David et al v. GMAC Mortgage, LLC et al

Filing 35

ORDER by Judge Hamilton Denying 31 Motion for Recusal (pjhlc2, COURT STAFF) (Filed on 12/6/2011) (Additional attachment(s) added on 12/6/2011: # 1 Certificate/Proof of Service) (nah, COURT STAFF).

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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ASHLEY V. DAVID, et al.,
Plaintiffs,

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v.

ORDER DENYING MOTION
FOR RECUSAL

GMAC MORTGAGE, LLC, et al.,

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For the Northern District of California

United States District Court

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No. C 11-2914 PJH

Defendants.
_______________________________/

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Before the court is pro se plaintiffs Ashley V. David and Nosheen David’s motion to

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recuse the undersigned judge pursuant to 28 United States Code § 455. Section 455, by

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contrast, mandates that a judge “shall disqualify himself in any proceeding in which his

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impartiality might reasonably be questioned;” or “[w]here he has a personal bias or

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prejudice concerning a party, or personal knowledge of disputed evidentiary facts

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concerning the proceeding.” See 28 U.S.C. § 455(a); id., at § 455(b)(1). The test for

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personal bias or prejudice in section 144 is identical to that in section 455. See United

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States v. Olander, 584 F.2d 876, 882 (9th Cir. 1978); see United States v. Carignan, 600

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F.2d 762, 764 (9th Cir. 1979).

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Plaintiffs have requested recusal due to an alleged “conflict of interest related to [the

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undersigned’s] investments in the banking industry.” Plaintiffs have filed an affidavit

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detailing the undersigned’s holdings in three separate mutual funds: investment of less than

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$1,000 in the FIdelity Puritan Fund; investment of between $1,000 and $2500 in the

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Vanguard 500 Index Fund; and investment of less than $1000 in Janus Worldwide Fund.

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According to plaintiffs, all of these mutual funds contain holdings belonging to large US

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banks and the US financial services sector, which fact purportedly constitutes a conflict of

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interest here, since the instant action involves a legal challenge involving a large US bank.

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Plaintiffs do not assert that any of the mutual funds held by the undersigned contain

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holdings related to GMAC specifically – the only banking entity a party to this action.

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Canon 3C(1)(c) of the Judicial Code of Conduct requires a judge to disqualify

subject matter in controversy or in a party to the proceeding,” or when the judge has “any

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other interest that could be affected substantially by the outcome of the proceeding.”

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However, an interest in a mutual fund or other similar “common fund” does not constitute a

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“financial interest” in the corporations whose stock is owned by the mutual fund, unless the

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judge participates in the management of the fund. Canon 3C(3)(C)(i). Thus, the mere fact

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For the Northern District of California

himself or herself when the judge knows that he or she “has a financial interest in the

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United States District Court

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that a judge’s mutual fund owns stock in a company appearing before the judge does not

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necessitate the judge’s disqualification. While there are various criteria involved in

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determining whether a fund is a “mutual or common investment fund” pursuant to the

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foregoing, most mutual funds registered with the Securities and Exchange Commission and

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sold to the public as mutual funds will likely meet this criteria. See Committee on Codes of

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Conduct, Advisory Opinion No. 106.

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Here, none of the three mutual funds in which the undersigned has invested are

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funds that provide a basis for disqualification in the first place, since none contain holdings

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in GMAC or any other party to this action, such that any financial ‘interest’ in the present

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action by the undersigned can be claimed. Even if the mutual funds did contain holdings in

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GMAC, however, the funds are sold to the public as mutual funds and are registered with

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the SEC. As such, they fall within the ambit of Canon 3C(3)(c)(i), and are excluded from

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the scope of ‘financial interests’ that could create a conflict of interest.

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To the extent, moreover, that plaintiffs otherwise assert that the undersigned is

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prejudiced “in favor of the banks” based on prior adverse decisions in related cases, the

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court notes that plaintiffs have not cited to any related cases upon which the court might

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assess the adequacy of plaintiffs’ argument. Furthermore, the mere fact that the

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undersigned may have reached decisions on prior unrelated cases not to plaintiffs’ liking,

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cannot be used as a reasonable basis for questioning the undersigned’s impartiality. See

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U.S. v. Sibla, 624 F.2d 864, 868 (9th Cir. 1980)(holding affidavit in favor of recusal not

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legally sufficient unless it alleges facts demonstrating bias or prejudice that "stems from an

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extrajudicial source").

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For all the foregoing reasons, plaintiffs' motion is insufficient as a matter of law, and

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plaintiffs' claim under 28 U.S.C. § 455 is untenable. Plaintiffs' motion for recusal is

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therefore DENIED.

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IT IS SO ORDERED.

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For the Northern District of California

United States District Court

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Dated: December 6, 2011
______________________________
PHYLLIS J. HAMILTON
United States District Judge

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