In this action, plaintiffs
request the Court to declare improper the participation of James Miller, III, Chairman of the Federal Trade Commission, in the so-called GM defects case.
In that proceeding, the Commission, by a 3-2 vote, approved a consent decree which provided for arbitration conducted by the Better Business Bureau in lieu of the direct reimbursement relief which had apparently been standard in other proceedings of this type. If Miller had recused himself, at 2-2 tie would have resulted and, under the Commission's procedures, the consent decree would not have been approved.
The request for recusal arises out of Chairman Miller's relationship with Economic Impact Analysts (EIA), an economic consulting firm whose largest client was General Motors. In addition to asking that Miller be ordered recused, plaintiffs also request that the GM defects case be remanded to the Commission for de novo consideration without Miller's participation. Presently pending before the Court are cross motions for summary judgment.
It is useful initially to state what is not involved here. Plaintiffs do not argue that Chairman Miller is disqualified on account of a present or actual conflict of interest. See 18 U.S.C. §§ 207, 208. Their sole claim is that Miller's participation in the GM defects case gave the appearance of a conflict of interest, and it is on this basis that they request that he in effect be ordered to recuse himself, retroactively, from that case.
It is settled law, not disputed by either party, that the appropriate legal standard to be applied in a case such as this is abuse of discretion. See Chitimacha Tribe of Louisiana v. Harry L. Laws Co., 690 F.2d 1157, 1166 (5th Cir. 1982); Blizard v. Frechette, 601 F.2d 1217, 1221 (1st Cir. 1979). It is also clear, however, that, as plaintiffs put it, that "there is little precedent or guidance concerning what [appearance of conflict] means or how it is to be applied."
Factually, plaintiffs' claim consists of two principal elements. One of these revolves around the relationships among Miller, EIA, and General Motors; the second relies on a number of precedents involving high-level executive officials who, it is said, recused themselves in circumstances similar to those presented here.
The crux of plaintiffs' case against Miller may be summarized as follows.
Prior to his appointment as Chairman of the Federal Trade Commission, Miller was chairman of EIA. During the period of his association with that consulting organization, the firm did a substantial amount of work for General Motors; indeed, GM was EIA' largest client, and in the two years preceding the Miller appointment to the FTC, EIA billed General Motors for over $75,000 in consulting fees. Miller received some of these funds during his service as Chairman of the FTC. Further, although EIA is now dormant, it continues to exist, and Miller has not excluded the possibility that he will return to it after his term with the FTC expires.
While these facts, as well as those surrounding the collateral charges summarized in note 5 supra, appear at first blush to lend substantial support to plaintiffs' position, they are less persuasive when viewed in their appropriate context.
First. Miller recused himself from all decisions involving General Motors for a period of two years following the date EIA received its last payment from General Motors. His participation in the GM defects case must be viewed, therefore, in light of the passage of an appreciable period of time following the severance of his relationship with EIA and indirectly from General Motors. Unless Miller were to be regarded as being tainted by those relationships on a permanent basis, the two-year hiatus would appear to be, absent other factors, a reasonable prophylactic measure.
Second. EIA did receive substantial amounts from General Motors for consulting services. However, even so, these fees constituted only between 12 and 25 percent of Miller's income, for during the periods in question he also held a full time, salaried position with the American Enterprise Institute, and his salary from that position provided the bulk of his income.
Third. Monies did continue to come to Miller from EIA during 1981 and 1982 while he was already working for the FTC. However, all of these monies represented income which EIA itself had received prior to Miller's entry into government service, and they were paid out to Miller during these two years only on a deferred income basis. Even with respect to these funds, only a small amount can be traced to EIA income from General Motors.
Fourth. Plaintiffs point out that the consent decree which was approved with Miller's vote was favorable to General Motors. The Court rejects this fact as a basis for disqualification or recusal. The decree was negotiated and recommended to the Commission by its career staff without any participation by Miller.
Beyond that, however, public policy dictates great caution regarding the attribution of weight for disqualification or recusal purposes to the final outcome of a case. Reliance upon such considerations is to invite challenges to officials based not upon true conflicts of interest but upon their philosophical or ideological leanings
or, worse, upon the result that would be brought about by the removal of a particular official from the consideration of a particular controversy.
Fifth. Potentially the most serious problem is Miller's refusal to rule out a return EIA. As indicated infra, several officials have recused themselves from controversies arising during their government service when the entities involved in these controversies -- usually law firms -- were organizations to which they intended to return. However, one fact is present here which takes the present situation out of this norm: EIA is not an organization having a continuous life; it is at present not even a going concern. It is dormant, and it is dormant precisely because EIA is Miller.
Thus, when Miller states that he may return to EIA, he is only saying that he will go back to being in essence a sole practitioner consultant. To require him to pledge that he will not return to EIA, therefore, as a condition of sitting on GM cases during his FTC service, is the equivalent of requiring him to pledge that he will not return to consulting work.
