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THE SUPREME COURT OF THE
FEDERATED STATES OF MICRONESIA
Cite as FSM v. Skilling,
1 FSM Intrm. 464 (Kos. 1984)

[1 FSM Intrm. 464]

TRIAL DIVISION-STATE OF KOSRAE

FEDERATED STATES OF MICRONESIA,
Plaintiff,

vs.

STERLING SKILLING,
Defendant.

CRIMINAL CASE 1984-2500


MEMORANDUM OPINION

Before Edward C. King
Chief Justice
Kosrae, Federated States of Micronesia 96944
May 8, 1984

APPEARANCES
     For the Plaintiff:          Carl V. Ullman
                                          Chief Litigator
                                          Office of the Attorney General
                                          Federated States of Micronesia
                                          Ponape, Caroline islands 96941

     For the Defendant:     Loretta Faymonville
                                          Public Defender
                                          State of Ponape
                                          Ponape, Caroline Islands 96941

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     The issue raised by defendant Skilling's motion for recusal is whether the impartiality of a trial judge may reasonably be questioned on the ground that the judge reviewed plea agreements submitted to him by the parties and rejected those agreements because they did not provide sufficient punishment to the defendant.
 
     For the reasons discussed here, I have concluded that  a recusal under these circumstances would not be appropriate.  I so advised the parties in Kosrae on March 26, 1984 and denied the motion for recusal at that time.  However, because this issue is significant to the jurisprudence of this Court and crucial to the conduct of the balance of this litigation at the trial level, I will enter the prescribed statement under rule 5 of this Court's Rules for Appellate Procedure recommending this ruling for immediate interlocutory review by the Appellate Division. This opinion is filed to record these facts and to explain my reasoning.

Factual and Procedural Background
     Sterling Skilling is the proprietor of a newly built hotel.  Small by most standards throughout the world, Mr. Skilling's is the largest hotel on Kosrae. it is also apparently the most expensive privately owned building on Kosrae.

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     Shortly after construction of the hotel was completed late in 1983, criminal charges were brought against Mr. Skilling.  The government alleges that during the period from January, 1980, through January, 1983, Mr. Skilling, by deception, forgery and other means, took some $140,000 from his former employer, Mobil Oil Company of Micronesia, Inc., and $75,000 from the State of Kosrae.

     Several months ago counsel for the government and Mr. Skilling drafted a proposed plea agreement.  The draft provided, among other things, that Mr. Skilling would operatethe hotel and apply the profits toward restitution, after using some of the proceeds to pay family living expenses.  In a court hearing in Kosrae I pointed out several problems withthe agreement concluding that the documentation could not be accepted in that form.  My attention and comments were focused upon the details, not the underlying concept, of the arrangement.

     Some time later, a second proposed plea agreement, reflecting an effort by the parties to meet the earlier objections, was presented.  In reviewing the second proposal, I recognized a more fundamental problem.  Specifically, the alleged diversion of funds, followed by construction and opening of Mr. Skilling's hotel, pointedly suggests a direct connection between the alleged illegal taking of funds and

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the financial ability of the defendant to construct the hotel.

     If this Court were to accept a plea of guilty from Mr. Skilling and then approve Mr. Skilling's continued possession and control of the hotel, this would surely send a powerful message to the people of Kosrae that:  (1) one practical way to become an owner of a large business is to bilk one's employer and the government and (2) even if the wrongdoer is found out, he will be allowed to retain control of the business.  Hence, in a meeting in my chambers in Ponape, I advised both counsel that no plea agreement providing for the defendant to retain possession and ownership of the hotel would be acceptable.

     Shortly thereafter, defendant Skilling filed this motion asking that I disqualify myself on the grounds that my "impartiality might reasonably be questioned" within the meaning of 4 F.S.M.C. 124(1).  The supporting affidavit,required under 4 F.S.M.C. 124(6) to state the reasons for the belief that grounds for disqualification exist, and sworn to by Mr. Skilling's attorney, says as follows:

1.  That she is attorney of record for Sterling Skilling.

2.  That she believes that the impartiality of Chief Justice King can reasonably be questioned because of his active participation in plea negotiations in this case.

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3.  That Chief Justice King directed the National Justice Ombudsman to go to Kosrae and conduct an investigation for the purpose of formulating a sentence recommendation and that a prior plea agreement was then modified to be consistent with this recommendation.

