In re: Kempthorne

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 14, 2005 Decided June 9, 2006

No. 03-5288

IN RE: DIRK KEMPTHORNE SECRETARY OF THE INTERIOR IN HIS
OFFICIAL CAPACITY ,
PETITIONER

On Petition for Writ of Mandamus to the
United States District Court for the District of Columbia
(No. 96cv01285)

Thomas M. Bondy, Attorney, U.S. Department of Justice,
argued the cause for petitioner. With him on the briefs were
Peter D. Keisler, Assistant Attorney General, Kenneth L.
Wainstein, U.S. Attorney, Gregory G. Katsas, Deputy Assistant
Attorney General, Robert E. Kopp, Mark B. Stern, Alisa B.
Klein, Mark R. Freeman, and I. Glenn Cohen, Attorneys.
Charles W. Scarborough, Attorney, entered an appearance.

Mark I. Levy argued the cause for respondents. On the brief
were Dennis M. Gingold, Elliott H. Levitas, G. William Austin,
III, and Keith M. Harper.

Before: GINSBURG , Chief Judge, and HENDERSON and
RANDOLPH , Circuit Judges.

Opinion for the Court filed by Chief Judge GINSBURG .
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GINSBURG , Chief Judge: The Secretary of the Interior, in
his official capacity, petitioned this court for a writ of
mandamus disqualifying Special Master Alan Balaran and
suppressing three reports he filed with the district court in the
on-going litigation involving Interior’s management of trust
accounts for the benefit of American Indians, Cobell v. Norton,
No. Civ. A. 96-1285 (D.D.C.). Although Balaran has since
resigned as Special Master, Interior still seeks to suppress both
his interim report on the misconduct charges Native American
Industrial Distributors, Inc. (NAID) made against the
Department and two reports on his visits to Interior facilities
where individual trust account information is maintained.
Before writing the three reports, Balaran had hired a former
employee of NAID to assist him, thereby creating a situation in
which his “impartiality might reasonably be questioned” and
requiring his disqualification pursuant to 28 U.S.C. § 455(a).
We therefore grant the Secretary’s petition and order that the
three reports be suppressed.

I. Background

The Special Master’s reports at issue here arise from the
protracted litigation over Interior’s mishandling of the
Individual Indian Money (IIM) trust accounts created for each
Indian having an interest in certain allotted lands. The facts and
procedural history we recount here tell but a small portion of the
full story of that class action, which began a decade ago. For a
more complete account, see Cobell v. Norton, 334 F.3d 1128,
1133-34 (D.C. Cir. 2003).

In 1999 the district court concluded that by failing properly
to account for the balances in the IIM trust accounts, the
Department, as trustee, had breached the fiduciary duty it owed
to the plaintiffs under the American Indian Trust Fund
Management Reform Act of 1994, 25 U.S.C. § 4001 et seq. See
Cobell v. Babbitt, 91 F. Supp. 2d 1, 40-50 (D.D.C. 1999). The
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court directed the Department to design and implement an
accurate accounting and record-keeping system for the trust
accounts; retained jurisdiction in order to provide “ongoing
judicial review of trust reform efforts”; and ordered the
Department to file quarterly progress reports. Id. at 57. The
better to monitor Interior’s progress, the district court authorized
Special Master Alan Balaran to oversee the “Department’s
retention and protection from destruction of IIM Records
through ... on-site visits to any location where IIM Records are
maintained.” Balaran was later charged also with oversight of
the Department’s policies and procedures relating to the security
of IIM records.

A significant element in the plan to reform Interior’s trust
management is the creation of the Trust Asset and Accounting
Management System (TAAMS), a computerized record-keeping
system meant to account properly for balances in IIM trust
accounts. For assistance with the TAAMS project, the
Department retained NAID, an information technology firm. In
August 2002 NAID filed a motion to intervene as a plaintiff in
the class action, claiming the Department had unilaterally
modified its contract with the company, effectively replacing it
with a competitor, in retaliation for NAID’s unfavorable
assessment of the TAAMS project. NAID also alleged the
Department had omitted material information from its Eighth
Quarterly Report, which it filed with the district court in January
2002. Upon determining the company could seek relief only
under the Contract Disputes Act of 1978, 41 U.S.C. § 601 et.
seq., the district court in September 2002 dismissed NAID’s
motion to intervene.

