[Congressional Record Volume 148, Number 108 (Thursday, August 1, 2002)]
[Senate]
[Pages S7869-S7875]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     NOMINATION OF D. BROOKS SMITH

  Mr. LEAHY. Mr. President, I ask unanimous consent that following my 
statement on July 30, 2002, on the nomination of D. Brooks Smith, 
located on pages S7553-S7558, that three letters be printed in the 
Record. The letters are: resolution from the City Council of 
Philadelphia; Monroe Freedman, Professor of Legal Ethics, Hofstra 
University and; Stephen Gillers, Vice Dean and Professor of Law, New 
York University.
  There being no objection, the letters was ordered to be printed in 
the Record, as follows:

                               Resolution

       Whereas, The nomination of Pennsylvania district court 
     Judge D. Brooks Smith to the Third Circuit Court of Appeals 
     in Philadelphia was voted out of the U.S. Senate Judiciary 
     Committee on May 23, 2002 by a 12-7; and
       Whereas, Judge Smith's nomination is opposed by a wide 
     range of public interest organizations. Among the 
     organizations that have formally expressed opposition to 
     Smith's appeals court nomination are People For the American 
     Way, Leadership Conference on Civil Rights, NAACP, Alliance 
     for Justice, National Organization for Women, Community 
     Rights Council, National Women's Law Center, NARAL, 
     Earthjustice, ADA Watch Action Fund, National Partnership for 
     Women & Families, Planned Parenthood, Defenders of Wildlife, 
     National Employment Law Association, Committee for Judicial 
     Independence, NOW Legal Defense and Education Fund, 
     Disability Rights and Education Defense Fund, Feminist 
     Majority, Friends of the Earth, Bazelon Center for Mental 
     Health Law, National Disabled Students Union, and the 
     National Council of Jewish Women; and
       Whereas, Judge Smith's membership in a discriminatory club, 
     his failure for ten years--in violation of governing ethical 
     standards--to resign from the club despite his commitment to 
     do so during his district court confirmation hearing, and the 
     contradictory explanations he has offered for his actions all 
     raise serious issues about Smith's judgment, willingness to 
     follow rules, and candor; and
       Whereas, Ethical questions have been raised regarding a 
     highly publicized bank fraud case involving millions of 
     dollars of public school money. Judge Smith continued to 
     preside over and issue orders in the case, even though the 
     fraud claims implicated a bank at which his wife was an 
     employee and in which he had substantial financial interests. 
     Several years later, he took on a related case, recusing 
     himself only after he was requested to do so by one of the 
     attorneys in the case, revealing only his wife's involvement 
     and not his own financial interest. On March 14, 2002, after 
     reviewing the facts and the arguments by Smith and his 
     defenders, noted legal ethics professor Monroe Freedman wrote 
     to the Senate Judiciary Committee that Smith committed 
     ``repeated and egregious violations of judicial ethics'' and 
     that Smith had been ``disingenuous before this Committee in 
     defending his unethical conduct.'' Professor Freedman 
     concluded that as a result, Smith is ``not fit to serve as a 
     Federal Circuit Judge''; and
       Whereas, Since his appointment in 1989, Judge Smith has 
     been reversed by the court of appeals to which he has been 
     nominated 51 times. This is a larger number of reversals than 
     any of the judges approved and rejected by the Senate 
     Judiciary Committee during this Congress for appellate court 
     posts, including Judge Charles Pickering. More important than 
     the number of these reversals, however, is their nature. Many 
     of these reversals concern civil and individual rights, and 
     reflect a disturbing lack of sensitivity towards such rights 
     and a failure to follow clearly established rules of law and 
     appellate court decisions; and
       Whereas, A number of Smith's reversals have concerned 
     discrimination or other claims by employees. For example, in 
     Wicker v. Consolidated Rail Corp., 142 F.3d 690 (3rd Cir.), 
     cert. denied, 525 U.S. 1012 (1998), the court of appeals 
     unanimously reversed Smith's decision to dismiss a suit by 
     Conrail employees who claimed that years of on-the-job 
     exposure to toxic chemicals was making them sick. Smith had 
     concluded that their lawsuit was barred because they had 
     signed a waiver as part of a settlement of unrelated injury 
     claims against the railroad. The appellate court ruled that 
     Smith's ruling was contrary to the Supreme Court's 
     interpretation of federal law; and
       Whereas, The Third Circuit unanimously reversed Smith's 
     decision in Ackerman v. Warnaco, 55 F.3d 117 (3rd Cir. 1995), 
     in which he upheld a company's unilateral denial of severance 
     benefits to more than 150 employees after they were laid off; 
     and
       Whereas, In Colgan v. Fisher Scientific Co., 935 F.2d 1407 
     (3rd Cir.), cert. denied, 502 U.S. 941 (1991), the appellate 
     court unanimously reversed Smith for granting summary 
     judgment against an age discrimination claim as untimely by 
     ruling that the statute of limitations began to run not when 
     the employee was terminated, but instead when he simply 
     received a negative performance review; and
       Whereas, In Schafer v. Board of Public Educ. of the School 
     Dist. of Pittsburgh, Pa., 903 F.2d 243, 250 (3rd Cir. 1990), 
     the Third Circuit unanimously reversed Smith for dismissing a 
     claim that a school district's family leave policy improperly 
     allowed only women, not men, to take unpaid leave for 
     ``childbearing'' as well as childbirth. Based

[[Page S7870]]

     on such decisions, the National Employment Lawyers 
     Association has opposed Smith's confirmation, explaining that 
     his record displays ``an attitude inimical to employee and 
     individual civil rights''; and
       Whereas, In other reversals involving individuals or other 
     plaintiffs against government or corporations, the Third 
     Circuit has specifically criticized Smith for abusing his 
     discretion or failing to follow the law. For example, in 
     Urrutia v. Harrisburg County Police Dept., 91 F.3d 451, 456-
     457 (3rd Cir. 1996), the appellate court found that Smith had 
     ``abused his discretion'' in refusing to allow a prisoner to 
     amend a complaint contending that he had been repeatedly 
     stabbed while handcuffed and in the custody of police 
     officers who looked on while failing to take any action; and
       Whereas, In Metzgar v. Playskool, 30 F.3d 459, 462 (3rd 
     Cir. 1994), three Reagan appointees reversed Smith for 
     dismissing a claim involving death by asphyxiation of a 15-
     month-old child who had choked on a toy, noting that they 
     were ``troubled by the district court's summary judgment 
     disposition'' of his parents' claims; and
       Whereas, In In re Chambers Development Company, 148 F.3d 
     214, 223-225 (3rd Cir. 1998), concerning a claim against a 
     county utility authority, the Third Circuit took the 
     extraordinary step of issuing a writ of mandamus--an unusual 
     direct command to a judge to rule a certain way--against 
     Judge Smith, who had ``ignored both the letter and spirit of 
     our mandate'' in a prior ruling in the case. As the court of 
     appeals explained, this was a ``drastic remedy'' that is 
     utilized only ``in response to an act amounting to a judicial 
     usurpation of power''; and
       Whereas, Judge Smith has also been criticized for rulings 
     not later reversed on appeal. For example, the Washington 
     Post expressed concern about his decision in United States v. 
     Commonwealth of Pennsylvania, 902 F. Supp. 565 (W.D. Pa. 
     1995), aff'd, 96 F.3d 1436 (3rd Cir. 1996), in which the 
     federal government had sued the state over allegedly 
     substandard conditions in a facility for persons with mental 
     disabilities. As the Post put it, although ``care was, in 
     Judge Smith's words, `frequently not optimal'--maggots were 
     found in one resident's ear, ants on others' bodies--the 
     judge found these to be `isolated incidents' '' and concluded 
     there was no constitutional violation. In another case, 
     Quirin v. City of Pittsburgh, 801 F. Supp. 1486 (W.D. Pa. 
     1992), the National Employment Lawyers Association (NELA) 
     found that Smith had improperly applied the ``aggressive'' 
     standard of ``strict scrutiny,'' which is reserved for claims 
     of racial, ethnic, and religious discrimination, to strike 
     down an affirmative action policy designed to remedy past 
     discrimination against women. As NELA concluded, such rulings 
     ``show a disturbing pattern of disregard and hostility for 
     the rights of minorities and protected classes,'' now 
     therefore,
       Be it resolved by the City Council of Philadelphia, That we 
     hereby strongly urge the United States Senate to reject the 
     nomination of Judge D. Brooks Smith to the Third Circuit 
     Court of Appeals.
       Further Resolved, That we hereby urge Pennsylvania Senators 
     Specter and Santorum to withdraw their support for the 
     confirmation of Judge D. Brooks Smith to the Third Circuit 
     Court of Appeals.
       Be it further resolved, That a copy of this resolution be 
     sent to all members of the United States Senate as evidence 
     of the grave concern by this legislative body.
                                  ____

