Court has stated that the trial judge's bias is presumed only where the judge has a personal or financial stake in the outcome or has been the target of personal abuse or criticism. See Withrow v. Larkin, 421 U.S. 35, 47, 95 S.Ct. 1456, 1464, 43 L.Ed.2d 712 (1975); Taylor v. Hayes, 418 U.S. 488, 501-03, 94 S.Ct. 2697, 2704-05, 41 L.Ed.2d 897 (1974); In Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847, 858, 108 S.Ct. 2194, 100 L.Ed.2d 855,(U.S.La.,Jun 17, 1988) the court stated, (a) Any justice, judge, or magistrate of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned. *859 (b) He shall also disqualify himself in the following circumstances: (4) He knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding. (c) A judge should inform himself about his personal and fiduciary financial interests, and make a reasonable effort to inform himself about the personal financial interests of his spouse and minor children residing in his household. [1][2] Scienter is not an element of a violation of 455(a). The judge's lack of knowledge of a disqualifying circumstance may bear on the question of remedy, but it does not eliminate the risk that his impartiality might reasonably be questioned by other persons. To read 455(a) to provide that the judge must know of the disqualifying facts, requires not simply ignoring the language of the provision-which makes no mention of knowledge-but further requires concluding that the language in subsection (b)(4)-which expressly provides that the judge must know of his or her interest-is extraneous. A careful reading of the respective subsections makes clear that Congress intended to require knowledge under subsection (b)(4) and not to require knowledge under subsection (a).FN8 Moreover, advancement of the purpose of the *860 provision-to promote public confidence in the integrity of the judicial process, see S.Rep. No. 93-419, p. 5 (1973); H.R.Rep. No. 93-1453, p. 5 (1974)-does not depend upon whether or not the judge **2203 actually knew of facts creating an appearance of impropriety, so long as the public might reasonably believe that he or she knew.

And the court stated, 455(b)(4) requires disqualification no matter how insubstantial the financial interest and regardless of whether or not the interest actually creates an appearance of impropriety. See 455(d)(4); In re Cement and Concrete Litigation, 515 F.Supp. 1076 (Ariz.1981), mandamus denied, 688 F.2d 1297 (CA9 1982), aff'd by absence of quorum, Arizona v. United States District Court, 459 U.S. 1191, 103 S.Ct. 1173, 75 L.Ed.2d 425 (1983). In addition, 455(e) specifies that a judge may not accept a waiver of any ground for disqualification under 455(b) (Liljeberg v. Health Services Acquisition Corp., supra, 486 U.S. at p. 860) And the court stated, The goal of section 455(a) is to avoid even the appearance of partiality. If it would appear to a reasonable person that a judge has knowledge of facts that would give him an interest in the litigation then an appearance of partiality is created even though no actual partiality exists because the judge does not recall the facts, because the judge actually has no interest in the case or because the judge is pure in heart and incorruptible. The judge's forgetfulness, however, is not the sort of objectively ascertainable fact that can avoid the appearance of partiality. Hall v. Small Business Administration, 695 F.2d 175, 179 (5th Cir.1983). Under section 455(a), therefore, recusal is required even when a judge lacks actual knowledge of the facts indicating his interest or *861 bias in the case if a reasonable person, knowing all the circumstances, would expect that the judge would have actual knowledge. 796 F.2d, at 802. (Liljeberg v. Health Services Acquisition Corp., supra, 486 U.S at p.860) And the court stated, [3] In this case both the District Court and the Court of Appeals found an ample basis in the record for concluding that an objective observer would have questioned Judge Collins' impartiality. Accordingly, even though his failure to disqualify himself was the product of a temporary lapse of memory, it was nevertheless a plain violation of the terms of the statute. (Liljeberg v. Health Services Acquisition Corp., supra, 486 U.S at p.861) In re Cement Antitrust Litigation (MDL No. 296), 688 F.2d 1297, 1307, 34 Fed.R.Serv.2d 1669,(9th Cir.(Ariz.),Oct 01, 1982) section 455.Section 455 provides in part that *1308 (a) Any justice, judge or magistrate of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned. (b) He shall also disqualify himself in the following circumstances: .... (4) (When) he knows that he, individually or as a fiduciary, or his spouse ... has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding .... .... (d) For the purposes of this section the following words or phrases shall have the meaning indicated:

(4) financial interest means ownership of a legal or equitable interest, however small .... .... (e) No justice, judge, or magistrate shall accept from the parties to the proceeding a waiver of any ground for disqualification enumerated in subsection (b). Where the ground for disqualification arises only under subsection (a), waiver may be accepted provided that it is preceded by a full disclosure on the record of the basis for disqualification. And the court stated, Judge Muecke recused himself on the ground that his wife's stock ownership constituted a financial interest in d party to the proceeding within the meaning of section 455(b)(4). [9] In his opinion Judge Muecke correctly noted that in subsection (b)(4) of the statute, the phrase financial interest in the subject matter in controversy or in a party to the proceeding, unlike the phrase or any other interest, is not modified by the subsequent phrase that could be substantially affected by the outcome of the proceeding.Thus, subsection (b)(4) establishes two classes of disqualifying interests: first, financial interests in the subject matter in controversy or in a party to the proceeding; these interests require recusal whether or not the outcome of the proceeding could have any effect on the interests; second, other interests; these interests require recusal only if they could be substantially affected by the outcome of the proceeding. See In re New Mexico Natural Gas Anti-Trust Litigation, 620 F.2d 794, 796 (10th Cir. 1980). An interest is disqualifying whether it is held by the judge or his spouse. The issue before Judge Muecke, then, was whether his wife's stock ownership in several of the class members constituted a financial interest in a party to the proceeding or the subject matter in controversy. If such ownership constituted a financial interest in either, it is irrelevant, for purposes of recusal, whether that interest would be substantially affected by the outcome of the proceeding. Judge Muecke held that ownership of stock in a class member constitutes a financial interest in a party to the proceeding. (In re Cement Antitrust Litigation (MDL No. 296), supra, 688 F.2d at p. 1307) And the court stated, Given that Congress's main concern in adopting section 455 was to promote public confidence in the impartiality of the judiciary, it is entirely consistent with congressional intent to hold that a financial interest in a class member requires recusal. While Congress did not consider or discuss the status of class members when it enacted section 455, we believe that Judge Muecke's construction of the statute effectuates the expressed congressional purpose in adopting the per se rule. In re Cement Antitrust Litigation (MDL No. 296), supra, 688 F.2d at p. 1313) 28 U.S.C 144; 455;
Davis v. Board of School Com'rs of Mobile County, 517 F.2d 1044, 21 Fed.R.Serv.2d 763 (5th Cir.(Ala.),Aug 21, 1975) Orders were entered in school desegregation cases in the United States District Court for the Southern District of Alabama at Mobile, William Brevard Hand, J., dismissing suit by one black assistant school principal with leave to intervene in another suit, denying motions to disqualify judge, and refusing to issue order to show cause why school board should not be held in contempt for failure to comply with desegregation consent order relative to professional promotions. The appeals were consolidated. The Court of Appeals, Bell, Circuit Judge, held that fact that separate suit of black assistant principal alleging discriminatory denial of promotion asserted claim under title VII as well as under sections 1981 and 1983

and consent decree was not ground for permitting assistant principal to proceed with separate suit rather than requiring intervention in pending class action inasmuch as intervention would not result in loss of substantive or procedural rights under title VII and would result in better management of the pending class action; that affidavits of assistant black principals to disqualify judge were legally insufficient where claim of bias was predicated on controversy between judge and affiants' attorney and there was no basis for imputing alleged bias against affiants' attorney to affiants; and that as assistant principals' claims of discrimination were pending, district court did not err in refusing to issue order to show cause why school board should not be held in contempt for failure to comply with desegregation consent order relative to professional promotions. Affirmed. [3] Judges 227 51(1)

227 Judges 227IV Disqualification to Act 227k51 Objections to Judge, and Proceedings Thereon 227k51(1) k. In general. Most Cited Cases The term party as used in statute providing for disqualification of judge when party makes sufficient showing that judge has personal bias or prejudice against him does not include counsel as such. 28 U.S.C.A. 144. [4] Judges 227 51(4)

227 Judges 227IV Disqualification to Act 227k51 Objections to Judge, and Proceedings Thereon 227k51(4) k. Determination of objections. Most Cited Cases Once motion is filed under statute providing for disqualification of judge, the judge must pass on the legal sufficiency of the affidavits, but may not pass on the truth of the matters alleged. 28 U.S.C.A. 144. [5] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In general. Most Cited Cases The requisite basis of bias and prejudice under statute disqualification of judge must be extra-judicial. 28 U.S.C.A. 144. [6] Judges 227 51(3) providing for

227 Judges 227IV Disqualification to Act 227k51 Objections to Judge, and Proceedings Thereon 227k51(3) k. Sufficiency of objection or affidavit. Most Cited Cases Language in order entered in case in which motion was made for disqualification of judge, and in an opinion in another case before the court, were not available as grounds for statutory disqualification of judge. 28 U.S.C.A. 144. [7] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In general. Most Cited Cases **Exception to requirement that basis of bias and prejudice required for disqualification of judge under statute must be extra-judicial exists where such pervasive bias and prejudice is shown by otherwise judicial conduct as would constitute bias against a party. 28 U.S.C.A. 144. [9] Judges 227 39

227 Judges 227IV Disqualification to Act 227k39 k. Nature and effect in general. Most Cited Cases Statute requiring disqualification of any judge when his impartiality might reasonably be questioned is self-enforcing on part of judge and may also be asserted by a party by motion in the trial court, through assignment of error on appeal, by interlocutory appeal, or by mandamus. 28 U.S.C.A. 455. [10] Judges 227 39

227 Judges 227IV Disqualification to Act 227k39 k. Nature and effect in general. Most Cited Cases Statute reasonably reasonable opinion of U.S.C.A. requiring disqualification of any judge when his impartiality might be questioned is intended to substitute the reasonable factual basisman test in determining disqualification for the subjective in the the judge test and to overrule the so-called duty to sit decisions. 28 455. 819

[11] Federal Courts 170B

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(K) Scope, Standards, and Extent 170BVIII(K)4 Discretion of Lower Court 170Bk819 k. Change of venue; continuance. Most Cited Cases (Formerly 106k406.5(12))

disqualifying

judge;

The abuse of sound judicial discretion test obtains on appellate review of ruling on motion to require disqualification of judge in any proceeding in which his impartiality might reasonably be questioned. 28 U.S.C.A. 455. [12] Judges 227 51(4)

227 Judges 227IV Disqualification to Act 227k51 Objections to Judge, and Proceedings Thereon 227k51(4) k. Determination of objections. Most Cited Cases In passing on questions of disqualification of judge under statute requiring judge to disqualify himself when party has filed sufficient affidavit that judge has personal bias or prejudice either against him or in favor of adverse party, or

where motion is his impartiality disqualification impartiality by determination on conduct within a [13] Judges 227

filed under statute requiring disqualification of any judge when might reasonably be questioned, reviewing court should determine on basis of conduct which shows bias or prejudice or lack of focusing on a party rather than counsel and should make basis of conduct extra-judicial in nature as distinguished from judicial context. 28 U.S.C.A. 144, 455. 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In general. Most Cited Cases Controversy between trial judge and attorney for parties to action would not require disqualification of judge in absence of showing of bias or personal prejudice to parties and where the judge's actions were judicial rather than extrajudicial. 28 U.S.C.A. 144, 455.

At p. 1046,
This is the thirteenth appeal in the Mobile school case (Mobile XIII), which case began in 1963.[FN1] The questions presented are illustrative of problems encountered in winding down a school case. Some are important to the administration of final school desegregation decree. One centers on an effort to disqualify the district judge. The questions arise out of four separate appeals which we have consolidated.

At p. 1047,
Two of the appeals are interlocutory and are brought under 28 U.S.C.A. s 1292(b). These are Nos. 75-1312 and 75-1827. [FN2] The appeals are from orders denying the motions of Foster and Buskey, respectively, to disqualify the district judge for bias under 28 U.S.C.A. s 144. [FN3] FN2. No. 75-1312 was numbered as No. 74-8484 prior to our allowing interlocutory appeal. No. 75-1827 was No. 75-8063 before being allowed. FN3. Buskey filed an identical motion but has not appealed. In circumstances, one appeal will suffice to settle the question presented. the the

The other appeal, No. 74-3894, is by the original class in Birdie Mae Davis from an order of the district court refusing to issue an order to show cause why the defendant school board should not be held in contempt for failure to comply with the desegregation consent order relative to professional promotions. (A) The Foster suit, filed on January 25, 1974 as a Complaint in Intervention, sought to maintain a class action consisting of black persons holding decrees in Administration and Supervision who have been passed over for promotion solely by reason of their race and color. This complaint followed an earlier independent suit by Foster, filed October 5, 1973, which had been dismissed on the authority of NEA, supra, with leave being granted for him to intervene in the Birdie Mae Davis case.

At p. 1048,

(L) On the same day, Mr. Foster filed a motion under 28 U.S.C.A. s 144, supported by affidavit, to disqualify Judge Hand from his case on the basis that Judge Hand had a personal bias or prejudice against Foster and other black parents, school children and school teachers in the Mobile school system as members of the plaintiff class. A copy of the affidavit is appended to this opinion and marked A. The affidavit makes it clear that Foster's affidavit is based on his reading, at the request of his counsel, of an opinion of the same district judge rendered on August 29, 1974 in another case in which counsel appeared. Robinson v. Union Carbide Corporation, S.D.Ala., 1974, 380 F.Supp. 731. Judge Hand denied the motion but allowed an interlocutory appeal. (This is No. 75-1312.) *1049 (M) The Buskey suit was dismissed on October 3, 1974, with leave to intervene in Birdie Mae Davis. Notice of appeal was filed on November 1, 1974. (This is No. 74-4257.) (N) On November 20, 1974, Buskey filed a motion and affidavit in haec verba to Foster's, to disqualify the district judge. The order denying this motion gave rise to the interlocutory appeal, No. 75-1827. III. NO. 74-4257 As stated, only Buskey has appealed from the order requiring intervention rather than being allowed to proceed with a separate suit. It is apparent, however, that our decisions requiring such a procedural approach were the genesis of the overall controversy which has arisen between counsel and the district court. It will be well, therefore, to consider this particular appeal as a first issue.

At p. 1049,
NOS. 75-1312 AND 75-1827 The separate motions of Foster and Buskey to disqualify Judge Hand and the supporting affidavits will be considered as one matter. The affidavits rest on facts brought to the attention of affiants by their counsel. In the main, the claim of bias centers on problems of counsel (Mr. Blacksher), in this litigation, and in Union Carbide Corporation, supra, where Judge Hand was of the opinion that overtones of barratry and champerty were present. An appeal in that case is pending in this court. No. 75-1008 Robinson v. Union Carbide Corporation. *1050 That opinion speaks for itself. Whether the district court was in error in its opinion there will be decided on that appeal and the record therein. Bias and prejudice is also alleged by affiants to rest on Judge Hand's order of August 16 wherein he granted the protective order relative to the Birdie Mae Davis interrogatories and the contempt motion.[FN7] FN7. One portion of the order reflects on original counsel in his effort to create a class action. The portion of the order which reflects on Mr. Blacksher is as follows: . . . In a not too veiled effort to circumvent this Court's ruling thereon, (the Foster case) plaintiff's counsel has now, through the aegis of Birdie Mae Davis, attempted to propound the same set of interrogatories in an effort to elicit the same information and try to build a case on behalf of unknown others whom this Court has not been shown exist. Such subterfuge borders on the edges of contempt. From these events, affiants concluded that Judge Hand was necessarily biased and prejudiced against them because he was biased and prejudiced against their lawyers,

and through them, against those represented by them. We find no error in the refusal of Judge Hand to disqualify himself. Section 144 requires personal bias or prejudice against a party.[FN8] No bias or prejudice personal to Foster and Buskey is set out. They seek disqualification on an imputation theory the bias against their lawyer is imputed to them.[FN9] Read broadly, this peremptory challenge type approach would bid fair to decimate the bench. Lawyers, once in controversy with a judge, would have a license under which the judge would serve at their will. FN8. s 144: Whenever a timely and pending has any adverse judge shall party to any proceeding in a district court makes and files a sufficient affidavit that the judge before whom the matter is a personal bias or prejudice either against him or in favor of party, such judge shall proceed no further therein, but another be assigned to hear such proceeding.

The affidavit shall state the facts and the reasons for the belief that bias or prejudice exists, and shall be filed not less than ten days before the beginning of the term at which the proceeding is to be heard, or good cause shall be shown for failure to file it within such time. A party may file only one such affidavit in any case. It shall be accompanied by a certificate of counsel of record stating that it is made in good faith. FN9. No. 75-1779, Jones v. Callaway, pending in this court on interlocutory appeal, involves a like challenge. [3] One answer is that party as used in s 144 does not include counsel as such. Cf. United States ex rel. Wilson v. Coughlin, 7 Cir., 1973, 472 F.2d 100, 104; *1051Giebe v. Pence, 9 Cir., 1970, 431 F.2d 942, 943. On the other hand, there could be a case where the cause of the controversy with the lawyer would demonstrate bias of such a nature as to amount to a bias against a group of which the party was a member e. g., all Negroes, Jews, Germans, or Baptists. This then would be bias of a continuing and personal nature over and above mere bias against a lawyer because of his conduct. We find no such lawyer-to-client constructive bias in this record. The controversy is not over race but over the employment of the class action device and its ramifications in litigation. Rule 23, F.R.Civ.P. It is true that plaintiffs are Negroes and that their counsel handles civil rights cases, but the connection between the judge and the claim of bias on behalf of the particular parties here is too attenuated to require disqualification. [4] Once the motion is filed under s 144, the judge must pass on the legal sufficiency of the affidavit, but may not pass on the truth of the matters alleged. See Berger v. United States, 1921, 255 U.S. 22, 41 S.Ct. 230, 65 L.Ed. 481; United States v. Roca-Alvarez, 5 Cir., 1971, 451 F.2d 843, 847-48; United States v. Townsend, 3 Cir., 1973, 478 F.2d 1072. The affidavits were found legally insufficient here and we agree. The truth of the matters alleged was not in issue. These were in substance lawyer motions as distinguished from party motions. [5][6] Moreover, aside from the doubtful showing of personal bias by Foster and Buskey, they are foreclosed for another reason. It is settled that the requisite basis of bias and prejudice under s 144 must be extra-judicial. See United States v. Grinnell Corp., 1966, 384 U.S. 563, 583, 86 S.Ct. 1698, 16 L.Ed.2d 778, 793; Berger v. United States, 1921, 255 U.S. 22, 31, 41 S.Ct. 230, 65 L.Ed. 481, 484. The controversy with the lawyers in the present case was not extra-judicial. Rather, it was very much judicial, consisting of language in an order in the very

case before the court, and in an opinion in another case before the court. Such statements are not available as grounds for a s 144 affidavit. See United States v. Board of School Commissioners, 7 Cir., 1974, 503 F.2d 68, 81; Hanger v. United States, 8 Cir., 1968, 398 F.2d 91, 101; Mirra v. United States, 2 Cir., 1967, 379 F.2d 782, 787-88; Tynan v. United States, 1967, 126 U.S.App.D.C. 206, 376 F.2d 761, 764-65; In re Union Leader Corp., 1 Cir., 1961, 292 F.2d 381, 388-89.

**[7] Here again, however, we think there is an exception where such pervasive bias and prejudice is shown by otherwise judicial conduct as would constitute bias against a party. But, as stated, supra, we find an insufficient basis for such a finding in the circumstances presented here.
But s 144 is not the end of the matter. The recent amendment of 28 U.S.C.A. s 455, to require disqualification of any judge when his impartiality might reasonably be questioned, also must be considered.[FN10] FN10. Pub.L. 93-512, s 1, 88 Stat. 1609. s 455 provides, in pertinent part: (a) Any justice, judge, magistrate, or referee in bankruptcy of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned. (b) He shall also disqualify himself in the following circumstances: (1) Where he has a personal bias or prejudice concerning a party, . . . [8][9] The office of the procedure under s 144 is to disqualify a judge prior to trial on motion of a party. Section 455 is the statutory standard for disqualification of a judge.[FN11] It is self-enforcing on the part of the judge. It may also be asserted by a party by motion in the trial court, Rapp v. Van Dusen, 3 Cir., 1965, 350 F.2d 806, 809; through assignment of error on appeal, United States v. Seiffert, 5 Cir., 1974, 501 F.2d 974; Shadid v. Oklahoma City, 10 Cir., 1974, 494 F.2d 1267, 1268, by interlocutory appeal, as here, or by mandamus, *1052Texaco, Inc. v. Chandler, 10 Cir., 1965, 354 F.2d 655. FN11. Compare American Bar Assn., 1972, Code of Judicial Conduct, Canon 3C. The quoted language, supra, in s 455 is new to the federal law of disqualification and we must determine whether Congress intended to overrule the gloss placed on s 144, and impliedly on s 455, by court decisions that it applies only to conduct which runs against a party and not the lawyer, cf. United States ex rel. Wilson v. Coughlin, supra, at 104; Giebe v. Pence, supra, at 943; see also, Annot., 23 A.L.R.3d 1416; and that disqualification results from extra-judicial conduct rather than from matters arising in a judicial context. See United States v. Grinnell Corp., supra, 384 U.S. at 583, 86 S.Ct. 1698, 16 L.Ed.2d at 793; United States v. Board of School Commissioners, supra, at 81; Hanger v. United States, supra, at 101; Mirra v. United States, supra, at 787-88; Tynan v. United States, supra, at 764-65; In re Union Leader Corp., supra, at 388-89. See generally, Annot. 2 A.L.R. Fed. 917. [10][11] We find no suggestion in the legislative history that these decisions were being overruled or in anywise eroded. The new language was designed to substitute the reasonable factual basis reasonable man test in determining disqualification for the subjective in the opinion of the judge test in use prior to the amendment. Cf. Kinnear-Weed Corp. v. Humble Oil & Refining Corp., 5 Cir., 1971, 441 F.2d 631, 635. It was also intended to overrule the so-called duty to sit decisions. See Edwards v. United States, 5 Cir., 1964, 334 F.2d 360. The abuse of sound judicial discretion test continues to obtain on appellate review. H.Rep.No.93-1453, 1974 U.S.Code Cong. & Admin.News pp. 6351, 6355.

[12] Construing ss 144 and 455 in pari materia we believe that the test is the same under both. We thus hold that an appellate court, in passing on questions of disqualification of the type here presented, should determine the disqualification on the basis of conduct which shows bias or prejudice or lack of impartiality by focusing on a party rather than counsel. The determination should also be made on the basis of conduct extra-judicial in nature as distinguished from conduct within a judicial context. This means that we give ss 144 and 455 the same meaning legally for these purposes, whether for purposes of bias and prejudice or when the impartiality of the judge might reasonably be questioned. [13] Here, we have judicial activity toward lawyers without more and the result under ss 144 and 455, considered separately and together, is that we find no error. Liteky v. U.S., 510 U.S. 540, 114 S.Ct. 1147, 127 L.Ed.2d 474, 62 USLW 4161 (U.S.Ga.,Mar 07, 1994) Defendants were convicted in the United States District Court for the Middle District of Georgia, J. Robert Elliott, J., of willfully injuring federal property, and they appealed. The Court of Appeals for the Eleventh Circuit affirmed, 973 F.2d 910, and certiorari was granted. The United States Supreme Court, Justice Scalia, held that: (1) extrajudicial source doctrine applies to recusal motions under the bias and prejudice provision of the disqualification statute; (2) extrajudicial source for the bias is not a necessary condition for recusal nor sufficient condition for recusal; (3) bias and prejudice connote a favorable or unfavorable disposition or opinion that is somehow wrongful or inappropriate; and (4) judge's conduct at prior trial involving one defendant and during the trial of defendants did not show bias and prejudice. Affirmed. Justice Kennedy filed an opinion concurring in the judgment in which Justices Blackmun, Stevens and Souter joined. [1] Judges 227 39

227 Judges 227IV Disqualification to Act 227k39 k. Nature and Effect in General. Most Cited Cases Judges 227 47(1)

227 Judges 227IV Disqualification to Act 227k47 Acting as Counsel or Other Participation in Cause 227k47(1) k. In General. Most Cited Cases Required judicial recusal for bias did not exist in England at the time of Blackstone but, since 1792, federal statutes have compelled district judges to recuse themselves when they have an interest in suit or have been counsel to a party. 28 U.S.C.A. 144, 455(a); Act May 8, 1792, 11, 1 Stat. 275; Act March 3, 1821, 3 Stat. 643. [2] Judges 227 39

227 Judges 227IV Disqualification to Act

227k39 k. Nature and Effect in General. Most Cited Cases Judges 227 45

227 Judges 227IV Disqualification to Act 227k45 k. Relationship to Party or Person Interested. Most Cited Cases Revision made in 1974 to statute prohibiting judge's participation in case which he has an interest or relationship to a party brought into the statute elements of general bias and prejudice recusal that had previously been addressed only in statute dealing with recusal of a district judge for bias in general; it entirely duplicated the grounds of recusal set forth in the latter statute but made them applicable to all justices, judges, and magistrates, not just district judges, and placed the obligation to identify the existence of those grounds upon the judge himself, rather than requiring recusal only in response to a party's affidavit. 28 U.S.C.A. 144, 455(b)(1). [3] Judges 227 39

227 Judges 227IV Disqualification to Act 227k39 k. Nature and Effect in General. Most Cited Cases Judges 227 45

227 Judges 227IV Disqualification to Act 227k45 k. Relationship to Party or Person Interested. Most Cited Cases Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases Revisions made in 1974 to statute dealing with disqualification of judge who has an interest in the case or relationship to a party require all interest or relationship and bias or prejudice grounds to be evaluated on an objective basis so that what matters is not the reality of bias or prejudice, but its appearance; recusal is required whenever impartiality might reasonably be questioned. 28 U.S.C.A. 455(a). [4] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases Terms bias and prejudice as used in recusal statutes connote a favorable or unfavorable disposition or opinion that is somehow wrongful or inappropriate, either **because it is undeserved or **because it rests upon knowledge that the subject ought not to possess or **because it is excessive in degree; extrajudicial source doctrine is one application of the pejorativeness requirement of the terms. 28 U.S.C.A. 144, 455(b)(1).

[5] Judges 227

49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases Fact that judge who presides at trial may, upon completion of the evidence, be exceedingly ill disposed towards the defendant, who has been shown to be a thoroughly reprehensible person, does not make the judge recusable for bias or prejudice, as his knowledge and the opinion it produced were properly and necessarily acquired in the course of the proceedings and might be necessary to completion of the judge's task. 28 U.S.C.A. 144, 455(b)(1). [7] Judges 227 47(2)

227 Judges 227IV Disqualification to Act 227k47 Acting as Counsel or Other Participation in Cause 227k47(2) k. Presiding at Former Trial Relating to Same or Similar Matter. Most Cited Cases Opinions held by judges as are not bias or prejudice judge to sit in the same case defendant. 28 U.S.C.A. 144, [8] Judges 227 49(1) result of what they learned in earlier proceedings requiring recusal, and it is normal and proper for upon remand and successive trials involving the same 455.

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases Extrajudicial source is not the only basis for establishing disqualifying bias or prejudice; it is the only common basis, but it is not the exclusive one, since it is not the exclusive reason a predisposition can be wrongful or inappropriate. 28 U.S.C.A. 144, 455. [9] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases Favorable or unfavorable predisposition can serve to be characterized as bias or prejudice requiring recusal because, **even though it springs from the facts adduced or the events occurring at trial, it is so extreme as to display clear inability to render fair judgment; that is the **pervasive bias exception to the extrajudicial source doctrine. 28 U.S.C.A. 144, 455. [10] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases

Partiality does not refer to all favoritism, but only to such as is, for some reason, wrongful or inappropriate; impartiality is not gullibility. 28 U.S.C.A. 144, 455. [11] Judges 227 39

227 Judges 227IV Disqualification to Act 227k39 k. Nature and Effect in General. Most Cited Cases Catch-all provision of the disqualification statute as a broader reach than subsection setting forth specific grounds for disqualification, but the provisions have some ground in common and should not be applied inconsistently. 28 U.S.C.A. 455(a, b). [12] Federal Courts 170B 951.1

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(L) Determination and Disposition of Cause 170Bk951 Powers, Duties and Proceedings of Lower Court After Remand 170Bk951.1 k. In General. Most Cited Cases Federal appellate court's ability to assign case to different judge on remand rests not on recusal statutes alone, but also on appellate court's statutory power to require such further proceedings to be had as may be just under the circumstances. 28 U.S.C.A. 144, 455, 2106. [13] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases Extrajudicial source doctrine applies disqualification statute. 28 U.S.C.A. 455(a). [14] Judges 227 49(1) to catchall provision of

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases Fact that opinion held by judge derives from source outside judicial proceedings is not necessary condition for bias or prejudice recusal, **as predisposition developed during the course of a trial will sometimes suffice; fact that opinion held by judge derives from a source outside judicial proceedings is also not a sufficient condition for bias or prejudice recusal, as some opinions acquired outside the context of judicial proceedings will not suffice; it is thus more proper to speak of an extrajudicial source factor than of an extrajudicial source doctrine in recusal jurisprudence. 28 U.S.C.A. 455(a). [15] Judges 227 227 Judges 49(1)

227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases Judicial rulings alone almost never constitute valid basis for bias or partiality motion for disqualification; in and of themselves, apart from surrounding comments or accompanying opinion, they cannot possibly show reliance on an extrajudicial source **and can only in the rarest circumstances evidence the degree of favoritism or antagonism required when no extrajudicial source is involved. 28 U.S.C.A. 455(a). [16] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases Opinions formed by judge on basis of facts introduced or events occurring in course of current proceeding, or prior proceedings, do not constitute basis for bias or partiality disqualification motion **unless they display deep-seated favoritism or antagonism that would make fair judgment impossible. 28 U.S.C.A. 455(a). [17] Judges 227 49(2)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(2) k. Statements and Expressions of Opinion by Judge. Most Cited Cases Judicial remarks during course of trial that are critical or disapproving of, or even hostile to, counsel, the parties, or their cases ordinarily do not support a bias or partiality challenge; **they may do so if they reveal an opinion that derives from an extrajudicial source and they will do so if they reveal such a high degree of favoritism or antagonism as to make fair judgment impossible. [18] Judges 227 49(2)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(2) k. Statements and Expressions of Opinion by Judge. Most Cited Cases Expressions of impatience, dissatisfaction, annoyance, and even anger, that are within the bounds of what imperfect men and women sometimes display, even after having been confirmed as federal judges, do not establish bias or partiality; judge's ordinary efforts at courtroom administration, even a stern and short-tempered judge's ordinary efforts at courtroom administration, are immune from disqualifications motions. 28 U.S.C.A. 455(a). [19] Judges 227 47(2)

227 Judges 227IV Disqualification to Act 227k47 Acting as Counsel or Other Participation in Cause 227k47(2) k. Presiding at Former Trial Relating to Same or Similar Matter. Most Cited Cases

Judges 227

49(2)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(2) k. Statements and Expressions of Opinion by Judge. Most Cited Cases Judge's recusal from prosecution of defendants for acts of vandalism on military reservation was not required by fact that judge had presided over prior prosecution of one of the defendants for engaging in protest action had displayed impatience, disregard for the defense and animosity towards defendant by stating that the purpose of the trial was a criminal case and not to provide a political forum, admonishing defendant that closing argument was not a time for making a speech in a political forum and giving him allegedly excessive sentence on the basis of the court's refusal to allow speeches or discussions concerning government policy in the instant prosecution and his instructions to defense counsel to limit remarks to what he expected the evidence to show or on the basis of his refusal in the prior trial to call the defendant, who was Catholic priest, Father. 28 U.S.C.A. 455(a). Before and during petitioners' 1991 trial on federal criminal charges, the District Judge denied defense motions that he recuse himself pursuant to 28 U.S.C. 455(a), which requires a federal judge to disqualify himself in any proceeding in which his impartiality might reasonably be questioned. The first motion was based on rulings and statements this same judge made, which allegedly displayed impatience, disregard, and animosity toward the defense, during and after petitioner Bourgeois' 1983 bench trial on similar charges. The second motion was founded on the judge's admonishment of Bourgeois' counsel and codefendants in front of the jury at the 1991 trial. In affirming petitioners' convictions, the Court of Appeals agreed with the District Judge that matters arising from judicial proceedings are not a proper basis for recusal. Held: Required recusal under 455(a) is subject to the limitation that has come to be known as the extrajudicial source doctrine. Pp. 1151-1158. (a) The doctrine-see United States v. Grinnell Corp., 384 U.S. 563, 583, 86 S.Ct. 1698, 1710, 16 L.Ed.2d 778-applies to 455(a). It was developed under 144, which requires disqualification for personal bias or prejudice. That phrase is repeated as a recusal ground in 455(b)(1), and 455(a), addressing disqualification for appearance of partiality, also covers bias or **1150 prejudice. The absence of the word personal in 455(a) does not preclude the doctrine's application, since the textual basis for the doctrine is the pejorative connotation of the words bias or prejudice, which indicate a judicial predisposition that is wrongful or inappropriate. Similarly, because the term partiality refers only to such favoritism as is, for some reason, wrongful or inappropriate, 455(a)'s requirement of recusal whenever there exists a genuine question concerning a judge's impartiality does not preclude the doctrine's application. A contrary finding would cause the statute, in a significant sense, to contradict itself, since (petitioners acknowledge) 455(b)(1) embodies the doctrine, and 455(a) duplicates 455(b)'s protection with regard to bias and prejudice. Pp. 1151-1156. (b) However, it is better to speak of the existence of an extrajudicial source factor, than of a doctrine, because the presence of such a source does not necessarily establish bias, and its absence does not necessarily *541 preclude bias. The consequences of that factor are twofold for purposes of this case. First, judicial rulings alone almost never constitute valid basis for a bias or partiality recusal motion. See Grinnell, supra, at 583, 86 S.Ct. at 1710. Apart from surrounding comments or accompanying opinion, they cannot possibly show reliance on an extrajudicial source; and, absent such reliance, they require recusal only when they evidence such deep-seated favoritism or antagonism as would make fair judgment impossible. Second, opinions formed by the judge on the basis of facts introduced or events occurring during current or prior proceedings are not grounds for a recusal motion unless they display a similar degree of favoritism or antagonism. Pp. 1156-1157. (c) Application of the foregoing principles to the facts of this case demonstrates that none of the grounds petitioners assert required disqualification. They all consist of judicial rulings, routine trial administration efforts, and ordinary admonishments (whether or not legally supportable) to counsel and to witnesses. All occurred in the course of judicial proceedings, and neither (1) relied upon knowledge acquired outside such proceedings nor (2) displayed deep-seated and unequivocal antagonism that would render fair judgment impossible. Pp. 1157-1158. 973 F.2d 910 (CA11 1992) affirmed. SCALIA, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and O'CONNOR, THOMAS, and GINSBURG, JJ., joined. KENNEDY, J., filed an opinion concurring in the judgment, in which BLACKMUN, STEVENS,

and SOUTER, JJ., joined, post, p. 1158. Peter J. Thompson, Washington, DC, appointed by this Court, for petitioners. Thomas G. Hungar, Washington, DC, for respondent. For U.S. Supreme Court briefs, see:1993 WL 387331 (Pet.Brief)1993 WL 384814 (Resp.Brief) Justice SCALIA delivered the opinion of the Court. Section 455(a) of Title 28 of the United States Code requires a federal judge to disqualify himself in any proceeding in which his impartiality might reasonably be questioned. This case presents the question whether required recusal under this provision is subject to the limitation that has come to be known as the extrajudicial source doctrine. *542 I In the 1991 trial at issue here, petitioners were charged with willful destruction of property of the United States in violation of 18 U.S.C. 1361. The indictment alleged that they had committed acts of vandalism, including the spilling of human blood on walls and various objects, at the Fort Benning Military Reservation. Before trial petitioners moved to disqualify the District Judge pursuant to 28 U.S.C. 455(a). The motion relied on events that had occurred during and immediately after an earlier trial, involving**1151 petitioner Bourgeois, before the same District Judge. In the 1983 bench trial, Bourgeois, a Catholic priest of the Maryknoll order, had been tried and convicted of various misdemeanors committed during a protest action, also on the federal enclave of Fort Benning. Petitioners claimed that recusal was required in the present case because the judge had displayed impatience, disregard for the defense and animosity toward Bourgeois, Bourgeois' codefendants, and their beliefs. The alleged evidence of that included the following words and acts by the judge: stating at the outset of the trial that its purpose was to try a criminal case and not to provide a political forum; observing after Bourgeois' opening statement (which described the purpose of his protest) that the statement ought to have been directed toward the anticipated evidentiary showing; limiting defense counsel's cross-examination; questioning witnesses; periodically cautioning defense counsel to confine his questions to issues material to trial; similarly admonishing witnesses to keep answers responsive to actual questions directed to material issues; admonishing Bourgeois that closing argument was not a time for making a speech in a political forum; and giving Bourgeois what petitioners considered to be an excessive sentence. The final asserted ground for disqualification-and the one that counsel for petitioners described at oral argument as the most serious-was the judge's interruption of the closing argument of one of Bourgeois' codefendants, *543 instructing him to cease the introduction of new facts, and to restrict himself to discussion of evidence already presented. The District Judge denied petitioners' disqualification motion, stating that matters arising from judicial proceedings were not a proper basis for recusal. At the outset of the trial, Bourgeois' counsel informed the judge that he intended to focus his defense on the political motivation for petitioners' actions, which was to protest United States Government involvement in El Salvador. The judge said that he would allow petitioners to state their political purposes in opening argument and to testify about them as well, but that he would not allow long speeches or discussions concerning Government policy. When, in the course of opening argument, Bourgeois' counsel began to explain the circumstances surrounding certain events in El Salvador, the prosecutor objected, and the judge stated that he would not allow discussion about events in El Salvador. He then instructed defense counsel to limit his remarks to what he expected the evidence to show. At the close of the prosecution's case, Bourgeois renewed his disqualification motion, adding as grounds for it the District Judge's admonishing [him] in front of the jury regarding the opening statement, and the District Judge's unspecified admonishing [of] others, in particular Bourgeois' two pro se codefendants. The motion was again denied. Petitioners were convicted of the offense charged. Petitioners appealed, claiming that the District Judge violated 28 U.S.C. 455(a) in refusing to recuse himself. The Eleventh Circuit affirmed the convictions, agreeing with the District Court that matters arising out of the course of judicial proceedings are not a proper basis for recusal. 973 F.2d 910 (1992). We granted certiorari. 508 U.S. 939, 113 S.Ct. 2412, 124 L.Ed.2d 636 (1993). II [1] Required judicial recusal for bias did not exist in England at the time of Blackstone. 3 W. Blackstone, Commentaries *544 *361. Since 1792, federal statutes have compelled district judges to recuse themselves when they have an interest in the suit, or have been counsel to a party. See Act of May 8, 1792, ch. 36, 11, 1 Stat. 278. In 1821, the basis of recusal was expanded to include all judicial relationship or connection with a party that would in the judge's opinion make it improper to

sit. Act of Mar. 3, 1821, ch. 51, 3 Stat. 643. Not until 1911, however, was a provision enacted requiring district-judge recusal for bias in general. In its current form, codified at 28 U.S.C. 144, that provision reads as follows: **1152 Whenever a party to any proceeding in a district court makes and files a timely and sufficient affidavit that the judge before whom the matter is pending has a personal bias or prejudice either against him or in favor of any adverse party, such judge shall proceed no further therein, but another judge shall be assigned to hear such proceeding. The affidavit shall state the facts and the reasons for the belief that bias or prejudice exists, and shall be filed not less than ten days before the beginning of the term at which the proceeding is to be heard, or good cause shall be shown for failure to file it within such time. A party may file only one such affidavit in any case. It shall be accompanied by a certificate of counsel of record stating that it is made in good faith. Under 144 and its predecessor, there came to be generally applied in the courts of appeals a doctrine, more standard in its formulation than clear in its application, requiring-to take its classic formulation found in an oft-cited opinion by Justice Douglas for this Court-that [t]he alleged bias and prejudice to be disqualifying [under 144] must stem from an extrajudicial source. United States v. Grinnell Corp., 384 U.S. 563, 583, 86 S.Ct. 1698, 1710, 16 L.Ed.2d 778 (1966) . We say that the doctrine was less than entirely clear in its application for *545 several reasons. First, Grinnell (the only opinion of ours to recite the doctrine) clearly meant by extrajudicial source a source outside the judicial proceeding at hand-which would include as extrajudicial sources earlier judicial proceedings conducted by the same judge (as are at issue here). FN1 Yet many, perhaps most, Courts of Appeals considered knowledge (and the resulting attitudes) that a judge properly acquired in an earlier proceeding not to be extrajudicial. See, e.g., Lyons v. United States, 325 F.2d 370, 376 (CA9), cert. denied, 377 U.S. 969, 84 S.Ct. 1650, 12 L.Ed.2d 738 (1964); Craven v. United States, 22 F.2d 605, 607-608 (CA1 1927). Secondly, the doctrine was often quoted as justifying the refusal to consider trial rulings as the basis for 144 recusal. See, e.g., Toth v. Trans World Airlines, Inc., 862 F.2d 1381, 1387-1388 (CA9 1988); Liberty Lobby, Inc. v. Dow Jones & Co., 838 F.2d 1287, 1301 (CADC), cert. denied, 488 U.S. 825, 109 S.Ct. 75, 102 L.Ed.2d 51 (1988). But trial rulings have a judicial expression rather than a judicial source. They may well be based upon extrajudicial knowledge or motives. Cf. In re International Business Machines Corp., 618 F.2d 923, 928, n. 6 (CA2 1980). And finally, even in cases in which the source of the bias or prejudice was clearly the proceedings themselves (for example, testimony introduced or an event occurring at trial which produced unsuppressible judicial animosity), the supposed doctrine would not necessarily be applied. See, e.g., Davis v. Board of School Comm'rs of Mobile County, 517 F.2d 1044, 1051 (CA5 1975) (doctrine has pervasive bias exception), cert. denied, 425 U.S. 944, 96 S.Ct. 1685, 48 L.Ed.2d 188 (1976); *546 Rice v. McKenzie, 581 F.2d 1114, 1118 (CA4 1978) (doctrine has always had limitations). [2] Before 1974, 455 was nothing more than the then-current version of the 1821 prohibition against a judge's presiding who has an interest in the case or a relationship to a party. It read, quite simply: Any justice or judge of the United States shall disqualify himself in any case in which he has a substantial interest, has been of counsel, is or has been a material witness, or is so related to or connected with any party or his attorney as to render it improper, in his opinion, for him to sit on the trial, appeal, or other proceeding therein. 28 U.S.C. 455 (1970 ed.). The 1974 revision made massive changes, so that 455 now reads as follows: *547 (a) Any justice, judge, or magistrate of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned. (b) He shall also disqualify himself in the following circumstances: (1) Where he has a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding; (2) Where in private practice he served as lawyer in the matter in controversy, or a lawyer with whom he previously practiced law served during such association as a lawyer concerning the matter, or the judge or such lawyer has been a material witness concerning it; (3) Where he has served in governmental employment and in such capacity participated as counsel, adviser or material witness concerning the proceeding or expressed an opinion concerning the merits of the particular case in controversy; (4) He knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a

financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding; (5) He or his spouse, or a person within the third degree of relationship to either of them, or the spouse of such a person: (i) Is a party to the proceeding, or an officer, director, or trustee of a party; (ii) Is acting as a lawyer in the proceeding; (iii) Is known by the judge to have an interest that could be substantially affected by the outcome of the proceeding; (iv) Is to the judge's knowledge likely to be a material witness in the proceeding. *548 Almost all of the revision (paragraphs (b)(2) through (b)(5)) merely rendered objective and spelled out in detail the interest and relationship grounds of recusal that had previously been covered by 455. But the other two paragraphs of the revision brought into 455 elements of general bias and prejudice recusal that had previously been addressed only by 144. Specifically, paragraph (b)(1) entirely duplicated the grounds of recusal set forth in 144 (bias or prejudice), but (1) made them applicable to all justices, judges, and magistrates (and not just district judges), and (2) placed the obligation to identify the existence of those grounds upon the judge himself, rather than requiring recusal only in response to a party affidavit. [3] Subsection (a), the provision at issue here, was an entirely new catchall recusal provision, covering both interest or relationship and bias or prejudice grounds, see **1154Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847, 108 S.Ct. 2194, 100 L.Ed.2d 855 (1988)-but requiring them all to be evaluated on an objective basis, so that what matters is not the reality of bias or prejudice but its appearance. Quite simply and quite universally, recusal was required whenever impartiality might reasonably be questioned. What effect these changes had upon the extrajudicial source doctrine-whether they in effect render it obsolete, of continuing relevance only to 144, which seems to be properly invocable only when 455(a) can be invoked anywaydepends upon what the basis for that doctrine was. Petitioners suggest that it consisted of the limitation of 144 to personal bias or prejudice, bias or prejudice officially acquired being different from personal bias or prejudice. And, petitioners point out, while 455(b)(1) retains the phrase personal bias or prejudice, 455(a) proscribes all partiality, not merely the personal sort. It is true that a number of Courts of Appeals have relied upon the word personal in restricting 144 to extrajudicial sources, see, e.g., *549Craven v. United States, 22 F.2d 605, 607-608 (CA1 1927); Ferrari v. United States, 169 F.2d 353, 355 (CA9 1948). And several cases have cited the absence of that word as a reason for excluding that restriction from 455(a), see United States v. Coven, supra, at 168, cert. denied, 456 U.S. 916, 102 S.Ct. 1771, 72 L.Ed.2d 176 (1982); Panzardi-Alvarez v. United States, 879 F.2d 975, 983-984, and n. 6 (CA1), cert. denied, 493 U.S. 1082, 110 S.Ct. 1140, 107 L.Ed.2d 1045 (1989). It seems to us, however, that that mistakes the basis for the extrajudicial source doctrine. Petitioners' suggestion that we relied upon the word personal in our Grinnell opinion is simply in error. The only reason Grinnell gave for its extrajudicial source holding was citation of our opinion almost half a century earlier in Berger v. United States, 255 U.S. 22, 41 S.Ct. 230, 65 L.Ed. 481 (1921). But that case, and the case which it in turn cited, Ex parte American Steel Barrel Co., 230 U.S. 35, 33 S.Ct. 1007, 57 L.Ed. 1379 (1913), relied not upon the word personal in 144, but upon its provision requiring the recusal affidavit to be filed 10 days before the beginning of the court term. That requirement was the reason we found it obvious in Berger that the affidavit must be based upon facts antedating the trial, not those occurring during the trial, 255 U.S., at 34, 41 S.Ct., at 233; and the reason we said in American Steel Barrel that the recusal statute was never intended to enable a discontented litigant to oust a judge because of adverse rulings made, ... but to prevent his future action in the pending cause, 230 U.S., at 44, 33 S.Ct., at 1010. In our view, the proper (though unexpressed) rationale for Grinnell, and the basis of the modern extrajudicial source doctrine, is not the statutory term personal-for several reasons. First and foremost, that explanation is simply not the semantic success it pretends to be. Bias and prejudice seem to us not divided into the personal kind, which is offensive, and the official kind, which is perfectly all right. As generally used, these are pejorative terms, describing dispositions that are never appropriate. It is common to speak of personal bias or personal prejudice without meaning the adjective to do anything except emphasize the *550 idiosyncratic nature of bias and prejudice, and certainly without implying that there is some other nonpersonal, benign category of those mental states. In a similar vein, one speaks of an individual's personal

preference, without implying that he could also have a nonpersonal preference. Secondly, interpreting the term personal to create a complete dichotomy between court-acquired and extrinsically acquired bias produces results so intolerable as to be absurd. Imagine, for example, a lengthy trial in which the presiding judge for the first time learns of an obscure religious sect, and acquires a passionate hatred for all its adherents. This would be official rather than personal bias, and would provide no basis for the judge's recusing himself. **1155 [4] It seems to us that the origin of the extrajudicial source doctrine, and the key to understanding its flexible scope (or the so-called exceptions to it), is simply the pejorative connotation of the words bias or prejudice. Not all unfavorable disposition towards an individual (or his case) is properly described by those terms. One would not say, for example, that world opinion is biased or prejudiced against Adolf Hitler. The words connote a favorable or unfavorable disposition or opinion that is somehow wrongful or inappropriate, either **because it is undeserved, or **because it rests upon knowledge that the subject ought not to possess (for example, a criminal juror who has been biased or prejudiced by receipt of inadmissible evidence concerning the defendant's prior criminal activities), or **because it is excessive in degree (for example, a criminal juror who is so inflamed by properly admitted evidence of a defendant's prior criminal activities that he will vote guilty regardless of the facts). The extrajudicial source doctrine is one application of this pejorativeness requirement to the terms bias and prejudice as they are used in 144 and 455(b)(1) with specific reference to the work of judges. [5][6][7] The judge who presides at a trial may, upon completion of the evidence, be exceedingly ill disposed towards the defendant,*551 who has been shown to be a thoroughly reprehensible person. But the judge is not thereby recusable for bias or prejudice, since his knowledge and the opinion it produced were properly and necessarily acquired in the course of the proceedings, and are indeed sometimes (as in a bench trial) necessary to completion of the judge's task. As Judge Jerome Frank pithily put it: Impartiality is not gullibility. Disinterestedness does not mean child-like innocence. If the judge did not form judgments of the actors in those court-house dramas called trials, he could never render decisions. In re J.P. Linahan, Inc., 138 F.2d 650, 654 (CA2 1943). Also not subject to deprecatory characterization as bias or prejudice are opinions held by judges as a result of what they learned in earlier proceedings. It has long been regarded as normal and proper for a judge to sit in the same case upon its remand, and to sit in successive trials involving the same defendant. [8][9] It is wrong in theory, though it may not be too far off the mark as a practical matter, to suggest, as many opinions have, that extrajudicial source is the only basis for establishing disqualifying bias or prejudice. **It is the only common basis, but not the exclusive one, since it is not the exclusive reason a predisposition can be wrongful or inappropriate. A favorable or unfavorable predisposition can also deserve to be characterized as bias or prejudice because, even though it springs from the facts adduced or the events occurring at trial, it is so extreme as to display clear inability to render fair judgment. (That explains what some courts have called the pervasive bias exception to the extrajudicial source doctrine. See, e.g., Davis v. Board of School Comm'rs of Mobile County, 517 F.2d 1044, 1051 (CA5 1975), cert. denied, 425 U.S. 944, 96 S.Ct. 1685, 48 L.Ed.2d 188 (1976).) [10] With this understanding of the extrajudicial source limitation in 144 and 455(b)(1), we turn to the question whether it appears in 455(a) as well. Petitioners' argument for the negative based upon the mere absence of the *552 word personal is, for the reasons described above, not persuasive. Petitioners also rely upon the categorical nature of 455's language: Recusal is required whenever there exists a genuine question concerning a judge's impartiality, and not merely when the question arises from an extrajudicial source. A similar plain-language argument could be made, however, with regard to 144 and 455(b)(1): They apply whenever bias or prejudice exists, and not merely when it derives from an extrajudicial source. As we have described, the latter argument is invalid because the pejorative connotation of the terms bias and prejudice demands that they be applied only to judicial predispositions that go beyond what is normal and acceptable. We **1156 think there is an equivalent pejorative connotation, with equivalent consequences, to the term partiality. See American Heritage Dictionary 1319 (3d ed. 1992) (partiality defined as [f]avorable prejudice or bias). **A prospective juror in an insurance-claim case may be stricken as partial if he always votes for insurance companies; but not if he always votes for the party whom the terms of the contract support. **Partiality does not refer to all favoritism, but only to such as is, for some reason, wrongful or inappropriate. Impartiality is not gullibility. Moreover, even if the pejorative connotation of partiality were not enough to import the extrajudicial source doctrine into 455(a), the reasonableness limitation (recusal is required only if the judge's impartiality might reasonably be questioned) would have the same effect. To demand the sort of child-like innocence that elimination of the extrajudicial source limitation would require is not reasonable. [11] Declining to find in the language of 455(a) a limitation which (petitioners acknowledge) is contained in the language of 455(b)(1) would cause the statute, in a significant sense, to contradict itself. As we have described, 455(a) expands the protection of 455(b), but duplicates some of its protection as well-not only with regard to bias and prejudice

but also with regard to interest and relationship. Within the *553 area of overlap, it is unreasonable to interpret 455(a) (unless the language requires it) as implicitly eliminating a limitation explicitly set forth in 455(b). It would obviously be wrong, for example, to hold that impartiality could reasonably be questioned simply because one of the parties is in the fourth degree of relationship to the judge. Section 455(b)(5), which addresses the matter of relationship specifically, ends the disability at the third degree of relationship, and that should obviously govern for purposes of 455(a) as well. Similarly, 455(b)(1), which addresses the matter of personal bias and prejudice specifically, contains the extrajudicial source limitation-and that limitation (since nothing in the text contradicts it) should govern for purposes of 455(a) as well.FN2 FN2. Justice KENNEDY asserts that what we have said in this paragraph contradicts the proposition, established in Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847, 108 S.Ct. 2194, 100 L.Ed.2d 855 (1988), that subsections (a) and (b), while addressing many of the same underlying circumstances, are autonomous in operation. Post, at 1163. Liljeberg established no such thing. It established that subsection (a) requires recusal in some circumstances where subsection (b) does not-but that is something quite different from autonomy, which in the context in which Justice KENNEDY uses it means that the one subsection is to be interpreted and applied without reference to the other. It is correct that subsection (a) has a broader reach than subsection (b), post, at 1163, but the provisions obviously have some ground in common as well, and should not be applied inconsistently there. Liljeberg concerned a respect in which subsection (a) did go beyond (b). Since subsection (a) deals with the objective appearance of partiality, any limitations contained in (b) that consist of a subjective-knowledge requirement are obviously inapplicable. Subsection (a) also goes beyond (b) in another important respect: It covers all aspects of partiality, and not merely those specifically addressed in subsection (b). However, when one of those aspects addressed in (b) is at issue, it is poor statutory construction to interpret (a) as nullifying the limitations (b) provides, except to the extent the text requires. Thus, as we have said, under subsection (a) as under (b)(5), fourth degree of kinship will not do. What is at issue in the present case is an aspect of partiality already addressed in (b), personal bias or prejudice. The objective appearance principle of subsection (a) makes irrelevant the subjective limitation of (b)(1): The judge does not have to be subjectively biased or prejudiced, so long as he appears to be so. But nothing in subsection (a) eliminates the longstanding limitation of (b)(1), that personal bias or prejudice does not consist of a disposition that fails to satisfy the extrajudicial source doctrine. The objective appearance of an adverse disposition attributable to information acquired in a prior trial is not an objective appearance of personal bias or prejudice, and hence not an objective appearance of improper partiality. [12] *554 Petitioners suggest that applying the extrajudicial source limitation to 455(a) will cause disqualification of a trial judge to be more easily obtainable upon remand of a case by an appellate court than upon direct motion. We do not see why that necessarily follows; and if it does, why it is necessarily bad. Federal appellate courts' ability to assign a case to a different judge on remand rests not on the recusal statutes **1157 alone, but on the appellate courts' statutory power to require such further proceedings to be had as may be just under the circumstances, 28 U.S.C. 2106. That may permit a different standard, and there may be pragmatic reasons for a different standard. We do not say so-but merely say that the standards applied on remand are irrelevant to the question before us here. [13][14] For all these reasons, we think that the extrajudicial source doctrine, as we have described it, applies to 455(a). As we have described it, however, there is not much doctrine to the doctrine. The fact that an opinion held by a judge derives from a source outside judicial proceedings is not a necessary condition for bias or prejudice recusal, since predispositions developed during the course of a trial will sometimes (albeit rarely) suffice. Nor is it a sufficient condition for bias or prejudice recusal, since some opinions acquired outside the context of judicial proceedings (for example, the judge's view of the law acquired in scholarly reading) will not suffice. Since neither the presence of an extrajudicial source necessarily establishes bias, nor the absence of an extrajudicial source necessarily precludes bias, it would be *555 better to speak of the existence of a significant (and often determinative) extrajudicial source factor, than of an extrajudicial source doctrine, in recusal jurisprudence. [15][16][17][18] The facts of the present case do not require us to describe the consequences of that factor in complete detail. It is enough for present purposes to say the following: First, judicial rulings alone almost never constitute a valid basis for a bias or partiality motion. See United States v. Grinnell Corp., 384 U.S., at 583, 86 S.Ct., at 1710. In and of themselves (i.e., apart from surrounding comments or accompanying opinion), they cannot possibly show reliance upon an extrajudicial source; and can only in the rarest circumstances evidence the degree of favoritism or antagonism required (as discussed below) when no extrajudicial source is involved. Almost invariably, they are proper grounds for appeal, not for recusal.

