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I intended to write earlier about Tuesday’s argument before the Supreme Court of Appeals of West Virginia in Caperton v. A. T. Massey Coal Co., which I watched on the Court's webcast, but better late than never with the post.

The composition of the Court has always been an issue in the case, as shown by former Justices Larry Starcher and Elliott Maynard's voluntary recusals and the United States Supreme Court’s decision that Chief Justice Brent Benjamin should have recused himself and its reversal of the West Virginia Supreme Court’s decision in favor of Massey. Four of the five justices currently on the Court did not participate in either of the prior appeals, and the one who did, Robin Davis, wrote both of the majority opinions that reversed the $50 million verdict in Caperton’s favor.

In reversing the verdict on two earlier occasions, the Court held that the circuit court should have granted Massey’s motion to dismiss based on the forum-selection clause in the coal services agreement between one of Hugh Caperton’s companies, Sovereign Coal Sales, Inc., and Massey’s subsidiary, Wellmore Coal Corporation, which required any litigation to take place in Buchanan Count, Virginia. Alternatively, if that ruling was not erroneous, the court should have granted Massey’s motion for summary judgment based on the doctrine of res judicata, as a result of the suit brought by Sovereign and another of Caperton’s companies, Harman Mining Corporation against Wellmore in Virginia, which alleged that Wellmore breached the coal services agreement with the plaintiffs, and resulted in a verdict of $6 million.

Not surprisingly, D. C. Offutt, Massey’s counsel, argued that the West Virginia action was barred by res judicata, on the grounds that Massey and its subsidiaries had been subjected to the same case in Virginia and West Virginia because the two actions involved the same parties and the same claims and the plaintiffs sought the same damages in both actions.

Justice Thomas McHugh questioned why Caperton could not bring the West Virginia case if he was not a plaintiff in Virginia. Offutt replied that the West Virginia action sought the same damages as had been recovered in Virginia.

Offutt also argued that all damages in both cases stemmed from Wellmore’s December 1, 2007 declaration of force majeure, which enabled it to cancel its contract with the Harman companies and led soon thereafter to their bankruptcy.

Justice Margaret Workman asked how Caperton could have foreseen that Massey would engage in “various machinations” to put him out of business, to which Offutt repeated that all the claims asserted in West Virginia related to the declaration of force majeure and cancellation of Wellmore's contract with the Harman companies.

David Fawcett, counsel for the Harman companies, distinguished between the Virginia action, which involved only the companies’ claim for breach of contract, and the West Virginia action, which asserted several torts, but no breach of contract. Fawcett said that in his closing argument, he identified ten acts of interference by Massey with the Harman companies’ business, so that the West Virginia case “was not a simple breach of contract.”

Fawcett also argued that Virginia law would not hold that the plaintiffs’ tortious interference claim and their breach of contract claim were the same claim for res judicata purposes.

Fawcett also claimed that West Virginia in its prior decisions was the first court in the United States to reverse a breach of contract verdict against a non-signatory to a contract on res judicata grounds, and that no other case nationally was on point.

Bruce Stanley, counsel for Caperton individually, argued that Caperton’s primary loss was that after Massey’s interest in buying Caperton’s companies had fallen through as a result of Massey’s own conduct, Caperton found himself on the Office of Surface Mining’s Applicant Violator System, which meant that he was "blacklisted" from the mining industry. Stanley argued that Caperton’s claim arose after the breach of contract litigated in Virginia.

Stanley told the Court that it had to presume that the jury had followed the circuit court’s instruction not to award any damages for breach of contract, which meant that the plaintiffs were not recovering twice for the breach of contract.

In his reply, Offutt told the Court that the modern trend is for courts to adopt forum-selection clauses, but that if it was worried, the claims were also barred by res judicata, which he described as putting “the nail in the coffin.”

The Court will likely issue its decision later in this term. I found the justices' questioning to be rather cryptic in terms of what they were focusing on, which makes it impossible, I think, to predict how the Court will rule.

