Appendix — Arizona v. Ash Grove Cement Co.

APPENDIX A A-l

FILED

JAN 27 1982

CLERK. US.

COURT OF

APPEALS

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN RE CEMENT ANTITRUST LITIGATION

(MDL No. 296)

STATE OF ARIZONA, ef al.,

Plaintiffs- Appellants,

vs. No. 81-5481

Ipeat Basic INDUSTRIES, ef al,

Defendants-Appellees.

4

STATE OF ARIZONA, ef al., )

Petitioners,

vs. No. 81-7465

Unirep States District CourT FOR THE

DisTRICT OF ARIZONA,

Respondent,

and

Kaiser CEMENT AND Gypsum Corpo-

RATION, ef al,

Real Parties in Interest.

STATE OF ARIZONA, ef al,

Petitioners,

vs. No. 81-8079

As Grove Cement COMPANY, ef al,

Respondents. OPINION

Berore: WaALLAce, Sxopi, and Boocuever, Circuit Judges.

A-2 Appendix A

WAL Lace, Circuit Judge:

Plaintiffs, appellants and petitioners herein, seek review of

the district court’s order of May 26, 1981, granting a motion to

recuse brought by defendants, appelices and real parties herein.

Three avenues are attempted: a direct appeal under 28 U.S.C.

§ 1291, a discretionary interlocutory appeal pursuant to 28

U.S.C. § 1292(b), and a petition for a writ of mandamus.

Defendants move to dismiss the appeal on the ground that a

grant of a motion to recuse is not a final appealable order

subject to review under 28 U.S.C. § 1291, and argue that an

interlocutory appeal under section 1292(b) is not warranted.

We dismiss the appeal for lack of jurisdiction and deny the

petition for permission to appeal pursuant to section 1292(b).

Review will be based upon the petition for mandamus.

L.

Plaintiffs, a national class of public and private purchasers

of cement and cement-containing products, and two statewide

classes of governmental purchasers, assert a nationwide con-

spiracy among various cement producers to fix, maintain and

stabilize the price of cement and cement products in violation

of, inter alia, Section | of the Sherman Act, 15 U.S.C. § 1. The

original suit was filed in the District of Arizona in 1976. Similar

actions, which were filed in other parts of the country, were

thereafter transferred by the Judicial Panel on Multi-District

Litigation to the District of Arizona for consolidated pretrial

proceedings. Because of his experience with the pretrial

proceedings that had already been conducted in the actions

pending in the District of Arizona, Judge Muecke was assigned

to hear the coordinated or consolidated pretrial proceedings. Jn

re Cement and Concrete Antitrust Litigation, 437 F. Supp. 750,

753 (J.P.M.D.L. 1977).

On March 9, 1979, Judge Muecke certified that the litiga-

tion proceed on behalf of a nationwide class of public and

private cement purchasers and two statewide governmental

entity classes. Following certification of these classes, the

parties lodged with the court a Master Class List of 210,235

Appendix A A-3

entities, consisting of all putative class members who could be

ascertained through reasonable efforts. On January 12, 1981,

after Judge Muecke had approved the list and had given notice

to the putative class member, pursuant to Fed. R. Civ. P.

23(c)(2), that they could elect exclusion from the class by

written request prior to December 31, 1980, defendants in-

formed Judge Muecke in a letter that a comparison of his 1980

financial disclosure statement with the Master Class List in-

dicated that his wife owned stock in seven of the 210,235

entities, none of which had requested exclusion. Defendants

asserted that such stock ownership constituted interests both in

parties to the litigation and in the subject matter of the

litigation, thereby mandating Judge Muecke’s recusal under 28

U.S.C. § 455(b)(4).' On February 23, 1981, defendants filed a

motion for Judge Muecke’s disqualification on the grounds

asserted in their »revious letter. Judge Muecke granted defend-

ants’ motion to recuse on the basis that his wife’s stock

ownership fell within the per se rule of 28 U.S.C. § 455(b)(4),

which requires recusal when a judge’s spouse has a financial

interest in a party to the proceeding. Jn re Cement and

Concrete Antitrust Litigation, 515 F. Supp. 1076 (D. Ariz.

1981).2 On June 3, 1981, Judge Muecke certified his order for

an interlocutory appeal pursuant to 28 U.S.C. § 1292(b).

The first question we must decide is whether a party may

take an appeal, pursuant to 28 U.S.C. § 1291, from an order

granting a motion to recuse. Under section 1291, the courts of

appeals are vested with “jurisdiction of appeals from all final

decisions of the district courts. ...” The Supreme Court has

consistently interpreted this language as indicating that a party

may not take an appeal under this section until there has been a

decision by the district court that “ends the litigation on the

merits and leaves nothing for the court to do but execute the

judgment.” Coopers & Lybrand v. Livesay, 437 U.S. 463, 467

(1978) (Coopers & Lybrand), quoting Catlin v. United States,

324 U.S. 229, 233 (1945). An order granting a motion to

recuse clearly does not terminate the entire litigation.3 “Such an

order is appealable, therefore, only if it comes within an

appropriate exception to the final-judgment rule.” Coopers &

Lybrand, supra, 437 U.S. at 467. In this case, plaintiffs rely on

A-4 Appendix A

the “collateral order” exception articulated by the Supreme

Court in Cohen v. Beneficial Industrial Loan Corp., 337 US.

541 (1949) (Cohen).

In Cohen the Supreme Court recognized that some orders

by their nature require review at an earlier stage, because they

will be effectively unreviewable upon appeal from a final

judgment. Jd. at 546. The Cohen collateral order doctrine

allows appeals from orders that can be said to fall within

that small class which finally determine claims of

rights separable from, and collateral to, rights asserted

in the action, too important to be denied review and

too independent of the cause itself to require that

appellate consideration be deferred until the whole

case is adjudicated.

Id. Although there is a strong policy behind the rule that

appeals are to be made only following final judgment on the

merits, the Court has recognized that under certain circum-

stances “a rigid insistence on technical finality would sometimes

conflict with the purposes of the statute.” Coopers & Lybrand,

supra, 437 U.S. at 471. Recently, the Court summarized the

Cohen standard in the following manner:

“{T]}he order must conclusively determine the dis-

puted question, resolve an important issue completely

separate from the merits of the action, and be effec-

tively unreviewable on appeal from a final judgment.”

Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 375

(1981), quoting Coopers & Lybrand, supra, 437 U.S. at 468.

Firestone also stressed that the Cohen exception is narrow

and teaches that “interlocutory orders are not appealable ‘on

the mere ground that they may be erroneous.’” /d. at 378.

Thus, in determining whether a district court’s order granting a

motion to recuse is appealable prior to final judgment, we must

be aware not only of the practical effect of denying immediate

review upon a particular party, but also of the potential

“unjustified waste of scarce judicial resources” which can result

if the limited exception carved out in Cohen is transformed

“into a license for broad disregard of the finality rule imposed

by Congress in § 1291.” Firestone Tire & Rubber Co. v. Risjord,

supra, 449 U.S. at 378.

Appendix A A-5

Plaintiffs argue that an order granting recusal is appealable

under Cohen. Applying the standard as summarized by the

Court in Firestone, id. at 375, we cannot disagree that an order

granting recusal conclusively determines a disputed question,

completely separate from the merits of the action, which, if not

reviewed immediately, will be effectively unreviewable on

appeal from final judgment. Cf In re Coordinated Pretrial

Proceedings in Petroleum Products Antitrust Litigation, Nos.

80-5970 et seqg., slip op. 5155 (9th Cir. Oct. 13, 1981)

(allowing appeal from order disqualifying counsel under Co-

hen). However, not all orders which meet the requirements of

this standard are reviewable under section 1291. The Court in

Cohen spoke of that small class of orders which finally deter-

mine “claims of right.” More recently the Court has explained

that in the situations in which Cohen has been applied, “each

invelved an asserted right the legal and practical value of which

could be destroyed if it were not vindicated before trial.”

United States vy. MacDonald, 435 U.S. 850, 860 (1978) ( foot-

note omitted). Thus, criminal defendants have been permitted

appeals prior to criminal trials when they claim a violation of

the double jeopardy clause, Abney v. United States, 431 U.S.

651, 662 (1977), or a violation of their statutory and con-

stitutional right to bail, Stack v. Boyle, 342 U.S. 1,6 (1951). In

these situations, like the posting of security for costs involved in

Cohen, the party seeking immediate review can establish not

only that the district court’s order is effectively unreviewable on

appeal, but also that the effect of an erroneous decision by the

district court will deprive him of some protectable interest. See

Firestone Tire & Rubber Co. v. Risjord, supra, 449 U.S. at 376-

77. The rights sought to be vindicated by an immediate appeal

would be extinguished by the time a final judgment is entered.

Since the Supreme Court has recently cautioned that the final

judgment rule and the important policies which support it must

not be eroded by an unnecessarily liberal application of the

Cohen exception, we are convinced that the “claim of right”

language used in Cohen and reiterated by the Court on

subsequent occasions must be viewed as establishing a manda-

tory prerequisite for a Cohen collateral order. See Community

Broadcasting of Boston, Inc. v. FCC, 546 F.2d 1022, 1028

(D.C. Cir. 1976). It is this threshold requirement that plaintiffs

in the present case have failed to meet.

A-6 Appendix A

In Hampton v. City of Chicago, 643 F.2d 478 (7th Cir.

1981), the Seventh Circuit considered the question of whether

the erroneous grant of a motion to recuse deprives the litigant

opposing the motion of any recognizable interest. In holding

that it did not, the court stated: “{W Je fail to conceive of any

interest which the plaintiffs have as litigants for review of [the]

recusal order.... While plaintiffs have a right to have their

claim heard by the district court, they have no protectable

interest in the continued exercise of jurisdiction by a particular

judge.” Jd. at 479. We agree.

Plaintiffs attempt to distinguish Hampton on two grounds.

First, they argue that Judge Muecke’s decision prevents any

other federal judge from being assigned to hear the case and

therefore denies them the right to have their case heard at all.

In Hampton, reassignment of the case was routinely made by

the clerk’s office on a random basis. In contrast, reassignment

of the instant case requires a concurrence of four of the seven

judges on the Judicial Panel of Multi-District Litigation. Plain-

tiffs claim that because five of the seven members of the Panel

own stock in putative class members, the Panel cannot act to

assign the cases to a new judge or remand them to the districts

where they were originally filed. Even the court in Hampton

suggested that a consequence such as that asserted by plaintiffs

might satisfy the “claim of right” requirement of Cohen. Id. at

479 & n.2.

We need not decide this question since we opine that stock

ownership in putative class members by judges on the Judicial

Panel on Muiti-District Litigation does not affect the Panel’s

ability to transfer the present proceedings to a new judge. 28

U.S.C. § 455(b)(4) requires only that a judge disqualify

himself in any “proceeding” where he has a financial interest in

the subject matter in controversy or in a pary to that proceed-

ing. Section 455(d)(1) defines the word “proceeding” as

including “pretrial, trial, appellate review, or other stages of

litigation.” 28 U.S.C. § 455(d)(1). Although the reassignment

by the Panel could be construed as a pretrial stage of litigation,

in light of the obvious purpose of section 455 to prevent a judge

from adjudicating rights in any case in which he appears to

have an interest, we refuse to construe the word “proceeding”

Appendix A A-7

to include the performance of ministerial duties such as assign-

ing a case to another judge. See Stringer v. United States, 233

F.2d 947, 948 (9th Cir. 1956). While the issue may be

ultimately decided if and when the question is presented

directly to the Panel, we conclude that the contention is of

insufficient merit to persuade us that plaintiffs’ fear of never

having their case heard is well founded.

