I've only heard of that happening. I have experienced first hand "friendship judging" where the judge is a good friend of the pilot flying and the score reflecting that. I scored a pilot pretty poorly on a sequence which for this pilot was unusual as I had judged him in the past, the other judge was his friend and ride to the contest and scored him well, telling me afterwards he cut him a few breaks because "he knew the pilot could easily do well but he was tired that day). Felt like choking him since we are trying our best in IMAC to eliminate that sort of stuff and he knows it and I tend to do a lot of judging up to and including Unlimted/Invitational unknowns

Typically there are two types of judging bias, knowingly giving someone a break for a given reason and not knowling giving someone a break for a given reason. The knowing version is pretty obvious, not knowing a judge is doing it typically falls under the fact that the pilot flying is well know and has always scored well so the judge tends to be more lenient

The rulebook even covers this

and I quote

1.1.1: Bias. Bias can either be conscious or unconscious. The conscious bias is fortunately rare, and would be for instance when a judge deliberately awards a score lower or higher than the competitor deserves. The word for that action is cheating and it shall not be tolerated. Conscious bias can also occur because a friendship or regional relationship with the competitor. Most problems with bias are of the unconscious or unintentional type since they are more prevalent. A good example would be the ‗halo‘ or recognition for a champion or well-known flier who might unintentionally be awarded extra points based on recognition alone. This can work against an unknown flier having a great day. This type of bias can also work against the champion flier, just because the judge unconsciously might want to see a new face in the winner circle. Another example might be bias towards a certain type of airplane like mono versus biplane, or bias towards a style of flying.
For instance, a pilot cuts crisp corners on square maneuvers versus a flier with a more graceful style. Sometimes we even see an equipment bias where a judge may unknowingly try to support a previous personal opinion regarding a certain brand of radio, certain type of engine, or size of aircraft. These unconscious biases are easily understood as we all have personal preferences. Nevertheless, the judge must try hard to base his or her score solely on the quality of the flight, and nothing more.

The problem is it's hard as heck to prove and as a CD my job is to do my best not to allow it to happen. IO am also on the International Rules Committee (IRC) and we are working towards changes like this, though it's not easy.