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When Justices play the stock market

COMMENTARY | May 16, 2008

Why don't Supreme Court justices explain their recusals – and not leave it up to reporters to guess?

By Gilbert Cranberg

The U.S. Supreme Court found itself hogtied the other day when it lacked a quorum after four justices recused (disqualified) themselves. At least six justices are required to decide a case. “As is usual,” the New York Times reported, “the court did not give reasons for the justices’ recusals.” The Times speculated that it may have been because three justices own stock in parties to the case and that the son of a fourth justice works for a litigant.

Why is it “usual” for justices to not explain their absence from cases? After all, when one or more justices sit out of cases litigants can be denied the court’s opinion. Without an explanation for a recusal there is no way to know how the federal recusal statute is being interpreted. And if the reasons for recusal form a recurring pattern perhaps something should be done about it. Speculation about the “why” of a recusal is no substitute for knowing the explanation in a justice’s own words. Besides, the court is a public body that ought to conduct its business as openly as possible.

Years ago I was curious about what looked to be mindless secrecy, so I wrote to the justices, in behalf of the Des Moines Register, to ask why they do not disclose the reasons when they recuse themselves. I was surprised as much by the number who answered as by the content of the reponses. I heard from six of the nine then-sitting justices – William Rehnquist, Lewis Powell, John Paul Stevens, Byron White, Harry Blackmun and Sandra Day O’Connor. For the most part, the reasons given were flimsy. Several cited custom or tradition; Rehnquist said he did not explain his reason for recusal “because it might well be a reason with which some of my colleagues would agree and some would not.” The justices, of course, disagree on a host of matters all the time.

The correspondence was prompted by the Register’s interest in the stock investments by members of the court. It seemed to the paper that too often the justices had invested in companies likely to be in litigation. In addition to requiring recusals that could deny the parties the participation of the full court, the stock investments created the possibility that some justices would inadvertently sit on cases in violation of the federal disqualification statute.

Indeed, the more I studied the financial disclosure forms and the high court’s docket the more cases I found where justices had been negligent in not recusing themselves. The federal law is unforgiving; it mandates recusal for the ownership of even one share of stock in a litigant, and justices are required to be informed about their holdings.

Not much has changed in terms of stock ownership in the more than quarter-century since I last looked into the subject, in large part because some justices have not been persuaded by the advice of the Register and others that  the justices quit the stock market except for mutual funds and securities placed in blind trusts. While some of the current justices have steered clear of the stock market, others, notably Justices Stephen Breyer and John Roberts, are heavily invested. Worse, several have invested in the same companies – Roberts and Samuel Alito in both Intel and Disney and Roberts and Breyer in Merck.

The most recently available  financial disclosure statements list stock in some 15 pharmaceutical or other health-care companies owned by the justices, chiefly Breyer and Roberts. Just recently the court could not muster a majority to decide a major pharmaceutical liability case because Roberts had to recuse himself. The 4-4 standoff left the court without an opinion in an important area of the law. Still pending before the court is a related case that could have major impact on suits against manufacturers of drugs and medical devices approved by the Food and Drug Administration.

The federal recusal statute requires that justices step aside not only if they own stock in a particular company with a case before the court but also if they have a “financial interest” in “the subject matter in controversy.” That presumably could come into play if the ruling in a case affects an entire industry. The many health-care investments by members of the court raise questions about whether there should have been more recusals in cases before the court dealing with product liability and the Food and Drug Administration.

A fresh flock of annual financial disclosure statements has just been filed and will be publicly available soon. The press ought to closely scrutinize the filings  and report whether the justices are getting out of the stock market or simply digging themselves in deeper. Questions need to be asked also, in light of the justices’ holdings, about how faithfully they adhere to the federal law’s admonition to remove themselves from cases in which their “impartiality might  reasonably be questioned.” And it ought to go without saying that the press should press for ending the inexcusable secrecy that surrounds why justices recuse themselves.

Marcia A.Wolff, a Washington lawyer, assisted in this article.

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