In re Literary Works in Elec. Databases Copyright

• Decision Date: 29 November 2007
• Docket Number: Docket No. 06-0223(CON).,Docket No. 05-5943-cv(L).
• Citation: 509 F.3d 136
• Parties: In re LITERARY WORKS IN ELECTRONIC DATABASES COPYRIGHT LITIGATION. Irvin Muchnick, Abraham Zaleznik, Charles Schwartz, Jack Sands, Todd Pitock, Judith Stacey, Judith Trotsky, Christopher Goodrich, Kathy Glicken and Anita Bartholomew, Objectors-Appellants, v. Thomson Corporation, Dialog Corporation, Gale Group, Inc., West Publishing Company, Inc., Dow Jones & Company, Inc., Dow Jones Reuters Business Interactive, LLC, Knight Ridder Inc., Knight Ridder Digital, Mediastream, Inc., Newsbank, Inc., Proquest Company, Reed Elsevier Inc., Union-Tribune Publishing Company, New York Times Company, Copley Press, Inc., Ebsco Industries, Inc. and Participating Publisher Tribune Company, Defendants-Appellees, Michael Castelman Inc., E.L. Doctorow, Tom Dunkel, Andrea Dworkin, Jay Feldman, James Gleick, Ronald Hayman, Robert Lacey, Ruth Laney, Paula McDonald, P/K Associates, Inc., Letty Cottin Pogrebin, Gerald Posner, Miriam Raftery, Ronald M. Schwartz, Mary Sherman, Donald Spoto, Robert E. Treuhaft and Jessica L. Treuhaft Trust, Robin Vaughan, Robley Wilson, Marie Winn, National Writers Union, The Authors Guild, Inc. and American Society of Journalists and Authors, Plaintiffs-Appellees, Edward Roeder, Appellant.
• Court: U.S. Court of Appeals — Second Circuit

509 F.3d 136

In re LITERARY WORKS IN ELECTRONIC DATABASES COPYRIGHT LITIGATION.

Irvin Muchnick, Abraham Zaleznik, Charles Schwartz, Jack Sands, Todd Pitock, Judith Stacey, Judith Trotsky, Christopher Goodrich, Kathy Glicken and Anita Bartholomew, Objectors-Appellants, v. Thomson Corporation, Dialog Corporation, Gale Group, Inc., West Publishing Company, Inc., Dow Jones & Company, Inc., Dow Jones Reuters Business Interactive, LLC, Knight

Ridder Inc., Knight Ridder Digital, Mediastream, Inc., Newsbank, Inc., Proquest Company, Reed Elsevier Inc., Union-Tribune Publishing Company, New York Times Company, Copley Press, Inc., Ebsco Industries, Inc. and Participating Publisher Tribune Company, Defendants-Appellees,

Michael Castelman Inc., E.L. Doctorow, Tom Dunkel, Andrea Dworkin, Jay Feldman, James Gleick, Ronald Hayman, Robert Lacey, Ruth Laney, Paula McDonald, P/K Associates, Inc., Letty Cottin Pogrebin, Gerald Posner, Miriam Raftery, Ronald M. Schwartz, Mary Sherman, Donald Spoto, Robert E. Treuhaft and Jessica L. Treuhaft Trust, Robin Vaughan, Robley Wilson, Marie Winn, National Writers Union, The Authors Guild, Inc. and American Society of Journalists and Authors, Plaintiffs-Appellees,

Edward Roeder, Appellant.

Docket No. 05-5943-cv(L).

Docket No. 06-0223(CON).

United States Court of Appeals, Second Circuit.

Argued: March 7, 2007.

Decided: November 29, 2007.

Charles D. Chalmers, Fairfax, CA, for Objectors-Appellants.

Charles S. Sims, Proskauer Rose LLP, New York, N.Y. (Stephen Rackow Kaye, Joshua W. Ruthizer, Proskauer Rose LLP; Kenneth Richieri, George Freeman, The New York Times Company, New York, NY; Henry B. Gutman, Simpson Thatcher & Bartlett, New York, NY; James F. Rittinger, Satterlee Stephens Burke & Burke, New York, NY; Jack Weiss, Gibson Dunn & Crutcher LLP, New York, NY; Juli Wilson Marshall, Latham & Watkins, Chicago, IL; Ian Ballon, Greenberg Traurig LLP, Santa Monica, CA; Michael Denniston, Bradley, Arant, Rose & White, LLP, Birmingham, AL; Christopher M. Graham, Levett Rockwood P.C., Westport, CT; Raymond Castello, Fish & Richardson PC, New York, NY, on the brief), for Defendants-Appellees.

Michael J. Boni, Kohn Swift & Graf, P.C., Philadelphia, PA (Joshua D. Snyder, Kohn Swift & Graf, P.C.; Diane S. Rice, Hosie McArthur LLP, San Francisco, CA; A.J. De Bartolomeo, Girard Gibbs & De Bartolomeo LLP, San Francisco, CA; Gary Fergus, Fergus, A Law Firm, San Francisco, CA, on the brief), for Plaintiffs-Appellees.

Before: WINTER and WALKER, Circuit Judges.¹

JOHN M. WALKER, JR., Circuit Judge:

Judges decide cases that implicate fundamental rights, restrict liberty, or even terminate life. Judicial authority is, however, circumscribed by the limits of judicial neutrality. Few responsibilities weigh more heavily on a judge than the task of addressing questions of our own potential partiality and ensuring that the parties and the public have confidence in the judges who hear the cases that affect them.