                                              New York University,


                                                School of Law,

                                       New York, NY, May 17, 2002.
     Hon. Russell D. Feingold,
     U.S. Senate,
     Washington, DC.
       Dear Senator Feingold: I am replying to your May 9, 2002 
     request for my views on three issues surrounding the 
     nomination of Federal District Judge D. Brooks Smith to a 
     seat on the United States Court of Appeals for the Third 
     Circuit. I assume familiarity with your letter and with the 
     facts, many of which have been discussed in testimony and 
     correspondence the Committee has received. I do not know 
     Judge Smith and have no interest one way or the other in 
     whether Judge Smith is confirmed. I take my facts mainly from 
     Judge Smith's testimony or his written submissions and partly 
     from other materials you have sent me and which I cite below. 
     The facts do not seem to be in dispute.
       Briefly, my qualifications for giving my opinion on your 
     questions are: I am vice-dean and professor of law at New 
     York University School of Law, where I have taught since 
     1978. Regulation of Lawyers (``legal ethics'') is my primary 
     area of teaching and research and writing. I have taught this 
     course for a quarter century here and as a visitor at other 
     law schools. I have a leading casebook in the area, first 
     published in 1984 and now in its 6th edition. Legal ethics 
     includes the ethical responsibilities of judges and a chapter 
     of my book is devoted to those issues. I have published in 
     the area in law journals and written extensively on the 
     subject for the popular and legal press. I speak widely on 
     legal ethics before bar groups, at judicial conferences, at 
     law firms, and at corporate law departments.
       In summary, my conclusions are:
       A. If Spruce Creek Red and Gun Club is in fact a purely 
     social club, and not a venue in which business or 
     professional interests are pursued, then Canon 2(C) of the 
     Code of Conduct for United States Judges would not forbid a 
     federal judge to be a member of the club. On this assumption, 
     the answers to the first two questions under Part A of 
     your letter are ``yes'' (the club is exempt from the 
     prohibition against membership in an organization that 
     invidiously discriminates) and ``no'' (Judge Smith did not 
     violate the Code by maintaining membership for 11 years). 
     My answer to your third question is that Judge Smith had 
     no obligation to seek an opinion from the Advisory 
     Committee on the propriety of his membership in the club. 
     Judge Smith had the responsibility to make sure that the 
     club was and remained a purely social club and that his 
     membership was therefore allowed.
       B. A federal judge who is invited to a privately funded 
     judicial education seminar, with expenses paid, has on 
     obligation to identify the source of funding to ensure that 
     acceptance of the gift is proper. This duty is not eliminated 
     because the sponsor of the seminar is a law school or other 
     educational institution that would not itself require the 
     judge to refuse the invitation. Funding for the seminar may 
     come from a person or entity whose generosity the judge 
     should not accept but whose contribution does not appear on 
     the face of the invitation. Consequently, Judge Smith should 
     have inquired of the sponsor of private judicial seminars he 
     attended to learn the source of funding and establish that 
     there was no impropriety in accepting the invitation under 
     the circumstances.
       C. Your third inquiry, concerning the timing of Judge 
     Smith's recusal decisions in SEC v. Black and U.S. v. Black, 
     is quite complicated. In sum, I conclude that Judge Smith 
     should have revealed his and his wife's investment in Mid-
     State Bank or in Keystone Financial, Inc., its holding 
     company (hereafter, collectively ``Mid-State''), not later 
     than October 27, 1997. Having failed to do so, he should have 
     made this disclosure on October 31, when he did recuse 
     himself. Failing to do so then, he should have done so as 
     soon as he knew of Mid-State's financial exposure for Black's 
     frauds so that counsel could, if advised, seek to vacate 
     Judge Smith's rulings based on a violation of the judicial 
     disqualification statute. Whether Judge Smith should have 
     recused himself on October 27 given what he says he knew at 
     the time is a more difficult question, which I address below. 
     However, I conclude that Judge Smith should have recused 
     himself on October 27 based on what he could have known and 
     should have discovered on that day. Judge Smith should have 
     recused himself form United States v. Smith as soon as it was 
     assigned to him.


                   the spruce creek rod and gun club

       Judge Smith promised more than he had to at his 1988 
     confirmation hearings. The Code of Conduct for United States 
     Judges did not then forbid membership in purely private clubs 
     that had no business or professional purpose. Although the 
     Code was thereafter strengthened, following on amendments to 
     the ABA Model Code of Judicial Conduct in 1992, even as 
     strengthen the Code does not forbid membership in Spruce 
     Creek. This assumes, however, that the club has no business 
     or professional purpose or function. Of course, the 
     opportunity for club members to meet in informal, social 
     situations, to get to know each other in that way, can 
     itself be seen as professionally or commercially 
     advantageous, but that alone does not make the club's 
     discrimination ``invidious.'' Defining the line between 
     clubs that may exclude women (or men, for that matter) and 
     those that may not because they have a business or 
     professional dimension is not always easy. But there is a 
     line and it is rooted in constitutional jurisprudence.
       I am assuming that club members sponsor no events or 
     meetings that could be characterized as business-related or 
     profession-related. If my assumptions are wrong, however, if 
     the club is not strictly social, then my conclusion will 
     change. I understand that the Committee has received 
     information that the club did allow its members to host 
     business or professional meetings. If it did, it would not be 
     purely private as I have been using that term, and its 
     discrimination against membership for women would then be 
     ``invidious'' within the meaning of the Code's prohibition. 
     This would be true even if women were allowed to attend some 
     or all business or professional meetings hosted by the club's 
     male members. Since the propriety of Judge Smith's membership 
     depended on the club maintaining a purely social purpose, he 
     had the responsibility of assuming that it has and retained 
     this status.
       Judge Smith suggests that he reexamined his obligations 
     under the Code of Conduct in 1992, when it was revised, and 
     concluded that his 1988 promise obligated him to do more than 
     the Code required him to do. As I wrote, the post 1988 
     amendments actually strengthened the prohibition against 
     membership in discriminatory clubs, but even as strengthened, 
     Spruce Creek does not, on the assumptions made, qualify as a 
     club that ``practices invidious discrimination on the basis 
     of . . . sex'' within the meaning of Canon 2(C).
       Two other comments on this issue: First, while Judge Smith 
     could have asked the Advisory Committee to give him an 
     opinion on whether the club's discriminatory policy was 
     ``invidious,'' I know of no rule imposing a duty to do so. 
     Second, I realize that Judge Smith made a promise to the 
     Committee in 1988 and then seems to have concluded that