Second, opinions formed by the judge on the basis of facts introduced or events occurring in the course of the current proceedings, or of prior proceedings, do not constitute a basis for a bias or partiality motion unless they display a deep-seated favoritism or antagonism that would make fair judgment impossible. Thus, judicial remarks during the course of a trial that are critical or disapproving of, or even hostile to, counsel, the parties, or their cases, ordinarily do not support a bias or partiality challenge. They may do so if they reveal an opinion that derives from an extrajudicial source; and they will do so if they reveal such a high degree of favoritism or antagonism as to make fair judgment impossible. An example of the latter (and perhaps of the former as well) is the statement that was alleged to have been made by the District Judge in Berger v. United States, 255 U.S. 22, 41 S.Ct. 230, 65 L.Ed. 481 (1921) , a World War I espionage case against German-American defendants: One must have a very judicial mind, indeed, not [to be] prejudiced against the German Americans because their hearts are reeking with disloyalty. Id., at 28 (internal quotation marks omitted). Not establishing bias or partiality, however, are expressions of impatience, dissatisfaction, annoyance,*556 and even anger, that are within the bounds of what imperfect men and women, even after having been confirmed as federal judges, sometimes display. A judge's ordinary efforts at courtroom administration-even a stern and short-tempered judge's ordinary efforts at courtroom administration-remain immune. III [19] Applying the principles we have discussed to the facts of the present case is not difficult. None of the grounds petitioners assert required disqualification. As we have described, petitioners' first recusal motion was based on rulings made, and statements uttered, by the District Judge during and after the 1983 trial; and petitioner Bourgeois' second recusal motion was founded on the judge's admonishment of Bourgeois' **1158 counsel and codefendants. In their briefs here, petitioners have referred to additional manifestations of alleged bias in the District Judge's conduct of the trial below, including the questions he put to certain witnesses, his alleged anti-defendant tone, his cutting off of testimony said to be relevant to defendants' state of mind, and his post-trial refusal to allow petitioners to appeal in forma pauperis.FN3 FN3. Petitioners' brief also complains of the District Judge's refusal in the 1983 trial to call petitioner Bourgeois Father, asserting that this subtly manifested animosity toward Father Bourgeois. Brief for Petitioners 30. As we have discussed, when intrajudicial behavior is at issue, manifestations of animosity must be much more than subtle to establish bias. All of these grounds are inadequate under the principles we have described above: They consist of judicial rulings, routine trial administration efforts, and ordinary admonishments (whether or not legally supportable) to counsel and to witnesses. All occurred in the course of judicial proceedings, and neither (1) relied upon knowledge acquired outside such proceedings nor (2) displayed deep-seated and unequivocal antagonism that would render fair judgment impossible. The judgment of the Court of Appeals is Affirmed.

In re U.S., 572 F.3d 301 (7th Cir.(Wis.),Jul 10, 2009) Positive outcome case for deep seated bias antagonism that would make fair judgment impossible
Background: Following rulings on pretrial motions, 607 F.Supp.2d 930, and denial of government's motion for reconsideration, 608 F.Supp.2d 1061, the government petitioned for a writ of mandamus from the District Court for the Eastern District of Wisconsin, J.P. Stadtmueller, J., in a prosecution for being a felon in possession of a firearm. Holdings: The Court of Appeals, Ripple, Circuit Judge, held that: (1) time period during which the government sought reconsideration of the district court's order denying its motion for recusal would not be considered in determining the timeliness of government's mandamus petition; (2) petition was timely; and (3) writ of mandamus for disqualification of district judge was warranted. Petition granted. [1] Mandamus 250 187.9(1)

250 Mandamus 250III Jurisdiction, Proceedings, and Relief 250k187 Appeal and Error 250k187.9 Review 250k187.9(1) k. Scope and extent in general. Most Cited Cases In considering a petition for a writ of mandamus seeking the disqualification of a district judge, the Court of Appeals reviews that judge's denial of a recusal motion de novo. 28 U.S.C.A. 1651(a). [3] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In general. Most Cited Cases Recusal is required when a reasonable person perceives a significant risk that the judge will resolve the case on a basis other than the merits. 28 U.S.C.A. 455(a). [5] Mandamus 250 143(1)

250 Mandamus 250III Jurisdiction, Proceedings, and Relief 250k143 Time to Sue, Limitations, and Laches 250k143(1) k. In general. Most Cited Cases The time period during which the government sought reconsideration of the district court's order denying its motion for recusal, in prosecution for being a felon in possession of a firearm, would not be considered in determining the timeliness of the government's petition for writ of mandamus seeking the disqualification of the district judge. 28 U.S.C.A. 455(a), 1651(a). [8] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In general. Most Cited Cases In determining whether recusal of a judge is warranted, a court decides one fundamental issue: whether a reasonable, well-informed observer could question the judge's impartiality. 28 U.S.C.A. 455(a). [9] Mandamus 250 29

250 Mandamus 250II Subjects and Purposes of Relief 250II(A) Acts and Proceedings of Courts, Judges, and Judicial Officers 250k29 k. Specific acts. Most Cited Cases Writ of mandamus for disqualification of district judge, based on appearance of impartiality, was warranted, in prosecution for being a felon in possession of a firearm; prior to ruling on motion to suppress and other pretrial motions, the district judge called an in-chambers meeting with the United States Attorney and the federal defender, no court reporter was present and no other record was made of the meeting, the parties agreed that during this meeting, the judge suggested a specific plea bargain, as prohibited by the federal rule of criminal procedure governing plea agreements, the judge questioned the government's decision to prosecute the matter, he expressed that neither party would be pleased with his rulings on the suppression motion, and he suggested that the case was an embarrassment to the justice system. 28 U.S.C.A. 455(a),

1651(a); Fed.Rules Cr.Proc.Rule 11(c)(1), 18 U.S.C.A. [10] Judges 227 49(2)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(2) k. Statements and expressions of opinion by judge. Most Cited Cases Although judicial remarks during the course of a trial that are critical or disapproving of, or even hostile, to, counsel, the parties, or their cases, ordinarily do not support a bias or partiality challenge, **they will do so if they reveal such a high degree of favoritism or antagonism as to make fair judgment impossible. 28 U.S.C.A. 455(a).

Before RIPPLE, ROVNER and WOOD, Circuit Judges. RIPPLE, Circuit Judge. The United States (the Government) has filed this petition for a writ of mandamus seeking the recusal of the respondent district judge currently presiding over a criminal action pending in the United States District Court for the Eastern District of Wisconsin. Because the Government has established that a reasonable, well-informed observer might question the impartiality of the district judge, we must grant the requested writ, disqualifying the judge from presiding over the proceeding and requiring that he vacate all orders entered since the filing of the recusal motion in the district court.

At p. 308,
[3] Section 455(a) of the Judicial Code provides: Any justice, judge, or magistrate judge of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned. 28 U.S.C. 455(a). The Supreme Court has explained that [t]he goal of section 455(a) is to avoid even the appearance of partiality. Liljeberg v. Health Serv. Acquisition Corp., 486 U.S. 847, 860, 108 S.Ct. 2194, 100 L.Ed.2d 855 (1988) (quoting Hall v. Small Bus. Admin., 695 F.2d 175, 179 (5th Cir.1983)). Accordingly, we have required recusal whenever there is a reasonable basis' for a finding of an appearance of partiality under the facts and circumstances' of the case. Pepsico, Inc. v. McMillen, 764 F.2d 458, 460 (7th Cir.1985) (quoting SCA Servs., Inc. v. Morgan, 557 F.2d 110, 116 (7th Cir.1977)). Recusal is required when a reasonable person perceives a significant risk that the judge will resolve the case on a basis other than the merits. In re Mason, 916 F.2d 384, 385 (7th Cir.1990); Nat'l Union Fire Ins. Co., 839 F.2d at 1229.FN7 FN7. See also Cheney v. United States District Court, 541 U.S. 913, 924, 124 S.Ct. 1391, 158 L.Ed.2d 225 (2004) (Scalia, J., in chambers); Microsoft Corp. v. United States, 530 U.S. 1301, 1302, 121 S.Ct. 25, 147 L.Ed.2d 1048 (2000) (statement of Rehnquist, C.J.). [4] Of course, needless recusals exact a significant toll; judges therefore should exercise care in determining whether recusal is necessary, especially when proceedings already are underway. [A] change of umpire mid-contest may require a great deal of work to be redone ... and facilitate judge-shopping. Nat'l Union Fire Ins. Co., 839 F.2d at 1229 (citation omitted). B. Mr. Salahuddin submits that the Government's petition is untimely. He suggests that this court requires litigants to petition for mandamus immediately after a judge grants or denies a motion for recusal. Salahuddin Br. at 8 (citing United States v. Horton, 98 F.3d 313 (7th Cir.1996), and United States v. Balistrieri, 779 F.2d 1191 (7th Cir.1985)). Here, the district court denied the Government's motion for recusal on January 8, 2009, and the Government did not file this petition until May 12, 2009, four months after the motion was denied and one month after the motion for reconsideration was denied. [5] We cannot accept this submission. The time during which the Government sought reconsideration of the district court's order denying its motion for recusal should not be considered in determining the timeliness of the petition. FN8 Mr. Salahuddin suggests no reason why the rule should be otherwise, and, indeed, *309 there are significant benefits in excluding that period. Most importantly, there is significant judicial economy in not requiring a party to file a petition for writ of mandamus in the court of appeals while the district court reconsiders its earlier denial. This approach gives the district court

adequate time to reflect on its order and, if necessary, correct its own error before another court becomes involved. Both the parties and the court of appeals are spared the burden of an additional round of litigation. FN9 Requiring the petition to be filed any earlier would accomplish very little; indeed, in most instances this court would withhold judgment until the district court had ruled on the motion to reconsider. FN8. Neither the All Writs Act, 28 U.S.C. 1651(a), nor Federal Rule of Appellate Procedure 21, provides a specific time frame within which all petitions for writ of mandamus must be filed. FN9. Cf. United States v. Dieter, 429 U.S. 6, 8, 97 S.Ct. 18, 50 L.Ed.2d 8 (1976) (per curiam) (noting that deferring appellate consideration until disposition of a petition for rehearing saves time and reduces the burden on appellate courts by giving district courts the opportunity promptly to correct their own alleged errors); Divane v. Krull Elec. Co., 194 F.3d 845, 850 (7th Cir.1999) (explaining that Federal Rule of Civil Procedure 59(e) allows district courts to correct their own errors, thus avoiding unnecessary appellate procedures (quoting Moro v. Shell Oil Co., 91 F.3d 872, 876 (7th Cir.1996))). [6] Here, the Government's petition was filed more than a month after the district court denied its motion to reconsider. Mr. Salahuddin suggests that this delay does not comport with this court's requirement that a petition for a writ of mandamus to compel the recusal of a district judge must be made immediately or not at all. Horton, 98 F.3d at 316-17; Balistrieri, 779 F.2d at 1205. Read in context, however, these cases simply stand for the proposition, well-established in this circuit, that a motion for recusal under section 455(a) must be made before trial; after trial, the damage to the public perception of the judicial system already has been done, and the party may not then seek relief because the simple appearance of partiality is, at most, harmless error.FN10 FN10. See United States v. Ruzzano, 247 F.3d 688, 694 (7th Cir.2001); United States v. Troxell, 887 F.2d 830, 833 (7th Cir.1989) (collecting cases); N.Y. City Hous. Dev. Corp. v. Hart, 796 F.2d 976, 978-79 (7th Cir.1986) (per curiam). [7] Rather than turning on the term immediately, our cases have taken a fact-specific, pragmatic approach in determining whether a petition seeking recusal is timely. We have examined the prejudice to any other party or to the district court caused by the delay and have examined the amount of work that the delay would cause the new judge to redo. See Nat'l Union Fire Ins. Co., 839 F.2d at 1232. Here, neither the Judge nor Mr. Salahuddin have suggested any prejudice caused by the time it has taken the Government to file its petition. Since denying the Government's motion for recusal, the Judge has issued, in addition to the denial of the Government's motion for reconsideration and the order staying proceedings pending this petition, only a handful of orders, most of which concern scheduling. The Judge did rule on the major issue on remand, the suppression motions, after the Government filed its motion for recusal. However, the Judge's decision to resolve all the suppression motions in the same order as the denial of the recusal motion cannot be attributed to the Government. Any delay attributable to the Government would not require significant work to be redone by a new judge. Moreover, the Government has given a significant reason for the four-week intermission between the denial of its motion for reconsideration and the filing of this petition. The United States Attorney's office was required, under the policies of the *310 Department of Justice, to obtain the permission of the Solicitor General before filing the petition for a writ of mandamus.FN11 See United States Attorneys' Manual, 2-2.124. The petition was filed the day after permission was received. While this requirement necessarily slows the progress of a case, it has long been recognized as a salutary device to ensure that governmental litigation is conducted in a manner consonant with national norms rather than provincial priorities. FN11. This reason is mentioned in footnote 1 of the motion for stay, but not in the petition for a writ of mandamus. C. [8] We now turn to the merits of the Government's submission. At bottom, this matter requires that we decide one fundamental issue: whether a reasonable, well-informed observer could question the Judge's impartiality. See, e.g., Hatcher, 150 F.3d at 637.FN12 FN12. This is an objective standard. Hook, 89 F.3d at 353-54. In denying the motion for reconsideration, the Judge suggested that the fact that Mr. Salahuddin did not desire his recusal demonstrates that such a standard has been met. We respectfully disagree. Mr. Salahuddin is not an impartial observer. The Judge's view of the future course of this prosecution clearly was favorable to the defendant.

[9] In answering this question, we must examine carefully the nature of the Judge's meeting with the heads of the two governmental offices involved. The Judge called an off-the-record meeting with the United States Attorney and the Federal Defender. This manner of proceeding in a federal criminal matter is indeed unusual and necessarily raises substantial concerns in the mind of any well-informed observer. We must take special note of the fact that no record was taken of the meeting. In other contexts, this and other courts have pointed out the need to make a record whenever substantive discussions take place between court and counsel, and we see no reason to exempt the present situation from that admonition. FN13 Indeed, the extraordinary nature of this meeting, evidenced by the Judge's initial willingness to disqualify himself, should it be requested, and his recognition that such a proceeding was extraordinary, should have made the need to memorialize the event even more obvious to the participants. FN13. See United States v. Head, 927 F.2d 1361, 1376 (6th Cir.1991) (observing that the parties' divergent recollections of what occurred during an off-the-record presentence conference demonstrated the serious dangers of such discussions off the record and, [b]ecause of the uncertainties attendant to this procedure, remanding with directions to afford a full opportunity to defendant to address those parts of the sentencing affected by the inchambers conference); cf. Maltby v. Winston, 36 F.3d 548, 561 n. 18 (7th Cir.1994) (noting that it is the responsibility of the district court, if it conducts the instruction conference without a court reporter, to provide the parties with an opportunity to specifically object to jury instructions on the record); United States v. Gallo, 763 F.2d 1504, 1532 (6th Cir.1985) (holding that the defendant had waived violations of Court Reporters Act but noting that the safe course was to let the reporter record what takes place during side bars). The substance of the discussion at the meeting convinces us that the Judge misapprehended the limits of his authority. The parties agree that, at the October 9 meeting, the Judge suggested a specific plea bargain. This participation was clearly violative of the specific prohibition in the Federal Rules of Criminal Procedure that forbids the court from becoming involved in plea negotiations. See Fed.R.Crim.P. 11(c)(1).FN14 As the Fifth Circuit *311 has noted, such involvement is likely to impair the trial court's impartiality. The judge who suggests or encourages a particular plea bargain may feel a personal stake in the agreement ... and may therefore resent the defendant who rejects his advice. United States v. Miles, 10 F.3d 1135,1139 (5th Cir.1993) (quoting United States v. Adams, 634 F.2d 830, 840 (5th Cir.1981)) (omissions in original). We have expressed the same view in United States v. Kraus, 137 F.3d 447, 452 (7th Cir.1998), when we wrote that [e]xcluding the judge from the plea discussions thus serves three purposes: it minimizes the risk that the defendant will be judicially coerced into pleading guilty, it preserves the impartiality of the court, and it avoids any appearance of impropriety. The judge who advocates a particular plea bargain may resent the government for disagreeing.FN15 FN14. Federal Rule of Criminal Procedure 11(c)(1) states: (c) Plea Agreement Procedure. 1) In General. An attorney for the government and the defendant's attorney, or the defendant when proceeding pro se, may discuss and reach a plea agreement. The court must not participate in these discussions. If the defendant pleads guilty or nolo contendere to either a charged offense or a lesser or related offense, the plea agreement may specify that an attorney for the government will: (A) not bring, or will move to dismiss, other charges; (B) recommend, or agree not to oppose the defendant?s request, that a particular sentence or sentencing range is appropriate or that a particular provision of the Sentencing Guidelines, or policy statement, or sentencing factor does or does not apply (such a recommendation or request does not bind the court); or (C) agree that a specific sentence or sentencing range is the appropriate disposition of the case, or that a particular provision of the Sentencing Guidelines, or policy statement, or sentencing factor does or does not apply (such a recommendation or request binds the court once the court accepts the plea agreement). FN15. Because of the distinct possibility of such resentment, the Rule is violated even when no plea negotiation actually takes place. See United States v. Baker, 489 F.3d 366, 371 n. 3 (7th Cir.2007). Here we must conclude that the Judge did more than simply participate in a plea bargain. FN16 He questioned the Government's decision to prosecute the matter as a federal case in terms that a reasonable observer might well interpret as critical of the Government's position in the case. The statement that neither party would be pleased with his ruling on the

suppression motions could have been interpreted as indicating that he was ill-disposed toward the Government's position and might rule based not on the merits, but on his distaste for its prosecutorial decision. **A reasonable, well-informed observer well may have concluded that the Judge was no longer acting as a neutral arbiter, but was advocating for his desired result. FN16. See United States v. Kraus, 137 F.3d 447, 457 (7th Cir.1998) whether the error in this case, or the appearance of error, was harmless and quoting Federal Rule of Criminal Procedure 11(h) for the proposition that [a]ny variance from the procedures required by this rule which does not affect substantial rights shall be disregarded, but also noting that insofar as judicial intervention in the negotiation of a plea agreement is concerned, the possibility of harmless error may be more theoretical than real. [10] The Supreme Court has noted that: [O]pinions formed by the judge on the basis of facts introduced or events occurring in the course of the current proceedings, or of prior proceedings, do not constitute a basis for a bias or partiality motion unless they display a deepseated favoritism or antagonism that would make fair judgment impossible. Thus, judicial remarks during the course of a trial that are critical or *312 disapproving of, or even hostile, to, counsel, the parties, or their cases, ordinarily do not support a bias or partiality challenge .... **they will do so if they reveal such a high degree of favoritism or antagonism as to make fair judgment impossible. Liteky v. United States, 510 U.S. 540, 555, 114 S.Ct. 1147 (1994) (emphasis in original). The parties therefore correctly acknowledge that [e]xpressions of impatience, dissatisfaction, annoyance, and even anger, do not establish bias or partiality. Id. at 555-56, 114 S.Ct. 1147. We must conclude, however, that, taken in context, some of the Judge's comments go further and comment on substantive matters, rather than the conduct of the proceedings. For example, as we have just noted, the Judge questioned why this case was accepted for federal prosecution, expressed concern about the time that had passed between Mr. Salahuddin's initial arrest and the commencement of federal proceedings, and suggested that this case was an embarrassment to the justice system and an inefficient allocation of taxpayer resources. He also sought to avoid a conviction under 18 U.S.C. 924(c), so as to prevent imposition of the fifteen-year mandatory minimum sentence. **In expressing these views and insisting that action be taken to conform the future course of litigation to those views, the Judge misapprehended the limits of his authority as the presiding judicial officer and undertook to participate in determinations that are in the proper domain of the Department of Justice. FN17 The power of the Executive Branch to make these decisions is a safeguard of liberty. As this court has noted, entrusting these prerogatives to the Executive ensures that no one can be convicted of a crime without the concurrence of all three branches. United States v. O'Neill, 437 F.3d 654, 660 (7th Cir.2006) (Posner, J., concurring in the judgment) (quoting In re United States, 345 F.3d 450, 454 (7th Cir.2003)). Judges do not possess, and should not attempt to exercise, prosecutorial discretion. FN17. We cannot accept the suggestion that the appearance of impropriety was somewhat lessened by the participation at the meeting of policy-level officers-the United States Attorney and the Federal Defender-rather than the litigating attorneys. The United States Attorney has the ultimate authority to prosecute cases. See 28 U.S.C. 547. A reasonable observer certainly could conclude that the purpose of the meeting was to pressure the officers present at the meeting to direct their subordinates to undertake the course of action preferred by the Judge. A motion under section 455(a) is directed against the appearance of partiality, whether or not the judge is actually biased. Balistrieri, 779 F.2d at 1204 (emphasis supplied). We must conclude that the Judge's actions, assessed in their totality, are such that a reasonable, well-informed observer would question his partiality. Hook, 89 F.3d 350 at 353-54. The question before us is not whether the Judge is biased. If the Government had the burden to establish that fact, it would have indeed a high mountain to climb in light of the Judge's distinguished public service of almost forty years. However, we must conclude that the Government is entitled to the issuance of the writ of mandamus for which it has petitioned because it has established that a reasonable well-informed observer could question the Judge's impartiality. Accordingly, all orders entered by the Judge after the motion for recusal was filed must be vacated. FN18 The Judge is directed to remove himself from further proceedings in this matter. FN18. See N.Y. City Hous. Dev. Corp., 796 F.2d at 979. *313 It is so ordered.FN19

Power of court to remove or suspend judge, 53 A.L.R.3d 882 (Originally published in 1973)
In Saint v Meraux (1926) 163 La 242, 111 So 691, it was stated that if a judge causes corrections to be made in his minutes so as to reflect a state of facts which he knows does not exist, or causes the minutes to be so written as not to reflect the truth, for the purpose of suppressing it, he is guilty of such misconduct in the office as to constitute malfeasance therein, all of which is includible in the term high crimes and misdemeanors in office, stated in the state constitution as a ground for removal from office. Likewise, continued the court, if a judge makes what he knows to be a false return to this court, he is guilty of a high crime in office, or at least of a misdemeanor therein, within the meaning of the constitutional provision. Also of interest in this regard is Mahoning County Bar Asso. v Franko (1958) 168 Ohio St 17, 5 Ohio Ops 2d 282, 151 NE2d 17, cert den 358 US 932, 3 L Ed 2d 305, 79 S Ct 312, in which a judge was indefinitely suspended from the practice of law, and thus from his office as judge, for violation of Canon 30 of the Canons of Judicial Ethics, providing that a judge should resign from office if he should decide to become a candidate for any nonjudicial office. It was pointed out by the court that under its rules it had the power to discipline any counselor at law or judge for misconduct which tended to defeat the administration of justice or to bring the courts of the state or the legal profession into disrepute. Misconduct was defined in the rules to mean any violation of any provision of the oath of office taken upon admission to [the] practice of law in this state, or any violation of the Canons of Professional Ethics or the Canons of Judicial Ethics as adopted by the courtfrom time to time, or the commission or conviction of a crime involving moral turpitude. The court concluded that since an attorney of law does not, upon assuming a judicial position, cease to be a member of the legal profession, but becomes such a member who has assumed a position of public trust which demands of him an even greater degree of responsibility and an even higher and more specialized standard of conduct than demanded of a practicing attorney, the State Supreme Court, through its inherent power and duty to maintain the honor and dignity of the legal profession of the state, may prescribe a specialized standard of conduct for all members of such profession who hold judicial office, and has jurisdiction over the discipline of such a member for acts committed in his judicial capacity which are in violation of the Canons of Judicial Ethics adopted by and made a rule of this court.

Removal or discipline of state judge for neglect of, or..., 87 A.L.R.4th 727
10. Adjudicatory powers improperly delegated [Cumulative Supplement] It was held by the court in the following case wherein a village justice was charged with neglect of judicial duties that the evidence sustained a finding that the subject justice had improperly delegated to an unauthorized person his adjudicatory duties with regard to minor offenses, justifying the discipline imposed. The practice of a village justice in permitting the deputy village attorney to dispose of minor criminal cases pending before the village court, essentially without supervision, justified removal of the justice from office, in the opinion of the court in Re Greenfeld (1988) 71 NY2d 389, 526 NYS2d 810, 521 NE2d 768. The court noted that the deputy village attorney conducted conferences with defendants after the court had written to the defendants and advised them to appear for trial,

accepted guilty pleas, determined the amount of fines to be paid by defendants and advised defendants of the amount of fines to be paid after they had entered pleas of guilty, and entered the disposition of cases on official court records. In virtually every case that was disposed of without trial, the court noted, the subject justice did not see the defendant after arraignment, nor did he review the disposition of the case after the plea bargain was consummated, although a later modification of this system involved the deputy village attorney writing the proposed disposition on the court papers, which were then delivered to the village justice the same evening for his examination, at which time the justice determined whether to accept the plea of guilty and, if so, set the fine in accordance with the agreement. Even then, the court noted, the defendants did not appear before the subject justice personally, but were told that the deputy village attorneys recommendation required court approval. That the procedures were instituted by the subject justices predecessor as village justice, the court said, did not excuse the conduct, the justice being responsible for his own conduct in the discharge of his judicial duties. CUMULATIVE SUPPLEMENT Cases: Judge committed prejudicial misconduct, as basis for judicial discipline, by making improper ex parte contacts with motorist charged with repeat drunk driving offense and then responding to the conflict by initially ceding sentencing decision to counsel and later taking control of sentencing and imposing unusually lenient sentence. Wests Ann. Cal. Const. Art. 6, 18(c) (1994); Wests Ann. Cal. C.C.P. 170.1(a)(6); Code of Jud. Ethics, Canon 3, subd. B(7). Fletcher v. Commission on Judicial Performance, 19 Cal. 4th 865, 81 Cal. Rptr. 2d 58, 968 P.2d 958 (1998). Judge who dismissed non-moving traffic violation charges without trial or hearing if defendant showed evidence of having cured deficiency and allowed highway patrol officers who had issued tickets to adjudicate them without notifying judge would be fined $500 and publicly reprimanded. Re Seal (1991, Miss) 585 So 2d 741. Misconduct of municipal court judge, who allowed his administrative assistant to create arraignment hearing entries, sign judges name on a state form, and deny request from the sheriff for a reduction in a defendants jail sentence, warranted sanction of a public reprimand, in light of mitigation evidence that judge discontinued practice of allowing his administrative assistant to create arraignment hearing entries immediately upon being informed by Disciplinary Counsel that the practice was inappropriate, lack of a prior disciplinary record involving judge, and failure of the administrative assistant to ever exercise independent judgment about defendants penalties or sanctions during pertinent period. Code of Jud.Conduct, Canons 1, 2, 3(B)(1), 4(A). Disciplinary Counsel v. Kubilus, 101 Ohio St. 3d 29, 2003-Ohio-6610, 800 N.E.2d 1131 (2003) (citing annotation). A. Adjudicatory Functions

6[a] Hearings or trials not held or delayedDiscipline or removal held justified or supportable although not specifically basing its determination that removal of the subject judge was warranted on the fact that, inter alia, the subject Family Court Judge had failed to conduct a hearing in a nonsupport case after entering a temporary order, although requested by counsel to do so several times, the court noted that fact as sufficiently proved to weigh in the courts judgment for removal from

office, based primarily on deliberate misconduct in falsifying court reports, and failure to advise litigants in the court of their constitutional or statutory rights, as well as failure to abide by normal statutorily mandated court procedures. Re Reeves (1984) 63 NY2d 105, 480 NYS2d 463, 469 NE2d 1321. In Re Glancey (1987) 515 Pa 201, 527 A2d 997, later proceeding on other grounds 518 Pa 276, 542 A2d 1350, later proceeding on other grounds 126 Pa Cmwlth 457, 560 A2d 263, app gr 524 Pa 613, 569 A2d 1371,16 the court held that a failure of a judge to answer a question in a financial disclosure form promulgated by the court system on the ground that to answer would violate the United States Constitutions Fifth Amendment privilege against self-incrimination was a proper basis for judicial discipline, up to and including removal from office. The question related to gifts received by the reporting judge from any source with an aggregate value of $200 or more. Reviewing the judicial history of the issue of self-incrimination in such a context as relating to public officers and employees, the court found that the constitutional requirements limited a governments ability to compel such information only insofar as the information demanded might be used in a subsequent criminal prosecution against the officer or employee. Thus, the court said, where sanctions for noncompliance were limited merely to loss of position or job, a failure to respond to an inquiry properly limited to matters directly affecting the employees or officers fitness for his or her position would be constitutionally permissible. The court therefore held that removal from office would be an appropriate sanction for failure to respond to the question at issue, but, recognizing that this position had not previously been promulgated in any unmistakable fashion, offered to dismiss the proceedings should the subject judge properly answer the question within 30 days. failure by the subject municipal judge to file an annual financial disclosure report, stating his assets and liabilities as required by law, constituted, in the view of the court, willful judicial misconduct deserving of disciplinary action, the court nevertheless refusing to view another instance of failure to make a required report as misconduct of such a serious nature ( 12[b]). Re Guay (1981) 101 Wis 2d 171, 303 NW2d 669.

Judges knowing and repeated acts of falsifying public records by backdating pleas accepted in driving under the influence cases warranted removal from office notwithstanding otherwise unblemished judicial record. Johnson, Inquiry Concerning a Judge, In re, 692 So. 2d 168 (Fla. 1997). Judges failure to recuse himself in civil cases in which attorneys with whom he was associated appeared did not require discipline in addition to public censure already imposed by his failure to recuse himself in criminal cases in which those attorneys appeared where judge had already been removed from bench by voters. In re Lemoine, 692 So. 2d 358 (La. 1997). Removal from bench was warranted for judge who, inter alia, engaged in ticket fixing, improperly handled DUI charge, accepted money without legal authority (received fine money directly from litigants), engaged in ex parte communications when cases were submitted to him for resolution, signed execution of judgment without legal authority, and obstructed judicial process after being served with formal complaint by disciplinary commission. Mississippi Comn on Judicial Performance v. Dodds, 680 So. 2d 180 (Miss. 1996) Supreme court justices misuse of his attorney escrow account while he was

practicing attorney and after he became civil court judge, commingling funds over substantial period of time and using account to pay personal expenses, compounded by his persistent failure to cooperate with investigation and his marked lack of candor, warranted removal. N.Y. Ct. Rules, 100.1, 100.2. In re Mason, 100 N.Y.2d 56, 760 N.Y.S.2d 394, 790 N.E.2d 769 (2003). Criminal court judges willful disregard of the law, abuse of the power of his office, and injudicious behavior constituted misconduct; judge dismissed 16 cases for facial insufficiency, without requiring written motion or giving the prosecutor notice and hearing or a chance to redraft charges, because he personally believed that the interests of justice did not warrant prosecution, and in several other cases subjected prosecutors to harsh personal criticisms and insensitive comments. McKinneys Const. Art. 6, 22(d); McKinneys CPL 140.45, 170.30, 170.35, 170.40, 170.45, 170.55, 210.45; McKinneys Judiciary Law 44; N.Y. Ct. Rules, 100.1, 100.2, 100.2(A), 100.3(B)(1); Code of Jud. Conduct, Canons 1, 2, subd. A, 3, 3, subd. A(1), McKinneys Judiciary Law App. Matter of Duckman, 92 N.Y.2d 141, 677 N.Y.S.2d 248, 699 N.E.2d 872 (1998). Judges failure to deposit in designated bank account all of the cash, checks and money orders received in the district justice office each day, and use of those public funds to meet her personal financial obligations, constituted conduct which brought the judicial office into disrepute, warranting discipline. Const. Art. 5, 18(d)(1). In re Strock, 727 A.2d 653 (Pa. Ct. Jud. Discipline 1998). the subject judges refusal, on constitutional grounds rejected by the Supreme Court of Wisconsin, to respond to the demand in an annual financial disclosure report required by the Supreme Court with regard to the finances of his spouse and dependent children for a single year was seen as having been made in good faith, the court nevertheless warning that further refusal following the issuance of the opinion in question would be treated as contumacious, a remedy later proving necessary ( 20,) upon the continued refusal of the subject judge to obey. Re Kading (1976) 70 Wis 2d 543b, 238 NW2d 63. there was but a single instance of failure to file a statutorily required personal financial disclosure report listing the subject judges assets and liabilities, the court noting that, following reprimand, the subject judge would have 10 days to file the required financial report on pain of removal from office. Re Guay (1981) 101 Wis 2d 171, 303 NW2d 669. Acknowledging that it lacked the power, under the Wisconsin Constitution as then formulated, to actually remove from office a judge who consistently, blatantly, and repeatedly refused to obey the court rule, already formally established as constitutional in earlier proceedings,21 requiring judges, as part of their annual financial disclosure report, to reveal the finances of their spouses and dependents as well, the court in Re Kading (1976) 74 Wis 2d 405, 246 NW2d 903, held the subject judge in civil contempt for his ongoing refusal, for a second year, to file the required information. Rejecting a contention by the subject judge that he had received no direct order to file the information in question, the court declared that this argument ignored all of the prior proceedings involving the subject judges refusal to file a complete financial report, including an express statement in an earlier, published opinion that if the subject judge failed to file the requisite information, he could be held in contempt, and a subsequent direct order to file the report or show cause why he should not be held in contempt. The court considered this notice to be more than sufficient to comply with any due process requirement. Expressing regret that a Wisconsin judge must be found in contempt of the Supreme Court, since a judge, perhaps more than anyone else, is aware of the

central role the rule of law plays in our society, the court noted that it had established procedures for challenging the exercise of judicial power, but that when such challenge is unsuccessful, there must be compliance with the courts decision or the rule of law will be destroyed. A judge who daily presides in court and makes rulings and decisions can only weaken his own judicial authority by refusing to comply with the judgment of the Supreme Court simply because he disagrees with the judgment, the court concluded. repeated and pointed refusal to obey valid orders of a higher court having supervisory authority over the subject judge, together with refusal to follow stare decisis on a matter in which the subject judge disagreed as to the constitutionality of a city ordinance, and coupled with abuse of the contempt power and improper refusal to allow certain attorneys to practice before him, the appropriate penalty being set at 60 days suspension. Re Hague (1982) 412 Mich 532, 315 NW2d 524. in addition to certain gross personal misconduct, including failure to act in certain probate matters in which he was personally involved as a fiduciary, and a repeated failure to file timely personal income tax returns, the subject judge was found to have largely abdicated his judicial responsibility to so organize his court with regard to handling probate matters as to avoid unnecessary delay and dispatch the courts business with promptness and convenience, justifying a 2-year suspension. Re Van Susteren (1984) 118 Wis 2d 806, 348 NW2d 579. apparent inability to handle recordkeeping requirements, as shown by his inability to account for certain court funds as determined by the New York Commission on Judicial Conduct upon investigation of a complaint by the Department of Audit and Control was seen by the court as a serious violation of the subject justices official responsibilities, and a breach of public trust warranting removal. Petrie v State Com. on Judicial Conduct (1981) 54 NY2d 807, 443 NYS2d 648, 427 NE2d 945. the subject judge was shown on several occasions to have refused to sign legal papers placed before him on the basis of alleged failure to comply with the law, but refused to say in what way the papers were deficient, the court nevertheless relying primarily on a strong showing of otherwise oppressive and arbitrary conduct on the bench as a basis for removal. Robberson v Board of Comrs (1924) 109 Okla 249, 235 P 525. Removal from office, rather than severe public censure, was appropriate for judge who committed willful misconduct by altering minute orders to mislead Commission on Judicial Performance and by becoming advocate against criminal defendant because of judges political rivalry with prosecutor, and who committed prejudicial misconduct by making ex parte contacts with defendants, their relatives, and witnesses, using court staff for campaign purposes, abusing his contempt powers, reacting inappropriately to disqualification attempts, prejudging cases, and publicly criticizing public officers, even if judge was not corrupt, venal, or biased. Wests Ann. Cal. Const. Art. 6, 18(c) (1994); Wests Ann. Cal. C.C.P. 170.1(a) (6); Code of Jud. Ethics, Canon 3, subd. B(7). Fletcher v. Commission on Judicial Performance, 19 Cal. 4th 865, 81 Cal. Rptr. 2d 58, 968 P.2d 958 (1998). Juvenile court judges persistent and pervasive pattern of misconduct, as notary, attorney, candidate, and judge, demonstrated disdain for rule of law and warranted removal from office, where judges explanations for her misconduct were preposterous or false; judge arranged for parole of over 900 adult detainees over twoyear period, to detriment of her duties in juvenile court, engaged in flagrant

and persistent failure to observe regular and predictable court hours, was unable to prepare judgments in timely manner, often conducted court by phone or allowed staff to run docket in her absence, failed to ensure that accurate record was made of proceedings, and employed convicted felons in positions in which they had access to confidential court records. LSAConst. Art. 5, 25(C); LSAR.S. 13:36, 13:4207, 15:574.15, 18:1482, 18:1495.4, 18:1505.1, 18:1505.4; Sup. Ct. Rules, Rule 23, 5(a), 13, 8 LSAR.S.; Sup. Ct. Rules, General Administrative Rules for All Louisiana Courts, Pt. G, 2, 8 LSAR.S.; LSACh.C. art. 412; Code of Jud. Conduct, Canons 1, 2, subds. A, B, 3, subds. A(1, 7), B(1), 7, subd. G, 8 LSAR.S.; State Bar Articles of Incorporation, Art. 16, Rules of Prof. Conduct, Rules 1.3, 1.4(a), 1.16(d), 8.1(c), 8.2(b), 8.4(c, d, g), LSAR.S. foll. 37:222; State Bar Articles of Incorporation, Art. 16, Rules of Prof. Conduct, Rule 1.5(f)(6), LSAR.S. foll. 37:222 (2003). In re Hughes, 874 So. 2d 746 (La. 2004). Judge would be removed from office on grounds of incompetence where, inter alia, he had failed to take action on matters of concern in court files, even after they were brought to his attention by clerks, and where he had failed to follow law in probate cases, for example, by failing to require filing of annual statements and reports by personal representatives and guardians, failing to require that proper notice be given to interested parties, and failing to hold hearings, all in contravention of applicable probate statutes. Re Baber (1993, Mo) 847 SW2d 800, petition for certiorari filed (Jun 21, 1993). Town court justices misappropriation of funds and related subterfuge, which resulted in his disbarment as an attorney while he was sitting as judge, warranted his removal from office, even though his wrongdoings related to conduct outside his judicial office, and his term of judicial office had reached its natural temporal conclusion. In re Tamsen, 100 N.Y.2d 19, 759 N.Y.S.2d 435, 789 N.E.2d 613 (2003). Judges conduct constituting incompetence in performance of her official duties and conduct in willfully or persistently allowing her improper relationships to influence her judgment in performance of her duties warranted that she be removed as justice of peace, and be prohibited from holding state judicial office in future, in judicial disciplinary proceeding; there were many instances of judicial misconduct, evidence supported findings that judge was incompetent in performance of her duties and had knowledge of her own incompetence, and judge had repeatedly failed in her obligation of protecting rights of those she was elected to serve. Vernons Ann. Texas Const. Art. 5, 1a(6), par. A; V.T.C.A., Government Code Title 2, Subtitle G App. B, Code of Jud. Conduct, Canons 2, subd. B, 3, subd. B(2, 5). In re Chacon, 138 S.W.3d 86 (Tex. Review Trib. 2004), petition for review filed, (June 18, 2004).