Plaintiffs also assert that the present case differs from

Hampton because of Judge Muecke’s four-year experience with

the litigation. In Hampton the recusal order came immediately

after the judge was assigned to the case and before he had

gained substantial experience with the litigation or made any

substantive orders. Hampton v. City of Chicago, supra, 643

F.2d at 479-80. Judge Muecke, on the other hand, had made

numerous pretrial orders and secured a working knowledge of

the suit during his four-year tenure. Plaintiffs essentially argue

that although a litigant docs not have a right to have a

particular judge hear his case, a litigant does have a protectable

interest in not having a judge disqualify himself unnecessarily

when a recusal order would so disrupt the course of the

litigation as to cause substantial delay. However, plaintiffs have

failed to demonstrate how Judge Muecke’s recusal would

substantially delay the present litigation. Plaintiffs merely

speculate that because the pretrial proceedings have taken over

five years, the time required for a new judge to familiarize

himself with the case will be substantial and thus deny them

their right to a speedy and inexpensive adjudication of their

claims. While plaintiffs’ assessment of Judge Muecke’s effective

service should not be minimized, we should not rule out the

possibility that the next judge selected by the Multi-District

Panel may be even more familiar with the substantive issues of

the litigation, which are as yet essentially undecided, or be

aware of different pretrial or trial techniques. Thus, the

ultimate disposition of this case may not be appreciably delayed

at all.

There is another, more fundamental reason that we cannot

accept plaintiffs’ argument. There may well be exceptional

situations in which the costs of familiarizing a new judge, in

terms of delay, will prove to be very great. However, there will

also be situations in which, although the original judge’s

A-8 Appendix A

participation greatly exceeds that of the judge in Hampton, the

effect of recusal on the course of litigation will be nonexistent or

insignificant. It is not necessary to create a general rule

permitting immediate appeal of all recusal decizions in order to

resolve the exceptional situations. See Firestone Tire & Rubber

Co. v. Risjord, supra, 449 U.S. at 378 n.13. Ultimately, if

dissatisfied with the district judge’s decision and confident that

the litigation will be greatly disrupted, a party may seek a writ

of mandamus from the court of appeals. It is for just such an

exceptional circumstance that the writ was designed. See

Community Broadcasting of Boston, Inc. v. FCC, supra, 546

F.2d at 1028. Plaintiffs have done so here and that petition will

be reviewed on the merits.

Plaintiffs have also applied to us for permission to appeal

the district court’s order pursuant to 28 U.S.C. § 1292(b).4

Section 1292(b) provides a mechanism by which litigants can

bring an immediate appeal of a non-final order upon the

consent of both the district court and the court of appeals.

Whether an order of judicial recusal is properly appealable

under section 1292(b) is a question of first impression in our

circuit. Our analysis must begin by examining the statute and

its legislative history.

When a party seeks a section 1292(b) interlocutory ap-

peal, the court of appeals must undertake a two-step analysis.

First, we must determine whether the district court has properly

found that the certification requirements of the statute have

been met. These certification requirements are (1) that there

be a controlling question of law, (2) that there be substantial

grounds for difference of opinion, and (3) that an immediate

appeal may materially advance the ultimate termination of the

litigation. If we conclude that the requirements have been met,

we may, but need not, exercise jurisdiction. The second step in

our analysis is therefore to decide whether, in the exercise of the

discretion granted us by the statute, we want to accept jurisdic-

tion. In the present case, it is not necessary to discuss how this

second determination is made, as we have concluded that the

question whether 28 U.S.C. § 455(b)(4) compels Judge

Appendix A A-9

Muecke’s disqualification is not a “controlling question of law,”

and therefore the jurisdictional prerequisites for section

1292(b) review have not been met.

While Congress did not specifically define what it meant

by “controlling,” the legislative history of 1292() indicates

that this section was to be used only in exceptional situations in

which allowing an interlocutory appeal would avoid protracted

and expensive litigation. United States Rubber Co. v. Wright,

359 F.2d 784, 785 (9th Cir. 1966) (per curiam); Millbert v.

Bison Laboratories, 260 F.2d 431, 433-35 (3d Cir. 1958).

Although some circuits have criticized such a narrow approach

to interlocutory appeals, see, e.g., Hadjipateras v. Pacifica, S.A.,

290 F.2d 697, 702-03 (Sth Cir. 1961), recently the Supreme

Court in Coopers & Lybrand indicated its approval of the

“exceptional circumstances” standard of section 1292(b) when

it stated that the appellant “still has the burden of persuading

the court of appeals that exceptional circumstances justify a

departure from the basic policy of postponing appellate review

until after the entry of a final judgment.” Coopers & Lybrand,

supra, 437 U.S. at 475, quoting Fisons, Ltd. vy. United States,

458 F.2d 1241, 1248 (7th Cir.), cert. denied, 405 U.S. 1041

(1972).

Keeping in mind this “exceptional circumstances” stan-

dard, we now must decide what Congress meant by the

expression “controlling question of law.” Courts have refused to

interpret the phrase so narrowly as to require that reversal of

the district court’s order terminate the litigation. See e.g.,

United States v. Woodbury, 263 F.2d 784, 787 (9th Cir. 1959).

One court has stated that, at the very least, a controlling

question of law must encompass “every order which, if er-

roneous, would be reversible error on final appeal.” Katz v.

Carte Blanche “orp., 496 F.2d 747, 755 (3d Cir.), cert. denied,

419 U.S. 885 (1974). However, this latter standard is of little

guidance in the present case since the erroneous granting of a

motion to recuse could not constitute reversible error upon a

final appeal. Quite to the contrary, after the litigation has been

tried before an impartial judge, the recusal order of the former

judge is effectively mooted.

Just because an erroneous recusal order would not con-

stitute reversible error on final appeal does not preclude it from

A-10 Appendix A

review under section 1292(b). Rather, all that must be shown

in order for a question to be “controlling” is that resolution of

the issue on appeal could materially affect the outcome of

litigation in the district court. See United States Rubber Co. v.

Wright, supra, 359 F.2d at 785. In discussing the “controlling

question of law” requirement in United States v. Woodbury, we

stated:

In our view the question of privilege which the

government now would have us review involves noth-

ing as fundamental as the determination of who are

necessary and proper parties, whether a court to which

a cause has been transferred has jurisdiction, or

whether state or federal law should be applied.

The issues of this lawsuit and the ability of the

court to render a binding decision therein are in no

way affected by the order to produce documents. .. .

In our opinion the claim of privilege here asserted

is collateral to the basic issues of this case, and cannot

be regarded as presenting a “controlling question of

law” as those words are used in the statute.

263 F.2d at 787-88 (emphasis added). The question whether

Judge Muecke erroneously disqualified himself under 28 U.S.C.

§ 455(b)(4) must be viewed as collateral to the basic issues of

this lawsuit.

Furthermore, Judge Muecke’s recusal order will neither

affect the ability of the district court to render a binding

decision nor materially affect the outcome of the litigation in the

district court. At best, all that can be said is that if the recusal

decision was erroneous and can be overturned immediately

upon appeal, some time at the district court level may ulti-

mately be saved. This assumes, of course, that it would take

less time for the parties to appeal the recusal order than it

would to familiarize a new judge with the litigation. If so, that

would not materially affect the outcome of this litigation, but

only its duration. Some courts have adopted the view that a

question is controlling if it is one the resolution of which may

appreciably shorten the time, effort, or expense of conducting a

lawsuit, see Katz v. Carte Blanche Corp., supra, 496 F.2d at

755-56; Hadjipateras v. Pacifica, S.A., supra, 290 F.2d at 702;

Appendix A A-ll

E.F. Hutton & Co. v. Brown, 305 F. Supp. 371, 403 (S.D. Tex.

1969), thus essentially reading the “controlling question of

law” requirement out of section 1292(b). We reject this

approach. Congress could easily have chosen only to require

that a question materially advance the litigation in order for it

to be immediately reviewable. Since Congress chose to add the

additional requirement that the issue for which review is sought

must be a “controlling question of law,” it would be improper

for us to construe the statute as though these two requirements

were interchangeable.

In conclusion, it is difficult for us to think of a question

which is more separable from and collateral to the merits of this

lawsuit than is the question of Judge Muecke’s recusal decision.

Since an appellate decision that recusal was improper could in

no way materially affect the eventual outcome of the litigation,

we cannot view the question as controlling. The precedent in

this circuit has recognized the congressional directive that

section 1292(b) is to be applied sparingly and only in ex-

ceptional cases, and that the “controlling question of law”

requirement be interpreted in such a way to implement this

policy. See, e.g., Robbins Constr. Co. v. Lawrence Mfg. Co., 482

F.2d 426, 429 (9th Cir. 1973); United States Rubber Co. v.

Wright, supra, 359 F.2d at 785. Such precedent prohibits us

from disregarding the “controlling question of law” require-

ment in the statute despite the fact that judicial resources might

be saved by doing so. We admit that our adherence to

precedent may mean that the important question of the appli-

cability of 28 U.S.C. § 455(b)(4) to class actions will not be

subject to direct appellate review, at least in the case where the

district court grants the motion to recuse, and will require the

parties to challenge the decision, as was done here, by a petition

for writ of mandamus. However, Congress must have been

aware of this possibility when it enacted the per se stock

ownership rules of 28 U.S.C. § 455(b)(4). It is for Congress to

decide whether this question is so important that direct appel-

late review must always be available.

APPEAL DISMISSED; PETITION TO APPEAL IN-

TERLOCUTORY ORDER . -NIED; PETITION FOR WRIT

OF MANDAMUS TO BE HEARD ON THE MERITS.

A-12 Appendix A

FOOTNOTES

1. Under 28 U.S.C. § 455(b)(4), a judge must disqualify himself

where:

He knows that he, individually or as a fiduciary, or his

spouse or minor child residing in his household, has a

financial interest in the subject matter in controversy or in a

party to the proceeding, or any other interest that could be

substantially affected by the outcome of the proceeding.

2. Judge Muecke also ruled that Canon 3C(1)(c) of the Code of

Judicial Conduct, which is identical to 28 U.S.C. § 455(b)(4), also

imposed a per se obligation that he recuse himself. Jn re Cement and

Concrete Antitrust Litigation, 515 F. Supp. 1076, 1079 (D. Ariz.

1981).

3. Apart from their Cohen argument, plaintiffs also assert that Judge

Muecke’s recusal order should be considered a final order and thus be

reviewable under section 1291 since it deprives the plaintiffs of having

their case heard at all. As we discuss in regard to the applicability of

the collateral order doctrine, see infra, there is no merit to the

argument that the recusal order effectively puts an end to the litigation

on the basis that the Judicial Panel on Multi-District Litigation will be

unable to reassign the case under 28 U.S.C. § 455(b)( 4). Therefore,

plaintiffs’ argument that the recusal order in this case should be

considered a final order must be rejected.

4. 28 U.S.C. § 1292(b) provides:

When a district judge, in making in a civil action an

order not otherwise appealable under this section, shall be of

the opinion that such order involves a controlling question of

law as to which there is substantial ground for difference of

opinion and that an immediate appeal from the order may

materially advance the ultimate termination of the litigation,

he shall so state in writing in such order. The Court of

Appeals may thereupon, in its discretion, permit an appeal

to be taken from such order, if application is made to it

within ten days after the entry of the order; Provided,

however, That an application for an appeal hereunder shall

not stay proceedings in the district court unless the district

court or the Court of Appeals or a judge thereof shall so

order.

Appendix A A-13

Boocnever, Circuit Judge dissenting:

I respectfully dissent. I think that Judge Muecke properly

certified his recusal order, pursuant to 28 U.S.C. §1292(b), and

that we should have accepted the interlocutory appeal. In

addition, I think that an appeal pursuant to the “collateral

order” exception to the final judgment rule, see Cohen v.

