5th Circuit vacates $125M award after discovery of federal judge, trial counsel’s friendship
A federal appeals court on Tuesday tossed a $125 million award in a complex contract dispute between IFG Port Holdings and the Port of Lake Charles, Louisiana, citing an undisclosed longtime friendship between the U.S. magistrate judge who heard the case and IFG Port Holdings’ lead trial counsel.
A federal appeals court on Tuesday tossed a $125 million award in a complex contract dispute between IFG Port Holdings and the Port of Lake Charles, Louisiana, citing an undisclosed longtime friendship between the U.S. magistrate judge who heard the case and IFG Port Holdings’ lead trial counsel.
In its Sept. 8 opinion, the 5th U.S. Circuit Court of Appeals at New Orleans noted that now-former U.S. Magistrate Judge Kathleen Kay of the Western District of Louisian disclosed that the daughter of IFG Port Holdings attorney William Monk of Stockwell, Sievert, Viccellio, Clements & Shaddock had clerked for her and would be screened from the case. But Kay did not disclose that she had known Monk for 40 years, that he had been a groomsman at her wedding, and that she officiated his daughter’s wedding.
“Judge Kay’s disclosure was incomplete, at best, and perhaps misleading,” according to the 5th Circuit. “The partial disclosure implied that Monk’s daughter’s clerkship was the extent of their ties, when the friendship was far closer.”
IFG Port Holdings sued the port, alleging that it was responsible for securing the permits needed to dredge a ship channel in Lake Charles, Louisiana, so that it could develop a grain terminal. In 2017, the parties consented to a bench trial before Kay, who awarded IFG Port Holdings $125 million.
After the district court denied the port’s motion to vacate Kay’s referral, the port appealed. A previous panel of the 5th Circuit remanded the case for further review, and the district court found that in that instance, the port’s consent was “not knowing” and vacated the referral.
“Vanishingly little direct or circumstantial evidence suggests the port actually knew about the friendship before judgment,” the 5th Circuit wrote in its opinion. “The district court applied the right knowledge standard to these facts: Only the port’s actual knowledge of the nature and extent of the Monk-Kay friendship before judgment is sufficient to show their knowing consent.”
Reuters had additional coverage.
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