UNITED STATES FIDELITY INSURANCE GUARANTY COMPANY v. MICHIGAN CATASTROPHIC CLAIMS ASSOCIATION (2009)

ORDER

On order of the Court, the motion for recusal is considered, and it is DENIED.

On March 27, 2009, this Court issued an order granting rehearing in this matter.¹ Since that time, defendant Michigan Catastrophic Claims Association (MCCA) has filed a motion asking me to recuse myself. The nature of the objection is well described in the parties' briefs and responses thereto.² I have reviewed these pleadings in detail.

I have also had an opportunity to review Caperton v. A.T. Massey Coal Co., Inc., 556 U.S. ----, 129 S.Ct. 2252, 173 L.Ed.2d 1208 (2009), and the briefs filed by the parties regarding this new decision. In reviewing whether there was a due process violation in the refusal of Justice Benjamin³ to disqualify himself, the United States Supreme Court held as follows:

We conclude that there is a serious risk of actual bias-based on objective and reasonable perceptions-when a person with a personal stake in a particular case had a significant and disproportionate influence in placing the judge on the case by raising funds or directing the judge's election campaign when the case was pending or imminent․

* * *

Our decision today addresses an extraordinary situation where the Constitution requires recusal. Massey and its amici predict that various adverse consequences will follow from recognizing a constitutional violation here-ranging from a flood of recusal motions to unnecessary interference with judicial elections. We disagree. The facts now before us are extreme by any measure. The parties point to no other instance involving judicial campaign contributions that presents a potential for bias comparable to the circumstances in this case. [Id., 556 U.S. at ---- - ----, 129 S.Ct. at 2263-64, 2265 (emphasis added).]

Given this test, I find no arguable due process violation in the cases before me. There is nothing alleged by the MCCA that would cause any reasonable person to believe that there is a significant and disproportionate influence being asserted upon me under any objective analysis.

Despite the theories proffered by the MCCA, my husband has no connection to or financial interest in this matter. He is not an attorney for or employee of any party, nor is he a litigant in either of these cases. He has no relationship with either the attorneys or the litigants in these cases. The MCCA asserts that, because my spouse has handled cases in the field of no-fault insurance law, I must recuse myself. However, this assertion suggests a basis for recusal that is so attenuated from the facts of these cases that it strains reasoned logic.

This is not to say that parties should be impeded from bringing such motions. However, not every hypothetical theory proffered by a litigant must be accepted as accurate or controlling. The issue to be decided is one of due process. Any alleged due process claim must be evaluated by an objective standard. Due process does not require that a justice recuse himself or herself merely because the justice's spouse or child is an attorney practicing in the field of law that is involved in the disputed case, just as due process would not require a justice's recusal in all medical malpractice cases merely because the justice's spouse is a physician or require a justice's recusal in all cases involving school systems merely because the justice's spouse is a teacher.

In conclusion, I have no personal bias or prejudice for or against any party in this matter. Moreover, neither I nor any member of my immediate family has any real or arguable financial interest in this case. The allegations made by the MCCA are not a basis for recusal because there is no appearance of impropriety and no due process violation. Accordingly, there is no reason to recuse myself.⁴ Having carefully considered this motion for recusal, I deny it.⁵

I agree with Justice Hathaway's denial of the recusal motion because due process is not violated in this case.

I take this opportunity to provide some history on the issue of disqualification in this Court. Since 2003, I have raised the issue of the need for clear, written, and fair disqualification rules for Michigan Supreme Court justices,⁶ but the “majority of four” (former Chief Justice Taylor and Justices Corrigan, Young, and Markman) refused to address the issue. When this Court looked at the issue of disqualification in 2006, the “majority of four” refused to publish proposed disqualification rules formulated by members of this Court.

