Recusal: Lawyers and Litigants Who Appear Before Judge Have Patronized Business Establishment Owned by Judge and Judge's Family Members
March 14, 2006
CJE Opinion No. 2006-1
You have requested guidance concerning your obligations under the Code of Judicial Conduct when attorneys and parties who appear before you patronize a business establishment that is owned by you and your family members. The establishment is open to the public with facilities available for rent for private functions such as wedding receptions and holiday parties. You own an approximately thirty-five per cent interest in the business. At present the only persons holding ownership interests are persons related to you by blood or marriage. You are a passive investor in the business. Your spouse, however, is employed part-time by the business and serves as an officer and director. Your inquiry does not indicate whether you hold your interest jointly with your spouse or whether your spouse has an independent ownership interest. The business is managed and operated by family members. You ask the following questions:
1. Does a law firm's payment to the business for rental of its facilities for a holiday party, which constitutes a small portion of the net income that you receive, require your recusal from all cases in which an attorney from the firm appears before you, or at least some form of disclosure?
2. If a lawyer or litigant uses and pays for the use of the facilities and then appears before you, is there an ethical concern if such payment comes to your attention either before or after the appearance?
3. Is the amount or frequency of any sums paid by an attorney or litigant to the business relevant to your ethical obligations?
4. Do you have any obligation to be "proactive" in trying to ascertain whether there is a potential conflict of interest, or must you take appropriate action only when such potential conflict comes to your attention?
The first question concerning a law firm's rental of the establishment is a question you recently confronted. The remaining questions are advisory. Because they involve facts that have not fully ripened, we can provide only general guidance on how to address these issues.
Section 3 E of the Code of Judicial Conduct and the commentary to Section 3 E guide the first step of the inquiry. Section 3 E (1) states that "[a] judge shall disqualify himself or herself in a proceeding in which the judge's impartiality might reasonably be questioned." Subsections (a)-(h) of Section 3 E (1) outline mandatory recusal situations. Section 3 E (1) (a) provides that a judge shall disqualify himself or herself in a proceeding in which his or her impartiality might reasonably be questioned because "the judge has a personal bias or prejudice concerning a party or a party's lawyer." Section 3 E (1) (f) provides in pertinent part that recusal is required if "the judge knows, or reasonably should know, that he or she, individually or as a fiduciary, has (i) an economic interest in the subject matter in controversy or in a party to the proceeding, which interest could be substantially affected by the outcome of the proceeding, (ii) a relationship interest to a party to the proceeding where the party could be substantially affected by the outcome of the proceeding or (iii) any other more than de minimis interest that could be substantially affected by the outcome of the proceeding." Section 3 E (1) (g) imposes a similar duty when the judge has knowledge or reason to know that the judge's "spouse or child wherever residing, or any other member of the judge's family residing in the judge's household," has such an interest.
The answers to your first three questions turn on the application of Section 3 E (1) to the facts of your ownership interest and that of your spouse. The thrust of your first two questions is whether a lawyer or litigant's use of the business in which you have a passive interest requires recusal. From the facts presented, the use does not involve "an economic interest in the subject matter in controversy or in a party to the proceeding, which interest could be substantially affected by the outcome of the proceeding," nor does it involve "a relationship interest to a party to the proceeding where the party could be substantially affected by the outcome of the proceeding," for purposes of Section 3 E (1) (f).
The question remains whether the potential collateral or indirect effects might require action on your part. Such collateral or indirect effects are captured under the general statement of Canon 2 that "[a] judge shall avoid impropriety and the appearance of impropriety in all of the judge's activities." The issue is whether your interest in a business that lawyers or litigants use would call into question your impartiality. Use that has a de minimis effect on you typically would not call into question your ability to serve impartially. This is a fact-sensitive inquiry, however, that, in order to be answered definitively in any given situation, would require a fuller assessment of underlying facts and circumstances beyond those stated in your letter.
