Miller Industries v. Caterpillar Tractor Co.

• Decision Date: 13 August 1980
• Docket Number: Civ. A. No. 78-70-H.
• Citation: 516 F. Supp. 84
• Parties: MILLER INDUSTRIES, INC., Joe N. Hendrix Co., Old Feller, Inc., J & G, Inc., Plaintiffs, v. CATERPILLAR TRACTOR CO., and Burford Equipment Co., Defendants, John N. Magoteaux, Intervenor.
• Court: U.S. District Court — Southern District of Alabama

516 F. Supp. 84

MILLER INDUSTRIES, INC., Joe N. Hendrix Co., Old Feller, Inc., J & G, Inc., Plaintiffs, v. CATERPILLAR TRACTOR CO., and Burford Equipment Co., Defendants John N. Magoteaux, Intervenor.

Civ. A. No. 78-70-H.

United States District Court, S. D. Alabama, S. D.

August 13, 1980.

A. Clay Rankin, III, and J. Hodge Alves, III, Mobile, Ala., for plaintiffs and intervenor.

James W. Garrett, Jr., and Robert A. Huffaker, Montgomery, Ala., for Burford Equipment Co.

William H. Hardie, Jr., Mobile, Ala., for Caterpillar Tractor Co.

MEMORANDUM DECISION

ARNOW, District Judge.

This action was originally tried without a jury by The Honorable W. B. Hand, United States District Judge for the Southern District of Alabama. Judgment was entered in favor of plaintiffs (Miller), 473 F.Supp. 1147, and defendants Caterpillar Tractor Company (Caterpillar) and Burford Equipment Company (Burford) appealed.

During the pendency of the appeal the Fifth Circuit rendered its decision in the case of Potashnick v. Port City Construction Co., 609 F.2d 1101 (5th Cir. 1980), which addressed, in part, the issue of the disqualification of Judge Hand to consider a case in which the plaintiff was represented by the Mobile law firm of Hand, Arendall, Bedsole, Greaves and Johnston (Hand, Arendall). Judge Hand had been a partner in Hand, Arendall prior to his appointment to the federal bench. Hand, Arendall represent Miller in this litigation.

Following Potashnick, Burford filed its motion in Fifth Circuit seeking reversal in this case or, in the alternative, the remandment of the case for consideration of the issue of disqualification. In an order entered on March 31, 1980, Fifth Circuit remanded the case to the district court for consideration by a judge other than the original trial judge. The case was assigned to this judge for consideration of that issue.

Judge Hand's father, Charles Hand, had been a senior partner in Hand, Arendall for many years, although during the pendency of this litigation he was in "of counsel" status until his death in March of 1980. In its motion in Fifth Circuit, Burford focused on this relationship. Before this court, while in briefs submitted their approaches are somewhat different, Burford and Caterpillar contend Judge Hand should have disqualified himself from hearing this action because of three things; first, the relationship of his father with Hand, Arendall; second, his personal relationship with Hand, Arendall; and, third, his relationship with his law clerk who continued to work on this case as law clerk after having accepted an offer of future employment by Hand, Arendall. Miller contends disqualification is not required.

In conference before this court the parties, commendably, agreed that they could and would be able to agree and stipulate on all the facts required for decision. They have filed a lengthy stipulation of facts; the facts which this court finds relevant are discussed in this decision.

At the outset it should be emphasized that there is no issue presented of actual prejudice, bias or misconduct by Judge Hand, the law clerk, or attorneys for Miller. Both through their stipulations of fact and briefs, the parties agree there is no shred of evidence of actual prejudice, bias, or misconduct by any such persons.

Rehearing in Potashnick was denied and a petition for certiorari to the United States Supreme Court has been filed but has not been ruled upon, according to this court's understanding. It is also this court's understanding that petition for certiorari on the order of remand has also been filed but has not yet been ruled upon. In this decision, this court travels on the assumption Potashnick is viable law, at least in Fifth Circuit, recognizing action by the Supreme Court might subsequently alter or affect the decision.

A. The Judge's Father

Judge Hand's father, Mr. Charles C. Hand, was a partner in the Hand, Arendall firm from its inception through the year 1976 but ceased being a partner as of January 1, 1977. From January 1, 1977, until his death at age 89 in March of 1980, Mr. Hand was "of counsel" with Hand, Arendall, during which period of time he was paid $12,000 annually and provided with an office, a parking space, the use of one of the partner's secretaries whenever he desired, and dues at a club. After January 1, 1977, he did not participate in partnership meetings or decisions and he had no right to vote in such meetings or decisions. He was essentially retired certainly by January 1, 1977 and, in fact, some time well before then.

