Opinion 16-44

March 16, 2016

Please Note: This opinion has been modified by Opinion 21-22(A) concerning a judge’s obligations when a party is appearing without counsel. As stated in Opinion 21-22(A), “we no longer prohibit remittal of disqualification merely because a party is unrepresented. We hereby modify our prior opinions to abolish that requirement.” This also affects opinions “where disclosure (or disclosure and insulation) is mandated in lieu of outright disqualification” (see id. fn 3).

Digest:         A judge may preside in cases of a global insurance company employing his/her non-lawyer spouse in a mid-level position with no litigation responsibilities, unless the spouse is personally involved in the matter.

Rules:          Judiciary Law § 14; 22 NYCRR 100.2; 100.2(A); 100.3(E)(1); 100.3(E)(1)(a)-(f); 100.3(F); Opinions 15-150; 15-40; 13-64; 09-138; 00-43; 99-87; 91-56; 88-105; People v Moreno, 70 NY2d 403 (1987).

Opinion:

         The inquiring judge presides over tort cases where insurance companies may appear as parties or defend cases of a named defendant. The judge’s spouse has a “mid-level position” as a financial consultant for a global insurance company’s national accounts department.¹ The spouse is not a company officer or director, and has no litigation-related duties. The judge asks about his/her ethics duties in cases involving the spouse’s employer.

         A judge must always avoid even the appearance of impropriety (see 22 NYCRR 100.2) and must always act to promote public confidence in the judiciary’s integrity and impartiality (see 22 NYCRR 100.2[A]). A judge must disqualify him/herself in statutorily required circumstances (see 22 NYCRR 100.3[E][1][a]-[f]; Judiciary Law § 14) and in other proceedings where the judge’s impartiality might reasonably be questioned (see 22 NYCRR 100.3[E][1]).

         For example, a judge must disqualify him/herself if the judge knows that the judge’s spouse “has an economic interest in the subject matter in controversy or in a party to the proceeding or has any other interest that could be substantially affected by the proceeding” (22 NYCRR 100.3[E][1][c]); is acting as a lawyer in the proceeding (see 22 NYCRR 100.3[E][1][e]) or is likely to be a material witness (id.); or is an officer, director or trustee of a party (see 22 NYCRR 100.3[E][1][d][ii]). Conversely, if disqualification is not mandatory under these objective standards, the judge is the sole arbiter of recusal (see People v Moreno, 70 NY2d 403 [1987]).

         The Committee has previously advised that a judge is disqualified, subject to remittal, from presiding at a trial in which his/her non-lawyer spouse’s private sector employer is a party (see e.g. Opinions 15-40 [regional chamber of commerce employs judge’s spouse as director]; 99-87 [private law firm employs judge’s spouse in a paralegal/clerical position]; 91-56 [spouse’s employer is a party]; 88-105 [bank employs judge’s spouse as secretary]).

         However, “[e]mployment in the insurance field may ... present some additional fact-specific considerations” (Opinion 15-150). For example, a judge may preside in cases involving hospitals and insurance companies, even though his/her spouse “is a salaried insurance broker employed by a company that places insurance on behalf of the employees of various hospitals” pursuant to contracts with the individual hospitals (see Opinion 00-43). The Committee emphasized the judge’s spouse was “a salaried employee” with no economic interest in any party to a negligence case, and the “outcome of any negligence case against one of the hospitals would not affect the spouse” in any way (id.). Although more remote than a spouse, the Committee has also advised that a judge whose first-degree relative is a salaried staff lawyer for an insurance company need not disclose this fact or disqualify him/herself when that company appears before the judge as a party or as a carrier of a party, provided the judge’s relative is a non-supervisory employee with no role in the case (see Opinion 15-150).

         Here, the judge’s non-lawyer spouse has no litigation-related duties and, thus, will not be acting as a lawyer or likely to appear as a material witness in any case before the judge (see 22 NYCRR 100.3[E][1][e]). As a salaried mid-level employee of a large insurance company, the spouse is not an officer or director and has no cognizable economic interest or any substantial interest in cases of the insurer or its numerous insureds (see generally Opinions 15-150; 00-43; 22 NYCRR 100.3[E][1][c]; 100.3[E][1][d][ii]). On these facts, the judge’s impartiality cannot be reasonably questioned in cases of his/her spouse’s employer, whether the insurer is a party or merely providing defense or indemnification to an insured. Thus, neither disclosure nor disqualification is required.

         Of course, if the judge learns his/her spouse is personally involved in a case, the judge must disqualify him/herself, subject to remittal (see generally 22 NYCRR 100.3[E][1][c]-[e]; 100.3[F]).²

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         ¹ The company is ranked among the largest insurance companies nationwide and/or worldwide, by some metrics. It has tens of thousands of employees and millions of customers around the world.

         ² If a party appears without counsel or the judge is unable or unwilling to make full disclosure on the record, remittal is unavailable (see Opinion 13-64). Where permitted, remittal is a three-step process: First, the judge must fully disclose the basis for disqualification on the record. Second, without the judge’s participation, the parties who have appeared and not defaulted and their lawyers must all agree the judge may preside. Third, the judge must independently conclude he/she can be impartial and is willing to preside. If all three steps are satisfied, the judge may accept remittal and must incorporate the parties’ and their attorneys’ agreement in the record (see Opinion 09-138; 22 NYCRR 100.3[F]).