Power of court to remove or suspend judge, 53 A.L.R.3d 882 Robert N. Kwan failing to take action against bank and attorney misconduct with which he becomes aware of in violation of the Code of Judicial Ethics In the State of Cal. v. Kleppe, 431 F.Supp. 1344, 1345, (C.D.Cal.,May 02, 1977), on a motion to disqualify judge under the authorization of 28 U.S.C. 455(A) and 28 U.S.C 455(B)(4), the Court noted the Affidavit of Richard E. Hammond on behalf of plaintiffs said Hammond having been at one time legal counsel on the staff of plaintiff California Coastal Zone Conservation Commission in which Affidavit Mr. Hammond indicated two things which the Court had not previously known, or at least had not consciously considered: 1. That, as stated in Mr. Hammond's Affidavit, particularly at pages 13 and

14, any decision in this case before the Court will be a dominant if not prime catalyst with respect to the development of oil production and financial well-being of other lessees in the Santa Barbara Channel, and 2. At Page 14 of the Hammond Affidavit, that Exxon shares ownership with Chevron (designated Operator), Union and Atlantic Richfield in the proposed Santa Cruz unit north of Santa Crux Island. *1346 Having noted these things on Monday morning, April 25, 1977, the Court brought to the attention of all counsel the fact that the Court was at one time, from 1952 to 1964, litigation counsel for Union Oil Company of California and**has possessed and still does possess several hundred shares of Union Oil Company Common Stock, acquired through stock option or incentive plans from Union Oil Company during the course of the Court's association with Union as litigation counsel. On affidavit of disqualification of judge, the District Court, Hauk, J., held that trial judge who had served for twelve years as legal counsel to a corporation which had a significant financial interest in the outcome of the litigation and who owned several shares of stock in that corporation was, upon presentation of proper affidavit alleging that the impartiality of the judge might reasonably be questioned, obligated to disqualify himself. And the court stated, that the Court held or holds several hundred shares of stock in Union Oil Company. Nor was the Court actively cognizant that any decision here will vitally affect Union Oil's fortunes, and therefore possibly affect the financial interests of the Judge herein, until last Monday, April 25, 1977, because it was not until that time that the Court discovered or at least become knowledgeably aware of the fact that Union not only has some lease interests in the Santa Barbara Channel close by the Santa Ynez Unit involved in these proceedings, but also has some partnership interests and royalty overrides in connection with Exxon and Exxon's leases as well as similar Exxon interests in Union Oil leases in the Santa Barbara Channel. Therefore it appears clear to the Court and the Court so (State of Cal. V. Kleppe, supra, 431 F.Supp. at p. 1349) And the court stated, It is further alleged that it is the belief of the affiant, Mr. Bodovitz, that members of the public may reasonably question the impartiality of the Judge to preside in this action for the reasons set forth thereinafter as well as **because of alleged financial interest in the subject matter by way of the Judge's stock ownership in Union Oil, whose fortunes might be affected by any decision rendered herein, for better or for worse, with respect to Union's leases in the Santa Barbara Channel and **by reason of its connections with Exxon in some partnerships and royalty overrides as well as with respect to any and all leases affecting Union's interest in the Santa Barbara Channel, **since it is further alleged that Exxon has approximately 64% of the known oil and gas reserves in the Channel. These facts that are set forth in the Affidavit the Court cannot question under the law, and the Court must and does accept them as true. The Court finds no fault with the truth of the allegations set forth in the Affidavit, except the Court does question somewhat the purport, although perhaps not permitted to do so legally, of the allegation that the public might reasonably question its impartiality. And yet the Court does not question even that too vigorously, because in light of the facts alleged, it is possible that somebody in the public whoever the public is, we are not

sure, but perhaps somebody not connected with the case, at any rate might reasonably question the Court's impartiality to preside over this case. Then there are other grounds and reasons set forth in the remaining paragraphs of the Affidavit (pp. 2 to 6). Briefly stated, they appear to be that not only did the Judge act as litigation counsel for Union Oil during the period indicated, 1952 to 1964, but on occasion he had reviewed and examined oil and gas leases for Union Oil; that while the Judge does not recall reviewing any specific leases in the Santa Barbara Channel, he does recall some of the names that are listed on the map which was Exhibit A to the Hammond Affidavit, which names seemed familiar, as the Judge so indicated last Monday, April 25, 1977; and that the Judge does own several hundred shares of Union Oil stock. Going on further, **the Affidavit alleges that while Union Oil is not a party here, the action here will directly affect the fortunes and affairs of Union Oil, because as set forth in the Bodovitz Affidavit, Exxon has an interest of some 64% of the known oil *1350 and gas reserves; that if Exxon does not utilize a pipeline as requested or sought by the plaintiffs here, but is able to tanker oil, it would set perhaps an unhappy precedent from the plaintiffs' point of view, and **might thereafter make it impossible to require Union Oil or any other oil company to utilize pipelines instead of tankering; **that Union's interests in the Santa Barbara Channel consist of ownership of some 17 oil and gas leases, fully or partially, including one lease from the United States Government and three leases from the State of California in their entirety, and **some 12 joint interests with other oil companies, including Exxon in leases from the United States and one from the State of California, all set forth in official government records and documents; **that Union has a further 121/2% override royalty interest in a presently nonproductive lease in the Santa Ynez Unit before the Court here; **that there are a number of units that are prospective or possible units next in line for future development in which both Union and Exxon hold some interests; **that Union has some interests in marine terminals in that area as well as oil drilling platforms, one of which is still in operation, and the other of which is being installed and being outfitted; and finally that a so-called Joint Government-Industry Study Group in connection with the proceedings before the Court has indicated that if, ultimately, it is held that a pipeline is the alternative to be followed rather than tankering, an existing Union Oil pipeline might be utilized for part of the pipeline route. (State of Cal. V. Kleppe, supra, 431 F.Supp. at pp. 1349-1350) And the court held, The ultimate finding and conclusion, must be and is therefore, that legally and factually the undersigned Judge must disqualify himself under 28 U.S.C. 144, 28 U.S.C. 455 and Canon 3C of the Code of Judicial Conduct, as amended to date (State of Cal. V. Kleppe, supra, 431 F.Supp. at p. 1351)
State of Cal. v. Kleppe, 431 F.Supp. 1344 (C.D.Cal.,May 02, 1977) Order accordingly. [5] Judges 227 51(4)

227 Judges 227IV Disqualification to Act 227k51 Objections to Judge, and Proceedings Thereon 227k51(4) k. Determination of Objections. Most Cited Cases Failure of attorneys for defendant to oppose plaintiff's motion for disqualification is strong support for granting of the relief. U.S.Dist.Ct. Rules

C.D.Cal., Local Rule 3(f)(2). [6] Judges 227 53

227 Judges 227IV Disqualification to Act 227k52 Waiver of Disqualification or Objections 227k53 k. In General. Most Cited Cases Waiver of disqualifying matter is not permitted with respect to disqualifying matter such as the judge's ownership of stock and financial interest. 28 U.S.C.A. 455(b, e). [7] Judges 227 43

227 Judges 227IV Disqualification to Act 227k41 Pecuniary Interest 227k43 k. Stockholder of Corporation. Most Cited Cases District Court judge who served for twelve years as counsel to a corporation whose financial interest would be significantly affected by the outcome of the litigation in question and **who possessed several hundred shares of stock in the corporation was required to disqualify himself upon presentation of proper affidavit alleging that the court's impartiality might reasonably be questioned in the matter. 28 U.S.C.A. 144, 455. This matter has now come on for hearing in the above-entitled Court on Friday, April 29, 1977, at 9:30 a. m., upon plaintiffs' AFFIDAVIT OF DISQUALIFICATION OF HONORABLE A. ANDREW HAUK and CERTIFICATE OF COUNSEL, both filed this morning, together with various comments, arguments and discussion between counsel and the Court today, as well as last Monday and Tuesday, April 25 and 26, 1977.

the Court noted the Affidavit of Richard E. Hammond on behalf of plaintiffs said Hammond having been at one time legal counsel on the staff of plaintiff California Coastal Zone Conservation Commission in which Affidavit Mr. Hammond indicated two things which the Court had not previously known, or at least had not consciously considered: 1. That, as stated in Mr. Hammond's Affidavit, particularly at pages 13 and 14, any decision in this case before the Court will be a dominant if not prime catalyst with respect to the development of oil production and financial well-being of other lessees in the Santa Barbara Channel, and 2. At Page 14 of the Hammond Affidavit, that Exxon shares ownership with Chevron (designated Operator), Union and Atlantic Richfield in the proposed Santa Cruz unit north of Santa Crux Island. *1346 Having noted these things on Monday morning, April 25, 1977, the Court brought to the attention of all counsel the fact that the Court was at one time, from 1952 to 1964, litigation counsel for Union Oil Company of California and**has possessed and still does possess several hundred shares of Union Oil Company Common Stock, acquired through stock option or incentive plans from Union Oil Company during the course of the Court's association with Union as litigation counsel. Further, on Monday, April 25, 1977, the Court indicated to all counsel that because of these facts, both in the Hammond Affidavit and as related by the Court, each of the parties should be given an opportunity to file appropriate pleadings under 28 U.S.C. 144FN1 by way of a timely and sufficient affidavit that the judge before whom the matter is pending has a personal bias or prejudice either against him or in

favor of any adverse party . . . which shall state the facts and the reasons for the belief that bias or prejudice exists, and shall be filed not less than ten days before the beginning of the term at which the proceeding is to be heard, or good cause shall be shown for failure to file it within such time. FN1.s 144. Bias or prejudice of judge Whenever a timely and pending has any adverse judge shall party to any proceeding in a district court makes and files a sufficient affidavit that the judge before whom the matter is a personal bias or prejudice either against him or in favor of party, such judge shall proceed no further therein, but another be assigned to hear such proceeding.

The affidavit shall state the facts and the reasons for the belief that bias or prejudice exists, and shall be filed not less than ten days before the beginning of the term at which the proceeding is to be heard, or good cause shall be shown for failure to file it within such time. A party may file only one such affidavit in any case. It shall be accompanied by a certificate of counsel of record stating that it is made in good faith. 28 U.S.C. s 144 It was further pointed out to counsel that under Section 144, the affidavit shall be accompanied by a certificate of counsel of record stating that it is made in good faith. Then, of course, the Court mentioned to counsel that 28 U.S.C. 455FN2 which corresponds*1347 in all pertinent parts, if not identically and virtually word-forword, with the Code of Judicial Conduct, Canon 3C, FN3 sets forth the various grounds for possible disqualification,*1348 including the vague and understandably disturbing ground in 28 U.S.C. 455(a) and Code of Judicial Conduct, 3C(1), to the effect that a Judge shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.In the two codes there are additional sections setting forth in more detail specific grounds which are or might be encompassed within that broadly vague and amorphous ground, including the judge's having acted as an attorney for a party interested in the matter, and the judge's ownership of some financial interest, however small. 28 U.S.C. 455(b)(4) and (d) (4), Code of Judicial Conduct, Canon 3C(1)(c), 3C(2) and 3C(3)(c). FN2.s 455. bankruptcy Disqualification of justice, judge, magistrate, or referee in

(a) Any justice, judge, magistrate, or referee in bankruptcy of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned. **(b) He shall also disqualify himself in the following circumstances: (1) Where he has a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding; (2) Where in private practice he served as lawyer in the matter in controversy, or a lawyer with whom he previously practiced law served during such association as a lawyer concerning the matter, or the judge or such lawyer has been a material witness concerning it; (3) Where he has served in governmental employment and in such capacity participated as counsel, adviser or material witness concerning the proceeding or expressed an opinion concerning the merits of the particular case in controversy;

**(4) He knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding; (5) He or his spouse, or a person within the third degree of relationship to either of them, or the spouse of such a person: (i) Is a party to the proceeding, or an officer, director, or trustee of a party; (ii) Is acting as a lawyer in the proceeding; (iii) Is known by the judge to have an interest that could be substantially affected by the outcome of the proceeding; (iv) Is to the judge's knowledge likely to be a material witness in the proceeding. (c) A judge should inform himself about his personal and fiduciary financial interests, and make a reasonable effort to inform himself about the personal financial interests of his spouse and minor children residing in his household. (d) For the purposes of this section the following words or phrases shall have the meaning indicated: (1) proceeding includes pretrial, trial, appellate review, or other stages of litigation; (2) the degree of relationship is calculated according to the civil law system; (3) fiduciary includes trustee, and guardian; such relationships as executor, administrator,

**(4) financial interest means ownership of a legal or equitable interest, however small, or a relationship as director, adviser, or other active participant in the affairs of a party, except that: (i) Ownership in a mutual or common investment fund that holds securities is not a financial interest in such securities unless the judge participates in the management of the fund; (ii) An office in an educational, religious, charitable, fraternal, or civic organization is not a financial interest in securities held by the organization; (iii) The proprietary interest of a policyholder in a mutual insurance company, of a depositor in a mutual savings association, or a similar proprietary interest, is a financial interest in the organization only if the outcome of the proceeding could substantially affect the value of the interest; (iv) Ownership of government securities is a financial interest in the issuer only if the outcome of the proceeding could substantially affect the value of the securities.

**(e) No justice, judge, magistrate, or referee in bankruptcy shall accept from the parties to the proceeding a waiver of any ground for disqualification enumerated in subsection (b). Where the ground for disqualification arises only under subsection (a), waiver may be accepted provided it is preceded by a full disclosure on the record of the basis for disqualification. Now, as heretofore indicated, the plaintiffs have filed an affidavit of disqualification, executed by one Joseph E. Bodovitz, Executive Director of the plaintiff California Coastal Zone Conservation Commission, accompanied by the good faith certificate of one of plaintiffs' counsel, Donatas Januta, Esq. FINDINGS AND CONCLUSIONS [1] Since the plaintiffs' Affidavit and Certificate are based upon 28 U.S.C. 144 and 455 and Code of Judicial Conduct, Canon 3C, we are required to examine them to determine if they meet the tests required by the Code sections and Canon, namely, those of timeliness and legal sufficiency. If they do, then the factual allegations contained in the Affidavit must be taken as true and the Court has no power or authority to contest in any way whatsoever the necessary acceptance of truthfulness of the facts alleged, even though the Court may be aware of facts which would indicate clearly the falsity of any such allegations. Berger v. United States, 255 U.S. 22, 33, 41 S.Ct. 230, 65 L.Ed. 481 (1921); Botts v. United States, 413 F.2d 41 (9th Cir. 1969); United States v. Tropiano, 418 F.2d 1069 (2d Cir. 1969); Lyons v. United States, 325 F.2d 370 (9th Cir. 1963), cert. den. 377 U.S. 969, 84 S.Ct. 1650, 12 L.Ed.2d 738 (1964). See also : United States v. Zarowitz, 326 F.Supp. 90, 91 (C.D.Cal.1971), United States v. Zerilli, 328 F.Supp. 706, 707 (C.D.Cal.1971), and Spires et al., v. Hearst, 420 F.Supp. 304, 306-307 (C.D.Cal.1976). Cf.: Mavis v. Commercial Carriers, Inc., 408 F.Supp. 55, 58 (C.D.Cal.1975). While perhaps not essential, it does seem to us appropriate, that we should now affirm that the Judge herein does not have, nor did he ever have, any personal bias or prejudice in the slightest degree for or against any of the parties to the case, cause and proceeding herein, and more particularly, does not now have and never did have any such personal bias or prejudice in the slightest degree against any of the plaintiffs herein, singly or collectively. Nor has the Judge ever knowingly or unknowingly given any cause for allegations of any such alleged personal bias or prejudice, or belief therein or suspicion thereof. [2] While it might be argued with some possible justification that the plaintiffs' Affidavit and Certificate are not timely within the meaning of 28 U.S.C. 144, since not filed until today, April 29, 1977, whereas the action herein was filed on October 29, 1976, nevertheless it appears conclusive and the Court so finds that the allegations of the Affidavit sufficiently set forth legal timeliness. Moreover, the Court of its own knowledge finds that herein the Affidavit and the Certificate were timely for the reasons set out in the preliminary remarks to these Findings, Conclusions and *1349 Order. There is no certainty that can be verified that the Court informed counsel on either side prior to the date of last Monday, April 25, 1977, that the Court held or holds several hundred shares of stock in Union Oil Company. Nor was the Court actively cognizant that any decision here will vitally affect Union Oil's fortunes, and therefore possibly affect the financial interests of the Judge herein, until last Monday, April 25, 1977, because it was not until that time that the Court discovered or at least become knowledgeably aware of the fact that Union not only has some lease interests in the Santa Barbara Channel close by the Santa Ynez Unit involved in these proceedings, **but also has some partnership interests and royalty overrides in connection with Exxon and Exxon's leases as well as similar Exxon interests in Union Oil leases in the Santa Barbara Channel. Therefore it appears clear to the Court and the Court so finds that the Affidavit and Certificate have been timely filed.

Now, the next question is whether or not the Affidavit and Certificate are legally sufficient within the meaning of the same statutory sections and Canon. Certainly they appear to be and the Court so finds. They are in proper form; they assert facts and not just conclusions; and so, in line with the cases the Court has previously cited, they are legally sufficient. The only question left is whether facts are alleged which require the Judge to disqualify himself under 28 U.S.C. 455 and Code of Judicial Conduct, Canon 3C. [3] The Affidavit and Certificate which are attached hereto as an Appendix, show without doubt that the case, cause and proceeding here before the Court involves issues of great public significance and import. Moreover, the Court can take judicial notice of this and so finds. **It is further alleged that it is the belief of the affiant, Mr. Bodovitz, that members of the public may reasonably question the impartiality of the Judge to preside in this action for the reasons set forth thereinafter as well as **because of alleged financial interest in the subject matter by way of the Judge's stock ownership in Union Oil, whose fortunes might be affected by any decision rendered herein, for better or for worse, with respect to Union's leases in the Santa Barbara Channel and **by reason of its connections with Exxon in some partnerships and royalty overrides as well as with respect to any and all leases affecting Union's interest in the Santa Barbara Channel, **since it is further alleged that Exxon has approximately 64% of the known oil and gas reserves in the Channel. These facts that are set forth in the Affidavit the Court cannot question under the law, and the Court must and does accept them as true. The Court finds no fault with the truth of the allegations set forth in the Affidavit, except the Court does question somewhat the purport, although perhaps not permitted to do so legally, of the allegation that the public might reasonably question its impartiality. And yet the Court does not question even that too vigorously, because in light of the facts alleged, it is possible that somebody in the public whoever the public is, we are not sure, but perhaps somebody not connected with the case, at any rate might reasonably question the Court's impartiality to preside over this case. Then there are other grounds and reasons set forth in the remaining paragraphs of the Affidavit (pp. 2 to 6). Briefly stated, they appear to be that not only did the Judge act as litigation counsel for Union Oil during the period indicated, 1952 to 1964, but on occasion he had reviewed and examined oil and gas leases for Union Oil; that while the Judge does not recall reviewing any specific leases in the Santa Barbara Channel, he does recall some of the names that are listed on the map which was Exhibit A to the Hammond Affidavit, which names seemed familiar, as the Judge so indicated last Monday, April 25, 1977; and that the Judge does own several hundred shares of Union Oil stock. Going on further, **the Affidavit alleges that while Union Oil is not a party here, the action here will directly affect the fortunes and affairs of Union Oil, because as set forth in the Bodovitz Affidavit, Exxon has an interest of some 64% of the known oil *1350 and gas reserves; that if Exxon does not utilize a pipeline as requested or sought by the plaintiffs here, but is able to tanker oil, it would set perhaps an unhappy precedent from the plaintiffs' point of view, and **might thereafter make it impossible to require Union Oil or any other oil company to utilize pipelines instead of tankering; **that Union's interests in the Santa Barbara Channel consist of ownership of some 17 oil and gas leases, fully or partially, including one lease from the United States Government and three leases from the State of California in their entirety, and **some 12 joint interests with other oil companies, including Exxon in leases from the United States and one from the State of California, all set forth in official government records and documents; **that Union has a further 121/2% override royalty interest in a presently nonproductive lease in the Santa Ynez Unit before the Court here; **that there are a number of units that are prospective or possible units next in line for

future development in which both Union and Exxon hold some interests; **that Union has some interests in marine terminals in that area as well as oil drilling platforms, one of which is still in operation, and the other of which is being installed and being outfitted; and finally that a so-called Joint GovernmentIndustry Study Group in connection with the proceedings before the Court has indicated that if, ultimately, it is held that a pipeline is the alternative to be followed rather than tankering, an existing Union Oil pipeline might be utilized for part of the pipeline route. Taking all of these allegations together, it seems to the Court that the Judge would be remiss in not taking as true the substance of the allegations in the Bodovitz Affidavit. Moreover, we might add that we must take them as true and do and so find. [4][5] The Court notes that Mr. Bodovitz himself at least seems convinced that the Judge's impartiality might reasonably be questioned and that is enough for the Court because all parties agree with the Court that the judiciary should not only be impartial, but always appear impartial. Perhaps that is one of the reasons that counsel for the defendants, both the private defendants Exxon, Standard and Shell and the Federal governmental defendants, through their counsel, have stated to the Court they would not interpose any objection to the Affidavit for Disqualification under our District Court Local Rule 3(f)(2). This failure to oppose the Affidavit for Disqualification is indeed very strong support for the granting of the relief sought in the Affidavit, to wit, disqualification. Finally, the Court should mention this: That 28 U.S.C. 455, and particularly 455(a), has been in all material respects identically enacted as Canon 3C(1) of the Code of Judicial Conduct. The other sections of 28 U.S.C. 455 have been similarly adopted, virtually verbatim, in the Code of Judicial Conduct, which was adopted and promulgated by the United States Judicial Conference at its April 5-6, 1973 Session, Conference Report, 1973, pp. 9 to 11; as amended at its September 14-17, 1973 Session, Conference Report, 1973, p. 52; at its March 7-8, 1974 semi-annual Session, Conference Report, 1974, p. 17, and at its March 6-7, 1975, Session, Conference Report, 1975, pp. 12-13. [6] We mention this virtual adoption by the Code of Judicial Conduct of the elements in 28 U.S.C. 455, because while 28 U.S.C. 455(e) provides that a judge may waive or accept waiver, we should say, from counsel of the ground for disqualification arising under Subsection (a), which is Code of Judicial Conduct, Canon 3C(1) that is, a judge should disqualify himself whenever his impartiality might reasonably be questioned such waiver is not permitted with respect to the various items under Subsection (b) of 28 U.S.C. 455, such as stock ownership, financial interest, and so forth. Moreover, while 28 U.S.C. does permit waiver with respect to Subsection (a) and denies it with respect to Subsection (b) of 28 U.S.C. 455, the Code of Judicial Conduct Canon 3C was amended in that aspect, that is, the waiver aspect, by a new Canon 3D which was enacted in 1975 by the Judicial Conference of the United States, deleting the prior 3D section which permitted the *1351 same opportunity for waiver that is permitted by 28 U.S.C. 455(e). It follows now, necessarily, that if the Court is to follow the Code of Judicial Conduct, it cannot accept a waiver of any disqualifying matter, whether it be under 28 U.S.C. 455(a) or (b), or whether it be under Code of Judicial Conduct Canon 3C, or otherwise. [7] The ultimate finding and conclusion, must be and is therefore, that legally and factually the undersigned Judge must disqualify himself under 28 U.S.C. 144, 28 U.S.C. 455 and Canon 3C of the Code of Judicial Conduct, as amended to date. [8] One caveat perhaps should be added that the Court's Findings and Conclusions of the truth of the facts alleged and stated in the Affidavit of Mr. Bodovitz, Appendix hereto attached, are compelled and mandated by the United States Code, the

Code of Judicial Ethics, their sections and Canon, and the cases decided thereunder, all as hereinabove mentioned. Of course, they do not constitute any findings or conclusions with respect to the actual facts and law governing the matters involved in the case, cause and proceeding herein. ORDER NOW, THEREFORE, IT IS HEREBY ORDERED: 1. That the undersigned Judge does hereby disqualify and recuse himself from any and all further matters in the within case, cause and proceeding, pursuant to 28 U.S.C. 455 and Canon 3C of the Code of Judicial Conduct, as amended to date, and pursuant, of course, also, to the Affidavit and Certificate filed herein by the plaintiffs;

Church of Scientology of California v. Cooper, 495 F.Supp. 455 (C.D.Cal. Jun 18, 1980) On a motion for recusal, the District Court, Hauk, J., held that recusal was appropriate where the district judge's impartiality might be questionable, even though the plaintiffs' motion for recusal was erroneous in its allegations. Motion granted. [1] Judges 227 51(3)

227 Judges 227IV Disqualification to Act 227k51 Objections to Judge, and Proceedings Thereon 227k51(3) k. Sufficiency of Objection or Affidavit. Most Cited Cases Factual allegations contained in affidavit in support of motion for be taken as true and court has no power or authority to contest whatsoever the necessary acceptance of truthfulness of facts alleged, court may be aware of facts which would indicate clearly the falsity allegations. 28 U.S.C.A. 144, 455(a). [2] Judges 227 51(1) recusal must in any way even though of any such

227 Judges 227IV Disqualification to Act 227k51 Objections to Judge, and Proceedings Thereon 227k51(1) k. In General. Most Cited Cases Recusal was appropriate where trial judge's impartiality might be questionable, even though plaintiffs' motion for recusal was erroneous in its allegations. 28 U.S.C.A. 144, 455(a). Rutter, Cal. Practice Guide: Civil Trials & Evidence Ch. 3-A, A. Challenges For Cause (2011) HN: 3,6 (S.Ct.) Rutter, Cal. Practice Guide: Fed.Civ.Pro. Before Trial CH. 16-D, D. Motion To Disqualify Judge (2011) HN: 2,3,6 (S.Ct.) Chase Manhattan Bank v. Affiliated FM Ins. Co., 343 F.3d 120 (2nd Cir.(N.Y.),Sep 09, 2003)

Positive case but out of circuit 28 U.S.C. 455. Disqualification of justice, judge, or magistrate judge (a) Any justice, judge, or magistrate judge of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned. (b) He shall also disqualify himself in the following circumstances: (1) Where he has a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding; (2) Where in private practice he served as lawyer in the matter in controversy, or a lawyer with whom he previously practiced law served during such association as a lawyer concerning the matter, or the judge or such lawyer has been a material witness concerning it; (3) Where he has served in governmental employment and in such capacity participated as counsel, adviser or material witness concerning the proceeding or expressed an opinion concerning the merits of the particular case in controversy; (4) He knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a financial interest in the **subject matter in controversy or **in a party to the proceeding, or **any other interest that could be substantially affected by the outcome of the proceeding; (5) He or his spouse, or a person within the third degree of relationship to either of them, or the spouse of such a person: (i) Is a party to the proceeding, or an officer, director, or trustee of a party; (ii) Is acting as a lawyer in the proceeding; (iii) Is known by the judge to have an interest substantially affected by the outcome of the proceeding; that could be

(iv) Is to the judge's knowledge likely to be a material witness in the proceeding. (c) A judge should inform himself about his personal and fiduciary financial interests, and make a reasonable effort to inform himself about the personal financial interests of his spouse and minor children residing in his household. (d) For the purposes of this section the following words or phrases shall have the meaning indicated: (1) proceeding includes stages of litigation; pretrial, trial, appellate review, or other

(2) the degree of relationship is calculated according to the civil law system; (3) fiduciary includes such relationships as executor, administrator, trustee, and guardian; (4) financial interest means ownership of a legal or equitable interest, however small, or a relationship as director, adviser, or other active participant in the affairs of a party, except that: (i) Ownership in a mutual or common investment fund that holds securities is not a financial interest in such securities unless the judge participates in the management of the fund; (ii) An office in an educational, religious, charitable, fraternal, or civic organization is not a financial interest in securities held by the organization; (iii) The proprietary interest of a policyholder in a mutual insurance company, of a depositor in a mutual savings association, or a similar proprietary interest, is a financial interest in the organization only if the outcome of the proceeding could substantially affect the value of the interest; (iv) Ownership of government securities is a financial interest in the issuer only if the outcome of the proceeding could substantially affect the value of the securities. (e) No justice, judge, or magistrate judge shall accept from the parties to the proceeding a waiver of any ground for disqualification enumerated in subsection (b). Where the ground for disqualification arises only under subsection (a), waiver may be accepted provided it is preceded by a full disclosure on the record of the basis for disqualification. In New York City Development Corp. v. Hart, 796 F.2d 976, 979, (7th Cir. (Ill.) Jul 21, 1986) the court stated, A judge may hold a mutual fund that contains AT & T stock. Yet the judge is expressly authorized by 455(d)(4)(i) to sit in a case involving AT & T, in part because the fund may sell the stock before the judge decides the case, in part because a change in the value of AT & T stock will have a small effect on the fund as a whole, and in part because a decision that helps or hurts AT & T may have the opposite effect on MCI, GTE, or other securities in the fund, washing out the effect on the judge's portfolio.
New York City Development Corp. v. Hart, 796 F.2d 976, 979, (7th Cir.(Ill.) Jul 21, 1986) [2] Judges 227 56

227 Judges 227IV Disqualification to Act 227k56 k. Effect on Acts and Proceedings of Judge. Most Cited Cases Orders rendered after filing of motion for recusal of judge must be vacated by

district judge or by writ of mandamus if motion is ultimately granted. 28 U.S.C.A. 455, 455(a). [6] Judges 227 42

227 Judges 227IV Disqualification to Act 227k41 Pecuniary Interest 227k42 k. In General. Most Cited Cases Judge's belief that his impartiality might reasonably be questioned in action seeking injunction against redemption of certain municipal bonds, where judge's wife owned interest in trust that included municipal bonds, prevented statute, which states that ownership of fund is not a financial interest in fund's securities unless judge participates in management of fund, from acting as safe harbor. 28 U.S.C.A. 455, 455(a), (d)(4)(i). [2] Perhaps, however, recusal under 455(a) runs prospectively only, so that all orders entered before the district judge removes himself (or the court of appeals issues a writ of mandamus) stand. The other option is that orders rendered after the filing of the motion must be vacated-by the district judge or by writ of mandamus-if the motion ultimately is granted. We think the latter view best carries out the purposes of 455. Murphy surveyed the cases involving the appearance of impropriety and concluded that none had required the court to set aside decisions that had been taken before any party asked for recusal. 768 F.2d at 1539. Several cases, on the other hand, have held or assumed that decisions taken after the filing of a justified motion must be set aside. We do not think that Balistrieri questions this conclusion. It would be undesirable to consider case by case whether the post-motion orders of the judge should be set aside; the inquiry would have no particular focus, and it would present especially difficult problems for a successor district judge asked to examine the propriety of his colleague's conduct. Neither 455 nor the legislative history of its amendment in 1974 addresses the question. There is no inevitable answer, but the position that provides the greatest measure of safety for the judicial system as a whole is one that vacates all decisions taken after the filing of a justified motion to disqualify a judge under 455(a). [3][4][5] This makes it necessary to decide whether the district judge was required to recuse himself under 455. If he was, then his orders of April 30 and May 7 must be vacated. The fact that he did recuse himself does not show that he had to, however, and a judge's unnecessary recusal ought not to require work to be redone by his successor. We may not be authorized to vacate the district judge's order of recusal, see Hampton v. City of Chicago, 643 F.2d 478 (7th Cir.1981), and at all events no one has asked us to do so, but if the order was unnecessary we need not add ripples to the splash. We conclude that the order was indeed unnecessary; Judge Hart is not disqualified. HDC relied on 455(b)(4), arguing that the disposition of the case may affect the value of bond funds, including those in which the district judge has an interest. Judge Hart found this argument insufficient, as do we. The value of many assets, even the performance of the economy as a whole (and hence all assets), may depend on rules of law. It could be said that no judge who owns a house should render a decision that potentially affects the value of real estate in general, that no judge who owns stock should decide a case under the securities or antitrust laws, and so on. Effects of this sort are both ubiquitous and too indirect to require disqualification. Cf. Union Carbide Corp. v. U.S. Cutting Service, Inc., 782 F.2d 710, 714-15 (7th Cir.1986). The effects are small, and almost every judge will have some remote interest of this sort. Moreover, the effects may have offsets

that are difficult to predict. A *980 decision under the securities laws that diminishes somewhat the value of bonds may increase somewhat the value of stocks; no judge with a diversified portfolio will be able to predict the effect on his wealth, and therefore there is little risk of either actual bias or the appearance of impropriety. These offsetting effects may be particularly strong within a fund of stocks or bonds. A judge may hold a mutual fund that contains AT & T stock. Yet the judge is expressly authorized by 455(d)(4)(i) to sit in a case involving AT & T, in part because the fund may sell the stock before the judge decides the case, in part because a change in the value of AT & T stock will have a small effect on the fund as a whole, and in part because a decision that helps or hurts AT & T may have the opposite effect on MCI, GTE, or other securities in the fund, washing out the effect on the judge's portfolio. When Congress amended 455 in 1974, it designed 455(d)(4)(i) as a safe harbor, a way for judges to hold securities without needing to make fine calculations of the effect of a given suit on their wealth. HDC wants us to do exactly what 455(d)(4)(i) prevents-to ask whether a decision could affect the value of the assets held by a mutual fund and then to order disqualification. Section 455(d)(4)(i) states that the ownership of a fund is not a financial interest in the fund's securities, unless the judge participates in the management of the fund. Because the underlying assets are not a financial interest of the judge it is unnecessary and inappropriate to inquire how a case might affect the value of the fund's assets. The statute operates in a mechanical fashion. Just as 455(b)(4) requires disqualification when there is any financial interest, however small, In re Cement Antitrust Litigation, 688 F.2d 1297, 1308 (9th Cir.1982), so 455(d)(4)(i) eliminates any inquiry into the size of the likely effect of a decision on the value of securities held through a mutual fund. [6][7] The district judge nonetheless thought that his impartiality might reasonably be questioned within the meaning of 455(a). To the extent this introduces through the back door an inquiry into the substantiality of the effect on the value of assets held by the mutual fund, it is an inappropriate use of 455(a). This inquiry would prevent 455(d)(4)(i) from acting as a safe harbor, once again calling on judges to decide whether a financial interest is sufficiently substantial to require disqualification. Moreover, 455(a) requires disqualification only when a judge's decision might reasonably be questioned. The inquiry is objective, from the point of view of a reasonable person with access to all of the facts. See Pepsico and Union Carbide. See also, e.g., United States v. DeLuna, 763 F.2d 897, 907 (8th Cir.), cert. denied, 474 U.S. 980, 106 S.Ct. 382, 88 L.Ed.2d 336 (1985). A reasonable person would not question the impartiality of a judge who holds nothing but well diversified mutual funds. Secondary Sources (U.S.A.) 85 Disqualification of judge under 28 U.S.C.A. s 455(b)(4), providing for disqualification where judge has financial or other interest in proceeding, 163 A.L.R. Fed. 575 (2000) HN: 5,6 (F.2d) 86 THE LIMITED POWER OF THE FEDERAL COURTS OF APPEALS TO ORDER A CASE REASSIGNED TO ANOTHER DISTRICT JUDGE, 120 F.R.D. 267, 281+ (1988) HN: 7 (F.2d) 87 Rutter, Cal. Practice Guide: Fed.Civ.Pro. Before Trial CH. 16-D, D. Motion To Disqualify Judge (2011) HN: 7,8 (F.2d) **88 Cyclopedia of Federal Procedure s 1.21, Disqualification of judges (2011) **89 Cyclopedia of Federal Procedure s 1.22, Disqualification of judgesInterest (2011) HN: 6 (F.2d) **90 Cyclopedia of Federal Procedure s 1.25, Disqualification of judgesPersonal bias or prejudice generally (2011) HN: 7 (F.2d) **91 Cyclopedia of Federal Procedure s 1.26.10, Disqualification of judgesWhat constitutes disqualifying bias or prejudice-Appearance of bias (2011) HN: 7,8 (F.2d) **92 Federal Procedure, Lawyers Edition s 20:145, What constitutes a financial

interest (2011) 93 Federal Procedure, Lawyers Edition s 20:52, Introduction (2011) 94 Federal Procedure, Lawyers Edition s 20:58, Generally (2011) 95 Rutter Practice Guide: Fed.Civ.Pro. Bef.Trial(5th Cir) CH. 16-D, D. Motion To Disqualify Judge (2011) HN: 7,8 (F.2d) 96 Practice Guide Federal Civil Procedure Before Trial -- National Edition CH 16-D, D. Motion To Disqualify Judge (2011) HN: 7,8 (F.2d) **97 Recusal: Analysis of Case Law Under ss 455 & 144 Pt. 1.IV.A, A. Standard for Applying (2002) **98 Rutter Practice Guide: Fed.Civ.Trials & Ev. CH. 3-A, A. Disqualification Of Judges Generally (2011) HN: 7 (F.2d) **99 Rutter Practice Guide: Fed.Civ.Trials & Ev. CH. 3-B, B. Grounds For Disqualification (2011) HN: 6,7 (F.2d) **100 Rutter Practice Guide: Fed.Civ.Trials & Ev. CH. 3-D, D. Disqualification Procedure (2011) 101 Wright & Miller: Federal Prac. & Proc. s 3541, History of Disqualification Statutes (2011) **102 Wright & Miller: Federal Prac. & Proc. s 3546, Grounds for Disqualification-Financial Interest (2011) **103 Wright & Miller: Federal Prac. & Proc. s 3549, Appearance of Bias, Prejudice, or Partiality (2011) **104 50 Am. Jur. Proof of Facts 3d 449, Disqualification of Trial Judge for Cause (2011) **105 Am. Jur. 2d Federal Courts s 98, What constitutes a financial interest (2011) HN: 5,6 (F.2d) 106 CJS Judges s 322, Effect on official acts (2011) HN: 2 (F.2d)

Wachovia Securities is a subsidiary of parent WELLS FARGO BANK N.A.


1) [16:199.5] Comparelocal rules providing otherwise: Section 455 does not prevent courts from adopting local rules referring disqualification motions to another judge. [See In re Bernard, supra, 31 F3d at 843] **For example, in the Central District of California (by General Order rather than local rule), recusal motions are randomly assigned to another judge for decision immediately on their being filed. The challenged judge may not proceed further until the recusal motion is determined. [CD CA Gen. Order 224, 4.0] 2) [16:199.6] Comparechallenges under 28 USC 144: By contrast, if a party files an affidavit properly alleging prejudice on the part of a district judge under 28 USC 144, the matter must be assigned to another judge (see discussion at 16:213 ff.). [See In re Bernard, supra, 31 F3d at 843, fn. 3] Berger v. U.S., 255 U.S. 22, 41 S.Ct. 230, 65 L.Ed. 481 (U.S.Ill.,Jan 31, 1921) Victor L. Berger and others were convicted of a violation of the Espionage Act, and they took the case by writ of error to the Circuit Court of Appeals for the Seventh Circuit, which certified certain questions to the Supreme Court. Questions answered. Constitutional Law 92 2503(1)

92 Constitutional Law 92XX Separation of Powers 92XX(C) Judicial Powers and Functions 92XX(C)2 Encroachment on Legislature 92k2499 Particular Issues and Applications 92k2503 Civil Remedies and Procedure 92k2503(1) k. In General. Most Cited Cases

(Formerly 92k70.1(11)) Judges 227 40

227 Judges 227IV Disqualification to Act 227k40 k. Constitutional and Statutory Provisions. Most Cited Cases If Judicial Code, 21, 28 U.S.C.A. 144, construed as depriving a judge against whom an affidavit of prejudice is filed of power to pass on the truth of the facts alleged, permits such affidavits to be abusively used, the court must nevertheless deal with it as it is expressed, and enforce it according to its expressions, and it is not the function of the court to approve or disapprove it. Judges 227 51(3)

227 Judges 227IV Disqualification to Act 227k51 Objections to Judge, and Proceedings Thereon 227k51(3) k. Sufficiency of Objection or Affidavit. Most Cited Cases Under 28 U.S.C.A. 144, the reasons and facts stated in an affidavit charging a judge with bias or prejudice for the belief in such bias or prejudice are an essential part of the affidavit, and must give fair support to the charge of a bent of mind that may prevent or impede impartiality of judgment. Judges 227 51(3)

227 Judges 227IV Disqualification to Act 227k51 Objections to Judge, and Proceedings Thereon 227k51(3) k. Sufficiency of Objection or Affidavit. Most Cited Cases In a prosecution under the Espionage Act, 50 U.S.C.A. 31-42, against five defendants, three of whom were of German or Austrian birth or descent, an affidavit that defendants believed that the judge had a personal bias and prejudice against such three defendants, and stating as the grounds for such belief that he was prejudiced and biased against them because of their nativity, and that on a specified date he said in substance that, if anybody had said anything worse about the Germans than he had, he would like to know it, so he could use it, that one must have a very judicial mind indeed not to be prejudiced against the GermanAmericans in this country, that their hearts were reeking with disloyalty, that this kind of propaganda had been spread until it had affected practically all the Germans in the country, etc., held sufficient, under 28 U.S.C.A. 144; the facts and reasons stated not being frivolous or fanciful, but substantial and formidable, and having relations to the attitude of the judge's mind towards defendants. Judges 227 51(3)

227 Judges 227IV Disqualification to Act 227k51 Objections to Judge, and Proceedings Thereon 227k51(3) k. Sufficiency of Objection or Affidavit. Most Cited Cases An affidavit of a judge's bias and prejudice under 28 U.S.C.A. 144, was not insufficient because the remarks alleged as the reasons for defendants' belief in such prejudice were alleged on information and belief to have been made, where the affidavit referred to a definite incident and gave the time and place thereof.

Judges 227

51(4)

227 Judges 227IV Disqualification to Act 227k51 Objections to Judge, and Proceedings Thereon 227k51(4) k. Determination of Objections. Most Cited Cases Under 28 U.S.C.A. 144, providing that, when a party shall file an affidavit that the judge has a personal bias or prejudice against him, the judge shall proceed no further, but another judge shall be designated, and that such affidavit shall state the facts and the reasons for the belief that such bias or prejudice exists, when an affidavit legally sufficient is filed, the judge against whom it is filed cannot pass on the truth of the matters alleged or preside on the trial. Rutter Group Prac. Guide Fed. Civ. Trials & Ev. Ch. 3-B Rutter Group Practice Guide: Federal Civil Trials and Evidence Robert E. Jones, Gerald E. Rosen, William E. Wegner, and Jeffrey S. Jones Chapter 3. Challenging The Judge B. Grounds For Disqualification (a) [3:56] Comparefinancial interest disqualification: Disqualification under 455(b)(4) (for a financial interest in the litigation or a party) requires a showing that the judge had personal knowledge of the disqualifying facts. See discussion at 3:285 ff. But a disqualification under 455(a) for a financial interest in either the litigation or a party does not require a showing that the judge had personal knowledge of the disqualifying facts. Section 455(a) applies when a reasonable person would conclude a judge is violating 455(b)(4). See discussion at 3:66 ff. (b) [3:57] Judges failure to stay informed as separate violation: In addition to not excusing a violation of 455(a), a judges failure to stay informed of his or her personal and fiduciary financial interests may violate 455(c) (A judge should inform himself about his personal and fiduciary financial interests ... ; see discussion at 3:286). [Liljeberg v. Health Servs. Acquisition Corp., supra, 486 US at 868, 108 S.Ct. at 2206] (c) [3:58] Judges knowledge as bearing on remedy: Although not necessary to establish a violation of 455(a), the judges knowledge (or lack of knowledge) of the disqualifying facts may bear upon the question of remedy: As in other areas of the law, there is surely room for harmless error committed by busy judges who inadvertently overlook a disqualifying circumstance. There need not be a draconian remedy for every violation of 455(a). [Liljeberg v. Health Servs. Acquisition Corp., supra, 486 US at 862, 108 S.Ct. at 22032204 (emphasis added)] Cross-refer: Remedies for 455 violations are discussed at 3:475 ff. [3:59] Judge claimed to have been unaware of the disqualifying facts until shortly after rendering judgment. But he admittedly knew and failed to disclose such facts before ruling on a motion for new trial and still failed to recuse himself. Judges violation of 455(a) was neither insubstantial nor excusable. [Liljeberg v. Health Servs. Acquisition Corp., supra, 486 US at 867, 108 S.Ct. at 2206]

[3:6064] Reserved. d. [3:65] Applicationrecusal required: The cases below illustrate circumstances under which a judges impartiality might reasonably be questioned (28 USC 455(a)). Note: These cases generally involve a single ground for challenging impartiality. If several grounds exist, the court must also consider their cumulative effect: [T]he whole is sometimes greater than the sum of the parts. The cumulative effect of a judges individual actions, comments and past associations could raise some question about impartiality, even though none (taken alone) would require recusal. [In re MartinezCatala (1st Cir. 1997) 129 F3d 213, 221 (parentheses in original)] [3:66] Financial interest in outcome: Recusal may be required when a judge has a direct personal or fiduciary interest in the outcome of the case (regardless of whether the judge is actually aware of that interest at the relevant times; 3:55 ff.). [Liljeberg v. Health Servs. Acquisition Corp. (1988) 486 US 847, 858859, 108 S.Ct. 2194, 2202] [3:67] Judge was a trustee of a university that had an interest in the subject matter of the litigation. Judge claimed he was initially unaware of the universitys interest, yet remained on the case and did not disclose the problem after he clearly knew of such interest. Judge should have disqualified himself because a reasonable person, knowing the circumstances, might not believe Judges explanation and would question Judges impartiality. [Liljeberg v. Health Servs. Acquisition Corp., supra, 486 US at 865867, 108 S.Ct. at 22052207] [3:67.167.4] Reserved. [3:67.5] Financial interest in party: Similarly, recusal may be required pursuant to 455(a) when a judge has a direct financial interest in a party to the proceeding (regardless of whether the judge is actually aware of that interest at the relevant times; 3:55 ff.). [Chase Manhattan Bank v. Affiliated FM Ins. Co. (2nd Cir. 2003) 343 F3d 120, 128131] [3:67.6] Plaintiff Chemical Bank (Chemical) merged with Chase Manhattan Bank (Chase). Judge and his spouse purchased over $250,000 of the new Chase stock. Neither the complaints caption nor Chemicals corporate disclosure form reflected Chases presence as a plaintiff. Judge conducted a bench trial in which witnesses mentioned the merger. Also, Judges findings of fact and conclusions of law identified plaintiff as Chemical Bank (now known as The Chase Manhattan Bank). Judge awarded $29 million to Chase/Chemical. After appeal and remand, Judge announced that he had become aware of the merger and divested the stock. But judge erred in not disqualifying himself at least before his decision on the merits pursuant to 455(a). A reasonable person would conclude that Judge had a disqualifying interest in a party and that Judge knew of the interest but heard the case. Moreover, divestiture after remand could not cure circumstances in which recusal was required years before. [Chase Manhattan Bank v. Affiliated FM Ins. Co., supra, 343 F3d at 124126, 128131] [3:68] Expressing personal views affecting outcome: Recusal is required where the judge has expressed views showing a personal bias concerning the outcome of the case. [United States v. Diaz (2nd Cir. 1986) 797 F2d 99, 100following reversal for resentencing, district judge wrote to U.S. Attorney and one of his Senators expressing need for legislation to increase penalties available for the crime in question; judge should have recused himself at sentencing hearing] [3:69] Racially insensitive remarks: Racially insensitive remarks may be enough by themselves to establish perceived bias. Such remarks are not to be tolerated in any litigation and most decidedly are verboten in litigation in which racial or ethnic considerations are relevant to an issue before the court. [In re Chevron, U.S.A., Inc. (5th Cir. 1997) 121 F3d 163, 166black Judge rejected documentary

evidence in racially charged case because white people wrote it; and made patently offensive comparison of ethnic differences between African and Chinese people] In re Chevron U.S.A., Inc., 121 F.3d 163 (5th Cir.(Tex.) Aug 19, 1997)

See internal secondary sources


[3:90] Judges close relative has stake in outcome: Under certain circumstances, a judges spouse (or other close relative) may have a sufficient interest in the outcome of the proceedings that a reasonable person might question the judges impartiality. [See In re Bernard (9th Cir. 1994) 31 F3d 842, 844845] [3:112] Former law partner? It is unclear whether a judges former partnership with a lawyer for one of the parties compels recusal under 455(a). [See Singer v. Wadman (10th Cir. 1984) 745 F2d 606, 608former partnership with defense attorney did not require disqualification; compare **Patterson v. Mobil Oil Corp. (5th Cir. 2003) 335 F3d 476, 484485recusal required where former law partner represented defendant in previous suit dealing with same subject matter and judge represented defendants workers comp insurer many years earlier] [3:116.1] A magistrate judge was not required to recuse himself from hearing discovery matters even though defendant bank held the mortgage on the magistrate judges principal residence. No reasonable well-informed observer could question the magistrate judges impartiality based on such a routine debt that is fully secured by the appraised value. [Ausherman v. Bank of America Corp. (4th Cir. 2003) 352 F3d 896, 899, fn. 2] d. [3:138] Test for personal bias or prejudice: Recusal under either 144 or 455(b)(1) is required only if the judges bias or prejudice **(1) is directed against a party; (2) stems from an extrajudicial source; and (3) casts doubt on his or her impartiality. [See Liteky v. United States (1994) 510 US 540, 544, 114 S.Ct. 1147, 1152; United States v. Studley (9th Cir. 1986) 783 F2d 934, 939] Sections 144 and 455(b)(1) are construed in pari materia and the test for disqualification is the same under both statutes. [Davis v. Board of School Commrs. of Mobile County (5th Cir. 1975) 517 F2d 1044, 1052; United States v. Conforte (9th Cir. 1980) 624 F2d 869, 880; Brokaw v. Mercer County (7th Cir. 2000) 235 F3d 1000, 1025] There may be extraordinary cases where the judges bias against demonstrates bias for or against a group of which the party is a member; AfroAmericans, Jews, Germans, or Baptists. Such virulent bias would bias for or against the party represented. [See Henderson v. Department Safety & Corrections (5th Cir. 1990) 901 F2d 1288, 1296] There may be extraordinary cases where the judges bias against demonstrates bias for or against a group of which the party is a member; AfroAmericans, Jews, Germans, or Baptists. Such virulent bias would bias for or against the party represented. [See Henderson v. Department Safety & Corrections (5th Cir. 1990) 901 F2d 1288, 1296] a lawyer e.g., all amount to of Public a lawyer e.g., all amount to of Public

(c) [3:153] Pervasive bias exception: Even though it springs from facts adduced at the present trial, a favorable or unfavorable predisposition that is so extreme as to display clear inability to render fair judgment is ground for recusal. [Liteky v. United States, supra, 510 US at 551, 114 S.Ct. at 1155 (emphasis added)] This exception applies where a judges remarks in a judicial context demonstrate such pervasive bias and prejudice that it constitutes bias against a party. [United States v. Monaco (9th Cir. 1988) 852 F2d 1143, 1147]

[3:154] An example of such pervasive bias was a judges statement during wartime that German Americans ... hearts are reeking with disloyalty. [Berger v. United States (1921) 255 US 22, 28, 41 S.Ct. 230, cited in Liteky v. United States, supra, 510 US at 555, 114 S.Ct. at 1157] [3:155] The pervasive bias exception does not apply to statements other than those reflecting personal animosity or prejudice. I.e., it does not apply to statements made in earlier proceedings indicating the judges view on issues that will arise in a pending proceeding. [King v. United States Dist. Ct. for Cent. Dist. of Calif. (9th Cir. 1994) 16 F3d 992, 993] (3) [3:156] Sufficient to cast doubt on impartiality: Whatever facts are alleged as showing the judges bias or prejudice must be sufficient to raise a reasonable question as to the judges impartiality. [United States v. Studley (9th Cir. 1986) 783 F2d 934, 939allegation that judge hated me without any cause insufficient to cast doubt on judges impartiality] 316 Review of federal judge's grant or denial of motion to recuse, 64 A.L.R. Fed. 433 (1983) Hamm v. Members of Bd. of Regents of State of Fla., 708 F.2d 647, 651, 32 Fair Empl.Prac.Cas. (BNA) 441, 32 Empl. Prac. Dec. P 33,715, 11 Ed. Law Rep. 798 (11th Cir.(Fla.),Jul 01, 1983) [6] Federal Courts 170B 612.1

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(D) Presentation and Reservation in Lower Court of Grounds of Review 170BVIII(D)1 Issues and Questions in Lower Court 170Bk612 Nature or Subject-Matter of Issues or Questions 170Bk612.1 k. In General. Most Cited Cases (Formerly 170Bk612) Where plaintiff failed to invoke recusal statutes in district court, plain error standard of review applied in review of contention that plaintiff was denied fair trial because district judge expressed bias and prejudged issues. 28 U.S.C.A. 144, 455. [7] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases General rule for recusal is that bias sufficient to disqualify a judge must stem from extrajudicial sources and must be focused against a party to proceeding. 28 U.S.C.A. 144, 455. [8] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases Exception to general rule that bias sufficient to disqualify a judge must stem from extrajudicial sources and must be focused against a party to proceeding is made when judge's remarks in a judicial context demonstrate such pervasive bias and prejudice that it constitutes bias against a party. 28 U.S.C.A. 144, 455.

