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U.S. Bankruptcy Judge David A. Scholl filed suit yesterday in the U.S. Court of Federal Claims in Washington to challenge the fairness of the decision by the judges of the 3rd U.S. Circuit Court of Appeals to deny him a second 14-year term on the bench. Attorneys Cletus P. Lyman and Richard A. Ash of Philadelphia’s Lyman & Ash and sole practitioner Kenneth A. Jacobsen filed the suit alleging that the appellate court’s process violated Scholl’s constitutional right to due process. The suit seeks compensation and reinstatement. The suit says federal regulations require that when a bankruptcy judge is up for reappointment, notice be published in “a general local newspaper or similar publication and, if practical, in a bar journal, newsletter or local legal periodical.” Such notices are required, the suit says, to allow for a “comment period” of up to 45 days during which the public and the bar can comment on the judge’s performance. That requirement was violated, the suit says, because no notice was ever published in any general circulation newspaper in the Philadelphia area, nor in The Legal Intelligencer. “The procedure followed in Judge Scholl’s case substituted a biased and unreliable survey for the required public comment process,” the suit says. On March 2, 2000, the suit says, the 3rd Circuit Executive issued a notice about Scholl’s being under consideration for reappointment. Then, on April 6, the executive issued a new public notice extending the comment period to May 5. “This notice violated the 45-day rule and also was not published in a general local newspaper,” the suit says. Then, on April 11, the suit says, Chief U.S. Circuit Judge Edward R. Becker issued a memo to all of the bankruptcy judges in the 3rd Circuit to inform them of a modification to the reappointment process — the adoption of a questionnaire to be sent to lawyers who had appeared before the judge over the prior three years. But the suit says the questionnaire in Scholl’s case was not sent to all 5,000 lawyers who had appeared before Scholl during that period. “Instead,” the suit says, “the questionnaire was sent to only 1,165 lawyers, disproportionately represented by those specializing in Chapter 11 business reorganization cases.” Chapter 11 cases account for less than one percent of Scholl’s docket, the suit says. Excluded from the process, the suit says, were “large numbers of practitioners representing creditors and debtors in consumer cases, the preponderance of the 12,000 cases Judge Scholl had assigned to him over the past three years.” No questionnaires were sent to many attorneys who regularly appear before Scholl and “who were in the best position to evaluate his performance and judicial demeanor,”‘ the suit says. Scholl’s lawyers complain that “survey results are hearsay” and are valuable “only insofar as they contain circumstantial guarantees of trustworthiness.” To do a proper survey, they argue, “a proper universe must be examined and a representative sample must be chosen; the persons conducting the survey must be experts; and the data must be properly gathered and accurately reported.” The survey in Scholl’s case, they argue, was flawed since it was not conducted by an expert and “did not meet the other requirements of trustworthiness.” That flawed process, they argue, “was a proximate cause of Judge Scholl’s non-retention.” Critical to Scholl’s chances of success in the suit will be clearing a few hurdles early on, first by convincing a judge that he has a “property interest” in staying on the bench. On that point, Scholl’s lawyers cite the 1803 decision of the U.S. Supreme Court in Marbury v. Madison. They also point to the federal regulations that were passed by the Judicial Conference to implement the statutory provisions of the Federal Courts Improvements Act of 1986. Lyman, in an interview yesterday, said that the Federal Courts Improvements Act was designed by Congress to end the wastefulness in the reappointment of bankruptcy judges. The law, he said, “created a presumption that an incumbent judge would be reappointed.” The regulations make that explicit, the suit says, by stating that “reappointment should not be denied unless the incumbent has failed to perform the duties of a bankruptcy judge according to the high standards of performance regularly met by United States bankruptcy judges.” On the due process claim, the suit says public employees are guaranteed “an objectively reasonable expectation of continued employment” and are “entitled to notice of the grounds for non-retention and a hearing before an impartial decisionmaker in advance of being deprived of employment.” At the very least, the suit says, a public employee is entitled to a post-termination hearing “where he can be informed of the reasons for his non-retention and can challenge their sufficiency.” Scholl asked for just such a post-termination hearing, but was denied, the suit says. In its final pages, the suit lauds Scholl as a hardworking and able judge who “performed his duties in accordance with the highest standards.” In his 14 years on the bench, the suit says, Scholl took on “an extremely difficult case load,” often taking extra cases to cover other judges’ conflicts. He also consistently maintained “the highest rate of disposition of cases and proceedings” among all of the judges in the Eastern District of Pennsylvania “and possibly in this nation,” the suit says. Scholl decided all matters promptly, the suit says, usually within 30 days and “frequently more quickly,” but never more than 60 days after submission. Due to his “national recognition,” the suit says Scholl was asked to author and update a well-known bankruptcy treatise and to work on other publications. Scholl also served as chief judge of the court “at a critical time (1994 to 1999) when the court attained autonomy of its clerk’s office and relocated to superior quarters.” Lyman said the suit was filed in the Court of Federal Claims because federal employees must go there to challenge such decisions. Scholl’s suit, he said, was filed under the Tucker Act, which allows the court to grant him compensation for lost wages and benefits and to order that he be reinstated to his former post. But Lyman said, that unlike other federal courts, the Court of Federal Claims does not have “broad equitable powers,” and therefore could not issue a temporary restraining order or preliminary injunction to put Scholl back on the bench while the case proceeds. Chief Judge Becker declined to comment on Scholl’s filing. “I have no comment. The matter is in court,” Becker said.

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