Beneficial Industrial Loan Corp., 337 U.S. 541 (1949), would

have been proper. The gist of the majority's opinion is that

exercising jurisdiction over this interlocutory appeal would be

improper because (1) Judge Muecke’s recusal order does not

present a “controlling question of law” and (2) plaintiffs assert

no “claim of right” as required by Cohen. I find neither of these

arguments convincing.

The majority states the issue before us too broadly, and, in

doing so, confounds the application of both section 1292(b)

and the collateral order doctrine. Stating the issue too broadly

causes the majority to overstate the risk of rampant inter-

locutory appeals. As I see it, the issue is not whether ail judicial

recusals are open to interlocutory appeal. The issue is much

narrower: is a judicial recusal order appealable either under

section 1292(b) or Cohen when (1) it arises in a complex class

action suit, (2) the judge bases his order upon a technical and

literal reading of 28 U.S.C. § 455 even though he finds that he

would neither be influenced by his spouse’s minor stock-

holdings nor create the impression of impropriety by hearing

the case, and (3) the judge recuses himself after presiding over

the case for several years under circumstances requiring a new

judge to expend substantial time and effort to become familiar

with the case? I answer this question in the affirmative.

A. Section 1292(b)

We must conduct a two-step analysis when a party seeks a

section 1292(b) appeal from a certified order. We must first

determine whether the order certified for appeal meets the

statute’s threefold certification requirements.’ If we find the

order certifiable, we must then decide whether we want to

accept jurisdiction. The majority concludes that Judge Muecke

' These requirements are set forth in the text of 28 U.S.C. § 1292(b),

which appears at note 4 of the majority's opinion.

A-14 Appendix A

erred in certifying his recusal order because the recusai issue

was not a “controlling question of law;” it, therefore, never

reaches the second step of the analysis. I disagree with the

majority’s reasoning, and believe that we should accept

jeriadict

Judge Muecke’s recusal order meets all of section

1292(b)’s certification requirements. Two are clearly satisfied.

First, an immediate appeal from Judge Muecke’s recusal order

might materially advance the ultimate termination of this

litigation. Judge Muecke has warned of the delay he foresees if

another judge is required to preside over this litigation. Second,

this appeal involves an issue over which reasonable judges

might differ. As Judge Muecke suggests, Congress may not

have contemplated the application of 28 U.S.C. § 455 to class

action litigation. This uncertainty provides a credible basis for

a difference of opinion regarding section 455’s applicability to

class action suits.

Finally, I think the certified recusal order presents a

“controlling question of law.” Judge Muecke’s recusal order

presents a question of law; whether that question is “con-

trolling” is the difficult issue. Because Congress did not explain

what it meant by “controlling,” we must construe that require-

ment in light of congressional purposes underlying section

1292(b)’s adoption—saving time for the district court and for

the litigants while protecting against undue proliferation of

appeals. See Katz v. Carte Blanche Corp., 496 F.2d 747, 755

(3d Cir.) (en banc), cert. denied, 419 U.S. 885 (1974);

Hadjipateras v. Pacifica, S.A., 290 F.2d 697, 702-03 (Sth Cir.

1961). The Third Circuit found testimony in section 1292(b)’s

legislative history indicating that “ ‘controlling’ means serious

to the conduct of the litigation, either practically or legally.”

Katz, 496 F.2d at 755. The Second Circuit has remarked that

“controlling questions of law” may include “procedural

determination{s] that may importantly affect the conduct of an

action.” Jn re Duplan Corp., 591 F.2d 139, 148 n.11 (2d Cir.

1978) (Friendly, J.). Several commentators have adopted

similar interpretations. See Note, Interlocutory Appeals in the

Federal Courts under 28 U.S.C. § 1292(b), 88 Harv.L.Rev.

607, 623 (1975); 16 C. Wright & A. Miller, Federal Practice

Appendix A A-15

and Procedure § 3930, at 169; 9 Moore, Federal Practice,

7 110.22[2], at 260 (2d.ed. 1975) (“The critical requirement is

that it [the question] have the potential for substantially

accelerating the disposition of the litigation.”). I agree with

these interpretations of the “controlling question” requirement.

So defined, it is abundantly clear that this case presents a

“controlling question of law.”

There can be no doubt but that Judge Muecke’s recusal

order would importantly affect the conduct of this action.

During the five years he presided over this case, Judge Muecke

devoted numerous hours to pleadings, hearings, and other

procedural matters. He has made numerous decisions that have

affected the scope and character of the suit. He shares an

intimacy with this litigation that would take another judge

much time and effort to acquire. He warns of the delay and

injustice that will occur if another judge is required to familiar-

ize himself with this case:

To transfer five and one-half years of work and paper

to a new judge seems unfair, not only to the parties,

but to the unlucky transferee and will in all likelihood

be the occasion for delay. Decisions which might

routinely be disposed of by me may well take a new

judge longer until he has the opportunity to become

acquainted with the case.

In re Cement and Concrete Antitrust Litigation, 515 F. Supp.

1077, 1081 (D. Ariz. 1981). We should not take these admoni-

tions lightly, as Judge Muecke is in a far better position than we

to evaluate the probability and effects of delay. With this in

mind, I would hold that Judge Muecke did not err in certifying

his recusal order for section 1292(b) review.

Finding us empowered to assert jurisdiction over this

appeal, I would then rule that we should hear its merits. In

exercising our discretion to accept or reject certified orders for

interlocutory appeal, we must be guided by the policies and

concerns that motivated Congress to adopt section 1292(b).

Congress intended to create a mechanism that would shorten

the period between the commencement of an action and its

ultimate termination and would avert unnecessary work and

expense. See Appeals from Interlocutory Orders and Con-

finement in Jail-Type Institutions: Hearings on H.R. 6238 and

A-16 Appendix A

H.R. 7260 before Subcomm. No. 3 of the House Comm. on the

Judiciary, 85th Cong., 2d Sess., at 14 (1958). See also Katz.

496 F.2d at 753-56. It placed this mechanism under “the

immediate, sole, and broad control of Judges so that within

reasonable limits disadvantages of piecemeal and final judg-

ment appeals might both be avoided.” Hadjipateras v. Paci-

fica, S.A., 290 F.2d at 702-03. In doing so, it has entrusted the

judiciary with the responsibility of developing an interlocutory

appellate procedure in light of its own perceptions of need and

its ability to control a potentially explosive source of appeals.

Congress instituted a guard against the proliferation of inter-

locutory appeals by requiring that district courts certify their

orders pursuant to stated criteria as a prerequisite to section

1292(b) appeals, and by further making such appeals subject

to our acceptance.

I believe that the issue in this case warrants review at this

interlocutory stage. The criteria for district court certification

have been established. The narrowness of the issue before us

obviates the risk of establishing precedent that might open the

floodgates of interlocutory appeals. The importance of that

issue and the impossibility of its later review dictate that we

exercise our discretion by accepting this application for inter-

locutory appeal. Cf. In re Virginia Electric & Power Co., 539

F.2d 357, 364 ( 4th Cir. 1976) ( applying similar logic to justify

interlocutory review of a judicial disqualification order).

B. Collateral Order Doctrine

I also disagree with the majority’s conclusion that we

cannot exercise jurisdiction over Judge Muecke’s recusal order

pursuant to the Cohen collateral order doctrine. To come

within that doctrine “the order must conclusively determine the

disputed question, resolve an important issue completely sepa-

rate from the merits of the action, and be effectively unreview-

able on appeal from a final judgment.” Coopers & Lybrand v.

Livesay, 437 U.S. 463, 468 (1978). The majority concedes that

Judge Muecke’s recusal order meets these requirements. It

adds, however, that the collateral order doctrine is designed

only to protect rights “the legal and practical value of which

could be destroyed if... [they are] not vindicated before

Appendix A A-17

trial.” United States v. MacDonald, 435 U.S. 850, 859-60

(1978) (footnote omitted). It then argues that petitioners can

assert no “claim of right,” as required by Cohen, 337 US. at

546. That is, the parties can claim no right to have a particular

judge hear their case. This argument ignores a significant

plaintiffs’ right. Plaintiffs are entitled to have their case proceed

to trial without undue delay. See generally Fed.R.Civ.P. 1.

This right is inarguably of “legal and practical value” and

would seem to mount in importance as their case approaches

trial.2 Under the circumstances of this case an erroneously

issued recusal order would infringe on this right by causing

undue delay.

Not only does the recusal order satisfy the judicially-

fashioned requirements for collateral order appeals, its present

review would also be consistent with the policies underlying the

collateral order exception to the final judgment rule.* Because

it recognized that the dangers of delaying review may occasion-

ally exceed the risk, cost, and inconvenience of piecemeal

review, the Court gives the finality requirement a “practical

rather than a technical construction.” Eisen v. Carlisle &

Jacquelin, 417 U.S. 156, 171 (1974), quoting from Cohen, 337

U.S. at 546. In the instant case, an appeal from Judge

Muecke’s recusal order would enable plaintiffs to obtain review

of a question that would otherwise escape review. Just as

important, review of the recusal order would not radically

disserve any of the policies that the final judgment rule was

designed to protect. A major risk of piecemeal re-

view —disruption of the trial court proceedings—has already

occurred in this case. Hearing this appeal would, at worst, only

2 Judge Muecke reported, in his recusal order, that, “| w hile trial is not

yet underway, discovery has been substantial and is nearing completion.” 515

F.Supp. at 1077. After more than five years of pretrial proceedings, the

parties have significantly neared trial.

3 Of course there is a countervailing right in having a disinterested judge

preside over this litigation. Concededly, this right supercedes the right to go

to trial promptly. It is not clear whether Judge Muecke is to be considered

disinterested. Consequently, the clash between plaintiffs’ right to proceed

promptly to trial and the defendants’ interest in assuring that a disinterested

judge preside over the case merely highlights the importance of having us

review the recusal order to determine whether plaintiffs’ right to a prompt

trial must be compromised.

4 The final judgment rule is set forth in 28 U.S.C. § 1291.

A-18 Appendix A

prolong the delay already injected into this proceeding.®

Moreover, added delay in this case is justified because it would

enable us to clarify the requirements of 28 U.S.C. § 455 and

thereby potentially prevent unnecessary recusals that could

cause delay in future cases. The instant case is one in which a

practical construction of the finality rule is justified. I would

allow a Cohen appeal.

To conclude, I think that the legal issue raised by Judge

Muecke’s recusal order is of major importance. It is likely to

recur in future class action suits, where it will again affect the

efficiency with which those cases proceed. Yet, because writs of

mandam"s will not issue unless the district court has committed

“clear and indisputable” error, see United States v. Mehrma-

nesh, 652 F.2d 766, 770 (9th Cir. 1981); Arthur Young & Co. v.

United States District Court, 549 F.2d 686, 691 (9th Cir. ), cert.

denied, 431 U.S. 829 (1977), confining our review of this issue

to occasions when writs of mandamus are sought may effec-

tively cause it to escape the type of review by which it may be

decided solely on its merits.

I would accept this ircerlocutory appeal.®

5 If we were to hear this appeal and affirm the recusal order, we would

effectively leave the case where it stood when it first came before us.

Alternatively, if we found grounds to reverse, we could return the litigation to

Judge Muecke and obviate the delay that will occur if another judge is

appointed to preside over this litigation.

1 also disagree with the majority’s thinking regarding the effect that

stockholdings by members of the Judicial Panel on Multi-District Litigation

will have on their qualification to reassign the case. In my opinion, the

reasons that would preclude a judge from adjudicating the merits of a case are

equally relevant in determining whether a judge should participate in the

reassignment of a case. Although this issue is not one of controlling

importance since temporary appointments to the panel could be made, see 28

US.C. § 1407(b) (authorizing Chief Justice of United States to designate

judges to serve as Panel members “from time to time”), thereby enabling it to

reassign the case, the need to empanel other judges would present the

prospect of additional delay.