4.  That the plea agreement was set forth in a four page document and presented to this Court at the plea hearing in open Court in Kosrae.

5.  That at the time Chief Justice King stated that several changes would have to be made before the agreement would be  acceptable to the Court.

6.  That Chief Justice King also told counsel for the Government that he should obtain certain financial records from the defendant and consider these in formulating the ultimate plea agreement.

7.  That counsel for both sides then resumed negotiations for the purpose of formulating a plea agreement that would meet Chief Justice King's requirements.

8.  That this was done and a five page document detailing the agreement was shown to Chief Justice King in conference in Ponape.

9.  That Chief Justice King then stated that the plea agreement was wholly unacceptable to him and that he would not accept an agreement that permitted Sterling Skilling to retain possession of his hotel.

10.  That a reasonable person could easily question the impartiality of Chief Justice King under these circumstances.

     The government contends that "there has been no activity in this case that would bring the Court's

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impartiality into question."  Yet, because it is "troubled" by the "sponginess" of the "very subjective" tests for recusal, the government joins in the defendant's motion for recusal.

Legal Analysis
A.  Judicial Administration Considerations.  This Court has previously observed:

There are presently but two justices on the FSM Supreme Court. They reside in locations hundreds of miles apart.  Disqualification of one Justice necessarily means that 50% of the national judiciary will be unavailable for further service in the litigation.  Only with substantial expense, effort and disruption can the Court then enable the litigation to proceed. Disqualification  also will inevitably entail considerable delay.

FSM v. Jonas (II), 1 FSM Intrm. 306, 315 (Pon. 1983).

     In a few instances, judges from other jurisdictions or state judges within the Federated States of Micronesia have assisted by sitting as temporary justices where FSM Supreme Court Justices are not available.1  Even these special assignments frequently require delay, travel and expense.  Moreover, special assignments are not preferred for their

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practical effect is that judges who have not undergone the constitutional nomination, advice and consent procedures and who do not have the judicial independence assured by the tenure, compensation and administrative provisions spelled out in Sections 3, 5 and 9, respectively, of Article XI of the Constitution, nevertheless exercise the constitutional powers bestowed upon FSM Supreme Court Justices.

     Finally, where recusal of one justice leads to transfer of a case at the trial level to the only other justice currently appointed under Article XI, Section 3, it is likely that both permanent FSM justices would then be barred from sitting on the appeal.  See FSM Const. art. XI, 2.  That appeal then would be heard and decided by three temporary justices, none of whom would have been previously approved by the President or the Congress under Article XI, Section 3 of the Constitution.

     These factors could be viewed as justifying invocation of the Rule of Necessity, whereby judges are obliged to hear and decide cases from which they might otherwise recuse themselves if no other judge is available to hear the case.  This Rule of Necessity has been held in the United States to prevail over the disqualification provisions of 28 U.S.C. 455 and Canon 3C of the Code of Judicial Conduct of the American Bar Association, both of which are nearly identical

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to the language of 4 F.S.M.C. 124(1) and (2).2  United States v. Will, 449 U.S. 200, 101 S. Ct. 471, 66 L. Ed. 2d 392 (1980).  As a minimum, the Rule of Necessity, and the various logistical and constitutional realities already noted here, serve as strong reminders that the power of a justice to recuse himself "must be exercised conscientiously, not used by the judge to avoid difficult or controversial cases," and should not be employed merely to accommodate or placate nervous litigants or counsel.  Jonas (II), 1 FSM Intrm. at 315-16.

     The practical realities compel this small Court serving a new nation, which has sparse resources and limited enthusiasm for expensive and extended litigation, to try to firm up whatever "sponginess" exists so that the pathways of section 124 may provide surer footing.

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     B. The Statute.  The Judiciary Act says:

A Supreme Court Justice shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.3

4 F.S.M.C. 124(1).  Plainly, the key words are "impartiality" and "might reasonably be questioned."

     1.  "Impartiality".  "Impartial" means "favoring neither; disinterested; treating all alike; unbiased; equitable, fair, and just."  H.C. Black, Black's Law Dictionary 677 (5th ed. 1979).  Questioning impartiality, under section 124(1), then, brings into issue possible favoritism, bias or some other interest of the judge for or against a party.  The subsection affords no basis for

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disqualifying a judge because of his general attitudes, beliefs or philosophy, even where it is apparent that those do not augur well for a particular litigant.