[9] Judges 227

49(2)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(2) k. Statements and Expressions of Opinion by Judge. Most Cited Cases Neither a trial judge's comments on lack of evidence, rulings adverse to a party, nor friction between court and counsel constitute pervasive bias which would call into play exception to general rule that bias sufficient to disqualify a judge must stem from extrajudicial sources and must be focused against a party to proceeding. 28 U.S.C.A. 144, 455. [10] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases District court judge's conduct in presiding over civil rights case did not constitute pervasive bias warranting disqualification. 28 U.S.C.A. 144, 455. The plaintiff contends that she was denied a fair trial because the district judge expressed bias and prejudged the issues. She points to several actions by the trial judge to buttress her argument, including refusals on several occasions to allow plaintiff's attorney to respond to defense objections, a statement near the start of trial that he was not going to hear a great lecture about the First Amendment and things like that, interruptions during the presentation of plaintiff's case while permitting the defense to proceed without interruption, and refusals to allow re-direct examination. Two statutes govern the recusal of a federal district judge. 28 U.S.C.A. 144, 455. Section 144 provides for recusal when a party files a timely and technically correct affidavit and motion alleging the judge before whom the matter is pending is personally biased or prejudiced against him or in favor of an adverse party. Section 455 sets forth a general rule that a judge shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned, 28 U.S.C.A. 455(a), and also lists several specific situations in which a judge must do so. 28 U.S.C.A. 455(b). [6][7][8][9] The plaintiff in this case invoked neither statute in the district court so that the plain error standard of review applies here. Cf. United States v. Schreiber, 599 F.2d 534, 535 (3rd Cir.), cert. denied, 444 U.S. 843, 100 S.Ct. 86, 62 L.Ed.2d 56 (1979). The general rule is that bias sufficient to disqualify a judge must stem from extrajudicial sources, Whitehurst v. Wright, 592 F.2d 834, 838 (5th Cir.1979), and must be focused against a party to the proceeding. Davis v. Board of School Commissioners of Mobile County, 517 F.2d 1044, 1050-52 (5th Cir.1975), cert. denied, 425 U.S. 944, 96 S.Ct. 1685, 48 L.Ed.2d 188 (1976). An exception to that rule is made when a judge's remarks in a judicial context demonstrate such pervasive bias and prejudice that it constitutes bias against a party. Davis, 517 F.2d at 1051. Neither a trial judge's comments on lack of evidence, rulings adverse to a party, nor friction between the court and counsel constitute pervasive bias. Whitehurst v. Wright, 592 F.2d at 838; Plaquemines Parish School Board v. United States, 415 F.2d 817, 82425 (5th Cir.1969). [10] After reviewing the transcript, we cannot conclude that the trial judge's conduct in this case requires a reversal. While some of his remarks may seem intemperate and impatient, given the short duration of the proceedings, his actions do not evince pervasive bias. This is not a case in which the judge openly exhibited a partisan zeal for the defendants or stepped down from the bench to assume the role of advocate on the defendants' behalf. Knapp v. Kinsey, 232 F.2d 458, 467 (6th Cir.), cert. denied, 352 U.S. 892, 77 S.Ct. 131, 1 L.Ed.2d 86 (1956); Crowe v. DiManno, 225 F.2d 652, 659 (1st Cir.1955). Knapp v. Kinsey, 232 F.2d 458 (6th Cir.(Mich.),May 01, 1956) [7] 1951.4

170A Federal Civil Procedure 170AXV Trial 170AXV(A) In General 170Ak1951.3 Role and Obligations of Judge 170Ak1951.4 k. In general. Most Cited Cases (Formerly 170Ak1951) Witnesses 410 246(2)

410 Witnesses 410III Examination 410III(A) Taking Testimony in General 410k246 Examination by Court or Jury 410k246(2) k. Calling and examination by court. Most Cited Cases (Formerly 170Ak1246) The trial judge in federal court is more than mere arbitrator to rule upon objections and to instruct jury, and it is his function to conduct trial in orderly way with view to eliciting the truth and to attaining justice between the parties and it is his duty to see that issues are not obscured and that testimony is not misunderstood and he has right to interrogate witnesses for this purpose. [8] Witnesses 410 246(2)

410 Witnesses 410III Examination 410III(A) Taking Testimony in General 410k246 Examination by Court or Jury 410k246(2) k. Calling and examination by court. Most Cited Cases (Formerly 170Ak1246) The right of trial judge to participate in proceedings and to interrogate witnesses is not an unlimited one, and such participation should be exercised in conformity with standards governing the judicial office and judge should exercise self-restraint and preserve atmosphere of impartiality. [9] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In general. Most Cited Cases In stockholders' suit, record disclosed bias or prejudice. Sherman Anti-Trust Act, 1-8, 15 U.S.C.A. 1-7, 15 note; Clayton Act, 1 et seq., 15 U.S.C.A. 12 et seq.; Fed.Rules Civ.Proc. rule 54(b), 28 U.S.C.A. [8] However, the right of the trial judge to participate in the proceedings and to interrogate witnesses is not an unlimited one. Such participation should be exercised in conformity with the standards governing the judicial office. Quercia v. United States, 289 U.S. 466, 470, 53 S.Ct. 698, 77 L.Ed. 1321. The judge should exercise self-restraint and preserve an atmosphere of impartiality. Pariser v. City of New York, 2 Cir., 146 F.2d 431, 433. When the remarks of the judge during the course of a trial, or his manner of handling the trial, clearly indicate a hostility to one of the parties, or an unwarranted prejudgment of the

merits of the case, or an alignment on the part of the Court with one of the parties for the purpose of furthering or supporting the contentions of such party, the judge indicates, whether consciously or not, a personal bias and prejudice which renders invalid any resulting judgment in favor of the party so favored. Crowe v. Di Manno, 1 Cir., 225 F.2d 652; In re Parkside Housing Project, 290 Mich. 582, 598-599, 287 N.W. 571; Clarke v. Commonwealth, 259 Ky. 572, 82 S.W.2d 823. As said by the Supreme Court in Berger v. United States, supra, 255 U.S. 22, 35, 41 S.Ct. 230, 234, * * * the tribunals of the county shall not only be impartial in the controversies submitted to them but shall give assurance that they are impartial, *467 free, to use the words of the section, from any bias or prejudice that might disturb the normal course of impartial judgment.' In In re Murchison, supra, 349 U.S. 133, 136, 75 S.Ct. 623, 625, 99 L.Ed. 942, the Supreme Court said Fairness of course requires an absence of actual bias in the trial of cases. But our system of law has always endeavored to prevent even the probability of unfairness. In Whitaker v. McLean, 73 App.D.C. 259, 118 F.2d 596, the Court saidHostility is a form of bias. * * * The policy * * * is that the courts of the United States shall not only be impartial in the controversies submitted to them but shall give assurance that they are impartial; i.e., shall appear to be impartial. * * * Often some degree of bias develops inevitably during a trial. Judges can not be forbidden to feel sympathy or aversion for one party or the other. Mild expressions of feeling are as hard to avoid as the feeling itself. But a right to be tried by a judge who is reasonably free from bias is a part of the fundamental right to a fair trial.' In Connelly v. United States District Court, 9 Cir., 191 F.2d 692, 697, the Court said- It is not enough that the judge, despite his predetermination of essential facts, may put them aside and conduct a fair trial but that there also shall be such an atmosphere about the proceeding that the public will have the assurance of fairness and impartiality.' In Brown v. Walter, 2 Cir., 62 F.2d 798, 800, the rule was briefly summarized: Justice does not depend upon legal dialectics so much as upon the atmosphere of the court room, and that in the end depends primarily upon the judge. Absence of the necessary judicial calm caused this Court in Moskun v. United States, supra, 143 F.2d 129, to reverse the judgment and remand the case for retrial by another judge. [9] In our opinion, the conduct of the District Judge did not conform to the standard required by the foregoing authorities. Whether unconsciously or otherwise, he failed from the start of the trial to view this case with the impartiality between litigants that the defendants were entitled to receive. His active participation in the case and in the questioning of witnesses exceeded what was reasonably necessary to obtain a clear understanding of what their testimony was and fully justifies appellants' complaint that at times he, figuratively speaking, stepped down from the bench to assume the role of advocate for the plaintiff. Although appellees' counsel did not ask or need such assistance, and apparently at times realized the possible prejudice to their cause, the prejudicial effect to appellants' rights requires a reversal of the judgment. Appeal of United States Securities and Exchange Commission, supra, 6 Cir., 226 F.2d 501, 519, 520; Berger v. United States, supra, 225 U.S. 22, 41 S.Ct. 230; Crowe v. Di Manno, supra. 1 Cir., 225 F.2d 652, 659; Whitaker v. McLean, supra, 73 App.D.C. 259, 118 F.2d 596; N.L.R.B. v. Phelps, supra, 5 Cir., 136 F.2d 562. The judgment is reversed and the case remanded to the District Court for a retrial before another judge. Crowe v. Di Manno, 225 F.2d 652 (1st Cir.(Mass.),Sep 15, 1955) [9] Federal Civil Procedure 170A 170A Federal Civil Procedure 170AXV Trial 170AXV(G) Instructions 2172

170Ak2172 k. Invasion of Jury's Province. Most Cited Cases Trial judge may analyze and dissect the evidence, but he may neither distort it nor add to it. [10] Federal Civil Procedure 170A 2172

170A Federal Civil Procedure 170AXV Trial 170AXV(G) Instructions 170Ak2172 k. Invasion of Jury's Province. Most Cited Cases The trial judge has the duty to use great care that an expression of opinion on the evidence should be so given as not to mislead and so that it is not one-sided. [11] Federal Civil Procedure 170A 2172

170A Federal Civil Procedure 170AXV Trial 170AXV(G) Instructions 170Ak2172 k. Invasion of Jury's Province. Most Cited Cases Trial judge, in commenting on the facts, should studiously avoid deductions and theories not warranted by the evidence. [12] Federal Civil Procedure 170A 1969

170A Federal Civil Procedure 170AXV Trial 170AXV(A) In General 170Ak1969 k. Judge's Remarks and Conduct. Most Cited Cases Federal Courts 170B 903

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(K) Scope, Standards, and Extent 170BVIII(K)6 Harmless Error 170Bk903 k. Examination and Impeachment of Witnesses. Most Cited Cases (Formerly 106k406.6(13), 106k406.6(18)) Federal Courts 170B 937.1

170B Federal Courts 170BVIII Courts of Appeals 170BVIII(L) Determination and Disposition of Cause 170Bk937 Necessity for New Trial or Further Proceedings Below 170Bk937.1 k. In General. Most Cited Cases (Formerly 170Bk937, 106k406.9(9)) Record on appeal from judgment for plaintiff in personal injury action established prejudicial misconduct on part of trial judge in respect to cross-examination of witnesses and comment on evidence, so as to entitle defendants to new trial before another judge. *659 [12] We could prolong this opinion to great length by the citation of many other instances of unfairness to the defendants on the part of the trial judge. To do so, however, would serve no useful purpose. It will be enough to remark in summary that it goes without saying that in all cases, and particularly in cases such as this involving the pathetic

dismemberment of a young woman of twenty, it is the trial judge's most solemn duty to see that the defendant has a fair opportunity to present his side of the case to the jury. After all, heart moving as a plaintiff's injuries may be, they may not have been caused by the defendant's fault. In this case Judge McCarthy signally failed in his duty. For, in addition to the instances of unfair conduct already mentioned, he, figuratively speaking, stepped down from the bench to assume the role of advocate for the plaintiff. And in that role he repeatedly exceeded the proper bounds of advocacy by asking witnesses not merely highly argumentative questions, but questions so leading as not really to be questions at all but statements of fact, often incomplete or distorted at least in emphasis and consistently slanted in the plaintiff's favor, which he followed by Didn't you? Isn't that right? or some similar phrase. In short, the record indicates that the judge throughout the trial openly exhibited a partisan real for the plaintiff wholly out of keeping with his office which deprived the defendants of their fundamental right to a fair and impartial trial. We must order a new trial before another judge. Whitaker v. McLean, 73 App.D.C. 259, 118 F.2d 596 (App.D.C.,Feb 24, 1941) [1] Judges 227 49(2)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(2) k. Statements and Expressions of Opinion by Judge. Most Cited Cases Where during the trial but in absence of jury trial judge made remarks which few, if any, judges would make, in the course of a trial, unless they had developed definite and positive hostility to plaintiff and his case, and judge directed verdict for defendant, judgment was required to be reversed since hostility is a form of bias. [2] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases The policy underlying the statute providing for the disqualification of a judge for bias is that the courts of the United States shall not only be impartial in controversies submitted to them, but shall give assurance that they are impartial. 28 U.S.C.A. 144. [3] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases A right to be tried by a judge who is reasonably free from bias is part of the fundamental right to a fair trial, and if before a case is over a judge's bias appears to have become overpowering, it disqualifies him. 28 U.S.C.A. 144. PER CURIAM. In a colloquy with counsel, during the trial though in the absence of the jury, the judge who tried this case made remarks which caused the plaintiff's attorney to express the opinion that he could not very well go on because the judge's remarks evidenced bias and prejudice. At the conclusion of the colloquy, the trial proceeded, and at the close of the testimony, the judge directed a verdict for the defendant. The plaintiff appeals. [1][2][3] The judge may, as indeed he insisted, have felt no hostility to the plaintiff, and in that view he was, subjectively, free from bias. But bias must be considered objectively. Few, if any, judges would make the reported remarks, in the course of a trial, unless they had developed definite and positive hostility to plaintiff and his case. Hostility is a form of bias. When a judge has shown bias before trial, Section 21 of the Judicial Code, 28 U.S.C.A. 25, provides means of disqualifying him. The policy underlying Section 21 is that the courts of the United States shall not only be impartial in the controversies submitted to them but shall give assurance that they are impartial; i.e., shall appear to be impartial. Berger v.

United States, 255 U.S. 22, 36, 41 S.Ct. 230, 234, 65 L.Ed. 481. A bias which develops during the trial and is grounded on the evidence has been held not to be within the terms of Section 21. Craven v. United States, 1 Cir., 22 F.2d 605, certiorari denied 276 U.S. 627, 48 S.Ct. 321, 72 L.Ed. 739. Often some degree of bias develops inevitably during a trial. Judges cannot be forbidden to feel sympathy or aversion for one party or the other. Mild expressions of feeling are as hard to avoid as the feeling itself. But a right to be tried by a judge who is reasonably free from bias is a part of the fundamental right to a fair trial. If, before a case is over, a judge's bias appears to have become overpowering, we think it disqualifies him. It follows that the judgment must be reversed. This is the more regrettable because it is our impression, based on an examination of the record, that the claim on which the plaintiff sued was probably without merit. Reversed and remanded. N.L.R.B. v. Phelps, 136 F.2d 562, 566, 12 L.R.R.M. (BNA) 793, 7 Lab.Cas. P 61,655 (C.C.A.5 Jun 22, 1943) [5] Constitutional Law 92 4185

92 Constitutional Law 92XXVII Due Process 92XXVII(G) Particular Issues and Applications 92XXVII(G)7 Labor, Employment, and Public Officials 92k4183 Labor Relations; Labor Organizations and Collective Bargaining 92k4185 k. Notice and Hearing; Proceedings and Review. Most Cited Cases (Formerly 92k275(5), 92k275(2)) Labor and Employment 231H 1887

231H Labor and Employment 231HXII Labor Relations 231HXII(J) Judicial Review and Enforcement of Decisions of Labor Relations Boards 231HXII(J)1 Review by Courts 231Hk1887 k. Vacation or Setting Aside. Most Cited Cases (Formerly 232Ak686 Labor Relations) Where examiner appointed by the National Labor Relations Board in proceeding against trustee in bankruptcy of corporation secured stipulation from trustee for purpose of instituting proceedings on his own motion against transferee of bankrupt corporation's assets, made rash statements that witnesses disobeyed subpoenas to prevent testifying to the facts, and otherwise exhibited partial and partisan general attitude, and board adopted examiner's findings and recommendations, order of board was vacated. U.S.C.A. Const.Amend. 14. [5] We cannot agree with the conclusion of the Board that respondents have had the fair trial by a disinterested and impartial trier of facts which the law accords them. Whatever ought to be said of the examiner's persistent and partisan efforts to conduct the proceedings to a decision favorable to the Board, if the examiner*567 had been really in the position he assumed that he was in of an agent for the Board to sustain its charges against, it cannot be successfully denied that his general attitude was not impartial but partial, not disinterested but partisan. This was shown both in the securing of the stipulation for the purpose of the institution of proceedings against Atlas and in respect of his conduct with regard to the subpoenas, including his expressed resentment against both respondents, and his particularly rash and unguarded statements to the effect, that Connally and Chance knew what the facts were, and that, in order to prevent testifying to them, they had disobeyed the subpoenas. Such an attitude, excusable if not commendable in a prosecutor, is a wholly improper one in a judge or an examiner who sits in judicial place to hear and determine facts, draw conclusions of law and make reports and recommendations based thereon. The Board brushed the complaint against the examiner aside with the bare statement that it had reached the conclusion that there was neither bias nor prejudice on the part of the examiner which affected the fairness of the hearing accorded to the respondents, and it cited authorities in support of that view. They do not support it, they support a contrary view. They determine that if a litigant feels the examiner is prejudiced, he should move his disqualification, and that, failing to prove, he should not be heard to complain after the hearing has been completed, Bethlehem Steel Co. v. N.L.R.B., 74 App.D.C. 52, 120 F.2d 641; N. L. R. B. v. Baldwin Locomotive Works, 3 Cir., 128 F.2d 39. They hold, too, that it is for the court and not for the board to determine whether in fact the hearing has been unfair, N. L. R. B. v. Acme-Evans Co., 7 Cir., 130 F.2d 477. Finally, Whitaker v. McLean, 73 App.D.C. 259, 118 F.2d 596, cited by the Board, holds that where a

judge made remarks, though in the absence of the jury, which caused the plaintiff's attorney to express the opinion that he could not very well go on because the judge's remarks evidenced bias and prejudice, the court should reverse because of the remarks. It did this in the interest of a fair trial though it stated that its impression was that the claim on which the plaintiff sued was probably without merit. Nor is the effect of the prejudice avoided here as it was held to have been in some of the cases cited in the Board's brief, N.L.R.B. v. Ford, 6 Cir., 114 F.2d 905; N.L.R.B. v. Air Associates, 2 Cir., 121 F.2d 586, by the fact that the trial examiner made no decision and his tentative findings were disregarded by the Board. Here, unlike those cases, the examiner made full and lengthy findings and recommendations, the Board completely adopted his findings, and put all of his recommendations into effect. More, instead of as it usually does, making detailed findings of its own, it contented itself with the very brief statement in which it precisely adopted the findings and reasoning of the examiner and made his decision in effect its own. The order of the Board will be vacated and set aside, and the matter will be remanded to the Board so that respondents may be accorded the fair and impartial trial guaranteed to them by law. 40 A.L.R. Fed. 954 (Originally published in 1978) Construction and application of 28 U.S.C.A. 455(a) providing for disqualification of justice, judge, magistrate, or referee in bankruptcy in any proceeding in which his impartiality might reasonably be questioned

A judge must recuse himself if a reasonable person with knowledge of all the facts would conclude that his impartiality might reasonably be questioned. 28 U.S.C.A. 455(a). Perry v. Schwarzenegger, 630 F.3d 909 (9th Cir. 2011). Substantive standard for determining whether recusal is warranted is whether a reasonable person with knowledge of all the facts would conclude that the judges impartiality might reasonably be questioned. 28 U.S.C.A. 144, 455(a). Pesnell v. Arsenault, 543 F.3d 1038 (9th Cir. 2008). Substantive standard for determining whether recusal is warranted is whether a reasonable person with knowledge of all the facts would conclude that the judges impartiality might reasonably be questioned. 28 U.S.C.A. 144, 455(a). Pesnell v. Arsenault, 531 F.3d 993, R.I.C.O. Bus. Disp. Guide (CCH) P 11509 (9th Cir. 2008). For purposes of the statute providing that any justice, judge, or magistrate judge of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned, the reasonable person is not someone who is hypersensitive or unduly suspicious, but rather is a well-informed, thoughtful observer; the standard must not be so broadly construed that it becomes, in effect, presumptive, so that recusal is mandated upon the merest unsubstantiated suggestion of personal bias or prejudice. 28 U.S.C.A. 455(a). U.S. v. Holland, 519 F.3d 909 (9th Cir. 2008). Substantive standard for determining whether recusal is warranted is whether a reasonable person with knowledge of all the facts would conclude that the judges impartiality might reasonably be questioned. 28 U.S.C.A. 144, 455(a). Pesnell v. Arsenault, 490 F.3d 1158, R.I.C.O. Bus. Disp. Guide (CCH) P 11305 (9th Cir. 2007). Statute allowing for disqualification of a judge asks whether a reasonable person perceives a significant risk that the judge will resolve the case on a basis other than the merits; the reasonable person in this context means a well-informed, thoughtful observer, as opposed to a hypersensitive or unduly suspicious person. 28 U.S.C.A. 455(a). Clemens v. U.S. Dist. Court for Central Dist. of California, 428 F.3d 1175 (9th Cir. 2005). Test for whether judge should have recused him/herself based on appearance of partiality is whether a reasonable person with knowledge of all the facts would conclude that judges impartiality might reasonably be questioned. 28 U.S.C.A. 455(a). In re Focus Media, Inc., 378 F.3d 916, Bankr. L. Rep. (CCH) 80138 (9th Cir. 2004). Recusal is appropriate when a reasonable person with knowledge of all the facts would conclude that judges impartiality might reasonably be questioned. Kulas v. Flores, 255 F.3d 780 (9th Cir. 2001). Test for disqualification of judge under 28 U.S.C.A. 455 is whether reasonable persons with knowledge of all facts would conclude that judges impartiality might reasonably be questioned; in evaluating judges impartiality, bias or prejudice must stem from extrajudicial source. Ronwin v State Bar of Arizona (1981, CA9 Ariz) 686 F2d 692, 1981-2 CCH Trade Cases 64414, 1982-83 CCH Trade Cases 65013.

28 U.S.C.A. 455(a) is designed to cover contingencies not foreseen by draftsmen who set out specific grounds for disqualification under 455(b); 455(a) establishes objective standard which requires disqualification if there is reasonable factual basis for doubting judges impartiality, while 455(b) is addressed to specific instances which are in addition to general standards set up in 455(a), but where specific instances are present, inquiry must proceed under 455(b) rather than 455(a), and waivers of disqualification may not be accepted. United States v Conforte (1980, CA9 Nev) 624 F2d 869. See United States v Winston (1980, CA9 Cal) 613 F2d 221, 7. Test for disqualification of federal judge, on ground that judges impartiality might reasonably be questioned, is objective one. 28 U.S.C.A. 455(a). U.S. v. Sundrud, 397 F. Supp. 2d 1230 (C.D. Cal. 2005). Recusal is required, even when a judge lacks actual knowledge of the facts indicating his interest or bias in the case, if a reasonable person, knowing all the circumstances, would expect that the judge would have actual knowledge; what matters is not the reality of bias or prejudice but its appearance. 28 U.S.C.A. 455(a). U.S. v. Sierra Pacific Industries, 759 F. Supp. 2d 1198 (E.D. Cal. 2010). Judge must disqualify him/herself if reasonable person with knowledge of all the facts would conclude that judges impartiality might reasonably be questioned. 28 U.S.C.A. 455. In re Hongisto, 293 B.R. 45 (N.D. Cal. 2003). Test, in a recusal motion, is whether a reasonable person with knowledge of all the facts would conclude that the judges impartiality might reasonably be questioned. 28 U.S.C.A. 455(a). U.S. v. Champlin, 388 F. Supp. 2d 1177 (D. Haw. 2005). Requisite that affidavit and supporting data under 28 U.S.C.A. 455 show reasonable factual basis for doubting the Judges impartiality cannot be founded upon judges findings of fact and expression of judicial opinion arising out of very case in which disqualification is sought. Hawaii-Pacific Venture Capital Corp. v Rothbard (DC Hawaii) 437 F Supp 230. Test under 28 U.S.C.A. 455(a) for determining judges impartiality is not subjective belief of defendant or that of judge, but whether facts have been presented that, assuming their truth, would lead reasonable person to infer that bias or prejudice existed, thereby foreclosing impartiality of judgment. Idaho v Freeman (1979, DC Idaho) 478 F Supp 33. Standard for recusal is whether reasonable person with knowledge of all facts would conclude that judges impartiality might reasonably be questioned. 28 U.S.C.A. 455. Keyter v. 230 Government Officers, 372 F. Supp. 2d 604 (W.D. Wash. 2005). Standard for disqualification of judge is objective one, that of whether reasonable person with knowledge of all the facts would conclude that judges impartiality might reasonably be questioned. 28 U.S.C.A. 455(a). In re Spirtos, 298 B.R. 425 (Bankr. C.D. Cal. 2003). Standard for determining whether judge should recuse him/herself for alleged bias or partiality is whether reasonable person with knowledge of all the facts would conclude that judges impartiality might reasonably be questioned. 28 U.S.C.A. 455. In re Marshall, 291 B.R. 855 (Bankr. C.D. Cal. 2003). Standard for judge disqualification is whether the charge of partiality is sufficiently grounded in facts to create in the mind of the fully informed objective disinterested observer of the community a reasonable or significant doubt concerning the judges impartiality. 28 U.S.C.A. 455. In re Keenan, 372 B.R. 496 (Bankr. S.D. Cal. 2007). III. Application

6. Disqualification required [Cumulative Supplement] Under the particular circumstances involved in the following cases, the courts held that the judges involved should be disqualified under 28 U.S.C.A. 455(a) See also California v Kleppe (1977, DC Cal) 431 F Supp 1344, where a motion for the judge to disqualify himself was made under 28 U.S.C.A. 455, and the court noted that if the affidavit of disqualification was timely and legally sufficient, it had

to be taken as true, and that the court had no power or authority to contest in any way the truthfulness of the facts alleged. The court stated that where it was alleged that the judges impartiality might reasonably be questioned because of his previous involvements and continued stock ownership in an oil company which would be affected by the outcome of the case, the judge would disqualify himself under 455. In United States v Ritter (1976, CA10) 540 F2d 459, cert den 429 US 951, 50 L Ed 2d 319, 97 S Ct 370, the court held that since there existed a reasonable likelihood that the case would not be tried with the impartiality that litigants had a right to expect in a District Court under 28 U.S.C.A. 455(a), the case would be tried before a different judge. The attorneys representing the government in an antitrust suit sought to have the judge disqualified because he had allegedly favored the position of the defendants and was caustic and curt toward government counsel, and because the judge repeatedly prevented government counsel from explaining their position, while at the same time he was deferential to the attorney for the defendants. Based upon all of the facts and considering the broad language of 455(a) requiring disqualification in any proceeding in which the impartiality of the judge might reasonably be questioned, stated the court, it must conclude that the interests of justice required that the cause be tried before another judge, in an effort to avoid stress, trouble, and complications in the upcoming trial. **In United States v Bray (1976, CA10 Utah) 546 F2d 851, the defendant appealed from a jury conviction for violating income tax laws, where the trial court had found that the defendants affidavit was inadequate to establish prejudice and bias warranting recusal. Reversing because the trial court had committed plain error in setting the defendants bail in the presence of the jury, the Court of Appeals stated that under the totality of the facts and circumstances, there was a real likelihood that the same trial judges impartiality might reasonably be at issue under 28 U.S.C.A. 455(a) at another trial. The affidavit filed by the defendant alleging prejudice stated (1) that the defendant had obtained 2,000 signatures of persons desiring the removal of the judge; (2) that he had written an article calling for the impeachment of the judge; (3) that he had a prior case dismissed by the judge; (4) that he had written a protest telegram against the judge; and (5) that he had filed a brief with the court accusing the judge of bribery, conspiracy, and the obstruction of justice, the Court of Appeals pointed out, and the trial judge had made some unjudicial comment and remarks that had clearly shown his feelings of hostility toward the defendant.

Where the defendant insurance company asked that on remand the appellate court direct that the case be heard by a judge other than the one who had entered summary judgment against the insurance company, the court in Webbe v McGhie Land Title Co. (1977, CA10 Utah) 549 F2d 1358, held that since 28 U.S.C.A. 455 provided that a judge should disqualify himself in any proceeding in which his impartiality might reasonably be questioned, and the trial judge, without reading the depositions, had announced, on the basis of the oral argument of the plaintiff and the third-party defendant, that the insurance company was stuck before even permitting counsel for the insurance company to address the court, further proceedings should be conducted by a different judge. Fact that trial judge owned corporate victims stock worth $10,000 to $15,000 was sufficient to cause reasonable apprehension of partiality and amounts to grounds for disqualification of judge from presiding over prosecution for interstate transportation of security taken from corporate victim by fraud. United States v Nobel (1982, CA3 Pa) 696 F2d 231, 12 Fed Rules Evid Serv 567, cert den Nobel v United States (1983, US) 77 L Ed 2d 1348, 103 S Ct 3086 District judges recusal is required by 28 U.S.C.A. 455(a), although he has no bias-in-fact against defendant, where objective appearance of bias has arisen as result of number of accusations made by defendant and his counsel concerning judge and members of judges staff, which accusations relate to alleged bias of judge against defendant, allegation that judges administrative aide improperly delivered documents to jury for consideration during its deliberations, and allegation that judges law associate had made derogatory remarks concerning merits of pretrial motions filed by defendant and had impugned motive of defense counsel in filing them. United States v Jonnet (1985, WD Pa) 620 F Supp 684. See Rice v McKenzie (CA4 W Va) 581 F2d 1114, 3. Judges remarks reflecting personal prejudice against defendant for successfully appealing prior conviction based on judges action require judges disqualification under 28 U.S.C.A. 455 where they were made in judicial context outside presence of jury. United States v Holland (1981, CA5 Ala) 655 F2d 44. Judges statement in making oral ruling from bench on plaintiff-appellees motion for preliminary injunction that [t]his thing

is the most transparent and the most blatant attempt to intimidate witnesses and parties that I have seen in a long time suggests that judge cannot guarantee his impartiality in future proceedings in same matter, and judge should disqualify himself pursuant to 28 U.S.C.A. 455(a) Nicodemus v Chrysler Corp. (CA6 Ohio) 596 F2d 152.

The statement of the law is disjunctive that means each is an independent ground for when the application applies, mutual funds is an exception to n/a
New York City Development Corp. v. Hart, 796 F.2d 976, 977, (7th Cir.(Ill.),Jul 21, 1986) Petition was filed for writ of mandamus, asserting that judge was disqualified from action seeking injunction against redemption of certain municipal bonds, because he had financial interest in subject matter in controversy. The judge denied the motion for preliminary injunction, refused to dismiss the suits, **but subsequently disqualified himself. Thereafter, the Court of Appeals held that: (1) orders rendered after filing of motion for recusal of judge must be vacated by district judge or by writ of mandamus if motion is ultimately granted, and (2) district judge was not required to recuse himself from suit on ground that his decision could affect value of bond trusts and funds in which judge had interest. Vacated in part and denied in part. [2] Judges 227 56 227 Judges 227IV Disqualification to Act 227k56 k. Effect on Acts and Proceedings of Judge. Most Cited Cases Orders rendered after filing of motion for recusal of judge must be vacated by district judge or by writ of mandamus if motion is ultimately granted. 28 U.S.C.A. 455, 455(a). [3] Judges 227 39

227 Judges 227IV Disqualification to Act 227k39 k. Nature and Effect in General. Most Cited Cases Fact that judge recused himself did not show that he had to. [4] Judges 227 56

227 Judges 227IV Disqualification to Act 227k56 k. Effect on Acts and Proceedings of Judge. Most Cited Cases Judge's unnecessary recusal ought not to require work to be redone by his successor. [5] Judges 227 42

227 Judges 227IV Disqualification to Act 227k41 Pecuniary Interest 227k42 k. In General. Most Cited Cases District judge was not required to recuse himself from suit seeking injunction against redemption of certain municipal bonds on ground that his decision could affect value of bond trusts and funds in which judge had interest; effects of such sort were both ubiquitous and too indirect to require disqualification. [6] Judges 227 42

227 Judges 227IV Disqualification to Act 227k41 Pecuniary Interest 227k42 k. In General. Most Cited Cases Judge's belief that his impartiality might reasonably be questioned in action seeking injunction against redemption of certain municipal bonds, where judge's wife owned interest in trust that included municipal bonds, **prevented statute, which states that ownership of fund is not a financial interest in fund's securities unless judge participates in management of fund, from acting as safe harbor. 28 U.S.C.A. 455, 455(a), (d)(4)(i). [7] Judges 227 51(1)

227 Judges 227IV Disqualification to Act 227k51 Objections to Judge, and Proceedings Thereon 227k51(1) k. In General. Most Cited Cases Statute requiring recusal when judge's impartiality might reasonably be questioned requires objective inquiry, from point of reasonable person with access to all facts. 28 U.S.C.A. 455(a). PER CURIAM. This petition for mandamus grows out of suits seeking an injunction against the redemption of certain bonds by defendant **New York City Housing Development Corp. (HDC). The redemption was planned for May 1, 1986. The case was assigned to Judge Hart on April 18, and he held several emergency hearings. HDC resisted on grounds of jurisdiction and venue, as well as on the merits. Judge Hart revealed on April 18 that his wife owned interests in trusts that included municipal bonds, including trusts organized by John Nuveen & Co. and Van Kampen Merritt, Inc., the two plaintiffs. He also revealed that **neither plaintiff is a trustee for any of the trusts, and that none of the trusts holds any of the bonds sought to be redeemed. This apparently satisfied HDC until April 29, when on the eve of Judge *978 Hart's ruling HDC made an oral motion for recusal. The next day-before Judge Hart could rule-HDC filed a petition for a writ of mandamus. This petition asserted that Judge Hart is disqualified under 28 U.S.C. 455(b)(4) because he has a financial interest in the subject matter in controversey ... or any other interest that could be substantially affected by the outcome of the proceeding. According to the petition, many municipal bonds have the same sort of call provisions included in defendant's bonds, the decision could affect many bonds and hence the value of bond trusts and bond funds in which the judge has an interest. HDC sought to avoid in this way the statutory rule that [o]wnership in a mutual or common investment fund that holds securities is not a financial interest in such securities unless the judge participates in the management of the fund. 28 U.S.C. 455(d)(4)(i). The disqualifying interest, HDC insisted, was the trusts themselves and not indirect ownership in defendant's bonds. On April 30 Judge Hart denied the plaintiffs' motion for a preliminary injunction, refused to dismiss the suits, and refused to disqualify himself. On May 7 he filed a written opinion explaining why he had refused to dismiss the suits and declined to issue an injunction. He also changed his mind and recused himself. He explained once more that the plaintiffs are not trustees of his wife's funds, that he has never dealt directly with the plaintiffs, and that the funds include none of HDC's bonds. But he continued: Except in the most unusual circumstances (ordinarily not present in a large district) a judge should not have to hear any case in which a party asserts a belief that the judge will not be impartial. The burdens of judicial office are simply too heavy to add to them the problem of a claim of judicial partiality and litigation on this issue. I do not want the integrity of the court or my ability to be impartial to be an issue in any case. I believe in liberal recusal and have heretofore granted every motion for recusal presented to me. On reflection, I believe that I would have granted a timely motion for recusal by resolving any doubts in defendant's favor had I not thought the oral motion to be simply a tactic to prevent even the consideration of emergency relief. Therefore, having disposed of the emergency issues and consistent with my views and past practices, I now recuse myself.

At p. 978,

The first question is whether HDC's request is within our power to decide. The case is in mid-stream, and an appeal from the final judgment would give HDC an opportunity to raise all objections to intermediate orders. Yet we held in United States v. Balistrieri, 779 F.2d 1191, 1204-05 (7th Cir.1985), that some objections to a judge's failure to recuse himself (or, as in Balistrieri and this case, a belated grant of a motion to recuse) may not be raised on appeal. Sometimes the disqualification of a judge is required, as under 28 U.S.C. 144 and 455(b), because of actual or imputed bias. Disqualification under these statutes is for the benefit of the parties, and errors may be assigned on appeal as grounds of reversal. But 455(a), which requires recusal when a judge's impartiality might reasonably be questioned, is designed for the benefit of the judicial system as a whole, and even if a judge errs in failing to disqualify himself promptly, the error does not call into question the substantive*979 decisions of the court. Because procedural rulings that do not affect the merits of the case (the substantial rights of the parties, see Fed.R.Civ.P. 61) are not good reasons to reverse the final judgment, we concluded in Balistrieri and United States v. Murphy, 768 F.2d 1518, 1539-41 (7th Cir.1985), cert. denied, 475 U.S. 1012, 106 S.Ct. 1188, 89 L.Ed.2d 304 (1986), that decisions taken before the filing of a motion under 455(a) are not reviewable at all, and that questions under 455(a) may not be raised on appeal from the final decision. Cf. Walton v. United Consumers Club, Inc., 786 F.2d 303, 313-14 (7th Cir.1986). So if the problem is one of the appearance of impropriety, as the district judge concluded, it is mandamus or nothing, and Balistrieri expressed a strong preference for mandamus over nothing. See also, e.g., Pepsico, Inc. v. McMillen, 764 F.2d 458, 460 (7th Cir.1985); SCA Services, Inc. v. Morgan, 557 F.2d 110 (7th Cir.1977). (We need not decide whether questions under 455(b), which may be raised on appeal, also may be raised by mandamus.) [2] Perhaps, however, recusal under 455(a) runs prospectively only, so that all orders entered before the district judge removes himself (or the court of appeals issues a writ of mandamus) stand. The other option is that orders rendered after the filing of the motion must be vacated-by the district judge or by writ of mandamus-if the motion ultimately is granted. **We think the latter view best carries out the purposes of 455. Murphy surveyed the cases involving the appearance of impropriety and concluded that none had required the court to set aside decisions that had been taken before any party asked for recusal. 768 F.2d at 1539. Several cases, on the other hand, have held or assumed that decisions taken after the filing of a justified motion must be set aside. We do not think that Balistrieri questions this conclusion. It would be undesirable to consider case by case whether the post-motion orders of the judge should be set aside; the inquiry would have no particular focus, and it would present especially difficult problems for a successor district judge asked to examine the propriety of his colleague's conduct. Neither 455 nor the legislative history of its amendment in 1974 addresses the question. There is no inevitable answer, but the position that provides the greatest measure of safety for the judicial system as a whole is one that vacates all decisions taken after the filing of a justified motion to disqualify a judge under 455(a). [3][4][5] This makes it necessary to decide whether the district judge was required to recuse himself under 455. If he was, then his orders of April 30 and May 7 must be vacated. The fact that he did recuse himself does not show that he had to, however, and a judge's unnecessary recusal ought not to require work to be redone by his successor. We may not be authorized to vacate the district judge's order of recusal, see Hampton v. City of Chicago, 643 F.2d 478 (7th Cir.1981), and at all events no one has asked us to do so, but if the order was unnecessary we need not add ripples to the splash. We conclude that the order was indeed unnecessary; Judge Hart is not disqualified. HDC relied on 455(b)(4), arguing that the disposition of the case may affect the value of bond funds, including those in which the district judge has an interest. Judge Hart found this argument insufficient, as do we. The value of many assets, even the performance of the economy as a whole (and hence all assets), may depend on rules of law. It could be said that no judge who owns a house should render a decision that potentially affects the value of real estate in general, that no judge who owns stock should decide a case under the securities or antitrust laws, and so on. Effects of this sort are both ubiquitous and too indirect to require disqualification. Cf. Union Carbide Corp. v. U.S. Cutting Service, Inc., 782 F.2d 710, 714-15 (7th Cir.1986). The effects are small, and almost every judge will have some remote interest of this sort. Moreover, the effects may have offsets that are difficult to predict. A *980 decision under the securities laws that diminishes somewhat the value of bonds may increase somewhat the value of stocks; no judge with a diversified portfolio will be able to predict the effect on his wealth, and therefore there is little risk of either actual bias or the appearance of impropriety. These offsetting effects may be particularly strong within a fund of stocks or bonds. **A judge may hold a mutual fund that contains AT & T stock. Yet the judge is expressly authorized by 455(d)(4)(i) to sit in a case involving AT & T, in part because the fund may sell the stock before the judge decides the case, in part because a change in the value of AT & T stock will have a small effect on the fund as a whole, and in part because a decision that helps or hurts AT & T may have the opposite effect on MCI, GTE, or other securities in the fund, washing out the effect on the judge's portfolio. When Congress amended 455 in 1974, it designed 455(d)(4)(i) as a safe harbor, a way for judges to hold securities without needing to make fine calculations of the effect of a given suit on their wealth. HDC wants us to do exactly what 455(d)(4)(i) preventsto ask whether a decision could affect the value of the assets held by a mutual fund and then to order disqualification. Section

455(d)(4)(i) states that the ownership of a fund is not a financial interest in the fund's securities, unless the judge participates in the management of the fund. Because the underlying assets are not a financial interest of the judge it is unnecessary and inappropriate to inquire how a case might affect the value of the fund's assets. The statute operates in a mechanical fashion. Just as 455(b)(4) requires disqualification when there is any financial interest, however small, In re Cement Antitrust Litigation, 688 F.2d 1297, 1308 (9th Cir.1982), so 455(d)(4)(i) eliminates any inquiry into the size of the likely effect of a decision on the value of securities held through a mutual fund. [6][7] The district judge nonetheless thought that his impartiality might reasonably be questioned within the meaning of 455(a). To the extent this introduces through the back door an inquiry into the substantiality of the effect on the value of assets held by the mutual fund, it is an inappropriate use of 455(a). This inquiry would prevent 455(d)(4)(i) from acting as a safe harbor, once again calling on judges to decide whether a financial interest is sufficiently substantial to require disqualification. Moreover, 455(a) requires disqualification only when a judge's decision might reasonably be questioned. The inquiry is objective, from the point of view of a reasonable person with access to all of the facts. See Pepsico and Union Carbide. See also, e.g., United States v. DeLuna, 763 F.2d 897, 907 (8th Cir.), cert. denied, 474 U.S. 980, 106 S.Ct. 382, 88 L.Ed.2d 336 (1985). A reasonable person would not question the impartiality of a judge who holds nothing but well diversified mutual funds. [8] The district judge's opinion suggests another ground, that a judge should recuse himself whenever a party asserts a belief that the judge will not be impartial. Section 455(a) then becomes a form of peremptory challenge against the judge. The statute does not create such a challenge, however. That is the point of limiting disqualification to a case where the judge's impartiality might reasonably be questioned. We held in SCA Services, 557 F.2d at 113 & n. 8, that the 1974 amendments to 455 abolish any duty to sit; a judge need not and should not decide close calls in favor of hearing the case. See also United States v. Haldeman, 559 F.2d 31, 139 n. 360 (D.C.Cir.1976) (en banc), cert. denied, 431 U.S. 933, 97 S.Ct. 2641, 53 L.Ed.2d 250 (1977); United States v. Wolfson, 558 F.2d 59, 63 (2d Cir.1977); H.R.Rep. No. 93-1453, 93d Cong., 2d Sess. 2, 5 (1974), reprinted in 1974 U.S.Code Cong. & Admin.News 6351, 6355; Comment, Disqualification of Federal Judges for Bias or Prejudice, 46 U.Chi.L.Rev. 236, 241-42 (1978). A judge may decide close calls in favor of recusal. But there must first be a close call. As we put it in *981Suson v. Zenith Radio Corp., 763 F.2d 304, 308-09 n. 2 (7th Cir.1985) , a district judge is ... obligated not to recuse himself without reason just as he is obligated to recuse himself when there is reason. See also United States v. Baskes, 687 F.2d 165, 170 (7th Cir.1981). A judge who removes himself whenever a party asks is giving that party a free strike, and Congress rejected proposals (now in effect in some states) to allow each party to remove a judge at the party's option. Branco v. Bank of America, 2009 WL 5206630 (E.D.Cal.,Dec 22, 2009) ORDER OF RECUSAL WILLIAM B. SHUBB, District Judge. *1 Because the spouse of one of my law clerks owns a small amount of stock in the Bank of America, I must recuse myself from this case. This memorandum is written to explain why I have reluctantly come to that conclusion. Under 28 U.S.C. 455(b)(4), a justice, judge, or magistrate judge of the United States is required to disqualify himself if [h]e knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a financial interest in the subject matter in controversy or in a party to the proceeding . With several itemized exceptions, including mutual funds the judge does not manage and government securities, 455(d)(4) defines financial interest to include ownership of a legal or equitable interest, however small, or a relationship as director, adviser, or other active participant in the affairs of a party. Accordingly, a judge must recuse himself from any case in which he owns stock in a corporate party or **in a parent corporation of a corporate subsidiary party. Amstadter v. Bank of America, 2009 WL 5206640 (E.D.Cal.,Dec 22, 2009)

ORDER OF RECUSAL WILLIAM B. SHUBB, District Judge. *1 Because the spouse of one of my law clerks owns a small amount of stock in the Bank of America, I must recuse myself from this case. This memorandum is written to explain why I have reluctantly come to that conclusion. Under 28 U.S.C. 455(b)(4), a justice, judge, or magistrate judge of the United States is required to disqualify himself if [h]e knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a financial

interest in the subject matter in controversy or in a party to the proceeding. With several itemized exceptions, including mutual funds the judge does not manage and government securities, 455(d)(4) defines financial interest to include ownership of a legal or equitable interest, however small, or a relationship as director, adviser, or other active participant in the affairs of a party. Accordingly, a judge must recuse himself from any case in which he owns stock in a corporate party or in a parent corporation of a corporate subsidiary party.

In Key Pharmaceuticals, Inc. v. Mylan Laboratories Inc., 24 F.Supp.2d 480, 482, (W.D.Pa.,Oct 14, 1998) the court stated, [1] Having examined that statute, case law, legislative history, and after consulting the Administrative Office of United States *482 Courts, the court believes the matter rests on the interpretation of 28 U.S.C. 455(f). Section 455(b)(4) makes recusal mandatory when a judge has a financial interest in ... a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding. FN2 Section 455(d)(4) defines financial interest in part as ownership of a legal or equitable interest, however small. Section 455(f) provides an exception to this rigid scheme. It states: FN2. While the judge's financial interest at issue here is not, strictly speaking, in a party to the proceeding, it is sufficiently close that it is governed by the mandatory recusal provisions of Section 455(b)(4). See Advisory Committee on Judicial Activities, Advisory Opinion No. 58, August 9, 1978 opining that under Code of Judicial Conduct for United States Judges and 28 U.S.C. Section 455, the owner of stock in a parent corporation has a direct legal or equitable interest in a controlled subsidiary and the judge should disqualify himself. Of course, as it relates to disqualification, this opinion must be read in light of the subsequent amendment of the statute by the addition of subsection (f).
Key Pharmaceuticals, Inc. v. Mylan Laboratories Inc., 24 F.Supp.2d 480, 482, (W.D.Pa.,Oct 14, 1998) [1] Having examined that statute, case law, legislative history, and after consulting the Administrative Office of United States *482 Courts, the court believes the matter rests on the interpretation of 28 U.S.C. 455(f). Section 455(b)(4) makes recusal mandatory when a judge has a financial interest in ... a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding. FN2 Section 455(d)(4) defines financial interest in part as ownership of a legal or equitable interest, however small. Section 455(f) provides an exception to this rigid scheme. It states: FN2. While the judge's financial interest at issue here is not, strictly speaking, in a party to the proceeding, it is sufficiently close that it is governed by the mandatory recusal provisions of Section 455(b)(4). See Advisory Committee on Judicial Activities, Advisory Opinion No. 58, August 9, 1978 opining that under Code of Judicial Conduct for United States Judges and 28 U.S.C. Section 455, the owner of stock in a parent corporation has a direct legal or equitable interest in a controlled subsidiary and the judge should disqualify himself. Of course, as it relates to disqualification, this opinion must be read in light of the subsequent amendment of the statute by the addition of subsection (f).

Postulates of equality Symmetric Property Equality: if A=B, then B=A, or If Parent =Subsidiary then Subsidiary = Parent Transitive Property of Equality: if A=B and C=B then A=C If Subsidiary1 = Parent and Subsidiary2 = Parent then Subsidiary1 = Subsidiary2
(f) Notwithstanding the preceding provisions of this section, if any justice, judge, magistrate, or bankruptcy judge to whom a matter has been assigned would be disqualified, after substantial judicial time has been devoted to the matter, because of the appearance or discovery, after the matter was assigned to him or her, that he or she individually or as a

fiduciary, or his or her spouse or minor child residing in his or her household, has a financial interest in a party (other than an interest that could be substantially affected by the outcome), disqualification is not required if the justice, judge, magistrate, bankruptcy judge, spouse or minor child, as the case may be, divests himself or herself of the interest that provides the grounds for the disqualification. In applying this language to the current problem, it is first appropriate to find that the text of the provision indeed operates as an exception to mandatory recusal for financial interest in a party; otherwise it would have no meaning. The conditions for operation of section 455(f) are: (1) the devotion of substantial time to a case; (2) the discovery of a financial interest in a party; (3) the interest is one that could not be substantially affected by the outcome; and (4) divestment of the financial interest in question. Brown v. Burlington Northern R.R. Co., 1996 WL 172292 (N.D.Ill. Apr 11, 1996) On April 9, however, this Court proceeded with the preparation of the 1995 joint income tax return and also of the calendar year 1995 Financial Disclosure Report required to be filed pursuant to 5 U.S.C. App. 6, 101-112. In the course of so doing, this Court learned that a corporation in which Mrs. Shadur had held stock for some period of time (Santa Fe Pacific Corporation) had in the fall of 1995 entered into a business combination with Burlington Northern, Inc., so that Mrs. Shadur now holds shares in the combined corporate entity, Burlington Northern Santa Fe Corporation. By reason of that stock ownership, this Court is required to disqualify itself under 28 U.S.C. 455(b)(4). Accordingly this Court hereby vacates: 1. its April 8 approval of the FPTO and 2. its April 8 minute order. As soon as this Court's recusal is implemented by the Executive Committee of this District Court, so that the case is assigned to one of this Court's colleagues, all of the relevant documents in the case (including a copy of this memorandum order) will be transmitted to the assignee judge so that he or she may take the necessary steps to restore the case to the appropriate status.

