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Friday, July 17, 2009

Ind. Decisions - No Indiana cases today from the 7th Circuit, but two of note nonetheless

Avnet Inc v. Maxwell, Andrew J. is an 8-page opinion in a bankruptcy case. Judge Stykes writes:

MarchFIRST, Inc., an Internet consulting company, entered Chapter 7 bankruptcy proceedings in April 2001. Soon thereafter, marchFIRST sent a notice of bankruptcy to its creditors requiring them to file any claims against its estate by 4 p.m. on October 11, 2001. Avnet, Inc., an unsecured creditor of marchFIRST, faxed its proof of claim to the claims agent at 4:43 p.m. on October 11. Andrew Maxwell, the trustee of marchFIRST’s estate, objected to Avnet’s claim because it was not timely filed. The bankruptcy court agreed and entered an order sustaining the objection, which the district court upheld. Because Avnet’s claim was filed after the deadline, we affirm.

I. Background

After marchFIRST entered Chapter 7 bankruptcy proceedings, the company mailed a notice of bankruptcy to its creditors. The notice stated that proof of any claims against its estate must be received by the bankruptcy clerk’s office by October 11, 2001. The notice listed two addresses where creditors could send their proofs of claim—one address for claims submitted by mail and another for claims submitted by hand or overnight courier. Attached to each notice was a personalized proof-of-claim form that stated in capital letters: “THE ORIGINAL OF THIS PROOF OF CLAIM MUST BE SENT SO THAT IT IS RECEIVED ON OR BEFORE 4:00 P.M., EASTERN TIME, ON OCTOBER 11, 2001.”

Avnet received marchFIRST’s bankruptcy notice and personalized proof-of-claim form. On October 11, 2001, at 4:43 p.m., Avnet faxed the proof-of-claim form to marchFIRST’s claims agent with a cover sheet stating: “Following is our proof of claim in this case. Original will arrive by courier tomorrow morning.” As promised, a courier delivered the original the following morning. Nevertheless, Maxwell objected to Avnet’s claim because the original proof-of-claim form did not arrive until October 12, one day after the deadline. The bankruptcy court sustained the objection and subordinated Avnet’s claim, and the district court affirmed. * * *

The facts here are indistinguishable from Outboard Marine: MarchFIRST’s notice was sufficiently clear that submission by mail or by hand were the only permissible methods of transmittal. The company was not required to also list all impermissible methods of transmittal. Furthermore, the form clearly emphasized that the original proof-of-claim form must be submitted, implicitly ruling out faxed submissions. Transmission by facsimile was improper, and the bankruptcy court correctly rejected Avnet’s argument.

Avnet next argues that the bankruptcy court erred by not exercising its discretion under Rule 5005(c) of the Federal Rules of Bankruptcy Procedure to deem its claim timely. * * * A claimant who wants the benefit of Rule 5005(c) must “offer[] [a] convincing justification or explanation for its untimely filing.” Id. The bankruptcy court did not abuse its discretion in declining to deem Avnet’s claim timely.

Finally, Avnet argues that the bankruptcy court should have considered its faxed submission as an informal proof of claim and its subsequent mailing of the original as an amendment to that informal claim. The informal proof-of-claim doctrine is an equitable doctrine that permits bankruptcy courts to treat a creditor’s late formal claim as an amendment to a timely informal claim. [cites omitted] Even if we were inclined to consider Avnet’s initial fax as an informal claim, the fax was not timely; Avnet’s fax arrived 43 minutes late.

In USA v. J.P. Stadtmueller, a 24-page opinion, the issue is whether district Judge Stadtmueller should recuse himself. Judge Ripple writes the opinion:
The United States (“the Government”) has filed this petition for a writ of mandamus seeking the recusal of the respondent district judge currently presiding over a criminal action pending in the United States District Court for the Eastern District of Wisconsin. Because the Government has established that a reasonable, well-informed observer might question the impartiality of the district judge, we must grant the requested writ, disqualifying the judge from presiding over the proceeding and requiring that he vacate all orders entered since the filing of the recusal motion in the district court. * * *

Here we must conclude that the Judge did more than simply participate in a plea bargain. He questioned the Government’s decision to prosecute the matter as a federal case in terms that a reasonable observer might well interpret as critical of the Government’s position in the case. The statement that neither party would be pleased with his ruling on the suppression motions could have been interpreted as indicating that he was illdisposed toward the Government’s position and might rule based not on the merits, but on his distaste for its prosecutorial decision. A reasonable, well-informed observer well may have concluded that the Judge was no longer acting as a neutral arbiter, but was advocating for his desired result. * * *

We must conclude, however, that, taken in context, some of the Judge’s comments go further and comment on substantive matters, rather than the conduct of the proceedings. For example, as we have just noted, the Judge questioned why this case was accepted for federal prosecution, expressed concern about the time that had passed between Mr. Salahuddin’s initial arrest and the commencement of federal proceedings, and suggested that this case was an embarrassment to the justice system and an inefficient allocation of taxpayer resources. He also sought to avoid a conviction under 18 U.S.C. § 924(c), so as to prevent imposition of the fifteen-year mandatory minimum sentence.

In expressing these views and insisting that action be taken to conform the future course of litigation to those views, the Judge misapprehended the limits of his authority as the presiding judicial officer and undertook to participate in determinations that are in the proper domain of the Department of Justice. The power of the Executive Branch to make these decisions is a safeguard of liberty. As this court has noted, entrusting these prerogatives to the Executive ensures that “ ‘no one can be convicted of a crime without the concurrence of all three branches.’ ” United States v. O’Neill, 437 F.3d 654, 660 (7th Cir. 2006) (Posner, J., concurring in the judgment) (quoting In re United States, 345 F.3d 450, 454 (7th Cir 2003)). Judges do not possess, and should not attempt to exercise, prosecutorial discretion.

A motion under section 455(a) is “directed against the appearance of partiality, whether or not the judge is actually biased.” Balistrieri, 779 F.2d at 1204 (emphasis supplied). We must conclude that the Judge’s actions, assessed in their totality, are such that a reasonable, well-informed observer would question his partiality. Hook, 89 F.3d 350 at 353-54.

The question before us is not whether the Judge is biased. If the Government had the burden to establish that fact, it would have indeed a high mountain to climb in light of the Judge’s distinguished public service of almost forty years. However, we must conclude that the Government is entitled to the issuance of the writ of mandamus for which it has petitioned because it has established that a reasonable well-informed observer could question the Judge’s impartiality. Accordingly, all orders entered by the Judge after the motion for recusal was filed must be vacated. The Judge is directed to remove himself from further proceedings in this matter.

Posted by Marcia Oddi on July 17, 2009 10:59 AM
Posted to Ind. (7th Cir.) Decisions