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Supreme Court hears judicial recusal, arbitration appeal cases

By Bernard Hibbitts (editor) and University of Pittsburgh School of Law students.

[JURIST] The US Supreme Court heard oral arguments in two cases on Tuesday. In Caperton v. A.T. Massey Coal Company the Court heard arguments on whether they should adopt a constitutional standard for requiring state judges to recuse themselves in cases where there is an "appearance of bias." The case is on appeal from a case in the Supreme Court of Appeals West Virginia where A.T. Massey sought to reverse a $50 million verdict against them. Caperton, the plaintiff in that case, argues that because then-Acting Justice Brent Benjamin received $3 million in campaign contributions from A.T. Massey, he should have recused himself, and that his failure to do so was a violation of the Due Process clause of the Fourteenth Amendment:When the circumstances, including the timing of the contribution, the magnitude and proportion of the contribution, are such that it would lead a reasonable person in possession of all of the facts - these are all words from these courts' decisions - to believe that the judge would have a difficult time being other than biased in favor of one of the parties, that would be the standard that would be applied.Massey argued that the imposition of a federal standard for state court recusal would be outside the reach of the Due Process clause.e're talking about appearance as distinct from actual bias or probable I can understand a rule that says the probability of bias is enough. I think it would be a very ill-advised rule without historical foundation, without foundation in the Court's precedents, and open-ended and creating all kinds of problems; but I can understand that rule. That at least is addressed to the right of the party to get a fair trial. Appearance is addressed to a different thing. It's addressed to the reputation of the judicial system, which is not, I think, the function of the Due Process Clause to address.In Arthur Andersen LLP v. Carlisle the Court heard arguments on whether the Federal Arbitration Act (FAA) gives federal appeals courts jurisdiction to rule on the denial of compelled arbitration motions. Arthur Andersen sought to stay the proceedings of a suit brought by Carlisle alleging misconduct in a tax shelter scheme, on the grounds that another party to the suit had an arbitration agreement with the plaintiffs, and that equitable estoppel required that their claims also be arbitrated under that agreement, contrary to the ruling of the US Court of Appeals for the Sixth Circuit:Respondents' theory of the case would wipe out 60 years of FAA case law recognizing that nonparties have arbitration rights. Theories such as third party beneficiary, assignment, agency, estoppel, including equitable estoppel, assumption, successor in interest, none of those cases can survive effectively if this Court were to affirm the decision of the Sixth Circuit.Carlisle responded that the section 3 of the FAA on which Arthur Andersen relies relates to "contract-based arbitration obligations":Estoppel is what you invoke when you have no contract to invoke, and this version of equitable estoppel is what you invoke when you have no arbitration agreement to invoke.The case stems from an effort by Arthur Andersen and other firms to limit the tax exposure of Carlisle and his business associates after the sale of their construction company. Carlisle had signed an arbitration agreement with Bricolage Capital LLC, one of the firms involved in the "leveraged option strategy" intended as a tax shelter. The IRS declared this strategy to be an abusive shelter, and assessed more than $25 million against Carlisle and his associates.

Full post as published by JURIST - The Paper Chase on March 03, 2009 (boomark / email).