[[Page S7871]]

     he had promised more than the Code required. Whether and to 
     what extent the Committee should be influenced by Judge 
     Smith's failure to keep his promise notwithstanding this 
     later conclusion, or by the Judge's failure to inform the 
     Committee that he did not intend to keep his promise because 
     of this conclusion, is not properly a question for me.


                      judicial education seminars

       As you know, expense-paid seminars for judges has been a 
     challenging issue. The gap between judges' reactions to 
     criticism of these events and the perspectives of the critics 
     does not seem to be shrinking. Many judges are annoyed that 
     anyone would think they would compromise their objectivity 
     because of an invitation (or many invitations) to a privately 
     funded judicial seminar. Critics, on the other hand, argue 
     that only certain groups of litigants have the wherewithal to 
     support these seminars and that it diminishes the appearance 
     of justice when judges attend them at luxury resorts to hear 
     programs designed by those who can afford to sponsor them. 
     Unfortunately, we have little in the way of guidance, 
     mainly Opinion 67 of the Advisory Committee and several 
     judicial opinions, including Judge Winter's opinion in In 
     re Aguinda, 241 F.3d 194 (2d Cir. 2001). Judge Winter 
     wrote: ``[A]ccepting something of value from an 
     organization whose existence is arguably dependent upon a 
     party to litigation or counsel to a party might well cause 
     a reasonable observer to life the proverbial eyebrow. . . 
     . Judges should be wary of attending presentations 
     involving litigation that is before them or likely to come 
     before them without at the very least assuring themselves 
     that parties or counsel to the litigation are not funding 
     or controlling the presentation.'' Judge Winter cites In 
     re School Asbestos Litigation, 977 F.2d 764 (3d Cir. 
     1992), another leading case from Judge Smith's Circuit. 
     the judge there was disqualified after attending a 
     conference without ascertaining the source of funding for 
     it. The source made the judge's attendance improper.
       The authorities agree that before attending an expense-paid 
     judicial seminar, a judge should learn who is picking up the 
     tab for the judge's travel and housing. This indeed is what 
     Opinion 67 says: ``It would be improper to participate in 
     such a seminar if the sponsor, or source of funding, is 
     involved in litigation, or likely to be so involved, and the 
     topics covered in the seminar are likely to be in some manner 
     related to the subject matter of litigation. If there is a 
     reasonable question concerning the propriety of 
     participation, the judge should take measures as may be 
     necessary to satisfy himself or herself that there is no 
     impropriety. To the extent that this involves obtaining 
     further information from the sponsors of the seminar, the 
     judge should make clear an intent to make the information 
     public if any question should arise concerning the propriety 
     of the judge's attention.''
       Obviously, there would be room for much mischief if a judge 
     invited to an expense-paid judicial seminar could rely on the 
     non-profit nature of an apparently neutral sponsor to 
     immunize the judge's attendance. Judge Smith is therefore 
     wrong in his assumption, in reply to your follow-up question 
     6a, when he wrote that because ``George Mason's sponsorship 
     of LEC was apparent from the face of the materials I received 
     regarding the seminars, I conclude that no further inquiry 
     into sources of funding was required.'' If was required.