APPENDIX B A-19

FILED

MAY 26, 1981

IN THE

UNITED STATES DISTRICT COURT

FOR THE

DISTRICT OF ARIZONA

MDL DOCKET

In Re CEMENT AND CONCRETE NO. 296

ANTITRUST LITIGATION ‘ MASTER FILE

NO. CIV. 76-488A

PHX CAM

Tuts DocuMENT Revartes To: } OPINION

AND

ALL ACTIONS } ORDER

This matter is before the Court on Motion to Recuse,

pursuant to 28 U.S.C. § 455(b)(4) and Canon 3C(1)(c) of the

Code of Judicial Conduct. I am asked to disqualify myself for

the reason that my wife owns shares of stock in several

members of the plaintiff class.

The present case is one of a growing number of very large

antitrust class actions that have confronted the federal court

system in recent years. The original suit was filed in this district

in 1976. Similar actions which were filed in other parts of the

country were thereafter transferred to this district by the Panel

on Multidistrict Litigation. The subject matter of this case

involves allegations of a nation-wide price fixing conspiracy in

the cement industry. Plaintiffs are purchasers of cement or

cement-containing products. In one way or another, Cement

touches millions of people.

A-20 Appendix B

The history of Cement is long and complex. In the five

years since it was filed, this Court has spent hundreds, if not

thousands of hours reading and researching pleadings, con-

ducting hearings, meeting with counsel, and issuing decisions.

While trial is not yet underway, discovery has been substantial

and is nearing completion.

In order to put defendants’ motion in context, it is impor-

tant to appreciate the size of the plaintiff classes. One of these

classes, the National Cement Class, consists of more than

210,000 names, a substantial portion of which are corporate

entities. The shareholders of these corporations would number

in the millions. Before the present dispute, the class list existed

only on microfiche and, to this Court’s knowledge, had never

been committed to hard copy.

On January 12, 1981, I received a letter from Mr. David

Bonderman, on behalf of various Cement defendants. Mr.

Bonderman advised the Court that, comparing the contents of

my 1980 financial disclosure report with the names on the

National Cement Class list, it appeared that my wife owned

shares of stock in seven of the 210,000 class members. From

this, Mr. Bonderman concluded that I was under a per se

obligation to recuse myself pursuant to 28 U.S.C. § 455(b)(4)

and Canon 3C(1)(c) of the Code of Judicial Conduct.

I must admit that my first reaction to Mr. Bonderman’s

position recalled the words of Mr. Bumble in Dickens’ Oliver

Twist: “If the law supposes that...the law is a ass—an

idiot.”* Upon closer review of the authority cited by Mr.

Bonderman, however, it became apparent that his argument

was not without support in the language of § 455 and Canon

3C. Therefore, on January 14, 1981, the Court ordered that

plaintiffs be prepared to respond to the legal arguments raised

in the letter at a hearing, which was set for Friday, January 30,

1981.

The Court’s decision in this matter follows extensive

briefing as ordered by the Court from the parties, eral argument

on two occasions, and input from the Advisory Committee on

1 See also George Chapman ( 1559-1634), Revenge for Honour, ULii: “1

am ashamed the law is such an ass.”

Appendix B A-21

Codes of Conduct of the Judicial Conference of the United

States. I have concluded that I must recuse myself, not because

I feel a sense of conflict, and not because I feel that to continue

would create the appearance of impropriety. I have concluded

that I must recuse myself for the sole reason that the law, as

written, says I must.

28 U.S.C. § 455 and Canon 3C

The relevant language of § 455 and Canon 3C is identical:

Any. . . judge. . . shall disqualify himself in any proceeding

in which his impartiality might reasonably be questioned.

He shall also disqualify himself in the following circum-

stances:

He knows that he... or his spouse... has a

financial interest in the subject matter in con-

troversy or in a party to the proceeding, or any

other interest that could be substantially affected

by the outcome of the proceeding. . . .

For the purpose of this section the following words or

phrases shall have the meaning indicated:

“Financial interest” means ownership of a legal

or equitable interest, however small. . ..

(Emphasis added).

Defendants have taken the position that my wife’s stock

ownership in class members constitutes a “financial interest” in

either the “subject matter in controversy” or in a “party to the

proceeding.”

Both of these arguments could be avoided if the words

“any other interest that could be substantially affected by the

outcome of the proceeding” could be read to modify a dis-

qualifying “financial interest.” If this were the case, a financial

A-22 Appendix B

interest in the “subject matter in controversy” or in “a party to

the proceeding” would be disqualifying only if the interest was

such that it could be “substantially affected by the outcome of

the proceeding.” Despite the logical attractiveness of such a

reading, the only Circuit Court to have addressed the issue has

rejected it:

The statute differentiates between two kinds of interests. If

the judge has a direct ownership, legal or equitable, then

disqualification is required regardless of the size of the

interest, unless one of the specified exceptions applies. On

the other hand, an interest not entailing direct ownership

falls under “other interest,” and requires disqualification

only if the litigation could substantially affect it.

In re New Mexico Natural Gas Antitrust Litigation, 620 F.2d

794, 796 (10th Cir. 1980). See also Opinion of the Advisory

Committee on Codes of Conduct of the Judicial Conference of

the United States, May 7, 1981 at 3, which is attached to this

Opinion as Exhibit A and incorporated by reference herein.

The Advisory Committee’s Opinion

Given the similarity between § 455 and Canon 3C, defen-

dants’ argument raises ethical as well as legal considerations:

For this reason, all memoranda in this matter, filed in the

Motion to Recuse, including a transcript of oral argument, were

referred to the Advisory Committee on the Codes of Conduct

with a request for an opinion, which request was first initiated

by this Court to the Committee on January 29, 1981.

Upon due consideration of all materials that were provided

to this Court, the Advisory Committee concluded that I should

recuse myself. The Committee did not consider the first issue

raised by defendants, whether my wife’s stock ownership in a

class member constituted a “financial interest in a party to the

proceeding.” While the Committee’s opinion was not specific, it

suggested the applicability of defendants’ alternate arguments,

that my wife’s stock constitutes a “financial interest in the

subject matter in controversy” or “any other interest that could

be substantially affected by the outcome of the proceeding.” In

Appendix B A-23

recommending recusal, the Committee emphasized tht ethical

considerations require a judge to consider “possible and poten-

tiai conflicts of interest as well as actual conflicts of interest.”

Advisory Opinion at 4. The Committee also suggested that any

eventual judgment which would result in a financial benefit to a

corporation in which my wife owned stock might create the

appearance of impropriety. See Canon 2, Code of Conduct.

§ 455

Regardless of the applicability of § 455, this Court is very

persuaded by the Advisory Committee’s conclusions as to

Canon 3C. Section 455 outlines the /ega/ boundaries of when a

judge must recuse himself. Canon 3C defines the ethical

boundaries. Even if I could legally proceed with a case, I would

refuse to do so if I were to determine that it was ethically

improper.

Given that § 455 purports to adopt a per se rule regarding

disqualification, it is amazing that the statute is not more

specific as to when the per se rule would apply. The problems

created by the language of § 455 are compounded by a dirth of

legislative history on the questions before this Court. Section

455 might operate with some degree of success in the context of

simple litigation. When applied to complex multidistrict class

actions, however, the statute appears to break down.

The first question raised by defendants is whether the class

members in whom my wife owns stock are “parties” within the

meaning of § 455(b)(4). If they are, the statute commands my

recusal “however small” my wife’s interest in them might be.

Despite the proliferation of class-actions in this country,

there is no indication that Congress directly considered the

question whether “party” under (b)(4) should be read to

include “class member.”

The strongest points raised by plaintiffs are that the

statutory language does not refer to class members, and that

general law does not treat class members and parties in an

A-24 Appendix B

identical fashion. See e.g. Greenfield v. Villager Industries, Inc.,

483 F.2d 824 (3d Cir. 1973) (the purpose of class actions is to

bind persons (class members) who are not “parties” ); Hawaii-

Pac Venture Capital Corp. v. Rothbard, 564 F.2d 1343 ( 9th Cir.

1977) (class members have no absolute right to intervene in

class action).

The problem with plaintiffs’ argument is that, where it

counts, class members and parties are identical. There is no

question that class members are included in the benefits and

burdens of a judgment on an equal basis with parties. For this

reason, there appears to be no reason in logic why a financial

interest “however small” in a named party to a litigation should _

be grounds for recusal, but that the same interest in a class —

member should not be. Neither the degree of conflict, nor the

appearance of impropriety is altered by a litigant’s classification

as “party” or “class member.”

The second question raised by defendants is whether my

wife’s stock in class members constitutes a “financial interest” in

the “subject matter in controversy.” As noted above, neither the

language nor the legislative history of § 455 provides much

guidance as to the application of the statute to the instant

situation. We know only that if my wife has such an interest,

“however small,” I must automatically recuse myself—even if it

does not make practical sense to do so.

I find the term “subject matter in controversy” to be

inherently vague. While it obviously applies to in rem proceed-

ings, see Hearings Before the Subcommittee on Improvements

in Judicial Machinery of the Committee of the Judiciary, United

States Senate, 93rd Congress, July 14, 1971, and May 17, 1973,

Congress has not indicated whether it is limited to such

proceedings and, if it is not, how far the term extends.

Although the Fourth and Tenth Circuits have determined that a

“remote, contingent benefit” is not a “financial interest” within

the meaning of the statute, see In re New Mexico Natural Gas

Antitrust Litigation, 620 F.2d 794, 796 (10th Cir. 1980); Jn re

Virginia Electric & Power Co., 539 F.2d 357 (4th Cir. 1976), I

am directed to no federal decisions which contain any signifi-

cant discussion on the particular issue involved here—the

definition of “subject matter in controversy.”

Appendix B A-25

Fortunately, my conclusion that the “parties” provision of

§ 455 is applicable to the present case makes the resolution of

the “subject matter in controversy” issue unnecessary.

Competing Considerations

As I have said, it is somewhat surprising that Congress did

not consider the effect of § 455 on the administration of class

action litigation. Not only has the class action become an

i i common form of litigation in this country, the

likelihooa of § 455 applying in a class action, with its many

“parties”, is is much increased over simple litigation. This is

aggravated when one considers that a party cannot waive the

application of § 455, either voluntarily or by estoppel, and that

§ 455 demands disqualification no matter how small a judge’s

financial interest in the litigation might be.

My surprise at Congress’ failure to consider the impact of

§ 455 on class action litigation is also occasioned by the fact

that the administrative burden of applying the per se rule to

class actions is greater than the burden of applying it to simple

litigation. Given the number of participants in a large class

action, it is not an easy matter to determine whether a per se

conflict exists. In normal litigation, a judge can simply compare

his families’ holdings with the names on the caption to the

complaint. In a complex multidistrict class action, the litigation

may be well underway before a comprehensive class list can be

compiled. To switch judges in mid-stream not only wastes

judicial time and energy, but can constitute a substantial

administrative burden. I question whether such a result should

be occasioned per se “however small” a judge’s financial *

interest. I also question whether the result should be the same

regardless of the stage of the litigation, and regardless whether

estoppel might otherwise apply.

The problems of applying § 455, as written, to large

multidistrict class action litigation are demonstrated by appli-

cation of the statute to Cement.

Consider the amount of money involved on the question

whether a judge would be influenced by potential gain to

himself or his family. As computed by plaintiffs, and not

A-26 Appendix B

contested by defendants, the total amount my wife could

possibly be enriched by a ruling favorable to the plaintiffs

(keeping in mind that a jury trial had been timely requested ) is

between $4.23 and $29.70. (See attached computations Exhibit

B). Given the cost of educating a new judge, both to the parties

and to the Government, this amount seems wholly in-

consequential. In addition, consider that the stocks in question

are my wife's sole and separate property, and whether Congress

took community property concepts into account when imputing

a spouse’s interests to a judge. Finally, consider that judges are

not even required to report gifts of less than $100 on the

financial disclosure reports.* In the face of these facts, can it

seriously be contended that my continuation in this matter

creates the appearance of impropriety?