Judges, within the range granted them by law, will differ in their exercise of discretion according to their temperaments and attitudes; for example, a judge may acquire a reputation for being "tough" or  "soft" on criminals, and it has been correctly held that the fact that a judgehas this type of predisposition is not sufficient [for disqualification].

Note, Disqualification of Judges for Bias in the Federal Courts, 79 Harv. L. Rev. 1435, 1448 (1966).  See also Note, Disqualification of Judges and Justices In the FederalCourts, 86 Harv. L. Rev. 736, 757-78 n.92 (1973).

     Section 124 also furnishes no grounds for disqualifying a judge on the basis of statements or rulings made by him in his judicial capacity reflecting reasoned views derived from documents submitted, arguments heard, or testimony received in the course of judicial proceedings in the same case.  FSM v. Jonas (II), 1 FSM Intrm. 306, 318-19 (Pon. 1983).

[A] motion for disqualification ordinarily may not be predicated on the judge's rulings in the instant case or in related cases, nor on a demonstrated tendency to rule any particular way, nor on a particular judicial leaning or attitude derived from his experience on the bench.

Phillips v. Joint Legislature Committee, 637 F.2d 1014, 1020

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(5th Cir. 1981), cert. denied, U.S. 102 S. Ct. 2035 (1982); Ma v. Community Bank, 686 F.2d 459, 472 (7th Cir. 1982) ("Adverse rulings do not show bias requiring disqualification of a trial judge."); Markus v. United States, 545 F. Supp. 998, 1000 n.8 (S.D.N.Y. 1982).

     Thus, it is only the judge's impartiality, not his competency, analytic approach, personality, general philosophy or prior rulings, which may be questioned under section 124(1).

     2.  "Might reasonably be questioned"  Most litigants, surely including the reasonable ones, are likely to "question" various characteristics of the judge, including his impartiality.  Normal litigants naturally might wonder and worry about the ability and impartiality of the judge whose duty it is to resolve important issues affecting the liberty or property interests of the litigants.  This normal questioning, although naturally induced by the worrisome activity of litigation, is not the kind of reasonable questioning which may justify disqualification.

     "Nothing in this ... legislation should be read to warrant the transformation of a litigant's fear that a judge may decide a question against him into a 'reasonable fear' that the judge will not be impartial."  H. Rep. No. 1453, 93d Cong., 2d Sess., 1974 U.S. Code Cong. & Admin. News at 6355 (referring to 28 U.S.C. 455).

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     To be "reasonable," the questioning must be grounded upon facts or reasons which furnish a rational basis for doubting the impartiality of the judge. Reasonableness isnot to be considered from the perspective of the litigant, or of the judge, but of the disinterested reasonable observer.  The test is whether a disinterested reasonable person who knows all the circumstances would harbor doubts about the judge's impartiality.  Parliament Ins. Co. v. Hanson, 676 F.2d 1069, 1075 (5th Cir. 1982); United States v. Martorano, 620 F.2d 912 (1st Cir. 1980), cert. denied, 449 U.S. 952 (1981); Note, Disqualification of Federal Judges for Bias or Prejudice, 46 U. Chi. L. Rev. 236, 250-52 (1979).

     One guide to the kinds of facts which could lead a disinterested reasonable observer to harbor doubts about a judge's impartiality is 4 F.S.M.C. 124(2).  The specific grounds stated there include, among others, personal bias or prejudice, knowledge of evidentiary facts, involvement of the judge or a former colleague of the judge in the litigation while the judge was a lawyer, or a financial interest of the judge or a relative in the outcome of the litigation.

     There is no contention that any ground enumerated in 4 F.S.M.C. 124(2) exists in this case.  If the factors specified in 4 F.S.M.C. 124(2) were the only bases for reasonable questioning of impartiality under 4 F.S.M.C. 124(1), the analysis could end here.

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     However, section 124(1) is not merely a restatement of section 124(2) using different terminology, but is intended to serve purposes beyond those reached by section 124(2).  Section 124(2) prescribes subjective tests, preventing a judge from acting when he is interested or partial in the case.  Under that section, a judge shall disqualify himself where "he has a personal bias" or where "he has served in government employment and in such capacity participated as its counsel" or 'where he knows, that he has a financial interest in the subject matter in controversy." (Emphasis added).  Thus, under section 124(2), the judge shall disqualify himself if he subjectively concludes that he falls within the statutory prohibitions.