In October 2002 Special Master Balaran, following up on
NAID’s allegations, contacted the Department of Justice and
asked for a copy of the administrative record upon which the
Interior Department had based the Eighth Quarterly Report.
Some weeks later the district court formally sanctioned
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Balaran’s inquiry, directing him “to ascertain whether there is
any validity to NAID’s contention that ... Interior withheld
information from the Court that should have been disclosed in
the Eighth Quarterly Report.” In late January 2003 Interior’s
counsel at Justice wrote to Balaran stating that Interior would
produce unprivileged documents, along with a privilege log, by
mid-February, but that did not happen. Interior’s counsel
instead invited Balaran to inspect the documents at the
Department of Justice, which he did on February 27. Interior’s
counsel also arranged for Mr. Michael S. Smith, an Executive
Vice President of NAID who had worked on the “TAAMS
Project Team” and was knowledgeable about the administrative
record, to attend on the 27th. Earlier that year, Smith had
written to Interior on NAID’s behalf reiterating the allegations
of fraud and demanding monetary relief.

Shortly after the inspection, and unbeknownst to the
Departments of Interior and of Justice, Balaran hired Smith to
assist him in collecting and analyzing documents relevant to his
investigation into the completeness and accuracy of the Eighth
Quarterly Report. Balaran also made Smith’s employment
“retroactive” from the date of the inspection. In due course
Balaran submitted to Interior billing records indicating that from
February 27 to April 14, 2003 inclusive one “MSS” had worked
some 110 hours on the investigation, much of that time
specifically “Review[ing] 8th QR documents,” “Analyz[ing] 8th
QR Exhibits,” and “Draft[ing] 8th QR Analysis.” On April 16
Smith, according to the President of NAID, “terminated any and
all relationships with Special Master Balaran,” after which
NAID was his “sole employer.”

On April 21 Balaran issued a 55-page interim report to the
district court, on the first page of which he noted that he had
relied upon “documentation obtained outside of normal channels
and to [sic] which the parties may have no familiarity.” The
referenced documents were attached to the report in the form of
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73 exhibits. The report detailed Interior’s alleged intention to
mask certain deficiencies of the TAAMS project and concluded
the Eighth Quarterly Report failed to provide “a clear and
independent picture of trust reform”; rather, it was designed “to
avoid liability at all costs.”

Apart from his investigation of the alleged cover-up relating
to TAAMs, in March 2003 Balaran had visited Interior’s offices
in Gallup, New Mexico and Window Rock, Arizona, and in
September he inspected the Department’s office in Dallas,
Texas. In August and September Balaran issued site-visit
reports in which he criticized various aspects of the
Department’s operations at those facilities.

In the meantime, having learned that Balaran had employed
Smith, Interior moved in May 2003 to disqualify Balaran from
further participation in the case, pursuant to 28 U.S.C. §§ 455(a)
(requiring recusal “in any proceeding in which [a judge’s]
impartiality might reasonably be questioned”) and 455(b)(1)
(requiring recusal where a judge “has a personal bias or
prejudice concerning a party, or personal knowledge of disputed
evidentiary facts concerning the proceeding”). The class action
plaintiffs opposed the motion. Six months later, the district
court not having ruled upon the motion, the Secretary of the
Interior petitioned this court for “a writ of mandamus directing
the recusal of Special Master Alan Balaran.” The district court
then denied the Department’s motion to disqualify Balaran, see
Cobell v. Norton, 310 F. Supp. 2d 102, 104 (D.D.C. 2004)
(holding Special Master Balaran “engaged in no untoward
conduct”), after which Balaran resigned as Special Master.

