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November 30, 2022 Judicial Ethics Column

Ethics for Bankruptcy Judges

By Marla N. Greenstein

Like many other readers of this magazine, I find the intricacies of bankruptcy court procedures mystifying, though they are explained thoughtfully in the articles of this issue. There is no special Code of Judicial Conduct for judges who serve as bankruptcy judges. In many ways, the concerns are not unique or different. Off the bench, bankruptcy judges face the same needs to avoid appearances of impropriety, ensure they do not create conflicts by engaging in activities with those likely to come before the court, and avoid political activities. However, bankruptcy judges may more frequently face some unique ethical issues in their court proceedings.

Aspects of bankruptcy proceedings that could give rise to ethical concerns include necessary communications with the bankruptcy trustee, the frequency of criminal referrals, and the need to keep abreast of related court proceedings. At times, all of these factors have come into play simultaneously.

While occasionally other judges may interact with third-party neutrals, in bankruptcy proceedings, it is routine. Just what constitutes an improper ex parte communication between court officials working on the same matter is often not clear. There is a presumption that procedural communications are often needed, but any substantive communications between those with adjudicative roles should only be done in writing and with notice to the parties. So, when a bankruptcy judge was perceived to have suggested to a bankruptcy trustee that the trustee should make a criminal referral arising out of the bankruptcy matter, the parties viewed that as grounds for recusal (In re Goodwin, 194 B.R. 214 (B.A.P. 9th Cir. 1996)). In non-bankruptcy matters, we often advise judges that any referrals be made after the matter at hand is adjudicated. Given the nature of bankruptcy proceedings, it is not surprising that this issue is anticipated in a statute. Section 3057, in title 18 U.S.C., mandates judges and trustees to report criminal violations to the U.S. attorney. Because these are mandatory referrals (unlike the discretionary referrals that are more typical in other courts), the referral would not indicate bias requiring recusal.

So too, while all courts find it efficient to be aware of related court proceedings, bankruptcy courts know it is essential. Any judge can make use of public court databases to identify proceedings involving the parties before the judge. Typically, this is attributed to “judicial notice” under the evidence rules. However, at times, judges may want to go beyond the mere acknowledgment of a case’s existence and seek to know more. ABA Formal Opinion 478 gives some guidance. The danger here is of recognizing “facts” without the benefit of presentation of those facts in an adversarial hearing. When in doubt, the solution is to give notice of the facts sought to be used and allow the parties to be heard.

In short, the types of ethical issues for a bankruptcy judge can be different from those other judges face. While the same provisions apply, the use of a trustee, the statute requiring criminal referrals, and the need to be aware of the nature of other court proceedings all require special ethical awareness. Sensitivity to the appearance of improper ex parte communications in these often complex matters will encourage ongoing public confidence in the bankruptcy process.

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By Marla N. Greenstein

Marla N. Greenstein is the executive director of the Alaska Commission on Judicial Conduct. She is also a former chair of the ABA Judicial Division’s Lawyers Conference. She can be reached at [email protected].