The stock of Wells Fargo & Co is the one that is publicly traded. WELLS FARGO BANK AND WELLS FARGO INVESTMENT ADVISORS are each of the subsidiaries provides income to the WELLS FARGO & CO which would affect each of the completely controlled subsidiaries. And in which the profit would be added and the loss subtracted from a parent. And the subsidiaries are all participating in the profit and loss and liability sharing process. The llegally derived profiteering in the instant case is in the appraised value of the property known as 3741 Avenida Sausalito Irvine, California, from the illegal fraudulent foreclosure sale and the loss is possible ranging from RICO damages and for imposition of actual damages for violations of 11 U.S.C. 362 automatic stay. In New York City Development Corp. v. Hart, 796 F.2d 976, 979, (7th Cir. (Ill.) Jul 21, 1986) the court stated, A judge may hold a mutual fund that contains AT & T stock. Yet the judge is expressly authorized by 455(d)(4)(i) to sit in a case involving AT & T, in part because the fund may sell the stock before the judge decides the case, in part because a change in the value of AT & T stock will have a small effect on the fund as a whole, and in part because a decision that helps or hurts AT & T may have the opposite effect on MCI, GTE, or other securities in the fund, washing out the effect on the judge's portfolio.

I refer to and incorporate the DWS Investments Deutsche Asset Management, California Tax Free Income Fund Supplement To The Currently Effective Statements Of Additional Information Of Each Of The Listed Funds. A true and correct copy is attached as Exhibit 2, and is incorporated herein by this reference. And I request the court to take judicial notice under the authorization of Rule 201 of the Federal Rules Of Evidence. at page II-80, Part III: Appendix II-E it states FIRMS WITH WHICH DEUTSCHE ASSET MANAGEMENT HAS REVENUE SHARING ARRANGEMENTS And it lists WELLS FARGO ADVISORS, LLC WELLS FARGO INVESTMENTS, LLC DWS has fixed and known revenue sharing agreement with Wells Fargo Advisors, L.L.C., and Wells Fargo Investments, L.L.C. this removes the underpinning that Mutual Funds the investor does not know which funds are being invested in and that a loss in one results in a gain in another. This fixed and known revenue sharing agreement makes it that the tribunal holding the fund knows that WELLS FARGO subsidiary is a party, WELLS FARGO BANK AND WELLS FARGO INVESTMENT ADVISORS are each of the subsidiaries provides income to the WELLS FARGO & CO which would affect each of the completely controlled subsidiaries. And in which the profit would be added and the loss subtracted from a parent. And the subsidiaries are all participating in the profit and loss and liability sharing process and in the instant case the llegally derived profiteering in the instant case is in the appraised value of the property known as 3741 Avenida Sausalito Irvine, California, from the illegal fraudulent foreclosure sale and the loss is possible ranging from RICO damages and for imposition of actual damages for violations of 11 U.S.C. 362 automatic stay. will gain or lose based on their decision when outcome of the case is affecting either the outcome of their decision. On October 7, I David Chey duly sworn and deposed state that I on October 6, 2011 Subsidiary: 1. giving aid support, service, etc. serving to supplement 2. Being in a secondary or subordinate relationship 3. Constituting or maintained by a subsidy or subsidies 4. A person or thing that is a subsidiary; specif a) a company controlled by another company which owns all or the majority of its shares (in full subsidiary company) Parent: adj. designating a corporation in relation to a subsidiary that it owns and controls. Profit gained or loss absorbed by the parent Its profit and loss are consolidated to a whole by the parent and thereby affect each other, affect each other through affect on the parent. In which the profit would be added and the loss subtracted from a parent. And the subsidiaries are all participating in the profit and loss and liability sharing process. Affiliate: 1 to take in as a member or branch 2 to connect or associate

oneself with 3 to trace the origins or source of vi. To associate oneself with; join n. an affiliated individual or organization member. Fortunes are tied together by parent How is This proceeding could not possibly affect the Court's stocks in WELLS FARGO INVESTMENT ADVISORS or its value? Through affecting WELLS FARGO BANK and through its common parent. Through enriching the subsidiary and the parent and thereby the other subsidiary Application of the 28 U.S.C. 455 operates in a mechanical fashion?? Writ of mandate warranted under Firestone v. Risjord 449 U.S. 368 (1981); Unified v Jelco 646 F.2d 1339 (9th Cir. 1981); Armstrong v. McAlpin 625 f.2d 433 (2d. Cir. 1980) Would negate argument that even if you examine the DWS mutual fund it still states that it has a fixed known revenue sharing agreement with WELLS FARGO ADVISORS LLC, AND WELLS FARGO INVESTMENTS, LLC I refer to and incorporate the DWS Investments Deutsche Asset Management, California Tax Free Income Fund Supplement To The Currently Effective Statements Of Additional Information Of Each Of The Listed Funds. A true and correct copy is attached as Exhibit 2, and is incorporated herein by this reference. And I request the court to take judicial notice under the authorization of Rule 201 of the Federal Rules Of Evidence. at page II-80, Part III: Appendix II-E it states FIRMS WITH WHICH DEUTSCHE ASSET MANAGEMENT HAS REVENUE SHARING ARRANGEMENTS And it lists WELLS FARGO ADVISORS, LLC WELLS FARGO INVESTMENTS, LLC DWS has fixed and known revenue sharing agreement with Wells Fargo Advisors, L.L.C., and Wells Fargo Investments, L.L.C. this removes the underpinning that Mutual Funds the investor does not know which funds are being invested in and that a loss in one results in a gain in another. This fixed and known revenue sharing agreement makes it that the tribunal holding the fund The llegally derived profiteering in the instant case is in the appraised value of the property known as 3741 Avenida Sausalito Irvine, California, from the illegal fraudulent foreclosure sale and the loss is possible ranging from RICO damages and for imposition of actual damages for violations of 11 U.S.C. 362 automatic stay. will gain or lose based on their decision when outcome of the case is affecting either the profit or loss of WELLS FARGO. Plain meaning of the statute foreclosure sales go to wells fargo bank and then to wells fargo & co.

Relationship wells fargo bank n.a. and wells fargo advisors llc are subisidaries of parent wells fargo and co., Has WELLS FARGO AND CO. ever been sued. Ruling for subsidiaries would benefit the parent And judge would benefit from the outcome. Financial interest in the subject matter of the litigation. 28 U.S.c. 455 in relevant part provides: (a) Any justice, judge, magistrate, or referee in bankruptcy of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned. (b) He shall also disqualify himself in the following circumstances: .. (4) He knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding; (d) For the purposes of this section the following words or phrases shall have the meaning indicated: (4) financial interest means ownership of a legal or equitable interest, however small, or a relationship as director, adviser, or other active participant in the affairs of a party, except that: (i) Ownership in a mutual or common investment fund that holds securities is not a financial interest in such securities unless the judge participates in the management of the fund;
FN3. s 455. Disqualification of justice, judge, magistrate, or referee in bankruptcy. (a) Any justice, judge, magistrate, or referee in bankruptcy of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned. (b) He shall also disqualify himself in the following circumstances: (1) Where he has a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding; (2) Where in private practice he served as lawyer in the matter in controversy, or a lawyer with whom he previously practiced law served during such association as a lawyer concerning the matter, or the judge or such lawyer has been a material witness concerning it; (3) Where he has served in governmental employment and in such capacity participated as counsel, adviser or material witness concerning the proceeding or expressed an opinion concerning the merits of the particular case in controversy; (4) He knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a

financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding; (5) He or his spouse, or a person within the third degree of relationship to either of them, or the spouse of such a person; (i) Is a party to the proceeding, or an officer, director, or trustee of a party; (ii) Is acting as a lawyer in the proceeding; (iii) Is known by the judge to have an interest that could be substantially affected by the outcome of the proceeding; (iv) Is to the judge's knowledge likely to be a material witness in the proceding. (c) A judge should inform himself about his personal and fiduciary financial interests, and make a reasonable effort to inform himself about the personal financial interests of his spouse and minor children residing in his household. (d) For the purposes of this section the following words or phrases shall have the meaning indicated: (1) proceeding includes pretrial, trial, appellate review, or other stages of litigation; (2) the degree of relationship is calculated according to the civil law system; (3) fiduciary includes such relationships as executor, administrator, trustee, and guardian; (4) financial interest means ownership of a legal or equitable interest, however small, or a relationship as director, adviser, or other active participant in the affairs of a party, except that: (i) Ownership in a mutual or common investment fund that holds securities is not a financial interest in such securities unless the judge participates in the management of the fund;

a judges holding in a mutual fund is not the basis for disqualification on matters involving a party in which the mutual fund may have a financial interest. Code of Conduct for United States Judges, Canon 3C(3)(c). That principle applies with equal force with respect to a company that serves as a holding company for mutual fund shares. Under the plain meaning of the construction of the statute states, the judge has a financial interest in the subject matter in controversy, or if the fact is that the judge has a financial interest (holding stock) or a legal or equitable interest as defined in 28 U.S.C. 455(d)(4) in the holding company that is a party, or any other interest that could be substantially affected by the outcome of the proceeding (Holding stock) or a legal or equitable interest in the holding company that is a party does not negate the interest in the holding company because the holding company is holding mutual funds In New York City Development Corp. v. Hart, 796 F.2d 976, 979, (7th Cir. (Ill.) Jul 21, 1986) the court stated, A judge may hold a mutual fund that contains AT & T stock. Yet the judge is expressly authorized by 455(d)(4)(i) to sit in a case involving AT & T, in part because the fund may sell the stock before the judge decides the case, in part because a change in the value of AT & T stock will have a small effect on the fund as a whole, and in part because a decision that helps or

hurts AT & T may have the opposite effect on MCI, GTE, or other securities in the fund, washing out the effect on the judge's portfolio. In addition one of the main public policies is to comply with due process, that the one of the purpose of the mutual fund is that the judge does not know who is gaining revenue from the decision

U.S. v. Sellers, 566 F.2d 884, 2 Fed. R. Evid. Serv. 840, 887, (4th Cir.(S.C.) Nov 30, 1977)

In U.S. v. Sellers, 566 F.2d 884, 2 Fed. R. Evid. Serv. 840, 887, (4th Cir. (S.C.) Nov 30, 1977) We hold that the trial court did not abuse its discretion. Disqualification for lack of discretion must have a reasonable basis, (italics are those of the House), and we can find on this record no reasonable factual basis for doubting the judge's impartiality. H.R. Rep. No. 93-1453, reprinted at 6355. No reason appears why owning stock in a holding company owning a bank that is robbed would lead to any reasonable apprehension that the stockholder judge would be partial. **Neither the bank nor its parent company are parties to the case,[FN2] and we find that any interest the judge might possibly have in the case is so remote as to be for all practical purposes non-existent. Ravich, supra. The business duties of his brother should likewise cause no reasonable fear that the judge will not be impartial. H.R.Rep. No. 93-1453, supra, reported at 6355. **FN2. Were they disqualification. parties, of course, s 455(b)(4) would require

In addition one of the main public policies is to comply with due process, that the holding company is holding stock in mutual fund doesnt negate the fact that the holder of stock in the holding company.

Also one of the purpose of the mutual fund is that the judge does not know who is gaining revenue from the decision I refer to and incorporate In addition subsidiary and another subsidiary are equivalent because a judgment for one subsidiary will benefit the other through membership through the whole parent.
Judges equity interest in party gave rise to appearance of partiality requiring disqualification, although judge did not know of his financial interest in party at time of trial, where his presiding role was not merely technical given that he presided over bench trial and rendered decision on the merits, and a reasonable person knowing pertinent facts would have known of disqualifying financial interest. 28 U.S.C.A. 455(a), (b)(4). Chase Manhattan Bank v. Affiliated FM Ins. Co., 343 F.3d 120 (2d Cir. 2003). 18[a] Ownership of stock or debt of nonparty, generallyJudge held disqualified It has been held that a district judges ownership of stock in a nonparty was a financial interest requiring recusal under 28 U.S.C.A. 455(b)(4) where there was a direct connection between the nonparty and the subject matter in controversy. The district judge in Sollenbarger v. Mountain States Tel. & Tel. Co., 706 F. Supp. 776 (D.N.M. 1989), held that his ownership of stock in three nonparty regional telephone companies created by the judicially mandated breakup of American Telephone & Telegraph Co. (AT&T), and his ownership of AT&T stock, constituted a financial interest in the subject matter in controversy under 28 U.S.C.A. 455(b)(4), which required his recusal in a class action against a regional telephone

company alleging illegality in the defendant telephone companys inside wire maintenance service contractscontracts that were offered when the defendant and the nonparty regional telephone companies were part of AT&T. The defendant regional telephone company contended that a Plan of Reorganization (POR) governing the relationship between the regional telephone companies and AT&T required recusal; the POR outlined a system for keeping track of and apportioning liabilities arising before the break up of AT&T. Declaring that, in cases where a judge has a financial interest within 455(d)(4) in a nonparty, the court examines how direct an effect the litigation will have on the interested nonparty, the district judge determined that recusal was required because the nexus between his financial interest in the nonparty companies and the outcome of the present litigation was sufficiently direct. The court observed that the nonparty companies were part of the contingent liability provision of the POR, since at least one of the nonparty companies would participate in the liability sharing process. Conceding that many events might occur before the first potential payment by a nonparty company to the defendant regional telephone company, the district judge said that he could hardly imagine a more explicit connection between the nonparty companies and the outcome of the instant litigation. The plaintiffs asserted that the connection between the instant litigation and the nonparty companies was contingent and remote, claiming that (1) the plaintiffs had to recover a judgment, overcoming the likely summary judgment motions, winning at trial, and winning on appeal; (2) even if successful at the three litigation stages, the liabilitysharing provisions of the POR would then become operative, and if some disagreement arose about the application of some of the provisions, the parties could take the matter to arbitration; (3) nonparty companies might never indemnify the defendant regional telephone company because the regional telephone companies and AT&T could reach an agreement to alter or waive the POR provisions; and (4) the defendant regional telephone company could settle the litigation and no liability sharing would occur under the express terms of the POR. None of these exigencies, the district judge ruled, either alone or in combination, significantly diminished the direct connection dictated by the POR between the nonparty companies in which the district judge held stock and the suit.

observation Although the courts in the following cases determined that a nonparty corporations status as a crime victim, standing alone, is not sufficient to establish a financial interest in the subject matter in controversy so as to disqualify a judge who owns stock in the corporate crime victim under 28 U.S.C.A. 455(b)(4), the situation may be viewed differently if the penalty for the crime involves restitution to the crime victim. For example, the district judge in U.S. v. Pappert, 1998 WL 596707 (D. Kan. 1998), recognized that she arguably had a financial interest in the subject matter in controversy based on her ownership of stock in the parent company of a corporate crime victim where restitution in the amount of $500,000 was ordered. The district judge did not decide the issue, however, because disqualification under 455(b)(4) applies only if a judge knows of a financial interest and, at the time of trial and sentencing, the district judge was unaware that she owned the stock in question (see 6).
Party District judge properly recused when he discovered that he owned stock in parent corporation of one of the defendants. Fact that judge had already dismissed case did not divest him of jurisdiction to recuse. Lopez Dominguez v. Gulf Coast Marine & Associates, Inc., 607 F.3d 1066, 1071-1073 (5th Cir. 2010). We conclude that the term party as used in section 455 must be given its broad customary meaning rather than the narrow construction suggested by plaintiffs, and hold that for purposes of the recusal statute, the term party includes class members. In re Cement Antitrust Litigation (MDL No. 296), 688 F.2d 1297, 1313 (9th Cir. 1982), judgment affd, 459 U.S. 1191, 103 S. Ct. 1173, 75 L. Ed. 2d 425 (1983) (affirming for want of a quorum pursuant to 28 U.S.C.A. 2109). Judge was required to recuse upon learning that one of the parties before him was a wholly-owned subsidiary of a company in which he owned stock. Catherines v. Copytele, Inc., 608 F. Supp. 1031 (E.D. N.Y. 1985). Business relation affected by case Commonwealth Coatings Corp. v. Continental Cas. Co., 393 U.S. 145, 89 S. Ct. 337, 21 L. Ed. 2d 301 (1968).

Commonwealth Coatings Corp. v. Continental Cas. Co., 393 U.S. 145, 89 S.Ct. 337, 21 L.Ed.2d 301 (U.S.Puerto Rico,Nov 18, 1968)
Even if no actual bias or prejudice The question before us is not whether the Judge is biased. * * * However, we must conclude that the Government is entitled to the

issuance of the writ of mandamus for which it has petitioned because it has established that a reasonable well-informed observer could question the Judges impartiality. In re U.S., 572 F.3d 301, 312 (7th Cir. 2009). Whether a judge actually has a bias, or actually knows of grounds requiring recusal is irrelevant section 455(a) sets an objective standard that does not required scienter. The test is whether the average person on the street who knows all the relevant facts of a case might reasonably question the judges impartiality. Moran v. Clarke, 247 F.3d 799, 805 (8th Cir. 2001), rehearing granted, opinion vacated on other grounds, 258 F.3d 904 (8th Cir. 2001), quoting In re Kansas Public Employees Retirement System, 85 F.3d 1353, 1358 (8th Cir. 1996). Reasonable person test Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847, 865, 108 S. Ct. 2194, 2205, 100 L. Ed. 2d 855 (1988), noted 1989 Wis.L.Rev. 1033. Although district judges appearance at the same social events as defendants would not create an appearance of impropriety, the ongoing social relationship between them might. The image of one sitting in judgment over a friends affairs would likely cause the average person in the street to pause. Reciprocal visits to one anothers home exacerbated the problem. The court of appeals remanded the case to the district judge for reconsideration of the motion to recuse under 455(a). Moran v. Clarke, 247 F.3d 799, 806 (8th Cir. 2001), rehearing granted, opinion vacated on other grounds, 258 F.3d 904 (8th Cir. 2001).

**Recusal is appropriate under 28 U.S.C.A. 455(a) and (b where bankruptcy judges nephew and nephews wife are customers of debtor and hold interest that could be substantially affected by outcome of proceeding; public confidence in impartiality and integrity of judicial process would best be promoted by judge removing himself from further participation in liquidation proceeding under Securities Investor Protection Act of 1970 (15 U.S.C.A. 78aaa et seq.). Securities Investor Protection Corp. v Bell & Beckwith (1983, BC ND Ohio) 28 BR 285

CALPERS owns equity in WELLS FARGO & CO based on 2009 CALPERS ANNUAL INVESTMENT REPORT.
3 Treatise on Const. L. 17.8(g) (4th ed.) Treatise on Constitutional Law-Substance & Procedure Current through the 2011 Update Ronald D. Rotundaa0, John E. Nowaka1 Chapter 17. Procedural Due ProcessThe Requirement of Fair Adjudicative Procedures III. What Process Is Due? The Procedures Required by the Due Process Clause 17.8. General Principles 17.8(g) Right to a Fair Decisional Process and an Impartial Decision-maker The essential guarantee of the due process clause is that of fairness. The procedure must be fundamentally fair to the individual in the resolution of the factual and legal basis for government actions which deprive him of life, liberty or property. Due process only guarantees an individual a fundamentally fair procedure. Nothing in the Constitution, or its amendments, guarantees that an individual will have the process that is most likely to result in a favorable ruling for that individual. Neither substantive due process nor procedural due process principles are violated when a government agency takes an adverse action against a government employee, for false statements the employee made during an investigation of misconduct within the agency.20 While different situations may entail different types of procedures, there is always the general requirement that the government process be fair and impartial. Therefore, there must be some type of neutral and detached decision-maker, be it a judge, hearing officer or agency. The Court has continually held that a fair trial in a fair tribunal is a basic requirement of due process.21 In Caperton v. A.T. Massey Coal Co,21.10 the Justices, by a five to four vote, ruled that due process required a judge to recuse himself from a case that involved the interests of a major contributor to his campaign for judicial office. The majority opinion in Caperton found that the long-standing due process principle requiring an impartial decision-maker included the common law principle requiring recusal of a judge who had a financial interest in a case before the judges court. In Caperton. the judge had received a very large amount of money to finance his campaign for judicial office from a party in

the case. Five justices believed that the particular circumstances in this case indicated that there was such a high likelihood of partiality on the part of the judge that he was required to recuse himself from the case. But the majority did not provide a clear guideline for determining when an individual or corporations contributions to a candidate for judicial office, in a state where judges are elected to office, would require the judge to recuse himself from any case that involved the individual or corporate contributor. Chief Justice Roberts, and Justices Scalia and Thomas and Alito dissented in Caperton. The dissenters did not question the due process principle requiring an impartial decision-maker in any governmental. Rather, they believed that adopting a principle requiring a state court judge to recuse himself in the case involving one of the judges campaign contributors was not necessary to ensure that the tribunal hearing the case would be impartial. Additionally, the dissenters believed that there were no easily definable standards to determine when a campaign contribution might prejudice the judge. Chief Justice Roberts, in a dissent joined by Justices Scalia and Thomas and Alito, listed 40 issues that might be involved in the implementation of the majoritys position.21.20 Justice Scalia also wrote a separate dissenting opinion in Caperton, expressing his views about undermining public confidence in judicial proceedings.21.30 This requirement applies to agencies and government hearing officers as well as judges.22 The Supreme Court has strictly enforced this right and held that decision makers are constitutionally unacceptable where they have a personal monetary interest in the outcome of the adjudication or where they are professional competitors of the individual.23 The rule against biased decision-makers also serves to disqualify a judge in cases where that bias was solely the result of abuse or criticism from the parties appearing before him. 24 However the Court has held that a single hearing officer or agency may be given a combination of investigative and adjudicative functions. Thus the hearing officer could be charged with investigating and compiling facts in a case and making decisions based on those facts. 25 If an initial factual determination in an administrative proceeding is made by a person who has both enforcement and factfinding duties, due process should require that the person whose rights were subject to that process be given a de novo review by a truly neutral adjudicator.26 The fact that a government agency receives part of its funding from monetary penalties that it helps to assess does not necessarily make the agency a constitutionally unacceptable decision-maker. When no government official connected to the decision-making process personally profits from the decision, anyone challenging the process as inherently unfair would have to establish that the amount of agency funding traceable to the imposition of the civil penalty actually created an impermissible risk of bias in the decision-making process.27 One must also remember that the democratic process itself may be biased against an individual because a majority of the electorate may be biased, yet the system will still be upheld as fair within the meaning of due process. Thus the Court has upheld a requirement that zoning changes be subject to popular referendum, for that does no more than allow the general electorate to determine whether they wish to alter their laws.28 Yet even this procedure cannot be used to disguise a system which subjects one to a determination of his rights by a group composed of his professional or commercial competitors. Thus the Supreme Court has held that the zoning of a tract of real property cannot be left to the discretionary voting of neighboring property owners with interests adverse to the individual property owner.29 a0 a1 20
University Professor and Professor of Law, George Mason University School of Law. David C. Baum Professor of Law Emeritus, University of Illinois College of Law. LaChance v. Erickson, 522 U.S. 262, 118 S.Ct. 753, 139 L.Ed.2d 695 (1998). In LaChance, Chief Justice Rehnquist, writing for a unanimous Court, explained that neither the due process clause nor the self-incrimination clause provided a defense for an employee who gave false information to the government, although an employee under investigation could exercise Fifth Amendment rights to remain silent, under appropriate circumstances, but that 522 U.S. at __, 118 S.Ct. at 756. See also, Bryson v. United States, 396 U.S. 64, 72, 90 S.Ct. 355, 360, 24 L.Ed.2d, 264 (1969); Nix v. Whiteside, 475 U.S. 157, 173, 106 S.Ct. 988, 997, 89 L.Ed.2d 123, (1986); United States v. Dunnigan, 507 U.S. 87, 97, 113 S.Ct. 1111, 1118, 122 L.Ed.2d 445 (1993). In Brogan v. United States, 522 U.S. 398, 118 S.Ct. 805, 139 L.Ed.2d 830 (1998), the Supreme Court held that a federal statute making it a crime to give false statements to federal investigators did not have an exception for giving a false statement that consisted of a general denial of wrong doing. Justice Scalia, writing for the majority in Brogan found that the Fifth Amendment, and cases interpreting it, had not created a right to give false information to the government. 522 U.S. at 40405, 118 S.Ct. at 810. Brogan was decided by a seven to two vote of the Justices. The two dissenting Justices in Brogan, disagreed with the majoritys interpretation of the federal statute. The dissenting Justices did not take the position that the Fifth Amendment created a right to lie to federal investigators. 522 U.S. at 418, 118 S.Ct. at 817 (Stephens, J., joined by Breyer, J., dissenting). In Rivera v. Illinois, __ U.S. __, 129 S. Ct. 1446, 173 L. Ed. 2d 320 (2009) the Justices were unanimous in ruling that a trial judges refusal to allow the defendant to use a peremptory challenge did not deprive the defendant of a right to a fair trial before an impartial jury. The trial judge had refused to allow a defendant to exercise a peremptory challenge because of the judges erroneous belief that allowing the defendant to challenge the juror might have constituted an improper use of a peremptory challenge based on the race of the juror. In 18.4, infra, we examine Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986) (Supreme Court rules that the prosecutors use of peremptory challenges to exclude persons from the jury based on their race violates equal protection), and Georgia v. McCollum, 505 U.S. 42, 112 S. Ct. 2348, 120 L. Ed. 2d 33 (1992) (Supreme Court rules that a defendants use of peremptory challenges to exclude potential jurors on the basis of race would violate the equal

protection clause). See Chapter 16, supra, regarding the state action issue in the peremptory challenge cases.

21

In re Murchison, 349 U.S. 133, 136, 75 S.Ct. 623, 625, 99 L.Ed. 942 (1955). Other cases examining the nature of judicial interest in proceedings that will result in a violation of the fair tribunal requirement include: Aetna Life Insurance Co. v. Lavoie, 475 U.S. 813, 106 S.Ct. 1580, 89 L.Ed.2d 823 (1986), on remand 505 So.2d 1050 (Ala.1987); Gibson v. Berryhill, 411 U.S. 564, 93 S.Ct. 1689, 36 L.Ed.2d 488 (1973); Ward v. Monroeville, 409 U.S. 57, 93 S.Ct. 80, 34 L.Ed.2d 267 (1972); Tumey v. Ohio, 273 U.S. 510, 47 S.Ct. 437, 71 L.Ed. 749 (1927). See also, Sao Paulo State of the Federative Republic of Brazil v. American Tobacco Co., Inc., 535 U.S. 229, 122 S.Ct. 1290, 152 L.Ed.2d 346 (2002), on remand 307 F.3d 317 (5th Cir.2002) (per curiam) (federal statute does not require recusal of a judge who did not know that his name mistakenly had been added to a standard motion filed against some of the same defendants in the case in which the judge was sitting, because no reasonable person would believe that the judge had an interest or bias in the case). Caperton v. A.T. Massey Coal Co, __ U.S. __, 129 S.Ct. 2252, __ L.Ed.2d __ (2009). See Rotunda, Judicial Disqualification in the Aftermath of Caperton v. A.T. Massey Coal Co., 60 Syracuse L. Rev. 247 (2010). __U.S. at __, 129 S.Ct. at 2267 (Roberts, C.J., joined by Scalia and Thomas and Alito, JJ., dissenting).

21. 10 21. 20 21. 30 22

__U.S. at __, 129 S.Ct. at 2274 (Scalia, J., dissenting).

Withrow v. Larkin, 421 U.S. 35, 46, 95 S.Ct. 1456, 1464, 43 L.Ed.2d 712 (1975), on remand 408 F.Supp. 969 (E.D.Wis.1975); Gibson v. Berryhill, 411 U.S. 564, 579, 93 S.Ct. 1689, 1698, 36 L.Ed.2d 488 (1973). Absent a showing that the decisionmaker had a vested interest in the outcome of the proceeding it may be difficult to show that a decisionmaker had reason to favor one party, or to disfavor another party, in the proceeding. Statutes that require a judge to recuse himself or herself may, or may not, offer an easier basis for challenging a judges participation in a case than does the due process fairness requirement. In Liteky v. United States, 510 U.S. 540, 114 S.Ct. 1147, 127 L.Ed.2d 474 (1994) the majority opinion by Justice Scalia interpreted a federal statute requiring an judge to disqualify himself or herself in proceedings in which his impartiality might reasonably be questioned. Justice Scalia ruled that the statute provided only a very limited basis for considering extra judicial sources as grounds for requiring a judge to recuse himself under the statute. Thus, facts introduced concerning the conduct of the judge in prior proceedings involving the same parties or interests that might indicate some degree of favoritism or antagonism towards a party did not provide a sufficient basis for forcing the judge to withdraw from the case. In Liteky, Justice Kennedy wrote for four concurring Justices. The concurring Justices believed that, under the facts of the case, there was no reason for the district judge to disqualify himself but they also believed that Justice Scalias majority opinion had construed the federal statute too narrowly. 510 U.S. at 556, 114 S.Ct. at 1158 (Kennedy, J., joined by Blackmun, Stevens, and Souter, JJ., concurring in the judgment). Justice Kennedys concurring opinion relied on Liljeberg v. Health Services Acquisition Corporation, 486 U.S. 847, 108 S.Ct. 2194, 100 L.Ed.2d 855 (1988) in which the Supreme Court ruled that the federal statute required a district judge to recuse himself in a case against a university for which the judge had served as a member of the board of trustees. A post-trial hearing following a criminal conviction is sufficient to determine if conduct of a juror impaired his ability to render an impartial verdict. Smith v. Phillips, 455 U.S. 209, 102 S.Ct. 940, 71 L.Ed.2d 78 (1982), on remand 552 F.Supp. 653 (S.D.N.Y.1982), affirmed 717 F.2d 44 (2d Cir.1983), cert. denied 465 U.S. 1027, 104 S.Ct. 1287, 79 L.Ed.2d 689 (1984). In Holloway v. Arkansas, 435 U.S. 475, 98 S.Ct. 1173, 55 L.Ed.2d 426 (1978), the Supreme Court held that, when a defense attorney requests the appointment of separate counsel for multiple defendants based on his representations regarding conflict of interest, the trial court must take adequate steps to ascertain whether the conflict of interest requires separate counsel. Failure to do so, the Court held, violated the defendants right to counsel. A trial courts failure to inquire into a defense counsels potential conflict of interest will not be presumed to be a due process violation if the potential conflict is not one that inherently would give rise to unfair proceedings. Even when defense counsels conflict of interest was not so serious as to raise a presumption that the trial proceeding was unfair, a defendants conviction will be reversed if the defendant can prove that he was actually prejudiced by the conflict of interest of his defense counsel. Compare, Holloway v. Arkansas, 435 U.S. 475, 98 S.Ct. 1173, 55 L.Ed.2d 426 (1978) (trial courts refusal to respond to defendant and defense counsels motion for appointment of separate counsel raised presumption of unfairness and prejudice), with Mickens v. Taylor, 535 U.S. 162, 122 S.Ct. 1237, 152 L.Ed.2d 291 (2002) (by a 5 to 4 vote, Court rules that defendant is required to show actual prejudice because of defense counsels possible conflict of interest; nature of conflict of interest not so serious as to raise presumption of a Sixth and Fourteenth Amendment violation). A defendants right to choose his own counsel, which is protected by the Sixth Amendment, is not unlimited. A court may refuse to accept a defendants waiver of a conflict of interest (on the part of an attorney whom the defendant wishes to have as his counsel) and insist that the codefendants in a case be represented by separate counsel. Wheat v. United States, 486 U.S. 153, 108 S.Ct. 1692, 100 L.Ed.2d 140 (1988), rehearing denied 487 U.S. 1243, 108 S.Ct. 2918, 101 L.Ed.2d 949 (1988). An attorney who is licensed in State A does not have a constitutional right to appear as counsel in a single case in State B, when the lawyer is not licensed to practice in State B. Most states will allow a lawyer licensed in another state to appear in a single case, [called an

appearance pro hoc vice] unless there is cause to deny the clients and attorneys request for permission for the attorney to represent the client in the individual proceeding. The attorney is not entitled to a hearing on a request to appear pro hoc vice. See, Leis v. Flynt, 439 U.S. 438, 99 S.Ct. 698, 58 L.Ed.2d 717 (1979). However, summary denial of a defendants request to have counsel from another state represent him in a specific criminal case, on a pro hoc vice basis, often will be a violation of the defendants Sixth Amendment right to retain counsel of his choice. Such a violation is not subject to harmless error analysis. See, United States v. Gonzales-Lopez, 548 U.S. 140, 126 S.Ct. 2557, 165 L.Ed.2d 409 (2006). A defendants ability to choose and retain his counsel is not unconstitutionally impaired by statutes that allow seizing the defendants assets that could be subject to forfeiture (because of the relationship of the assets to violations of drug regulations) even though the defendant desired to use the assets to pay his attorneys fees. See, Caplin & Drysdale, Chartered v. United States, 491 U.S. 617, 109 S.Ct. 2646, 105 L.Ed.2d 528 (1989); United States v. Monsanto, 491 U.S. 600, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989).

23

Gibson v. Berryhill, 411 U.S. 564, 579, 93 S.Ct. 1689, 1698, 36 L.Ed.2d 488 (1973); Ward v. Village of Monroeville, 409 U.S. 57, 93 S.Ct. 80, 34 L.Ed.2d 267 (1972); Tumey v. Ohio, 273 U.S. 510, 47 S.Ct. 437, 71 L.Ed. 749 (1927); Cf. Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 89 S.Ct. 337, 21 L.Ed.2d 301 (1968), rehearing denied 393 U.S. 1112, 89 S.Ct. 848, 21 L.Ed.2d 812 (1969). In Friedman v. Rogers, 440 U.S. 1, 1720, 99 S.Ct. 887, 89899, 59 L.Ed.2d 100 (1979), rehearing denied 441 U.S. 917, 99 S.Ct. 2018, 60 L.Ed.2d 389 (1979) the Supreme Court noted that a person has a right to a fair and impartial hearing board in professional disciplinary proceedings even though he has no right to be regulated as a professional by a board sympathetic to his philosophy of commercial practice. However, the Court refused to consider whether a disciplinary board for optometrists which, as a matter of state law, was required to have members from a specific professional association could judge fairly complaints against non-members of the association, because there was no specific disciplinary proceeding or a concrete controversy concerning this issue before the Court. In this case the Supreme Court also upheld the regulation of commercial practices of optometrists by a board composed of members of a specific professional organization; the composition of the board did not justify meaningful judicial review of the regulations for conduct of a professional practice. In Bracy v. Gramley, 520 U.S. 899, 117 S.Ct. 1793, 138 L.Ed.2d 97 (1997), the Justices were unanimous in ruling that a prisoner had shown good cause for discovery regarding whether the judge who had presided at in his criminal trial might have been biased in favor of the prosecution. The trial judge whose rulings were challenged in Bracy was himself convicted, in a later federal prosecution, for taking bribes in other state criminal cases. The prisoners theory was that this dishonest judge would have wanted to balance his record in cases in which he took bribes by taking pro-prosecution positions in other cases. Therefore, this judge might have been biased in favor of the government in cases wherein the defendant had not bribed the judge. The Supreme Court did not rule on the ultimate validity of the prisoners claim in Bracy. The Justices ruled only that the prisoner had established a basis for proceeding with discovery regarding the claim. In Edwards v. Balisok, 520 U.S. 641, 117 S.Ct. 1584, 137 L.Ed.2d 906 (1997) the Supreme Court ruled that a state prisoners claim for money damages for an alleged violation of his due process rights concerning a hearing that denied him of good-time credits was not cognizable under 42 U.S.C.A. 1983 because the proceeding would have required a court to find that the substantive decision in the case was wrong. The majority opinion in Edwards noted that due process principles would invalidate the decision of a hearing officer who was biased and who dishonestly excluded evidence favorable to the defendant. 520 U.S. at 646, 117 S.Ct. at 1588. In a series of cases, the Supreme Court has held that a federal court cannot consider a state prisoners claim under 42 U.S.C.A. 1983 if a ruling in favor of the prisoner would require a federal court to find that the prisoners original conviction or sentence was invalid. However a federal court may consider a 1983 by a prisoner so long as a ruling for the prisoner in the 1983 action would not require a federal court to make findings contrary to the basis for the prisoners conviction or sentence. Prisoners may bring suit under 1983 for constitutional violations in prison including, but not limited to: challenges to the fairness of procedures for determining which prisoners shall be paroled prior to the completion of their full sentence; and for allegedly abusive behavior towards the prisoner while in prison. Wilkinson v. Dotson, 544 U.S. 74, 125 S.Ct. 1242, 161 L.Ed.2d 253 (2005); Muhammad v. Close, 540 U.S. 749, 124 S.Ct. 1303, 158 L.Ed.2d 32 (2004); Edwards v. Balisok, 520 U.S. 641, 117 S.Ct. 1584, 137 L.Ed.2d 906 (1997); Heck v. Humphrey, 512 U.S. 477, 114 S.Ct. 2364, 129 L.Ed.2d 383 (1994). See generally, W. LaFave, J. Israel, N. King, and O. Kerr, Criminal Procedure (3rd ed. 2007, with annual supplements). See also, People ex rel. Illinois Judicial Inquiry Bd. v. Hartel, 72 Ill.2d 225, 235, 235, 20 Ill.Dec. 592, 597, 380 N.E.2d 801, 806 (1978) (Underwood, J., citing an earlier edition of this treatise), certiorari denied 440 U.S. 915, 99 S.Ct. 1232, 59 L.Ed.2d 465 (1979). Taylor v. Hayes, 418 U.S. 488, 50103, 94 S.Ct. 2697, 270406, 41 L.Ed.2d 897 (1974); Mayberry v. Pennsylvania, 400 U.S. 455, 91 S.Ct. 499, 27 L.Ed.2d 532 (1971); Pickering v. Board of Education, 391 U.S. 563, 56869 n. 2, 88 S.Ct. 1731, 1735 n. 2, 20 L.Ed.2d 811 (1968); Cf. Ungar v. Sarafite, 376 U.S. 575, 584, 84 S.Ct. 841, 84647, 11 L.Ed.2d 921 (1964), rehearing denied 377 U.S. 925, 84 S.Ct. 1218, 12 L.Ed.2d 217 (1964). Withrow v. Larkin, 421 U.S. 35, 95 S.Ct. 1456, 43 L.Ed.2d 712 (1975), on remand 408 F.Supp. 969 (E.D.Wis.1975); Schweiker v. McClure, 456 U.S. 188, 102 S.Ct. 1665, 72 L.Ed.2d 1 (1982); see generally Rotunda, The Combination of Functions in Administrative Actions, 40 Ford.L.Rev. 101 (1971).

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In Concrete Pipe and Products of California, Inc. v. Construction Laborers Pension Trust, 508 U.S. 602, 113 S.Ct. 2264, 124 L.Ed.2d 539 (1993) the Supreme Court upheld federal statutes that provided for the determination of the liability of an employer who was withdrawing from a multiemployer pension fund even though the initial assessment of liability was made by trustees of the pension fund who were appointed by unions that participated in the fund and by employers (most of whom would be continuing in the fund). The Court found that the possible lack of neutrality on the part of the trustees was offset by the fact that the statute provided for a de novo review of all decisions of the trustees by an arbitrator who was admittedly neutral and fair. The Court described the arbitrator review process as being the first adjudication of liability and found that the statutory system for determining liability, taken as a whole, met procedural due process standards. A statutory presumption favored determinations made by the plan sponsors, but the Court, in the Concrete Pipe case, ruled that the presumption did no more than place the burden of proof on the employer challenging the trustees findings of liability (against the employer) to show that the initial assessment of liability was incorrect. Because the statutory presumption did not foreclose independent consideration of any issue by the arbitrator, the Court found that there was no due process violation. The majority opinion by Justice Souter in Concrete Pipe found that the federal statutes creating the presumption of validity for the initial assessment of liability were unclear to the point where the statute could be described as being truly incoherent. The majority interpreted the statute to allow a party who objected to the initial assessment of liability to challenge every factual issue concerning that liability determination. Justice Souter found that this interpretation of the statute was necessary to avoid serious constitutional issues. If the employer was not allowed to challenge all aspects of the initial liability finding, there would be a serious question as to whether the employer would be deprived thereby of the impartial adjudication in the first instance to which [the withdrawing employer] is entitled under the due process clause. 508 U.S. at 625, 113 S.Ct. at 2281. Marshall v. Jerrico, Inc., 446 U.S. 238, 100 S.Ct. 1610, 64 L.Ed.2d 182 (1980) (civil penalty provisions of Fair Labor Standards Act permissible even though the agency received partial reimbursement of its enforcement and administration expenses from the fines collected because there was no risk of personal bias by the agency decision-maker, who acted primarily as an investigator and prosecutor rather than an adjudicator). See also, Young v. United States ex rel. Vuitton et Fils S.A., 481 U.S. 787, 107 S.Ct. 2124, 95 L.Ed.2d 740 (1987). In Young the Court found that a reversal of contempt convictions was required because of the appointment of a manufacturers attorneys as the special prosecutors in a criminal contempt case in which the manufacturer had an interest, even though the district court had the authority to appoint a special prosecutor. The court appears to hold that this ruling would be required as a matter of Supreme Court supervisory authority over a lower federal court; a part of the opinion, which was formed by a majority, found a requirement of a disinterested prosecutor. A due process principle requiring a disinterested prosecutor might not require the same degree of impartiality as is required for judges. Eastlake v. Forest City Enterprises, Inc., 426 U.S. 668, 96 S.Ct. 2358, 49 L.Ed.2d 132 (1976), on remand 48 Ohio St.2d 47, 356 N.E.2d 499 (1976). In Cuyahoga Falls v. Buckeye Community Hope Foundation, 538 U.S. 188, 123 S.Ct. 1389, 155 L.Ed.2d 349 (2003) the Justices unanimously rejected a variety of equal protection and due process challenges to a city administrators refusal to issue a building permit for low income housing pending a state court determination of the validity of a voter referendum to repeal the ordinance that authorized the building of a low-income housing complex. The Cuyahoga Falls case is discussed in 18.44 of this Treatise. Washington ex rel. Seattle Title & Trust Co. v. Roberge, 278 U.S. 116, 49 S.Ct. 50, 73 L.Ed. 210 (1928); Eubank v. Richmond, 226 U.S. 137, 33 S.Ct. 76, 57 L.Ed. 156 (1912). Dukesherer Farms, Inc. v. Ball, 405 Mich. 1, 37 n. 1, 273 N.W.2d 877, 893 n. 1 (1979) (Levin, J., concurring, citing an earlier edition of this treatise). The Supreme Court has found that a state statute which gave to the governing bodies of schools and churches the power to prevent the issuance of liquor licenses for the dispensation of alcoholic beverages within 500 feet of a church or school violated the establishment clause of the First Amendment, Larkin v. Grendels Den, Inc., 459 U.S. 116, 103 S.Ct. 505, 74 L.Ed.2d 297 (1982). The Court in this case wished to emphasize that the government may not delegate governmental power to a private entity in order to achieve a sectarian or religious purpose. The Court did not invalidate the statute as denying due process to the property owners whose zoning was subject to the total control of adjacent property owners who had economic interests adverse to theirs.
2011 Thomson Reuters. No claim to original U.S. Government Works.

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1 Cyc. of Federal Proc. 1.26.10 (3rd Ed.) Cyclopedia of Federal Procedure Database updated September 2011 Staff plus contributing author Karl Oakes Part I. Courts, Jurisdiction, and General Considerations Chapter 1. Federal Courts and Judicial System, in General

References

1.26.10. Disqualification of judgesWhat constitutes disqualifying bias or prejudiceAppearance of bias A justice, judge, or magistrate must disqualify himself or herself in any proceeding in which his or her impartiality might reasonably be questioned.1 Judges should not use this provision to avoid sitting on difficult or controversial cases.2 In determining whether to disqualify himself or herself, the judge should decide whether a reasonable person would question the judges impartiality,3 if the reasonable person knew or understood all the relevant facts.4 A charge of partiality must be supported by a factual basis.5 A judge need not show his or her impartiality beyond a reasonable doubt. 6 Adverse rulings by themselves do not make a judges impartiality questionable,7 but the judges conduct during a proceeding may make impartiality an issue.8 A judge need not disqualify himself or herself merely because the judge is a friend of one of the parties.9 A judges background associations, including religious affiliation, should not be considered as a ground for disqualification.10 The fact that a judge came upon allegedly prejudicial information in a judicial capacity is relevant to an analysis of impartiality.11 An interest that is not direct but remote, contingent, or speculative is not the kind of interest which reasonably brings into question a judges impartiality.12 1
28 U.S.C.A. 455(a). Illustrative cases: Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847, 108 S. Ct. 2194, 100 L. Ed. 2d 855, 47 Ed. Law Rep. 366, 11 Fed. R. Serv. 3d 433 (1988); Milgard Tempering, Inc. v. Selas Corp. of America, 902 F.2d 703, 11 U.C.C. Rep. Serv. 2d 558 (9th Cir. 1990); In re Continental Airlines Corp., 901 F.2d 1259 (5th Cir. 1990); Willner v. University of Kansas, 848 F.2d 1023, 47 Ed. Law Rep. 128, 11 Fed. R. Serv. 3d 556 (10th Cir. 1988); Herrington v. Sonoma County, 834 F.2d 1488, 10 Fed. R. Serv. 3d 693 (9th Cir. 1987), opinion amended on denial of rehg, 857 F.2d 567 (9th Cir. 1988); New York City Development Corp. v. Hart, 796 F.2d 976 (7th Cir. 1986). Federal district judge must recuse himself in federal habeas corpus case when, as chief justice of state, he had participated in state supreme courts adjudication of same claims. Rice v. McKenzie, 581 F.2d 1114 (4th Cir. 1978). Construction and application of 28 U.S.C.A. 455(a) providing for disqualification of justice, judge, magistrate, or referee in bankruptcy in any proceeding in which his impartiality might reasonably be questioned, 40 ALR Fed 954. HR Rep No. 1453, 93d Cong, 2d Sess, reprinted in 1974 U.S. Code Cong & Admin News 6351, 6355. Nichols v. Alley, 71 F.3d 347 (10th Cir. 1995); Del Vecchio v. Illinois Dept. of Corrections, 31 F.3d 1363 (7th Cir. 1994); In re Beard, 811 F.2d 818 (4th Cir. 1987); Ronwin v. State Bar of Arizona, 686 F.2d 692 (9th Cir. 1981), judgment revd on other grounds, 466 U.S. 558, 104 S. Ct. 1989, 80 L. Ed. 2d 590 (1984); U.S. v. Heldt, 668 F.2d 1238 (D.C. Cir. 1981); In re United States, 666 F.2d 690 (1st Cir. 1981); Margoles v. Johns, 660 F.2d 291 (7th Cir. 1981); Potashnick v. Port City Const. Co., 609 F.2d 1101, 54 A.L.R. Fed. 825 (5th Cir. 1980) (rejected by, Pashaian v. Eccelston Properties, Ltd., 88 F.3d 77 (2d Cir. 1996)); U.S. v. Gigax, 605 F.2d 507 (10th Cir. 1979) (disapproved of on other grounds by, U.S. v. Lang, 364 F.3d 1210 (10th Cir. 2004)); SCA Services, Inc. v. Morgan, 557 F.2d 110, 40 A.L.R. Fed. 942 (7th Cir. 1977); U.S. v. Cowden, 545 F.2d 257 (1st Cir. 1976). **Judge abused his discretion and reversibly erred in failing to recuse himself prior to sentencing in criminal case, after defendants attorney testified against judge in proceedings before a special investigatory committee of the Fifth Circuit Judicial Council; reasonable person would harbor doubts about judges ability to remain impartial in case involving an attorney who had testified adversely to judge Judicial Council proceedings that could lead to judge being reprimanded or even sanctioned. U.S. v. Anderson, 160 F.3d 231 (5th Cir. 1998). Judges affidavit as expert witness twenty years earlier in case encompassing same general question but involving different tribunal, different statute, different facts and different issues cannot reasonably be seen as an impediment to impartiality. Schurz Communications, Inc. v. F.C.C., 982 F.2d 1057 (7th Cir. 1992), amended (Dec. 8, 1992). Nichols v. Alley, 71 F.3d 347 (10th Cir. 1995); Milgard Tempering, Inc. v. Selas Corp. of America, 902 F.2d 703, 11 U.C.C. Rep. Serv. 2d 558 (9th Cir. 1990); In re Drexel Burnham Lambert Inc., 861 F.2d 1307 (2d Cir. 1988); Pepsico, Inc. v. McMillen, 764 F.2d 458 (7th Cir. 1985). Willner v. University of Kansas, 848 F.2d 1023, 47 Ed. Law Rep. 128, 11 Fed. R. Serv. 3d 556 (10th Cir. 1988); U.S. v. Dalfonso, 707 F.2d 757, 13 Fed. R. Evid. Serv. 75 (3d Cir. 1983); In re United States, 666 F.2d 690 (1st Cir. 1981); U.S. v. Mirkin, 649 F.2d 78 (1st Cir. 1981).

2 3

U.S. v. Anderson, 160 F.3d 231 (5th Cir.(Tex.) Nov 10, 1998)

Defendant was convicted before the United States District Court for the Northern District of Texas, John J. McBryde, J., of bank robbery, and he appealed his sentence. The Court of Appeals, Reynaldo G. Garza, Circuit Judge, held that: (1) trial judge abused his discretion and reversibly erred in failing to recuse himself prior to sentencing, after defendant's attorney testified against judge in proceedings before a special investigatory committee of the Fifth Circuit Judicial Council, and (2) motion for recusal filed one day prior to sentencing was timely. Sentence vacated and remanded. [3] Judges 227 49(1) 227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases Party seeking recusal must demonstrate that, if a reasonable person knew of all of the circumstances, they would harbor doubts about the judge's impartiality. 28 U.S.C.A. 455(a). [4] Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases If a judge concludes that his impartiality might be reasonably questioned, then he should find that statute requires his recusal. 28 U.S.C.A. 455(a). [5] Judges 227 40

227 Judges 227IV Disqualification to Act 227k40 k. Constitutional and Statutory Provisions. Most Cited Cases The goal of recusal statute is to avoid even the appearance of partiality. 28 U.S.C.A. 455(a). [6] Criminal Law 110 1166(1)

110 Criminal Law 110XXIV Review 110XXIV(Q) Harmless and Reversible Error 110k1166 Preliminary Proceedings 110k1166(1) k. In General. Most Cited Cases Judges 227 49(1)

227 Judges 227IV Disqualification to Act 227k49 Bias and Prejudice 227k49(1) k. In General. Most Cited Cases Judge abused his discretion and reversibly erred in failing to recuse himself prior to sentencing in criminal case, after defendant's attorney testified against judge in proceedings before a special investigatory committee of the Fifth Circuit Judicial Council; **reasonable person would harbor doubts about judge's ability to remain impartial in case involving an attorney who had testified adversely to judge Judicial Council proceedings that could lead to judge being reprimanded or even sanctioned. 28 U.S.C.A. 455(a). Defendant whose attorney testified against trial judge in proceedings before a special investigatory committee of the

Fifth Circuit Judicial Council after defendant was convicted timely moved for recusal, where motion was filed one day prior to his sentencing; although defendant knew of his attorney's testimony for six weeks before he made motion, he did not wait to see what sentence judge would impose. 28 U.S.C.A. 455(a).