Then came In re Brooks, 383 F.3d 1036 (D.C. Cir. 2004),
in which we held Special Master Balaran’s ex parte contacts
with parties and counsel to certain contempt proceedings arising
from this same class action necessitated his recusal with respect
to those proceedings under both §§ 455(a) and (b)(1) of 28
 6
U.S.C. Id. at 1046. In order to protect those proceedings from
the taint of his participation, we ordered that Balaran’s work
product relevant to those proceedings be suppressed. Id. In
light of that decision, Interior now urges us to suppress the three
reports Balaran issued after he hired Smith.

II. Analysis

Although Interior concedes that “Balaran’s resignation
mooted the question of his further participation in the case,” the
Department argues suppression of the three reports is still
appropriate if Balaran was disqualified as Special Master before
he submitted those reports to the district court. The class action
plaintiffs claim the Department’s mandamus petition became
moot in its entirety upon Balaran’s resignation and oppose
suppression of the three reports here at issue.

A. Mootness

The plaintiffs point out that Interior’s mandamus “petition
requested no other relief than an end to [Balaran’s] involvement
in the underlying litigation.” Because “there is no need for the
Court to decide whether to compel [Balaran’s] removal from
further involvement in the case” now that he has resigned, the
plaintiffs maintain the entire case is moot.

Interior responds that a live controversy remains because
the plaintiffs continue to rely upon the disputed and allegedly
tainted reports in support of related claims and motions they
have filed with the district court. In any event, the Department
maintains, our decision In re Brooks is controlling on the
question of mootness: Although Balaran had resigned while that
case was pending, we held the petitions for writs of mandamus
recusing Balaran from the contempt proceedings were not moot
because his work product was still at issue; therefore we
addressed the petitions on their merits, held Balaran disqualified,
 7
and suppressed his tainted work product even though, as in this
case, the petitions did not expressly request suppression. Id. at
1044-46.

We agree with Interior that In re Brooks forecloses the
plaintiffs’ contention the instant petition is moot. There we
squarely held Balaran’s resignation did not render moot the
mandamus petitions seeking his recusal from the contempt
proceedings even though, as the class action plaintiffs pointed
out, “vacatur of Balaran’s reports and recommendations was not
the relief requested in the petitions.” Id. at 1044. The cases are
on all fours in this respect and the result, therefore, must be the
same.

B. Disqualification of the Special Master

We explained In re Brooks that “[i]f ... Balaran should have
been recused from the contempt proceedings, then any work
produced pursuant to the [contempt] referrals must also be
‘recused’ -- that is, suppressed.” Id. Similarly, in this case to
determine whether we should suppress the reports at issue, we
must address the merits of Interior’s petition to disqualify
Balaran. Although a writ of mandamus is “an extraordinary
remedy,” Gulfstream Aerospace Corp. v. Mayacamas Corp.,
485 U.S. 271, 289 (1988), we will issue the writ “compelling
recusal of a judicial officer where the party seeking the writ
demonstrates a clear and indisputable right to relief.” In re
Brooks, 383 F.3d at 1041.

Under 28 U.S.C. § 455(a) a “justice, judge or magistrate
judge” must recuse himself “in any proceeding in which his
impartiality might reasonably be questioned ... by one fully
apprised of the surrounding circumstances.” Cobell, 334 F.3d
at 1143 (internal quotation marks omitted). Under § 455(b)(1)
he must recuse himself if “he has a personal bias or prejudice
concerning a party, or personal knowledge of disputed
 8
evidentiary facts concerning the proceeding.” We have held that
a special master is subject to the same ethical restrictions as a
judge when the special master serves as the “functional
equivalent” of a judge even though the special master is under
a judge’s “control.” Jenkins v. Sterlacci, 849 F.2d 627, 630-32
(D.C. Cir. 1988).