Compare my wife’s financial interest in this litigation with

the burden of applying § 455. As I have said, this case is into its

sixth year. This Court has entered 75 pretrial orders, decided

countless motions, and retains a working knowledge of where

the suit has been and where it is headed. Such knowledge is

crucial to competent case management. To transfer five and

one-half years of work and paper to a new judge seems unfair,

not only to the parties, but to the unlucky transferee and will in

all likelihood be the occasion for delay. Decisions which might

routinely be disposed of by me may well take a new judge

longer until he has the opportunity to become acquainted with

the case.?

This Court’s observation that § 455 works anomalous

results when a litigation is well under way has been noted by

the Advisory Committee on Codes of Conduct and the Judicial

Conference of the United States. In 1980, the Committee

submitted the following draft legislation to the Conference,

which would add a new subsection (f) to 28 U.S.C. § 455:

* But, see Canon 5(C)(4)(c), Code of Judicial Conduct for United

States Judges.

2 Contributing considerably to a quick understanding of this case, is the

high level of competence of the attorneys involved. This Court is deeply

appreciative of the superb quality of the briefs and arguments presented by

counsel, and it is a cause of personal regret that meetings with counsel will

come to an end.

Appendix B A-27

(f) Notwithstanding the foregoing provisions, if any

justice, judge, magistrate, or bankruptcy judge to whom a

matter has been assigned would be disqualified, after

substantial judicial time has been devoted to the matter,

because of the appearance, after the matter was assigned

to him, of a party in which he individually or as a

fiduciary, or his spouse or minor child residing in his

household, has a financial interest (other than an interest

that could be substantially affected by the outcome), a

waiver of disqualification may be accepted from the

parties; in the absence of waiver, disqualification is nut

required if the judge determines that the public interest in

avoiding the cost of delay of reassignment outweighs any

appearance of impropriety arising from his continuing with

the matter to completion.

The Conference approved the foregoing, and authorized its

transmission to Congress, where it is presently pending. Should

Congress see fit to adopt the proposed subsection (f), many of

the problems referred to in this decision would be remedied.

Indeed, had proposed subsection (f) been in force today, this

Court would have reached a different conclusion as to the

necessity of disqualification under § 455.

Effect of Recusal on the Future of Cement

My reluctance to let this case go would be increased if I

thought it would invalidate any of the action taken in this case

in the past years. I am firmly convinced, however, that my past

rulings will remain intact, and that the only effect will be

administrative.

Despite its other possible shortcomings, § 455 does not

require disqualification until a judge “knows” that he has a

financial interest. Until he is so informed, how can there be a

conflict? How can there even be the appearance of impro-

priety? More importantly, how can it be contended that his

past decisions could be affected by a financial interest of which

he was unaware?

A-28 Appendix B

Defendants have conceded that I was unaware that the

companies in whom my wife held stock were class members.

After all, the National Cement Class alone contains over

210,000 members, and the class list, which was on microfiche,

was not provided to the Court until this dispute arose and the

Court requested this list and it was provided im a printout four

feet high. Since the Court became apprised of this problem, it

has made no substantive rulings. Motions have been argued,

but taken under advisement pending the Court’s decision on

recusal.

Given that “knowledge” of a financial interest in a class

member cannot be discovered until the litigation has progressed

to the point that it has produced a class list, to permit attacks on

“pre-knowledge” rulings on the basis of a subsequent determi-

nation of interest would not only be illogical, it would constitute

an intolerable burden to the administration of class action

litigation.

In accordance with the above, I hereby recuse myself from

further participation in ~e Cement portion of this litigation.

Whether this ruling should also apply to the Concrete portion,

which has not been raised in the Motion to Recuse, is a decision

that should be made in light of the foregoing Opinion. This

Court will entertain any proposals or motions that the parties

believe appropriate.

This Court will also be in touch with the members of the

Panel on Multidistrict Litigation who will determine the Court

to which these proceedings will be transferred.

DATED this 26th day of May, 1981.

Appendix B A-29

EXHIBIT A

May 7, 1981

The Honorable C. A. Muecke

Chief Judge, U. S. District Court

United States Courthouse

Phoenix, Arizona 85025

Dear Judge Muecke:

Your inquiry to Judge Tamm of January 29, 1981 has

recently been referred to the Advisory Committee on Codes of

Conduct.

We understand your question arises by reason of your

acting as presiding judge in a multidistrict class action which

has been assigned to you. It involves allegations against

numerous defendants by reason of a claimed nation-wide price

fixing conspiracy. The case was brought by a large group of

named plaintiffs in 1976. One of the alleged classes, known as

National Cement Class, consists of over 210,000 names, almost

all being corporate entities. The members of this class may

have more than 10,000,000 individual shareholders. Defend-

ants’ counsel in a brief filed with you in support of their motion

to recuse state that the action is against “virtually all of the

national cement manufacturers.”

it appears thet yor have been advised recently by counsel

for cetain named defendants that they have learned from your

financial disclosure statements that either you or your wife is the

owner of stock in nine members of the National Cement Class.

None of the nine are named as party plaintiffs. Some docu-

ments indicate seven corporations. The number is immaterial.

You have advised that your wife does own stock in these

companies through an inheritance from her mother; that the

inheritance was received by her at about the time the suit was

filed. You advise that the total value of the stock so held by

your wife is approximately $50,000.

It further appears undisputed that these companies are

members of the class referred to in the complaint as “National

A-30 Appendix B

Cement Class.” It further appears that under the court’s order

any member of this class was permitted to opt out by December

31, 1980 and that none in which your wife was a shareholder

did so. It follows that each of these corporations will be bound

by the litigation assigned to you and will benefit from the

litigation if a recovery is had.

We infer from your letter that the number of shares owned

by your wife in the companies is not large and when considered

in relation to the total number of shares outstanding in all nine

companies may be de minimis. You have very frankly, and

commendably, told us that the total value of the number of

shares owned by her as it relates to your wife’s total financial

holdings makes it of substantial importance to her.

We first circumscribe the coverage of this opinion. This is

not a case where the judge after he has spent weeks or months

in a trial learns of the facts such as those which exist here. It is

also not a case where during or following a long trial an attempt

is made to bring in a party or parties, or create a situation, in

order to disqualify the judge. This is not a case where any

corporation has been added to the class in order to disqualify

the judge. It is also likely, but we do not regard it as controlling

in your reaching a decision, that at the time the suit was filed

the grounds for the claim of disqualification were unknown to

counsel and to the court.

While your letter raises indirectly the question of whether

there is any judge or judge’s spouse who does not have an

interest in some Cement Class corporation similar to your wife’s

interest, we do not presently feel that that question is presented.

If the multidistrict litigation committee should conclude that all

federal judges available in the United States to hear the case

have the same factual situation which exists in your family we

will then meet that issue. We do not consider such a conclusion

as a likelihood.

To review, we again mention certain undisputed facts.

You are aware that your wife owns stock in a corporation or

corporations which though not named parties to the lawsuit

Appendix B A-31

before you will be bound by its results. It is certain that these

corporations, if plaintiffs are successful in the suit, will benefit

financially by the result. The extent of the benefit is presently

undeterminable. It is presently unknown whether the financial

benefits to your wife, if any, will be substantial or will be de

minimis. We do know that your wife's total stock interest in

certain corporations of the class is substantial to her.

The briefs submitted to you, copies of which you have so

kindly furnished each member of the Committee, discuss

whether or not your wife is a party to the litigation before you.

A majority of the Committee concludes that it does not

need to reach that issue. The disqualification statute, 28 USC

§ 455, provides in (a)(4) that a judge shall also disqualify

himself in the following circumstances:

“He knows that... his spouse... has a financial in-

terest in the subject matter in controversy or in a party

to the proceeding, or any other interest that could be

substantially affected by the outcome of the proceed-

ing. ...

and in the definitions provides in (d)(4):

“financial interest’ means ownership of a legal or

equitable interest, however small... .”

Whether the spouse is a party or not the judge should

disqualify himself if the spouse has a financial interest, however

small, in the subject matter in controversy or any other interest

that could be substantially affected by the outcome of the

proceeding. While the other interest must be one that could be

substantially affected by the outcome of the proceeding the

financial interest in the subject matter in controversy is not so

limited.

There are other matters which you should consider also:

That judges must report gifts amounting to over $100.

This may or may not have any bearing with you as to what is

substantial.

A-32 Appendix B

That Resolution L adopted by the Judicial Conference of

the United States in October, 1971 (see IV-27 Code of Judicial

Conduct for United States Judges) indicated that all judges

should consider not only actual, potential or probable conflicts

of interest but possible conflicts as well. The effect of possible

conflicts is emphasized in the statement that the frequent

practice of a judge having to advise counsel of a possible

conflict is fraught with potential coercive elements which make

this practice undesirable. Under the resolution you should

consider not only possible conflicts but potential conflicts as

well. This may also make irrelevant the question of whether

she or the corporations are actually parties. Possible and

potential conflicts of interest as well as actual conflicts of

interest are to be considered by a judge.

That Canon 3 disqualifies a judge who holds stock in a

corporation which is a party to a lawsuit regardless of how large

or small the financial interest may be. That Canon 3 also states

in effect that a judge should disqualify himself in a proceeding

in which his impartiality might be reasonably questioned,

including instances where he knows that his spouse has “any

other interest that could be substantially affected by the out-

come of the proceeding”.

That Canon 2 requires that a judge avoid not only

impropriety but the appearance of impropriety as well. From

the facts outlined by you you have knowledge of your wife’s

financial interest in certain of the class members. In Advisory

Opinion 57 this Committee has previously suggested that the

owner of stock in a parent corporation has a direct legal or

equitable interest in a controlled subsidiary and where the

judge knows that a party before him is controlled by a

corporation in which he owns stock the judge should disqualify

himself. In Advisory Opinion No. 27 it was held that although

the judge’s wife had no financial interest in a drug store

defendant which was her lessee and which, with others, was a

defendant in a class action case brought under the Sherman and

Clayton Antitrust Acts and also under the antitrust laws of the

Appendix B A-33

state that there could be an appearance of impropriety for the

husband to hear the case. You must consider whether or not

your inquiry presents in substance this question, to-wit: Couid

you say in good conscience, if you do not recuse and later enter

a judgment in this case whereby one or more of the corpo-

rations in which your wife is a stockholder receive financial

benefit, that it would not have the appearance of impropriety

for you to have heard the case and entered such an order?

A majority of the members of the Committee conclude that

you should recuse but we emphasize to you that the Com-

mittee’s function is solely advisory. The final decision in this, as

in other ethical situations, remains your individual responsi-

bility.

For the Committee,

rere rrrr ree re te el

A-34 Appendix B

EXHIBIT B

QUANTIFICATION OF MRS. MUECKE’S

INTEREST IN THE LITIGATION

The insubstantiality of the Court's “other” interest in this

litigation is demonstrated by Table I, set forth below. These

calculations are made with the following assumptions, all

designed to unrealistically maximize Mrs. Muecke’s recovery:

(1) Each of the nine entities which defendants claim

provide the basis for recusal files a timely claim, for the full

amount of purchases set forth in the compilation of defendants’

interrogatory answers, and these claims are all approved for

participation against the recovery herein. This assumption is

unwarranted, since certain of the entities (e.g., American Can),

apparently have a miniscule claim unlikely to warrant the

effort.

(2) The approved plan of distribution provides for full

weighting of claims of cement-containing products purchases

with claims of cement, which are included in defendants’

compilations of total purchases. (See, e.g., sales of ready-mix

concrete to Carolina Power & Light by Gifford-Hill, as de-

scribed in Gifford-Hill’s responses to the Revised 15th Set of

Interrogatories and included in defendants’ compilations ).