In U.S. v. Anderson, 160 F.3d 231 (5th Cir.(Tex.) Nov 10, 1998), Tony Anderson plead guilty to one count of bank robbery before John McBryde, Judge of for the United States District Court Northern District Of Texas. Anderson's trial counsel, First Assistant Public Defender Paul D. Strickney, was subpoenaed as a witness, and testified against Judge McBryde in proceedings before a special investigatory committee of the Fifth Circuit Judicial Council. On October 9, 1997, one day prior to sentencing, Anderson moved for recusal of Judge McBryde (U.S. v. Anderson, supra, 160 F.3d 233). And, Judge McBryde denied the recusal motion on the ground that these facts did not create an appearance of bias or prejudice against Anderson or his counsel (Id. at p. 233) And Anderson appealed. The court stated, Anderson contends that Judge McBryde abused his discretion and reversibly erred by refusing to recuse himself from Anderson's case after Anderson's attorney testified against Judge McBryde in the Fifth Circuit Judicial Council proceedings. Anderson asserts that a reasonable person would harbor doubts about Judge McBryde's ability to remain impartial in a case involving an attorney who had testified adversely to Judge McBryde in Judicial Council proceedings that could lead to him being reprimanded or even sanctioned. We find Anderson's contentions valid. (U.S. v. Anderson, supra, 160 F.3d 233) And the court stated, This Circuit has recognized that each section 455(a) case is extremely fact intensive and fact bound, and must be judged on its unique facts and circumstances rather than by comparison to similar situations considered in prior jurisprudence. United States v. Jordan, 49 F.3d 152, 157 (5th Cir.1995). The party seeking recusal must demonstrate that, if a reasonable person knew of all of the circumstances, they would harbor doubts about the judge's impartiality. Travelers Ins. Co. v. Liljeberg Enterprises, Inc., 38 F.3d 1404, 1408 (5th Cir.1994). Thus, if a judge concludes that his impartiality might be reasonably questioned, then he should find that the statute requires his recusal. In re Faulkner, 856 F.2d 716, 721 (5th Cir.1988) (citing Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847, 860, 108 S.Ct. 2194, 100 L.Ed.2d 855 (1988)). The goal of section 455(a) is to avoid even the appearance of partiality. Liljeberg, 486 U.S. at 860. In light of the specific facts of this case we hold that the Judge McBryde abused his discretion and reversibly erred in failing to recuse himself from Anderson's case. It is clear that a reasonable person, when apprised of the relevant circumstances that surround this case, would harbor doubts about Judge McBryde's impartiality. The average person when viewing this specific situation, would question Judge McBryde's ability to be impartial in a case involving an attorney who has testified adversely against Judge McBryde in a Judicial Council proceeding. There is no denial that these payments were not received. And there is no enial the payments are unconstitutional as ruled by the California Court of Appeal in Sturgeon v. County of Los Angeles, 167 Cal.App.4th 630, 84 Cal.Rptr.3d 242, (Cal.App. 4 Dist.,Oct 10, 2008)] There is no immunity from violation of the Penal Code stated in Government Code Sections 68220, 68221,

68222. And Article 1 Section 9. Bill of attainder; ex post facto laws; obligation of contracts, of the California Constitution provides, Sec. 9. A bill of attainder, ex post facto law, or law impairing the obligation of contracts may not be passed. In People v. Alford, 42 Cal.4th 749, 171 P.3d 32, 68 Cal.Rptr.3d 310, (Cal.,Dec 03, 2007) the court held The ex post facto prohibitions Article I, section 10, clause 1 of the federal Constitution and article I, section 9 of the state Constitution prohibit the passage of ex post facto laws. (Grant, supra, 20 Cal.4th at p. 158, 83 Cal.Rptr.2d 295, 973 P.2d 72 .) California's ex post facto law is analyzed in the same manner as the federal prohibition. (Ibid.) [T]he ex post facto clauses of the state and federal Constitutions are aimed at laws that retroactively alter the definition of crimes or increase the punishment for criminal acts. (Grant, at p. 158, 83 Cal.Rptr.2d 295, 973 P.2d 72 quoting California Dept. of Corrections v. Morales (1995) 514 U.S. 499, 504, 115 S.Ct. 1597, 131 L.Ed.2d 588.) Here, the court security fee does not alter the definition of a crime; the question is whether it increases punishment. In making this determination we consider whether the Legislature intended the provision to constitute punishment and, if not, whether the provision is so punitive in nature or effect that it must be found to constitute punishment despite the Legislature's contrary intent. (People v. Castellanos (1999) 21 Cal.4th 785, 795, 88 Cal.Rptr.2d 346, 982 P.2d 211.)

State litigant who subsequently sued in federal court, seeking to recover property lost in marital dissolution, failed to demonstrate any facts indicating that judge sanctioned crimes, obstructed justice or failed to perform legal obligations under criminal statutes, as required for judges recusal on grounds of insufficient impartiality; judges prior order setting status conference and statements regarding rules applicable to pro se litigants did not evidence deep-seated favoritism or antagonism. Keyter v. 230 Government Officers, 372 F. Supp. 2d 604 (W.D. Wash. 2005).

Rutter Group Prac. Guide Fed. Civ. Trials & Ev. Ch. 8G-G Rutter Group Practice Guide: Federal Civil Trials and Evidence Robert E. Jones, Gerald E. Rosen, William E. Wegner, and Jeffrey S. Jones Chapter 8. Evidence G. Hearsay Evidence G. Residual (CatchAll) Exception (FRE 807) [8:3191] Newspaper articles. [Larez v. City of Los Angeles (9th Cir. 1991) 946 F2d 630, 643644newspaper articles reporting police chiefs statement sufficiently trustworthy because 3 separate newspapers attributed same quotation to police chief and chief never disputed that he made statements; compare Eisenstadt v. Centel Corp. (7th Cir. 1997) 113 F3d 738, 743744newspaper article containing quote from corporate representative stating several firms interested in bidding for corporation not admissible under residual exception where reporter could have been deposed and there was uncertainty about meaning of quoted statement] A reporters willingness to testify and be cross-examined about the editing process may be enough to establish trustworthiness. [See In re Columbia Secur. Litig. (SD NY 1994) 155 FRD 466, 475479] However, if the reporter invokes the journalists privilege to avoid answering questions ( 8:4060 ff.), an article may not have sufficient indicia of reliability to be admitted under FRE 807. [See Jacobson v. Deutsche Bank, A.G. (SD NY 2002) 206 F.Supp.2d 590, 596, fn. 22 (distinguishing In re Columbia Secur. Litig.)in defamation suit, interview with Defendants CEO implying Plaintiff was a loser was inadmissible] Cross-refer: Old newspaper articles may be admissible in certain circumstances under the FRE 803(16) ancient documents exception or the FRE 807 residual exception. See 8:2976.5 ff.

From

ca debt issuance primer

BOND ISSUANCE: DEFINITION AND PURPOSE To issue a bond is to borrow money. A bond is simply the evidence of the debt, in the same way that a promissory note is evidence of the obligation to repay an ordinary loan. The issuance of bonds in connection with a borrowing results in the creation of securities evidencing the loan that can be bought and sold, i.e. traded. The buyers of bonds are thus investors, both individual and institutional, who loan money to the public agency issuer (or through the public agency issuer to conduit borrowers) through the purchase of bonds. A bond typically specifies an obligation to pay a stated amount (the principal) at a given time (the maturity) with interest at a stated rate. Types of Issuers. The tax-exempt status of municipal issuers distinguishes them from other issuers of debt. A municipal debt issuer can be any entity authorized by the Internal Revenue Service (IRS) to issue tax-exempt securities. IRS code subtitle 18, part III, section 103(a) states that interest on the obligations of a State, a Territory, or a possession of the United States, or any political jurisdiction of any of the foregoing, or of the District of Columbia is exempt from tax. IRS code defines tax-exempt municipal issuers in a variety of ways, but the main types of municipal issuers are states, counties,

cities, and school districts. In addition to these typical government units, there is a category of entities classified as special districts. A special district is a limited-purpose government unit with legal authority to tax. California has a myriad of special districts authorized to levy tax assessments. Special districts range from fire and flood districts to financing districts. These special districts are identified, along with the authorizing statute, in Appendix D Legal References Table D-1-2 of this Primer. Legal Authorization. Issuers are authorized by state law to borrow money, i.e. issue bonds for many different specific purposes, and in some cases for their general corporate purposes. For the most part, these purposes are limited to those that in one respect or another benefit the public welfareso-called public purposes. In the case of chartered cities, debt may be issued for purposes that constitute municipal affairs. (See Chapter 4, State Constitutional Limitations The 1879 Constitution Charter Cities and Home Rule for a discussion of the municipal affairs doctrine.) Within these statutory and constitutional guidelines, an issuer determines its own capital improvement program (including the parameters of any lending program), determines the resources that it has available for the payment of capital expenditures (including the repayment of any debt), and is in ultimate control of the process of issuing bonds as a part of that capital improvement program. In addition, in certain limited circumstances, an issuer may determine to issue debt to finance noncapital items. Chapter 6, Types of Financing Obligations contains a discussion of the constitutional and statutory authorization for a variety of different types of debt financing programs.

Issuer's Responsibilities. One of the first decisions to be made by an issuer is the selection of the initial members of its debt financing team, including bond counsel (and perhaps disclosure counsel) and either a financial advisor or underwriter, or both. Team members may be selected on the basis of a request for proposals, long-standing relationship with the issuer, reputation, or recommendation by others (see Using a Request for Proposals to Select Financing Team Members in this chapter). The nature of the financing team members may depend upon several factors including: The type of debt being issued Procedural requirements for that type of debt The level of in-house sophistication of the issuer

For example, in a situation in which bonds are to be sold at competitive (or public) sale (the opening of bids from prospective underwriters at a time and place specified in a published notice of sale), an issuer will typically hire a financial advisor. On the other hand, in cases in which bonds are to be sold in a negotiated (or private) sale, an issuer will customarily select an underwriter or an

underwriting team and also may select a financial advisor (see sections in this chapter on Financial Advisor and Underwriter/Placement Agent/Purchaser). Legal Team. The legal team for a bond issue sold on a negotiated basis generally will include bond counsel, issuers counsel, underwriter's counsel and/or disclosure counsel, counsel for the company or other nongovernmental borrower, if any, and trustee's counsel. Bond counsel's role in these cases will customarily be as special counsel to the issuer for the financing and not as counsel to the investor. In a negotiated sale, the interests of the investor are indirectly represented by the underwriter and underwriters counsel. A listing of bond counsels utilized by the State Treasurers Office are available on its website at www.treasurer.ca.gov/bonds.

FINANCIAL ADVISOR Scope of the Financial Advisory Relationship. A financial advisor is a professional consultant retained (customarily by the issuer) to advise and assist the issuer in formulating and/or executing a debt financing plan to accomplish the public purposes chosen by the issuer. A financial advisor may be a consulting firm, an investment banking firm, or a commercial bank. Some financial advisors identify themselves as independent financial advisors, being entities that do not engage in underwriting or trading of municipal securities.

Traditional Services of a Financial Advisor. As an example, in a public facilities capital improvement program to be financed by general obligation or revenue bonds required to be sold at competitive sale, the financial advisor will customarily do each of the following: Review the financial feasibility of the capital projects Assess the available sources of revenue

Recommend a financing structure (including the nature of the security for the bonds, excess revenue coverage requirements, debt service reserve account requirements, facilities insurance requirements, liability insurance requirements, and the need for credit enhancement)
CHAPTER 1. OVERVIEW OF A DEBT FINANCING

Recommend a maturity schedule, redemption terms, and other terms of the notice of sale

Prepare on the issuers behalf an Official Statement, for distribution to potential underwriters and investors, describing the issuer, the bonds, the security for repayment of the bonds, and any other matters that would be material to an investor Be the primary spokesperson on behalf of the issuer with the credit rating agencies Recommend the timing of sale of the bonds

Arrange for and direct the mailing of the Official Statement and the official notice of sale to potential underwriters and investors Contact and answer the questions of potential underwriters and investors Analyze bids received at the competitive sale Recommend whether to accept or reject such bids

Assist bond counsel in organizing the closing (i.e. the delivery of the bonds in return for payment for the bonds) Recommend appropriate investments for the proceeds of the bonds

Other possible responsibilities include recommending, when the options are available, competitive sale, negotiated sale, or a private placement of the bonds and, in the case of a negotiated sale or private placement, negotiating bond terms on behalf of the issuer.

Conflicts of Interest. The relationship between the issuer and the financial advisor should be one of confidence and trust, and is in the nature of a fiduciary relationship. The law emphasizes this by prohibiting certain actions that might create a conflict of interest. Section 53591 of the Government Code prohibits a financial advisor, with respect to an issue of bonds, from acquiring the bonds from the issuer as principal, either alone or as a participant in a syndicate or other similar account unless the issue is sold by the issuer at competitive public sale and the issuer has, prior to the bid, expressly consented in writing. Section 53592 of the Government Code requires each financial advisory relationship to be evidenced by a written document executed prior to or promptly after the inception of the relationship, or promptly after the creation or selection of the issuer if the issuer does not exist or has not been determined at the time the relationship commences. The document must describe the basis of compensation for the services to be rendered. With certain limited exceptions, the compensation must be on a basis other than a percentage of the amount of the bonds to be issued. Section 1090 of the Government Code also regulates conflict of interest. The full text of these Government Code sections is set out in Appendix D Legal References. Rule G-23 of the Municipal Securities Rulemaking Board (MSRB) contains requirements that are similar to, although not quite as stringent as, the requirements of Government Code Sections 53591 and 53592 relating to financial advisory relationships. Rule G-23 includes an express additional

requirement that prior to purchasing from an issuer bonds with respect to which a financial advisor has provided advisory services, the financial advisor must terminate its financial advisory relationship with the issuer with respect to that issue. Neither state law nor the MSRB rules prohibit a financial advisor from purchasing bonds in the secondary market, either for the financial advisor's own trading account or for the account of customers, except to the extent that such purchase is made to contravene the purpose and intent of the above-described requirements. As these rules emphasize, the financial advisor's professional duty is to the issuer, and the advisor must advance the financial interests of the issuer on the issuer's chosen course. A listing of financial advisors utilized by the State Treasurers Office is available on its website at www.treasurer.ca.gov/bonds.

Rules on Conflict of Interest Issues. MSRB Rule G-37 generally prohibits underwriters that have made political contributions to elected officials of an agency from conducting any underwriting business with that agency for a period of two years after the contribution is made. In some cases, state law or local ordinances may impose similar limitations or exclusions. The MSRB established Rule G-38 to address actual and perceived abuses associated with the awarding of municipal securities business to brokers and dealers. The rule is intended to deter and detect attempts by dealers to avoid the limitations placed on certain dealer activities. It also seeks to provide information to issuers about the relationship between dealers and the persons they have engaged to seek municipal securities business on their behalf. Rule G-38 was adopted in 1996 and essentially requires dealers to disclose information about consultant arrangements. It defined consultants as individuals used by dealers to obtain business through direct or indirect communication with issuers, in exchange for payment. The rule specifies that this definition does not include people who did substantive work on bond issues, such as engineers or accountants. In 2005, Rule G-38 was amended to bar municipal securities dealers from using anyone other than their employees or affiliated persons to solicit municipal securities business on their behalf. The rule change was adopted because of concern that an increasing number of municipal securities dealers were hiring and paying independent consultants to obtain business for them when the consultants were not subject to any of the same regulatory requirements as the dealers. The change prohibits a municipal securities dealer from making any direct or indirect payment to any person, other than an associated person of the dealer. Solicitation is defined as a direct or indirect communication with an issuer for the purpose of obtaining or retaining municipal securities business.

Disclosure and Securities Laws Compliance. Underwriters counsel often coordinate preparation of the Official Statement with input provided by other financing team members, including the issuer, issuer's general counsel, the underwriter, bond counsel, the financial advisor (if any), the credit enhancement provider (if any), and the nongovernmental borrower (if any). In addition, underwriters counsel often prepare the continuing disclosure agreement or certificate to evidence the undertakings of the issuer and other obligated persons with respect to SEC Rule 15c212. In so doing, underwriters counsel will make recommendations concerning the disclosure requirements of federal and state securities laws. Upon the issuance of the bonds, underwriters counsel give to the underwriters a 10b5 opinion (named after SEC Rule 10b5) concerning compliance with the disclosure requirements of federal law. In order to give a 10b5 opinion, underwriters counsel need to conduct due diligence concerning the issuer, the securities, and their sources for repayment. Due diligence is the inquiry made to reveal or confirm facts about the issuer, the issue, and the security for the issue that would be material to a prudent investor in making a decision to purchase the issue. Due diligence inquiries are made by underwriters and lawyers to determine, for example, whether the issue follows the purpose and scope outlined by the enabling legislation, statutes, and resolutions of the issuer and whether all material facts have been accurately disclosed in the Official Statement. This exercise varies depending upon the type of debt being issued and the issuer involved, but typically involves review of documents including financial statements, minutes of meetings, major contracts, licenses, permits and real estate documents and other items relevant to the credit involved. Counsel will typically start this process with a request that specific documents be made available for inspection in the issuers offices on a particular day. After review of the documents, counsel may need to follow up with interviews or requests for additional information.

TRUSTEE/FISCAL AGENT/PAYING AGENT/REGISTRAR/AUTHENTICATING AGENT An issuer customarily selects one or more commercial banks or trust companies to perform one or more of several administrative duties relating to a bond issue. Historically, an issuer may have received, held, and disbursed the bond proceeds itself, and collected, held, and paid debt service on the bonds with the revenues pledged as security for the bonds. However, today, relatively few issuers have the banking capabilities and relationships necessary to perform those services themselves. In addition, investors are comforted by the involvement of a fiduciary acting on their behalf and holding the funds and accounts relating to the bond issue. As a result, many bond resolutions and indentures appoint a trustee or fiscal agent to perform a number of duties relating to the bond issue. In performing those duties, a trustee acts in a fiduciary relationship to both the issuer and the bondholders, since both are beneficiaries of the trust established by the bond indenture. By contrast, a fiscal agent or paying agent is not a trustee, but merely acts as an agent of the issuer to perform functions necessary to comply with the requirements of the documents. A trustee or fiscal agent may perform one or more of the following duties:

As trusteeestablishing and holding the funds and accounts relating to the bond issue, including accounts for bond proceeds and revenues, determining that the conditions for disbursement of proceeds and revenues have been met, and, in some cases, collecting revenues and executing investments As bond registrarmaintaining a list of the names and addresses of all registered owners of the bonds and recording transfers and exchanges of the bonds As authenticating agentauthenticating bonds upon initial issuance or upon transfer or exchange As paying agentpaying interest on the bonds by check or wire to the respective registered owners, and paying principal of the bonds to the registered owners upon surrender of the bonds at maturity or upon earlier redemption As trusteeprotecting the interests of bondholders by monitoring compliance with covenants and acting on behalf of bondholders in the event of default As escrow agentholding the investments acquired with the proceeds of an advance refunding and using payments on those investments to pay debt service on the refunded bonds As dissemination agentacting on behalf of the issuer or other obligated person to disseminate annual reports and event notices to repositories under SEC Rule 15c2-12 In several of the above capacitiesmailing required notices to bondholders Acting as a liaison to bondholder committees (in the event of a default or workout situation)

NONGOVERNMENTAL BORROWER In California, various issuers are authorized to issue bonds and lend the proceeds to one or more nongovernmental borrowers to finance facilities the development of which is deemed to be a public purpose. Such facilities include, among others: Single-family housing

Multifamily housing Student loan programs Hospitals and other health care facilities Educational facilities Pollution control facilities Solid waste facilities Power facilities Airports, seaports, and marinas Certain kinds of sports facilities Certain other types of industrial or commercial facilities

In each case, the criteria for qualification as a borrower are derived from state constitutional and statutory criteria, the issuer's own policy requirements, and, in the case of federally tax-exempt bonds, federal tax requirements. Such financings are often called conduit financings and the nongovernmental borrowers are often called conduit beneficiaries. Generally, the nongovernmental borrower and any credit enhancement provided by or on its behalf, are the only sources of revenues for repayment of the bonds. In some cases, the nongovernmental borrower will take a very active role in designing and negotiating the terms of the bonds. In others, for example in the case of single-family lending programs, nongovernmental borrowers are not directly represented, but establish a market in which the lending program must operate. However, in all cases, the issuer is the central figure in a financing.

INVESTORS A bond financing structure must meet not only the needs of the issuer, but also the needs of the investor. Target investors in a bond financing have considerable influence in determining the features and structure of the bonds. Over five million households own municipal bonds either directly or through institutional portfolios, including mutual funds, unit investment trusts, and bank trust accounts. The investment market for municipal bonds is one of the world's largest securities markets with approximately $2 trillion worth of municipal bonds in the hands of investors. There are more than 50,000 state and local entities that issue municipal securities, and two million separate bond issues outstanding. Generally, however, investors in tax-exempt bonds have one characteristic in commonthe ability to take advantage of the exemption from federal income taxes customarily applicable to interest on municipal bonds.

24 CHAPTER 1. OVERVIEW OF A DEBT FINANCING

Retail Investors. Retail investors typically are individuals with high net worth who achieve the tax exemption from federal and, in some cases, state income taxes. These retail investors tend to be highly sophisticated clients of the organizations involved in the underwriting and remarketing of tax-exempt issues. Institutional Investors. Institutional investors, such as tax-exempt bond and money market funds, also are major players in the market for municipal securities. National municipal bond funds invest primarily in the bonds of various municipal issuers in the United States. These funds seek interest income free from federal tax. State municipal bond funds invest primarily in municipal bonds issued by a particular state. These funds seek high after-tax income for residents of individual states. Tax-exempt money market funds invest in short-term municipal securities and must have average maturities of 90 days or less. These funds seek the highest level of incomefree from federal and, in some cases, state and local taxesconsistent with preservation of capital. As of 2003, there were 527 state municipal bond funds, 251 national municipal bond funds, and 312 tax-exempt money market funds. Both retail and institutional buyers may have slightly different investment objectives in the purchase of municipal securities. Thus it is important for the issuer and underwriter to recognize these market nuances when pricing and marketing the bond issue. Major changes in the composition of the municipal bond market are the result, in large part, of changes in federal tax law which made tax-exempt interest less attractive to certain segments of the market. For example, banks historically constituted a large segment of the market for municipal bonds but they are now denied a federal tax deduction for the portion of interest paid on their own obligations (such as deposits) attributable to the carrying of tax-exempt bonds. Similarly, changes in federal tax law may adversely affect the attractiveness of municipal bonds to property and casualty insurance companies and to corporations and individuals with alternative minimum tax liability. Other entities such as pension funds and certain other tax-exempt entities have never been attracted to municipal bonds because of the inability to take advantage of the tax exemption (since their income is already tax-exempt). Conversely, the segment of the municipal bond market represented by bond funds and bond trusts is growing, as more and more investors take advantage of the ability to invest through mutual funds, including tax-exempt money market funds. Suitability. In addition to the tax exemption, other criteria that serve as primary determinants of the suitability of a particular bond for a particular investor include the credit quality of the bond (credit rating), its term to maturity, its risk of redemption, and its potential for sale in the secondary market. It is critical that broker dealers offering bonds to investors match up the sophistication, risk tolerance, and economic situation of a potential investor with the structural features, liquidity, and credit quality of the bonds being offered. The securities laws require that broker dealers take these factors into account when offering and selling bonds. It is important for issuers to know what suitability considerations a broker dealer will use in selling the issuers bonds.

CHAPTER 1. OVERVIEW OF A DEBT FINANCING

25

The relative demand by investors for bonds having different characteristics may influence the financial advisors or the underwriters recommendations concerning the structure of a financing. For example, in a market where short-term, high credit quality bonds are in great demand, it may be advantageous for an issuer to issue variable rate put bonds rather than long-term fixed rate bonds. Or, in periods of relatively high interest rates, investors may demand that bonds not be redeemable prior to maturity (or be redeemable only after an extended period of time) to assure investors that they will have the benefit of the high interest rate and not run the risk of having to reinvest at a time when the market offers lower interest rates. Suitability rules play a role in determining what securities a broker-dealer or underwriter may recommend to an investor. Historically the SEC has deferred to self-regulatory organizations to regulate this conduct. Under suitability rules used by the NASD (National Association of Securities Dealers), the NYSE (New York Stock Exchange), and the MSRB the members or the securities dealer must have some basis for believing that any particular security that they recommend is suitable for the customer on the basis of facts disclosed by the customer. The MSRB suitability rule (Rule G19) is considerably more stringent than those of the NASD and the NYSE and imposes on the municipal securities dealer an affirmative duty to have knowledge or inquire about the customers financial background, tax status, and investment objectives and any other similar information. As a result, in each financing, the issuer and its financing team members must design the financing structure to meet the needs of the issuer in the context of the investor market for the issuers debt. See Chapter 10, Continuing Disclosure and Investor Relations Programs for more information.

INVESTMENT ADVISOR In many cases, issuers will wish to retain an investment advisor to assist them in investing bond proceeds. (See Chapter 11, Investment of Bond Proceeds for more information on the considerations that should be taken into account in determining appropriate investments.) Often the financial advisor or underwriter will act as an investment advisor with respect to the bond proceeds, but the issuer also may use a separate advisor. In some cases, the members of the issuers staff have substantial investment experience and will handle this task in-house.

Chapter 3

GENERAL FEDERAL TAX REQUIREMENTS


INTRODUCTION

This chapter provides an overview of the basic federal tax concepts and rules applicable to public finance. Federal tax concepts that relate in a unique way or are only applicable to a particular type of bond are discussed in Chapter 6, Types of Financing Obligations in the applicable section. Under the Internal Revenue Code of 1986, as amended (the tax code), bonds issued by states and local governmental units generally bear interest that is excluded from gross income for federal income tax purposes. The term bond includes any evidence of indebtedness, and covers notes, installment sale agreements, or financing leases. Although exempt from federal income tax, interest on bonds may be taken into account in determining other federal income tax consequences, such as personal or corporate alternative minimum tax, interest expense deductions, taxation of Social Security benefits, and the like. In general, interest on bonds is taxable if: The bonds are not treated as obligations of a state or political subdivision of a state (see below) The bonds are arbitrage bonds The bonds are hedge bonds The bonds violate various other prohibitions contained in the tax code

Furthermore, nongovernmental bonds such as private activity bonds used to finance projects that substantially benefit private businesses, generally are not tax-exempt. Certain qualified private activity bonds can be tax-exempt. The discussion below sets forth the principal federal tax rules in enough detail to give the reader a basic understanding of the concepts and limitations listed above. In addition to the requirements covered in this chapter, the following universal requirements apply to all tax-exempt bonds: An information return (Form 8038) must be filed for the bonds Bonds must be issued in registered form Bonds may not be directly or indirectly guaranteed by the federal government In many cases, but typically with bonds issued to fund public infrastructure and payable from general governmental revenues, the tax rules discussed in this chapter will not have a significant effect on the way a bond issue is structuredat least from the issuers perspective. Bond counsel will analyze the requirements and take steps to help the issuer comply, but the tax aspects of the transaction will not be particularly difficult. In other financings, such as qualified private activity bonds or financings (e.g. single-family housing bonds) involving underlying loans, the tax rules are critical to the structuring and success of the transaction, and much of the effort of the financing team

will be devoted to ensuring compliance with these complex requirements. In all financings, care must be taken to comply with all of the requirements of the tax code. OBLIGATIONS OF A STATE OR POLITICAL SUBDIVISION In order to be tax-exempt, bonds must be issued by or on behalf of a state or a political subdivision of a state. Political subdivisions are public agencies that can independently exercise a substantial amount of one or more of the following governmental powers: Eminent domain Police power Taxing power

Public agencies such as joint powers authorities that are not political subdivisions but that issue bonds at the direction of, or are completely controlled by, a political subdivision typically are treated as issuing bonds on behalf of a political subdivision. Tax lawyers sometimes refer to these issuers as on behalf of issuers. Additionally, under some circumstances bonds issued by nonprofit corporations are treated as bonds issued on behalf of a political subdivision. See the Special Federal Tax Issues discussion in Chapter 6, Types of Financing Obligations Public Lease Revenue Bonds. These functions are not necessarily always performed by the same bank or trust company and, in some instances, may be performed by more than one such entity.

TRUSTEE/FISCAL AGENT/PAYING AGENT/REGISTRAR/AUTHENTICATING AGENT An issuer customarily selects one or more commercial banks or trust companies to perform one or more of several administrative duties relating to a bond issue. Historically, an issuer may have received, held, and disbursed the bond proceeds itself, and collected, held, and paid debt service on the bonds with the revenues pledged as security for the bonds. However, today, relatively few issuers have the banking capabilities and relationships necessary to perform those services themselves. In addition, investors are comforted by the involvement of a fiduciary acting on their behalf and holding the funds and accounts relating to the bond issue. As a result, many bond resolutions and indentures appoint a trustee or fiscal agent to perform a number of duties relating to the bond issue. In performing those duties, a trustee acts in a fiduciary relationship to both the issuer and the bondholders, since both are beneficiaries of the trust established by the bond indenture. By contrast, a fiscal agent or paying agent is not a trustee, but merely acts as an agent of the issuer to perform functions necessary to comply with the requirements of the documents. A trustee or fiscal agent may perform one or more of the following duties:

As trusteeestablishing and holding the funds and accounts relating to the bond issue, including accounts for bond proceeds and revenues, determining that the conditions for disbursement of proceeds and revenues have been met, and, in some cases, collecting revenues and executing investments As bond registrarmaintaining a list of the names and addresses of all registered owners of the bonds and recording transfers and exchanges of the bonds As authenticating agentauthenticating bonds upon initial issuance or upon transfer or exchange As paying agentpaying interest on the bonds by check or wire to the respective registered owners, and paying principal of the bonds to the registered owners upon surrender of the bonds at maturity or upon earlier redemption As trusteeprotecting the interests of bondholders by monitoring compliance with covenants and acting on behalf of bondholders in the event of default As escrow agentholding the investments acquired with the proceeds of an advance refunding and using payments on those investments to pay debt service on the refunded bonds As dissemination agentacting on behalf of the issuer or other obligated person to disseminate annual reports and event notices to repositories under SEC Rule 15c2-12 In several of the above capacitiesmailing required notices to bondholders Acting as a liaison to bondholder committees (in the event of a default or workout situation)

These functions are not necessarily always performed by the same bank or trust company and, in some instances, may be performed by more than one such entity.

Anti-abuse Rule. U.S. Treasury Regulations section 1.141-3(g2)(iv) prevents abuse of the Private Business Tests. These regulations permit the IRS to determine the amount of private business use according to the greater percentage of private business use in any one-year period. The issuer establishes the term of the bond issue: issue For a period that is longer than reasonably necessary for the government purpose of the bond For the principal purpose of increasing the permitted amount of private business use

60 CHAPTER 3. GENERAL FEDERAL TAX REQUIREMENTS

Measuring Private Business Use

As described above, the Private Business Use Test is met if more than 10 percent (in some cases 5 percent) of the proceeds of the issue are used directly or indirectly in trades or businesses carried on by nongovernmental persons. Private business use generally is measured by determining the average percentage of private business use of the property that occurs during the period of time beginning on the later of the date the bonds are issued or the date the financed facility is placed in service, and ending on the earlier of the date the bonds mature or the end of the reasonably expected useful life of the facility. Average private business use of the facility for any given year is equal to the amount (i.e. number of days) of private business use during that year divided by the amount (i.e. number of days) of total use (private use and governmental use) of the facility during that year.

Private Business Use Example A state uses the proceeds from a bond issue with a 20 year term to reimburse itself for the acquisition of a 10-story office building. The facility is used solely for governmental purposes for 18 years. At the end of the 18th year, state officials lease the entire building for two years to a corporation for its private business use. Two years of 100 percent private use averages over the 20-year measurement period only to 10 percent private business use, and thus the Private Business Use Test is not satisfied. However, if the state sold the building to the corporation, the private business use of the building would be equal to the greatest percentage of private business use for any one-year period. Thus, the facility will have 100 percent private business use for its entire life and will therefore satisfy the Private Business Use Test.

However, uses may need to be weighted if fair market value of the use varies. Periods of nonuse are disregarded for the purpose of computing percentage use. Simultaneous private business use and governmental use may require more complicated methods of measuring the amount of private business use. Private business use that takes place before or after the measurement period described above is ignored. Special rules exist for measuring the amount of private business use attributable to certain contractual rights to the output of electric and gas generation, transmission and related facilities, and certain water facilities.
If the private business use of a financed facility is the result of ownership of the facility by a private business, then the amount of private business use is determined based on the highest percentage of private business use during any of the annual periods that make up the general measurement period.
Management or Service Provider Contracts

Any contract between a governmental entity and a private business providing services with respect to a bond-financed facility is a potential source of private business use and must be examined when

determining whether the 10 percent private business use limitation has been or will be exceeded. Generally, the determination of whether a service contract between a governmental person and a service provider gives rise to private business use is based upon all the facts and circumstances of the arrangement.
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61
Safe Harbors for Certain Compensation Arrangements

There are certain safe harbors for compensation arrangements in management or service contracts. In order to meet the safe harbors, the compensation to the service provider under the contract must not be based on net profits, the service provider must not be in a position to limit the governmental entitys rights under the contract, and the contract must fall within one of the following six categories:
95 percent Fixed Fee Contracts. At least 95 percent of the compensation is based on a periodic fixed fee, and the contract term does not exceed the lesser of 15 years or 80 percent of the reasonably expected useful life of the managed facility. A one-time, fixed incentive payment based on gross revenue or expense targets is allowed to be paid to the service provider without affecting the fixed fee payment requirement.

80 percent Fixed-Fee Contracts. At least 80 percent of the compensation is based on a periodic fixed fee, and the contract term does not exceed the lesser of 10 years or 80 percent of the reasonably expected useful life of the managed facility. A one-time, fixed incentive payment based on gross revenue or expense targets is allowed to be paid to the service provider without affecting the fixed-fee payment requirement. Public Utility Property. If the facility is predominantly public utility property, the 15 year and 10 year requirements described above are substituted with a 20 year requirement. 50 percent Fixed-Fee or Capitation Contracts. Fifty percent of the compensation is based on a periodic fixed fee, or 100 percent is based on a capitation (per person) fee or a combination of the two, and the contract term does not exceed five years. The issuer must have the power to terminate the contract without penalty after three years. Per-Unit Fee Contracts. One hundred percent of the compensation is based on a per-unit fee, or a combination of a per-unit fee and a periodic fixed fee, and the contract term does not exceed three years. The issuer must have the power to terminate the contract without penalty after two years. Percentage of Revenue or Expense Contracts. Applies only to contracts under which the service provider primarily provides service to third parties (e.g. a radiologist) or during the start-up phase of a new facility. One hundred percent of the compensation is based on a percentage of fees charged, or a combination of a per-unit fee and a percentage of revenue or expense fee, and the

contract term does not exceed two years. The issuer must have the ability to terminate the contract without penalty after one year. Renewal Options. For purposes of the six categories above, renewal options by the service provider that are enforceable against the issuer are counted in the term limitation. Renewal options by the issuer and automatic renewal provisions subject to cancellation by either party do not count. Indexing. The payments under the fixed-fee contract may change over time if tied to an objective external standard, such as the Consumer Price Index. Prohibited Relationships. The service provider must not have any relationship with the governmental entity that, in effect, substantially limits the governmental entitys ability to exercise its rights under the contract. A safe harbor from this relationship limitation is provided if all of the following three requirements are satisfied: The service provider does not control more than 20 percent of the voting power of the board of the governmental entity Overlapping board members do not include the chief executive officers of either party

CHAPTER 3. GENERAL FEDERAL TAX REQUIREMENTS

63 The service provider and the governmental entity are not related parties Private Business Use Contracts. Two types of contracts almost always result in private business use:
A contract that provides for compensation based upon net profits of the bond-financed facility A contract under which the service provider is considered the lessee or owner of the bondfinanced facility for federal tax purposes Exempted Contracts. U.S. Treasury regulations provide a list of arrangements that are not considered management contracts. The following contracts are explicitly not included within the definition of management contracts: Contracts for services that are solely incidental to the primary governmental function of the facility (e.g. janitorial contracts, equipment repair contracts, contracts for billing services) Granting of admitting privileges by a hospital to doctors, even if conditioned on the provision of de minimis services, if available to all qualified physicians in the area consistent with the size and nature of the facilities Contracts relating to the operation of public utility property where the only compensation is reimbursement of direct actual and direct expenses of the service provider and reasonable administrative overhead expenses

Contracts to provide services where the only compensation is reimbursement to the service provider for actual and direct expenses to unrelated third parties
As its name implies, the Private Security or Payment Test looks at the source of the monies paid toward debt service (directly or indirectly) and the security provided for the bonds by nongovernmental persons. The Private Security or Payment Test is met if the aggregate present value of the private payments and private security exceeds 10 percent of the present value of the debt service on the bonds, with certain adjustments. Absent deliberate actions by the issuer, satisfaction of the Private Security or Payment Test is based upon reasonable expectations as of the date on which the bonds are issued. Presen values are computed using the yield on the bonds as a discount rate.

Debt service: series of payments of interest and principal required on a debt over a given period of time
Private Loan Test

An issue of bonds qualifies as a private activity bond issue if it satisfies either the Private Business Tests or the Private Loan Test. The Private Loan Test is met if more than the lesser of 5 percent or $5 million of the proceeds of the issue is used to make or finance loans to nongovernmental persons. In determining if the Private Loan Test is met, all loans must be identified. A loan is any transaction that is characterized as a loan under general federal income tax principles. The substance of the transaction is determinative. For example, a lease or a management contract might be considered a loan if federal tax ownership of the facility is transferred to the lessee or manager. Likewise, an output contract might be considered a loan if the agreement shifts significant burdens and benefits of ownership to the output purchaser. An arrangement is not a loan for purposes of the Private Loan Test if: It arises from the imposition of a mandatory tax or other assessment of general application The assessment is imposed for essential governmental functions, and

An equal basis requirement is met


Private Loan Test

An issue of bonds qualifies as a private activity bond issue if it satisfies either the Private Business Tests or the Private Loan Test. The Private Loan Test is met if more than the lesser of 5 percent or $5 million of the proceeds of the issue is used to make or finance loans to nongovernmental persons. In determining if the Private Loan Test is met, all loans must be identified. A loan is any transaction that is characterized as a loan under general federal income tax principles. The substance of the transaction is determinative. For example, a lease or a management contract might be considered a loan if federal tax ownership of the facility is transferred to the lessee or manager. Likewise, an output contract might be considered a loan if the agreement shifts significant burdens and benefits of ownership to the output purchaser. An arrangement is not a loan for purposes of the Private Loan Test if: It arises from the imposition of a mandatory tax or other assessment of general application The assessment is imposed for essential governmental functions, and

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65

An equal basis requirement is met

Certain Prohibited Facilities. None of the proceeds of qualified private activity bonds may be used to provide any of the following: Airplane Skybox or other private luxury box Health club facility Facility primarily used for gambling

Store, the principal business of which is the sale of alcoholic beverages for consumption offpremises The prohibition against financing health club facilities does not apply to qualified 501(c)(3) bonds.

Chapter 4

STATE CONSTITUTIONAL LIMITATIONS


This chapter of the California Debt Issuance Primer (Primer) briefly outlines several key state constitutional provisions affecting public finance transactions, including the constitutional debt limitation, the prohibition on gifts of public funds and lending of public credit, initiatives and referenda, and the Jarvis Family of Initiatives (discussing the relevant provisions of Propositions 13, 4, 62, and 218). The intent of this chapter is to provide the general purpose and effect of the constitutional provisions and thus enable the reader to intelligently consult with legal advisors concerning the impact of these provisions on a particular financing. While the provisions do not represent all of the constitutional provisions that may affect a particular transaction, they are the most commonly-encountered limitations in the public finance arena. The full text of the constitutional provisions discussed in this chapter may be found in Appendix D Legal References.

THE 1879 CONSTITUTION


Californias Constitution was ratified in 1879 at the Constitutional Convention that took place in Monterey the same year. Like many other Western states, Californias Constitution contains

limitations on the authority that may be granted to local governments in the area of public debt and other financial transactions. These limitations were in part intended to curb municipal extravagance and in part a response to the temptations local officials of the day faced with respect to expansion of the railroads. In a situation not dissimilar to the modern competition among localities for sales-tax generating uses such as big box retailers and auto dealerships, the railroads of the late 19th century recognized that they could gain valuable subsidies by playing one locality against another in the competition for the locations of routes and stations. Though of debatable effectiveness, the fiscal limitation provisions of the 1879 Constitution were an attempt to blunt those efforts by limiting the extent to which localities could legally succumb to these temptationsat least without first obtaining supermajority voter approval. THE DEBT LIMIT Article XVI, Section 18 of the California Constitution (the debt limit) prohibits cities (including chartered cities), counties, and school districts from entering into indebtedness or liability that in any year exceeds the income and revenue provided for such year unless the local agency first obtains two-thirds voter approval for the obligation. This general limitation has several important exceptions as described below. It is important to remember that this limitation applies not only to traditional bonds, but could apply to many forms of indebtedness or liability, such as installment payment obligations, long-term service or construction contracts, letter-of-credit reimbursement agreements, and other types of arrangements commonly seen in public finance transactions. In determining whether the arrangement under consideration might pose a problem under the debt limit it is useful to ask the following questions:

Does the arrangement provide for payment in future fiscal years that comes out of revenue generated in those years? Does the arrangement call for payments by a city, county, or school district (as opposed to other types of governmental agencies)? If the answer to these two questions is yes, then the analysis should proceed to determine if one of the exceptions to the debt limit applies. There are three major exceptions to the debt limit that have been recognized by California courtsthe Offner-Dean lease exception, the special fund doctrine, and the obligations imposed by law exception. The Offner-Dean Lease Exception. Named after the two leading California Supreme Court cases in the areaCity of Los Angeles v. Offner and Dean v. Kuchelthe Offner-Dean lease exception provides that a long-term lease obligation entered into by a city, county, or school district as lessee will not be considered an indebtedness or liability under the debt limit if the lease meets the following criteria: The obligation to pay rent in each year is contingent upon the lessee having beneficial use and occupancy of the leased premises during that year

If such use and occupancy is not provided, there is an abatement of rent during the period that use and occupancy is not available In the event the lessee fails to pay rent when due, there can be no acceleration of the future rent due The rent in each year represents the fair rental value of the premises

Some courts have recognized an exception to the debt limit provided by the Offner-Dean exception when so-called contingent liabilities are involved. These cases involve fact patterns containing multiyear term contractual obligations the payment for which is contingent upon a service or other consideration being provided in each year. Thus, for example, courts have approved long-term contracts for services where the payment is contingent in each year on the provision of the service by the contracting party. One public finance application of these cases is the financing of pre-paid service contracts, such as telephone contracts. For a more detailed description of the requirements of a lease financing, see Chapter 6, Types of Financing Obligations Public Lease Revenue Bonds. The Special Fund Doctrine. The special fund doctrine is another judicially-created exception to the debt limit, which permits long-term indebtedness or liabilities to be incurred
80 CHAPTER 4. STATE CONSTITUTIONAL LIMITATIONS

without an election if the indebtedness or liability is payable from a special fund and not from the entitys general revenues. A special fund is a fundsuch as one consisting of enterprise revenueswhich is used to finance an activity related to the source of the revenues, such as the activity of the enterprise. For constitutional purposes, indebtedness to finance the enterprise payable solely from the special fund is not an indebtedness or liability of the local agency itself, but merely an indebtedness or liability of the special fund in which the revenues are deposited. To determine if a special fund exception might be available, consider the following questions: Is the indebtedness being issued to finance an asset that is part of the project or system that generates the revenues? Have the revenues in the fund been artificially segregated by the local agency from other general revenues in order to create the special fund, or are they inherently restricted revenues? In the event the special fund revenues are insufficient to pay the debt, is there any obligation of the local agency to make up the shortfall from other funds? There must be a nexus between the project being financed with the indebtedness and the special fund itself. For example, a new water treatment plant could be financed through indebtedness secured by the revenues of the water system (i.e. water fees and charges), but the use of the water revenue fund to finance an unrelated facility, such as a public parking lot, would not qualify under the special fund doctrine. It is important to note that the California Supreme Court has not allowed the special fund doctrine to be used to create special funds out of revenues that would otherwise be available to the general fund. In City of Redondo Beach v. Taxpayers, Property Owners, et al., the court held that the creation of a separate fund into which the city would deposit the sales tax revenues generated from within the marina area of the city could not be used to support an indebtedness to finance improvements to the marina area. The court reasoned that, but for the creation of this separate account by the city, the sales tax revenues would have been deposited in the general fund and would have been available for appropriation by the city council for any lawful purpose. The court rejected the argument that there was a nexus between the marina improvements sought to be financed and the general sales tax revenues, noting that this nexus, even if proved, was not sufficient since the revenues themselves were not inherently restricted to marina uses but rather were available to the city for any use.

Obligation Imposed by Law Exception. Another exception to the debt limit is the obligation imposed by law exception. While not as commonly used as the OffnerDean lease
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81

and special fund exceptions described above, this exception has gained importance due to its use to support pension obligation bonds and certain types of Teeter Plan Financings. Courts applying this exception have determined that an indebtedness to finance an obligation which is imposed on the local agency by lawsuch as a large money judgment against the local agency or a court order to provide a facility required by state law to be provided (like a courthouse or a jail)is not subject to the debt limit. The theory of this exception is that the obligation is involuntary, and therefore it would be meaningless to put the question to the voters. Because this exception has been applied in only a handful of appellate cases and is therefore not well-defined, most financings using this exception are subjected to a validation action to provide assurance that they are lawful. For a detailed discussion of the most common applications of this exception, please see Chapter 6, Types of Financing Obligations Pension Obligation Bonds and Teeter Plan Property Tax Receivables Financings. THE PROHIBITION ON GIFTS OF PUBLIC FUNDS AND LENDING OF PUBLIC CREDIT Article XVI, Section 6 of the California Constitution prohibits a public agency from making any gift of public funds or from lending its public credit to any person. This provision also prohibits a public agency from becoming a stockholder in any private corporation. The purpose of this limitation is to prohibit the use of public financial resources to benefit private persons or firms. The provision is directly traceable to the expansion of the railroads in the West and the pressures put on public agencies to become financial benefactors of and investors in the railroads as an inducement to obtaining service. In its application to modern public finance transactions, this provision can limit the ability of public agencies to enter into so-called public-private partnerships for projects and activities, and must be carefully considered whenever a private firm or person is involved with a public entity in such a joint venture.

