M2 Software Inc v. M2 Communications, LLC

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

M2 SOFTWARE INC., a Delaware 
corporation, No. 03-56602
Plaintiff-Appellant, D.C. No.
v. CV-02-01588-AHM
M2 COMMUNICATIONS, L.L.C., a  Central District
limited liability company; JEFF of California,
MOSELEY, an individual; GAYLORD Los Angeles
ENTERTAINMENT INC., a corporation, ORDER
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. M2 Communications’ request for sanctions
against M2 Software is also DENIED.

PREGERSON, Circuit Judge, specially concurring:

I concur in the court’s order.

10237
10238 M2 SOFTWARE INC. v. M2 COMMUNICATIONS
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 owned Word Entertainment, not a
party to this suit either. See 10-Q filing for Warner Music
Group, at 7 (June 13, 2005), available at http://www.sec.gov/
Archives/edgar/data/1319161/000104746905017103/0001047
469-05-017103-index.htm. Word Entertainment had an exclu-
sive distribution contract with M2 Communications, a small
Christian music label and a party to this suit. See Word Enter-
tainment, available at http://www.wmg.com/recordedmusic/
?promo=24020007.

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 contracted with 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, M2 Communications 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 par-
ties 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-
sonably have been called into question, and thus recusal is not
required under § 455(a).
 M2 SOFTWARE INC. v. M2 COMMUNICATIONS 10239
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.
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.