M2 Software Inc. v. M2 Communications, L.L.C.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

M2 SOFTWARE INC., a Delaware 
corporation,
Plaintiff-Appellant, No. 03-55957
v. D.C. No.
CV-00-02853-AHM
MADACY ENTERTAINMENT, a
corporation e/s/a Madacy  Central District
Entertainment Group, Inc.; of California,
HANDLEMAN COMPANY, a Los Angeles
corporation; SFX ENTERTAINMENT, ORDER
a corporation,
Defendants-Appellees.

Filed August 21, 2006

Before: Harry Pregerson, William C. Canby, Jr., and
Robert R. Beezer, Circuit Judges.

Order;
Concurrence by Judge Pregerson;
Concurrence by Judge Beezer

ORDER

Appellant M2 Software’s motion to recall the mandate and
vacate the opinion in the above case is DENIED. M2 Soft-
ware’s request that the recusal motion be assigned to a new
panel is DENIED. Madacy Entertainment’s motion for sanc-
tions against M2 Software is also DENIED.

10233
10234 M2 SOFTWARE INC. v. MADACY ENTERTAINMENT
PREGERSON, Circuit Judge, specially concurring:

I concur in the court’s order.

To set the matter straight, at the time this case was assigned
to this panel and at the time we decided it, I owned an equita-
ble interest in Time Warner. Time Warner was not a party to
the suit. Unbeknownst to me, Time Warner had an option
(never exercised) to purchase up to 19.9% of Warner Music
— also not a party to this suit. See David A. Vise, Time War-
ner Sells Music Unit to Bronfman for $2.6B, Wash. Post, Nov.
24, 2003. Warner Music owns Warner Special Products, not
a party to the suit either. See Warner Special Products FAQ’s,
available at http://www.warnerspecialproducts.com/wsp/
wcm_help/helpfaq.jsp. As indicated on the allegedly infring-
ing CDs at issue in this case, Warner Special Products manu-
factured, produced, and licensed music for a division of
Madacy, a party to this suit.

In sum, then, I had no interest “however small” in the sub-
ject matter in controversy. Instead, I had an interest in a com-
pany (a) that had an option to purchase 19.9% of a company
(b) that owned a company (c) that manufactured, produced,
and licensed music for a corporate division of a party to this
suit. Such an indirect interest does not require recusal. See
United States v. Bayless, 201 F.3d 116, 127 (2d Cir. 2000)
(“Disqualification is not required on the basis of remote, con-
tingent, indirect or speculative interests.”) (citations omitted).
Indeed, Madacy was not required to list, and did not list, Time
Warner or Warner Music on its Federal Rule of Appellate
Procedure 26.1 disclosure, which requires the parties to list
only parent corporations and corporations that own 10% of
the entity’s stock.

Accordingly, I had no financial interest in the subject mat-
ter of this suit that required recusal under § 455(b). Nor, given
the remote nature of my interest, could my impartiality rea-
 M2 SOFTWARE INC. v. MADACY ENTERTAINMENT 10235
sonably have been called into question, and thus recusal is not
required under § 455(a).

BEEZER, Circuit Judge, specially concurring:

I concur in the court’s order denying the motion to recall
the mandate and the denial of the motion for sanctions.
Because the mandate is not recalled, I believe we have no
jurisdiction to address the challenge to Judge Pregerson’s par-
ticipation in this appeal.

M2 Software, Inc. moves the court for an order recalling
the mandate and vacating the opinion. Appellant’s counsel
asserts that Judge Pregerson owns stock in Time Warner, Inc.
and that such ownership required his recusal from participa-
tion in the decision of the case pursuant to 28 U.S.C. § 455.

Our authority to recall a mandate is to be “exercised only
in extraordinary circumstances” and the “sparing use of the
power demonstrates that it is one of last resort, to be held in
reserve against grave, unforeseen contingencies.” Calderon v.
Thompson, 523 U.S. 538, 550 (1998). When a motion to
recall a mandate is based on allegations of fraud on the court
or allegations of misconduct affecting the integrity of the judi-
cial process, the harm must be “gross” and enforcement of the
judgment “manifestly unconscionable.” Hazel-Atlas Glass
Co. v. Hartford-Empire Co., 322 U.S. 238, 245 (1944), over-
ruled on other grounds, Standard Oil Co. of Cal. v. United
States, 429 U.S. 17 (1976).

Nothing presented by M2 Software suggests perpetration of
fraud, gross misconduct or that enforcement of the judgment
would be manifestly unconscionable. Nor is the motion to
recall the mandate “grounded in any real infirmity in our pre-
vious decision, either when it was entered or when it is
viewed in light of later Supreme Court decisions.” Nevius v.
10236 M2 SOFTWARE INC. v. MADACY ENTERTAINMENT
Sumner, 105 F.3d 453, 460-61 (9th Cir. 1996). The Supreme
Court has twice considered the opinions of this panel in this
matter and has twice denied certiorari. The interests of finality
and repose balanced against the claims of M2 Software
require denial of the motion to recall the mandate.
 PRINTED FOR
ADMINISTRATIVE OFFICE—U.S. COURTS
BY THOMSON/WEST—SAN FRANCISCO

The summary, which does not constitute a part of the opinion of the court, is copyrighted
© 2006 Thomson/West.