From the column: Disturbing news from the Supreme Court
By Jennifer J. Foster
Buried beneath last week’s political headlines was this disturbing story about a recent development at the Supreme Court. From the NY Times:
Financial and personal conflicts of interest affecting four Supreme Court justices left the court without a quorum last week and unable to decide whether to hear an appeal brought by more than 50 companies that did business in apartheid-era South Africa.
Justices Anthony Kennedy, Stephen Breyer and Samuel Alito, Jr., joined Chief Justice John Roberts in recusing themselves from the case, American Isuzu Motors, Inc. v. Ntsebeza, No. 07-919.
Linda Greenhouse, writing for the Times, says the move “calls attention to the occasionally uncomfortable consequences of the justices’ ownership of stock in individual companies.“
Federal law requires judges to “remove themselves from cases if they own even a single share of stock in a company that is a party in a case,“ Greenhouse writes, but solitary recusals are much more frequent: Judges are not required to divest themselves of their stock holdings, as some executive branch officials are. “A 4-to-4 deadlock is a more common outcome than an inability to proceed with the case at all,“ she writes. But the apartheid case, which Greenhouse says is essentially a consolidation of 10 lawsuits filed in the name of everyone who lived in South Africa from 1948 to 1994 and who was injured by the official system of racial separation,“ involves “dozens of corporate defendants” that represent “a who’s who of American business.“
Justices had recused themselves at least twice this year before the apartheid case came up last week: Roberts did not participate in a March case involving “the permissibility of damage suits against the makers of federally approved pharmaceuticals” (he owns stock in Pfizer, Inc., which owns Kent Pharmaceuticals, the defendant in that case); Alito recused himself from the Exxon Valdez punitive damages case in February (Alito owns stock in Exxon Mobil).
So you see the problem: Judges are forbidden from participating when they hold stock in a company that is party to a case, but they are not required to divest themselves of their stock holdings when they assume the bench.
The Constitution is mute on this subject, offering only this single sentence in Article III, Section 1 on the requirements of federal judicial nominees:
The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behavior, and shall, at stated Times, receive for their Services a Compensation which shall not be diminished during their Continuance in Office.
But it’s not like the Senate, which is charged with confirming federal court nominees, doesn’t see the potential for conflict in this area. Here’s a link to the Senate Judiciary Committee’s questionnaire for then-court nominee Alito. Note that the questionnaire specifically probes nominees on the following:
Question 21. Deferred Income/ Future Benefits: List the sources, amounts and dates of all anticipated receipts from deferred income arrangements, stock, options, uncompleted contracts, and other future benefits which you expect to derive from previous business relationships, professional services, firm memberships, former employers, clients or customers. Please describe the arrangements you have made to be compensated in the future for any financial or business interest.
Question 22. Potential Conflicts of Interest: Explain how you will resolve any potential conflict of interest, including the procedure you will follow in determining these areas of concern. Identify the categories of litigation and financial arrangements that are likely to present potential conflicts-of-interest during your initial service in the position to which you have been nominated.
Question 25. Sources of Income: List sources and amounts of all income received during the calendar year preceding your nomination and for the current calendar year, including all salaries, fees, dividends, interest, gifts, rents, royalties, patents, honoraria, and other items exceeding $500 or more. (Copies of the financial disclosure report, required by the Ethics in Government Act of 1978, may be substituted here.)
Question 26. Statement of Net Worth: Please complete the attached financial net worth statement in detail (add schedules as called for).
You can see the list of Alito’s stock holdings at the time of his nomination to the Court—16 companies and funds, including the much-ballyhooed six Vanguard funds, worth nearly $730,000—on Page 64 of the questionnaire.
Perhaps it was this information that led Congress in 2006 to “deal with the recusal problem by making divestiture more appealing,“ as Greenhouse says. The plan “extended to the federal judiciary the relief from capital gains tax liability that it had already granted to executive branch officials who sell individual stocks and reinvest the proceeds in government securities or approved mutual funds.“
But so far, the justices aren’t buying—or selling.
I tend to think that if executive branch officials who deal in policymaking are expected to divest themselves of stock holdings, the same bar should be applied to justices who could be adjudicating the constitutionality and applications of those policies. The Court is supposedly so well insulated from politics; why not take steps to similarly insulate it from financial influences? Yes, the law already requires justices to remove themselves from cases where they own stock in a company that is a party to the case. But if justices didn’t hold individual stock at all, the law wouldn’t be necessary. The same end—barring justices from participating in a decision that could affect their personal financial worth—would be accomplished, but justices might hear more cases. This apartheid case is one example.
So what do you think? Is this a serious problem, or is it much ado about nothing? I know you’re out there, so chime in with your opinion.