Neither the recusal precedents nor the principles underlying the recusal rules require such draconian relief.
In sum, the specific incidents upon which plaintiffs rely are not nearly as menacing as they might appear when viewed outside their appropriate context.
Plaintiffs contend next that Miller's failure to recuse himself departs significantly from the standards applied by other high officials in similar situations, and that, in the words of the usual recusal test, this departure from accepted standards would lead a reasonable person with the knowledge of all the facts to conclude that his impartiality might reasonably be questioned. United States v. Haldeman, 181 U.S. App. D.C. 254, 559 F.2d 31, 132-33 n.247 (D.C. Cir. 1976); C.J. Trotter v. Int'l. Longshoremen's Union, Local 13, 704 F.2d 1141, 1144 (9th Cir. 1983); Potashnick v. Port City Construction Co., 609 F.2d 1101, 1111 (5th Cir. 1980).
In support of this contention, plaintiffs cite the recusal policies of sixteen high-level officials which, they claim, suggest that these individuals would not have participated in the GM defects case had they been in Miller's position. But here again plaintiffs' broad brushstrokes reveal imperfections when subjected to closer examination.
A number of the officials on whose actions plaintiffs rely
promised only to recuse themselves from controversies directly involving their former companies; they made no reference whatever to controversies involving clients of these companies. These precedents thus stand only for the proposition that Miller should not have sat on cases involving EIA -- and no claim is made that he did -- they do not suggest that he should have recused himself from a case involving EIA's client General Motors.
The cases involving seven of the other officials likewise presented fact patterns quite different from those presented here.
With respect to some of these cases, the difference with the instant proceeding is immediately apparent; with respect to the remainder that difference lies in the fact that here the former employer (EIS) is not at all representing a party (GM) before the particular agency (FTC), let alone in the very controversy at issue (the GM defects case). Because the facts are different, none of these precedents is controlling.
The precedents involving the remaining four officials
in the two most recent Administrations
are considerably more relevant. Former Attorneys General Griffin B. Bell and Benjamin R. Civiletti, former Assistant Attorney General John H. Shenefield, and former Deputy Attorney General Edward C. Schmults all promised to recuse themselves from cases involving clients of their former law firms, and there is thus a factual parallel to the claim that Miller should have recused himself because of his relationship to EIA's client General Motors. Nevertheless, the Court has concluded that Chairman Miller's failure to do so does not call for an order of this Court requiring his recusal based on these precedents, for the following reasons.
First. The known precedents do not invariably point in the same direction. Thus, although one Department of Justice official during the Reagan Administration -- Schmults -- disqualified himself in these factual circumstances, another -- Assistant Attorney General William Baxter
-- did not.
Second. The precedents all involve Justice Department officials. In an executive agency, another official is always available in case of disqualification or recusal of the agency head to whom full authority may be delegated, just as one judge can be substituted for another in case of disqualification or recusal. That is not so in a regulatory commission. If one member of such a commission is disqualified or recused, he cannot, under the law, be replaced (see 16 C.F.R. § 4.14(c)), and the body may thus be left, as in this case, unable to make an effective decision by virtue of an even split.
For that reason, there may remain here, unlike in the judicial area, vestiges of a "duty to sit."
Although this factor should not be given decisive weight by any means,
it is a consideration which distinguishes this case from the Department of Justice precedents.
Third. As indicated supra, here, unlike in most cases, there is no ongoing firm to which Miller might be returning, for EIA is merely a shell. One principal reason for concern where an official participates in a case in which the clients of his former firm have a stake is that, by ruling in a particular way, he might be thought to be enriching that firm, his once and future employer. Since EIA is Miller, and since EIA effectively does not now exist, the problem here is not of the same magnitude as it might be in other circumstances.
The Court does not endorse
-- it is not called upon to endorse -- Chairman Miller's refusal to recuse himself as being the proper ethical decision.
Absent an abuse of discretion, the decision with regard to recusal is that of the official who is directly involved. That is entirely appropriate because, however much the law has shifted in recent years toward a more objective standard,
there remain, of necessity, elements of subjectivity. Individuals differ in the degree to which they might be influenced by various kinds of economic or social relationships as well as in the degree to which they feel they might be influenced by such contacts. Except to the extent that disqualification is mandated by law or by a delineated ethical standard, these are subtle matters which for that reason are governed, at least initially, by individual subjective considerations. That being so, it is appropriate that discretion should be vested in the first instance in the individual whose recusal is at issue, and that his decision should be overturned by a court only for an abuse of that discretion.
The Court's choice thus is not between an endorsement of the conduct in question, on the one hand, and an order disqualifying Miller retroactively from the GM defects case, on the other. All the Court is called upon to do is to determine whether by refusing to recuse himself, Chairman Miller abused the discretion vested in him. For the reasons discussed above, that question must be answered in the negative. Judgment will accordingly be entered for the defendants.