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In re Certain Underwriter Defendants

In re Certain Underwriter Defendants

United States Court of Appeals for the Second Circuit

February 8, 2002, Submitted ; April 1, 2002, Decided

Docket No. 01-3092

Opinion

 [*299]  POOLER, Circuit Judge:

Determined to recover losses sustained in the initial public offering ("IPO") market which flourished during the stock market boom of the late 1990s, investor-plaintiffs brought more than 1,000 class action lawsuits (the "Securities Actions") against issuers, underwriters, and brokers, all alleging widespread manipulation of both the IPO market and IPO aftermarket. In re Initial Pub. Offering Secs. Litig., 174 F. Supp. 2d 70, 75 (S.D.N.Y. 2001). On August 8, 2001, Chief [**2]  Judge Michael B. Mukasey signed an order transferring all of the Securities Actions for pre-trial purposes to the Hon. Shira A. Scheindlin, district judge for the United States District Court for the Southern District of New York. Certain defendants asked Judge Scheindlin to recuse herself from the Securities Actions. She refused. Thirty-nine of the defendant underwriting firms (the "Moving Defendants") now petition for a writ of mandamus reversing the November 28, 2001, opinion and order of the district court (Scheindlin, J.) denying their motion for recusal under 28 U.S.C. § 455. In seeking the district judge's removal, the Moving Defendants primarily argue that (1) the district court judge's financial and legal interests, as well as knowledge acquired during her participation as a private investor in several IPOs, mandate recusal under 28 U.S.C. § 455(b)(1), (4) and (5); (2) 28 U.S.C. § 455 does not permit a district court judge to cure a conflict by divesting the offending interest unless substantial judicial time has been invested; (3) substantial judicial time has not been invested here because the Securities [**3]  Actions were not consolidated and transferred until August 2001; and (4) comments made by the district court judge, along with her divestment of certain stocks to retain jurisdiction, create an appearance of partiality requiring her recusal under 28 U.S.C. § 455(a). Because we find the district court expended substantial judicial time in the Securities Actions before the recusal motion was made, and because we do not believe an appearance of bias exists, we deny the writ.

BACKGROUND

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294 F.3d 297 *; 2002 U.S. App. LEXIS 6487 **; Fed. Sec. L. Rep. (CCH) P91,755

IN RE: CERTAIN UNDERWRITER DEFENDANTS, IN RE INITIAL PUBLIC OFFERING SECURITIES LITIGATION, Petitioners-Appellants.

Prior History:  [**1]  Appeal from the November 28, 2001, opinion and order of the United States District Court for the Southern District of New York (Shira A. Scheindlin, J.) denying appellants' petition for recusal.

In re Initial Pub. Offering Sec. Litig., 174 F. Supp. 2d 70, 2001 U.S. Dist. LEXIS 19391 (S.D.N.Y. 2001) 

Disposition: Petition for writ of mandamus to reverse lower court denied.

CORE TERMS

recusal, stock, district judge, district court, judicial time, divesting, appearance, partiality, district court judge, disqualification, conflicts, consolidated, devoted, parties, cases, antitrust action, financial interest, recusal motion, class action, invested, waived, class member, aftermarket, quotation, assigned, expended, broker, marks

Civil Procedure, Inability to Proceed, Disqualification & Recusal, General Overview, Governments, Courts, Rule Application & Interpretation, Appeals, Standards of Review, Abuse of Discretion, Remedies, Writs, Common Law Writs, Mandamus, Judges, Judicial Officers, Judges, Federal Judges, Grounds for Disqualification & Recusal, Appearance of Partiality, Financial Interests, Personal Bias