There are several narrow exceptions to this provision contained in the language of the constitutional provision itself. In addition, the courts have created a fairly broad public purpose exception which frequently is applied to sanction activities that otherwise might run afoul of the constitution. Under the public purpose exception, a transaction that is for a valid public purpose, even though it may provide an incidental benefit to private persons, is not prohibited by Article XVI, Section 6. Another formulation of this exception holds that if the public agency receives valid consideration for the payment or provision of value to the private person, there is no gift. As noted above, this constitutional provision should be carefully considered whenever a publicprivate partnership structure is being used. It also frequently comes up in connection with redevelopment and other economic development activities where public finance transactions are used to provide benefit or inducement to private firms for the purpose of achieving economic advantages to the community.
Ca Const Art 16 Sec 3

2. Gifts or loans--In general Counties cannot make gifts of public funds and cannot use public funds for private purposes. Goodall v. Brite (App. 4 Dist. 1936) 11 Cal.App.2d 540, 54 P.2d 510. Counties 153.5 3. ---- Public purposes, generally, gifts or loans The primary question to be considered in determining whether an appropriation of public funds is to be considered a gift in violation of the California Constitution is whether the funds are to be used for a public or private purpose; if they are to be used for a public purpose, they are not a gift within the meaning of the constitutional prohibition. Page v. MiraCosta Community College Dist. (App. 4 Dist. 2009) 102 Cal.Rptr.3d 902, 180 Cal.App.4th 471, rehearing denied , review denied. Municipal Corporations 871

Ca Const Article XVI, Section 6. Public credit or funds; loan or gift; public ownership of corporate stock; veterans aid; transfer of funds Sec. 6. The Legislature shall have no power to give or to lend, or to authorize the giving or lending, of the credit of the State, or of any county, city and county, city, township or other political corporation or subdivision of the State now existing, or that may be hereafter established, in aid of or to any person, association, or corporation, whether municipal or otherwise, or to pledge the credit thereof, in any manner whatever, for the payment of the liabilities of any individual, association, municipal or other corporation whatever; nor shall it have power to make any gift or authorize the making of any gift, of any public money or thing of value to any individual, municipal or other corporation whatever; provided, that nothing in this section shall prevent the Legislature granting aid pursuant to Section 3 of Article XVI; and it shall not have power to authorize the State, or any political subdivision thereof, to subscribe for stock, or to become a stockholder in any corporation whatever; provided, further, that irrigation districts for the purpose of acquiring the control of any entire international water system necessary for its use and purposes, a part of which is situated in the United States, and a part thereof in a foreign country, may in the manner authorized by law, acquire the stock of any foreign corporation which is the owner of, or which holds the title to the part of such system situated in a foreign country; provided, further, that irrigation districts for the purpose of acquiring water and water rights and other property necessary for their uses and purposes, may acquire and hold the stock of corporations, domestic or foreign, owning waters, water rights, canals, waterworks, franchises or concessions subject to the same obligations and liabilities as are imposed by law upon all other stockholders in such corporation; and Provided, further, that this section shall not prohibit any county, city and county, city, township, or other political corporation or subdivision of the State from joining with other such agencies in providing for the payment of workers' compensation, unemployment compensation, tort liability, or public liability losses incurred by such agencies, by entry into an insurance pooling arrangement under a joint exercise of powers agreement, or by membership in such publicly-

owned nonprofit corporation or authorized by the Legislature; and

other

public

agency

as

may

be

Provided, further, that nothing contained in this Constitution shall prohibit the use of State money or credit, in aiding veterans who served in the military or naval service of the United States during the time of war, in the acquisition of, or payments for, (1) farms or homes, or in projects of land settlement or in the development of such farms or homes or land settlement projects for the benefit of such veterans, or (2) any business, land or any interest therein, buildings, supplies, equipment, machinery, or tools, to be used by the veteran in pursuing a gainful occupation; and Provided, further, that nothing contained in this Constitution shall prohibit the State, or any county, city and county, city, township, or other political corporation or subdivision of the State from providing aid or assistance to persons, if found to be in the public interest, for the purpose of clearing debris, natural materials, and wreckage from privately owned lands and waters deposited thereon or therein during a period of a major disaster or emergency, in either case declared by the President. In such case, the public entity shall be indemnified by the recipient from the award of any claim against the public entity arising from the rendering of such aid or assistance. Such aid or assistance must be eligible for federal reimbursement for the cost thereof. And provided, still further, that notwithstanding the restrictions contained in this Constitution, the treasurer of any city, county, or city and county shall have power and the duty to make such temporary transfers from the funds in custody as may be necessary to provide funds for meeting the obligations incurred for maintenance purposes by any city, county, city and county, district, or other political subdivision whose funds are in custody and are paid out solely through the treasurer's office. Such temporary transfer of funds to any political subdivision shall be made only upon resolution adopted by the governing body of the city, county, or city and county directing the treasurer of such city, county, or city and county to make such temporary transfer. Such temporary transfer of funds to any political subdivision shall not exceed 85 percent of the anticipated revenues accruing to such political subdivision, shall not be made prior to the first day of the fiscal year nor after the last Monday in April of the current fiscal year, and shall be replaced from the revenues accruing to such political subdivision before any other obligation of such political subdivision is met from such revenue.

82. ---- Public pension or retirement system, stock ownership Shares in investment-trust type of mutual funds are corporation shares within constitutional and statutory provisions prohibiting investment of public funds in corporation shares, and hence funds of county employees' retirement systems may not be invested in securities issued by a mutual fund. 35 Op.Atty.Gen. 130 (1960).

County retirement system is an agency of the county and a political subdivision of the state and is therefore prohibited by Constitution section from investing funds in stocks of any private corporation or investment trust and provisions of Gov.C. 31595, purporting to authorize such investments, are unconstitutional. 18 Op.Atty.Gen. 159 (1951).

County Retirement System is prohibited by Art IV 31 from investing funds in stocks of any private corporation or investment trust. 18 Ops. Cal. Atty. Gen. 159.
Article XVI. Public Finance (Refs & Annos) 17. State; loan of credit; stock subscription or ownership; mutual water companies; public pension or retirement system; powers and duties of retirement board Sec. 17. The State shall not in any manner loan its credit, nor shall it subscribe to, or be interested in the stock of any company, association, or corporation, except that the State and each political subdivision, district, municipality, and public agency thereof is hereby authorized to acquire and hold shares of the capital stock of any mutual water company or corporation when the stock is so acquired or held for the purpose of furnishing a supply of water for public, municipal or governmental purposes; and the holding of the stock shall entitle the holder thereof to all of the rights, powers and privileges, and shall subject the holder to the obligations and liabilities conferred or imposed by law upon other holders of stock in the mutual water company or corporation in which the stock is so held. Notwithstanding any other provisions of law or this Constitution to the contrary, the retirement board of a public pension or retirement system shall have plenary authority and fiduciary responsibility for investment of moneys and administration of the system, subject to all of the following: (a) The retirement board of a public pension or retirement system shall have the sole and exclusive fiduciary responsibility over the assets of the public pension or retirement system. The retirement board shall also have sole and exclusive responsibility to administer the system in a manner that will assure prompt delivery of benefits and related services to the participants and their beneficiaries. The assets of a public pension or retirement system are trust funds and shall be held for the exclusive purposes of providing benefits to participants in the pension or retirement system and their beneficiaries and defraying reasonable expenses of administering the system. (b) The members of the retirement board of a public pension or retirement system shall discharge their duties with respect to the system solely in the interest of, and for the exclusive purposes of providing benefits to, participants and their beneficiaries, minimizing employer contributions thereto, and defraying reasonable expenses of administering the system. A retirement board's duty to its participants and their beneficiaries shall take precedence over any other duty. (c) The members of the retirement board of a public pension or retirement system shall discharge their duties with respect to the system with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims. (d) The members of the retirement board of a public pension or retirement system shall diversify the investments of the system so as to minimize the risk of loss and to maximize the rate of return, unless under the circumstances it is clearly not prudent to do so. (e) The retirement board of a public pension or retirement system, consistent with the exclusive fiduciary responsibilities vested in it, shall have the sole and exclusive power to provide for actuarial services in order to assure the competency of the assets of the public pension or retirement system. (f) With regard to the retirement board of a public pension or retirement system which includes in its composition

elected employee members, the number, terms, and method of selection or removal of members of the retirement board which were required by law or otherwise in effect on July 1, 1991, shall not be changed, amended, or modified by the Legislature unless the change, amendment, or modification enacted by the Legislature is ratified by a majority vote of the electors of the jurisdiction in which the participants of the system are or were, prior to retirement, employed. (g) The Legislature may by statute continue to prohibit certain investments by a retirement board where it is in the public interest to do so, and provided that the prohibition satisfies the standards of fiduciary care and loyalty required of a retirement board pursuant to this section. (h) As used in this section, the term retirement board shall mean the board of administration, board of trustees, board of directors, or other governing body or board of a public employees' pension or retirement system; provided, however, that the term retirement board shall not be interpreted to mean or include a governing body or board created after July 1, 1991 which does not administer pension or retirement benefits, or the elected legislative body of a jurisdiction which employs participants in a public employees' pension or retirement system. 6. Investment of funds The legislature intended that funds held by the state pursuant to deferred compensation plans, under Gov.C. 16431, may be invested in common and preferred stock of corporations subject to the percentage limitation and other qualifications provided for in this section, for the investment of money of any public pension or retirement fund in common and preferred stock. 56 Op.Atty.Gen. 529, 12-12-73. 8. ---- Deferred compensation funds, pension or retirement system Where the deferred compensation funds are in fact public pension or retirement funds within the meaning of Constitution section, that provision applies and permits investment of such funds in corporate stock in mutual fund shares subject to the limitations set forth in this section. 57 Op.Atty.Gen. 534, 11-13-74.

PROCESS OF ISSUING ASSESSMENT BONDS 1911 Act Bonds. Under the bond issuance provisions of the 1911 Act (Sections 6400 et seq.), an assessment bond may be issued for the amount of each unpaid assessment of $150 or more on a particular parcel. The security for each assessment bond issued under the 1911 Act is the unpaid assessment lien on a particular parcel, and the principal amount of each bond is equal to the unpaid assessment on that parcel. Thus, one assessment bond may be issued in the amount of $1,500 and another may be issued in the amount of $265. Assessments under $150 may be collected upon the tax roll if the legislative body so determines. 1911 Act assessment bonds provide for payment of a principal installment to the bondholder annually, on January 2. The governing body may provide for the annual principal installments to be payable in other than equal annual amounts and may provide for the classification of assessments into different maturities so that some assessments (and, correspondingly, some of the assessment bonds) mature over a shorter period of time than others. Interest is payable semiannually on January 2 and July 2. Local agencies considering the issuance of 1911 Act bonds should be aware of the following:

At the present time, services of paying agent, registrar, and transfer agent are not generally available from outside service providers Billing and collection of installments of principal and interest on account of unpaid assessments to pay 1911 Act bonds cannot be made on the county property tax rolls, as with 1915 Act bonds Accordingly, the treasurer of the local agency must handle these duties, and the staffing for and costs of performing these duties needs to be a part of the preliminary planning for the issuance of 1911 Act bonds. Furthermore, 1911 Act bond provisions (unlike those of the 1915 Act) contain no authorization to include administrative costs in the installments billed to property owners, so those costs must be estimated and provided for either as up-front incidental costs, which are funded directly from bond proceeds, or as annual administrative costs authorized under the statutory scheme for imposing the assessments. Another important feature that distinguishes 1911 Act bonds from 1915 Act bonds is that foreclosure proceedings for enforcement of delinquent installments of principal or interest must be brought by and in the name of the bondholder, rather than that of the issuer as is the case with 1915 Act bonds. This feature is generally regarded as material in the determination of suitability of 1911 Act bonds for some investors who may not have the time or resources to pursue foreclosure on their own behalf. For these and other reasons, issuance of 1911 Act bonds is relatively uncommon and generally regarded as suitable for only a limited segment of the investor community.
1915 Act Bonds. As stated earlier in this section, by far the more common assessment bond in California is the 1915 Act bond. The structure of a 1915 Act assessment bond issue is very different from the 1911 Act bond and much more closely resembles the structure of the other common debt instruments described in the succeeding sections of this chapter. Rather than issuing each individual bond upon the security of a specific unpaid assessment, 1915 Act bonds are issued in a pooling arrangement, with the security for all bonds of the issue being the aggregate of the liens on all the parcels within the assessment district. The entire principal amount of a specific 1915 Act bond matures on a specific September 2, and principal denominations are typically $5,000 or integral multiples thereof, with authority to depart from the $5,000 norm when appropriate. Interest is payable semiannually on March 2 and September 2. The maturity schedule for a 1915 Act bond issue is customarily structured to provide for equal annual debt service, although alternatives are authorized.

1915 Act bonds are customarily sold on a negotiated basis. The Resolution of Intention generally specifies a maximum interest rate and a maximum maturity. The final interest rate or rates, together with the maturity schedule, is customarily established when the bonds are sold. Under the 1915 Act, certain determinations regarding terms of 1915 Act assessment bonds must be resolved and a determination stated in the Resolution of Intention. These are: Whether the local agency will obligate itself to advance available funds of the local agency to cure any deficiency that may occur in the bond redemption fund

Whether a 2 percent delinquent penalty may be charged per month on the amount of a delinquent assessment, rather than the customary one-time late charges and the lower monthly penalties applicable to property tax delinquencies Whether the local agency will preclude itself from refunding the bonds for some stated period of time following issuance (not to exceed 10 years after the date of issuance) METHOD OF REPAYMENT AND SECURITY FEATURES Each 1911 Act bond is payable solely from the installments paid on account of a particular parcel, and payment of such installments is secured solely by the lien on that particular parcel, whereas 1915 Act bonds of a single issue are secured on parity by the pooled assessments on all of the parcels assessed for the improvements financed by the issue. 1915 Act bonds also may have a reserve fund for the benefit of bondholders and though rarely done, issuers of 1915 Act bonds are authorized to obligate themselves to advance available funds of the issuer to compensate for delinquent installments from property owners. Assessments that are not paid when due become delinquent and the parcels upon which the delinquent assessments are levied are subject to judicial foreclosure or, where 1911 Act bonds have been issued, to an administrative foreclosure procedure known as the treasurers foreclosure. Delinquent assessments accrue penalties under the 1911 Act at the rate of 2 percent per month for assessment bonds and under the 1915 Act at either the same rate or the rate established for general taxes (currently, an immediate 10 percent late charge and, commencing July 1 after the delinquency, 1.5 percent per month). The first month's penalty under the 1911 Act may be kept by the treasurer as a cost of servicing the delinquency. When 1911 Act bonds have been issued, the foreclosure accelerates the remaining unpaid principal, with the foreclosure sale price established on that basis. The 1911 Act bond in question is actually surrendered and canceled following completion of the foreclosure sale, and the former bondholder receives either cash, if a third party submitted the winning bid at the sale, or title to the property. When 1915 Act bonds have been issued, there is no acceleration of unpaid principal, and the foreclosure sale price is based upon only the delinquent installments of principal and interest, together with penalties, late charges, and attorneys fees and costs of foreclosure. Assuming a bid in excess of the minimum, the winning bidder takes title to the parcel subject to the continuing lien of future installments as they come due and payable. In the event no adequate bid is received, further proceedings are required, a discussion of which is beyond the scope of this Primer. Property upon which there are assessment liens may be divided. Both the 1911 Act and the 1915 Act contain provisions by which the remaining unpaid assessment can be apportioned among the new parcels in accordance with the benefits received. Costs associated with the procedure to reapportion the assessment may be paid by the property owner or included in the amended assessment. Under the 1911 Act, except under limited circumstances, the bondholder must generally approve any division of land that secures a bond and new assessment bonds corresponding to the new liens and parcels must be issued to the bondholder.

Generally, assuming the ratio of the value of the land to the amount of the assessment is sufficiently high, no additional security such as a letter of credit or bond insurance is necessary or, if available, cost effective for assessment bonds. In certain circumstances, primarily property development situations where the project land is undeveloped and the assessments are comparatively high, issuers or bond underwriters may require the developer to provide a letter of credit to assure timely payment of assessment installments until such time as the credit risk is reduced through development and sale of at least substantial portions to third parties or the general public. To date, bond insurance has been found to be cost effective only with respect to refunding of assessment bonds after significant portions of the assessed property have been developed and sold.

LOCAL AGENCY GENERAL OBLIGATION BONDS


DEFINITION AND GENERAL FEATURES General obligation (GO) bonds are the simplest bond security type. In California, they require a supermajority voter approval and as a result are utilized infrequently by many local governments. General obligation bonds are secured either by a pledge of the full faith and credit of the issuer or by a promise to levy property taxes in an unlimited amount as necessary to pay debt service, or both. The State of California's general obligation bonds are full faith and credit bonds, to which the state's General Fund, rather than any particular tax revenue, is pledged. The various general obligation bond programs of the State of California are described in Appendix A Working with State Agencies. With very few exceptions, local government agencies are not authorized to issue full faith and credit bonds. The general obligation bonds of such agencies are typically payable only from ad valorem property taxes, which are required to be levied in an amount sufficient to pay interest and principal on the bonds coming due in each year. These property tax revenues are distinct from general property tax collections and are dedicated to debt service payment and cannot be levied or used for any other purpose. Some local agencies may also pledge revenues of the facilities financed by the bonds as additional or even primary security for the bonds. Interestingly, relatively few statutes (other than those relating to the state's bonds) use the designation, general obligation bonds and it may be more accurate to think of these obligations as unlimited tax bonds. Under Article XVI, Section 18 of the State Constitution, no county, city, town, or school district may incur indebtedness without a two-thirds popular vote. This article was modified in 2000 through the enactment of Proposition 39, which authorizes bonds for repair, construction, or replacement of school facilities, classrooms (if approved by 55 percent local vote for projects evaluated by schools), community college districts, and county education offices for safety, class size, and information technology needs.

SECURITY AND SOURCES OF PAYMENT General obligation bonds are secured by the legal obligation to levy an ad valorem property tax upon taxable property in the jurisdiction of the issuer in an amount sufficient to pay the debt service. In the case of certain revenue-producing facilities, the bonds may be additionally, or even primarily,

secured by or paid from revenues generated by those facilities financed from the bonds. Certain special districts have old statutory authority to issue bonds secured by what are called ad valorem assessments, but under Article XIIIA, it is not clear if these statutes authorize the levy of ad valorem taxes to pay the bonds. Issuers should consult with bond counsel to determine if such bonds may still be issued and if taxes or assessments may be levied to pay them.

LEGAL AUTHORITY Legal Authority in General. The California Constitution contains several provisions governing the issuance of general obligation bonds: All Issuers Article XVI, Section 18two-thirds favorable vote required for bonds of cities, counties, and school districts Article XIIIA, Section 1(b)exception from 1 percent real property tax limit for taxes to pay voter-approved general obligation bonds to finance the acquisition or improvement of real property Article XIIIB, Sections 8(g) and 9(a)exception from appropriations limit for debt service on general obligation bonds Article XIII, Section 20power of legislature to provide maximum property tax rates and bonding limits for local governments Article XIII, Section 26(b)exemption from state income taxes for interest on local government bonds Cities The general authorization and procedures for issuance are found at Government Code Sections 43600 et seq. Alternative procedures for issuance are found at Government Code Sections 53506 et seq. The charter of any charter city may contain special authorization, limitations, and procedures pursuant to home rule powers granted under Article XI, Section 5 of the California Constitution Counties The general authorization and procedures for issuance are found at Government Code Sections 29900 et seq. Alternative procedures for issuance are found at Government Code Sections 53506 et seq. School districts The general authorization and procedures for issuance are found at Education Code Sections 15100 et seq. Alternative procedures for issuance are found at Government Code Sections 53506 et seq.

Special districts The general authorization and procedures for issuance vary for each issuer. See Appendix D Legal References Table D-2-1.

PROJECTS THAT MAY BE FINANCED


Public Capital Improvement Bonds

Marks-Roos bonds may be issued to directly pay the cost of public capital improvements. Direct financing of these improvements under Marks-Roos Act generally takes the form of bonds issued by the JPA and secured by payments to be made under a loan agreement, installment purchase agreement, or lease between the JPA and the local agency which is paying for the project. Under this type of arrangement, the JPA is acting as a conduit issuer for the local agency and has no obligation on the bonds other than to make payment from the payments received under the underlying agreement with the local agency. The source of revenues for the underlying agreement with the local agency can vary greatly and will determine which type of agreement will likely be used. Public capital improvements include the following: An exhibition building or other place for holding fairs A coliseum, stadium, sports arena, or sports pavilion Any other public buildings A regional or local public park, recreational area, or recreational center

A facility for the generation or transmission of electrical energy (but not a retail distribution system) A facility for the disposal, treatment, or conversion to energy and reusable materials of solid or hazardous waste or toxic substances Facilities for the production, storage, transmission, or treatment of water or wastewater Local streets, roads, and bridges Bridges and major thoroughfares construction Mass transit facilities or vehicles

Publicly owned or operated commercial or general aviation airports and airport-related facilities Police or fire stations Public works facilities, including corporation yards

Public health facilities owned or operated by a city, county, city and county, special district, or authority
Criminal justice facilities, including court buildings, jails, juvenile halls, and juvenile detention facilities

Public libraries Publicly owned or operated parking garages

Low-income housing projects owned or operated by a city, county, city and county, or housing authority
Public improvements authorized in a project area created pursuant to the Community Redevelopment Law (see the section on Tax Allocation and Other Redevelopment Bonds in this chapter) Public improvements authorized pursuant to certain assessment acts and the Mello-Roos Act (see the sections on Assessment Bonds and Mello-Roos Bonds in this chapter)

Telecommunication systems or service

Programs, facilities, rights, properties, and improvements for the management, conservation, reuse, or recycling of electric capacity or energy, natural gas, water, wastewater, or recycled water, including demand side or load management and other programs and facilities designed to reduce the demand for, or permit or promote the efficient use of, those resources Certain equipment related to the above facilities

If the local agency is a city, county, or school district and the payments are to be made from the local agencys general fund, the agreement will likely be a lease. For more detail on lease financing, see the section on Public Lease Revenue Bonds in this chapter. If the source of payment is a local enterprise fund (such as a water system enterprise fund), the agreement will probably be an installment purchase agreement or loan agreement. PERS. Public entities that are members of the California Public Employees' Retirement System (PERS) are authorized by the Government Code to participate in and to make all or part of their employees members of PERS by contract. Thereafter they are obligated to make contributions to PERS as provided in the Government Code, including payments in respect of unfunded liability as determined by an actuary, amortized over periods particular to each public entity not exceeding 40 years, with interest at an assumed rate. Accordingly, these public entities also may engage in pension obligation financings.

PUBLIC ENTERPRISE REVENUE BONDS


DEFINITION AND PURPOSE

Public enterprise revenue bonds are bonds that finance facilities for a revenue-producing enterprise and are payable from the revenues of that enterprise. Examples of such enterprises include an airport, a water system, a power system, a sewer system, a single power plant, or a bridge. Revenues may include such items as service charges, tolls, connection fees, admission fees, and rents. This section discusses the issuance of public enterprise revenue bonds by cities, counties, and joint powers authorities. As described in this section, voter approval is required for revenue bonds issued under the Revenue Bond Law of 1941 (Government Code Sections 54300 et seq., the 1941 Act). This requirement and others in the 1941 Act have resulted in many issuers using alternative revenue bond financing structures when financing improvements to their revenue-generating enterprises. See the sections in this chapter on Marks-Roos Bonds and Financing Leases and Certificates of Participation Legal Authority Special Fund Obligations. LEGAL AUTHORITY; ISSUERS Constitutional Considerations for Cities and Counties. California courts have determined that revenue bonds of cities and counties are not required by the California Constitution to be approved by a two-thirds vote in a bond election because the revenue bonds are not payable from taxes or from the general fund of the issuer. Rather, they are paid solely from a special fund consisting of enterprise revenues. To qualify for the special fund exception, the revenues must relate to or be derived from the enterprise that is financed in whole or in part by the bonds. Statutory Authorization. Cities and counties generally may issue public enterprise revenue bonds under the 1941 Act. Bonds may be issued for water conservation, treatment and supply, garbage collection, treatment and disposal, sewage collection, treatment and disposal, parking, ferries, airports, harbors, hospitals, golf courses, and electric energy generation and transmission (but not distribution). Charter cities may, unless limited by their charters, adopt ordinances establishing their own procedures for the issuance of revenue bonds for enterprises authorized (or not prohibited) by their charters or which incorporate certain of the procedures set forth in the 1941 Act without being bound by the restrictions therein (e.g. the 1941 Act requirement for a majority vote election may be eliminated). See Appendix D Legal References Table D-3-1 for a list of other statutory authorizations for the issuance of public enterprise revenue bonds.
CHAPTER 6. TYPES OF FINANCING OBLIGATIONS 179

Public agencies also are authorized to join together to create a separate entitya joint powers authority (JPA)to issue revenue bonds for a project. The Joint Exercise of Powers Law (Government Code Sections 6500 et seq.) authorizes the establishment of these joint powers authorities and the issuance of revenue bonds by them for a wide variety of projects and programs. The following projects and programs can be financed and undertaken with a JPA: Public buildings (generally) Working capital programs Insurance programs Fair and exhibition facilities Stadiums, sports arenas, parks, and recreational centers Electric generation and transmission facilities Solid waste disposal, treatment, or conversion facilities Water facilities and wastewater facilities Streets, roads, bridges, and mass transit or vehicles facilities Airports, police stations, and fire stations Public works facilities (including corporation yards) Public health facilities Criminal justice facilities (including court buildings and jails) Public libraries Public parking garages Low income housing projects Redevelopment improvements Telecommunications systems or services Computers Service vehicles Public improvements authorized by the various special assessment and Mello-Roos statutes

PUBLIC LEASE REVENUE BONDS

DEFINITION AND PURPOSES Public lease revenue bonds are issued by a public entity (such as a JPA) or on behalf of a public entity (such as by a nonprofit corporation on behalf of a city) and provide a means to finance capital improvements to be leased to a public agency. The bonds are payable solely from lease payments paid by a public agency other than the issuer. Unlike a certificate of participation (COP) financing (see the section in this chapter on Financing Leases and Certificates of Participation), the lease to the public entity need not be a financing lease because the bonds themselves, which are issued by or on behalf of a public entity, are the taxexempt obligations and the lease simply provides the security for payment of the bonds. PROJECTS THAT MAY BE FINANCED Joint Powers Authorities. Perhaps the most frequent type of issuer of lease revenue bonds is a JPA. JPA lease revenue bonds may be used to finance the projects or programs listed in this chapter in the section on Marks-Roos Bonds Projects That May be Financed with MarksRoos Bonds Public Capital Improvement Bonds. Nonprofit Corporations. Nonprofit corporation lease revenue bonds may be used to finance virtually any facility or project that can be leased to a public agency, including equipment. Historically, they have been used to finance schools, public administrative buildings, stadiums, convention centers, airport facilities, entire water distribution or sewer systems, and other similar projects. Redevelopment Agencies. Redevelopment agency lease revenue bonds may be used to finance publicly owned buildings or facilities that are of benefit to the project area or its immediate neighborhood if no other reasonable means of financing such buildings or facilities are available to the community. Parking Authorities. Parking authority lease revenue bonds may be used to finance parking facilities and structures. Public Works Board. A variety of state-funded projectsinstructional, research, and medical facilities, prisons, state office buildings and equipmentmay be authorized by the State Legislature for financing through Public Works Board lease revenue bonds. For a listing of the statutory references for each of these types of lease revenue bonds, see Appendix D Legal References Table D-4-1. In each case, authority also must exist for the public agency lessee to enter into the lease. A listing of the most commonly used of these statutory provisions is provided in Appendix D Legal References Table D-5-1. POLICY CONSIDERATIONS

Generally, public lease revenue bond financing is expensive compared to general obligation bond financing and, for that reason, may be a less desirable alternative. Historically, public lease revenue bonds have been used to finance several different types of projects: Projects, such as stadiums or parking facilities, which were intended directly or indirectly to pay their own way, but with respect to which revenues were either sufficiently uncertain or sufficiently indirect as to not provide an adequate basis for bondholders security. Thus the public agencies general fund credit was placed behind the project. Projects, which were permitted to be financed by general obligation bonds of local agencies or the state, but were either not sufficiently popular to obtain a favorable two-thirds vote at an election or for which timing considerations did not permit the delay attendant in calling and holding an election Projects, which were necessary and desirable, but for which no other method of financing reasonably existed, frequently because the financed facilities do not house activities that generate revenuesfor example, the building and equipping of a fire station For a complete discussion of the policy considerations for lease revenue bonds, see Guidelines for Leases and Certification of Participation (CDIAC 1993). SECURITY AND SOURCE OF REPAYMENT The pledged revenues for a public lease revenue bond are the payments made pursuant to the lease by the public agency lessee. The lease may take the form of a beneficial use and occupancy lease (payable from the general fund of the lessee), a non-appropriation lease (which also may be payable from the general fund of the lessee, subject to the right of the lessee to terminate the agreement in any fiscal year), or a special fund lease (payable solely from certain limited revenues relating to the project). These three types of lease obligations, and their security features, are discussed in more detail in this chapter in the section on Financing Leases and Certificates of Participation. Also, see Chapter 4, State Constitutional Limitations The 1879 Constitution The Debt Limit. PROCESS FOR APPROVAL Joint Powers Authorities. Under the Joint Exercise of Powers Act (Government Code Sections 6500 et seq., the JPA Act), two or more public agencies may agree to jointly exercise any power common to each of the contracting agencies as authorized by their legislative or governing bodies. A public agency is defined as including federal, state, and local agencies.
186 CHAPTER 6. TYPES OF FINANCING OBLIGATIONS

A JPA, created pursuant to a joint powers agreement, is an entity separate and apart from the public agencies that are parties to the joint powers agreement. The joint powers authority is required, within 30 days after the effective date of the joint powers agreement, to cause a notice of the joint powers agreement to be prepared and filed with the office of the Secretary of State. A JPA may generally issue lease revenue bonds without an election. However, if the lease revenue bonds are issued pursuant to Article 2 of the JPA Act, the public agency lessee must approve the financing by ordinance subject to referendum. The ordinance takes effect 60 days after its date of adoption, and during this time opponents of the project may circulate referendum petitions on the ordinance. If the required number of voters signs the petition, lease revenue bonds cannot be issued until after the ordinance has been approved at an election. On the other hand, if the lease revenue bonds are issued pursuant to Article 4 of the JPA Act, no ordinance is required. Nonprofit Corporations. Generally, after determining to finance a particular facility or project with nonprofit corporation lease revenue bonds, the first step is the creation of a nonprofit corporation under the Nonprofit Public Benefit Corporation Law (Corporations Code Sections 5110 et seq.). A group of public spirited citizens may form a nonprofit corporation by filing articles of incorporation with the Secretary of State. To avoid treatment of the nonprofit corporation as the alter ego of the public agency, the governing body of the public agency does not directly appoint members of the board of directors of the nonprofit corporation. However, board members may be subject to the approval of the governing body of the public agency. Nonprofit corporations are often utilized in a public leaseback financing governed by Government Code Sections 54240 et seq. Such a financing is typically structured as follows: The public agency leases the site to the nonprofit corporation, which agrees to construct the project and subleases the site and project back to the public agency The project is financed with the proceeds of bonds issued by the nonprofit corporation and the bonds are payable from and secured by a lien on the rental payments made by the public agency pursuant to the sublease A sublease (or lease if the nonprofit corporation owns the site outright) with a term of five years or more must be approved by ordinance of the lessee, subject to referendum If a sufficient number of voters petition to place the matter on a ballot, and a majority of those voting oppose the leaseback, all proceedings must be terminated

SINGLE-FAMILY MORTGAGE REVENUE BONDS


DEFINITION AND PURPOSE Single-family mortgage revenue bond programs assist individuals and families of low and moderate income to acquire, improve, or rehabilitate homes by providing mortgage loans with interest rates

lower than the rates on conventional mortgage loans. The bonds are limited obligations of the issuer payable primarily from payments received with respect to the mortgage loans. PROGRAMS THAT MAY BE FINANCED A description of a typical local agency single-family mortgage bond program follows. Many variations are possible, particularly where the program is for home improvement or rehabilitation rather than home acquisition. In a typical local agency program, the issuer (through the bond trustee) uses bond proceeds to purchase mortgage loans (or mortgage-backed securities backed by mortgage loans) originated by one or more mortgage lenders selected by the issuer to participate in the program. A program may include either or both of the following elements: A first-come, first-served program in which the issuer commits to purchase a mortgage loan only if and when a lender has received an application for the loan, or A forward commitment program in which the issuer commits to lenders (and/or housing developers) for a specified period of time to purchase specified amounts of loans originated by the lenders (or on homes located in approved developments built by the developers) The period during which the lenders can make mortgage loans and sell them to the issuer is typically 6 to 24 months long, and may be extended if certain conditions are met. The homes financed must be within the jurisdiction of the issuer. The mortgage loans are generally 30-year, fixed-rate mortgage loans with a mortgage interest rate determined at the time of issuance of the bonds. However, issuers have designed programs with graduated payment mortgage loans and mortgage loans of less than 30 years. The mortgage interest rate for a particular program depends upon a number of factors, including the interest rates borne by the bonds, the amount of lender and developer fees or issuer contribution, and the interest rates obtained on the investment of bond proceeds prior to the purchase of the mortgage loans. For cities, counties, housing authorities, and joint powers authorities, the mortgagor income limits are the following: 120 percent of median income for mortgages made for improving a home or for homes where the purchaser will be the first occupant, and 100 percent of median income where the mortgagor will not be the first occupant (with onehalf of the monies for such purposes allocated for mortgagors whose income does not exceed 80 percent or 90 percent of median income, depending upon certain findings) Each mortgagor must intend to occupy the home for a period of at least two years. In addition, for the bonds to be federally tax-exempt, the additional income limits, purchase price limits, and other requirements of federal tax law must also be met (see below in this section).

Although the redevelopment law authorizes redevelopment agencies to issue single-family mortgage revenue bonds, there is no apparent advantage to using a redevelopment agency for this purpose. In fact, there are a number of significant limitations on redevelopment agency programs when compared with city and county programsfor example, with certain exceptions, redevelopment agencies may only make loans within redevelopment project areas. POLICY CONSIDERATIONS The primary policy consideration for a single-family mortgage revenue bond program, as for any program that finances a private activity, is whether the activity proposed to be financed merits governmental support. Bonds can be used to assist or encourage any or all of the following: Housing construction generally The construction of particular types of housing The construction of particular housing developments Home improvement and rehabilitation Owner-occupied housing as opposed to rental housing Housing affordability for low- and moderate-income families

In each case, the limitations placed on tax-exempt single-family mortgage revenue bonds by federal law will affect the ability of the issuer to accomplish its objectives. In some cases, the viability of a program may be dependent upon the issuer committing some of its own monies to the program to make it work. Although single-family mortgage revenue bond programs are generally intended to be administered by the private parties involved (the bond trustee, the mortgage lenders, and the mortgage servicers) and are not supposed to be a burden upon the issuer or its general fund, such programs do generally require some attention from the issuer. Issuer involvement can include efforts such as helping to conduct an initial training and information session for lenders and developers, fielding questions to be answered by bond counsel or the investment banker, and troubleshooting when a problem arises (e.g. when one of the private parties makes a mistake). SECURITY AND SOURCES OF PAYMENT California law requires local agency single-family mortgage revenue bonds to be limited obligations of the issuer, payable solely from program revenues and various reserves held as security for the bonds. Bonds are paid primarily from mortgage loan payments and prepayments, mortgage insurance proceeds, and investment earnings on funds held under the indenture.

The mortgage loans (or mortgage-backed securities backed by mortgage loans) are owned by the bond trustee (on behalf of the issuer) to secure payment of the bonds. Mortgage lenders generally service the mortgage loans they originate, although the issuer may engage a master servicer. Mortgage lenders are permitted to collect from mortgagors a loan origination fee and a loan-servicing fee. Mortgage lenders may be required to pay a fee to participate in the program and each developer is usually required to pay a commitment fee for the bond proceeds reserved for the purchase of mortgage loans on homes built by the developer. Developer fees (and in some instances lender fees) are essential to the economics of a bond program and are sometimes supplemented by an equity contribution from the issuers own funds. Mortgagors are generally required to maintain mortgage insurance and standard hazard insurance. Mortgage insurance protects the bondholders and the issuer against losses resulting from payment defaults on a mortgage loan and may be in the form of Federal Housing Authority (FHA) insurance, Veterans Administration (VA) guarantee or insurance provided by a private insurance company (private mortgage insurance or PMI). Mortgage-backed securities are commonly guaranteed by the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation. PROCESS FOR APPROVAL
General

Local agency issuers must establish a home mortgage financing program by ordinance prior to issuing single-family mortgage revenue bonds and also must enact rules and regulations governing lender participation in their programs and the qualifications of mortgagors, mortgage loans, and homes. Unless otherwise required by the charter of a charter city, bonds may be authorized to be issued and the various other agreements to be entered into may be authorized, by resolution of the governing body of the issuer. Volume Cap As described in Chapter 3, General Federal Tax Requirements, single-family mortgage revenue bonds are required to obtain an allocation of volume cap from the California Debt Limit Allocation Committee (CDLAC). When evaluating applications from local issuers for allocations for singlefamily housing assistance, CDLACs current procedures consider the following matters: The potential for special program implementation by local issuers

The need for competition between the California Housing Finance Agency (CalHFA) and local issuers The relative past performance of CalHFA and local issuers

The proportionate amount of single-family allocation remaining for a county (based on the countys population in relation to the total state population) after subtracting the CalHFA reservation allocable to that county When there is more than one local single-family issuer in a county, each local issuers share of the allocation shall be based upon the population served by each issuer at the time of application, or as agreed upon by the local issuers in that county With respect to any remaining single-family allocation, the extent to which lower income households will be served and the extent to which new construction or substantial rehabilitation will be financed With respect to programs using forward commitments to developers, the drawdown schedules and the programs ability to fully use allocations In a competitive environment, other public purpose factors specified by the CDLAC procedures may also be considered. The CDLAC procedures are normally updated each year. See Appendix A Working with State Agencies for more information. PROCESS FOR SALE Single-family mortgage revenue bonds may be sold at competitive or negotiated sale and the resolution authorizing the issuance of the bonds may delegate to officials of the issuer the power to approve the final principal amount, maturity schedule, interest rates, and other terms, all within specified limits. OTHER LIMITATIONS ON TERMS OF BONDS For cities, counties, and joint powers authorities, there is no maximum bond issuance amount specified by state law, and no maximum interest rate. Variable interest rates are permitted. The maximum maturity for bonds issued is 45 years.
202 CHAPTER 6. TYPES OF FINANCING OBLIGATIONS

For redevelopment agencies, there is no maximum bond issuance amount specified by state law and no maximum interest rate. Variable interest rates are permitted and the maximum maturity for bonds issued is 50 years. For housing authorities, there is no maximum bond issuance amount specified by state law. The maximum interest rate is 12 percent per year and the maximum maturity is 45 years. LEGAL AUTHORITY See Appendix D Legal References Table D-7-1 for a list of statutes applicable to local agencies authorized to conduct home mortgage financing programs through the issuance of bonds. SPECIAL FEDERAL TAX ISSUES Federal tax law contains a number of requirements applicable to single-family mortgage revenue bond programs for the bonds to be tax-exempt. Restrictions on mortgage loans and mortgagors include the following: A principal residence requirement A first-time home-buyer requirement A residence acquisition cost limitation A mortgagor income limitation, and A new mortgage requirement

These requirements must be satisfied with respect to each mortgage loan purchased with bond proceeds and must be satisfied by any purchaser of a home who desires to assume an existing bond-financed mortgage loan. Program-wide limitations include a targeted area set-aside requirement, arbitrage restrictions, and volume cap allocation requirements. To satisfy the residence requirement, a home financed must be a single-family residence that is, or will within a reasonable time become, the principal residence of the mortgagor. No more than 15 percent of the total area of the residence may be used in a trade or business. The first-time home-buyer requirement is satisfied if: The mortgagor did not own his or her principal residence within the preceding three years, or The home is in a targeted area

Targeted areas are census tracts in which 70 percent of the families have incomes that are not more than 80 percent of statewide median family income and certain census tracts designated as areas of chronic economic distress. The acquisition cost requirement is satisfied if the acquisition cost of a home does not exceed 90 percent (110 percent if the home is in a targeted area) of the average purchase price in the metropolitan statistical area. The income requirement is satisfied with respect to a home that is not in a targeted area if the mortgagor's family income does not exceed 115 percent (100 percent in the case of one- or twoperson families) of the greater of the median gross income in the metropolitan statistical area or the statewide median gross income. For two-thirds of the financing for homes in targeted areas, the mortgagor's family income may not exceed 140 percent (120 percent in the case of one- or twoperson families) of the applicable median family income. There is no federal law income limitation with respect to the balance of homes in targeted areas. The new mortgage requirement is satisfied if the mortgage loan is not for refinancing (other than refinancing of temporary initial financing or refinancing in the case of certain rehabilitation loans). Additional special rules apply with respect to the financing of qualified home improvement loans, qualified rehabilitation loans, and loans for certain homes in federally designated disaster areas. These provide relief from one or more of the first-time home-buyer requirements, the acquisition cost limits, and the income limits but contain certain additional requirements. To satisfy the targeted area set-aside requirement, the issuer must reserve for a one-year period, for the purchase of mortgage loans with respect to homes in targeted areas, an amount equal to 20 percent of the lendable proceeds of the bond issue (or, if less, an amount equal to 40 percent of the average annual aggregate principal amount of mortgages made in targeted areas during the three preceding calendar years). For the arbitrage requirement to be satisfied, the effective rate of interest on the mortgage loans may not exceed the yield on the bond issue by more than 1.125 percentage points. In determining the effective rate of interest on the mortgage loans, commitment and origination fees paid by the mortgagor or the seller of the home are taken into account. No adjustment to bond yield is permitted for underwriters' discount, costs of issuance, or administrative costs. Unless the issuer contributes money of its own, these costs and mortgage pool insurance and special hazard insurance premiums (if any) must be recovered within the permitted 1.125 percent spread. Arbitrage earnings on nonmortgage investments must be rebated to mortgagors or to the federal government. Costs of issuance (including underwriters discount) funded with bond proceeds may not exceed 2 percent of the proceeds of the bond issue (3.5 percent if the amount of the bond issue is less than $20 million). Single-family mortgage revenue bonds are private activity bonds and, therefore, as described in the discussion regarding qualified private activity bonds in Chapter 3, General Federal Tax Requirements:

Issuers must obtain a volume cap allocation from CDLAC

The requirement for public approval following notice and public hearing (the Tax and Equity Fiscal Responsibility Act of 1982, the TEFRA requirement) must be satisfied, and Certain information must be reported after bond issuance

In addition, issuers must submit to annual reports to the IRS that contain data with respect to the beneficiaries of bond programs (i.e. the mortgagors). Finally, if a mortgagor sells the home within 10 years, a portion of the subsidy provided by tax-exempt financing may be subject to recapture by the federal government. http://www.treasurer.ca.gov/inside/divisions/cashmanagement.asp

Cash Management Division


In 1949, the California Legislature amended Government Code Section 16305 to create the Centralized Treasury System (CTS) thereby requiring agencies of the State to deposit their money in trust with the Treasurer. This legislation requires the Treasurer to safeguard the money and make safe and prudent investments. It has since become the responsibility of the Cash Management Division (CMD) to oversee all banking aspects of the CTS. The goal of the CTS is to have all State money invested each day. This goal is accomplished by: (1) forecasting agency revenue collections and disbursements and their impact on the Treasurer's Pooled Money Investment Portfolio and; (2) using compensating balances to allow for the variances in cash flow that are a natural consequence when forecasting the movement of cash. In 1955, the Legislature created the Pooled Money Investment Board (PMIB), giving the Board the responsibility to designate the amount of money available for the investment in securities, bank deposits and loans to the General Fund. The CMD is responsible for creating long-term, medium-term, and short-term forecasts of cash flow that assist the PMIB in meeting its responsibility. In order to safeguard the State's money on deposit with the depository banks, it is CMD's responsibility to assure that all collected funds on deposit are collateralized 110 percent, or in accordance with Sections 16520 through 16533 of the Government Code. The State Treasurer maintains demand bank accounts with eight statewide banks for the purpose of providing necessary depository coverage for the remittance of funds collected by the various state agencies. Currently, the State Depository Banks are: 1. 2. 3. 4. 5. 6. 7. 8. Bank of America Bank of the West Citibank JP Morgan Chase Union Bank of California U. S. Bank Wells Fargo Bank WestAmerica Bank

Disbursements from these accounts are made by drawing checks or wire transfers in payment of warrants, agency checks or vouchers. A daily report of these disbursements is required by law to be made to the State Controller. Additionally, the CMD keeps these accounts at the monthly average balance prescribed by the PMIB as compensation to the banks for services provided and uncollected funds deposited.

Stop Payment File


The State Treasurers Office, Item Processing Section maintains a Stop Payment File, which is available to the public to check the status of stop payments. You can verify whether a stop payment has been placed on a State Controllers Office warrant, Agency Trust (Revolving Fund) check, Unemployment Insurance check, or Unemployment Disability Insurance check. You will need to know the serial number, fund number (if applicable) and the date of the check to verify whether there is currently a stop payment on the warrant or check. The Stop Payment File will be updated daily. All state issued warrants and checks are invalid one year from issue date.

Government Code Section 31595. Control of investments; authority to invest assets; discharge of duties The board has exclusive control of the investment of the employees retirement fund. The assets of a public pension or retirement system are trust funds and shall be held for the exclusive purposes of providing benefits to participants in the pension or retirement system and their beneficiaries and defraying reasonable expenses of administering the system. Except as otherwise expressly restricted by the California Constitution and by law, the board may, in its discretion, invest, or delegate the authority to invest, the assets of the fund through the purchase, holding, or sale of any form or type of investment, financial instrument, or financial transaction when prudent in the informed opinion of the board. The board and its officers and employees shall discharge their duties with respect to the system: (a) Solely providing minimizing expenses of in the interest of, and for the exclusive purposes of benefits to, participants and their beneficiaries, employer contributions thereto, and defraying reasonable administering the system.

(b) With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims. (c) Shall diversify the investments of the system so as to minimize the risk of loss and to maximize the rate of return, unless under the circumstances it is clearly prudent not to do so.
2. Securities Under former 31595 (see, now, this section) authorizing county employees' retirement associations to invest in securities which are legal for savings bank investments, it was intended to establish a common standard of legality

for investments of saving banks and of funds and it was not improper for Board of Retirement of County Employees Retirement Association to purchase securities at a premium. Wilson v. Board of Retirement of Los Angeles County Emp. Retirement Ass'n (App. 1959) 167 Cal.App.2d 229, 334 P.2d 230. Counties 69.2 Shares in investment-trust type of mutual funds are corporation shares within constitutional and statutory provisions prohibiting investment of public funds in corporation shares, and hence funds of county employees' retirement systems may not be invested in securities issued by a mutual fund. 35 Op.Atty.Gen. 130. County Retirement System is an agency of the county and a political subdivision of the state and is therefor prohibited by Const. Art. 13, 25, from investing funds in stocks of any private corporation or investment trust and provisions of this section, purporting to authorize such investments are unconstitutional. 18 Op.Atty.Gen. 159.

Government Code Section 16430. Eligible securities for investment of surplus moneys
Eligible securities for the investment of surplus moneys shall be any of the following: (a) Bonds or interest-bearing notes or obligations of the United States, or those for which the faith and credit of the United States are pledged for the payment of principal and interest. (b) Bonds or interest-bearing notes on obligations that are guaranteed as to principal and interest by a federal agency of the United States. (c) Bonds, notes, and warrants of this state, or those for which the faith and credit of this state are pledged for the payment of principal and interest. (d) Bonds or warrants, including, but not limited to, revenue warrants, of any county, city, metropolitan water district, California water district, California water storage district, irrigation district in the state, municipal utility district, or school district of this state. (e) Any of the following: (1) Bonds, consolidated bonds, collateral trust debentures, consolidated debentures, or other obligations issued by federal land banks or federal intermediate credit banks established under the Federal Farm Loan Act, as amended (12 U.S.C. Sec. 2001 et seq.). (2) Debentures and consolidated debentures issued by the Central Bank for Cooperatives and banks for cooperatives established under the Farm Credit Act of 1933, as amended (12 U.S.C. Sec. 2001 et seq.). (3) Bonds or debentures of the Federal Home Loan Bank Board established under the Federal Home Loan Bank Act (12 U.S.C. Sec. 1421 et seq.). (4) Stocks, bonds, debentures, and other obligations of the Federal National Mortgage Association established under the National Housing Act, as amended (12 U.S.C. Sec. 1701 et seq.). (5) Bonds of any federal home loan bank established under that act. (6) Obligations of the Federal Home Loan Mortgage Corporation. (7) Bonds, notes, and other obligations issued by the Tennessee Valley Authority under the Tennessee Valley Authority Act, as amended (16 U.S.C. Sec. 831 et seq.).

(8) Other obligations guaranteed by the Commodity Credit Corporation for the export of California agricultural products under the Commodity Credit Corporation Charter Act, as amended (15 U.S.C. Sec. 714 et seq.). **(f)(1) Commercial paper of prime quality as defined by a nationally recognized organization that rates these securities, if the commercial paper is issued by a corporation, trust, or limited liability company that is approved by the Pooled Money Investment Board as meeting the conditions specified in either subparagraph (A) or subparagraph (B): (A) Both of the following conditions: (i) Organized and operating within the United States. (ii) Having total assets in excess of five hundred million dollars ($500,000,000). (B) Both of the following conditions: (i) Organized within the United States as a special purpose corporation, trust, or limited liability company. (ii) Having programwide credit enhancements including, but not limited to, overcollateralization, letters of credit, or surety bond. (2) A purchase of eligible commercial paper may not do any of the following: (A) Exceed 180 days' maturity. (B) Represent more than 10 percent of the outstanding paper of an issuing corporation, trust, or limited liability company. (C) Exceed 30 percent of the resources of an investment program.

(not authorized by California Constitution Article XVI, Section 6)


**(3) At the request of the Pooled Money Investment Board, an investment made pursuant to this subdivision shall be secured by the issuer by depositing with the Treasurer securities authorized by Section 53651 of a market value at least 10 percent in excess of the amount of the state's investment. **(g) Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers acceptances, that are eligible for purchase by the Federal Reserve System. (h) Negotiable certificates of deposits issued by a federally or state-chartered bank or savings and loan association, a state-licensed branch of a foreign bank, or a federally or state-chartered credit union. For the purposes of this section, negotiable certificates of deposits are not subject to Chapter 4 (commencing with Section 16500) and Chapter 4.5 (commencing with Section 16600). (i) The portion of bank loans and obligations guaranteed by the United States Small Business Administration or the United States Farmers Home Administration. (j) Bank loans and obligations guaranteed by the Export-Import Bank of the United States. (k) Student loan notes insured under the Guaranteed Student Loan Program established pursuant to the Higher Education Act of 1965, as amended (20 U.S.C. Sec. 1001 and following) and eligible for resale to the Student Loan Marketing Association established pursuant to Section 133 of the Education Amendments of 1972, as amended (20

U.S.C. Sec. 1087-2). (l) Obligations issued, assumed, or guaranteed by the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the International Finance Corporation, or the Government Development Bank of Puerto Rico. (m) Bonds, debentures, and notes issued by corporations organized and operating within the United States. Securities eligible for investment under this subdivision shall be within the top three ratings of a nationally recognized rating service. (n) Negotiable Order of Withdrawal Accounts (NOW Accounts), invested in accordance with Chapter 4 (commencing with Section 16500).

