Ex-judge wins round in his fight to regain job A pretrial ruling says David A. Scholl had a right to expect a second term as a federal bankruptcy judge.

Posted: December 10, 2002

A federal judge has ruled that former federal Bankruptcy Judge David A. Scholl might have been improperly denied reappointment two years ago.

Parsing his way through murky statutory language that he said "Humpty Dumpty would glory in," Judge Lawrence M. Baskir, of the U.S. Court of Federal Claims in Washington, ruled that Scholl had a legal expectation of being reappointed "absent the showing that he had failed to perform according to high standards."

That explanation of failure was something neither Scholl nor the public ever got when the U.S. Court of Appeals for the Third Circuit did not appoint Scholl to a second, 14-year-term.

Under a 1984 law reorganizing the nation's bankruptcy courts, the 12 regional U.S. Circuit Courts were given the job of appointing local bankruptcy judges.

Baskir's decision Wednesday rejected a Justice Department motion to dismiss the suit Scholl filed in 2000 to recover his judgeship and lost wages.

Although not a final victory, Baskir's ruling was an important win for the former judge on virtually untrod legal ground. Baskir ordered both sides to submit a report by Jan. 20 suggesting how to proceed.

Justice Department spokesman Charles Miller declined comment.

Scholl, 58, who has been building a bankruptcy practice out of Newtown Square in Delaware County since his involuntary retirement from the court, said it was difficult to get too optimistic over an early pretrial ruling.

"Obviously, I'm pleased with this decision," Scholl said, adding that the ruling "upholds the dignity of bankruptcy judges."

Bankruptcy judges earn $138,000 a year and Scholl said the Third Circuit's decision two years ago forced him to start a law practice at an age when some lawyers were beginning to think about retirement.

The Third Circuit's decision not to reappoint Scholl - the first bankruptcy judge appointed in Philadelphia after the 1984 law - surprised many lawyers, almost as much as Scholl's decision to sue to recover his judgeship and lost wages.

In a 19-page opinion tracing the history of the appointment process for bankruptcy judges, Baskir wrote that "it is clear that the [process] placed the incumbent in so preferred a position that only by a demonstration that he or she had 'failed to perform' could the reappointment be denied."

One of the strongest pieces of evidence in Scholl's favor, Baskir added, was that in March 2001 the Judicial Conference of the United States revised the appointment procedure to "remove a phrase . . . that might appear to create a presumption of reappointment."

The 2001 revisions make it difficult to assess the wider significance of Baskir's decision, said Scholl's attorney, Cletus P. Lyman. Although the revisions appear to close a loophole, Lyman said bankruptcy judges appointed before March 2001, and who now are not reappointed, might also argue they, like Scholl had a "firm right of reappointment."

The appointments of Scholl and Bruce I. Fox to the region's bankruptcy court after the 1984 reorganization surprised many members of the bankruptcy bar. Critics feared Fox and Scholl, both veteran Community Legal Services lawyers, might have a pro-debtor bias.

Those early fears seemed to fade and Scholl began a five-year term as chief judge in 1994. In March 2000, the Third Circuit announced its intent to reappoint Scholl and solicited public comment.

A month later, the Third Circuit decided to supplement the public comment period with a 35-question survey sent to 1,165 lawyers and non-lawyers with bankruptcy experience.

Scholl later said he received a letter from the circuit summarizing 278 completed questionaires and giving him the chance to respond to 54 negative comments to his reappointment.

After his response letter, Scholl said he was informed by U.S. Circuit Judge Edward R. Becker, chief of the Third Circuit, that a second vote had been requested and the judges voted against reappointing him.

Scholl said he has never learned officially why he was not reappointed. Published reports have said some bankruptcy lawyers considered him pro-creditor, too tough on lawyers' fee petitions, and generating too many rulings requiring appeals.

"I didn't see it and I didn't see any personality problems," Scholl added. "I moved my opinions and decided things very quickly. That's not usually what's complained about in a judge."

Contact Joseph A. Slobodzian

at 215-854-2658 or jslobodzian@phillynews.com.

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