SCA Services, Inc. v. Morgan, No. 77-1194

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Writing for the CourtBefore CUMMINGS, SPRECHER and BAUER; PER CURIAM; Wood
Citation557 F.2d 110
PartiesSCA SERVICES, INC., Petitioner, v. Hon. Robert D. MORGAN, Judge, United States District Court for the Southern District of Illinois, et al., Respondents.
Docket NumberNo. 77-1194
Decision Date17 June 1977

Page 110

557 F.2d 110
40 A.L.R.Fed. 942
SCA SERVICES, INC., Petitioner,
v.
Hon. Robert D. MORGAN, Judge, United States District Court
for the Southern District of Illinois, et al., Respondents.
No. 77-1194.
United States Court of Appeals,
Seventh Circuit.
Submitted May 20, 1977.
Decided June 17, 1977.

Page 112

Jerome P. Facher, James C. Donnelly, Jr., Boston, Mass., Max Wildman, Jerald P. Esrick, Chicago, Ill., for petitioner.

Clyde D. Stoltenberg, Rock Island, Ill., Richard N. Molchan, Bret S. Babcock, Peoria, Ill., C. William Garratt, Detroit, Mich., for respondents.

Before CUMMINGS, SPRECHER and BAUER, Circuit Judges.

PER CURIAM.

The petitioner, SCA Services, Inc. (SCA) is the plaintiff in SCA Services, Inc. v. Lucky Stores, Inc., a civil action pending in the District Court for the Southern District of Illinois, Northern Division, before Judge Robert D. Morgan. 1 In October, 1976, SCA filed a "Motion to Disqualify", supported by affidavits, seeking the disqualification of Judge Morgan pursuant to 28 U.S.C. § 455, as amended in 1974, on three separate grounds: (1) the judge's brother is acting as a lawyer in the proceeding (id. § 455(b)(5)(ii)); (2) the judge's brother has an interest which could be substantially affected by the outcome of the proceeding (id. § 455(b)(5)(iii)); and (3) the judge's impartiality might reasonably be questioned under all the particular facts and circumstances of the case (id. § 455(a)). The motion to disqualify did not allege actual bias or prejudice on the part of Judge Morgan, but was based solely on the statutory grounds contained in section 455, which the petitioner believes require mandatory disqualification.

Judge Morgan denied SCA's motion to disqualify without a hearing and filed a "Memorandum of Decision" on November 2, 1976. The judge also denied SCA's request for an order allowing an interlocutory appeal. Three months later, on February 17, 1977, SCA filed a "Petition for Mandamus" in this Court seeking an order directing the respondent judge to refrain from presiding at further proceedings in SCA Services, Inc. v. Lucky Stores, Inc., and to assign the case to another judge. Responses and a reply thereto have been filed. Although discovery and other proceedings have continued in the district court, the trial date has been indefinitely postponed pending resolution of this petition.

This is a case of first impression under 28 U.S.C. § 455, as amended, involving the mandatory disqualification of a federal judge based on relationship to counsel and on the appearance of partiality which might reasonably arise from the relationship. 2

Page 113

This case raises important public issues concerning the interpretation and application of the statute and affecting public confidence and trust in the impartiality of the judicial system.

Legislative History

In 1972, the House of Delegates of the American Bar Association adopted a new Code of Judicial Conduct which advocated the "appearance of justice" standard for judicial disqualification. 3 One year later the Judicial Conference applied this new code to all federal judges, but it specifically provided that this adoption "did not abrogate or modify . . . conflicting provisions of (Federal) Statutes 4 'which were considered to be less restrictive' ". 5 Finally, in 1974, Congress enacted the new section 455 which was designed to reconcile the 1972 Code of Judicial Conduct with the federal statutes. 6 Its purpose was to eliminate "dual standards, statutory and ethical, couched in uncertain language (that) had the effect of forcing a judge to decide either the legal or the ethical issue at his peril." 7 Congress also intended to overrule the concept that close cases involving disqualification should be resolved on the ground that a judge had a "duty to sit." 8

Pertinent to this case are the following provisions of section 455:

"(a) Any justice, judge, magistrate, or referee in bankruptcy of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.

