1st Circuit pulls opinions after judge’s conflict surfaces – Massachusetts Lawyers Weekly Page 1 of 2

1st Circuit pulls opinions after judge’s conflict surfaces

* By: Pat Murphy ) June 28, 2018

The 1st U.S. Circuit Court of Appeals recently took the unusual step
of withdrawing two decisions due to the belated discovery of a
financial interest conflict involving a member of the panel and a
named defendant.

On June 14, the court issued an order withdrawing the Aug. 8,

2017, opinion in Hayden, et al. v. HSBC Bank, USA, et al. and the
Nov. 14, 2016, opinion in Dyer v. Wells Fargo Bank, N.A., et al.

Both cases involved wrongful foreclosure actions brought by Fall River consumer debt attorney Glenn F. Russell Jr.
on behalf of Massachusetts homeowners. In both cases, Judge David J. Barron was a member of a unanimous panel
that affirmed the dismissals of the homeowners’ claims, which included allegations that the respective lenders’
actions violated the state’s foreclosure-under-power-of-sale statute, G.L.c. 244, §14.

In Hayden, Judge Sandra L. Lynch authored the opinion affirming the dismissal of the claims of the owners of a
home in Rehoboth. Barron wrote the opinion in Dyer, which upheld the dismissal of the claims of a Boston
homeowner.

Those matters appeared settled until May, when the clerk of the 1st Circuit sent letters to counsel revealing that
Barron had learned a family member had a financial interest in Wells Fargo Bank — a defendant in both cases —
that ordinarily would have required his recusal under federal law and judicial canons. All parties agree there was no
wrongdoing by Barron.

“He did the right thing by coming forward,” Russell says.

The court invited the parties to submit briefs on the appropriate remedy.
The defendant banks argued that, because the decisions were unanimous,
Barron’s vote really didn’t matter in the long run, so the decisions should
stand.

The defendants further argued Barron had no obligation to recuse himself because he was unaware of the financial
interest of the family member in Wells Fargo at the time the cases were heard, and scienter is required to trigger a
judge’s disqualification on the ground of financial interest under 28 U.S.C. §455(b)(4).

But Russell successfully argued that §455(a) of the federal disqualification statute controlled under the U.S.
Supreme Court’s 1988 decision in Liljeberg v. Health Services Acquisition Corp.

“You don’t need scienter or knowledge, because the goal of [§455(a)] is to protect the integrity of the judiciary,”
Russell says, adding that the question becomes whether there’s an “appearance of impropriety.”

Section 455(a) requires a judge to disqualify himself in any proceeding in which his impartiality might reasonably be
questioned. In Liljeberg, the court held that vacatur was the appropriate remedy when a U.S. District Court judge
decided the ownership of a Louisiana hospital years before he realized he was a trustee of an institution that had an
interest in the dispute.

On June 14, the 1st Circuit entered orders vacating the decisions in Hayden and Dyer, directing the cases to be
assigned to new panels for further review.

Russell says it’s worth it for his clients to re-argue their cases because they address important issues under
Massachusetts foreclosure law, including a novel request for relief under the state’s obsolete mortgage statute,
G.L.c. 260, §33.

https://masslawyersweekly.com/2018/06/28/1st-circuit-pulls-opinions-after-judges-conflict... 6/29/2018
1st Circuit pulls opinions after judge’s conflict surfaces – Massachusetts Lawyers Weekly Page 2 of 2

Sean R. Higgins of K&L Gates in Boston represents the defendants in Hayden. Higgins declines to comment, citing
the pending litigation. Michael R. Stanley of Sheehan Phinney and David E. Fialkow of K&L Gates represented the
defendants in the Dyer appeal.

Stanley says he no longer represents Wells Fargo in Dyer. But he thinks the decision should have stood because it
was unanimous and based on binding precedent.

“Dyer was decided right,” he says. “I don’t think it was necessary for the 1st Circuit to pull it.”

Susan J. Goldberg, circuit executive for the court, says it’s rare but not unheard of for judges in the circuit and other
federal courts to discover potential conflicts of interest in a post-decision context.

Goldberg says the court found a total of eight cases case affected by Barron’s family interest in Wells Fargo Bank,
including Dyer and Hayden. Four of those cases remain under consideration for assignment to new panels; the court
hasn’t received a response from the parties in the other two cases, she reports.

Issue: JULY 2 2018 ISSUE

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