In March of this year, after former Chief Justice Taylor's removal from this Court as a result of his overwhelming defeat in the 2008 election, the “remaining three” (Justices Corrigan, Young, and Markman) voted against publishing proposed rules for disqualification. Fortunately, a majority voted in March to publish, for public comment until August 1, 2009, three proposals for rules of disqualification⁷ to be considered at a public hearing later in 2009. Of the proposals published by this Court in March, I note that Alternative C sufficiently provides the due process protections laid out by the United States Supreme Court in the recent decision of Caperton v. A.T. Massey Coal Co, Inc, 556 U.S. ----, 129 S.Ct. 2252, 173 L.Ed.2d 1208 (2009).

I also note that the United States Supreme Court's Caperton⁸ discussion of disqualification with regard to campaign contributions for justice elections raises further issues with regard to due process concerns. Currently, this Court has no rules providing for a justice's disclosure of campaign contributions when parties to cases, or the parties' immediate family members, contribute significant amounts of money, directly or indirectly, to a justice's campaign.⁹ Hopefully this Court, the Legislature, and/or the public will create disclosure rules that will ensure the protection of due process rights.

I would not resolve the recusal motion of defendant Michigan Catastrophic Claims Association (MCCA) at this time. Rather, I would order supplemental briefing of the application of Caperton v. A.T. Massey Coal Co, Inc, 556 U.S. ----, 129 S.Ct. 2252, 173 L.Ed.2d 1208 (2009) Caperton, to these cases. Caperton addressed the disqualification of a judge when a party alleges that the judge's interest in a case requires recusal under the Due Process Clause of the federal constitution. To weigh whether recusal is required, Caperton requires an assessment of whether a serious, objective risk of actual bias exists that requires the judge to recuse himself or herself. Because the MCCA argues that Justice Hathaway's participation in these cases violates its federal due process rights, Caperton is relevant and could prove controlling. Indeed, the MCCA has submitted Caperton to this Court as supplemental authority in support of its motion.

The scope of Caperton and how courts will implement it present significant unanswered questions, particularly for our Court. Caperton held that a state supreme court justice was disqualified from hearing a case involving a corporate party whose chairman and CEO had expended $3 million to support the justice's campaign, although the individual expended this money independently and through donations to an independent political group. Caperton, supra, 556 U.S. at ---- - ----, 129 S.Ct. at 2254-2256. The Court concluded that the justice was disqualified although he professed that the funds were solicited and expended without his knowledge, direction, or control under state election laws very similar to our own. See Caperton v. A.T. Massey Coal Co, Inc, 223 W.Va. 624, 679 S.E.2d 223 (2008), (concurring opinion issued July 28, 2008), 223 W.Va. at ---- - ----, 679 S.E.2d at 245-247 (W.Va. Caperton) (Benjamin, acting C.J., concurring). Indeed, Michigan allows independent political groups to expend unlimited money during elections, often without being required even to reveal their funding sources.¹⁰ For example, during the 2008 election cycle, independent expenditures aimed at the race for Justice Hathaway's current seat on this Court topped $3.75 million.¹¹

For these reasons, in my view, deciding the MCCA's recusal motion within days of Caperton is precipitous. Caperton was released on June 8, 2009. We have hardly had time to digest the opinion, much less its ramifications, particularly given that the opinion is positively Delphic in explaining the standards for courts attempting to implement it. Four justices of this Court now vote, without any explanation or the benefit of fact-finding, to support Justice Hathaway's decision to participate in these cases. Thus, although we have had little time to study Caperton and do not have the benefit of briefing on it, the Court proceeds essentially to hold that such a vote is a mandatory procedure for all recusal motions raising due process concerns.¹²