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In advance of tomorrow's argument in Caperton v. A. T. Massey Coal Co., the Supreme Court of Appeals of West Virginia has granted the Caperton corporations'  motion require Massey to post an appeal bond, but has denied their motion to affirm the judgment from the circuit court. Here is my post from last month that discussed the motions.

Paul Nyden reported in the Saturday Gazette-Mail that the Court ruled last Thursday and ordered Massey to post a new bond or letter of credit with the Circuit Court of Boone County, West Virginia for at least $55 million (although the motion had requested a bond of $85 million, which is the current value of the verdict with accrued interest). In 2003, the circuit court judge who presided over the trial ordered Massey to post a bond of $55 million, which Massey did with an irrevocable letter of credit from PNC Bank, but apparently the parties reached an agreement in 2007 that, among other things, released Massey's letter of credit. The Supreme Court's order reinstates the circuit court's 2003 order.

 But the Court denied the motion filed by Harman Development Corporation, Harman Mining Corporation, and Sovereign Coal Sales, Inc to affirm the circuit court's judgment order on the grounds that without Chief Justice Brent Benjamin's vote in Massey's favor in April 2008, the vote would have been 2-2, which should have acted to affirm the order.

I have not seen the Supreme Court's order, and Nyden's article did not quote any language regarding the basis for its denial of the corporations' motion. But obviously the Court did not interpret the United States Supreme Court's decision to reverse its decision in Massey's favor as precluding further review on the state court level.

Remember that you can watch tomorrow's argument -- and any others, for that matter -- on the Supreme Court's webcast, which you can access here. I intend, at this point, anyway, to watch the argument and write about it.

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The Supreme Court of Appeals of West Virginia has scheduled arguments in Caperton v. A. T. Massey Coal Co. for September 8 at 2 p.m. But according to the corporate appellees, there isn't any need for further argument.

In a motion filed last month, Harman Development Corporation, Harman Mining Corporation, and Sovereign Coal Sales, Inc. asked the court to affirm the trial court's judgment order because without Chief Justice Brent Benjamin's vote in favor of Massey in April 2008, the vote would have been 2-2, which should affirm the underlying judgment. The corporations have also asked that Massey be required to post bond in the amount of $85 million, which is the approximate current value of the jury's verdict and accumulated interest.

The corporations rely on West Virginia precedent that "[w]hen a justice is disqualified, and the result is an evenly divided court, the standard practice in West Virginia is to affirm the last official ruling in the matter," which they contend is the judgment order. They also argue that because the United States Supreme Court "reversed" rather than "vacated" the Supreme Court of Appeals' order, the Supreme Court meant to "produce a directly opposite result from that obtained by the parties before this Court -- entry of a judgment sustaining and upholding the judgment of the circuit court in favor of the Appellees."

If the court "chooses not to give effect to the prior vote in this case," the corporations maintain that "due process requires the Court to reconsider the prior decision of this Court to grant Massey's Petition for Appeal which was granted by a 3-2 vote which included the now nullified vote of Justice Benjamin." 

Their rationale is that because three new justices have joined the court since Massey's appeal was granted on April 4, 2007 by a 5-0 vote, and a fourth has been appointed to replace Chief Justice Benjamin, "these four individuals [should have] the opportunity to consider what portions, if any, of Appellants' Petition for Appeal to grant, thus providing Appellees with the due process the high Court ultimately determined they were deprived of in the first instance."  

Here is the appellees' justification for the Supreme Court of Appeals to review whether Massey's petition for appeal should have been granted:

Corporate Appellees submit that it is the present Court -- which includes only one justice who participated in the decisions relative to Massey's Petition for Appeal almost three years ago -- which must decide whether an appeal should have been granted to some, any or all of the issues raised by Massey. And, when it does, Appellees respectfully submit that it will see that the Petition for Allowance of Appeal was improvidently granted in the first instance, especially given that nothing about the verdict, as affirmed by Judge Hoke, cries out to be rectified. In fact, the opposite is true, as the various judges who have considered this matter have all agreed that the verdict was fully supported by the evidence. As stated in this Court's first opinion on the merits of this matter: "At the outset, we wish to make it perfectly clear that the facts of this case demonstrate that Massey's conduct warranted the type of judgment rendered in this case." (11/21/07 Opinion, p. 13.)