For better or worse, many lawsuits have become exercises in mass aggregation, and judges must confront new issues relating to the propriety of their participation in such cases as they come before them. Cf. Aetna Life Ins. Co. v. Lavoie, 475 U.S. 813, 826, 106 S.Ct. 1580, 89 L.Ed.2d 823 (1986) (noting that without due care "constitutional disqualification arguments could quickly become a standard feature of class-action litigation"). We decide today that a judge who learns that he is a party to a class action lawsuit by virtue of his possession of a small financial interest in one of the parties or in the subject matter of the lawsuit, and who has devoted substantial time to consideration of that case, but who promptly divests himself of the otherwise disqualifying financial interest, need not recuse himself from continued participation in the disposition of that case.

BACKGROUND

This appeal concerns the settlement of a large lawsuit brought as a class action on behalf of freelance authors whose work has been reproduced without their express consent on a variety of electronic databases, including but not limited to LexisNexis and Westlaw. Cf. N.Y. Times Co. v. Tasini, 533 U.S. 483, 121 S.Ct. 2381, 150 L.Ed.2d 500 (2001). Class members received notice of the class action and its proposed settlement by mail, email, and publication, beginning on or about April 26, 2005. Class members were "required to submit their Proofs of Claim within 120 days of the first date of the Class Notice Program." The claims period thus expired on September 30, 2005.

On September 27, 2005, the United States District Court for the Southern District of New York (George B. Daniels, Judge) approved the settlement. Several members of the class who objected to the settlement filed an appeal on October 21, 2005. On December 29, 2006, the appeal was calendared for oral argument to be held on March 7, 2007 before the Second Circuit, and, thereafter, more than three months after the expiration of the time for filing claims, a panel consisting of Judges Winter, Walker, and Straub received the parties' briefs.

On March 6, 2007, after extensive pre-argument preparation, Judge Winter and I realized that there was a high probability that we held copyrights in works, such as law review articles and speeches, reproduced on defendants' databases. At oral argument on March 7, we publicly stated in open court that we would forego any financial interest in the settlement that we could possibly have now or in the future. No party brought to our attention that, because the claims period had expired without either of us asserting a claim, we were at that point ineligible to recover anything in the class action in any event.

Within days, we solicited the opinion of the Committee on Codes of Conduct of the Judicial Conference of the United States (the "Committee") as to how to proceed. By letter dated March 22, 2007, the Committee informed us of its opinion that we should not "continue to serve on the panel." Letter from the Committee on Codes of Conduct of the Judicial Conference of the United States to Judges Winter and Walker, Docket No. 1934, at *5 (Mar. 22, 2007). Relying on Canon 3C(1)(d)(i) of the Code of Conduct for United States Judges (the "Code of Conduct" or the "Code"), the Committee reasoned that, because we are "part[ies] to the proceeding," we must recuse ourselves. Id. at *3. While the Committee suggested that "[i]t makes . . . sense to allow an appellate judge . . . to take action equivalent to opting out after the opt-out period expires so long as the action occurs promptly upon assignment and discovery of the potential conflict," id. at *4, it concluded that our divestiture on March 7 was insufficient to cure our putative disqualification because we had devoted substantial time to the case before that date (in preparing for oral argument, etc.), id. at *5.²

On March 27, 2007, we informed the Committee of the added fact that the case had been assigned to us after the claims period had expired — and therefore, even had we not affirmatively renounced any interest in the outcome, we would have been ineligible to participate in any recovery. On March 30, 2007, the Committee Chair informed us that this fact did not alter the Committee's opinion that recusal should occur. We must now decide whether to follow the Committee's opinion.

DISCUSSION

I. Recusal Under the Code of Conduct and 28 U.S.C. § 455

Section 455 of Title 28, and its more-or-less identical analogue in the Code of Conduct,³ is designed to "promote public confidence in the impartiality of the judicial process by saying, in effect, if there is a reasonable factual basis for doubting the judge's impartiality, he should disqualify himself." H.R.Rep. No. 93-1453, reprinted in 1974 U.S.C.C.A.N. 6351, 6355. Thus, it provides that a judge should recuse himself not only when he is actually biased or partial, 28 U.S.C. § 455(b); see also id. § 144, but also when a reasonable observer might question his neutrality, id. § 455(a). As the Supreme Court has explained, § 455(b) "rendered objective and spelled out in detail the `interest' and `relationship' grounds of recusal" that had been covered by judicial recusal statutes dating back to 1792.⁴ Liteky v. United States, 510 U.S. 540, 548, 114 S.Ct. 1147, 127 L.Ed.2d 474 (1994). Under § 455(a), by contrast, "what matters is not the reality of bias or prejudice but its appearance." Id. (emphasis added).

Nevertheless, despite the breadth of § 455, "[a] judge is as much obliged not to recuse himself when it is not called for as he is obliged to when it is." In re Drexel Burnham Lambert Inc., 861 F.2d 1307, 1312 (2d Cir.1988). Indeed, we as judges must balance our duty to appear impartial against several practical considerations, including the availability of other judges, United States v. Will, 449 U.S. 200, 214, 101 S.Ct. 471, 66 L.Ed.2d 392 (1980) (Rule of Necessity), the cost in judicial resources of recusal and reassignment of the case to different judges, and the interest of the parties and the public in a swift resolution of the dispute.

To assist us in striking this balance, 28 U.S.C. § 455(f) provides that,

[n]otwithstanding the preceding provisions [§§ 455(a) and (b)] . . ., if any . . . 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 ... 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 . . . divests himself or herself of the interest that provides the grounds for the disqualification.

This court has, for instance, found § 455(f) "directly appli[cable]" to a situation involving a district judge's belated discovery that he owned stock in a company that, in turn, owned a substantial number of shares in one of the...