(b) He shall also disqualify himself in the following circumstances:

(5) He or his spouse, or a person within the third degree of relationship to either of them, or the spouse of such a person:

(ii) Is acting as a lawyer in the proceeding;

(iii) Is known by the judge to have an interest that could be substantially affected by the outcome of the proceeding." (Emphasis added.)

The new statute contains the general, all-inclusive objective standard of the 1972 Judicial Code: a judge "shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned." 28 U.S.C. § 455(a). In addition, subsections (b)(1), (2), (3), (4) and (5) provide for the mandatory disqualification of a judge in certain specific circumstances, such as where family or financial interests are involved.

In the underlying case none of the parties disputes that Donald A. Morgan is Judge Morgan's brother and that he is a senior partner in Davis & Morgan, the firm which has entered a general appearance for one of the parties in the district court litigation. 9 The parties dispute, however, whether or not this relationship mandates Judge Morgan's disqualification pursuant to 28 U.S.C. § 455(b)(5)(ii). SCA posits that when general principles of agency and partnership are applied in the factual setting of a law firm, Donald A. Morgan is "acting as a

Page 114

lawyer" regardless of his involvement or non-involvement in this case. Contrariwise, respondents urge that this position is specious because Donald A. Morgan has not performed any professional duties in this case since its initiation over one-and-a-half years ago. They are supported in their argument by Judge Morgan's own findings, after "specific inquiry," that Donald Morgan was not acting as lawyer in this case. (Petitioner's App. at D-3.)

On the basis of the undisputed facts in this case and the well-settled principles of agency and partnership law, it is clear that the appearance of Davis & Morgan in the case before Judge Morgan is the appearance of every lawyer in the firm, including Donald A. Morgan. A Formal Opinion issued by the A.B.A. Committee on Professional Ethics as long ago as 1931 opined that every member of a law firm is prohibited from accepting employment which another member could not accept because of a conflict of interest. See A.B.A. Comm. on Prof. Ethics, Formal Opinion No. 33 (1931). More recently this Court in a case involving a conflict of interest situation assumed this same ethical stance: "confidential information presumptively possessed by . . . (one attorney) would be imputed to the other members of the . . . firm." Schloetter v. Railoc of Ind., Inc., 546 F.2d 706, 710 (7th Cir. 1976). Although Schloetter is distinguishable on the facts because it involved an order disqualifying an attorney from proceeding in a case, it does afford precedential value for applying partnership law to law firms. In addition, both Illinois case law and statutes support the principle that an agency relationship exists between partners of a law firm and between each partner and the firm itself. See Schumann-Heink v. Folsom, 328 Ill. 321, 159 N.E. 250 (1928); Ill.Rev.Stat. ch. 1061/2, §§ 11, 13, 15 (1975); see also Restatement (Second) Agency § 20, Comment e (1958).

I.

Having decided that Donald A. Morgan is an attorney in this action by virtue of his relationship with the firm of Davis & Morgan is not to decide, however, that he is "acting as a lawyer" within the language and intent of § 455(b)(5) (ii). Although the statute on its face mandates recusal where "near relatives" are involved, the Senate hearings suggest disqualification was not intended to be automatic. 10 Rather, it was indicated that the limitations which had been recommended in the Commentary to Canon 3C of the Judicial Code and adopted by the 1973 Judicial Conference should continue to guide the judiciary when "near relatives" were involved. 11 The Commentary accompanying that section provides:

"The fact that a lawyer in a proceeding is affiliated with a law firm with which a lawyer-relative of the judge is affiliated does not of itself disqualify the judge. Under appropriate circumstances, the fact that 'his impartiality might reasonably be questioned' under Canon 3C(1), or that the lawyer-relative is known by the judge to have an interest in the law firm that could be 'substantially affected by the outcome of the proceeding' under Canon 3C(1)(d)(iii) may require his disqualification."

