COMMITTEE ON CODES OF CONDUCT
ADVISORY OPINION NO. 69
Removal of Disqualification by Disposal of Interest.
Judges have inquired whether disposing of a disqualifying interest
would remove the disqualification and permit them to continue to sit in
the case. Though the ideal envisages resolution of disqualification questions
before a judge participates at all in a case, the present question arises
when a disqualifying interest surfaces after the judge has participated
for some time in the case, i.e., the judge or spouse owns stock in a corporation
that intervenes as a party, that is found to be a corporate parent of a
party, etc. The existence of a disqualifying interest has been learned
directly by the judge in some instances and has come to light in counsel's
motion for recusal in others. The question has arisen after the judge has
taken minimal action, after years of discovery orders, and after trial
but before decision. The question has arisen in single and multi-judge
districts and in appellate courts.
Canon 3C(1) provides that "[a] judge shall disqualify himself or
herself in a proceeding in which the judge's impartiality might reasonably
be questioned. . . ." Canon 3C(1) continues by providing a non-exhaustive
list of circumstances requiring disqualification. Canon 3C(4), however,
recognizes that in some instances, such as those listed above, the disqualification
may not exist or be known until after the judge has participated in the
case, and this canon addresses the propriety of the judge continuing to
sit on such a case:
Notwithstanding the preceding provisions of this Canon, if a 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 judge, spouse or minor child, as the case may be,
divests himself or herself of the interest that provides the grounds for
the disqualification.
Canon 3C(4). See also 28 U.S.C. § 455.
Although Canon 3C(4) refers to situations in which a judge has already
expended a substantial amount of time on a matter, the Committee is of
the opinion that this provision applies as well to cases in which a judge
has expended no judicial time. Accordingly, if a judge learns of a disqualifying
financial interest in a party before expending judicial time on the case,
the judge may avoid disqualification by divesting himself or herself of
the interest. Since in this situation, a judge could in any event recuse,
divest and then have the matter reassigned to the judge, the Committee
has concluded that Canon 3C(4) should be applied in this circumstance since
any other interpretation would require the judge to do a futile act.
While disposing of a disqualifying interest may allow a judge to
continue to sit on a case, Canon 3C(4) limits this option to the disposal
of financial interests that will not be substantially affected by the outcome
of the litigation. If the financial interest could be substantially affected
by the outcome, even if he divests a judge cannot continue to sit on the
case under Canon 3C(4). In determining whether a financial interest could
be substantially affected, the Committee looks to the application of Canon
3C(1)(c), which provides for disqualification if the judge holds any other
"interest that could be affected substantially by the outcome of the litigation."
The natural reading of the language in both Canon 3C(1)(c) and 3C(4) is
that it is the interest itself that must be substantially affected. Ultimately,
a judge must decide the potential effect on the interest.
The possibility that the judge may appear as seeking to participate
in a case by disposing of a disqualifying interest may under some circumstances
be one of impropriety. Though that possibility should be considered, the
Committee considers the likelihood of such appearance remote. In the case
in which a great deal of time and effort had been invested by the judge,
by counsel, and by the litigants, when the existence of the disqualifying
interest came to light, the public interest in the efficient administration
of justice would appear to outweigh concern for an appearance that the
judge is seeking to continue participation in a particular case.
The Committee further advises that the manner in which the fact
of a disqualifying interest is learned, and the nature of the interest,
are viewed as unimportant. Though disposal of the interest removes any
question of the propriety of the judge's continued participation, the stage
in the litigation at which existence of the interest is learned and the
availability of another judge may influence the judge's decision to continue
participation.
Should the judge decide to continue to participate in the matter
following disposal of the disqualifying interest, the facts giving rise
to the disqualification, the judge's disposal of the disqualifying interest,
and the public interest in continued participation of the judge, should
be made known to the parties and of record in the case.
October 15, 1981
Revised January 16, 1998