The plaintiffs contend § 455 is simply inapplicable here,
“[f]irst and foremost” because Balaran’s “assignment was solely
investigatory (rather than ‘adjudicative’).” On the contrary, the
district court charged the Special Master with finding the facts
in the first instance and making a “report and recommendation
detailing his findings and conclusions.” As we held In re
Brooks, Balaran’s role in assessing allegations of misconduct
“plainly demonstrates the adjudicative nature of [the] position,”
383 F.3d at 1045; he was “functionally indistinguishable from
... a trial judge.” Jenkins, 849 F.2d at 631. The disqualification
provisions of § 455 therefore applied fully to Balaran in his
conduct of that investigation.

Interior contends Balaran’s conduct warranted his
disqualification under both §§ 455(a) and (b)(1). NAID charged
the Department had committed a fraud on the court by omitting
from its Eighth Quarterly Report material information on the
progress of the TAAMS project and, as explained below, after
unsuccessfully attempting to intervene in the class action, NAID
brought administrative proceedings against the Department in
connection with those allegations. The Department also points
to the plaintiffs’ statement in their brief that Balaran hired Smith
specifically to identify and produce “many of the [exhibits] used
to prepare the Interim Report filed on April 21, 2003.”
Invoking § 455(a), the Department contends that “[a] judicial
officer who collaborates with an accusing party to determine the
accuracy of the party’s accusations cannot under any objective
standard be thought to be impartial.” Alternatively, Interior
argues Balaran exhibited actual bias, in violation of § 455(b):
 9
“[t]he retention of Mr. Smith revealed Mr. Balaran’s bias, it did
not create it.”

With respect to § 455(a), the plaintiffs respond that an
objective observer would not question Balaran’s impartiality
because his interim report includes only “findings firmly rooted
in evidence”; indeed, we are told, “[e]very fact is supported by
one of the 73 exhibits [Balaran] attached to his report -- exhibits
containing the very record Interior was ordered to turn over ...
but did not.” Furthermore, Balaran’s site visit reports were
made pursuant to the district court’s authorization and direction
to investigate the “retention and protection from destruction of
IIM Records through ... on-site visits to any location where IIM
Records are maintained.” Because Balaran had broad authority
to investigate and to interview any relevant persons in
connection with NAID’s allegations, the plaintiffs reason that
Interior has not produced any evidence Balaran either was or
appeared to be biased.

We agree with the Department that Balaran should have
recused himself pursuant to § 455(a). His impartiality was
placed in question when he hired Smith because NAID, of which
Smith was until then a senior executive, stood to gain financially
from a finding of misconduct. As recounted above, NAID had
sought to intervene in the class action against Interior and had
been remitted by the district court to an administrative action
against the Department for relief under the Contract Dispute Act
of 1978. A finding by Balaran that Interior covered up
deficiencies in the TAAMS over NAID’s protests would tend to
support NAID’s claim that the Department terminated its
contract because of the company’s unfavorable assessment of
the TAAMS project. In fact, Smith -- who returned to NAID
after working for Balaran -- because of his direct involvement
in the TAAMS project, will likely be a witness in NAID’s case
against the Department. As a sister circuit has made plain,
“conflicted advisors who participate or influence a judge
 10
require[] the judge’s disqualification” under § 455(a), “as
distinct from an expert or other assistant to the judge who is
disinterested and non-conflicted.” In re Kensington Int’l Ltd.,
368 F.3d 289, 311 (3d Cir. 2004).

What is more, Balaran’s employment of Smith raises the
specter of “selection bias” which, as we held In re Brooks,
necessitates his disqualification under § 455. See 383 F.3d at
1046. An impartial observer apprised of the facts would
reasonably believe Balaran’s reliance upon Smith for documents
and other sources of information likely “color[ed] the way in
which he approach[ed] his task, and ultimately his reports and
recommendations to the district court.” Id. Indeed, a reasonable
observer would be hard-pressed to conclude otherwise for, as the
plaintiffs concede, Balaran hired Smith to help in obtaining
documents and information upon which Balaran could assess
NAID’s allegations of misconduct against the Department.