                              sec v. black

       Conflicts in the Black cases arise from the fact that the 
     Smiths owned stock in Mid-State or Keystone. How much is 
     uncertain. I understand that Judge Smith's financial 
     disclosure form In 1997 revealed between $100,000 and 
     $250,000 in stock in Keystone. The form also indicated 
     that his wife had a 401(k) account with Mid-state, where 
     she was an officer. Her account ranged between $100,000 
     and $250,000, but Judge Smith's financial disclosure form 
     did not say where the money was invested. In answers to 
     recent questions you posed (question 14), Judge Smith 
     wrote: ``At the time in question [October 1997], my wife 
     and I held stock in Mid-state and she was employed by the 
     company.'' So now we do know that Mrs. Smith also held 
     stock in Mid-State, but we don't know how much. As a 
     result, we do know the amount of the Smiths' joint 
     holdings in Mid-State or Keystone in October 1997 and 
     thereafter or what percentage of their wealth it 
     represented.
       Anoter basis for a possible conflict in the Black matters 
     was the fact that Mrs. Smith was an officer in Mid-State. 
     However, Judge Smith recently responded to your written 
     quesiton1 7 by stating that his wife ``was a corporate loan 
     officer for Mid-state, a position far removed from those 
     parts of the bank that had dealings with John Gardner 
     Black.''
       In this answer,I will assume that the Smiths had a 
     substantial financial interest in Mid-State or Keystone or 
     both (it was between $100,000 and $500,000) and that that 
     interest represented a signficant portion of their wealth. No 
     submission offered by or on behalf of Judge Smith has 
     asserted otherwise and the record we have supports this 
     conclusion.
     a. October 27, 1997
       I want now to focus on October 27, 1997 and the weeks 
     immediately preceding:
       On October 24, ``all investment funds were removed from 
     Mid-State Bank'' by the Trustee. Letter of Mark A. Rush, 2/
     22/02, at 2, Judge Smith knew this because the fact is 
     recited in an order he issued October 27. Letter of Douglas 
     A. Kendall, 2/20/02, at 5.
       In the chambers conference with the Trustee and his counsel 
     on October 27, Judge Smith was told ``that information, 
     although in its very early developmental phases, was being 
     uncovered which may change Mid-State-Bank's involvement in 
     the case from that of merely a depository of funds.'' He was 
     advised ``of only a developing but not confirmed suspicion by 
     the Trustee that Mid-State Bank's role may be more than a 
     depository.'' Rust letter at 2, 3.
       In September and October, the press in Pennsylvania 
     reported the possibility that defrauded school districts 
     would sue Mid-state. Kendall letters, 5/10/02, at 4 and 
     exhibits. Certainly, the possibility of bank liability, or at 
     least exposure to litigation, would have been apparent to any 
     lawyer. Suits were in fact filed, starting as early as 
     October 31, 1997. Id at 4. The suit was reported in the 
     press the next day. Id.
       Papers before Judge-Smith suggested that the bank prepared 
     reports to the school districts showing the market value of 
     their account at $157 million, while reporting to Black that 
     the market value of these accounts was only $86 million. This 
     information was in a footnote that was in an exhibit to an 
     exhibit in the papers before Judge Smith, who apparently did 
     not recognize its significance or did not see it. Reply to 
     your follow-up question 8. However, the discrepancy was 
     reported in the local press on October 31. Id. at 3.
       In the October 27 chambers conference, Judge Smith told the 
     Trustee and his counsel ``of his wife's employment in an 
     unrelated division of Mid-State Bank.'' And the Judge 
     ``indicated an intention to consider recusing himself based 
     on the potential for a future appearance of a conflict.'' 
     Rush letter at 3. Judge Smith did not then reveal the Smiths' 
     financial interest in Mid-State or Keystone.
       The information Judge Smith knew on October 27 required him 
     to reveal his family's financial interest before ruling on 
     the applications before him. So far as the Trustee and his 
     counsel knew, the only basis for recusal was Mrs. Smith's 
     employment in an ``unrelated division'' of the bank. That is 
     all they were told. Understandably, they did not see that as 
     a fact that required recusal or further discussion. (More on 
     this below.) But had Judge Smith revealed the Smiths' 
     financial interests in Mid-State on October 27, then the 
     Trustee and his counsel, and counsel for the school districts 
     seeking to unfreeze money held by Black in non-Mid-State 
     banks, would have been able to provide the Judge with 
     information (already in the press) about Mid-State's and 
     Keystone's potential future liability for Black's frauds. 
     Then, the footnote in the exhibit to the exhibit in the 
     papers before Judge Smith could have surfaced and its import 
     explained. Then, too, the public discussion about the 
     possibility of legal action against Mid-State could have 
     surfaced. The Trustee and counsel would then have had reason 
     to be more expansive about their statement in chambers that 
     ``Mid-State Bank's involvement in the case [may change] from 
     that of merely a depository of funds.''
       In fact, had Judge Smith revealed not merely his wife's 
     employment in an ``unrelated division'' of the bank on 
     October 27, but also his family's substantial financial 
     investment in the bank, it would have been incumbent on 
     counsel to reveal all they knew about the bank's legal 
     exposure and to explore with the Judge whether what they 
     knew, but did not see any need to elaborate, and what Judge 
     Smith knew, but did not reveal, required recusal under 
     Section 455(b)(4), which disqualifies a judge if the judge or 
     the judge's spouse has ``any . . . interest that could be 
     substantially affected by the outcome of the proceeding.'' 
     Based on what parties collectively knew at the time, this 
     exploration should have led to Judge Smith's recusal on 
     October 27, before he ruled on the school districts' effort 
     to unfreeze non-Mid-State accounts in Black's control 
     (totalling about $175 million). Once Judge Smith learned of 
     the probable lawsuits against Mid-State, he would have had to 
     step out of the case. By failing to reveal his family's 
     financial interest, however, Judge Smith effectively 
     prevented the entire inquiry and led to a ruling he was 
     disqualified from making because a bank in which his 
     family had a substantial investment had an interest in the 
     ruling, as discussed further below.
       Although I focused above on the particular ruling Judge 
     Smith made on October 27, that ruling is incidental to a more 
     imposing fact. Even if there were no application for a ruling 
     on October 27, Judge Smith should still have recused himself 
     based on information that he could and should have discovered 
     on that date. That information revealed the enormity of Mid-
     State's potential liability. As stated above, and as reported 
     in the press in October, Mid-State's own documents showed a 
     potential shortfall of $71 million in school district funds 
     that Black had deposited with Mid-State. So I want to stress 
     that it was this exposure, and not alone the ruling Judge 
     Smith was asked to make on October 27, that required recusal 
     by that date if not sooner. In short, Judge Smith should not 
     have been sitting in a matter when, as he could have and 
     should have known, a bank in which he had a substantial 
     investment faced financial liability in tens of millions of 
     dollars. As we now know, Keystone eventually paid $51 million 
     to settle depositor claims.

[[Page S7872]]