Because the legislative history of section 455 indicates that a judge would be advised to consider whether his near relative has "an interest in the law firm that could be 'substantially affected by the outcome of the proceeding' " or whether " 'his...

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122 practice notes
  • State v. Moyer, No. 105,183
    • United States
    • United States State Supreme Court of Kansas
    • May 17, 2017
    ...that his impartiality could not reasonably be questioned. This court noted that Weinberger distinguished SCA Services, Inc. v. Morgan, 557 F.2d 110 (7th Cir. 1977), where the Seventh Circuit held that the judge should have recused when his brother was a partner in the law firm representing ......
  • U.S. v. State of Ala., No. 86-7090
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • October 6, 1987
    ...455 survived. Compare, e.g., In re International Business Machines Corp., 618 F.2d 923 (2d Cir.1980) with SCA Services, Inc. v. Morgan, 557 F.2d 110 (7th Cir.1977). In United States v. Slay, 714 F.2d 1093 (11th Cir.1983), cert. denied, 464 U.S. 1050, 104 S.Ct. 729, 79 L.Ed.2d 189 (1984), th......
  • School Asbestos Litigation, In re, No. 45
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • October 23, 1992
    ...decision not to extend precedents concerning review of section 144 rulings to expanded section 455. Before SCA Services, Inc. v. Morgan, 557 F.2d 110 (7th Cir.1977) (per curiam), the Seventh Circuit had (like us) taken the minority position that mandamus did not lie to review section 144 ru......
  • Grace v. Burger, No. 80-2044
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • September 8, 1981
    ...Robin, 553 F.2d 8, 11 (2d Cir. 1977) (en banc) (sought preservation of the general appearance of fairness); SCA Services, Inc. v. Morgan, 557 F.2d 110, 116 (7th Cir. 1977) (section 455(a) "enunciates the appearance of partiality as the general standard for judicial recusal"); United States ......
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122 cases
  • State v. Moyer, No. 105,183
    • United States
    • United States State Supreme Court of Kansas
    • May 17, 2017
    ...that his impartiality could not reasonably be questioned. This court noted that Weinberger distinguished SCA Services, Inc. v. Morgan, 557 F.2d 110 (7th Cir. 1977), where the Seventh Circuit held that the judge should have recused when his brother was a partner in the law firm representing ......
  • Grace v. Burger, No. 80-2044
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • September 8, 1981
    ...Robin, 553 F.2d 8, 11 (2d Cir. 1977) (en banc) (sought preservation of the general appearance of fairness); SCA Services, Inc. v. Morgan, 557 F.2d 110, 116 (7th Cir. 1977) (section 455(a) "enunciates the appearance of partiality as the general standard for judicial recusal"); United States ......
  • Cement Antitrust Litigation (Mdl No. 296), In re, No. 81-7465
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • October 1, 1982
    ...Construction Co., 609 F.2d 1101 (5th Cir. 1980) cert. denied, 449 U.S. 820, 101 S.Ct. 78, 66 L.Ed.2d 22 (1982); SCA Services v. Morgan, 557 F.2d 110 (7th Cir. 1977); Los Angeles Trust Deed & Mortgage Exchange v. SEC, 285 F.2d 162 (9th Cir. 1960), cert. denied, 366 U.S. 919, 81 S.Ct. 1095, 6......
  • In re EState Ann Wilson (arnetta Williams, No. 108487.
    • United States
    • Supreme Court of Illinois
    • October 21, 2010
    ...immediately from the challenged judge's finding of insufficiency of the allegations under section 144. See SCA Services, Inc. v. Morgan, 557 F.2d 110, 117 (7th Cir.1977) (explaining appellate review of section 144 motions). In Illinois, in contrast, an appeal from the denial of the motion f......
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