Knopf v. Phillips

Background

Norma Knopf and Michael Knopf moved to recuse, or disqualify, Judge Denise Cote from continued oversight of two related federal actions. The opinion refers to the actions as the Section 1983 Action and the Breach of Contract Action. The disputes also involved substantial, longstanding state-court litigation.

The Section 1983 Action had been filed in August 2017. In December 2017, the court dismissed the plaintiffs’ claim under 42 U.S.C. § 1983 and declined to exercise supplemental jurisdiction over their state-law claims. The court later imposed sanctions on the plaintiffs and their attorney, Eric Berry; that sanctions decision was later revised and the sanctions reduced. The Breach of Contract Action had been filed in August 2016. The opinion recounts several rulings in that case, including entry of default against Pursuit Holdings LLC, dismissal of a tortious-interference claim against Michael Phillips, summary judgment for Phillips on a fraudulent-conveyance claim, a ruling declaring Michael Sanford an alter ego of Pursuit, and later dismissal of the remaining claims against Sanford and Pursuit.

In February 2020, the Court of Appeals for the Second Circuit reversed some of the dismissals and post-judgment sanctions orders. It affirmed dismissal of the tortious-interference claim against Phillips but vacated the dismissal of the fraudulent-conveyance claim against Phillips and the dismissals of claims against Sanford and Pursuit. The Knopfs then moved for reassignment of both federal actions.

Arguments and Legal Standard

The Knopfs principally argued that Judge Cote’s rulings had been wrong and that their reversal on appeal demonstrated hostility toward their lawyer and favoritism toward the defendants. They also argued that sanctions should have been imposed on Nathaniel Akerman and Dorsey & Whitney LLP rather than on the plaintiffs and their attorney. In reply, they argued that Judge Cote could not fairly assess Akerman’s credibility because both had worked in the U.S. Attorney’s Office for the Southern District of New York at roughly the same time about forty years earlier. The opinion also notes that Judge Cote had disclosed in 2015 that she knew Akerman.

Under 28 U.S.C. § 455(a), a judge must disqualify herself when her impartiality might reasonably be questioned. Sections 144 and 455(b)(1) also address personal bias or prejudice concerning a party. The court explained that disqualifying bias generally must come from outside the case and produce an opinion about the merits based on something other than information learned through participation in the litigation. Judicial rulings, routine case administration, and ordinary statements to lawyers and witnesses generally do not establish bias unless they show reliance on outside knowledge or deep and unequivocal hostility that makes fair judgment impossible.

Ruling

Judge Cote denied the Knopfs’ March 4 motions for recusal. She ruled that whether her earlier decisions were right or wrong, they arose from matters presented during the litigation and did not come from outside knowledge about the parties, claims, or defenses. The fact that some decisions had been reversed on appeal therefore did not justify recusal. She also relied on the delay of more than three years before the motions were filed, stating that reassignment at that stage would unfairly burden another court.

Judge Cote further ruled that a reasonable person fully informed of the facts would not significantly doubt that justice could be done merely because she and Akerman had worked for the same employer about four decades earlier, along with many other lawyers. The court’s disposition was: the plaintiffs’ motions for recusal were denied.