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GORDON v. RELIANT ENERGY

April 24, 2001

PAMELA R. GORDON, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
RELIANT ENERGY, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Moskowitz, District Judge.

ORDER OF RECUSAL

The above captioned case is one of three before the Court in which various plaintiffs have filed suit against various generators and traders of wholesale electricity in California. The suit, styled as a class action, is brought on behalf of persons who have purchased electricity, for purposes other than resale or distribution, from San Diego Gas and Electric ("SDG & E"), Pacific Gas and Electric ("PG & E"), and Southern California Edison ("SCE") since 1999.

I. THE HENDRICKS AND GORDON CASES

This suit was originally filed in San Diego Superior Court, and was removed to this Court on December 20, 2000. A related case, Hendricks v. Dynegy Power Marketing, Inc., 00CV2524 BTM (RBB), similarly styled as a class action, was removed on the same day. Plaintiffs in both cases filed a motion to remand, and defendants promptly filed ex parte applications to stay proceedings pending the resolution of defendants' motion to transfer currently before the Judicial Panel on Multidistrict Litigation.*fn1

Plaintiffs' motions to remand were calendared for hearing on March 26, 2001. In light of defendants' motions to stay, the Court ordered the parties to appear on March 22, 2001. At the March 22, 2001 hearing, the Court sua sponte raised the issue of recusal in light of the fact that the Court was a putative class member in both cases. The Court asked the parties for briefing on the recusal issue, vacated the hearing date for the remand motions, and set a hearing for April 17, 2001 on the recusal and stay issues.

Pursuant to 28 U.S.C. § 455, the Court must recuse itself from any proceeding in which its "impartiality might reasonably be questioned." 28 U.S.C. § 455(a). Additionally, a judge is required to recuse himself if

[h]e 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.

28 U.S.C. § 455(b)(4). Similarly, a judge must recuse if the judge "or his spouse, or a person within the third degree of relationship to either of them, or the spouse of such person . . . [i]s a party to the proceeding." 28 U.S.C. § 455(b)(5)(i).

"[C]lass members are parties within the meaning of section 455(b)(4)." In re Cement Antitrust Litigation, 688 F.2d 1297, 1315 (9th Cir. 1982). Whether putative class members are parties as contemplated in section 455(b)(4) and (b)(5)(i) has not yet been determined by the Ninth Circuit. In Tramonte v. Chrysler Corp., 136 F.3d 1025 (5th Cir. 1998), the Fifth Circuit concluded that putative class members qualify as parties under section 455(b)(4). Tramonte, 136 F.3d at 1030. In so concluding, the court stated that

where a judge, her spouse, or a minor child residing in her household is a member of a putative class, there exists a `financial interest' in the case mandating recusal under § 455(b)(4). The statute stresses that any financial interest, `however small' requires the recusal of a judge. The fact that a class has not yet been certified unquestionably diminishes the expected value of the outcome of the litigation to the interested judge, as it makes a financial recovery less certain. Yet recovery in any matter that has not yet reached final judgment is uncertain; otherwise, there would be no case or controversy. Because § 455(b)(4) requires recusal for even paltry financial interests, the increased uncertainty of recovery in the precertification stage of a class action affects the size but not the existence of a disqualifying financial interest. . . . An assertion that a member of a putative class lacks a financial interest relevant to the trial court's decision until after the class is certified blinks at reality.

Id. Given the Ninth Circuit's determination that members of a class action are deemed parties for purposes of section 455, see In re Cement Antitrust Litigation, 688 F.2d at 1315, coupled with the logic set fourth in Tramonte, the Court concludes that the issue of recusal is one which must necessarily be addressed at the outset of these cases.

It is clear that, as a purchaser of electricity from SDG & E, the undersigned judge and his family members are parties to these actions. Thus, under 455(b)(5)(i), the Court should automatically recuse. However, in the wake of the March 22, 2001 hearing, plaintiffs in both the Hendricks and Gordon cases amended their complaints to exclude the following as members of the class:

(1) any judge who hears any aspect of this litigation, whether in state or federal court or at trial or on appeal, (2) the judge's spouse, minor children residing in the household, or personal staff (including, but not limited to, secretaries, law clerks, and research attorneys), or (3) any person within the third degree of relationship to either the judge or his or her spouse, or the spouse of such a person.

(Gordon First Amnd. Cmpl., ¶ 20; Hendricks First Amnd. Cmpl., ¶ 16.) According to plaintiffs, this amendment renders the issue of recusal moot and removes any impediment to ...


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