People v Grasso

[*1] People v Grasso 2006 NY Slip Op 51823(U) [13 Misc 3d 1214(A)] Decided on September 14, 2006 Supreme Court, New York County Ramos, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through December 6, 2006; it will not be published in the printed Official Reports.

Decided on September 14, 2006
Supreme Court, New York County

The People of the State of New York, Plaintiff, v. Richard A. Grasso, Defendant.



40162004

Charles E. Ramos, J.

The defendant Richard A. Grasso moves for an order reassigning this matter to another Justice. Both the New York Stock Exchange and the Attorney General oppose his motion. This Court does not seek to appear insensitive to the defendant's anxiety which no doubt motivated this motion to recuse, but the motion must be denied.

Mr. Grasso raises two arguments in support of his motion: (1) the Court participated in a preliminary settlement discussion and (2) the Court's resume was circulated by an executive placement firm to the New York Stock Exchange.

New York Judiciary Law §14 governs the disqualification of judges. It provides:

A judge shall not sit as such in, or take any part in the decision of, an action, claim, matter, motion or proceeding to which he is a party, or in which he has been attorney or counsel, or in which he is interested, or if he is related by consanguinity or affinity to any party to the controversy within the sixth degree . . . ??. No judge shall be deemed disqualified from passing upon any litigation before him because of his ownership of shares of stock or other securities of a corporate litigant, provided that the parties, by their attorneys, in writing, or in open court upon the record, waive any claim as to disqualification of the judge.

"Recusal, as a matter of due process, is required only where there exists a direct, personal, substantial or pecuniary interest in reaching a particular conclusion." People v. Alomar, 93 NY2d 239, 246 (1999). "The alleged bias and prejudice to be disqualifying must stem from an extrajudicial source and result in an opinion on the merits on some basis other than what the judge learned from his participation in the case." United States v Grinnell Corp., 384 US 563, 583 (1966).

This Court has no interest in this case and has formed no premature opinion on the validity of any claim or defense. The fact that this Court's resume was twice circulated to the New York Stock Exchange in October 2002 and 2003 by an executive placement firm long before this case was even filed in May 2004 does not disqualify this Court. In addition, although these facts were known to the defendant from the outset, he never objected to this Court's assignment and expressly waived any objection. Anonymous v. Anonymous, 222 AD2d 295, 296 (1st Dept 1995). It is now almost two years since the defendant was fully aware of the actions of the executive placement firm.

To show that this Court has a bias against large salaries, Mr. Grasso points to the executive search firm's list of cases demonstrating this Court's expertise in matters of legal ethics. [*2]Over its 23 years on the bench, this Court has rendered thousands of decisions. Grasso relies on one in which this Court held that it had jurisdiction to review the reasonableness of $625 million in attorneys' fees paid by tobacco company defendants to plaintiff's counsel. No determination of excessive compensation was ever made in that case. The Court simply held that it had the authority to review attorneys' fees and directed a hearing to do just that. The fact is that none of this Court's prior thousands of decisions in cases with completely different facts are predictors of this Court's conclusion in this case.

The moving papers also suggest that this Court's failed attempt to start settlement negotiations somehow requires our disqualification. This is a contention without merit.

In the first instance, courts are authorized to confer separately with the parties and their counsel on agreed-upon matters, including settlement.1 This Court did state, as it must, that if settlement negotiations progressed to the point that it would be improper for this Court to continue, this Court would reassign this matter.2

This Court's offer to reassign this case, as stated to Mr. Zauderer, "depend[ed] on 'how far things go' with settlement discussions." It was clear from our conversation, that as of that point in time, neither the Court nor Mr. Zauderer had any concern about recusal. Recusal would depend on how "things" progressed from that point. The most significant fact omitted from the moving papers is that "things" went nowhere. That conversation with Mr. Zauderer in May followed the one and only meeting with his client. There was no further follow-up. There was only that one failed attempt to start the process of compromise, but the process never began. There was never any basis upon which this Court in good faith could consider it necessary or proper to reassign this matter.

Prior to the conference with Mr. Grasso, concerns were expressed by his attorneys that sensitive information would be revealed to this Court which might warrant recusal. On this basis, this Court was led to believe that Mr. Grasso was willing to engage in meaningful, substantive settlement negotiations. In that context, this Court assured counsel that if recusal was warranted, this Court would recuse. Instead of engaging in even the most preliminary settlement negotiations, Mr. Grasso used the conference as a vehicle to relate to this Court his and his family's subjective feelings about the claims asserted against him and his unwillingness to settle. This Court does not fault Mr. Grasso for his feelings, they were no doubt strongly felt. However, nothing of any substance or sensitivity (in the context of recusal) was revealed and the subject of settlement was clearly not on the table. Given the tenor of counsels' statements to this Court prior to the conference, this Court was misled (perhaps not intentionally) to believe that sensitive matters were going to be revealed.

Mr. Grasso never wavered from his refusal to discuss any compromise. This Court stated to the defendant and his attorneys that we respect his position not to settle and that he had the right to insist upon a trial. This Court did not and will not pressure the defendant to yield in his determination not to compromise. [*3]

In addition, since that single conference in May this Court has ruled on multiple substantive motions without Mr. Grasso's attorneys ever suggesting, formerly or informally, that this Court's continued participation was in any way improper. Thus Mr. Grasso waived any conceivable objection. Between this Court's one unsuccessful meeting with Mr. Grasso in May, and the letter requesting reassignment in August, this Court decided seven motions without any objection by Mr. Grasso that the failed settlement conference (or anything else) required recusal. This Court assumes that our recent decisions, some of which were adverse to the defendant or those allied with him, have increased his anxiety. However, adverse decisions have never been a basis for recusal.

The trial of this case by this Court without a jury will afford the parties a particularly thorough right to appeal. Trying this matter without a jury requires this Court to rule on separately numbered proposed findings of fact that the parties will submit at the close of trial. Therefore, unlike a jury verdict which does not specify the basis of the jury's determination, this Court is required to state in its decision those facts "it deems essential." See, CPLR 4213(a)(b). This procedure affords the Appellate Division a more precise focus in its review of questions of fact and provides the appealing party the ability to easily identify where it contends the court below was in error. CPLR 5501(c).

The fact that this Court has urged the defendant to consider settlement does not suggest that his position is flawed or otherwise untenable. Ortiz v. City of New York, 136 Misc 2d 500 (Sup Ct, NY County 1987) ( Saxe, J.). Indeed, this Court has in turn urged compromise on each of the other parties in this case in similar fashion.

This Court has taken pains to ensure that the appellate courts have had an ample opportunity to review our rulings before the trial begins. Appellate guidance, especially in a case of this magnitude, is a comfort to us. In this vein, this Court is releasing this brief Decision and Order as quickly as possible to afford the defendant yet another opportunity to seek a stay of the trial from the Appellate Division.

This shall constitute the Decision and Order of this Court.

1. See 22 NYCRR §100.3 (B)(6)(d). See also Rule 30, Rules of the Commercial Division of the Supreme Court, 22 NYCRR §202.70.

2. Mr. Zauderer's statement that this Court would defer to Mr. Grasso if he objected to this Court's assignment, is the product of a misunderstanding. No court is permitted to defer the question of the court's case assignment to the whim of a party. A judge is only permitted to disqualify in circumstances that warrant a concern that the judge's impartiality might be reasonably questioned. See 22 NYCRR §100.3 (E) (Rules of the Chief Administrator). [*4]