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Bias Creating Remand

Posted on May 1, 2017

I wrote last August about the first case in the Tax Court involving a motion for reconsideration based on a decision by former Judge Kroupa alleging that the petitioner lost the case due to bias because at the time of the issuance of the opinion the IRS had begun its investigation.  The docket sheet suggests that the case is moving toward a new trial.   Occasional guest blogger Andy Roberson of McDermott Will and Emery posted on his law firm blog another case in which the petitioner sought remand due to the alleged bias of former Judge Kroupa.  The party argued that a decision by former Judge Kroupa in a different case with a similar issue should not be followed because of her bias which impacted the outcome of her opinion, making her opinion one on which the 1st Circuit should not rely in reaching its decision in the Santander case.  Despite seeking to have former Judge Kroupa’s bias somehow impact the outcome of a case with a related issue, the effort to argue her bias did not stop the 1st Circuit from reversing the decision of the district court.

Andy also blogged about the Tax Court’s new rules for judicial conduct adopted in 2016 after the indictment of former Judge Kroupa.  My research assistant looked for other cases in which parties had alleged bias by former Judge Kroupa should result in a reversal of the initial opinion.  She did not find any other cases raising this issue.

On March 6, 2017, the Supreme Court issued a per curiam order in the case of Rippo v. Baker in which it reversed the decision of the Supreme Court of Nevada on the basis that the judge presiding over the state court trial of Mr. Rippo was the target of a federal bribery probe at the time of his case.  Mr. Rippo argued that, even though he was being tried in the state system and his judge was being investigated by the feds, the local DA’s office was playing a role in the federal investigation and that connection prevented the judge from acting impartially.  The judge declined to recuse himself.  After the judge’s indictment, a different judge denied Rippo’s motion for a new trial.  The Nevada Supreme Court affirmed the denial of a new trial.  Mr. Rippo continued to advance his argument in seeking post-conviction relief.  The state courts continued to deny him relief and likened his defense to the ‘camouflaging bias’ theory discussed in Bracy v. Gramley, 520 U.S. 899 (1997) where the Court stated:

The Bracy petitioner argued that a judge who accepts bribes to rule in favor of some defendants would seek to disguise that favorable treatment by ruling against defendants who did not bribe him.  Id., at 905.  We explained that despite the ‘speculative’ nature of that theory, the petitioner was entitled to discovery because he had also alleged specific facts suggesting that the judge may have colluded with defense counsel to rush the petitioner’s case to trial.  See id., at 905-909.  The Nevada Supreme Court reasoned that, in contrast, Rippo was not entitled to discovery or an evidentiary hearing because his allegations ‘did not support the assertion that the trial judge was actually biased in this case’  132 Nev., at __, 368 P. 3d, at 744.

Bracy is a criminal case and we could not find where the rule in Bracy had been applied in a civil proceeding.

The Supreme Court vacated the decision of the Nevada Supreme Court because it applied the wrong standard, stating that “the Due Process Clause may sometimes demand recusal even when a judge ‘has no actual bias.’” Citing to Aetna Life Ins. Co. v. Lavoie, 475 U.S. 813, 825 (1986) the Court went on to state that “[r]ecusal is required when, objectively speaking, ‘the probability of actual bias on the part of the judge or decisionmaker is too high to be constitutionally tolerable.’”  Aetna Life was a civil proceeding in which one of the judges had a significant personal interest in a class action against Blue Cross and decided against the insurance company.  Interestingly, the other judges in the case also had some interest because they were connected or covered by Blue Cross but it was determined that their connection was remote and minimal so it did not reach the bias threshold.

The Court went on to talk about the risk being too high that bias might exist to be constitutionally tolerable as it remanded the case for further proceedings.  The Rippo case differs from the cases alleging bias by former Judge Kroupa both because it involves a criminal matter and the person claiming bias did so at the outset of the proceeding.  Still, Rippo shows the struggles that occur when sorting out possible motives for a judge to rule in a case where objectivity comes into question.  The fallout from former Judge Kroupa’s actions may now be limited to the Eaton case.  Other petitioners in the cases she decided and the IRS do not seem to have brought any cases alleging bias and enough time has now passed that it seems unlikely that additional parties will allege bias because of the criminal investigation.  The Tax Court showed its willingness in Eaton to give the taxpayers a second chance with a new judge.  Rippo demonstrates that the Supreme Court has little tolerance for biased judges, but that case involves criminal liability.  It will be hard to demonstrate that former Judge Kroupa’s decisions resulted from bias because of the criminal investigation.  Maybe this chapter of troubles for the Tax Court resulting from former Judge Kroupa’s action will end with Eaton.

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