     b. October 31, 1997
       On October 31, Judge Smith recused himself citing only his 
     wife's employment. He has explained to the Committee that he 
     did so because he foresaw the possibility that the bank might 
     be a source of evidence in the case. Letter of 2/25/02, at 2. 
     As stated, Judge Smith has acknowledged that his wife was in 
     a ``position far removed from those parts of the bank that 
     had any dealing with John Gardner Black.'' It is hard to 
     understand why Mrs. Smith's position caused Judge Smith to 
     recuse himself, even assuming that Mid-State officials might 
     be deposed or that Mid-State might be the source of 
     documents. At this point Judge Smith believed that the bank 
     was merely a ``depository.'' If that were all it was, it 
     should make no difference that officers or employees, from a 
     part of the bank ``unrelated'' to the one in which his wife 
     worked, might be deposed or that the bank might be a source 
     of documents. In fact, Judge Smith does not appear to believe 
     that he even had to recuse for this reason. In his answer to 
     your question 13, he wrote that he had no ``legal 
     obligation'' to recuse when he did, but did so ``out of an 
     abundance of caution.'' (See also the answer to your question 
     14.) Judge Smith acknowledges in his answer to question 18 
     that there was a possibility that his wife might herself be a 
     witness. By failing to reveal the Smiths' investments on 
     October 31, Judge Smith denied the litigants information that 
     they could have used to overturn on October 31, Judge Smith 
     denied the litigants information that they could have used to 
     overturn his October 27 ruling refusing to unfreeze half the 
     money (about $77 million) that Black maintained in non-Mid-
     State accounts.
       A ruling by a judge who should have been disqualified may 
     be vacated. This is true even if the judge, when ruling, was 
     unaware of the basis for the disqualification. Liljeberg v. 
     Health Services Acquisition Corp., 486 U.s. 847 (1988) Judge 
     Smith's rulings in SEC v. Black, and in particular his ruling 
     on October 27 refusing to unfreeze all of the non-Mid-
     State funds in Black's control, could have been challenged 
     based on the Smiths' financial interest. However, because 
     Judge Smith did not reveal the Smiths' financial interest 
     in Mid-State on October 27, or on October 31 when the 
     Judge did recuse himself, or thereafter, parties to the 
     proceedings before him, including the school districts 
     that sought to unfreeze all of their non-Mid-State funds, 
     could not use this interest as a basis for vacating the 
     Judge's rulings. While it is true that a judge may recuse 
     without giving any reason, where there are reasons for 
     recusal that could retroactively affect the legitimacy of 
     orders already entered, the judge must reveal that 
     information so that the parties can determine whether to 
     challenge the judge's orders on this basis. Id. at 867. 
     The fact that a judge might not believe that a particular 
     fact would suffice to warrant recusal, or to warrant an 
     order vacating a ruling, is not a justification for 
     failing to make the disclosure. A judge should not, 
     through silence, be the ultimate arbiter of his or her own 
     disqualification. If a fact could reasonably support 
     disqualification or an effort to overturn a ruling, as is 
     true here, that fact should be revealed so that counsel 
     may argue it or bring it to the attention of another judge 
     or an appellate court. Id.
     c. Events after October 31, 1997
       Even if Judge Smith continued to believe on October 31 that 
     the bank's role was solely as a prospective witness in its 
     capacity as depository, it shortly thereafter became 
     apparent, when lawsuits were filed, that this was not so, and 
     that in fact the bank would be exposed to financial 
     liability. At that point, at least, Judge Smith should have 
     revealed the Smith's financial investment in Mid-State. While 
     it is true that Judge Smith no longer had jurisdiction over 
     SEC v. Black after October 31, he did not need jurisdiction 
     to make financial information known. So even assuming Judge 
     Smith did not realize the bank's financial exposure as of 
     October 31, which I do assume, and even assuming (which I do 
     not) that he had no duty even to explore the possibility of 
     the bank's financial exposure with counsel on October 27, 
     Judge Smith should nevertheless have revealed his family's 
     financial interest in the bank once its potential civil 
     liability became evident, as it did soon after October 31.
       Those appealing Judge Smith's order would have benefited 
     from knowledge of the facts and amounts of the Smiths' Mid-
     State investment because that investment meant Judge Smith 
     should not have ruled on any issue that could affect Mid-
     State's financial exposure. The effort to unfreeze the non-
     Mid-State money is such an issue because the more money 
     available from other sources to compensate school districts 
     with Mid-State accounts, the smaller would be Mid-State's 
     exposure. In other words, if money in non-Mid-State banks 
     could be used to compensate districts whose funds were in 
     Mid-State accounts, Mid-State could be benefited. So could 
     the Smiths as substantial investors.
       In Liljeberg, supra, Judge Collins ruled in a case even 
     though at the time, he was a fiduciary of a non-party 
     (Loyola) that stood to gain financially from the ruling. At 
     the time he ruled, he did not know of Loyola's interest in 
     the matter, although he previously knew of it and learned of 
     it again later. The Court agreed that Judge Collins could not 
     have recused himself when he lacked knowledge of the 
     disqualifying fact. A ``judge could never be expected to 
     disqualify himself based on some fact that he does not know, 
     even though the fact is one that perhaps he should know or 
     one that people might reasonably suspect that he does know.'' 
     486 U.S. at 860. The Court then went on to hold that ``[n]o 
     one questions that Judge Collins could have disqualified 
     himself and vacated his judgment when he finally realized 
     that Loyola had an interest in the litigation.'' Id. at 861. 
     Doing so might ``promote confidence in the judiciary by 
     avoiding even the appearance of impropriety whenever 
     possible.'' Id. at 865. Judge Collins ``silence,'' once he 
     recalled Loyola's interest, ``deprived respondent of the 
     basis for making a timely motion for a new trial and also 
     deprived it of an issue on direct appeal.'' Id. at 867. So, 
     too, here.
       Judge Smith no longer had jurisdiction of the case after 
     October 31, and therefore could not recuse himself or vacate 
     his orders, as the Supreme Court ruled Judge Collins could 
     have done. But once he learned of the bank's exposure, Judge 
     Smith could have taken the lesser step of informing counsel 
     of his family's financial interests in the bank. He should 
     have done this because he should have realized that the 
     following facts, once publicly known, would undermine 
     confidence in the judiciary and create the appearance of 
     impropriety. These facts are:
       (1) Judge Smith was told on October 27 that the bank may be 
     more than a mere depository:
       (2) papers before Judge Smith on October 27 showed a 
     substantial discrepancy between what the bank was telling 
     depositors and what the bank was telling Black;
       (3) the press in Pennsylvania was reporting on the prospect 
     of lawsuits against the bank;
       (4) the Smiths had a substantial financial interest in the 
     bank:
       (5) three days prior to October 27, as Judge Smith knew, 
     the Trustee had removed all of the school district funds from 
     the bank and placed it in another institution;
       (6) on October 27 Judge Smith made a ruling that an 
     objective observer could view as beneficial to Mid-State by 
     keeping frozen monies that might be available to compensate 
     school districts that had accounts in Mid-State;
       (7) despite the information available to him on October 27, 
     Judge Smith made no effort to conduct a further inquiry of 
     counsel into the possible financial exposure of Mid-State or 
     reveal his family's investment in Mid-State.
       The upshot of this is that even if we assume that as of 
     October 31 Judge Smith thought of Mid-State as merely a 
     depository whose personnel might be witnesses, nonetheless, 
     in retrospect, Judge Smith should have realized from the 
     facts itemized above that his conduct threatened confidence 
     in the impartiality of the courts and that he had to take 
     steps to correct that, Liljeberg, quoting the lower court's 
     opinion, states: ``The goal of Section 455(a) is to avoid 
     even the appearance of partiality. If it would appear to a 
     reasonable person that a judge has knowledge of facts that 
     would give him an interest in the litigation then an 
     appearance of partiality is created even though no actual 
     partiality exists because the judge does not recall the 
     facts, because the judge actually has no interest in the case 
     or because the Judge is pure in heart and incorruptible. The 
     judge's forgetfulness, however, is not the sort of 
     objectively ascertainable fact that can avoid the appearance 
     of partiality. Under section 455(a), therefore, recusal is 
     required even when a judge lacks actual knowledge of the 
     facts indicating his interest or bias in the case if a 
     reasonable person, knowing all the circumstances, would 
     expect that the judge would have actual knowledge.'' Id. at 
     860 (internal citations omitted). See also In re School 
     Asbestos Litigation, 977 F.2d at 784, quoting some of the 
     same language from Liljeberg. It is hard to fathom Judge 
     Smith's silence after October 31 even if one accepts his 
     explanations for his conduct until that time.


                         united states v. black

       This brings me to United States v. Black, the criminal case 
     against Mr. Black, assigned to Judge Smith in 1999, when Mid-
     State's financial exposure was apparent. Judge Smith kept the 
     case for five months, until a motion to recuse him was made 
     and granted. Again judge Smith cited his wife's employment as 
     the basis for granting the motion. I don't understand why, if 
     an ``abundance of caution'' caused Judge Smith to recuse 
     himself sua sponte in SEC v. Black because of the prospect of 
     testimony from bank personnel, or because the bank might be a 
     source of documents, he did not recuse in United States v. 
     Black immediately. Be that as it may, for other reasons 
     Judge Smith should never have accepted United States v. 
     Black. First, Third Circuit precedent directly on point 
     prohibited Judge Smith from accepting the case. ``We adopt 
     the view that a judge who owns a substantial interest in 
     the victim of a crime must disqualify himself or herself 
     in the subsequent criminal proceeding because the strict 
     overarching standard imposed by Sec. 455(a) requires that 
     the appearance of impartiality be maintained.'' United 
     States v. Nobel, 696 F.2d at 231, 235 (3rd Circuit 1982). 
     This is a holding of the case and cannot be more explicit. 
     The court went on to conclude that on the particular facts 
     disqualification had been waived under Sec. 455(e). But 
     the court would not have had to consider waiver unless it 
     had first found that the judge, as an investor in the 
     defrauded institution (``INA''), was disqualified from 
     sitting in judgment of the man accused of defrauding that 
     institution.