Nor would a reasonable observer see any justification for
Balaran’s conduct. If Balaran needed Smith’s help in
identifying and analyzing documents, then at the very least
Balaran immediately should have disclosed the arrangement to
the Department. Interior’s counsel had invited Smith to assist in
Balaran’s initial inspection because his knowledge of the
administrative record would be helpful to the Department in
meeting its obligation to produce the relevant documents; for
Balaran then to hire and pay Smith “retroactive” to the date of
that inspection therefore seems particularly suspect. Worse still,
after Balaran’s initial inspection, Interior’s counsel was not
present to dispute anything Smith was telling Balaran. It is
difficult to imagine a more biased way of conducting and
reporting upon an investigation, save perhaps by permitting
Smith actually to write the report. In fact, having selected the
exhibits upon which the report was based, Smith might as well
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have written it.*

C. Suppression of the Special Master’s Reports

The plaintiffs maintain that even if Balaran was disqualified
pursuant to § 455(a) prior to his resignation -- as we have now
so held -- suppression of his reports is “unnecessary.” To this
end they say “none of the three reports targeted by [Interior] has
even been adopted by the District Court -- much less acted upon
to the [Department’s] detriment.” The plaintiffs also argue
Interior could have moved to exclude Balaran’s reports and
findings pursuant to Federal Rules of Civil Procedure 53(g)
(party may file objections to master’s report) and 26(c) (party
may move for protective order preventing disclosure of specific
documents or information). A writ of mandamus, the plaintiffs
contend, being an extraordinary remedy, is simply not required
in order to afford the Department the relief it seeks.

Interior responds that “a party confronted with adverse
reports from a biased judicial officer is not required to litigate
the merits of each of their findings and conclusions, but may
properly obtain vacatur of the reports if grounds for
disqualification are established.” The Department also
maintains Rules 53 and 26 are of little use now because the
district court has already rejected its argument that Balaran
should have been disqualified.

We believe suppression of Balaran’s reports is warranted
and indeed necessary. As we noted In re Brooks, “selection
bias” does not necessarily manifest itself in the record; it may

* Because we hold that Balaran was disqualified from the proceeding
pursuant to § 455(a) upon his hiring of Smith, we need not reach the
question whether Balaran also exhibited the requisite “personal bias”
for disqualification pursuant to § 455(b)(1).
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derive from “information that leave[s] no trace in the record.”
383 F.3d at 1046 (internal quotation marks omitted) (alteration
in the original). Balaran’s reliance upon Smith in choosing
which documents to consider and, by implication, which
documents not to consider, would lead “one fully apprised of the
surrounding circumstances,” Cobell, 334 F.3d at 1143, to
conclude Balaran’s interim report was likely affected by
selection bias; Smith obviously was not a disinterested source,
and his input was received ex parte and therefore untested by the
adversary process.

Because Balaran was disqualified from proceeding once he
hired Smith, his subsequent work product -- including the April
2003 interim report of investigation and the two site-visit reports
that followed -- must be suppressed. If those reports have not
been used against the Department and are not presently part of
the record before the district court, then so much the better; only
suppression can ensure neither the plaintiffs nor the district court
will rely upon the reports in the future, to the detriment of the
“public’s confidence in the judicial process.” Liljeberg v.
Health Servs. Acquisition Corp., 486 U.S. 847, 864 (1988).

III. Conclusion

Upon his hiring Smith, Balaran’s “impartiality might
reasonably [have been] questioned.” 28 U.S.C. § 455(a).
Therefore, we grant Interior’s petition for a writ of mandamus
and order the suppression of the three disputed reports Balaran
submitted to the court after he hired Smith. They shall “be
stricken from the district court’s records” and given “no legal
effect.” Gardiner v. A.H. Robins Co., 747 F.2d 1180, 1183 (8th
Cir. 1984) (striking from record reprimand of counsel and
related comments made by judge disqualified for bias).

So ordered.