(3) The amount of recovery equals the total approved

claims, such that for each $1.00 of approved purchases, the

claimant receives $1.00 recovery, with the net result that all

cement and cement-containing products have a net cost of zero.

( By contrast, recoveries as a percentage of claimed amounts in

other multidistrict antitrust actions have been less than 5%.)

(4) The nine class members pay no federal, state or local

taxes on any recovery obtained.

(5) The entities in which Mrs. Muecke owns stock dis-

tribute their entire recovery to shareholders in the form of

dividends. (This assumption also recognizes the increase in the

corporations’ total assets, which is presumably reflected in the

price of their stock.)

Appendix B A-35

(6) With respect to ITT, Minnesota Mining and Union

Oil, the full amount of the recovery is transferred from the

subsidiary (which is the class member) to the “parent” in

which Mrs. Muecke owns stock, or, in the case of Union

Electric, from the “agent” (which is the class member) to the

“principal” in which she owns stock. This assumption is

obviously extremely generous to defendants since, e.g., Min-

nesota Mining no longer owns the subsidiary accounting for

over 97% of its total “claim”, and ITT no longer owns the two

subsidiaries accounting for over 99% of its total “claim”.

Nonetheless, employing all of these unlikely assumptions,

the total benefit to Mrs. Muecke would be less than $29.70. By

discarding assumption (6), above, her total benefit (either by

dividends or pro-rata increase of total assets) would be less

than $4.23.

A-36 Appendix B

TABLE I

Calculations of Mrs. Muecke’s Share of

100% Recovery (Ignoring Corporate Income Tax)

(a)

Shares

Mrs.

Muecke

Owns

pL | ee 125

Carolina P.&L. 150

Continental Oil Co. «0.0.0.0... 200

Potomac Electric Power Co. .......... 150

Peoples E EE 100

Excluding

Union Electric Co. ............eesveessneee 100

Excluding Agents

Union Oil 200

3M 50

Excluding Former Subsidianes

Excluding All 1

TT wcioding F 200

‘ormer

Excluding All Subsidianes =

Total Including All

1 a 1,275

a teeeeceeeereeececesereces

Notes:

(ec)

Total

Cement

or Cement-

(b) Containing

Total Products (d)

Shares Purchases Mrs. Muecke’s

Out- and Share of

Standing 100% Recovery 100% Recovery

19,327,543 § 244.23 $ .0O1S8

45,886,288 261,976.71 85639

107,673,296 15,518.45 .02883

41,658,461 929,730.68 3.34768

26,753,459 15,261.68 05705

594.68 .00222

58,796,909 $94,203.96 1.01060

0- 0-

173,288,776 19,945,245.96 23.01960

0- 0-

117,296,499 1,041,568.83 44399

31,047.91 01323

-0- 0-

115,780,173 $37,881.57 92914

13.50 .00002

-0- O-

706,461,404 23,347,632.07 $29.69486

21,799,243.08 $28.33498

214,064.75 $ 4.23670

(a) See Court’s Exhibit A, distributed at January 30, 1981

hearing.

(b) As of 12/31/79, except for Peoples Energy Corp., which is

as of 9/30/79. Source: Standard & Poor’s.

(c) As reflected in Defendants’ “Summary of Sales Set Forth

in Interrogatory Answers” ( filed March 5, 1981).

(d) Entries in this column are the result of dividing the column

(a) entry for the entity in which Mrs. Muecke owns stock by the

corresponding column (b) entry, and multiplying the result by the

column (c) entry on the appropriate line.

APPENDIX C A-37

LODGED FILED

MAY 29 1981 JUN 3 1981

OFFICE OF THE CLERK W. J. PURSTENAU

CLERK

U.S. DISTRICT COURT UNITED STATES

DISTRICT COURT

DISTRICT OF ARIZONA FOR THE DISTRICT

OF ARIZONA

Babin sec

IN THE

UNITED STATES DISTRICT COURT

FOR THE

DISTRICT OF ARIZONA

MDL DOCKET

IN Re CEMENT AND CONCRETE NO. 296

ANTITRUST LITIGATION MASTER FILE

NO. CIV. 76-488A

PHX CAM

PRETRIAL ORDER NO. 77

Re: Certification of Interlocutory Appeal

This Court having issued its opinion and order dated May

26, 1981, and plaintiffs having made a motion in open Court

during the regularly scheduled pretrial conference on May 26,

1981, for the certification of this opinion and order for inter-

locutory appeal pursuant to 28 U.S.C. § 1292(b), and good

cause appearing therefor,

Now, TuHererore, It Is Heresy OrpereD that plaintiffs’

motion is granted and that this Court’s opinion and order dated

May 26, 1981, be and it is hereby amended by the addition of

the following:

A-38 Appendix C

Tuis Court Finps AND DeTERMINES that its May 26, 1981,

opinion and order regarding 28 U.S.C. § 455 involves a

controlling question of law as to which there is substantial

ground for difference of opinion and an immediate appeal from

that opinion and order may materially advance the ultimate

determination of the litigation and that opinion and order is

certified for interlocutory appeal pursuant to 28 U.S.C.

§ 1292(b).

Done IN Open Court this 3rd day of June 1981.

C. A. Muecke

EERE REE EERE EERE EEE EE EEE EEE TREES EERE EEE EEE

C. A. MUECKE

United States District Judge

APPROVED AS TO Form:

Kenneth R. Reed

KENNETH R. REED

Liaison Counsel for plaintiffs

on behalf of plaintiffs

William J. Maledon

SEER EERE EEE EEE HEHEHE EEE EEE EEE E EEE E EEE Ee

WILLIAM J. MALEDON

Liaison counsel for defendants

listed on Exhibit “D”

PPP PPP ee error Terre

GEORGE READ CARLOCK

Liaison counsel for defendants

listed on Exhibit “E”

Pee eee eee erie Serer

PHILIP E. VON AMMON

Liaison counsel for defendants

listed on Exhibit “F”

APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN RE CEMENT ANTITRUST LITIGATION

(MDL No. 296)

STATE OF ARIZONA, ef al,

Plaintiffs/ Appellants,

vs.

IDEAL Basic INDUSTRIES, ef al,

Defendants/ Appellees.

STATE OF ARIZONA, ef al,

. Petitioners,

VS.

Unitrep States District Court For THe

DISTRICT OF ARIZONA,

Respondent,

and

KaisenR CEMENT AND Gypsum Corpo-

RATION, ef al.,

Real Parties in Interest.

STATE OF ARIZONA, ef al,

Petitioners,

Vs.

AsH Grove CEMENT COMPANY, ef al,

Respondents.

_™

—_— *

A-39

81-5481

81-7465

81-8079

ORDER

Berore: WALLACE, Skopit and Boocuever, Circuit Judges

A-40 Appendix D

This matter comes before the Court on petitions to permit

an appeal under 28 U.S.C. § 1292(b) from the opinion and

order of Judge Carl A. Muecke entered May 26, !981 and

modified on June 3, 1981 recusing himself from all future

proceedings in the class action litigation in Jn Re Cement and

Concrete Antitrust Litigation; and for a writ of mandamus to

vacate that order. Additionally, petitioners have filed a direct

appeal (No. 81-5481) and have moved for relief from com-

pliance with Fed. R. App. P. 21 and 25 and 9th Cir. R. 13(e).

Respondents have moved to dismiss appeal No. 81-5481.

The clerk shall calendar the mandamus petition for oral

argument on the first available hearing date. The opposition to

the petition for permission to appeal pursuant to 28 U.S.C.

§ 1292(b) shall be treated as the response to the petition for

mandamus. This order is without prejudice to further briefing

being requested by the merits panel.

The motion to dismiss appeal No. 81-5481 is granted

because a recusal order is not a final judgment or an order of

the type from which a direct appeal may be taken under Cohen

v. Beneficial Industries Loan Corp., 337 U.S. 541, 546 (1949).

Permission to appeal under 28 U.S.C. § 1292(b) is denied.

The motion for relief from compliance with Fed. R. App. P. 21

and 25 and 9th Cir. R. 13(e) is granted.

Judge Boochever would grant permission to appeal under 28

U.S.C. § 1292(b) but because no such permission has been

granted concurs in the remainder of the order.

APPENDIX E A-4l

FILED

NOV 19 1981

CLERK, US.

COURT OF

APPEALS

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN RE CEMENT ANTITRUST LITIGATION

(MDL No. 296)

STATE OF ARIZONA,

Plaintiffs/ Appellants,

vs. No. 81-5481

IpEAL Basic INDUSTRIES, ef al,

Defendants/ Appellees.

STATE OF ARIZONA, ef al.,

Petitioners,

vs. No. 81-7465

Unirep States District Court For THE AMENDED

District OF ARIZONA, DISSENT

Respondent,

and

Kaiser CEMENT AND Gypsum Corpo-

RATION, ef al,

Real Parties in Interest.

‘

STATE OF ARIZONA. ef al,

Petitioners,

vs. No. 81-8079

Asu Gaove Cement COMPANY, ef al,

Respondents.

The dissent in the court’s order of October 30, 1981 is

amended to read as follows:

A-42 Appendix E

Judge Boochever would grant permission to appeal under

28 U.S.C. § 1292(b) or in the alternative would permit a direct

appeal under Cohen v. Beneficial Industrial Loan Corp., 337

U.S. 541 (1949); see In re Coordinated Pretrial Proceedings in

Petroleum Products Antitrust Litigation, No. 80-5970, et al., slip

op. at 5155 (9th Cir. October 13. 1981), but because no such

permission has been granted concurs in the remainder of the

order.

United States Circuit Judge

APPENDIX F

A-43

JAN 26 1982

CLERK, U.S. COURT

OF APPEALS

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN Re CEMENT ANTITRUST LITIGATION

(MDL No. 296)

STATE OF ARIZONA, ef al.,

Plaintiffs-Appellants,

vs.

IDEAL Basic INDUSTRIES, ef al.,

Defendants-Appellees.

STATE OF ARIZONA, ef al,

Petitioners,

vs.

Unitep States District Court For THE

DisTRici OF ARIZONA,

Respondent,

and

Kaiser CEMENT AND Gypsum Corpo-

RATION, ef al.,

Real Parties in Interest.

STATE OF ARIZONA, ef al,

Petitioners,

vs.

AsH Grove CEMENT COMPANY, ef al,

Respondents.

No. 81-5481

No. 81-7465

No. 81-8079

ORDER

4

Berore: WALLACE and Boocuever, Circuit Judges.

A-44 Appendix F

Petitioners-appellants’ motion for leave to file a petition for

reconsideration out of time is granted. The petition attached to

the motion is ordered lodged with the court.

An opinion expanding the views summarily expressed in

the order filed October 30, 1981, will be filed on January 27,

1982. Petitioners-appellants may have seven (7) days from the

date of filing of said opinion to file a new petition for rehearing

if petitioners-appellants care to do so. If not, the petition

heretofore lodged will be ordered filed.

APPENDIX G A-45

FILED

APR 15 1982

PHILLIP B. WINBERRY

CLERK COURT

OF APPEALS

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN RE CEMENT ANTITRUST LITIGATION

(MDL No. 196)

’

STATE OF ARIZONA, ef al.,

Plaintiffs-Appellants,

vs. No. 81-5481

IDEAL Basic INDUSTRIES, ef al.,

Defendants-Appellees.

STATE OF ARIZONA, ef al., )

Petitioners,

vs. No. 81-7465

Unitep Stares District Court For THE

DISTRICT OF ARIZONA,

Respondent,

and

KaiseR CEMENT AND Gypsum Corpo-

RATION, ef al.,

Real Parties in Interest.

4

No. 81-8079

STATE OF ARIZONA, ef al.,

Petitioners, AMENDMENT

OF OPINION

vs. } AND DENIAL

OF REHEARING

AsH Grove CEMENT COMPANY, ef al.,

Respondents.