[[Page S7873]]

       The facts here are even stronger than the facts in Nobel. 
     Nobel also held that Sec. 455(a) would have required 
     disqualification of the trial judge even though ``by the time 
     of the criminal trial a settlement had been effected which 
     called for defendant to repay INA for substantially all of 
     the funds which defendant received as a result of the 
     fraud.'' Id. at 234. Since INA had recovered its lost money 
     in Nobel, no ruling in that case could have affected the size 
     of the investing judge's loss. Not so here. Mid-State was 
     either the victim of Black's misconduct or civilly liable for 
     facilitating it (or perhaps both). In either event, unlike 
     INA, it stood to lose or have to pay a lot of money (as in 
     the end it did) in part as a result of Black's acts. 
     Obviously, it was in the bank's interest to minimize the 
     amount it would lose or have to pay, and in furtherance of 
     that goal it would want to shift as much blame to Black as 
     possible. It was in the interest of the Smiths as Mid-State 
     investors to achieve the same objectives. It should have been 
     apparent that these objectives might be furthered by rulings 
     in Black's criminal case and by limiting any monetary 
     sanction against Black, as next discussed. Judge Smith's 
     defense (in answer to your question 20) that Nobel is 
     inapposite because Mid-State was not a ``victim'' in the same 
     way that INA was a victim entirely misses the purpose of the 
     disqualification statute and the reasoning of Nobel.
       Judge Smith should have realized that decisions he might 
     make in Mr. Black's criminal case could affect the civil 
     actions then pending against Mid-State. This could happen in 
     at least two ways. First, Judge Smith would be called upon in 
     Black to make evidentiary rulings that could lead to the 
     revelation, or to the concealment, of information that might 
     affect the course of the civil litigation against Mid-State. 
     Second, I understand that in the event of a conviction, Black 
     would have been subject to monetary sanctions. Obviously, the 
     more money Black had to pay as a criminal sanction, the less 
     money he would have available to compensate the school 
     districts allegedly harmed by Mid-State and Black. 
     Consequently, Mid-State would have an interest in Black 
     retaining as much money as possible so that his wealth could 
     be used to offset depositor losses. If somehow Judge Smith 
     did not appreciate that his family's Mid-State investments 
     required recusal, he should have revealed this information to 
     counsel so they, and the defendant, could decide whether to 
     act on it.
       In sum, assuming that Judge Smith did not know of Mid-
     State's financial exposure on October 27, 1997, and did not 
     therefore recognize a need to recuse himself in SEC v. Black, 
     still there was sufficient information before him to warrant 
     both further inquiry and revelation of his family's 
     investments in Mid-State. Inquiry and revelation at this 
     point would have resolved the issue and made disqualification 
     immediately necessary. As stated above, a federal judge does 
     have a duty to be forthcoming with facts that could support a 
     request for recusal. Once Mid-State's financial exposure 
     became apparent, as early as press reports of the first 
     lawsuit on November 1, Judge Smith's continued silence is 
     inexplicable. His order of October 27 was being challenged 
     and his family's financial investment would have provided the 
     challengers with strong arguments to vacate it, perhaps more 
     quickly. Just as Judge Collins in Liljeberg should have 
     immediately revealed his reawakened knowledge of Loyola's 
     interest in a litigation before him, Judge Smith should have 
     revealed his family's financial interest in the bank 
     immediately on learning that the bank had financial exposure 
     in the events underlying SEC v. Black.
       For the reasons given above, Judge Smith should never have 
     accepted United States v. Black. Rulings in that case have 
     affected the amounts of money Mid-State would eventually have 
     to pay and therefore the value of the Smiths' investment. 
     Even if they could not, Circuit precedent required his 
     recusal.
       I hope I have answered your questions. Please don't 
     hesitate to ask if I can be of further assistance.
           Sincerely,
                                                  Stephen Gillers,
     Vice Dean.
                                  ____

                                               Hofstra University,


                                                School of Law,

                                      Hempstead, NY, May 21, 2002.
     Re nomination of Judge D. Brooks Smith.

     Hon. Russell D. Feingold,
     Committee on the Judiciary, Hart Senate Office Building, U.S. 
         Senate, Washington, DC.
       Dear Senator Feingold. This letter is in response to your 
     letter to me of May 9, 2002, requesting my opinion on ethical 
     issues that have arisen in connection with the nomination of 
     United States District Judge D. Brooks Smith to the United 
     States Court of Appeals for the Third Circuit. These issues 
     related to (A) Membership in the Spruce Creek Rod and Gun 
     Club; (B) Attendance at Judicial Education Seminars; and (C) 
     Judicial Disqualification Requirements.
     (A) Membership in the Spruce Creek Rod and Gun Club
       I had originally concluded that Judge Smith's membership in 
     the Spruce Creek Rod and Gun Club was not a ground for 
     denying him a judgeship on the Court of Appeals. In reaching 
     that conclusion, I was relying in significant part on the 
     opinion expressed in the letter to Senator Orrin G. Hatch of 
     April 23, 2002 by Professor Ronald D. Rotunda, for whom I 
     have considerable respect. Subsequent research has convinced 
     me, however, that Professor Routunda's analysis in this 
     instance is seriously flawed, that his conclusion is 
     clearly wrong, and that Judge Smith's membership in the 
     Club is a serious violation of his ethical 
     responsibilities as a judge.
       I was troubled from the outset, of course, that Judge 
     Smith's membership in the Rod and Gun Club violates the plain 
     meaning of Canon 2C of the Code of Conduct for United States 
     Judges. That provision forbids a judge to hold membership in 
     an organization that ``practices invidious discrimination on 
     the basis of . . . sex. . . .'' Since the bylaws of the Rod 
     and Gun Club arbitrarily restrict membership to men, and 
     since Judge Smith held membership in the Club for eleven 
     years while he was a federal judge, his violation of Canon 2C 
     appears to be obvious.
       Nevertheless, two aspects of Professor Rotunda's letter 
     persuaded me that this plain-meaning reading was not the 
     final word. First, I accepted Professor Rotunda's assertion 
     that the Club is a ``purely social'' organization with no 
     formal business or professional activities. In this regard, 
     Professor Rotunda may well have been misled by Judge Smith 
     himself, who has repeatedly mischaracterized the Club to the 
     Judiciary Committee as a ``purely social group'' that does 
     not conduct any business or professional activities. In any 
     event, I now understand that the crucial factual premise is 
     false, because professional meetings are in fact held at the 
     Rod and Gun Club.
       Of equal importance to my original judgment is the fact 
     that I accepted Professor Rotunda's statement regarding 
     Sec. 2.14(b) of the Code of Conduct for United States Judges, 
     Compendium of Selected Opinions (2002). In Professor 
     Rotunda's words, that section holds that: ``[T]he Masonic 
     Order, which limits full membership to males does not 
     practice `invidious' sex discrimination because it does `not 
     provide business or professional opportunities to members.'' 
     Frankly, I have difficult with the notion that important 
     business and professional contacts are not made at a club 
     where business and professional men interact and bond with 
     each other and with important political figures and judges. 
     Moreover, I was troubled that this exception for the Masons--
     as stated Professor Rotunda--would effectively swallow up the 
     rule against discrimination on grounds of sex. Nevertheless, 
     for purposes of forming an opinion about Judge Smith's 
     compliance with the Code of Judicial Conduct, I accepted 
     Professor Rotunda's representation that such a distinction 
     has been made in the Compendium of Opinions.
       However, the full summary of the opinion regarding the 
     Masons in Sec. 2.14(b) of the Compendium is not based simply 
     on the premise that the organization does not provide 
     business or professional opportunities to members (which is a 
     factual premise that, in any event, is inapplicable to the 
     Rod and Gun Club). Rather, the summary refers only once to 
     the absence of business or professional opportunities, but 
     refers twice to the religious purposes of the Masons. 
     Compare, then, the actual summary set forth in Sec. 2.14(b) 
     with Professor Rotunda's rendering of that summary, which is 
     quoted supra: ``Masonic Order, represented to be fraternal 
     organization devoted to charitable work with religious focus 
     and not providing business or professional opportunities to 
     members, is not consider to be an organization practicing 
     invidious discrimination although women are not permitted to 
     be full-fledged members. Organization is considered to be 
     dedicated to the preservation of religious and cultural 
     values of legitimate common interest to members. Commentary 
     to Canon 2C.'' Because of this reiteration in Sec. 2.14(b) of 
     the Masons as being ``devoted'' and ``dedicated'' to the 
     preservation of religious values through charitable work, the 
     exception for the Masons does not swallow up the proscription 
     of Canon 2C against discrimination on grounds of sex. 
     Instead, the Masons' exception becomes a limited one that 
     respects the First Amendment's guarantee of freedom of 
     religion.
       Contrary to Professor Rotunda's abridged version of 
     Sec. 2.14(b), therefore, the full text of Sec. 2.14(b) does 
     not support the conclusion that the Spruce Creek Rod and Gun 
     Club's discrimination against women is permissible. 
     Accordingly, Judge Smith was clearly in violation of Canon 2C 
     for most of the eleven years that ``dragged on'' while Judge 
     Smith was on the bench and remained a member.
       Finally, with respect to the specific questions that you 
     raised on this issue in your letter to me:
       1. Judge Smith is incorrect in asserting that revisions to 
     Canon 2 of the Code of conduct exempt clubs like Spruce Creek 
     from the ban on membership in discriminatory organizations. 
     Indeed, that assertion is fanciful, on a plain-meaning 
     reading of Canon 2C: ``A judge should not hold membership in 
     any organization that practices invidious discrimination on 
     the basis of . . .  sex . . .'' Moreover, the exceptions in 
     the Comment reinforce the conclusion that the Rod and Gun 
     Club falls within this plain language. For example, the 
     Comment exempts an organization that is ``dedicated to the 
     preservation of religious, ethnic or cultural values of 
     legitimate common interest to its members [like the Masons], 
     or that is in fact and effect an intimate, purely private 
     organization whose membership limitations could not be 
     constitutionally prohibited.'' Obviously, neither clause in 
     that exception describes the Spruce Creek Rod and Gun Club.
       2. Judge Smith violated ethical standards by remaining a 
     member of the Spruce Creek

