The Ninth Circuit avoided creating a split of circuits by withdrawing a majority opinion written three years ago over a vigorous dissent. In its place, the appeals court filed a new opinion this week deciding a different issue and obviating another dissent.
In the original decision from June 2014, the majority opinion written by Circuit Judge Sidney R. Thomas held that an attorney who drafts an order at the direction of a state court judge would not be entitled to quasi-judicial immunity for his actions that allegedly violate the automatic stay. Dissenting, Circuit Judge Ronald Lee Gilman, sitting by designation from the Sixth Circuit, said that the “majority’s decision not to extend quasi-judicial immunity to an officer of the court acting at the behest of a judge is in conflict with every other federal appellate court that has confronted the issue.”
Later June 2014, the lawyer deprived of quasi-judicial immunity moved for panel rehearing and rehearing en banc. On June 10, 2017, the panel filed what it called an amended opinion and denied rehearing, saying that no judge on the circuit bench voted for en banc reconsideration. The second time around, there was no dissent by Judge Gilman because the new holding was on a different and noncontroversial issue.
The facts were complex. In substance, there was a dispute over who was entitled to settlement proceeds from a lawsuit by an individual who later filed bankruptcy. The bankruptcy lawyer deposited the net proceeds with the trustee after deducting his fee.
Joining neither the debtor nor his bankruptcy lawyer as defendants, one of the claimants to the money started a declaratory judgement suit in state court to determine how the money should be distributed. At the direction of the state court judge, a lawyer for the plaintiff prepared a draft order directed at the individual’s bankruptcy lawyer, threatening to hold him in contempt if he did not deposit the money with the clerk of the state court. Being threatened with contempt of the automatic stay, the lawyer for the claimant never filed the order with the state court judge.
The debtor’s lawyer then filed a lawsuit in federal district court against everyone else, claiming they violated the automatic stay.
The district judge granted a motion to dismiss by the state court judge, holding that he was entitled to judicial immunity. The district court denied a motion to dismiss filed by the lawyer for the plaintiff who drafted the order, holding that he was not entitled to quasi-judicial immunity. An interlocutory appeal followed because the Supreme Court has held that a substantial claim to absolute immunity is appealable.
The new opinion for the unanimous court was written by Judge Thomas, who is now the circuit’s chief judge. The opinion lays out the rules on the extension of absolute immunity to nonjudicial officers when there is a “sufficiently close nexus to the adjudicative process.” To be protected, he said, the action must involve “the exercise of discretion in resolving disputes,” akin to the actions of a judge.
Judge Thomas explained why quasi-judicial immunity has been extended to bankruptcy trustees, U.S. Trustees and prosecutors, but not to court reporters.
The second time around, the appeals court avoided controversy by holding that drafting or volunteering to draft the order in state court was “not relevant” to the question of quasi-judicial immunity because the order was never filed with nor entered by the state court judge.
The unanimous appeals court upheld the denial of quasi-judicial immunity for the plaintiff’s lawyer since “quasi-judicial immunity does not extend to acts of private advocacy or attempted debt collection because such acts are distinct from the judicial function.” The circuit court ducked the question of whether the plaintiff’s lawyer was eligible for quasi-judicial immunity with regard to the order because it was never filed.
The new opinion is Infinity Capital Management v. Burton, 12-15618 (9th Cir. July 10, 2017). The opinion three years ago was reported at 753 F.3d 954 (9th Cir. June 4, 2014).