The MCCA's Motion for Recusal

The most relevant aspects of the MCCA's motion follow. After this Court issued its March 2009 decision to grant reconsideration¹³ of its December 2008 decision,¹⁴ occasioned by newly elected Justice Hathaway's participation in these cases, the MCCA moved for her recusal. Specifically, the MCCA argues that Justice Hathaway's husband, Michael Kingsley, has an interest that could be substantially affected by the outcome of the proceedings because he is a practicing plaintiffs' no-fault attorney in Michigan. As such, he has a direct interest that is more than de minimis in the MCCA's unlimited obligations to reimburse insurers for personal protection insurance benefits paid to insureds who have been catastrophically injured in automobile accidents.¹⁵ The MCCA further asserts that it reimburses insurers for payments made to Kingsley's clients, having made such a reimbursement as recently as April 9, 2009.¹⁶ The MCCA's obligation to reimburse insurers-and the potential resulting benefits to plaintiffs' attorneys-is directly at issue in these cases. Indeed, the MCCA asserts that it has raised the amounts needed to pay expected claims and its reserves by almost $694 million in anticipation of this Court's likely reversal on rehearing of its prior decision, stemming from the participation of newly elected Justice Hathaway in the decision after rehearing. The MCCA further states that this increase is the primary cause of the 19 percent increase in its assessments for catastrophic coverage this year, which affects all no-fault insurance policy holders' rates. The MCCA claims that if, on rehearing, this Court prohibits the MCCA from engaging in a “reasonableness” inquiry, see n 6 of this statement, attorneys will reap the rewards at the expense of Michigan drivers, whose insurance rates will rise to support the resulting increased systemic costs.¹⁷

The Caperton Decision

In Caperton, the United States Supreme Court “underscore[d] the need for objective rules” and asserted that the Due Process Clause requires recusal motions to be decided “by objective standards that do not require proof of actual bias.” Caperton, supra, 556 U.S. at ----, 129 S.Ct. at 2263. In concluding that recently elected West Virginia Supreme Court of Appeals Justice Brent Benjamin was disqualified from hearing the underlying case as a result of substantial campaign expenditures by the chairman, CEO, and president of the respondent company, A.T. Massey Coal Co., Inc., the Court held that “[d]ue process requires an objective inquiry” to establish whether the circumstances “ ‘would offer a possible temptation to the average ․ judge to ․ lead him not to hold the balance nice, clear and true.’ ” Id. at ----, 129 S.Ct. at 2264-2265 quoting Tumey v. Ohio, 273 U.S. 510, 532, 47 S.Ct. 437, 71 L.Ed. 749 (1927). Significantly, the Court thus considered the purported facts underlying the motion for recusal, see Caperton, supra, 556 U.S. at ----, 129 S.Ct. at 2263-2264¹⁸ and concluded, on the basis of its assessment of those facts, that “there was ․ a serious, objective risk of actual bias,” id. at ----, 129 S.Ct. at 2265.

Questions Raised by Caperton

In light of the Caperton opinion, I do not think that we can resolve the MCCA's recusal motion-which squarely raises due process concerns-without first addressing the following questions:

• Does this Court's historical recusal practice-which permits each justice to decide motions for his or her recusal and which Justice Hathaway follows here-comport with the Caperton Court's requirement for objective standards? Justice Hathaway states: “Because neither I nor any member of my immediate family has any financial interest in this case, and because I have no personal bias or prejudice for or against any party in this matter, there is no appearance of impropriety nor any Due Process violation.” Ante at ----. She adds: “Given [the Caperton ] test, I find no arguable due process violation in the cases before me. There is nothing alleged by MCCA that would cause any reasonable person to believe that there is a significant and disproportionate influence being asserted upon me under any objective analysis.” Ante at ----. But the challenged justice in Caperton issued similar statements in which he declined to recuse himself, explaining that the moving party had provided no objective evidence of actual bias and expressing his subjective opinion that none of his motives were improper. Caperton, supra, 556 U.S. at ----, 129 S.Ct. at 2262-2263. Indeed, West Virginia's recusal rules are strikingly similar to the practice followed by this Court. See W.Va. Caperton, supra, 223 W.Va. at ----, 679 S.E.2d at 244. Like Justice Hathaway-albeit while providing extensive factual detail concerning the allegations against him and legal precedent on the subject of recusal-Justice Benjamin asserted: “I have no pecuniary interest in the outcome of this matter․ I have no personal involvement with nor harbor any personal antipathy toward any party or counsel herein.” Id. at ----, 679 S.E.2d at 296. He added: “[N]o improper act or conduct, and no appearance of an improper act or conduct with respect to this case, or any other case, has occurred on my part[.]” Id. at ----, 679 S.E.2d at 300. “Simply put, I do not have, nor was there any evidence to show that I had a ‘direct, personal, substantial, pecuniary interest’ in this case.” Id. at ----, 679 S.E.2d at 301. Yet the United States Supreme Court concluded that his subjective assertions that he lacked actual bias were insufficient for constitutional purposes. Caperton, supra, 223 W.Va. at ----, 679 S.E.2d at 234. Particularly in light of the similarities between Michigan's and West Virginia's recusal practices-indeed, in both states recusal decisions have been left to the discretion of the individual justice whose recusal is sought, W.Va. Caperton, supra, 223 W.Va. at ----, 679 S.E.2d at 244-I simply cannot conclude without further study that the historic practice followed by Justice Hathaway today complies with Caperton. Nor can I conclude that Justice Hathaway may conclusively disavow any similarity to the facts of Caperton by simply offering her own opinion that “[t]here is nothing alleged by MCCA that would cause any reasonable person to believe that there is a significant and disproportionate influence being asserted upon me based on any objective analysis.” Ante at ----.

