Davis v. Xerox

• Decision Date: 03 March 1987
• Docket Number: No. 85-6285,85-6285
• Citation: 811 F.2d 1293
• Parties: 42 Empl. Prac. Dec. P 36,880, 55 USLW 2501 Elbert J. DAVIS, Plaintiff-Appellant, v. XEROX, a New York Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1293

811 F.2d 1293

42 Empl. Prac. Dec. P 36,880, 55 USLW 2501

Elbert J. DAVIS, Plaintiff-Appellant, v. XEROX, a New York Corporation, Defendant-Appellee.

No. 85-6285.

United States Court of Appeals Ninth Circuit.

Argued and Submitted July 10, 1986.

Decided March 3, 1987.

Elbert J. Davis, Inglewood, Cal., for plaintiff-appellant.

Virginia S. Grogan, Los Angeles, Cal., for defendant-appellee.

Appeal from the United States District Court for the Central District of California.

Before CANBY, REINHARDT and NOONAN, Circuit Judges.

NOONAN, Circuit Judge:

This suit was brought under Title VII, 42 U.S.C. Sec. 2000e, and under 42 U.S.C. Sec. 1981 with pendent state claims, by Elbert J. Davis against Xerox Corporation. Davis appeals from a judgment in favor of Xerox. We affirm.

Events. On January 7, 1981 Davis sued Xerox for discriminatory demotion in 1975 and added, by an amendment of his complaint, a count for illegally discharging him in 1983. The district judge (the first judge) made rulings on discovery and on December 23, 1981 dismissed the discriminatory demotion claim as barred by the Statute of Limitations. On July 18, 1984 the first judge recused himself. The case was ultimately assigned to Judge Hupp, and in a jury trial before him Xerox prevailed on the remaining issue of the discriminatory discharge.

In 1979, the first judge had filed with the clerk of the district court the Financial Disclosure Report required by 28 U.S.C. app. Sec. 301. It showed the judge in 1978 receiving from Xerox income labeled "interest" in an amount under $1,000. On May 13, 1980 the first judge had amended his 1979 Financial Disclosure Report but continued to show interest income for 1978 from Xerox in an amount under $1,000.

The first judge's Financial Disclosure Reports for 1980, 1981, 1982, and 1983 do not reflect any income from Xerox. But on July 13, 1984 he wrote the Chairman of the Judicial Ethics Committee that he had "just recalled" that "some years ago" he had purchased a $500 warrant issued by Xerox and that he had "received dividends in the amount of $30 a year." His Financial Disclosure Report for 1984, filed May 15, 1985, showed the receipt of interest income from Xerox in an amount under $1,000.

Issues. The principal issue on this appeal is whether the rulings made by the first judge prior to his recusal should be allowed to stand. Davis also appeals certain rulings on evidence made by Judge Hupp.

Analysis. No one should be judge in his own case. The principle is ancient. Long established in Roman, in canon, and in English law, the principle's classic application is by Chief Justice Coke upholding the right of a graduate of Cambridge University to practice medicine without being mulcted by the judicial representatives of a monopoly conferred on the graduates of University College, London--representatives who would share in the mulct imposed. Dr. Bonham's Case, 8 Co. 107a, 113b, 77 Eng.Rep. 638, 646 (K.B.1608). In the United States the principle has been elevated to one of constitutional law so that due process is violated when a judge has "a direct, personal, substantial, pecuniary interest" in the judgment. Tumey v. Ohio, 273 U.S. 510, 523, 47 S.Ct. 437, 441, 71 L.Ed. 749 (1927). Tumey has been glossed to mean that a judge is disqualified when he has "the slightest pecuniary interest." Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 148, 89 S.Ct. 337, 339, 21 L.Ed.2d 301 (1968) (quoting Tumey, 273 U.S. at 524, 47 S.Ct. at 441).

Taken to this extreme, the principle operates not merely to bar the judge who is actually incapacitated from judging by virtue of his bias but to eliminate the judge who might be tempted to go from the harmless to the dangerous and the judge who appears to the public at large, although he is not, venal. The principle becomes prophylactic and cosmetic; it functions as "a fence around the law" and to enhance the image of the court.

Against this background of a fundamental requirement judicially adopted and artfully expanded in the federal courts, we apply a statutory formulation of the principle. Under 28 U.S.C. Sec. 455(a) the duty to recuse is mandatory. The judge "shall disqualify himself" in any case where his impartiality "might reasonably be questioned." This mandatory duty is clearly distinct from the mandatory duty imposed under Sec. 455(b) where knowledge by the judge is required. 28 U.S.C. Sec. 455(b) prescribes that a judge "shall ... disqualify himself" when he "knows" that he has a "financial interest" in the subject matter in controversy. "Financial interest" is defined by the statute itself as any pecuniary interest "however small." The phrase "however small" has been authoritatively construed as meant literally. See In re Cement Antitrust Litigation, 515 F.Supp. 1076 (D.Ariz.1981), aff'd, 688 F.2d 1297 (9th Cir.1982), aff'd for want of a quorum, 459 U.S. 1191, 103 S.Ct. 1173, 75 L.Ed.2d 425 (1983). The statute, like the principle embodied, now has prophylactic and cosmetic functions. We apply it mindful of those functions.

We have before us the judge's Financial Disclosure Reports for 1979 and 1984, and we take judicial notice of the intervening Reports. In 1979 the judge holds an obligation of Xerox that pays him interest. In 1984 he holds an obligation of Xerox that pays him interest. His Financial Disclosure Reports for the intervening years show no income from the sale of this obligation. It is a reasonable inference that he held the same security from 1979 to 1984. The inference is confirmed by his letter in July 1984 to the Chairman of the Judicial Ethics Committee indicating that he has, for some indefinite time in the past, been in the receipt of $30.00 a year from Xerox. The description of this income as "dividends" does not of course jibe with the description on his 1979 and 1984 Reports, but it may be explained as rough recollection of a trifling annual payment.

Section 455(a) covers acts that may appear to create a conflict even if in reality none exists. Section 455(b), on the other hand, is a per se rule and covers acts that actually create a conflict even if there is no appearance of one. Frequently, an overlap will occur--an act will appear to create a conflict and will fall within the per se rule. Here, we ask if either section of the statute was violated.

To possess a security that yields interest is to possess a pecuniary interest in the issuer. To possess a warrant, entitling one to buy the stock of the issuer at a fixed price, is also to possess a pecuniary interest. The first judge held a financial interest in Xerox. No reasonable person, however, would suppose that the value of Xerox stock subject to the warrant or the warrant itself or the financial stability of Xerox as a debtor would be affected one thimbleful by the outcome of the present suit. The judge's own financial welfare would be advanced not one whit whichever way he decided. No reasonable person would suspect bias in the judge. He did not violate Sec. 455(a). Did he violate Sec. 455(b)? He did if from 1981 to 1983 he knew he possessed the interests earlier and later reported.

Acknowledging that he received income from the obligation in 1979 and for some time prior to July 1984, is the judge conclusively presumed to have "known" in 1980, 1981, 1982, and 1983 that he owned the warrant and the obligation generating the income? Apparently he had forgotten and, subjectively speaking, had no knowledge of his interests when he sat on Xerox's case. The argument is advanced that we should not go by the subjective awareness of the judge. A subjective standard...