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December 4, 2013
The Center’s methodology for grading states on supreme court financial disclosure
States more lax than feds
After seeking input from leading judicial ethics experts, the Center created a grading system based on a slightly tougher version of disclosure requirements for
federal judges. Federal disclosures scored an 84 out of 100 possible points for a letter grade of B. ( See full methodology.)
Federal disclosuresfell short because they are not available online and judges can report the value of investments in broad ranges rather than exact amounts.
Not one state equaled or bettered the federal system’s score.The two highest-scoring states —
Californiaand Maryland— got Cs. Six other states earned a D, while the rest failed.
In many states, it’s practically impossible to glean any meaningful information from judges’ financial disclosures.
Kentucky, a state that earned just 15 points, judges are not required to provide the names of companies in which they have a financial interest. They report family stock ownership in companies in broad categories such as “insurance,” “entertainment” and “energy.”
District of Columbiarequires judges to complete an eight-page disclosure form, but only releases one page to the public.
Ohioasks justices to disclose who gave them gifts, but doesn’t ask what the gifts are or how much they are worth, creating a form that doesn’t distinguish between a keychain and a Cadillac.
Maryland, Missouriand Minnesotarequire requesters to pick up reports in person while judges in Montana, Utahand Idahoaren’t required to file any disclosure reports at all.
“Forty-seven other states have them. What’s wrong with you guys?” asked Les Abramson, a University of Louisville law professor who specializes in judicial ethics.
The Center identified 14 instances in the past three years of justices participating in cases involving companies whose stock was owned by the justices themselves or their spouses.(
See complete list.)
Justices also ruled on cases in which they or their family members received oil and gas royalties or farming subsidies from parties to the litigation.
Like federal jurists, state justices are permitted to own stocks, bonds, mutual funds, real estate and other investments. But state codes of conduct, modeled after American Bar Association guidelines, advise judges to manage their investment portfolios to avoid frequent recusals and limit their business associations with people who are likely to end up appearing in the judges’ courtrooms.
Judges can avoid conflicts by investing in mutual funds rather than individual stocks and bonds. Blind trusts — which contain assets unknown to the judge and are controlled by an outside party — are another strategy used to avoid conflicts.
Still, direct stock investments are relatively common among the judges on the states’ highest courts. Of the 273 supreme court justices required to disclose stock holdings, 107 reported owning stock, or just under 40 percent.
North CarolinaJustice Robert Edmunds is one of many judges who reportedfamily ownership of shares in dozens of companies.
The Center found that he ruled in favor of two companies in which he owned stock — Abbott Laboratories and Wells Fargo & Co.
In an interview, Edmunds told the Center that it was not a conflict of interest for him to preside in those cases.
“Our ethical rules allow participation if the ownership is de minimis,” he said, using the Latin term to describe a trivial amount. “It was so minuscule. … It effectively means whatever decision I make will not have any impact on my financial situation.”
North Carolina’s forms only require that investments worth at least $10,000 be reported, but do not ask for an exact amount.
He declined to provide thevalue of his holdings in those companies.
“Our job is to make decisions and not to try to get out of cases,” he said.
ArkansasJustice Paul Danielson used the same logic to defend an opinionhe wrote in a 2012 case involving XTO Energy, a natural gas company.
The same year Danielson wrote the court’s opinion in favor of XTO, a subsidiary of Exxon Mobil Corp., the justice
reportedhis wife earned between $1,001 and $12,499 in income from the company. He reported the same range of income from XTO in 2011.
Danielson said his wife earned the XTOincome in the form of oil and gas royalties tied to land she inherited from her family. He said he didn’t need to recuse himself from the XTO case. “It certainly wasn’t going to affect my decision,” he said.
“If I had Wal-Mart stock worth $100,000, I’d get off a Wal-Mart case,” Danielson said. “But I won’t get off a case for silly reasons.”
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December 4, 2013
See the nine justices we found who ruled on their own financial interests.
What constitutes a conflict?
But how much stock, real estate or other interests is enough to influence a judge’s rulings on the bench? And who gets to decide? The answer varies from judge to judge, and court to court.
Massachusetts, judges evaluate both the dollar value of the financial interest and whether the interest comprises a substantial portion of the judge’s total economic holdings to determine whether an investment requires stepping aside from a case, said Massachusetts Supreme Judicial Court spokeswoman Jennifer Donahue.
The federal recusal statute, however, says that a judge may not sit if he or she or certain family members have even one share of stock in one of the parties involved in a case.
“The appearance of impartiality is as important as the fact of impartiality,” said Abramson, the Louisville law professor, who is married to Kentucky Supreme Court Justice Lisabeth Abramson. “It’s really about how the public perceives the judiciary.”
Some states — like
Florida, Wyomingand Connecticut— do not include information about spouses, domestic partners or dependent children.
Ethics experts call such omissions unacceptable, noting that the financial interests of a spouse or minor child could directly benefit the judge.