[[Page S7874]]

     Rod and Gun Club for eleven years--or, at least, for most of 
     those years--while serving as a federal district judge. The 
     1998 Code reiterates the language of the 1992 Code in 
     allowing a judge a maximum of two years to make immediate and 
     continuous efforts to change the club's policy before 
     resigning. Since Judge Smith claims to have made such efforts 
     beginning in 1988, he should have resigned at least by 1992, 
     when he knew that four years of efforts had already been 
     unavailing.
       3. If Judge Smith somehow believed after 1992 that he could 
     ethically remain a member of the Club (a conclusion that is 
     difficult to credit) he should at least have consulted with 
     the Advisory Committee on Judicial Conduct before continuing 
     his membership. Apart from that, having given his word to the 
     Judiciary Committee that he would resign from the Club if it 
     did not change its discriminatory bylaw, Judge Smith should 
     have informed the Committee of his intention to break his 
     word and his reasons for doing so.
     (B) Attendance at Judicial Education Seminars
       In answer to your specific question, Judge Smith is not 
     correct in asserting that under existing ethical standards, 
     he was not required to inquire into the identity of corporate 
     financial supporters of an organization like the Law and 
     Economics Center at George Mason University.
       As noted in the Comment to Canon 2A, the appearance of 
     impropriety depends on the appearance to a reasonable person 
     who has ``knowledge of all the relevant facts that a 
     reasonable inquiry would disclose.'' Thus, if a reasonable 
     inquiry would reveal the source of the funding, the source of 
     the funding is relevant to determining whether there is an 
     appearance of impropriety and, thereby, whether the judge has 
     committed a violation of the standard. In order to conform 
     his conduct to the rule, therefore, the judge must at least 
     make the same reasonable inquiry that the hypothetical 
     reasonable person would be making into the source of the 
     funds for the seminar.
       It is important to address here Professor Rotunda's 
     disparaging comments on the appearance of impropriety as a 
     standard in judges' and lawyers' ethics. Professor Rotunda is 
     correct in saying that some authorities have rejected the 
     appearance of impropriety as a standard. That has come about, 
     however, for reasons that have nothing to do with the merits 
     of the standard. Moreover, the views of those authorities 
     could not overrule either the Due Process Clause of the 
     Constitution or the Code of Conduct for United States Judges.
       In fact, the appearance of impropriety is central in 
     judges' and lawyers' ethics, and, specially, in the Code of 
     Conduct for United States Judges. Moreover, a fundamental 
     principle of constitutional due process of law is that ``any 
     tribunal permitted by law to try cases and controversial not 
     only must be unbiased but also must avoid even the appearance 
     of bias.'' That is, ``to perform its high function in the 
     best way, justice must satisfy the appearance of justice.''
       As recently as 1998, the Judicial Conference of the United 
     States reiterated its commitment to avoiding the appearance 
     of impropriety on the part of judges. As stated in the 
     Comment to Canon 2A:
       ``Public confidence in the judiciary is eroded by 
     irresponsible or improper conduct by judges. A judge must 
     avoid all impropriety and the appearance of impropriety. A 
     judge must expect to be the subject of constant public 
     scrutiny. A judge must therefore accept restrictions that 
     might be viewed as burdensome of the ordinary citizen and 
     should do so freely and willingly. The prohibition against 
     behaving with impropriety or the appearance of impropriety 
     applies to both the professional and personal conduct of a 
     judge. Because it is not practicable to list all prohibited 
     acts, the proscription is necessarily cast in general terms 
     that extend to conduct by judges that is harmful although not 
     specifically mentioned in the Code.'' Then, directly 
     addressing Professor Rotunda's complaint that the appearance 
     of impropriety is ``too vague to be a standard,'' the Comment 
     explains precisely what is meant by the standard of an 
     appearance of impropriety: ``Actual improprieties under this 
     standard include violations of law, court rules or other 
     specific provisions of this Code. The test for appearance of 
     impropriety is whether the conduct would create in reasonable 
     minds, with knowledge of all the relevant circumstances that 
     a reasonable inquiry would disclose, a perception that the 
     judge's ability to carry out judicial responsibilities with 
     integrity, impartiality, and competence is impaired.''
       Thus, the Code tells us, that an appearance of impropriety 
     is one that would cause a reasonable person, with knowledge 
     of all the relevant circumstances that a reasonable inquiry 
     would disclose, to believe that the judge has violated a 
     specific provision of the Code, or has violated the law, or 
     has violated court rules, in such a way that impairs the 
     judge's impartiality.
       Consistent with that definition, the appearance of 
     impropriety with regard to the judicial seminars is the 
     appearance that a party is buying special access to the 
     judge, both by financing an expert to express ex parte 
     opinions to the judge, and by making a gift to the judge to 
     induce the judge to pay special attention to the expert's ex 
     parte opinion. Thus, judge Smith's conduct violates Canons 2, 
     2B, and 6, and appears to violate Canon 3A(4), as explained 
     below.
       As a general matter, there is nothing in the Code of 
     Conduct for United States Judges that would forbid a judge 
     from attending a privately-sponsored judicial seminar. Also 
     as a general matter, there is no limitation--nor should there 
     be--on the ways in which judges engage in continuing legal 
     education.
       However, a specific rule of critical importance in Canon 
     3A(4), which forbids a judge to consider ``ex parte 
     communications on the merits * * * of a pending or impeding 
     proceedings.'' This rule goes so far as to forbid a judge to 
     receive the ex parte advice even of a ``disinterested 
     expert'' on the law applicable to a proceeding before the 
     judge, unless the judge gives nothing to the parties of the 
     person consulted and the substance of the advice, and affords 
     the parties reasonable opportunity to respond.
       Also relevant is Canon 6, which provides that a judge may 
     not receive reimbursement of expenses to judicial seminars 
     ``if the source of such payment * * * give[s] the appearance 
     of influencing the judge in the judge's judicial duties or 