     Section 124(1), on the other hand, is designed to guard against the appearance of partiality.  Potashnick v. Port City Constr. Co., 609 F.2d 1101, 54 A.L.R. Fed. 825 (5th Cir. 1980).  The standard under section 124(1) is objective in contrast to the subjective test of section 124(2).

     A second consideration behind section 124(1) was that there could be factors other than those specified in section 124(2) which would lead a reasonable person to doubt the impartiality of the judge.  Section 124(1) is "designed to cover contingencies not foreseen by the draftsmen, who set out specific grounds for disqualification" in section

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124(2).  United States v. Conforte, 624 F.2d 869, 880 (9th Cir. 1980) (referring to 28 U.S.C. 455(a) and (b)).

     Despite the "catch-all" nature of section 124(1), however, it still remains necessary to show a factual basis, not just wide-ranging speculation or conclusions, for questioning the judge's impartiality.  United States v. Peltier, 553 F. Supp. 886 (D.N.D. 1982); Markus, 545 F. Supp. at 1000.  Thus, I do not reject the defendant's motion simply because no section 124(2) grounds exist here but as the inquiry continues, facts, rather than litigants' speculations or fears, must be produced.  The analysis can then proceed to determine whether the specific facts set out in the affidavit filed by the defendant, or whether other information of which I am aware, could lead a reasonable person to question my impartiality within the meaning of section 124(1).

Application of Law to the Facts
     Neither the Faymonville affidavit nor the statement of points and authorities in the affidavit elaborates on the connection between the facts alleged in the affidavit and the conclusion that "a reasonable person could easily question the impartiality of Chief Justice King under these circumstances."  The only statements in the documents filed
 
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by  the defendant remotely calculated to furnish a logical connection between my actions and reasonable doubt as to my impartiality are:

     a.  [I]mpartiality....can reasonably be questioned because of this Court's active participation in plea negotiations in this case".  Defendant's Points and Authorities, page 1. See also Faymonville affidavit paragraph 2.

     b.  . A reasonable person could easily believe that a judge who has expressed a definite opinion of what sentence would be acceptable to him in a criminal case could not be a fair and impartial trier of fact."  Points and Authorities, page 3.

I shall consider each of these contentions in turn.

     A.  Active Participation in Plea Negotiations.  At the outset it should be noted that while I do not challenge the factual allegations in the affidavit, I do not agree with theconclusion that my actions constituted "active participation in plea negotiations."  I did not, and the affidavit does not say I did, do anything other than comment from the perspective of the trial judge upon the proposed plea agreements.4  These were prepared by counsel and parties without any involvement by the Court, and then voluntarily submitted by counsel to the Court.

My actions cannot accurately be termed "negotiating."

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For the first draft, I merely commented on what I perceived to be drafting problems which might have rendered the proposed agreement ineffective to bring about the results intended by the parties.  Upon further reflection, I decided that the results sought by the parties, that is, continued operation of the hotel by the defendant as a means ofproviding restitution, were not appropriate for resolution of the charges against the defendant.  My comments on the second proposed plea agreement were to that effect.

     At no time did I consider myself to be negotiating with the parties concerning the proposed plea.  I did not suggest, either directly or by implication, that Mr. Skilling should plead guilty to any charge nor did my actions provide incentives to either party to enter into a plea agreement.  The Court made no effort to encourage the parties to pursue further negotiations and made no promise to accept any plea agreement ultimately arrived at.  Finally, I was at no time present when plea agreement negotiations took place between the parties.

     In sum, I reviewed proposed plea agreements at the request of the parties.  I reviewed and commented judicially upon the proposed pleas, but did not participate in plea negotiations.  Thus, there was no "active participation" in plea negotiations which could lead one reasonably to question my impartiality.