MontanaCourt Administrator Beth McLaughlin said disclosure could “provide information about a spouse or child’s place of employment or home, which is simply ridiculous and can pose a very real risk to judicial families.”
At the federal level, judges must report their family members’ investments, gifts and liabilities. Federal judges, however, are protected by the U.S. Marshals Service as needed, including a 24/7 response to threats.Federal judges can also choose to have security systems installed in their homes at the government’s expense, according to U.S. Marshals spokeswoman Lynne Donahue.
State court systems generally don’t have such formal programs. Judges can request help from state or local law enforcement agencies, though.
State judges’ financial disclosures also may not yield much sensitive security information about families beyond what a cursory search of the Internet might uncover — or what the judges already share.
In the online biographies on Montana Supreme Court’s own
website, some justices have disclosed their children’s names or ages, which is more than most of the toughest disclosure forms require.
A $50,000 vacation?
In 2012, Arkansas Justice Courtney Goodson
accepteda $50,000 trip to Italy from Arkansas attorney W.H. Taylor, according to Goodson’s financial disclosure. The year before, Taylor paid for Goodson’s $12,000 “Caribbean Cruise.”
Goodson’s trip to Italy was by far the most expensive gift reported by supreme court justices in 2012. But she wasn’t the only judge to accept something of value.
In fact, judges reported receiving everything from meals and Indianapolis 500 tickets to country club memberships and expense-paid trips to attend conferences. In some cases, gifts received by judges stood out because of their sheer value, or because the gift giver could have ended up before the court.
Out of 335 judges, 248 are required to report at least some information about gifts or reimbursements they receive, but only 201 are required to disclose the dollar value of the gifts. Of that number, 82 judges reported receiving roughly $279,000 in freebies, with a median value of more than $1,800 per judge.
Twelve states don’t require any disclosure of gifts received or expenses reimbursed.
Some states have gift limits or restrictions. The state of
Washington’s rules are especially strong, limiting gifts to $50 or less. Still, the limits are not without problems due to exceptions or loopholes.
Washington judges can receive “unsolicited tokens or awards of appreciation” worth more than $50 yet still not have to report them. In Iowa, officials face restrictions but can receive gifts worth any amount on their wedding or 25th and 50th wedding anniversaries.
West Virginiarestricts public officials from accepting gifts worth $25 or more from lobbyists or parties who are likely to come before them, meaning judges have to anticipate who might end up in their courtroom.
Joan Parker, executive director of the West Virginia Ethics Commission, acknowledged that the statewide gift laws do not always “match up nicely” with judicial ethics standards.Additionally, West Virginia’s public officials may accept limitless food and drinks as long as the donor is present.
Stephen Gillers, a New York University law professor who specializes in ethics, said gifts should not be banned. “The solution is transparency and reporting.”
Most states only require gifts above a certain dollar amount to be reported and the starting points vary widely, from as little as $50 in
Virginiato as high as $1,000 in New Yorkand New Jersey.
In Goodson’s case, the two trips she received from the Arkansas attorney were allowed under the state’s rules. However, they raised eyebrows after
media reportsearlier this year revealed that Taylor’s clients include John Tyson, the chairman of Tyson Foods, Inc., a food-processing giant based in Arkansas. Taylor and John Goodson, the justice’s husband, have collaborated on several lawsuits.
In an emailed statement to the Center, court spokeswoman Stephanie Harris wrote that Goodson will recuse herself from cases involving Taylor, who is also the judge’s personal attorney. “And out of an abundance of caution,” Harris’ email said, “she will continue to recuse in cases involving Tyson.”
Henry Chambers, a professor of law at the University of Richmond, said that such an extravagant gift from an attorney to a judge might suggest a greater systemic problem with the state’s legal community.
“I just can’t imagine that there are very many legal cultures around the country where that would be viewed as anything but crazy, horrible judgment. You shouldn’t have to have a rule on something like that,” Chambers said. “That’s something where you’ve just got to clean up the legal culture.”
Sometimes judges don’t step aside from cases involving gift givers.
In 2012, for example, Be-Be Adams, a registered lobbyist for Barrick Gold of North America,
gave a $250 giftto NevadaSupreme Court Justice Ron Parraguirre, presumably a ticket to a charity gala.
Less than two months after the benefit, Parraguirre’s court received a still-pending case referred by a U.S. Court of Appeals, involving one of the company’s mines.
His assistant, Roxanne Doyle, told the Center on his behalf that the gift posed no conflict.
“That information was disclosed pursuant to the rules,” she said. “It has no effect on his rulings.”
Gillers, the NYU professor, said judges often tell him they feel that people wrongly assume that a gift or an investment means they can be corrupted.
“I say, it’s not about you, and it’s not about your incorruptibility. It’s about the public’s confidence in unbiased decision-making,” he said. “You can have a just opinion, but if people think it’s unjust because of some undue influence, then the administration of justice has suffered.”