First of all, I wonder why Hugh Caperton, who is represented separately, did not join in this motion. But leaving that aside, the motion is interesting, but I don't think the Supreme Court of Appeals is going to interpret the Supreme Court's reversal as meaning that the judgment order should be affirmed without any further review on the state level. And likewise, the appellees' argument that the decision to accept the petition for appeal should be reviewed, given the subsequent recusals, has some merit, but I don't expect the court to start over -- although its decision to review whether Massey's petition should have been accepted would be consistent with the language in its opinion that Massey's conduct justified the verdict.

In other legal news regarding Massey, it has withdrawn its lawsuit against the Supreme Court of Appeals, in light of former Justice Larry Starcher’s retirement from the court. Massey had claimed that the court's recusal procedure was unconstitutional, in that it provided a litigant with no mechanism to challenge a justice's refusal to recuse him or herself from an action.

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There are a few more items I want to mention today about the Supreme Court’s decision in Caperton v. A. T. Massey Coal Company. The first is a personal statement released by Don L. Blankenship, the chairman of Massey Energy Co., and the person whose 2004 campaign contributions on behalf of Brent Benjamin created the conflict that culminated in the Court’s decision on Monday.

Blankenship’s statement is not on Massey’s website and apparently does not represent Massey’s official reaction to the decision. Massey’s statement released on Monday quotes only Shane Harvey, Massey’s general counsel and vice-president, and is far more measured than Blankenship’s.

Blankenship’s statement is his attempt to justify his substantial financial support on behalf of Justice Benjamin, even though the highest court in the country just held that his support objectively required Justice Benjamin to recuse himself from Caperton, and that Justice Benjamin's failure to due so denied Hugh Caperton and his companies due process under the United States Constitution. I guess if I were in Blankenship’s position, I’d issue a statement that was as unapologetic and arrogant as the motive behind the contributions that were at the heart of the situation.

Of more interest and, I think, far more value is this interview on The BLT: The Blog of Legal Times with Thomas R. Phillips, retired Chief Justice of the Supreme Court of Texas, and an author of an amicus brief in Caperton on behalf of the conference of chief justices in support of neither party.

I encourage you to read his entire interview, which is brief, but this is his analysis of the decision:

Caperton established a principle that is really important: There are constitutional concerns with a judge sitting in judgment of a case where a party is a significant donor. At some point, the support becomes so substantial and so overwhelming that due process requires the judge to step aside, even if neither the donor not [sic] the judge did anything illegal or even unethical.

(Emphasis added.)

He identifies six criteria in Caperton that must be satisfied in order to establish a violation of a party’s due process and contends that its holding is so narrow that, “I’m not sure Caperton will ever be direct precedent for another recusal.”

Finally, here’s a post from Daily Kos that’s getting quite a bit of traction around the Internet. Its title is a reference to John Grisham’s novel, The Appeal, which, by sheer coincidence, I finished reading about 2 a.m. Monday morning.

As you may be aware, when the book came out last year, Grisham stated that the story wasn't far-fetched and had already happened in West Virginia, which, allowing for some poetic license in the novel, is accurate.

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There has been so much reaction and commentary about the Supreme Court’s decision yesterday in Caperton v. A. T. Massey Coal Company that it is hard to know where to begin.

First, I want to discuss the dissents, which I did not do in my post yesterday  because I wanted to focus on Justice Kennedy’s opinion.

Chief Justice Roberts wrote a dissent in which Justices Scalia, Thomas, and Alito joined. He criticized the majority opinion for

enlist[ing] the Due Process Clause to overturn a judge’s failure to recuse because of a "probability of bias." Unlike the established grounds for disqualification, a "probability of bias" cannot be defined in any limited way. The Court’s new "rule" provides no guidance to judges and litigants about when recusal will be constitutionally required. This will inevitably lead to an increase in allegations that judges are biased, however groundless those charges may be. The end result will do far more to erode public confidence in judicial impartiality than an isolated failure to recuse in a particular case.

(Emphasis added.)

