Cellspin Says Judge Gonzalez Rogers’ Financial Ties to Silicon Valley Require Recusal

“It simply cannot be objectively reconciled that an Article III judge’s wife’s holding of $4,687.99 Cisco stock can nullify [that judge’s] judgment but Judge Gonzalez Rogers owning millions of dollars in defendants’ stock would not.” – Cellspin Soft

CellspinEarlier this month, patent owner Cellspin Soft filed a motion for recusal under 28 U.S.C. § 455 seeking the vacatur of a summary judgment order entered in the Northern District of California by U.S. District Judge Yvonne Gonzalez Rogers releasing several defendants from infringement liability, including Fitbit. Cellspin Soft’s motion points to several financial interests between Judge Gonzalez Rogers and Fitbit’s parent company Google, including business relationships developed by Judge Gonzalez Rogers’ husband through McKinsey & Company, as requiring recusal under Section 455, a statute that was recently raised by a petition for writ denied last December by the U.S. Supreme Court.

Section 455(f) Requires a Judge to Be Completely Dispossessed of Financial Interest

As Cellspin’s motion notes, Section 455(a) requires a judge to disqualify herself in any proceeding in which the judge’s impartiality might reasonably be questioned. While Section 455(f) gives judges an opportunity to divest the financial interest, such divestitures require the judge to be dispossessed of the financial interest entirely under the U.S. Court of Appeals for the Federal Circuit’s 2022 decision in Centripetal Networks, Inc. v. Cisco Systems, Inc. Analyzing the statutory language of Section 455, the Federal Circuit concluded that “selling or donating the [financial interest] is the only cure envisioned under [Section] 455(f).”

Among Judge Gonzalez Rogers’ financial interests in Google include investments in Vanguard Fund holdings totaling anywhere from $9.4 million to $43.6 million, according to a 2020 financial disclosure filed by Gonzalez Rogers. Index funds at Vanguard into which Gonzalez Rogers has invested hold significant positions in Google; other defendants in Cellspin Soft patent cases including Nike and Under Armour; Samsung, which manufactures watches that contain Under Armour’s accused instrumentalities; and Apple, which manufactures watches that contain Nike’s accused instrumentalities. Unlike mutual funds, Vanguard index funds held by Gonzalez Rogers are passively managed and hold securities in companies according to their proportional weight in the index.

Because these funds are passively managed, Cellspin Soft argues that these investments by Judge Gonzalez Rogers do not meet the exception for common investment funds codified at Section 455(d)(4)(i). That exception requires that a judge not take an active management role in the investment fund at issue. “If nobody is managing the fund, then everybody is managing it (including Judge Gonzalez Rogers), because everyone knows what stocks are part of the Index fund (and especially the top ten holdings of the index fund,” Cellspin Soft argues. Citing back to the legal standard employed by the Federal Circuit in Centripetal Networks, Cellspin Soft asserts that “[i]t simply cannot be objectively reconciled that an Article III judge’s wife’s holding of $4,687.99 Cisco stock can nullify [that judge’s] judgment but Judge Gonzalez Rogers owning millions of dollars in defendants’ stock would not.”

Additional Financial Interests Stemming from Spouse’s Business Relationships

Cellspin Soft’s motion for recusal also traces business relationships between Google and McKinsey & Company, the latter of which Judge Gonzalez Rogers’ husband serves as senior partner. McKinsey and Google have partnered to improve refinery performance for a McKinsey client in the oil and gas industry, and Cellspin Soft’s motion points out that Matt Rogers works as a consultant in McKinsey’s energy group. McKinsey has also used Google Cloud services and architecture to aid an energy sector client in addressing power outages associated with forest fires in California. Cellspin Soft alleges that the substantial business ties between Google and McKinsey creates an objective appearance that Judge Gonzalez Rogers would be biased in favor of Google due to her husband’s business ties.

Further conflicts of interest arise from Matt Rogers’ position as operating partner at Ajax Strategies, a private equity firm that operates several startups receiving significant financial support from Google. Cellspin Soft’s motion for recusal includes several exhibits demonstrating that global imaging company Planet Labs, hydropower developer Natel Energy, and vegan dairy alternative producer Ripple Foods each raised millions in seed funding from Google while those startups were overseen by Ajax Strategies.