Who needs disclosure?
But discovering “undue influence” requires robust, easy-to-access financial disclosures — something few states have and which some state officials find unnecessary.
Montana, where judges don’t file personal financial disclosures, officials say judges are subject to the American Bar Association’s Model Code of Judicial Conduct and that’s enough to discourage bad behavior. “Frankly, we believe the rules provide a solid guideline for justices to avoid financial conflicts or potential conflicts,” said McLaughlin, the state court administrator.
Minnesota’s court spokesman John Kostouros said his state, which
earned just 17.5 points in the Center’s study, does not need the types of disclosure rules that are necessary in states such as Illinois or New York.
“You really have to watch public officials in those states,” Kostouros said. “Minnesota has a very low tolerance for corruption.”
However, Cynthia Gray, director of the American Judicature Society’s Center for Judicial Ethics, said financial disclosures are a crucial tool for courts to share with the public to help demonstrate the integrity of their judges.
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December 4, 2013
“It’s important for the public to know that [judges] have no basis for their ruling other than the law or the arguments in a specific case,” she said.
In addition, disclosure reports in many states are difficult to obtain. For example, 11 states require judges to file multiple public reports, often kept in different offices. Reports are sometimes filled out in illegible handwriting or so heavily redacted as to reveal little useful information.
Most states supply disclosure reports upon request by mail or email, sometimes for a processing or copying fee — like the federal government. Only eight states post all of their supreme courts’ financial disclosure statements online. Another four post at least some sets of their reports online.
See all available 2012 disclosures.)
“It’s indefensible not to put them online,” said Gillers, the NYU professor. “It’s just a way of making it harder for the public to learn what the judge has an obligation to reveal. So it’s a way of cutting back on the disclosure obligation without omitting the information you have to file.”
Janet Wright, former counsel of
Delaware’s Public Integrity Commission, said the state agency does not post financial disclosure reports online, fearing they could be used to “phish” for account numbers or create a false identity.
Gillers does acknowledge the safety concerns of putting judges’ phone numbers or home addresses on the documents but little else.
“The price of becoming a public servant, including a judge, is that you give up some privacy rights,” he said. “You don’t forsake all of your privacy, but here the loss of privacy, to the extent of identifying your investments, is low. Some would consider it to be nearly nonexistent and therefore not troubling at all.”
Furthermore, some of the states with the most detailed disclosures have not hesitated to go online.
Californiaand Hawaii, among the top-scoring states for their relatively robust disclosure rules, put their reports online. Additionally, more states are moving in that direction. Wyomingposted its reports online after the Center asked about them.
New Mexico, however, went in the other direction. It stopped posting disclosures online this year because the statute only calls for making them accessible to “citizens” of the state, said the secretary of state’s spokesman Ken Ortiz.
Disclosure requirements are worthless without enforcement.
Thirty-six states have meaningful authority to enforce penalties on judges who file disclosures improperly, with penalties ranging from fines to jail time. However, 12 states have only self-policing mechanisms to enforce disclosure rules for their top state judges. They are
Hawaii, Iowa, Kansas, Maine, Maryland, Michigan, Minnesota, Nebraska, New Jersey, New York, South Carolinaand Vermont.
In those states, a judicial commission can investigate complaints about the high-court judges but those same judges must ratify the commission’s decision or decide which penalties to hand down.
Wyominghas such a system, but it has taken steps to avoid justices ruling on their peers.
While the state Supreme Court is the ultimate stop for judicial misconduct cases, the state constitution calls for creating a special court made of up of district judges to rule on any investigations involving Supreme Court justices. The state even had to use it, said Ronda Munger, the court system’s spokeswoman, for a justice who ultimately agreed to retire from the bench.
“It was a good process. It was not a nice process,” she told the Center. “We really wish it didn’t happen.”
But sometimes even after a judge has been admonished, the problems do not end.
WisconsinSupreme Court Justice Annette Ziegler was officially warned by a state commission about conflicts of interest for her work in a lower court after she was reportedto have presided in more than 22 cases involving companies in which she owned stock.
She apologized for the ethical violations, saying they were unintentional.
Yet the Center found that, as a Supreme Court justice, she again ruled on a case in which she had a financial stake in one of the parties.
Ziegler took part in a 2012 decision involving Merck & Co. and Johnson & Johnson after the drug companies were accused of charging inflated drug prices to the state’s Medicaid system. The court decided against the companies on two of the three legal questions presented in the appeal. Ziegler
reportedowning more than $50,000 worth of each company.
The justice did not return multiple calls for comment.
California, the reaction to the potential conflict raised by the Center was quite different.
The California Supreme Court said it will review its internal procedures meant to detect potential conflicts of interest, noting that something went wrong when it failed to discover Justice Werdegar’s financial interest in Wells Fargo.
“The justice regrets the error,” said court spokesman Cathal Conneely.