He also identified 40 “fundamental questions” that courts will now have to determine “with little help from the majority,” such as:

1. How much money is too much money? What level or contribution or expenditure gives rise to a ‘probability of bias’?

6. Does the analysis change depending on whether the judge whose disqualification is sought sits on a trial court, appeals court, or state supreme court?

8. What if the “disproportionately’ large expenditure is made by an industry association, trade union, physicians’ group, or the plaintiffs’ bar? Must the judge recuse in all cases that affect the association’s interests? Must the judge recuse in all cases in which a party or lawyer is a member of that group? Does it matter how much the litigant contributed to the association?

13. Must the judge’s vote be outcome determinative in order for his non-recusal to constitute a due process violation?

21. Does close personal friendship between a judge and a party or lawyer now give rise to a probability of bias?

24. Under the majority’s ‘objective’ test, do we analyze the due process issue through the lens of a reasonable person, a reasonable lawyer, or a reasonable judge?

35. What is the proper remedy? After a successful Caperton motion, must the parties start from scratch before the lower courts? Is any part of the lower court judgment retained?

Chief Justice Roberts also looked at two of the Court’s decisions in cases involving double jeopardy (United States v. Halper, 490 U.S. 435 (1989) and Hudson v. United States, 522 U.S. 93 (1997)), and drew a comparison with the Court’s holding in Caperton, saying that,

The déjà vu is enough to make one swoon. Today, the majority again departs from a clear, longstanding constitutional rule to accommodate an ‘extreme’ case involving ‘grossly disproportionate’ amounts of money. I believe we will come to regret this decision as well, when courts are forced to deal with a wide variety of Caperton motions, each proclaiming the title of "most extreme" or "most disproportionate.

(Emphasis added.)

He also pointed out that, “Justice Benjamin just might have won because the voters of West Virginia thought he would be a better judge than his opponent. Unlike the majority, I cannot say with any degree of certainty that Blankenship ‘cho[se] the judge in his own cause.' Ante, at 16. I would give the voters of West Virginia more credit than that.”

(Emphasis added.)

Justice Scalia also dissented separately, and predicted that the Court’s decision would have the effect of reinforcing the perception that “litigation is just a game, that the party with the most resourceful lawyer can play it to win, that our seemingly interminable legal proceedings are wonderfully self-perpetuating but incapable of delivering real-world justice.” He also predicted that the opinion would add to “the vast arsenal of lawyerly gambits what will come to be known as the Caperton claim.”

Yesterday, Chief Justice Benjamin issued this statement regarding the decision, which was written on his official letterhead and posted on the Supreme Court of Appeals’ website, but was described as “personal” and “not a release of the Supreme Court of Appeals of West Virginia.”

For coverage of the decision, let me start with Paul Nyden’s article in today’s Charleston Gazette, and Jake Stump’s article in today’s Daily Mail. Nyden also wrote an interesting sidebar about who will preside as chief justice when Chief Justice Benjamin recuses himself. I think it will be Justice Robin Davis, as she has the most seniority, but apparently no one from the Court is willing to go on the record at this point.

What is most interesting is that when the Court hears this appeal again, probably during its term that starts in September, Justice Davis, who wrote both of the previous majority opinions, will be the only member who has considered the appeal. Justices Margaret Workman and Menis Ketchum were elected last November and Justice Thomas McHugh was appointed to serve the remainder of Justice Albright's term through 2010. And the acting chief justice must appoint a replacement for Chief Justice Benjamin. So how the Court will rule for the third, and presumably last, time is very much open.

For a sampling of commentary and analysis, Tony Mauro has this article on The National Law Journal 's website; on The BLT ,he has this post about Chief Justice Roberts’ connection to United States v. Halper, one of the double jeopardy cases cited in his dissent.

Carolyn Elefant of Legal Blog Watch wrote this post yesterday about the decision, with links to Mauro, Lyle Dennis at SCOTUSBlog, and George Washington University Law Professor Jonathan Turley.  Also, here is some analysis from the Constitutional Prof Law Blog.

For a couple of different takes on the decision, here are Dahlia Lithwick's "The Great Caperton Caper" on Slate and a post from Balkinization. 