A-46 Appendix G

Berore: Wa.tace, Skopu, and BoocHever, Circuit Judges.

The Opinion fi'ed in the above matter on January 27, 1982,

is amended as follows:

Following the sentence, “In conclusion, ... recusal deci-

sion,” on page 602 of the slip opinion, first column, first full

paragraph, footnote 5 is added as follows:

We do not imply that issues collateral to the merits

may never properly be the subject of a section

1292(b) appeal. This is only one factor that should

be considered in determining whether permitting an

appeal would materially affect the outcome of the

litigation. We have allowed section 1292(b) appeals

on issues that are clearly collateral to the merits. See,

e.g., Lear Siegler, Inc. v. Atkins, 330 F.2d 595 (9th

Cir. 1964); United Air Lines, Inc. v. Wiener, 286 F.2d

302 (9th Cir. 1961). In each instance, however,

“exceptional circumstances” justified th: departure

from the basic policy of postponing appellate review

until after the entry of a final judgment. See Coopers

& Lybrand, supra, 437 U.S. at 475.

A majority of the panel as constituted above has voted to

deny the petition for rehearing. Judge Boochever would grant a

panel rehearing. The panel has voted unanimously to reject the

suggestion for rehearing en banc.

The full court has been advised of the suggestion for

rehearing en banc, and no judge of the court has requested a

vote on the suggestion for rehearing en banc. Fed. R. App. P.

35(b).

The petition for rehearing is denied and the suggestion for

rehearing en banc is rejected.

APPENDIX H A-47

DOCKET NO. 296

BEFORE THE JUDICIAL PANEL ON MULTIDISTRICT

LITIGATION

IN RE CEMENT AND CONCRETE ANTITRUST

LITIGATION

ORDER DEFERRING DECISION

The Panel previously centralized several actions in this

litigation before the Honorable C. A. Muecke in the District of

Arizona for coordinated or consolidated pretrial proceedings

pursuant to 28 U.S.C. § 1407. Jn re Cement and Concrete

Autitrust Litigation, 437 F. Supp. 750 (J.P.M.L.1977); 465 F.

Supp. 1299 (J.P.M.L. 1979). Defendants in this litigation have

moved the Panel, pursuant to 28 U.S.C. § 1407(b), for an order

reassigning the actions in this litigation to another transferee

judge.

Defendants’ motion was prompted by Judge Muecke’s

order, filed on May 26, 1981, recusing himself from the Cement

portion of this litigation pursuant to 28 U.S.C. § 455(b)(4).

Plaintiffs in this litigation have sought review of Judge

Muecke’s ruling in the United States Court of Appeals for the

Ninth Circuit, and plaintiffs’ petition for a writ of mandamus

has been briefed and orally argued before the Ninth Circuit.

It Is THEREFORE Orperep that further consideration of

defendants’ motion for reassignment be, and the same hereby is

DEFERRED until plaintiffs’ mandamus petition pending in the

Ninth Circuit has been resolved.

For THE PANEL:

Andrew A. Caffrey

PPeTrrrrririrrrririttt tit

ANDREW A. CAFFREY

Chairman

A-48 APPENDIX I

STATUTORY PROVISIONS

28 U.S.C. § 455

§ 455. Disqualification of justice, judge, or magistrate

(a) Any justice, judge, or magistrate of the United States

shall disqualify himself in any proceeding in which his impar-

tiality might reasonably be questioned.

(b) He shall also disqualify himself in the following

circumstances:

(1) Where he has a personal bias or prejudice

concerning a party, or personal knowledge of disputed

evidentiary facts concerning the proceeding;

(2) Where in private practice he served as lawyer in

the matter in controversy, or a lawyer with whom he

previously practiced law served during such association as

a lawyer concerning the matter, or the judge or such

lawyer has been a material witness concerning it;

(3) Where he has served in governmental employ-

ment and in such capacity participated as counsel, adviser

or material witness concerning the proceeding or expressed

an opinion concerning the merits of the particular case in

controversy;

(4) He knows that he, individually or as a fiduciary,

or his spouse or minor child residing in his household, has

a financial interest in the subject matter in controversy or in

a party to the proceeding, or any other interest that could

be substantially affected by the outcome of the proceeding;

(5) He or his spouse, or a person within the third

degree of relationship to either of them, or the spouse of

such a person:

(i) Is a party to the proceeding, or an officer,

director, or trustee of a party;

(ii) Is acting as a lawyer in the proceeding;

Appendix I A-49

(iii) Is known by the judge to have an interest

that could be substantially affected by the outcome of

the proceeding;

(iv) Is to the judge’s knowledge likely to be a

material witness in the proceeding.

(c) A judge should inform himself about his personal and

fiduciary financial interests, and make a reasonable effort to

inform himself about the personal financial interests of his

spouse and minor children residing in his household.

(d) For the purposes of this section the following words or

phrases shall have the meaning indicated:

(1) “proceeding” includes pretrial, trial, appellate

review, or other stages of litigation;

(2) the degree of relationship is calculated according

to the civil law system;

(3) “fiduciary” includes such relationships as execu-

tor, administrator, trustee, and guardian;

(4) “financial interest” means ownership of a legal or

equitable interest, however small, or a relationship as

director, adviser, or other active participant in the affairs of

a party, except that:

(i) Ownership in a mutual or common in-

vestment fund that holds securities is not a “financial

interest” in such securities unless the judge partici-

pates in the management of the fund;

(ii) An office in an educational, religious, chari-

table, fraternal, or civic organization is not a “finan-

cial interest” in securities held by the organization;

(iii) The proprietary interest of a policyholder in

a mutual insurance company, of a depositor in a

mutual savings association, or a similar proprietary

interest, is a “financial interest” in the organization

only if the outcome of the proceeding could substan-

tially affect the value of the interest;

A-50 Appendix I

(iv) Ownership of government securities is a

“financial interest” in the issuer only if the outcome of

the proceeding could substantially affect the value of

the securities.

(e) No justice, judge. or magistrate shall accept from the

parties to the proceeding a waiver of any ground for dis-

qualification enumerated in subsection (b). Where the ground

for disqualification arises only under subsection (a), waiver

may be accepted provided it is preceded by a full disclosure on

the record of the basis for disqualification.

28 U.S.C. § 1291

§ 1291. Final decisions of district courts

The courts of appeals shall have jurisdiction of appeals

from all final decisions of the district courts of the United

States, the United States District Court for the District of the

Canal Zone, the District Court of Guam, and the District Court

of the Virgin Islands, except where a direct review may be had

in the Supreave Court.

28 U.S.C. § 1292

§ 1292. Interlocutory decisions

(a) The courts of appeals shall have jurisdiction of

appeals from:

(1) Interlocutory orders of the district courts of the

United States, the United States District Court for the

District of the Canal Zone, the District Court of Guam,

and the District Court of the Virgin Islands, or of the

judges thereof, granting, continuing, modifying, refusing or

dissolving injunctions, or refusing to dissolve or modify

injunctions, except where a direct review may be had in the

Supreme Court;

(2) Interlocutory orders appointing receivers, or

refusing orders to wind up receiverships or to take steps to

accomplish the purposes thereof, such as directing sales or

other disposals of property;

Appendix I A-51

(3) Interlocutory decrees of such district courts or the

judges thereof determining the rights and liabilities of the

parties to admiralty cases in which appeals from final

decrees are allowed;

(4) Judgments in civil actions for patent infringement

which are iinal except for accounting.

(b) When a district judge, in making in a civil action an

order not otherwise appealabie under this section, shall be of

the opinion that such order involves a controlling question of

law as to which there is substantial ground for difference of

opinion and that an immediate appeal from the order may

materially advance the ultimate termination of the litigation, he

shall so state in writing in such order. The Court of Appeals

may thereupon, in its discretion, permit an appeal to be taken

from such order, if application is made to it within ten days

after the entry of the order: Provided, however, That application

for an appeal hereunder shall not stay proceedings in the

district court unless the district judge or the Court of Appeals or

a judge thereof shall so order.

A-52 APPENDIX J

List of Respondents, Other Defendants, Their Parents,

Affiliates and Subsidiaries.

Alamo Cement Corp.

Alpha Portland Industries, Inc.

Alpha Portland Cement Company

Leemilt’s Petroleum Inc.

Power Test Petroleum Distributors

Kimco Corporation

State Farm Mutual Automobile Insurance Co.

Amcord, Inc.

Hercules Cement Company

Phoenix Cement Company

Riverside Cement Company

Arkansas Cement Corp.

Arkansas-Louisiana Gas Co.

Ash Grove Cement Co.

Fordyce Concrete Company

Atlantic Cement Co.

Newmont Mining Co.

California Portland Cement Company

Arizona Portland Cement Company

Arizona Sand and Rock Company

California Cement Shake Co., Inc.

Pacific Prestressed Products, Inc.

Arizona Prestressed Concrete Company

Southeast Prestressed Concrete Products,

Inc. ( dissolved )

Spancrete of California

Triangle Rock Products, Inc.

Canada Cement La Farge

Capitol Aggregates, Inc., its parent

H.B. Zachry Company, its Capitol Aggregates,

Inc. Austin Division, and the following affiliated

business entities:

Bexar Exporting, Inc.

Canyon Creed Railway, Inc.

Appendix J A-53

Const: uction Modules, Inc.

H.B. Zachry Co. ( Carribean)

H.B. Zachry Co. ( International )

Zachry Construction, Ltd.

Constructora Zachry de Mexico,

S.A. de C.E.

Zachry International, Inc.

Zachry Overseas Construction, Inc.

Zachry of San Antonio, Inc.

Zachry of Texas, Inc.

Centex Corp.

Centex Cement Corp.

Centex Materials, Inc.

Illinois Cement Co., Inc.

Matthews Ready-Mix, Inc.

Nevada Cement Co.

Citadel Cement Corp.

Columbia Cement Corp., and its parent,

Filtrol Corporation

Coplay Cement Mfg. Co., and its former subsidiary

Nazareth Cement Co.

Crane Corp.

Cyprus Hawaiian Cement Corp.

Dundee Cement Co.

Santee Portland Cement Company

“Holderbank” Financiere Glaris, Ltd.

Independent Cement Corp.

St. Lawrence Cement, Inc.

F. [li Buzzi S.p.A. Cementi

General Portland, Inc.

Trinity Concrete Products

Pacific Western Industries, Inc.

General Processing, Inc. { formerly Rackle Com-

pany of Texas)

A-54 Appendix J

Genstar, Ltd.

Giant Portland Cement Co.

Giant Portland Masonry & Cement Co.

H. K. Porter Co.

Gifford-Hill & Company, Inc.

Gifford-Hill American, Inc.

Gifford-Hill Portland Cement Co.

Texas Concrete Works, Inc. of Waco

Austin Concrete Works, Inc.

Mission Concrete Pipe Co.

Ready-Mix Concrete of Raleigh

Concrete Supply Co.

Concrete Materials of Georgia, Inc.

Concrete Materials, Inc.

Gifford-Hill Panhandle, Inc.

Gifford-Hill Pipe Co.

Heidelberg Zement A.G.

Holderbank Financere Glaris, Ltd.

Ideal Basic Industries, Inc.

Springland Associates

Builders Supply Co. of Houston (its former

Kaiser Cement & Gypsum Corp.

Glacier Sand & Gravel

Keystone Portland Cement Co.

Lehigh Portland Cement Co., its Kentucky and

Florida Concrete Divisions

Virginia Concrete Company, Inc. (its former

subsidiary )

Lone Star Industries, Inc.

Bangor Punta

Companhia Nationale de Cimento

Portland, S.A.

Appendix J A-55

Lone Star Florida Pennsuco, Inc.

Lone Star Lafarge, Inc.

