Liljeberg v. Health Svcs. Acq. Corp., 486 U.S. 847 (1988)

Liljeberg v. Health Services Acquisition Corp.

No. 86-957

Argued December 9, 1987
Reargued April 25, 1988
Decided June 17, 1988
486 U.S. 847

CERTIORARI TO THE UNITED STATES OF APPEALS FOR

THE FIFTH CIRCUIT

Syllabus

In 1977, pursuant to a plan to construct and operate a hospital in Kenner, Louisiana, petitioner formed a corporation (St. Jude) to apply for the necessary state "certificate of need." During the next two years, petitioner negotiated with Loyola University over a proposal to purchase as the hospital site a portion of Loyola’s Kenner land for several million dollars, coupled with a plan to rezone Loyola’s adjoining land to greatly increase its value. Federal District Court Judge Robert Collins was a member, and regularly attended the meetings, of Loyola’s Board of Trustees, whose minutes indicated regular discussions of the negotiations’ progress and reflected the fact that Loyola’s interest in the project was dependent on the issuance of the certificate. Petitioner also conducted negotiations with respondent’s corporate predecessor, Hospital Affiliates International (HAI), culminating in HAI’s purchase of a Kenner site not owned by Loyola and its filing of the certificate application upon petitioner’s execution of an agreement which HAI believed gave it title to St. Jude. After the certificate was issued in St. Jude’s name, and a dispute between petitioner and HAI arose as to St. Jude’s ownership, petitioner’s proposal to reopen the Loyola negotiations was discussed and formally approved at the Board’s meeting on November 12, 1981, which Judge Collins attended. On November 30, 1981, respondent filed suit in the District Court seeking a declaration of ownership of St. Jude. Judge Collins, sitting without a jury, tried the case on January 21 and 22, 1982, immediately announcing his intention to rule for petitioner. On January 28, 1982, at a meeting which Judge Collins did not attend, the Loyola Board discussed the terms of an agreement of sale with petitioner, which provided, inter alia, that it would be void if petitioner failed to satisfy certain conditions, the fulfillment of which depended on his retention of control over the certificate. Judge Collins did not read the minutes of that meeting until March 24, 1982. In the meantime, on March 16, he entered judgment for petitioner, crediting petitioner’s version of crucial, disputed conversations. Ten months after the Court of Appeals affirmed that judgment, respondent, having just learned that Judge Collins was associated with Loyola while petitioner and the University were engaged in negotiations concerning the hospital site, moved pursuant to Federal Rule of Civil Procedure 60(b)(6) to vacate the judgment on the ground that Judge Collins was disqualified under 28 U.S.C. § 455(a). Judge Collins denied the motion, but the Court of Appeals reversed and remanded to a different judge, who also denied the motion on the ground that, although the evidence gave rise to an appearance of impropriety, Judge Collins lacked actual knowledge of Loyola’s interest in the litigation during the trial and prior to the filing of the judgment. The Court of Appeals again reversed, ruling that the appearance of impropriety is a sufficient ground for disqualification under § 455(a). Moreover, the court ruled that vacatur was an appropriate remedy in these circumstances.

Held:

1. A violation of § 455(a) -- which requires a judge to disqualify himself in any proceeding in which his impartiality might reasonably be questioned -- is established when a reasonable person, knowing the relevant facts, would expect that a judge knew of circumstances creating an appearance of partiality, notwithstanding a finding that the judge was not actually conscious of those circumstances. To require scienter as an element of a § 455(a) violation would contravene that section’s language and its purpose of promoting public confidence in the integrity of the judicial system. This reading of § 455(a) does not require judges to perform the impossible by disqualifying themselves based on facts they do not know, since, in proper cases, the provision can be applied retroactively to rectify an oversight once the judge concludes that "his impartiality might reasonably be questioned." Here, where both lower courts found an ample basis in the record for concluding that an objective observer would have questioned Judge Collins’ impartiality, his failure to disqualify himself was a plain violation of § 455(a) even though it was initially the product of a temporary lapse of memory. Pp. 858-862.

2. Vacatur was a proper remedy for the § 455(a) violation in the circumstances of this case. In determining whether a § 455(a) violation requires vacatur under Rule 60(b)(6) -- which gives federal courts broad authority to grant relief from a final judgment "upon such terms as are just," provided that the motion is made within a reasonable time -- it is appropriate to consider the risk of injustice to the particular parties, the risk that the denial of relief will produce injustice in other cases, and the risk of undermining the public’s confidence in the judicial process. Here, despite his lack of actual knowledge of Loyola’s interest in the dispute during trial, Judge Collins’ participation in the case created a strong appearance of impropriety, particularly in light of his regular attendance at Board meetings, including the one on November 12, 1982, and the financial importance of the project to Loyola; his failure to attend the January 28, 1982, meeting or to read the minutes of that meeting before entering judgment; his inexcusable failure to recuse himself or disclose his interest on March 24, 1982, when respondent still had time to file a new trial motion or to use the failure as an issue on direct appeal; and his failure to acknowledge, in denying the motion to vacate, that he had known about Loyola’s interest both shortly before and shortly after trial, or to indicate any awareness of a duty to recuse himself in March, 1982. Moreover, vacatur here will not produce injustice in other such cases, and may, in fact, prompt other judges to more carefully search for and disclose disqualification grounds. Furthermore, a careful study of the merits of the underlying litigation suggests that there is a greater risk of unfairness in upholding the judgment for petitioner than in allowing a new trial, while neither petitioner nor Loyola has made a showing of special hardship by reason of their reliance on the original judgment. Finally, although a 10-month delay would normally foreclose vacatur based on a § 455(a) violation, the delay here is excusable, since it is entirely attributable to Judge Collins’ conduct. Pp. 862-870.

796 F.2d 796, affirmed.

STEVENS, J., delivered the opinion of the Court, in which BRENNAN, MARSHALL, BLACKMUN, and KENNEDY, JJ., joined. REHNQUIST, C.J., filed a dissenting opinion, in which WHITE and SCALIA, JJ., joined, post, p. 870. O’CONNOR, J., filed a dissenting opinion, post, p. 874.