Government Code Section 53651. Eligible securities


Eligible securities are any of the following: (a) United States Treasury notes, bonds, bills or certificates of indebtedness, or obligations for which the faith and credit of the United States are pledged for the payment of principal and interest, including the guaranteed portions of small business administration loans, so long as the loans are obligations for which the faith and credit of the United States are pledged for the payment of principal and interest. (b) Notes or bonds or any obligations of a local public agency (as defined in the United States Housing Act of 1949) or any obligations of a public housing agency (as defined in the United States Housing Act of 1937) [FN1] for which the faith and credit of the United States are pledged for the payment of principal and interest. (c) Bonds of this state or of any local agency or district of the State of California having the power, without limit as to rate or amount, to levy taxes or assessments to pay the principal and interest of the bonds upon all property within its boundaries subject to taxation or assessment by the local agency or district, and in addition, limited obligation bonds pursuant to Article 4 (commencing with Section 50665) of Chapter 3 of Division 1, senior obligation bonds pursuant to Article 5 (commencing with Section 53387) of Chapter 2.7, and revenue bonds and other obligations payable solely out of the revenues from a revenue-producing property owned, controlled or operated by the state, local agency or district or by a department, board, agency or authority thereof. (d) Bonds of any public housing agency (as defined in the United States Housing Act of 1937, as amended) [FN2] as are secured by a pledge of annual contributions under an annual contribution contract between the public housing agency and the Public Housing Administration if such contract shall contain the covenant by the Public Housing Administration which is authorized by subsection (b) of Section 22 of the United States Housing Act of 1937, as amended, and if the maximum sum and the maximum period specified in the contract pursuant to that subsection 22(b) shall not be less than the annual amount and the period for payment which are requisite to provide for the payment when due of all installments of principal and interest on the obligations. (e) Registered warrants of this state. (f) Bonds, consolidated bonds, collateral trust debentures, consolidated debentures, or other obligations issued by the United States Postal Service, federal land banks [FN3] or federal intermediate credit banks [FN4] established under the Federal Farm Loan Act, as amended, [FN5] debentures and consolidated debentures issued by the Central Bank for Cooperatives [FN6] and banks for cooperatives established under the Farm Credit Act of 1933, [FN7] as amended, consolidated obligations of the federal home loan banks established under the Federal Home Loan Bank Act, [FN8] bonds, debentures and other obligations of the Federal National Mortgage Association [FN9] or of the Government National Mortgage Association [FN10] established under the National Housing Act, as amended, [FN11] bonds of any federal home loan bank established under that act, bonds, debentures and other obligations of the Federal Home Loan Mortgage Corporation established under the Emergency Home Finance Act of 1970, [FN12]

and obligations of the Tennessee Valley Authority. [FN13] (g) Notes, tax anticipation warrants or other evidence of indebtedness issued pursuant to Article 7 (commencing with Section 53820), Article 7.5 (commencing with Section 53840) or Article 7.6 (commencing with Section 53850) of this Chapter 4. (h) State of California notes. (i) Bonds, notes, certificates of indebtedness, warrants or other obligations issued by: (1) any state of the United States (except this state), or the Commonwealth of Puerto Rico, or any local agency thereof having the power to levy taxes, without limit as to rate or amount, to pay the principal and interest of such obligations, or (2) any state of the United States (except this state), or the Commonwealth of Puerto Rico, or a department, board, agency or authority thereof except bonds which provide for or are issued pursuant to a law which may contemplate a subsequent legislative appropriation as an assurance of the continued operation and solvency of the department, board, agency or authority but which does not constitute a valid and binding obligation for which the full faith and credit of such state or the Commonwealth of Puerto Rico are pledged, which are payable solely out of the revenues from a revenue-producing source owned, controlled or operated thereby; provided the obligations issued by an entity described in (1), above, are rated in one of the three highest grades, and such obligations issued by an entity described in (2), above, are rated in one of the two highest grades by a nationally recognized investment service organization that has been engaged regularly in rating state and municipal issues for a period of not less than five years. (j) Obligations issued, assumed or guaranteed by the International Bank for Reconstruction and Development, InterAmerican Development Bank, the Government Development Bank of Puerto Rico, the Asian Development Bank, the International Finance Corporation, or the African Development Bank. (k) Participation certificates of the Export-Import Bank of the United States. (l) Bonds and notes of the California Housing Finance Agency issued pursuant to Chapter 7 (commencing with Section 51350) of Part 3 of Division 31 of the Health and Safety Code. **(m) Promissory notes secured by first mortgages and first trust deeds which comply with Section 53651.2. (n) Any bonds, notes, warrants, or other evidences of indebtedness of a nonprofit corporation issued to finance the construction of a school building or school buildings pursuant to a lease or agreement with a school district entered into in compliance with the provisions of Section 39315 or 81345 of the Education Code, and also any bonds, notes, warrants or other evidences of indebtedness issued to refinance those bonds, notes, warrants, or other evidences of indebtedness as specified in Section 39317 of the Education Code. (o) Any municipal securities, as defined by Section 3(a)(29) of the Securities Exchange Act of June 6, 1934, (15 U.S.C. Sec. 78, as amended), which are issued by this state or any local agency thereof. (p) With the consent of the treasurer, letters of credit issued by the Federal Home Loan Bank of San Francisco which comply with Section 53651.6.

Government Code Section

53651.2. Eligible security; promissory note

(a) To be an eligible security under subdivision (m) of Section 53651, a promissory note placed in a securities pool on or after January 1, 1987, shall comply with all of the following provisions: (1) Each promissory note shall be secured by a first mortgage or first trust deed on improved 1 to 4 unit residential real property located in California, shall be fully amortized over the term of the note, and shall have a term of no more than 30 years. Any first mortgage or first trust deed which secures a promissory note providing for negative

amortization shall be removed from the securities pool and replaced with an eligible security under subdivision (m) of Section 53651 if the loan to value ratio exceeds 85 percent of the original appraised value of the security property as a consequence of negative amortization. (2) Each promissory note shall be eligible for sale to the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation; provided, however, that up to 25 percent of the total dollar amount of any promissory note securities pool established pursuant to Section 53658 may consist of promissory notes with loan amounts which exceed the maximum amounts eligible for purchase by the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation, but which do not exceed: (i) five hundred thousand dollars ($500,000) in the case of a single family dwelling; (ii) one million dollars ($1,000,000) in the case of a 2, 3, or 4 unit dwelling. (b) The following shall not constitute eligible securities under subdivision (m) of Section 53651: (1) Any promissory note on which any payment is more than 60 days past due. (2) Any promissory note secured by a mortgage or deed of trust as to which there is a lien prior to the mortgage or deed of trust. For the purposes of this paragraph, no lien specified in Section 766 of the Financial Code shall be considered a prior encumbrance unless any installment or payment thereunder (other than a rental or royalty under a lease) is due and delinquent. (3) Any promissory note secured by a mortgage or deed of trust as to which a notice of default has been recorded pursuant to Section 2924 of the Civil Code or an action has been commenced pursuant to Section 725a of the Code of Civil Procedure. (c) The depository may exercise, enforce, or waive any right granted to it by the promissory note, mortgage, or deed of trust. (d) For purposes of this article, the market value of a promissory note which is an eligible security under subdivision (m) of Section 53651, shall be determined in accordance with the regulations adopted by the Treasurer under paragraph (2) of subdivision (m) of Section 53651, as the regulations and statute were in effect on December 31, 1986. However, if and when regulations on the subject are adopted by the administrator, the market value shall be determined in accordance with those regulations of the administrator.

Investment Program
Although the PMIB designates how much shall be invested in interest-bearing time deposit accounts and securities, it is the responsibility of the State Treasurer to administer the investment program on a day-to-day basis in line with overall Board policy. This entails a daily determination of amounts available for investment, or the need for liquidating securities to meet estimated warrant redemption requirements, while maintaining the approved compensating balance position. This means that the State Treasurer must continually adjust the estimates for receipts and disbursements to reflect current, available information. For 2009-10, daily investments in time deposits ranged from $3,995,640,000 to $5,556,000,000 and averaged daily $4,647,944,411. There were 1,720 time deposit transactions totaling $38,102,390,000 during the year. California commercial banks, savings banks and credit unions receiving these State

deposits must secure them with approved securities having a market value of at least 110 percent of the deposits or with approved promissory notes secured by mortgages or deeds of trust having a market value of at least 150 percent of the deposits. The same collateral requirements also apply to the States demand accounts. At the end of 2009-10, interestbearing time deposits were held by 48 commercial banks, 6 credit unions and 4 savings banks throughout California. For the fiscal year, PMIA holdings in time deposits had an average yield of 0.20 percent.
10Constitutional or statutory provisions prohibiting municipalities or other subdivisions of the state from subscribing to, or acquiring stock of, private corporation, 152 A.L.R. 495 (1944) HN: 3,4 (P.2d) 92 CONSTITUTIONAL LAW 92I Nature and Authority of Constitutions 92k502 k. Constitution as supreme, paramount, or highest law.

**California Logistics, Inc. v. State, 73 Cal.Rptr.3d 825


92 CONSTITUTIONAL LAW 92I Nature and Authority of Constitutions 92k502 k. Constitution as supreme, paramount, or highest law. Cal.App.1.Dist.,2008 California Constitution is the supreme law of California, subject only to the supremacy of the United States Constitution. U.S.C.A. Const. Art. 6, cl. 2 ; West's Ann.Cal. Const. Art. 3, 1 .

**People v. Ortiz, 38 Cal.Rptr.2d 59


Cal.App.3.Dist.,1995 Statute does not trump the Constitution. Playboy Enterprises, Inc. v. Superior Court, 201 Cal.Rptr. 207 Cal.App.2.Dist.,1984 When the Constitution speaks plainly on a particular matter, it must be given effect as the paramount law of the state. Wright v. Compton Unified Sch. Dist., 120 Cal.Rptr. 115 Cal.App.2.Dist.,1975 State Constitution is controlling and statutes which are inconsistent with and contrary to constitutional provisions cannot stand. City of Modesto v. Modesto Irrigation Dist., 110 Cal.Rptr. 111 Cal.App.5.Dist.,1973 If there is conflict between California Constitution and a law adopted by legislature, Constitution prevails.

Dye v. Council of City of Compton, 182 P.2d 623 Cal.App.2.Dist.,1947 The Constitution is the fundamental and supreme law of state as to all matters within its scope. 92 CONSTITUTIONAL LAW 92V Construction and Operation of Constitutional Provisions 92V(F) Constitutionality of Statutory Provisions 92k655 k. In general. [Cited 11 times for this legal issue] Collins v. Riley, 152 P.2d 169 Cal.,1944 The State Constitution is not a grant of power, but a restriction on Legislature's powers and Supreme Court does not look to Constitution to determine whether Legislature is authorized to pass an act, but only to see whether it is prohibited. [Cited 4 times for this legal issue] Fair Political Practices Com. v. State Personnel Bd., 143 Cal.Rptr. 393 , case leaves open initiative process to amend the California Constitution. Cal.App.3.Dist.,1978 Powers, obligations, and rights bestowed or declared by the State Constitution may not be amended, modified, or derogated by statute, whether that statute is adopted by the legislature or the initiative method. West's Ann.Const. art. 2, 8 , 10 .

[Cited 3 times for this legal issue] People v. Navarro, 497 P.2d 481 Cal.,1972 Whenever statutes conflict with constitutional provisions, the latter must prevail.

People v. Navarro, 7 Cal.3d 248, 260, 497 P.2d 481, 102 Cal.Rptr. 137 (Cal.,May 23, 1972) [14] Constitutional Law 92 655

92 Constitutional Law 92V Construction and Operation of Constitutional Provisions 92V(F) Constitutionality of Statutory Provisions 92k655 k. In General. Most Cited Cases (Formerly 92k38, 92k1.1, 92k1) Whenever statutes conflict with constitutional provisions, the latter must prevail. [13][14][15] It is not to be presumed that the Legislature would deliberately enact a statute prohibited by the Constitution. Wherever statutes conflict with constitutional provisions, the latter must prevail. ( Hart v. Jordan (1939) 14 Cal.2d 288, 292, 94 P.2d 808.) As part of the Welfare and Institutions Code, section 3051 is governed by the general rules of construction contained in the preliminary provisions thereof (Gov.Code, s 9603), and the provisions of section 18 of the Welfare and Institutions Code. *261 This reads: If any provision of this code, or the application thereof to any person or circumstance, is held invalid, the remainder of the code, or the application of such provision to other person or circumstances, shall not be affected thereby. Such a statement though not conclusive is persuasive evidence of legislative intent. ( Fort v. Civil Service Comm. (1964) 61 Cal.2d 331, 339 340, 38 Cal.Rptr. 625, 392 P.2d 385; see Witkin, Summary of California Law (7th ed.) p. 1882.)

[Cited 2 times for this legal issue] Hotel Employees and Restaurant Employees Intern. Union v. Davis, 981 P.2d 990 Cal.,1999 Statute inconsistent with the State Constitution is void. [Cited 1 times for this legal issue] Penner v. County of Santa Barbara, 44 Cal.Rptr.2d 606 Cal.App.2.Dist.,1995 Legislature may not enact statute as end run around explicit language of constitution. 92 CONSTITUTIONAL LAW 92V Construction and Operation of Constitutional Provisions 92V(F) Constitutionality of Statutory Provisions [11/4/2011] 92k655 k. In general. Strauss v. Horton, 46 Cal.4th 364, 207 P.3d 48, 93 Cal.Rptr.3d 591, 09 Cal. Daily Op. Serv. 6281, 2009 Daily Journal D.A.R. 7585, 2009 Daily Journal D.A.R. 7609 (Cal. May 26, 2009) Background: Same-sex couples and municipal entities filed three petitions for writ of mandate seeking to prevent state officials from enforcing Marriage Protection Act (MPA), and in the alternative sought a declaration that MPA does not apply to same-sex marriages that were in existence when the amendment went into effect. The Supreme Court issued orders to show cause and consolidated the cases for decision. Holdings: The Supreme Court, George, C.J., held that: (1) MPA carves out only the right of same-sex couples to equal access to the designation marriage from California privacy and due process clauses; (2) MPA carves out only the right of same-sex couples to equal access to the designation marriage from California equal protection clause; (3) MPA was not a constitutional revision from a quantitative standpoint; (4) MPA was not a constitutional revision from a qualitative standpoint; (5) MPA was not sufficiently far reaching in its scope to be a constitutional revision; (6) effect of MPA in lessening constitutional rights of a suspect class did not preclude its adoption as constitutional amendment; (7) MPA does not violate separation of powers; (8) effect of MPA in diminishing inalienable constitutional right did not preclude its adoption as constitutional amendment; but (9) MPA does not invalidate marriages of same-sex couples performed in California prior to MPA's effective date. Petitions denied. Kennard, J., filed concurring opinion. Werdegar, J., filed concurring opinion. Moreno, J., filed concurring and dissenting opinion. [3] Constitutional Law 92 92 Constitutional Law 655

92V Construction and Operation of Constitutional Provisions 92V(F) Constitutionality of Statutory Provisions 92k655 k. In general. Most Cited Cases A California statute is invalid if it conflicts with the governing provisions of the California Constitution. [3] During the period in which the Marriage Cases proceeding was pending in this court but before we issued our decision, individuals circulated for signature an initiative petition proposing the adoption of the constitutional initiative measure at issue in the present casethat is, the initiative measure ultimately designated as Proposition 8.FN3 As set forth in the initiative petition, the measure proposed to add one new sectionsection 7.5to article I of the California Constitution. The proposed new article I, section 7.5 read in full: Only marriage between a man and a woman is valid or recognized in California. As we have seen, these are the identical 14 words that were embodied in Proposition 22 and adopted as Family Code section 308.5 at the March 2000 election. The difference between the measure proposed by Proposition 8 and the one contained in Proposition 22 is that Proposition 8 proposed to add this language as a provision of the California Constitution, whereas by Proposition 22 this language had been adopted as a statutory provision. (A California statute, of course, is invalid if it conflicts with the governing provisions of the California Constitution.)

Silicon Valley Taxpayers Ass'n, Inc. v. Santa Clara County Open Space Authority, 187 P.3d 37 Cal.,2008 A local agency acting in a legislative capacity has no authority to exercise its discretion in a way that violates constitutional provisions or undermines their effect.

**Consulting Engineers and Land Surveyors of California, Inc. v. Professional Engineers in California
Government, 169 P.3d 903 Cal.,2007 Legislature cannot take action by enacting a statute that contravenes a constitutional provision. Consulting Engineers and Land Surveyors of California, Inc. v. Professional Engineers in California Government, 42 Cal.4th 578, 588, 169 P.3d 903, 67 Cal.Rptr.3d 485, 155 Lab.Cas. P 60,510, 07 Cal. Daily Op. Serv. 12,812, 2007 Daily Journal D.A.R. 16,547 (Cal.,Nov 05, 2007) Background: Engineering corporation filed petition for writ of mandate seeking to enjoin implementation of provision, in memorandum of understanding (MOU) between state and union, requiring state to make every effort to use state employees to perform architectural and engineering services for public works projects before resorting to contracts with private companies. The Superior Court, Sacramento County, No. 03CS01654,Raymond M. Cadei, J., granted petition and issued permanent injunction. Union appealed. The Court of Appeal affirmed. The Supreme Court granted review, superseding the opinion of the Court of Appeal. Holding: The Supreme Court, Moreno, J., held that MOU provision conflicted with state constitutional provision, enacted by voters in Proposition 35, removing constitutional restriction on state's contracting with private firms for architectural and engineering services. Affirmed. Opinion, 44 Cal.Rptr.3d 687, superseded.

See also, 40 Cal.4th 1016, 56 Cal.Rptr.3d 814, 155 P.3d 226. [5] Constitutional Law 92 655

92 Constitutional Law 92V Construction and Operation of Constitutional Provisions 92V(F) Constitutionality of Statutory Provisions 92k655 k. In General. Most Cited Cases Legislature cannot take action by enacting a statute that contravenes a constitutional provision. [6] Consulting Engineers counters that, because approval of the MOU was a legislative amendment to the initiative, it failed to comply with section 5 of Proposition 35, which permits such amendment only to further [the] purposes of Proposition 35 and which requires a two-thirds vote of each house. (Voter Information Guide, Gen. Elec. (Nov. 7, 2000) text of Prop. 35, 5, p. 66.) We do not agree that the MOU was, or could have been, an amendment of the initiative. The operative principle applicable here is that the Legislature cannot take action, whether by statute or MOU, that contravenes a constitutional provision. (See California State Personnel Bd. v. California State Employees Assn., Local 1000, SEIU, AFLCIO (2005) 36 Cal.4th 758, 774, 31 Cal.Rptr.3d 201, 115 P.3d 506

**Arden Carmichael, Inc. v. County of Sacramento, 94 Cal.Rptr.2d 673


Cal.App.3.Dist.,2000 The Legislature cannot amend the constitution, and wherever statutes conflict with constitutional provisions, the latter must prevail. Hotel Employees and Restaurant Employees Intern. Union v. Davis, 981 P.2d 990 Cal.,1999 Statute inconsistent with the State Constitution is void.

Penner v. County of Santa Barbara, 44 Cal.Rptr.2d 606 Cal.App.2.Dist.,1995 Legislature may not enact statute as end run around explicit language of constitution. Carmel Valley Fire Protection Dist. v. State of California, 234 Cal.Rptr. 795 Cal.App.2.Dist.,1987 Constitution of State is supreme and any statute in conflict therewith is invalid. Carmel Valley Fire Protection Dist. v. State of California, 190 Cal.App.3d 521, 234 Cal.Rptr. 795 (Cal.App. 2 Dist.,Feb 19, 1987) Consolidated appeals arose from actions of the Los Angeles Superior Court, Norman L. Epstein, Jack T. Ryburn, JJ., concerning unsuccessful efforts of local agencies to secure reimbursement of state-mandated costs. The Court of Appeal, Eagleson, J., held that: (1) State waived its right to contest findings of Board of Control concerning whether costs incurred by local agencies were state-mandated; (2) State was collaterally estopped from attacking Board's findings; (3) executive orders requiring local governments to purchase protective equipment and clothing for fire fighters constituted type of program that was subject to constitutional imperative of subvention by State; (4) trial court order did not violate separation of powers doctrine; (5) legislature's plenary power to regulate worker safety did not affect rights of local agencies to reimbursement; and (6) claims were not time barred. Judgment modified and as modified affirmed.

[25] Constitutional Law 92

655

92 Constitutional Law 92V Construction and Operation of Constitutional Provisions 92V(F) Constitutionality of Statutory Provisions 92k655 k. In General. Most Cited Cases (Formerly 92k38) Constitution of State is supreme and any statute in conflict therewith is invalid. [24][25] Also, this remedy is purely a discretionary course of action. By using the permissive word may, the Legislature did not intend to override article XIII B, section 6 and Revenue and Taxation Code section 2207 and former section 2231. These constitutional and statutory imprimaturs each impose upon the State an obligation to reimburse for state-mandated **813 costs. Once that determination is finally made, the State is under a clear and present ministerial duty to reimburse. In the absence of compliance, traditional mandamus lies. (Code Civ.Proc., 1085.) FN18 FN18. We leave undecided the question of whether this type of legislation could ever be held to override California Constitution, article XIII B, section 6. The Constitution of the State is supreme. Any statute in conflict therewith is invalid. ( County of Los Angeles v. Payne, supra, 8 Cal.2d at p. 574, 66 P.2d 658.) Similarly, former Revenue and Taxation Code section 2255, subdivision (c) cannot abrogate the constitutional directive to reimburse.

People v. Blankenship, 213 Cal.Rptr. 666 Cal.App.4.Dist.,1985 Where statutory and constitutional provisions are in conflict, latter must prevail. U.S. v. Villamonte-Marquez, 103 S.Ct. 2573 U.S.La.,1983 No act of Congress can authorize violation of Constitution. People v. Fosselman, 659 P.2d 1144 Cal.,1983 Legislature has no power to limit constitutional obligation by statute. Unger v. Superior Court, 162 Cal.Rptr. 611 Cal.App.1.Dist.,1980 Constitutional grant constitutes a restraint upon lawmaking powers of the state and legislative enactments contrary to its provisions are void. [case applies to california statute discriminating

against women being employed as bartenders.]


U.S. v. Odneal, 565 F.2d 598 C.A.9.Cal.,1977 No act of Congress can authorize a violation of the Constitution. U.S.C.A.Const. Amend. 4 .

U.S. v. Brignoni-Ponce, 95 S.Ct. 2574 U.S.Cal.,1975 No act of Congress can authorize a violation of the constitution.

People v. Navarro, 497 P.2d 481 Cal.,1972 Whenever statutes conflict with constitutional provisions, the latter must prevail.

Porter v. City of Riverside, 68 Cal.Rptr. 313 Cal.App.4.Dist.,1968 Legislative action will be upheld by courts unless beyond legislative powers or legislative judgment or discretion is being fraudulently or corruptly exercised.

John A. Kronstadt decision is fraudulent because he himself has taken illegal payments from the County of Los Angeles.
State v. Superior Court of Los Angeles County, 60 Cal.Rptr. 653 Cal.App.2.Dist.,1967 Where the provisions of Constitution and a statute are in conflict the Constitution must prevail. McMillan v. Siemon, 98 P.2d 790 Cal.App.4.Dist.,1940 A constitutional amendment contravened by statute prevails, whether statute was adopted by Legislature or by people as initiative measure. West's Ann.Const. art. 4, 1. McMillan v. Siemon, 36 Cal.App.2d 721, 725, 98 P.2d 790 (Cal.App. 4 Dist.,Jan 25, 1940) Proceeding by J.J. McMillan to contest the election of Alfred Siemon as City Councilman in the City of Bakersfield. From a judgment declaring contestant elected to such office and directing issuance of a certificate of election to him, contestee appeals. Affirmed. [2] Constitutional Law 92 655

92 Constitutional Law 92V Construction and Operation of Constitutional Provisions 92V(F) Constitutionality of Statutory Provisions 92k655 k. In General. Most Cited Cases (Formerly 92k38) A constitutional amendment contravened by statute prevails, whether statute was adopted by Legislature or by people as initiative measure. West's Ann.Const. art. 4, 1. [1][2] If the constitutional provision is applicable to the facts of this case, and if there is a conflict between the constitutional provision and the statutory one, then the Constitution will prevail and be controlling, regardless of the fact that the statute was adopted as an initiative measure. We cannot subscribe to appellant's suggestion that, because the two measures were adopted as initiatives at the same election, they must be considered as parts of one act and

that consequently the code provision is equal in force and not subject to the currently adopted constitutional proviso. Article IV, section 1, of the Constitution, which reserved to the people the power to propose laws and amendments, known as the initiative, itself distinguishes between a law or act and a constitutional amendment. When initiative measures are voted upon by the people they are apprised by the title and the contents, as well as by other available information, whether they are passing upon a statute or an amendment to the organic law of the state. There is no reason why a constitutional amendment should not prevail if contravened by a statute, by whatever means the statute was adopted. Wallace v. Zinman, 200 Cal. 585, 593, 254 P. 946, 62 A.L.R. 1341; Hammond Lbr. Co. v. Moore, 104 Cal.App. 528, 531, 286 P. 504. Robison v. Payne, 66 P.2d 710 Cal.App.3.Dist.,1937 Act of Legislature in conflict with Constitution is void .[ opinion itself on rule of law and

internal citation has inconclusive statement as to prior rule of law] see below In re Shattuck.
In re Shattuck, 208 Cal. 6, 10, 279 P. 998 (Cal.,Aug 20, 1929) It is a long-established and well-settled rule of statutory construction that an act of the state Legislature is not to be declared unconstitutional and void by the courts, unless it shall appear that there is *10 a clear repugnance between the terms of the act and the inhibitions of the Constitution, and that where there exists a reasonable doubt from the consideration of the act as a whole as to whether it is repugnant to the Constitution the courts should hold it to be constitutional. This principle was declared by this court in the early and leading case of Bourland v. Hildreth, 26 Cal. 161, and has been consistently adhered to in the later decisions of this tribunal. Reclamation Dist. No. 1500 v. Superior Court in and for Sutter County, 154 P. 845 Cal.,1916 Legislative act conflicting with Constitution is utterly void, having no force or legal existence. [not on analogous, on point on facts. Hotel Employees and Restaurant Employees Intern. Union v. Davis, 21 Cal.4th 585, 602, 981 P.2d 990, 88 Cal.Rptr.2d 56, 99 Cal. Daily Op. Serv. 6813, 1999 Daily Journal D.A.R. 8671 (Cal. Aug 23, 1999) Union and an individual filed petitions for writ of mandate, seeking to prevent the implementation of an initiative statute purporting to authorize various forms of gaming in tribal casinos. The Supreme Court, Werdegar, J., held that: (1) the initiative statute was invalid as inconsistent with the State Constitution's declaration that The Legislature has no power to authorize, and shall prohibit casinos of the type currently operating in Nevada and New Jersey, and (2) only one provision of the initiative, a sentence waiving the State's immunity from suit in disputes arising out of negotiations for new or amended tribal-state compacts other than the measure's model compact, was severable form the invalid portions. Issuance of peremptory writ of mandate directed. Kennard, J., filed dissenting opinion. [4] Constitutional Law 92 655

92 Constitutional Law 92V Construction and Operation of Constitutional Provisions 92V(F) Constitutionality of Statutory Provisions 92k655 k. In general. Most Cited Cases

(Formerly 92k38) Statute inconsistent with the State Constitution is void. [5] Gaming 188 3

188 Gaming 188I Gambling Contracts and Transactions 188I(A) Nature and Validity 188k3 k. Constitutional and statutory provisions. Most Cited Cases Statutes 361 303

361 Statutes 361IX Initiative 361k303 k. Matters subject to initiative. Most Cited Cases Phrase, The Legislature has no power, within the meaning of the State Constitution's declaration that The Legislature has no power to authorize, and shall prohibit casinos of the type currently operating in Nevada and New Jersey, denies legislative power to the legislative body as such and, hence, to both legislative bodies, i.e., the Legislature and the people acting through initiative. West's Ann.Cal. Const. Art. 4, 19(e). [6] Statutes 361 301

361 Statutes 361IX Initiative 361k301 k. Initiative in general. Most Cited Cases Statutory initiative is subject to the same state and federal constitutional limitations as are the Legislature and the statutes which it enacts. III. Proposition 5 and California Constitution, Article IV, Section 19(e) [4] We turn to the claims by the Union and Cortez that Proposition 5 is invalid under the California Constitution, specifically section 19(e)'s declaration that [t]he Legislature has no power to authorize ... casinos of the *602 type currently operating in Nevada and New Jersey. We consider and decide the causes before us on the pleadings, without recourse to evidentiary proceedings, for none of the papers raise any question as to a matter of fact essential to determination of the petition. (Code Civ. Proc., 1090.) A statute inconsistent with the California Constitution is, of course, void. (Nougues v. Douglass (1857) 7 Cal. 65, 70.) In order to decide whether Proposition 5 is inconsistent with section 19(e), we begin by examining and interpreting each part of section 19(e). The Legislature has no power.... [5] The power referred to is, of course, the legislative power, which is the subject of article IV of the California Constitution as a whole. The legislative power may be exercised by either of two legislative bodies, inasmuch as article IV, section 1 declares that it is vested in the Legislature and also reserve[d] to the people acting through initiative, specifically, initiative statute. Section 19(e) could, therefore, be taken, relatively narrowly, to deny legislative power to the Legislature alone of the two legislative bodies or, relatively broadly, to deny legislative power to the legislative body as such and, hence, to both legislative bodies. For two reasons, we conclude the broader interpretation is the correct one. Nogues v. Douglass (Nougues v. Douglass), 7 Cal. 65, 1857 WL 649 (Cal. Jan Term 1857)

Constitutional Law 92

2478

92 Constitutional Law 92XX Separation of Powers 92XX(C) Judicial Powers and Functions 92XX(C)2 Encroachment on Legislature 92k2478 k. Invalidation, Annulment, or Repeal of Statutes. Most Cited Cases (Formerly 92k70.1(3), 92k70(1)) The legislature has the actual power to pass any acts it pleases, and the courts cannot interfere to prevent their passage; but, when the legislature transcends its powers, its acts are void and are not laws. States 360 115

360 States 360IV Fiscal Management, Public Debt, and Securities 360k115 k. Limitation of Amount of Indebtedness or Expenditure. Most Cited Cases (Formerly 92k35) Const. art. 8, which expressly prohibits the legislature from creating a debt in any way which shall, in the aggregate, exceed the sum of $300,000, is mandatory, and not merely directory. **5 The Legislature has the actual power to pass any Act it pleases, and this Court would never interfere by injunction or otherwise to prevent the passage of such Acts, as the Constitution has provided other and more appropriate remedies. While that body confines its action within the limits of the Constitution, its acts are rightful and conclusive; and when it transcends the limits of that instrument, its acts are void and bind no one. In the contemplation of our system they are not laws; and as the Courts are always open for redress, there is a practical mode provided for determining the rights of the citizen.

Pooled Money Investment Bd. v. Unruh, 153 Cal.App.3d 155, 200 Cal.Rptr. 500 (Cal.App. 3 Dist. Mar 16, 1984) The Pooled Money Investment Board petitioned for peremptory writ of mandate compelling the Treasurer to comply with adopted resolutions of the Board directing the Treasurer to issue and sell up to $150 million in commercial paper notes and up to $150 million in bank credit notes representing monies borrowed by the state in fiscal year 19831984. Upon transfer of the case by the Supreme Court, the Court of Appeal, Puglia, P.J., held that statutory authorization for state borrowing of money to be expended for any authorized general fund purpose transgresses the $300,000 limitation on state indebtedness imposed by the State Constitution. Petition denied.

At p. 159,
Except in cases of war, section 1 of article XVI of the California Constitution prohibits the Legislature from creating, in any manner, state debts or liabilities which exceed the sum of three hundred thousand dollars ($300,000) without a vote of the people.FN3 As the resolutions under consideration here authorize the state to borrow up to three hundred million dollars ($300,000,000) for purposes unrelated to war without the prior approval *160 of the electorate, the question posed is whether implementation of the statutory authority to borrow this sum of money would create a debt within the meaning of the constitutional prohibition. If so, the borrowing scheme is

constitutionally invalid regardless of the seriousness of the state's financial situation or the economic benefits associated with the use of short-term, tax-exempt financing instruments. The Constitution is the supreme law of the state and neither transient urgency nor abstract practicality can override it. FN3. The pertinent language of section 1 of article XVI is as follows: The Legislature shall not, in any manner create any debt or debts, liability or liabilities, which shall, singly or in the aggregate with any previous debts or liabilities, exceed the sum of three hundred thousand dollars ($300,000), except in case of war to repel invasion or suppress insurrection, unless the same shall be authorized by law for some single object or work to be distinctly specified therein which law shall provide ways and means, exclusive of loans, for the payment of the interest of such debt or liability as it falls due, and also to pay and discharge the principal of such debt or liability within 50 years of the time of the contracting thereof, and shall be irrepealable until the principal and interest thereon shall be paid and discharged, and such law may make provision for a sinking fund to pay the principal of such debt or liability to commence at a time after the incurring of such debt or liability of not more than a period of one-fourth of the time of maturity of such debt or liability; but no such law shall take effect unless it has been passed by a two-thirds vote of all the members elected to each house of the Legislature and until, at a general election or at a direct primary, it shall have been submitted to the people and shall have received a majority of all the votes cast for and against it at such election; and all moneys raised by authority of such law shall be applied only to the specific object therein stated or to the payment of the debt thereby created.... The mandate of article XVI, section 1, has remained unchanged since its original inclusion in the Constitution of 1849. Referring to what was then article VIII, the Supreme Court stated: The language of the article ... is too clear and explicit to admit of but one interpretation. In fact, it would defy the ingenuity of the most subtle intellect to invent a consistent interpretation, other than that which naturally suggests itself from the words of the Article. It is without ambiguity, and expressly forbids the Legislature from creating a debt of more than three hundred thousand dollars, in any way, unless the same is left to the vote of the people. So plain is the meaning of the language, that it is scarcely worth while to invoke rules of construction, ... (The People ex rel. The Attorney General v. Johnson (1856) 6 Cal. 499, 500501, disapproved on other grounds in People ex rel. Deukmejian v. Brown (1981) 29 Cal.3d 150, 159, 172 Cal.Rptr. 478, 624 P.2d 1206.)

At p. 165,
Despite the fact that the Legislature has appropriated funds to service the loans, the borrowing scheme contained in sections 1728117294 lacks the *166 elements of a cash transaction necessary to avoid creation of a constitutionally repugnant debt or liability. As the appropriation doctrine is inapposite, the legislation and implementing resolutions involved here fatally conflict with the $300,000 debt limitation of article XVI, section 1, of the California Constitution and must be held invalid. Accordingly, petitioner is not entitled to a writ of mandate to compel the respondent Treasurer to issue up to $150,000,000 in commercial paper notes and up to $150,000,000 in bank credit notes. The petition for peremptory writ of mandate is denied; the alternative writ is discharged. SPARKS and SIMS, JJ., concur. Wenzler v. Municipal Court of Pasadena Judicial Dist., 235 Cal.App.2d 128, 45 Cal.Rptr. 54 (Cal.App. 2 Dist.,Jun 16, 1965) Petitioner brought mandamus proceeding against the Municipal Court of Pasadena Judicial District, the judge thereof, and the County of Los Angeles to compel the return to the petitioner of a fine and a penalty assessed against the petitioner after he was convicted under a city ordinance which was thereafter declared unconstitutional, and to compel the return of exhibits which were used in evidence in the prosecution under the city ordinance. The Superior Court of Los Angeles County, A. Curtis Smith, J., entered an order denying a writ of mandate, and the petitioner appealed. The District Court of Appeal, Files, P. J., held that mandamus did not lie, where presumably the fine and

penalty had been deposited with the county treasurer and there was no allegation that any of the exhibits remained in the custody of the Municipal Court. Order affirmed. [5] Mandamus 250 151(2)

250 Mandamus 250III Jurisdiction, Proceedings, and Relief 250k150 Parties Defendant or Respondents 250k151 In General 250k151(2) k. Public Officers and Boards and Municipalities. Most Cited Cases Mandamus 250 154(4)

250 Mandamus 250III Jurisdiction, Proceedings, and Relief 250k154 Petition or Complaint, or Other Application 250k154(4) k. Right of Petitioner, and Authority, Duty, or Power of Respondent, in General. Most Cited Cases Mandamus proceeding did not lie against municipal court, judge thereof, and county to compel return to petitioner of fine and penalty assessment paid by petitioner after he was convicted under a city ordinance thereafter declared unconstitutional and to compel return of exhibits used as evidence in prosecution under city ordinance, where fine and penalty had presumably been deposited with county treasurer, and there was no allegation that exhibits in question remained in custody of municipal court. West's Ann.Code Civ.Proc. 21, 1063, 10841097, 1085, 1086, 1963, subd. 33; West's Ann.Pen.Code, 1418, 1463.

At p. 130,
On May 15, 1963, petitioner, through his attorney, wrote to Mr. Roscoe Hollinger, the auditor-controller of the county, requesting repayment of the fine and assessment. On May 24, 1963, petitioner was notified that the county was denying this request.

At p. 131,
With respect to the money, Penal Code section 1463 requires that all finds and forfeitures shall, as soon as practicable after the receipt thereof, be deposited with the county treasurer * * * In the absence of any allegation to the contrary it must be assumed that this provision of law was obeyed. (Code Civ.Proc., 1963, subd. 33.) Neither Judge Sprankle nor the municipal court had any jurisdiction to withdraw this money from the county treasury. ( Draper v. Grant, 91 Cal.App.2d 566, 205 P.2d 399; Paton v. Teeter, 37 Cal.App.2d 477, 99 P.2d 699.) Draper v. Grant, 91 Cal.App.2d 566, 205 P.2d 399 (Cal.App. 4 Dist.,Apr 29, 1949) Mandamus by Charles Fowler Draper against W. H. Grant, City Judge of the City of Coalinga, and E. H. Hanst, City Treasurer of the City of Coalinga, and others, to compel the refund to petitioner of a fine allegedly imposed upon petitioner by respondent judge while acting in excess of his authority. From an order denying the writ, petitioner appeals. Affirmed.

Draper v. Grant, 91 Cal.App.2d 566, 205 P.2d 399 (Cal.App. 4 Dist.,Apr 29, 1949) Mandamus by Charles Fowler Draper against W. H. Grant, City Judge of the City of Coalinga, and E. H. Hanst, City Treasurer of the City of Coalinga, and others, to compel the refund to petitioner of a fine allegedly imposed upon petitioner by respondent judge while acting in excess of his authority. From an order denying the writ, petitioner appeals. Affirmed. [2] Mandamus 250 12

250 Mandamus 250I Nature and Grounds in General 250k12 k. Nature of Acts to Be Commanded. Most Cited Cases Mandamus lies only to compel performance of an act which law specifically enjoins as a duty resulting from an office, trust, or station. [3] Mandamus 250 100

250 Mandamus 250II Subjects and Purposes of Relief 250II(B) Acts and Proceedings of Public Officers and Boards and Municipalities 250k100 k. Appropriation or Other Disposition of Public Money. Most Cited Cases Where money collected by city judge as a fine was deposited with city treasurer as required by statute and thereafter city judge had no authority to withdraw it from treasury, mandamus would not lie against judge to compel such action. Gen.Laws, Act 5233, 885 (repealed. See Govt. Code, 3652236524). [4] Municipal Corporations 268 880

268 Municipal Corporations 268XIII Fiscal Matters 268XIII(B) Administration in General, Appropriations, Warrants, and Payment 268k880 k. Collection and Custody of Funds. Most Cited Cases Municipal Corporations 268 883

268 Municipal Corporations 268XIII Fiscal Matters 268XIII(B) Administration in General, Appropriations, Warrants, and Payment 268k883 k. Disbursements in General. Most Cited Cases Funds belonging to a municipality may be withdrawn only in manner prescribed by law, and usually city treasurer is only custodian of city funds, including a fine received as part of city's income. [2] The reasons for the denial of the writ by the trial court is not stated. Although neither counsel have argued the question in their respective briefs, there appears to be a ground for denying the relief prayed for against the parties to whom the writ is sought to be directed. The writ of mandate does not lie at the suit of every one having a cause of action against a person occupying a public office. It lies only to compel the performance of an act which the law specifically enjoins as a duty resulting from an office, trust or station. Dufton v. Daniels, 190 Cal. 577, 213 P. 949; 16 Cal.Jur. 804, sec. 27; People v. Turnbull, 184 Ill.App. 151.

*570 [3][4][5][6][7] Under Act 5233, sec. 885, Deering's California General Laws, Vol. 2, p. 2000, all moneys collected by any officer for the use of the City shall immediately be deposited into the city treasury. Apparently the money collected as a fine in the instant case was thus deposited and the city judge had no authority to withdraw it from the treasury and accordingly a writ of mandate would not lie to compel such action. Funds belonging to a municipality may be withdrawn only in the manner prescribed by law and usually the city treasurer is only the custodian of the city funds. City of El Paso v. Two Republics Life Insurance Co., Tex.Civ.App., 278 S.W. 231; City of Princeton v. Baker, 237 Ky. 325, 35 S.W.2d 524. This rule has been applied to a fine received as part of the city's income. In re Becher v. Case, 243 App.Div. 375, 277 N.Y.S. 733; People v. City of Hornell, 256 App.Div. 113, 8 N.Y.S.2d 976. Where the authority of an officer to do an act must be found in the statute, the writ does not lie to compel the performance of the act if the statute does not authorize it. Mattingly v. Nichols, 133 Cal. 332, 65 P. 748; 16 Cal.Jur. 819, sec. 33. It likewise appears that the city treasurer, merely upon demand, had one been made, would not have been authorized under any statute to refund fines paid to that officer, without a proper claim made to the city council and without a warrant having been issued therefor by the proper authority

Political Reform Act provides private attorney general causes of action under Government Code Sections, 91004, 91005, 91005(b) for violation of the Poltical Reform Act. Steadman v. Osborne, 178 Cal.App.4th 950, 100 Cal.Rptr.3d 724, 09 Cal. Daily Op. Serv. 13,057, 2009 Daily Journal D.A.R. 15,278 (Cal.App. 4 Dist. Oct 27, 2009) Background: Private citizen brought action against a campaign committee and its founders, requesting injunction and civil penalties under the Political Reform Act (PRA). Defendants moved to strike a cause of action for misuse of campaign funds as strategic lawsuit against public participation (SLAPP). The Superior Court, Riverside County, No. RIC495912,Gloria Trask, J., denied the anti-SLAPP motion. Founder appealed. Holdings: The Court of Appeal, Hollenhorst, Acting P.J., held that: (1) catch-all provision for enforcement of PRA does not create standing for a private civil enforcement action, and (2) statute requiring copies of complaints filed pursuant to catch-all provision to be served on Fair Political Practices Commission (FPPC) does not create standing for a private civil enforcement action. Reversed. At p. 953, I. INTRODUCTION Defendant and Appellant Clyde B. Osborne, Sr.,FN1 appeals from the trial court's denial of his motion to strike the ninth cause of action

in the complaint filed by plaintiff and respondent Therese Steadman. Although Osborne raises a variety of contentions, we find one dispositive, and we therefore need not address the rest. We conclude Steadman does not have the right to prosecute her ninth cause of action as a private attorney general, and we will reverse. FN1. Appellant's last name is Osborn throughout the record. spelled Osborne as well as

II. FACTS AND PROCEDURAL BACKGROUND **Valley Health Systems (VHS) is a local healthcare district in Riverside County that operates several hospitals. After the defeat of a bond measure in September 2006, VHS began exploring the sale of its assets, including its hospitals, to a private entity. In June 2007, VHS's board of directors recommended such a sale, and in August 2007, VHS's board of directors approved the proposed sale. However, the proposed sale of VHS assets required approval by the voters of the hospital district. (Health & Saf.Code, 32121, subd. (p).) The proposed sale of VHS assets was submitted to the voters as Measure G in the November 2007 election. Defendants Charles Bolton and Osborne formed defendant **Hospital Defense League PAC (HDL) in July 2007, as a committee within the meaning of Government Code FN2 section 82013, subdivision (a), with the specific purpose of opposing Measure G. Bolton was the treasurer, and Osborne was the assistant treasurer of HDL. HDL, Osborne, and Bolton are sometimes referred to collectively herein as defendants. FN2. All further statutory references are to the Government Code unless otherwise indicated. Among other actions, HDL filed a complaint as a joint plaintiff with several individuals against VHS and several individuals, alleging violations of Health and Safety Code sections 32121 et seq. and Government Code sections 54950 et seq., breach of fiduciary duty, and declaratory relief. Measure G was ultimately defeated in the election. In January 2008, Steadman filed a complaint and demand for investigation of HDL with the Fair Political Practices Commission (FPPC) under sections *954 91007, subdivision (a), 91003, and 83115. Steadman's complaint to the FPPC alleged numerous violations of the Political Reform Act (PRA) ( 81000 et seq.), including that HDL had violated reporting laws with respect to receipts and expenditures, had concealed anonymous cash contributions, had failed to file contribution reports, and had spent campaign funds on matters outside its primary purpose. In February 2008, the FPPC responded to Steadman's complaint by authorizing her to proceed with a civil action in accordance with Section 91007[, subdivision] (a)(2). In March 2008, Steadman filed an addendum to her **726 complaint with the FPPC, alleging additional violations of the PRA, and the FPPC authorized her to proceed with a civil action as to those additional allegations.

On March 21, 2008, Steadman filed a verified complaint against defendants, requesting injunction and civil penalties under the PRA. The ninth cause of action in Steadman's complaint was captioned Misuse of Campaign Funds and alleged that HDL violated sections 89512.5, 89513, subdivision (b), and 89514, by raising funds to oppose Measure G but instead had spent those funds to help finance a lawsuit against VHS that was unrelated to the Measure G election. In her ninth cause of action, Steadman sought statutory penalties against defendants under sections 91005.5 and 91006. Defendants filed a motion to strike the ninth cause of action under Code of Civil Procedure section 425.16. Following briefing and a hearing, the trial court denied the motion. Only Osborne filed a notice of appeal. At p. 953, The enforcement provisions of the PRA are set forth in chapter 11, commencing with section 91000. Several different statutory provisions relate to civil enforcement, but not all provide for private enforcement actions to recover civil penalties. (See Major v. Silna (2005) 134 Cal.App.4th 1485, 1502, 36 Cal.Rptr.3d 875.) **Three sections, however, explicitly authorize private citizens as well as public prosecutors to bring actions to recover civil penalties based on specified misconduct. **First, section 91004 authorizes a person residing within the jurisdiction to bring a civil action against [a]ny person who intentionally or negligently violates any of the reporting requirements.... ( 91004.) **Second, section 91005, subdivision (a) authorizes a person residing within the jurisdiction to bring a civil action against [a]ny person who makes or receives a contribution, gift, or expenditure that violates section 84300, 84304, 86203, or 86204. **Finally, section 91005, subdivision (b) authorizes a person residing within the jurisdiction to bring a civil action against certain employees and public officials who realize[ ] an economic benefit as a result of a violation of [s]ection 87100 or of a disqualification**727 provision of a conflict of interest code.... **Thus, sections 91004 and 91005 allow private enforcement actions to recover civil penalties for specific violations of the PRA with respect to reporting requirements, unlawful contributions, gifts, and expenditures, and conflicts of interest. ( 91004, 91005.) [3] Section 91005.5 is a catch-all provision that provides for enforcement of the violation of any provision of this title, except [s]ections 84305, 84307, and 89001, for which no specific civil penalty is provided, ... Section 91005.5 provides for a civil action to be brought by the FPPC, a district attorney, or an elected city attorney to recover penalties of up to $5,000 per violation. **Unlike sections 91004 and 91005, section 91005.5 does not include a person residing with the jurisdiction among those authorized to bring a civil action.

Other statutory provisions indicate that the Legislature did not intend to provide a private enforcement action **in section 91005.5. Section 91007, subdivision (a), provides that persons bringing civil actions under sections 91004 and 91005 must first file a written request with the civil prosecutor. Section 91009 provides that when a judgment is entered against the defendant in an action brought under section 91004 or 91005, **the plaintiff shall receive fifty percent of the amount recovered. The remaining *956 fifty percent shall be deposited in the General Fund of the state. In an action brought by the civil prosecutor, the entire amount shall be paid to the general fund or treasury of the jurisdiction. **Reading all these statutory provisions together inexorably leads us to conclude the Legislature did not intend to create a private civil enforcement action in the catch-all statute, section 91005.5. Section 81002 sets forth the general purposes of the PRA, which include providing [a]dequate enforcement mechanisms to public officials and private citizens in order that this title will be vigorously enforced. ( 81002, subd. (f).) The PRA itself states that its provisions are to be liberally construed to accomplish its purposes. ( 81003.) However, even liberal construction does not allow us to read language into a statute something which the Legislature did not insert therein. (Woodmansee v. Lowery (1959) 167 Cal.App.2d 645, 652, 334 P.2d 991.) **We conclude that section 91005.5 does not provide a private citizen standing to bring a civil action. [4] Steadman notes that in its February 14, 2007, letter in response to her administrative complaint, the FPPC stated, [Y]ou have requested that the Commission file a civil action in this matter. We have decided to pursue this under the administrative sanctions provided in Government Code section 83116 and do not intend to file a civil action. This response permits you to proceed with a civil action in accordance with Section 91007(a)(2). (Bolding omitted.) Section 91007, subdivision (a) provides that persons bringing civil actions under sections 91004 and 91005 must first file a written request with the civil prosecutor. The FPPC, however, has no authority to confer jurisdiction beyond that provided in the PRA, and we do not read the FPPC's letter as attempting to do so. [5] Steadman next asserts that section 91007 expressly contemplated her civil enforcement suit, including the ninth cause of action. Section 91007, subdivision (b) requires any person filing a complaint pursuant to section 91005.5 to serve a copy of the complaint on the FPPC within 10 days of such filing. She argues she is a person as that term is broadly defined in the PRA. However, the Legislature has demonstrated that when it intends to create a private civil enforcement action for violations**728 of the PRA, it does so in clear and explicit language ( 51004, 51005), not by a tortured cobbling together of inferences from general definition statutes. We conclude that section 91005.5 does not provide for a private

enforcement action for violations of sections 89512.5, 89513, and 89514. The ninth cause of action should be stricken on the basis that Steadman lacks standing to bring such claims.

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