The law in question is 28 U.S.C. 455. It mandates that a justice "shall disqualify himself in any proceeding in which his impartiality might be reasonably questioned" or "(w)here he has served in governmental employment and in such capacity participated as counsel, adviser or material witness concerning the proceedings ..."
Here is why Kagan must recuse:
In December 2009, the Senate passed the Patient Protection and Affordable Care Act -- or "Obamacare." Its fate then moved to the House. Within days, states were threatening to challenge Obamacare in court if it were enacted.
Kagan was then President Obama's solicitor general. Her job was to defend his administration's positions in federal court disputes.
Anticipating the threatened lawsuits, Obama's Justice Department did not waste time.
CNSNews.com gained documentation of this from the limited number of documents DOJ did release as the result of a Freedom of Information Act request CNSNews.com filed on May 25, 2010. (DOJ initially stalled on releasing any documents in response to this FOIA. On Nov. 23, 2010, the Media Research Center, of which CNSNews.com is a division, sued DOJ over the mater. On March 15, 2011, DOJ released 65 pages of emails and withheld others.)
The released documents included a Jan. 8, 2010, email that Brian Hauck, senior counsel to Associate Attorney General Tom Perrelli, sent to Neal Katyal, Kagan's top deputy.
"Tom wants to put together a group to get thinking about how to defend against inevitable challenges to the health care proposals that are pending, and hoped that OSG (Office of Solicitor General Kagan) could participate," Hauck wrote. "Could you figure out the right person or people for that? More the merrier. He is hoping to meet next week if we can."
Three minutes after receiving this, Katyal responded enthusiastically. "Absolutely right on. Let's crush them," he wrote. "I'll speak with Elena and designate someone."
Thirty-eight seconds later, Katyal forwarded Hauck's email to Kagan, suggesting Kagan assign him to this case.
"I am happy to do this if you are okay with it," Katyal said to Kagan.
About three minutes later, Kagan personally assigned her top deputy to handle the Obamacare issue. "You should do it," she emailed Katyal.
More than two hours then passed. Then at 1:05 p.m., Katyal sent another email to Hauck indicating no ambiguity about what he understood to be Kagan's intentions.