• Is it sufficient under Caperton that four justices of this Court have voted to support Justice Hathaway's decision here? Although Caperton expressly failed to address a proper method for fact-finding, the Court reached its decision by carefully considering the facts surrounding Justice Benjamin's election. Here the MCCA alleges that Justice Hathaway must recuse herself because her husband has more than a de minimis financial interest in the subject matter of these cases. The MCCA points to very recent payments it has just made to one of Mr. Kingsley's clients. It also alleges that it has raised the amounts needed to pay expected claims and its reserves by $693.8 million in anticipation of this Court's potential reversal on rehearing of its earlier ruling in these cases; it states that the rate hike will be necessary because, if we reverse, claimants such as Mr. Kingsley's clients will receive substantially higher payments-which result in higher attorney contingency fees-because insurers will have no legal basis for resisting unreasonable settlement demands made by plaintiffs' attorneys. Can we possibly decide whether these alleged facts establish that “ ‘the probability of actual bias on the part of [Justice Hathaway] is too high to be constitutionally tolerable’ ” without first engaging in some kind of independent inquiry to test the claim and Justice Hathaway's summary denial of it? 19 See Caperton, supra, 556 U.S. at ----, 129 S.Ct. at 2254 quoting Withrow v. Larkin, 421 U.S. 35, 47, 95 S.Ct. 1456, 43 L.Ed.2d 712 (1975).

I raise these concerns in part in light of the dissent filed by Chief Justice Roberts in Caperton. He asks, among 40 questions, whether-although a justice does not have an actual financial interest in the case-a litigant may challenge the justice's refusal to recuse himself or herself in federal district court under 42 USC 1983,²⁰ which permits a person deprived of a federal right by a state official to sue for damages. Caperton, supra, 556 U.S. at ----, 129 S.Ct. at 2271 (Roberts, C.J., dissenting). He also reasonably asks whether the parties are “entitled to discovery with respect to the judge's recusal decision” and, “[i]f a judge erroneously fails to recuse, do we apply harmless-error review?” Id. at ----, 129 S.Ct. at 2272 (Roberts, C.J., dissenting). As he suggests, the ramifications of Caperton are broad. This Court should seriously consider how to properly dispose of a “Caperton claim”²¹ alleging that the probability of a justice's bias disqualifies that justice under the Due Process Clause.

I would thus invite thorough supplemental briefing on these significant issues before disposing of the MCCA's recusal motion. Because the majority has chosen to precipitously resolve this disqualification motion, I dissent.

Consistent with the Court's 170-year-old disqualification practice, I do not participate in the determination whether Justice Hathaway should disqualify herself. I join in Justice Corrigan's dissenting statement concerning the Caperton²² question. I believe that this new United States Supreme Court opinion has radically altered the landscape of judicial disqualification and this change warrants that this Court at least entertain argument by the parties about how Caperton might affect the pending disqualification motion.