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     B.  Expression of Opinion as to Sentence.  Defendant's other stated claim, in the Points and Authorities, is that my expression of a "definite opinion of what sentence would be acceptable" could lead a reasonable person to believe I could not be fair and impartial.  Here too it is desirable to assess the accuracy of the characterization.  The affidavit does not say that I expressed an opinion as to what sentence would be acceptable.  Instead, the sworn affidavit accurately restricts itself to the fact that I stated that I "would not accept an agreement that permitted Sterling Skilling to retain possession of his hotel." (Emphasis added). There is an appreciable difference between insisting on a particular sentence and refusing to accept an aspect of a proposed plea agreement.  The former would imply significantly greater involvement and control than anything done by the Court in this case.

     It is most important to keep in mind however that the plea bargaining process contemplates that plea agreements will be submitted to the trial judge for acceptance or rejection.  FSM Crim. R. 11.  Counsel place the agreement before the Court for the purpose of obtaining the Court's reactions.  When counsel place documents before a court either voluntarily or as part of standard court procedures under circumstances where the court is normally expected to

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comment judicially on the documents, it would be odd indeed if counsel could then customarily use the court's response as a basis for disqualification.  Jonas (II), 1 FSM Intrm. at 318-19; United States v. Grinnell Corp., 384 U.S. 563, 582-83, 86 S. Ct. 1698, 1710, 16 L. Ed. 2d 778, 793 (1966). Even conceding that extraordinarily unbalanced or intemperate remarks or other statements unjustified by anything contained in the papers or revealed in the judicial proceedings could reveal bias calling for disqualification of the judge, this is not such a case.

     My remarks were based upon and related to the documents presented.  As I said, and as I continue to believe, a person who owns a large hotel on a Micronesian island will necessarily be the recipient of a good deal of prestige and even power, let alone wealth.  Important businessmen and government leaders stay at hotels and hotel owners readily acquire special relationships with such people.  Leading hotels become centers of activity in an island community and the hotel owner and operator is at the hub of that activity.

     This Court would not lightly approve any sentencing or plea agreement which would specifically confer on one guilty of mishandling funds the right to retain ownership and control of a hotel or an, other substantial business.  When, as here, the allegations and circumstances strongly suggest

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that the funds to construct or acquire the hotel or business may have been obtained by the illegal actions charged in the case, it would seem especially strange and unjust for the Court to approve an arrangement which would confirm, rather than undo, the ability of the defendant to continue to own
and control the building.

     To state these factors is not to prejudge the innocence or guilt of Sterling Skilling.  Sanctions may be applied only if guilt is established, either after a trial or through a guilty plea.  That has not occurred, nor have I formed or expressed any opinion as to his guilt.

     Submission of a proposed plea agreement to the Court, it should be remembered, is intended to elicit from the Court some indication of an acceptable sanction, assuming that the defendant will admit guilt.  The Court thus is responding to the parties' hypothetical, "If the defendant enters a plea of guilty, would our proposed arrangement be acceptable?"  The Court's statements as to an acceptable penalty reflect Court compliance with the parties' request that a guilty plea be assumed.  They do not denote belief by the judge that Mr. Skilling is guilty.  I therefore conclude that my statements concerning an appropriate sentence in this case are not a basis upon which a reasonable disinterested person might harbor doubts about my impartiality in this case.

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     C.  Other Possibilities.  I have also considered whether I should disqualify myself simply because the parties have made it clear that serious consideration has been given to entering into a plea agreement in this case.  That would not be appropriate for several reasons.

     First, such an approach would place in counsel the power to remove a judge from a case almost at will, simply by advising the judge of plea negotiations.  In light of the lack of judicial resources here, this could threaten our system of justice with chaos.  It is to protect against such unworkable results that Courts normally adhere to the rule that any alleged bias and prejudice, to be disqualifying, must stem from an extrajudicial source.  See Jonas (II), 1 FSM Intrm. at 318-19 and cases cited there.

     Second, the existence of plea negotiations says little to the Court about the actual guilt of a defendant.  In many cases, as here, counsel conduct the negotiations and it is unclear to the Court whether, and to what extent, the defendant is willing to admit guilt.  It has been widely recognized that even an innocent defendant, aware that a strong case can be mounted against him, may be tempted to enter a plea of guilty in order to obtain a lesser charge or to place a ceiling on the penalty to which he may be to exposed.  See W.F. McDonald & J.A. Cramer, Plea Bargaining,

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26, 77-78 (1980); A.S. Goldstein, The Passive Judiciary, 39-47 (1981).

