USA v. AL Power Company, et al

Filing 396

MEMORANDUM OPINION AND ORDER DENYING #386 MOTION to Vacate Final Orders and Judgment for reasons set out herein. Signed by Judge Virginia Emerson Hopkins on 2/5/2014. (JLC)

FILED
2014 Feb-05 PM 03:29
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
ALABAMA ENVIRONMENTAL
COUNCIL,
Plaintiff-Intervenor
v.
ALABAMA POWER COMPANY,
Defendant.

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Civil Action No. 2:01-CV-152-VEH

MEMORANDUM OPINION AND ORDER
Currently before the court is the Government’s Motion to Vacate and Recuse, and supporting
brief, doc. 386, as supplemented, doc. 389.1 The motion has been responded to by Defendant
Alabama Power Company (doc. 390). The motion accordingly is under submission.2
I.

THE MOTION

The motion states that it is brought pursuant to 28 U.S.C. § 455(a), (b)(4), and (b)(5)(iii) and
that recusal is mandatory under those provisions. Accordingly, I will limit my discussion to the facts
and the law relevant to the Government’s motion, as framed.
The facts, as laid out by the Government’s brief, are these:
1

The motion was filed by the United States Environmental Protection Agency and joined
in by intervenor Alabama Environmental Council.
2

To the extent that the motion asks the court to vacate its opinions striking the
Government’s expert witnesses’ testimony as not meeting the standards set out at Daubert, and
accordingly, upon the Government’s concession that it could not proceed without the stricken
testimony, granting summary judgment to Alabama Power, the motion is moot in light of the
Eleventh Circuit Court of Appeals decision on appeal. United States v. Alabama Power
Company, 730 F.3d 1278 (11th Cir. 2013).

•

Judge Hopkins’[s] mother owned 1,000 shares of defendant Alabama Power
Company’s parent corporation, Southern Company. That ownership lasted for at least
a decade, including several years after the judge was assigned the case in 2004. The
Judge knew of her mother’s ownership for some portion of that time.

•

The Judge, during the pendency of this case, received a Durable Power of Attorney
in January 2009 that gave her fiduciary control over her mother’s stock in Southern
Company. The shares were sold in May 2009.

•

In November 2010, Judge Hopkins purchased shares in a utility sector mutual fund
that had substantial holdings in Southern Company and other coal-fired utilities
facing similar lawsuits to this one.

Each of these three financial interests disqualified Judge Hopkins from this case and
mandated recusal. 28 U.S.C. § 455(b)(4), (5). The Judge did not disclose these facts to the
Parties until after judgment was entered and only when the United States inquired. The
totality of circumstances create a record where Judge Hopkins’[s] “impartiality might
reasonably be questioned,” another basis requiring recusal. 28 U.S.C. § 455(a).
(Doc. 386-1, at 7).
II.

THE STATUTE

In relevant part, 28 U.S.C. § 455, provides as follows:
(a) Any justice, judge, or magistrate judge 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:
***
(4) He knows that he, individually or as a fiduciary, or his spouse or minor child
residing in his household, has a financial interest in the subject matter in controversy
or in a party to the proceeding, or any other interest that could be substantially
affected by the outcome of the proceeding;
(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:
***
(iii) Is known by the judge to have an interest that could be substantially
affected by the outcome of the proceeding;
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***
(c) A judge should inform himself about his personal and fiduciary financial interests, and
make a reasonable effort to inform himself about the personal financial interests of his
spouse and minor children residing in his household.
***
(d) For the purposes of this section the following words or phrases shall have the meaning
indicated:
***
(3) “fiduciary” includes such relationships as executor, administrator, trustee, and
guardian;
(4) “financial interest” means ownership of a legal or equitable interest, however
small, or a relationship as director, adviser, or other active participant in the affairs
of a party, except that:
(I) Ownership in a mutual or common investment fund that holds securities
is not a “financial interest” in such securities unless the judge participates in
the management of the fund;
***
(f) Notwithstanding the preceding provisions of this section, if any justice, judge, magistrate
judge, or bankruptcy 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 individually or as a
fiduciary, or his or her spouse or minor child residing in his or her household, 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 justice, judge, magistrate judge, bankruptcy judge,
spouse or minor child, as the case may be, divests himself or herself of the interest that
provides the grounds for the disqualification.
III.

ANALYSIS

First, under subsections (b)(4), (b)(5)(iii), and (f), interests which could not be substantially
affected by the outcome of the proceeding do not require recusal. None of the “interests” to which
the movant refers could be substantially affected by this matter.

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Further, no one disputes that I have “devoted” “substantial judicial time” to this matter.
Further, the statute creates a class of people -- specifically, my spouse and my minor children who
reside in my household -- whose ownership interests are imputed to me, and as to whom I have a
duty to inform myself about ownership interests. Notably, my mother is not within that class. It is
also undisputed that my mother executed a durable power of attorney appointing me her attorney in
fact in January of 2009. Up until that date, I did not want to know about my mother’s investments
(nor did I have any obligation to inquire). However, after she executed the power of attorney to me,
I felt I should inform myself about all of her investments, and I did. I realized that she owned 1,000
shares of stock of Southern Company. Alabama Power is a wholly owned subsidiary of Southern
Company. I asked my mother to sell the stock precisely because of this case. I did this because even
if, instead of giving me power of attorney, my mother had died in January of 2009, and assuming that
her death resulted in my direct ownership interest of a portion of her estate as one of her heirs, under
Section 455(f) “disqualification is not required if the ... judge ...divests ... herself of the interest that
provides the grounds for the disqualification.” In other words, although the power of attorney was
not equivalent to a direct ownership interest by me, I treated it as though it were and asked my
mother to sell the stock so that, even under the highest standard, the stock would fall within the
Congressionally-created “cure.” At the end of the day, the decision was my mother’s; she agreed
to sell the stock. The sale occurred in May, 2009.
Since, even under a standard higher than that warranted by the facts, the sale “cured” any
recusal issue related to my mother’s stock ownership of Southern Company, and since no reasonable
person could think it appears improper for a judge to go beyond what is required and apply a cure
that is both Congressionally created and unnecessary, the Government’s motion, to the extent it

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relates to that stock ownership, is due to be denied.
The Government’s motion, to the extent that it is based on my ownership, between November
and December of 2010, of shares of an exchange traded fund, specifically, shares of iShares S&P
Global Utility Index Fund, also is due to be denied. An exchange traded fund is a “common
investment fund.” Congress expressly permits a judge to invest, without disqualification, in a
common investment fund unless the judge “participates in the management of the fund.” 28 U.S.C.
§ 455(d)(4)(I). It is undisputed that I did not participate in the management of this fund. Further,
until the Government’s motion, I did not realize that one of the many companies that iShares S&P
Global Utility Index Fund invested in was Southern Company, nor did (or do) I know the names of
the other entities who, during that approximately one month period, were in litigation with the
United States, much less about what issues. Thus, this investment clearly was statutorily permitted
and no reasonable person would think it appears improper for a judge to own a statutorily permitted
investment. The Government’s motion, to the extent that it is based on my investment in this fund,
is due to be denied.
Finally, no reasonable person would think that these facts, in combination, create an
appearance of impropriety.
IV.

CONCLUSION

For the reasons set out above, the pending motion is due to be, and hereby is, DENIED to
the extent it was not made moot by virtue of the Eleventh Circuit’s decision in U.S. v. Ala. Power
Co., 730 F.3d 1278.

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DONE and ORDERED this the 5th day of February, 2014.

VIRGINIA EMERSON HOPKINS
United States District Judge

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