Brian Watson objects to judge’s decision not to recuse himself

Brian Watson is the owner and CEO of Northstar Commercial Partners. (BusinessDen file)

Northstar Commercial Partners CEO Brian Watson has formally objected to a Virginia judge’s decision not to recuse himself from a case involving the company over stock ownership.

For the last 18 months, Judge Liam O’Grady of the Eastern District of Virginia has overseen a lawsuit that was filed against the Denver-based real estate firm by Seattle-based Amazon.

Amazon has accused Northstar, which is fully owned by Watson, of bribing two Amazon employees in order to win data center development deals in northern Virginia. Watson has denied wrongdoing.

Last week, O’Grady told the parties involved in the case that he learned on Nov. 23 that his wife held about $22,000 of Amazon stock “not in a mutual fund as he understood, but in a brokerage account.” He said his wife sold the stock on Dec. 2.

Judges are not allowed to hear cases in which they or their family have a financial interest.

In his Dec. 14 filing, however, O’Grady said he had determined that he did not need to disqualify himself from the case and that he would continue to oversee it. He said the parties could object to that decision if they wanted.

Watson, Northstar and Carl Nelson — one of the two now-former Amazon employees, and also a defendant in the lawsuit — did so on Tuesday.

In a joint filing, the defendants said that learning that O’Grady’s wife owned Amazon stock “has fundamentally shaken the confidence of these Defendants in the Court’s ability to hear and consider their positions impartially.”

“This litigation has, obviously, not gone well for the Northstar Defendants during this preliminary stage and the rulings of this Court have devastated their business,” the defendants wrote in the filing.

In disclosing the stock ownership last week, O’Grady cited several reasons for continuing to oversee the case.

“All interests that provide the grounds for disqualification have been divested; the financial interests held were not substantially affected by any actions taken by the Court and will not after divestiture be substantially affected by the outcome of this litigation; the Court has devoted substantial time to this litigation; and disqualification would substantially affect the progress of the case, and the public interest in the efficient administration of justice,” O’Grady wrote.

Watson, Northstar and Nelson, however, said they consider the case to still be in the “early stages.”

They also questioned O’Grady’s brief account of realizing that his wife owned the stock. They wrote in their filing that O’Grady listed Amazon stock in a required “Financial Disclosure Report” as early as 2015, and specifically said it was held in “Brokerage Account #1.” The Amazon holding was included again in subsequent years’ reports.

Although judges file these reports, the defendants said that they can be difficult for the public to actually obtain.

“To access them, an individual must submit a written request for the report of a specific judge for a specific year, and even then the Committee on Financial Disclosure estimates that release of the requested Report could take months or years,” they wrote.

Watson, Northstar and Nelson said they requested O’Grady’s most recent financial reports on or around Sept. 28, the day the Wall Street Journal published an investigative report focusing on stock holdings by federal judges.

Watson, Northstar and Nelson wrote they remain “resolute in their determination to fight this case on the merits and to clear their names,” and said they’re glad the case is proceeding to the discovery stage. But they said a new judge should be assigned to it.

“A reasonable observer might well conclude that Judge O’Grady knew of his spouse’s financial interest in Amazon when (the) case was assigned to him, yet decided to take the case and issue a raft of decisions, nearly all of which favored Amazon,” they wrote. “Such facts call into question whether the Court is acting impartially.”