Lone Star Minorala, Inc.

National Building Centers, Inc.

NBC of Texas, Inc.

Davidson Case of Oklahoma, Inc.

Lindsley Lumber Company

G.M. Stewart Lumber Company

Ward & Harrington Lumber Company

Cashway, Inc.

Sun Lumber Company

W.E. Cooper Lumber Co.

Palmetto Quarries Company, Inc.

Pioneer San’ & Gravel Company

Portland Cement Co. of Utah

Southern Materials Company, Inc.

W.D. Haden Company

Wesco-Wamikx, Inc.

Louisvil!e Cement Co.

Bessemer Cement Company

Martin Marietta Corp.

Embecon (S.A. )( Pty.) Limited

Halcon Mining, Inc.

Immuebles Rentables, S.A. de C.V.

International Laser Systems, Inc.

Lane Mt. Silica Co.

Nisso Master Builders Co., Ltd.

Rio Quima S.A.

Tecnocarto, S.A. de C.V.

Traitments Techniques des Detones

Marquette Co.

Afram Films, Inc.

American Motion Picture Export Co.

( Africa ) Inc.

Amfac, Inc.

Aros A.P.A.

A-56

Appendix J

Associates Financial Services Limited

Austurienne New Jersey S.A.

Australian Finance and Securities Limited

Blackjack Mines Ltd.

Bliss Emua, S.A. —

Biue Fame Music Corporation

Bonney Forge Vertriebs GmBH

Brazmount Music Corp.

Brown Company

Brunswick Corp.

CBF Fabrics, Inc.

Camino Gold Mines Limited

Canaries Cigar and Tobacco Company S.A.E.

Caribbean Barge Corporation

Casmo Mining, Ltd.

Cementos Nacionales, S.A.

Chinchilla Varona do Brasil, Limitada

Cluett Peabody & Co.

Cliref S.A.

Compagnia Italiana Simmons,

La Campagnie Africaine Simmons S.A.

La Compania Insular Tabacalera S.A.

Consul Music Corporation

Corporacion Turistica de Cibao, S.A.

Cuban Cigar Brands, N.V.

Dale & Gene Auto Parts, Inc.

Desilu Music Corp.

Esquire, Inc.

Entertainment Services ( International ) Ltd.

Friga-Bohn Iberica S.A.

Friga-Bohn S.A.

Future Gereral Corporation

General Tire & Rubber Co.

B. F. Goodrich Co.

Grand Palais S.A.#.L.

Great Lakes Carbon Company of Canada, Ltd.

Appendix J

Gulf & Western Iberica S.A.

Gulf & Western Industries Inc.

Haughwood Limited

Holiday on Ice, Inc.

Hollywood Park Inc.

International Arena Productions B.V.

International Cigar Distributors N.V.

International Film Productions (IFP) N.V.

International Overseas Film Services

International Overseas Productions, Inc.

James River Corporation of Virginia

Johathan Logan, Inc.

Kennwest B.V.

La Financiere des Caraibes S.A.

Libbey Owens Ford Co.

Madison Square Garden Soccer, Inc.

Magicam, Inc.

Mobile Equipment International Limited

Mohasco Corp.

Musingwear, Inc.

National Steel Corp.

North Atlantic Investments N.V.

Par-Ed Music Corporation

Para-Andi Music Corporation

Para-Kim Music Corporation

Para-Nowgen Music Corporation

Para-Tal Music Corp.

Para-Thumb Music Corporation

Para-Tracs Music Corporation

Para-Wag Music Corporation

Pareafrance Films S.A.

Paramount Sound Systems Cerporation

Paramount-Roy Rogers Mus + Co., Inc.

Pellevoysin S.C.L.

Piedmont Minerals Associates

Qit-Fer-Et Titane, Inc.

R. IL. Dixon Auto Parts, Inc.

Richards Bay Iron and Titanium ( Proprietary)

Limited

A-57

A-58

Appendix J

Security First Group, Inc.

Security First Management Corporation”

Sega Enierprises, Inc.

Senecran §.A.R.L.

79 Lead-Copper Company

Societe Anonyme Morocaine Simmons

Societe Anonyme des Accumulateurs A.M.E.

Societe Anonyme du Theatre de L’Avenue

Societe de Blancs de Zinc de la Mediterrance

Societe Marocaine de Galvanisation

J. P. Stevens & Co.

Supercines S.A.R.L.

T. F. de Mexico, S.A.

Tabacalera de Garcia, Ltd.

Talisman Sugar Corporation

Teakgrove Limited

Tisand ( Proprietary )

Trans-World Tobacco S.A.

Valerco Limited

Wesbro Investments Ltd.

Wurlitzer Co.

Xcor International Inc.

Medusa Corp.

West Lafayette Concrete Products Corp. (its

former subsidiary )

Missouri Portland Cement Company, and its former

subsidiaries

Botsford Ready-Mix Company

Springfield Ready-Mix Company

Memphis Ready-Mix Company

Monarch Cement Company

Salina Concrete Products Corp.

Monolith Portland Cement Co.

Monolith Portland Midwest Company

Wyoming Construction Company

Stewart & Nuss, Inc.

Appendix J

National Cement Co., Inc.

National Gypsum Co.

Binswanger Glass Company

Gold Bond Building Products Division

DMH Division

Cement Division ( formerly Huron Portland

Cement Company Allentown Portland

Cement Company )

Binning’s Building Products Division

Decorative Products Division

Biscayne Decorative Products, Inc.

American Olean Tile Company

Northwestern States Portland Cement Co.

OKC Corporation

Oregon Portland Cement Co.

Continental Steel Corp. (formerly Penn-Dixie In-

dustries, Inc. )

Former subsidiaries:

Guy H. James Construction Co.

Spancrete Northwest, Inc.

Hudson River Concrete Products Co.

Castle Chemical Corp.

Concrete Plank Co.

Consolidated Precast, Inc.

Penn-Dixie Chemical Co.

Perlite Concrete Corp.

Poretherm, Inc.

Tecfab, Inc.

Tecfab Industries

Portland Cement Association

River Cement Company, its former parent, the

Missouri River Corporation, and its former

subsidiaries,

Richter Concrete Corporation

Stewart Cencrete and Materials

John A. Denny & Sons

A-59

Appendix J

Societe des Cements Francasi

Societe de Anonymes des Cements Vicat

Standard Oil Company ( Indiana)

Southwestern Portland Cement Co.

Southdown, Inc.

The Flinkote Co.

Campanella Corporation

Harry T. Campbell Sons’ Co.

Frontier Stone Products, Inc.

Kosmos Portland Cement Co.

Standard Materials Co.

Stockton Building Materials Co.

United States Steel Corp., its Universal Atias Cement

Division, and its Bahama Cement Co. subsidiary

Valley Cement Industries, Inc.

Vigier Cement Ltd.

Whitehall Cement Mfg. Co.

Wyandotte Cement Inc.

APPENDIX K A-61

State of California 3580 WLSHIRE BivO

LOS ANGELES 90010

Department of H#ustice (213) 736 2304

George Devukmejian

(PRONOUNCED DUKE MAY GIN)

Attorney General

July 23, 1981

Alexander L. Stevas, Clerk

Office of the Clerk

Supreme Court of the United States

Washington, D.C. 20543

Re: Alpha Portland Industries, Inc., et al. v. California,

et al. No. 80-2062

Dear Mr. Stevas:

By your letter of June 26, 1981, respondents have been

granted an extension of time until August 7, 1981 within which

to file a response opposing the petition for writ of certiorari in

the above-entitled case. We hereby request a second extension

on the two separate grounds stated below.

A. Respondents intend to file a separate motion along

with the response to the petition for the writ of certiorari. This

motion will be (1) to suggest recusal of the Chief Justice and

certain Associate Justices; (2) to suggest the absence of a

quorum; (3) to dismiss the petition for the writ of certiorari,

and: (4) to affirm the judgment of the Court of Appeals.

Recusal will be suggested because the Chief Justice and

Associate Justices Powell and Blackmun, or their wives or

minor children, apparently are stockholders in certain corpo-

rations that are members of a class represented by respondents

in the litigation to which the above-entitled case is ancillary, Jn

Re Cement & Concrete Antitrust Litigation, MDL Docket No.

296, Master File No. CIV-76-488A-PHX-CAM, (D. Ariz.)

A-62 Appendix K

(hereinafter “M.D.L. 296”)' The District Judge in M.D.L. 296

disqualified himself on May 26, 1981 pursuant to 28 U.S.C.

§ 455(b)(4) because his wife owns stock in certain members of

a class tota...g over 210,000 entities which purchased cement or

cement-containing products within the United States between

January 1, 1968 and December 31, 1976. Although we do not

think this decision is correct,? if it is correct, the Chief Justice

and the above named Associate Justices would have to consider

disqualifying themselves from ruling upon the petition for

certiorari.?

Preparation of that motion, and dissemination to all re-

spondents for comments will require additional time, until

September 8, 1981.

B. If Rule 28.1 is applicable, there is an additional

problem which, unless relief from that Rule is granted, will

require an extension of time. The class member list in M.D.L.

296 contains the names of over 210,000 putative class members,

mostly corporations. That list by itself in computer print-out

form is over four feet high. Rule 28.1 provides that “[a]ny

document . . . filed by or on behalf of one or more corporations,

shall include a listing naming all parent companies, subsidiaries

(except wholly owned subsidiaries) and affiliates of each such

corporation.”

California filed an action in the District of Tennessee, Southern

Division, specifically on behalf of all plaintiffs in M.D.L. 296 for transfer of

grand jury materials from custody of that District Court to the District of

Arizona for possible disclosure and use in M.D.L. 296. The decision

authorizing transfer was appealed by petitioner herein to the Court of

Appeals for the Sixth Circuit, and affirmed by that Court. Petitioner then

filed the pending petition for writ of certiorari.

2 In Re Cement & Concrete Antitrust Litigation, 1981-1 CCH Trade

Cases $64,030 at 76,331 (D.Ariz. 1981). On June 9, 1981, respondents

appealed that decision to the Court of Appeals for the Ninth Circuit pursuant

to 28 U.S.C. § 1291, on June 15, 1981 petitioned that Court for permission to

appeal pursuant to 28 U.S.C. § 1292(b), and have moved to consolidate

those appeals. On July 20, 1981, respondents also petitioned that Court for a

Writ of Mandamus.

3 Judge Sandra O'Connor would also have to consider disqualifying

herself should she become an Associate Justice because her husband is a

senior partner in a lawfirm which represents certain petitioners in this case as

well as defendants in M.D.L. 296.

Appendix K A-63

The District Judge in M.D.L. 296 said he must disqualify

himself because class members are “parties” within the mean-

ing of 28 U.S.C. 455(b)(4). Since that same statute will be the

basis of our motion, and since we will file the motion and our

response to the petition for writ of certiorari “on behalf of” the

210,000 putative class members, it would seem from a literal

reading of Rule 28.1 that we must file a separate list of all

parent companies, subsidiaries and affiliates of each such

corporate class member to comply with that Rule. If that is

required, and we urge and hope that it is not, compliance with

Rule 28.1 would be a massive undertaking and we would need

an indefinite extension of time.

We would greatly appreciate advice as to compliance with

that Rule in these circumstances. Can you determine whether

Rule 28.1 is applicable, and if so, whether such an undertaking

is required and whether you can grant the necessary extension

of time? Or, should we seek relief from the Rule or its

clarification frem the Court?

Enclosed for your convenience are nine copies of this letter

in the event you believe this matter should be brought to the

attention of the Court.

Thank you for your consideration.

Very truly yours,

GEORGE DEUKMEJIAN

Attorney General

Peter K. Shack

Sree rrrrrrrrrrrr rt terri ir ee

PETER K. SHACK

Deputy Attorney General

PKS: la

Attachment: Certificate of Service