However, given Justice Hathaway's stated position on disqualification matters, I also write to raise questions about the casual way she has chosen to decide this motion and how her response may bear on the extraconstitutional disqualification proposals currently under consideration by this Court.

Few issues have been the subject of more continual and contentious debate on this Court in the last decade than the appropriate standard that should apply in the disqualification of justices.²³ Justice Hathaway, who is now the subject of a disqualification motion in these cases, dismisses our efforts to comment on this issue as “inappropriate,” “unnecessary,” and a waste of taxpayer dollars. Such questions, however, are a traditional part of the debate and discussion inherent in the judicial process. It is, for example, why this Court holds oral arguments, and why it welcomes briefs, responses to briefs, and even replies to responses to briefs. By this process we educate ourselves and hopefully arrive at better decisions. Justice Hathaway either fails to appreciate the nature of the judicial process or simply seeks to avoid the hard questions about the inadequacies of her own extraordinarily limited response to the disqualification motion. This is particularly evident because one of the central themes of Justice Hathaway's late Michigan Supreme Court campaign was her assertion that she subscribed to an “appearance of impropriety” disqualification standard and was, therefore, “more ethical” than the members of the previous philosophical majority-former Chief Justice Taylor and Justices Corrigan and Markman and I.²⁴

The Nature of the Allegations Against Justice Hathaway

Defendant Michigan Catastrophic Claims Association (MCCA) has asserted that Justice Hathaway's husband is a no-fault plaintiffs' attorney who stands to profit in his no-fault practice if Justice Hathaway participates in these cases to overturn a decision made by this Court just months ago. The thrust of this claim is that a reversal of our earlier opinion will remove the legal basis, and thus the incentive, for insurance companies to resist unreasonable no-fault settlements demanded by claimants and their attorneys. Consequently, because insurance companies will be free to pass on these unreasonable settlements to the MCCA (which will eventually be paid for by the public, who must buy no-fault insurance), no-fault practitioners will increase their contingency fee yields by obtaining higher settlements than warranted.²⁵ A reversal will cost purchasers of Michigan no-fault insurance an aggregate of $693.8 million more this year alone, accounting, in large part, for a more than 19 percent increase in the catastrophic claims premium every automobile no-fault insurance policy issued in this state will bear, which increase the MCCA's board of directors has already approved in anticipation of Justice Hathaway's critical vote to reverse the Court's prior decision. See the affidavit filed by the MCCA in Docket No. 133466, which is one of the documents referred to in fn 2 of this order.

Despite this, and without bothering to explain why, Justice Hathaway simply denies that she should be disqualified, adding that there is no appearance of impropriety in her participation. Justice Hathaway does not even deign to deny that her husband is a plaintiffs' no-fault practitioner or to assert that his practice will not benefit from her participation in a decision to overturn this Court's prior decision.

Justice Hathaway's refusal to live up to her own expressed standard of conduct is worthy of note in its own right: The people of this state deserve to know whether candidates promise one thing when running for office but deliver another when elected. But the far more important issue is the horror that would be visited on this Court if Justice Hathaway's preferred “appearance of impropriety” disqualification standard were actually adopted.

How May a Justice Rebut an “Appearance of Impropriety”?

Justice Hathaway has provided no information in response to defendant's allegations of her family's financial interest in a reversal of the Court's prior decision; surely her terse and conclusory statement is not what the people envisioned when they elected a candidate vowing to adhere to a “higher” “appearance of impropriety” disqualification standard. Ought not such a standard require that the target of the disqualification motion provide financial statements 26 or that an evidentiary hearing be conducted to determine the merit of the allegations of disqualification?²⁷

What Suffices to Establish an “Appearance of Impropriety”?