Mr. Hand did not participate in this litigation and no contention is raised that Judge Hand should have disqualified himself because his father was an attorney in the litigation. Instead, Burford and Caterpillar contend that the trial judge should have disqualified himself because his father was "known by the judge to have an interest that could be substantially affected by the outcome of the proceeding" within the meaning of 28 U.S.C. § 455(b)(5)(iii).

Contrary to the factual situation presented in Potashnick, Mr. Charles Hand was not a partner in Hand, Arendall during this litigation. He was "of counsel" to the firm. He had no percentage interest in the firm; he was paid fixed compensation. He had no financial interest at stake, nor did he, as in Potashnick, have a discernible interest in the firm's reputation, its relationship with its clients, and its ability to attract new clients.

In United States ex rel. Weinberger v. Equifax, Inc., 557 F.2d 456 (5th Cir. 1977), the court held that the status of the judge's son as an associate in the law firm did not mandate disqualification.

There is even less reason to hold Mr. Hand's status mandates disqualification. In Weinberger the associate's salary interest was held to be too remote to fall under the "financial" interest prohibition. While its amount does not appear from the decision, it is reasonable to assume it was at least equal to, and probably greater than, Mr. Hand's compensation. Hand, Arendall is a successful 33 member firm; it boggles the imagination to assume that any financial interest Mr. Hand had in this litigation could be affected in any way, much less "substantially", by the outcome of the proceedings.

While the "other interest" aspect of the statute is not discussed in Weinberger, an associate in a law firm obviously must have some, and certainly more, interest in the firm's ongoing progress, reputation and ability to attract and keep clients than a former partner in his late 80's, essentially retired, and in "of counsel" status.

There is no basis for concluding that Judge Hand should have recused himself because of his father's position with Hand, Arendall. Mr. Hand had no interest that could be substantially affected by the outcome of the proceeding within the meaning of 28 U.S.C. § 455(b)(5)(iii).

B. The Judge's Relationship With Hand, Arendall

Contentions of Burford and Caterpillar under this are presented under 28 U.S.C. § 455(a), which provides that a judge shall disqualify himself in any proceeding "in which his impartiality might reasonably be questioned."

In support of their contentions, they point out that Judge Hand had entered into various investments with certain of his partners which he continued to maintain after his appointment as a district judge and during the pendency of this litigation. While these investments were primarily passive in nature they did require, from time to time, the preparation and execution of various legal instruments such as deeds and mortgages, and other instruments, in the management of the properties. Required instruments were prepared by attorneys with Hand, Arendall and submitted to Judge Hand and the other investors for execution. Some were so prepared and executed by Judge Hand during the pendency of this litigation.

Paul Brock, of Hand, Arendall, represented Judge Hand and others named as defendants in a law suit settled on July 1, 1978, after this litigation commenced, although approximately a year prior to the trial and judgment in this suit.

In May of 1979, at Judge Hand's request, a lawyer with Hand, Arendall prepared a deed, executed by Judge Hand, transferring some property Judge Hand owned on Dauphin Island. In 1980 Charles Arendall, of Hand, Arendall, prepared a deed for all the owners, including Judge Hand, in connection with the sale of property owned by them with the sale consummated and the proceeds distributed among the owners.

Burford, in brief before this court, includes not only these matters, but refers to the situation involving the judge's father, and the law clerk. The law clerk's situation is discussed subsequently in more detail in this decision. Burford states:

The contention of Burford that the impartiality of the trial judge might reasonably be questioned springs from a combination of factual circumstances previously addressed in this brief, none of which in or of itself might be sufficient to require disqualification but all of which when considered in their totality compel the conclusion.

Caterpillar's approach is somewhat different. It focuses primarily on the law clerk matter, pointing out it did not know of the law clerk's accepting future employment with Hand, Arendall until after he had gone to work with the firm. It points out its counsel were aware of Judge Hand's personal relationship with his former firm and that it would not assert his continuing relationship as a friend and client to his former law firm as grounds for disqualification were that circumstance to stand alone.

Caterpillar agrees this case differs from Potashnick where disqualification was required in the situation where the trial attorney for plaintiff had business relationships with the trial judge. It does contend, however, that at least eleven attorneys at Hand, Arendall represented, shared investments with, had confidential relations with, or retained business interests with Judge Hand since ...