And from blogs that focus on appellate litigation, here are Todd Smith's post at Texas Appellate Law Blog, which questions the effect of the decision on Texas courts, whose members are elected, and a post from Alabama Appellate Watch, which is written by Lightfoot Franklin White LLC.  

Finally, I think there have been as many editorials as there have been news articles and blog posts about the decision. But for your consideration, here is The New York Times' editorial today entitled "Honest Justice" and The Wall Street Journal's editorial entitled "Judges and 'Bias.'" I'll leave it to you to figure out what each paper thought about the decision.

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The Supreme Court of the United States issued its opinion today in Caperton v. Massey and in a 5-4 decision held that the Due Process Clause of the Fourteenth Amendment required Supreme Court of Appeals of West Virginia Chief Justice Brent Benjamin to recuse himself from Caperton's appeal and reversed the Supreme Court of Appeals' decision in Massey's favor and remanded the case for further proceedings. 

The opinion by Justice Anthony Kennedy noted that the majority "do not question his [Justice Benjamin's subjective findings of impartiality and propriety. Nor do we determine whether there was actual bias."

But the Court found that the "difficulties of inquiring into actual bias ... simply underscore the need for objective rules":

Not every campaign contribution by a litigant or attorney creates a probability of bias that requires a judge's recusal, but this is an exceptional case... We conclude that there is a serious risk of actual bias -- based on objective and reasonable perceptions -- when a person with a personal stake in a particular case has had a significant and disproportionate influence in placing the judge on the case by raising funds or directing the judge's election campaign when the case was pending or imminent. The inquiry centers on the contribution's relative size in comparison to the total amount of money contributed to the campaign, the total amount spent in the election, and the apparent effect such contribution had on the outcome of the election.

(Emphasis added.)

The Court concluded, based on the application of the principle, that:

... Blankenship's campaign efforts had a significant and disproportionate influence in placing Justice Benjamin on the case. Blankenship contributed some $3 million to unseat the incumbent and replace him with Benjamin. His contributions eclipsed the total amount spent by all other Benjamin supporters and exceeded by 300% the amount spent by Benjamin's campaign committee. App. 288a. Caperton claims Blankenship spent $1 million more than the total amount spent by the campaign committees of both candidates combined. Brief for Petitioners 28.

(Emphasis added.)

The Court rejected Massey's argument that ultimately West Virginia voters elected Justice Benjamin to the Court, stating that, "[w]hether Blankenship's campaign contributions were a necessary and sufficient cause of Benjamin's victory is not the proper inquiry. Much like determining whether a judge is actually biased, proving what ultimately drives the electorate to choose a particular candidate is a difficult endeavor, not likely to lend itself to a certain conclusion."

The Court also focused on the "temporal relationship between the campaign contributions, the justice election, and the pendency of the case...", meaning the the winner of the election would be on the Court when it reviewed the $50 million verdict:

Although there is no allegation of a quid pro quo agreement, the fact remains that Blankenship's extraordinary contributions were made at a time when he had a vested stake in the outcome. Just as no man is allowed to be a judge in his own cause, similar fears of bias can arise when -- without the consent of the other parties -- a man chooses the judge in his own cause. And applying this principle to the judicial election process, there was here a serious, objective risk of actual bias that required Justice Benjamin's recusal.

(Emphasis added.)

In describing this as "an extraordinary situation where the Constitution requires recusal," the majority opinion also rejected Massey and its amici's prediction that finding a constitutional violation in this case would result in various adverse consequences, "ranging from a flood of recusal motions to unnecessary interference with judicial elections." 

The Court found that almost every state, including West Virginia, had adopted the American Bar Association's objective standard that "a judge shall avoid impropriety and the appearance of impropriety," and also noted that the West Virginia Code of Judicial Conduct required a judge's recusal in similar circumstances.

Chief Justice John Roberts wrote a dissent in which Justices Scalia, Thomas, and Alito joined, and Justice Scalia also dissented separately.

I'll write some more about the decision, but I wanted to provide the opinion right now.  For some additional reaction, here is SCOTUSBlog's initial post  and David Stout's article in The New York Times.

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