According to Justice Hathaway, allegations of a spouse's “economic interest in the subject matter in controversy” or “more than de minimis interest that could be substantially affected by the proceeding”-grounds requiring recusal under MCR 2.003(B)(5) and (6)(c)-are so irrelevant as to not even merit a discussion in her statement. If these allegations of increased family profit as a result of her participation in these cases do not establish an appearance of impropriety, what would?²⁸

Who Will Determine Whether There Is an “Appearance of Impropriety”?

For the first time to my knowledge, members of the Court have participated in the merits of a disqualification decision on a motion addressed to another justice. Although Justices Cavanagh and Weaver and Chief Justice Kelly have joined and endorsed Justice Hathaway's decision, they have done so solely on the basis of Justice Hathaway's statement without any additional inquiry into the merits of her participation or the allegations raised. In this, their participation is merely a rote ratification of Justice Hathaway's cursory denial of the motion to disqualify.

The new majority's approval of and participation in the merits of the determination whether Justice Hathaway should be disqualified, while an alteration of our traditions, is consistent with several of the Court's pending disqualification proposals that require full Court participation or that of the Chief Justice.²⁹ Without question, lodging such a determination with other justices of this Court will, at best, lead to gamesmanship to change the philosophical composition of the Court to alter the result in each such case. I ask: Would a 4-3 decision by the members of the Court favoring participation of a challenged justice cause the public to have greater or lesser faith that the targeted justice should ethically participate?

How would such a procedure better serve the people of this state than the nearly 200-year-old current disqualification practice?

These are but a few of the questions raised by Justice Hathaway's disposition of the pending motion to disqualify her. Given Justice Hathaway's campaign promises and our colleagues' published statements on disqualification over the years, not only the parties, but the public deserve more.

Defendant has moved for Justice Hathaway's disqualification, arguing that “her spouse has an interest that could be substantially affected by the outcome of the proceedings.” Justice Hathaway now denies this motion, concluding that she has “no personal bias or prejudice,” that there is “no appearance of impropriety,” and that there is “nothing alleged ․ that would cause any reasonable person to believe that there is a significant and disproportionate influence being asserted upon me,” with little to no explanation. This decision must be viewed against a backdrop in which Justice Hathaway has been free in her criticism of other justices for their disqualification decisions. (For example, asserting that the former Chief Justice of this Court was a “walking conflict of interest” because his wife worked for the Governor's office; stating that “our Supreme Court is not being fair and impartial ․ they are not recusing themselves and that is the problem; we need judges who are going to be fair and impartial in rendering their decisions and that is not happening”; and proclaiming that, “I have, and I will continue to disqualify myself whenever there is the appearance of impropriety.”)³⁰ Justice Hathaway has also supported this Court's decision to propose new procedures that would require disqualification whenever there is an “appearance of impropriety.” ADM File No. 2009-04; see 483 Mich. 1205 (2009). Finally, the United States Supreme Court's decision a few weeks ago in Caperton v. A.T. Massey Coal Co., Inc., 556 U.S. ----, 129 S.Ct. 2252, 173 L.Ed.2d 1208 (2009), held that disqualification must now be determined on the basis of “objective standards.”

Given this backdrop, it is difficult to understand why Justice Hathaway believes that her conclusory response to defendant's motion is sufficient. Contrary to her justification for her unwillingness to explain her position (“I will not participate in this Court's practice of engaging in responses to comments of others which are inappropriate and unnecessary. This Court should discontinue devoting the state's limited resources to unproductive colloquy.”), it is hardly to take the high ground for a justice to decline to address questions that have been raised by the parties and by other justices, and that are a direct outgrowth of that justice's own reform proposals, her own criticisms of other justices, and a recent decision of the United States Supreme Court. Given that Caperton was decided just a few weeks ago, and in fairness to the parties, I would direct the filing of supplemental briefs. Among the questions I would direct the parties to address are whether all justices must now participate in deciding another justice's disqualification and whether the justice who is the object of disqualification may even participate. Absent such briefing, I am not yet prepared to deviate from this Court's practice of 172 years to the contrary. Therefore, I neither participate in nor address the merits of Justice Hathaway's decision not to grant defendant's motion.