     otherwise give[s] the appearance of impropriety.''.
       I understand that Judge Smith has attended seminars in 
     which experts addressed legal issues that appeared to be the 
     same as the issues that were presented in matters that were 
     then before him. In addition, it is entirely possible that 
     one or more of the speakers discussed those issues in 
     informal contacts with the judge at those seminars.
       Your letter refers, for example, to Gerber v. Medtronic, 
     Inc. This was a products liability case that Judge Smith was 
     adjudicating when he attended a seminar at Hilton Head. At 
     the seminar, experts discussed ``Risk, Injury, and 
     Liability.'' In the Center's words, this seminar 
     ``demonstrates the superiority of a legal system that assigns 
     liability to those best able to avoid injury over a system 
     that seeks only to spread losses by assigning them to the 
     `deepest pockets.''' Also, one of the lecturers at the 
     seminar published a paper the same year arguing for federal 
     preemption of state tort claims involving pharmaceuticals 
     subject to federal regulation.
       Upon returning home, Judge Smith granted summary judgment 
     in favor of Medtronic--the party that had provided financial 
     support to the Law and Economics Center, which had sponsored 
     the seminar. The ground for Judge Smith's decision was 
     federal preemption of the state tort claims.
       On those facts, there is an appearance that Judge Smith 
     violated Canon 3A(4) by receiving ex parte communications on 
     issues then before him in the Medtronic case.
       Under the language of Canon 3A(4), of course, it is 
     irrelevant whether the seminars were funded by a party 
     appearing before the judge. However, the fact that a party 
     before the judge was providing financial support for a 
     seminar at an expensive resort, the fact that the judge 
     stayed at the resort without cost, and the fact that the 
     expert's ex parte presentation was also financed in part by 
     the party, would all heighten the appearance of impropriety. 
     Specifically, the appearance is that the party is buying 
     special access to the judge, both by making a gift to the 
     judge and by financing an ex parte communication by an 
     expert.
       In addition, Judge Smith's attendance at the seminar 
     violated Canon 6 because of the source of the reimbursement 
     of the judge's expenses ``give[s] the appearance of 
     influencing the judge in the judge's judicial duties or 
     otherwise give[s] the appearance of impropriety.''
     (C) Judicial disqualification requirements
       Your final question to me is whether there is anything in 
     Judge Smith's answers to your written questions that changes 
     the opinion in my letter to the Committee of March 14, 2002 
     (which I adopt here by reference).
       The answer is no. Judge Smith's written answers like his 
     testimony before the Committee, consist of obfuscation and 
     disingenuousness. In addition, those answers confirm the 
     conclusion stated in my earlier letter that Judge Smith has 
     committed repeated and egregious violations of judicial 
     ethics; that to this day he has failed to inform himself of 
     his obligations under the Federal Judicial Disqualification 
     Statute; and that he has been disingenuous before this 
     Committee in defending his unethical conduct.
       For example, in answer to your Question 7a, Judge Smith 
     says: ``Starting on October 27th, I began to develop concerns 
     that Mid-State's involvement in SEC v. Black might, in the 
     future, require it to play a more prominent evidentiary role 
     in the litigation. I may have told the Trustee and his lawyer 
     that I would consider recusing myself based on the potential 
     for a future appearance of impropriety...'' In those two 
     sentences, Judge Smith displays either an ignorance of the 
     nature of conflict of interest law or a desire to confuse the 
     issue with meaningless verbiage (``the potential for a future 
     appearance of impropriety'').
       First, all conflicts of interest are concerned with 
     potentials--that is, with the risk of substantive ethical 
     violations that might arise in the future. As explained by 
     the Restatement of the Law Governing Lawyers, ``conflict of 
     interest'' refers to whether there is a ``substantial risk'' 
     that a substantive violation of one's ethical obligations 
     will arise in the future. (With regard to a judge, this would 
     refer, e.g., to the risk that the judge's impartiality might 
     come to be impaired in the course of the litigation.) To be 
     ``substantial,'' the risk must be ``more than a mere 
     possibility.'' However, it need not be

[[Page S7875]]

     ``immediate, actual, and apparent.'' On the contrary, as 
     explained in the comment to Restatement Sec. 121, a risk 
     can be substantial, within the meaning of the rule, even 
     if it is ``potential or contingent,'' and despite the fact 
     that it is neither ``certain or even probable'' that it 
     will occur. The ultimate test is that there be a 
     ``significant and plausible'' risk of adverse effect on 
     one's ethical responsibilities.
       When Judge Smith said, therefore, that on October 27th he 
     ``began to develop concerns that Mid-State's involvement in 
     SEC v. Black might, in the future, require it to play a more 
     prominent evidentiary role in the litigation,'' he was 
     acknowledging that he had a conflict of interest that 
     required him immediately to recuse himself. That is, he was 
     acknowledging that there was a ``significant and plausible 
     risk''--even if it was not ``certain or even probable''--that 
     he would find himself adjudicating a case in which he had a 
     substantial financial interest.
       Moreover, Judge Smith reiterates that ``Mid-State Bank was 
     not a party to the litigation before me.'' As a Federal Judge 
     for fourteen years, Judge Smith should be familiar with the 
     leading Supreme Court case of Liljeberg v. Health Services 
     Acquisition Corp. He should know, therefore, that it is 
     immaterial whether the Bank had been a party. In Liljeberg, 
     for example, Loyola University was not a party and, indeed, 
     the judge had forgotten that Loyola had any possible interest 
     in the outcome of the case. Nevertheless, simply because the 
     judge had been a trustee of Loyola, the Supreme Court vacated 
     the judgment under the Federal Disqualification Statute (28 
     U.S.C. Sec. 455).
       For all of the reasons in my earlier letter and in this 
     one, therefore, I continue to believe that Judge D. Brooks 
     Smith should not be honored with advancement to a 
     distinguished Federal Circuit Court.
           Respectfully submitted,

                                           Monroe H. Freedman,

                              Lichtenstein Distinguished Professor
     of Legal Ethics.

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