Securities and Exchange Commission v. Penn

Motion and Allegations

Lawrence E. Penn III moved under 28 U.S.C. § 455, the federal statute governing judicial disqualification, to disqualify Judge Valerie E. Caproni. Penn alleged evidence of bias in favor of the Securities and Exchange Commission and prejudice against the defendants.

Court’s Reasoning

The court stated that Penn’s motion was substantially similar to an earlier motion for disqualification filed more than a year earlier. That earlier motion had been denied as untimely because Penn had not moved at the earliest possible time after learning facts that allegedly supported disqualification. The court said Penn’s current motion identified no recently discovered information that could support a timely request, making it even more untimely than the earlier motion.

The court also explained that mere conclusions, opinions, rumors, or vague gossip are insufficient to require disqualification. It stated that disqualifying bias must come from an outside source and produce an opinion based on something other than what the judge learned while participating in the case. According to the court, the record showed that Penn was making baseless, conclusory, and conspiratorial allegations in response to adverse rulings by the court, rather than identifying an outside statement or act by the judge.

Disposition

Judge Caproni denied the motion and directed the Clerk of Court to terminate the pending motion at Docket 370. The court warned that further frivolous motions, efforts to relitigate substantially similar motions, or other vexatious behavior may result in sanctions.