Harry v. Wedbush Securities Inc.

Background

Bright Harry and Ronald S. Draper, proceeding without lawyers, sued Wedbush Securities Inc., KCG Americas LLC, Main Street Trading, Inc., several individuals, and other entities. The opinion says they asserted claims including claims under the Racketeer Influenced and Corrupt Organizations Act and fraud claims. It also states that this was their fourth lawsuit against the defendants in ten years.

The plaintiffs moved to disqualify the assigned judge, Haywood S. Gilliam Jr., under 28 U.S.C. §§ 144 and 455. Judge Gilliam referred the motion for random assignment to another district judge. Judge Richard Seeborg was selected to consider the motion under Section 144.

Plaintiffs’ allegations

The plaintiffs alleged that Judge Gilliam fraudulently presided over the case, suppressed important evidence in an earlier case involving the parties, manipulated case assignments to benefit the defendants, colluded with defendants, and held the plaintiffs as “legal hostages” in federal court. They also argued that the case belonged in state court because the federal court supposedly lacked subject-matter jurisdiction and the defendants’ removal was allegedly fraudulent.

The opinion notes that the plaintiffs had filed a substantially similar motion in an earlier lawsuit. Judge Charles Breyer denied that earlier motion and explained that the case had been assigned to Judge Gilliam because it was related to a previously filed lawsuit, consistent with the court’s local rules.

Legal standard

Section 144 permits disqualification when a party files a timely and legally sufficient affidavit alleging personal bias or prejudice. The court explained that the affidavit must allege facts fairly supporting the conclusion that the judge’s bias came from an outside, nonjudicial source.

Ruling

Judge Seeborg denied the motion to disqualify Judge Gilliam. He concluded that none of the plaintiffs’ allegations showed bias or prejudice from an outside source. The court held that Judge Gilliam’s decisions about federal jurisdiction, removal, remand, and related-case assignment were judicial reasoning and could not provide a basis for disqualification under Section 144. The court also found that the allegations of manipulation and collusion lacked merit or foundation. The order denied the motion.