In addition to the financial interest, the Code requires you to also consider the nature of any social relationship that you may have with any litigant or party. Canon 2's requirement that a judge avoid impropriety and the appearance of impropriety in all of his or her activities also implicates potential social relationships. This admonition may be of concern if attorneys or parties who use the establishment's facilities appear before you with regularity or great frequency. While you have indicated that you are a passive investor, the committee does not know to what degree, if any, you use the establishment yourself or whether any of the attorneys or parties appearing before you are regular patrons. Our guidance is thus limited in this respect by the scope of the information you have provided. In general, however, you should note that Section 2 B requires that "[a] judge . . . not allow . . . social . . . relationships to influence the judge's judicial conduct or judgment . . . nor shall a judge convey or permit others to convey the impression that they are in a special position to influence the judge." The commentary to Section 2 B further states that "[a] judge should be careful to avoid developing excessively close relationships with frequent litigants . . . in any court where the judge often sits, if such relationships could reasonably tend to create either an appearance of partiality or the likely need for later disqualification under Section 3 E (1)."
Disclosure is not required if there is no basis for disqualification. As the commentary to Section 3 E states, "[i]f the judge believes there is no real basis for disqualification, a judge may, but is not required to, disclose on the record information that the judge believes the parties or their lawyers might consider relevant to the question of disqualification." If you conclude that facts would support your disqualification, remittal of disqualification (i.e., disclosure and seeking waiver by the parties) would not be available in cases in which you would be disqualified under Section 3 E (1) (a). See Section 3 F (2).
Your fourth question asks whether you have an obligation to be "proactive" in determining if there is a potential conflict of interest, or whether you must take appropriate action only when a potential conflict comes to your attention. Your question reveals one of the dynamic tensions contained in the Code. On the one hand, Section 4 D (2) provides that "a judge may hold and manage investments, including real estate . . . but shall not serve, with or without remuneration, as an officer, director, manager, general partner, advisor or employee of any business." The committee has interpreted this to mean that a judge cannot be involved in the day-to-day management of a business. CJE Opinion No. 2004-6 ("establishing a dividing line between management of an 'investment,' on the one hand, and management of a 'business,' on the other hand, is a matter of degree, and it must be done based on the unique facts of each case"). This provision suggests that you should not be proactive by taking an oversight role. On the other hand, the Code also presumes that judges will take reasonable steps to acquire the information to determine if a Code violation is likely. If a lawyer or litigant's involvement with this business establishment comes to your attention, you should certainly assess whether their involvement would create an appearance of partiality on your part.
Ultimately, in the scenarios you have described, you must be the arbiter and decide whether you believe that your interest in the business requires recusal or disclosure or whether you have an excessively close or personal relationship with an attorney or party that might create an appearance of impartiality. Deciding where to draw the line is a decision you will have to make. In Lena v. Commonwealth, 369 Mass. 571 (1976), the Supreme Judicial Court provided guidelines for your consideration. The case's two-part test has a subjective and objective component. Faced with a question of his or her capacity to rule fairly, a judge should first consult his or her own emotions and conscience, and then, if he or she passes this internal test of freedom from disabling prejudice, he or she must next attempt an objective appraisal of whether the proceeding is one in which his or her impartiality might reasonably be questioned. Id. at 575. See CJE Opinion No. 89-8 and CJE Opinion No. 2004-9. The subjective component of the test must necessarily be decided by the judge on a case-by-case basis, and the "same is true, although to a lesser extent, of the general objective inquiry . . . where none of the specific examples listed . . . is applicable." CJE Opinion No. 89-8. As regards the objective component, even if you believe you could be fair, would disinterested observers, fully informed of your relationship with the business and with an attorney or party appearing before you, entertain significant doubt regarding your impartiality? In this regard you should be mindful that "partiality is more likely to affect the unconscious thought processes of a judge than he or she may realize." J.M. Shaman, S. Lubet & J.J. Alfini, Judicial Conduct & Ethics, §4.01 at 108 (3rd ed. 2000). In most circumstances the question of disqualification is left to the judge's discretion. See, e.g., Commonwealth v. Gogan, 389 Mass. 255, 258-260 (1983). Except for situations in which recusal is mandatory, the judge ultimately has the obligation of determining whether recusal is the correct course of action.