The motion also details the use of Google software platforms in five other companies operated by Ajax including electric scooter sharing company Lime, which uses Google Maps to operate its micromobility service; distributed energy software company Voltus, which leverages Google Nest for smart home thermostat solutions; transportation analytics company Streetlight Data, which uses Google Cloud services to offer data-as-a-service solutions to government entities; geospatial software engineering company Descartes Labs, which uses Google Cloud to process satellite imagery for famine prediction; and regenerative agriculture company Regrow, which uses several Google platforms to analyze observable earth data to reduce climate change impacts.

No ‘De Minimis’ Exception for Recusal Based on Financial Interest

Section 455(b)(4), which governs a judge’s recusal obligations in light of the financial interests held by the judge or the judge’s spouse, provides “a bright line rule as to disqualification based on a known financial interest in a party” according to the U.S. Court of Appeals for the Second Circuit’s 2003 ruling in Chase Manhattan Bank v. Affiliated FM Insurance Co. While Section 455(f) stands as an exception to those obligations, the financial interests in Google held by Judge Gonzalez Rogers and her husband cannot be divested, Cellspin Soft asserts. The patent owner further cites to Judge Gonzalez Rogers’ own answers to the Senate Judiciary Committee during her 2011 confirmation process where the judge acknowledged that “there is no ‘de minimis’ exception for recusal based on financial interest,” and that her husband’s position at McKinsey & Company would likely require the judge’s recusal from “[m]atters relating to McKinsey and, more broadly, to my husband’s primary clients.”

Finally, Cellspin Soft notes that Judge Gonzalez Rogers’ 2020 financial disclosure statement includes an investment of between $5 million and $25 million in “McKinsey & Company Special Situations Aggressive Long-Term.” This opaque investment could include major investments in Big Tech firms involved in the case, Cellspin Soft alleges, and the patent owner argued that a U.S. Office of Management and Budget (OMB) employee was required to divest this exact same type of investment during her confirmation proceedings in the U.S. Senate.

Judge Gonzalez Rogers’ SJ Rulings Fail Liljeberg’s Harmless Error Test

While mandatory recusal does not require mandatory vacatur, Cellspin Soft contends that Judge Gonzalez Rogers failure to disqualify herself was not harmless error under the U.S. Supreme Court’s test from Liljeberg v. Health Services Acquisition Corp. (1988) In the present case, Cellspin Soft argues that plain injustice from Judge Gonzalez Rogers summary judgment orders, which allegedly were not decided by an objective factfinder, and public distrust resulting from the judge’s ties to Silicon Valley companies leading to favorable decisions for tech companies, are both factors showing that Judge Gonzalez Rogers’ failure to recuse herself was not harmless. This error also spreads to other Cellspin Soft cases on Judge Gonzalez Rogers’ docket as the motion for recusal cites 20 footnotes throughout her summary judgment ruling where the judge noted that issues were being decided under the same reasoning from cases involving Fitbit and other Google business partners.

Cellspin Soft’s motion for Judge Gonzalez Rogers’ recusal and vacatur of her summary judgment order comes about a month and a half after the Supreme Court denied a petition for writ of certiorari on very similar issues in Centripetal Networks. Centripetal, which had a multi-billion infringement verdict wiped out for a judge’s failure to recuse, had argued on appeal that the Federal Circuit’s decision “gave short shrift” to the district court’s concerns that the sale of Cisco stock held by the judge’s wife, an investment that was only discovered after the judge had already a full draft opinion on the issues presented during bench trial with a ruling unfavorable to Cisco, would itself create an improper appearance of bias. In proceedings at the Patent Trial and Appeal Board (PTAB), an administrative patent judge (APJ) recused himself in early January of this year after Centripetal Networks filed a motion for recusal noting the APJs investments in Cisco, although the APJs withdrawal notice argued that Centripetal’s allegations were without merit.


Image Source: Deposit Photos
Image ID: 168692948
Author: threecvet.gmail.com


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Join the Discussion

2 comments so far.

  • [Avatar for Eileen McDermott]
    Eileen McDermott
    February 1, 2023 08:20 am

    Sorry, that’s posted now.

  • [Avatar for Curious Patent Attorney]
    Curious Patent Attorney
    February 1, 2023 07:00 am

    Please post the motion.

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