Hollywood lobbed a legal ethics bombshell in the bitter financial interest and syndication rules battle yesterday by seeking the disqualification of a Chicago judge who recently wrote an opinion tossing out new Federal Communications Commission fin-syn regs.

The controversy centers on Judge Richard A. Posner, a member of Chicago’s U.S. 7th Circuit Court of Appeals, who two weeks ago wrote a 3-0 opinion overturning FCC fin-syn revisions adopted in 1991. Posner called the rules “unreasoned and unreasonable.”

The decision delighted exex at the Big Three networks, who now appear on the verge of eliminating the 20-year-old rules that have prevented the webs from taking a financial interest in or reaping syndication profits from independently produced TV shows.

Hollywood’s bid to seek Posner’s ouster from the case stems from the fact that Posner, while serving as a professor of law with the U. of Chicago in 1977, was hired by CBS in a case closely related to fin-syn (Daily Variety, Oct. 26). His work for the Eye web involved an affidavit written opposing fin-syn-related antitrust consent decrees proposed by the U.S. Dept. of Justice against NBC.

Federal law states that a judge “shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned,” but typically, the decision to recuse is left entirely to the judge.

In its 21-page “motion for disqualification” filed yesterday, Hollywood’s fin-syn coalition zeroed in on what it asserted was the similarity in Posner’s argument as a law professor 15 years ago in the CBS affidavit, and his ruling two weeks ago against the new FCC fin-syn rules.

In both the affidavit and the judicial decision, Posner theorizes that independent producers should actually benefit if the webs are allowed to acquire fin-syn interests — a claim that has been rejected by advocates of the rules and the FCC.

Hollywood noted in yesterday’s motion that Posner said the FCC is “not entitled to ignore” his theory.

Hollywood’s motion said, “In essence,… the court has directed the (FCC) to provide a satisfactory explanation to the court — including Judge Posner — why Professor Posner’s expert view as advanced in his affidavit is wrong.

“A reasonable person would question whether Judge Posner could be impartial in assessing whether any commission explanation will be satisfactory. Unless he disqualifies himself, Judge Posner will ultimately have to sit in judgment on the FCC’s rebuttal to Professor Posner’s expert theory. The appearance of partiality is overwhelming.”

Hollywood also noted that neither Posner nor CBS disclosed publicly that the judge once worked for the web.

Network lawyers maintain they were not aware of Posner’s past work for CBS. However, Hollywood noted in its filing with the court yesterday that the same D.C. law firm now arguing the network case before the Chi court (Wilmer, Cutler & Pickering) also hired Posner to file his 1977 affidavit.

Backing up Hollywood’s request for Posner’s dismissal were the Assn. of Independent Television Stations, King World Prods. and the D.C. public interest law firm Media Access Project–all groups that have been ardent allies of Hollywood in the fin-syn fight.

Hollywood bolstered its case by persuading two prominent law school professors to sign on to the legal brief: Prof. Geoffrey Hazard of Yale Law School, a noted scholar in judicial ethics, and Steven Lubet of Northwestern U.’s School of Law. Hazard declined comment; Lubet couldn’t be reached.

The Chicago court responded quickly to the disqualification motion by giving all parties until Monday to argue whether Posner should remain on the case. A court spokesman said, “We don’t comment on pending litigation.”

Hollywood’s case against Posner — which represents an extraordinary challenge to the integrity of a federal judge — carries some risk. Perhaps the biggest fear among some fin-syn supporters is that Posner’s fellow judges on the Chi court will be offended by an attack on a fellow jurist.

“The risk is that you tick the other judges off by taking what might be perceived as a cheap shot at a fellow judge,” said one D.C. source.

Another fear among fin-syn supporters is that should Posner remove himself from the case–an option that seems unlikely–he could be replaced by Judge Frank Easterbrook, a 7th Circuit Court jurist regarded as Posner’s equal in his advocacy of free market deregulation.

Diane Killory, lawyer for the fin-syn coalition, declined comment on yesterday’s action. “The paper we filed in court speaks for itself.”

Network reps were not so silent. NBC general counsel Rick Cotton said the pro-fin-syn side “knew about (Posner’s work for CBS) before he ruled on the case. The fact that they’re acting after the decision … is hypocritical sour grapes.”

ABC general counsel David Westin said it is “inexcusable” that Hollywood waited until after Posner released his decision before challenging the judge’s ethics. Westin also dismissed the fact that two prominent law school professors supported Hollywood’s request for a dismissal.

“It’s not like you’re getting an independent decision-maker giving an opinion ,” said Westin. “They’re paid to take a position.”

Westin conceded that Posner himself was paid by CBS for his work on the affidavit.

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