     Indeed, if the fact that counsel for defendant is considering recommending that the client plead guilty to a diminished charge suggests that the client is afraid of beingfound guilty, then presumably willingness of governmental counsel to engage in such discussions is likewise a strong indication that the government doubts that it can prove its case.  Thus the mere existence of such discussions does not create an appreciable inference of guilt.

     Finally, I note that it has been held elsewhere that a judge who presides over an unsuccessful plea attempt is not necessarily required to disqualify himself from further proceedings in the case.  United States v. Cepeda Penes, 577 F.2d 754 (1st Cir. 1978).  Also see United States v. Bourque, 541 F.2d 290 (1st Cir. 1976).

     This is merely a corollary of the broader rule, essential to judicial administration, that adverse rulings by a judge do not per se create grounds for disqualification. In re International Business Machines Corp., 618 F.2d 923, 929 (2d Cir. 1980).  See also United States v. Martorano, 620 F.2d 912, 919 (1st Cir.), cert. denied, 449 U.S. 952 (1980) ("mere fact that a judge entertains a motion for a new trial in a case over which he presided initially does not

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reasonably call into question his impartiality.').

Prescribed Statement
     For purposes of a possible interlocutory appeal, I state the following.5  This order involves a controlling question of law, the proper interpretation of 4 F.S.M.C. 124(1), as to which there is substantial ground for differences of opinion.  An immediate appeal may materially advance the ultimate termination of the litigation.

Conclusion
     Finding no factual basis upon which a reasonable disinterested observer would harbor doubts about my impartiality, this Court denies defendant's motion for recusal.  An appropriate order consistent with this opinion will be issued.

 /s/ Edward C. King
Chief Justice
Supreme Court of the Federated
States of Micronesia
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     Entered this  9th  day of May 1984.

 /s/ Emiliana J. Kihleng
Chief Clerk of Court
Supreme Court of the Federated
States of Micronesia

Footnotes:

1.  Special assignments of temporary justices are made pursuant to Article XI, Section 9(b) of the Constitution and 4 F.S.M.C. 104. Back to Opinion

2.  Canon 3C of the ABA Code of Judicial Conduct applies here directly by virtue of 4 F.S.M.C. 122:  "Justices of the Supreme Court shall adhere to the standards of the Code of Judicial Conduct of the American Bar Association except as otherwise provided by law or rule...." Back to Opinion

     Canon 3C is substantially similar to 4 F.S.M.C. 124 and 28 U.S.C. 455, upon which 4 F.S.M.C. 124 is based.  See note 3, infra.

     There is no hint that Canon 3C, as incorporated by the Judiciary Act of 1979, and 4 F.S.M.C. 124, were intended by the Congress of the Federated States of Micronesia to have different meanings.  Thus Canon 3C does not call for analysis separate from the almost identical language of 4 F.S.M.C. 124(1) and (2).

3.  The Committee Report of the Judiciary and Governmental Operations Committee confirms that the disqualification provisions were adopted from 28 U.S.C. 455, although the report further refers to "modifications, making the rules more strict in light of the circumstances of the Federated States of Micronesia."  SCREP No. 1-19, J. of 1st Cong., 1st Reg. Sess. 246, 247 (1979). However, the modification apparently referred to was the insertion of the requirement that a justice disqualify himself if he or his spouse have a "close relationship" to a person involved in the litigation. 4 F.S.M.C. 124(2)(e).  In 28 U.S.C. 455(b)(5), the test is whether the judge or his spouse is "within the third degree of relationship" to such a person.  This is the only modification of the United States statute concerning disqualification discussed during the floor debate.  J. of 1st Cong., 1st Reg. Sess. 184-86 (1979).  The inference is that, aside from the one modification, 4 F.S.M.C. 124 was intended to have the same meaning as 28 U.S.C. 455.  Thus,decisions and commentary concerning 28 U.S.C. 455 are relied upon throughout this opinion as a guide to the intended meaning of 4 F.S.M.C. 124. Back to opinion

4.  Of course, I also have not reviewed any documentation or report prepared by the National Justice Ombudsman in response to the directive referred to in numbered paragraph 3 of the Faymonville affidavit. Back to opinion

5.  See Lonno v. Trust Territory (II), 1 FSM Intrm. 75 (Kos. 1982)Back to opinion