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Study: Eight federal judges had conflict of interest

By Charles Bierbauer/CNN

September 13, 1999
Web posted at: 2:01 p.m. EDT (1801 GMT)

WASHINGTON -- Eight federal judges heard arguments and ruled in 17 cases in which they held a financial interest in one of the parties, according to a study obtained by CNN.

The Community Rights Counsel, a public interest law firm which conducted the study, contends the failure of the appeals court judges to recuse themselves is a violation of federal statutes requiring judges to disqualify themselves in such circumstances.

"There is no question there is an absolute statutory bar," Community Rights Counsel's executive director Doug Kendall told CNN. "The last thing in the world you anticipate as a litigant in the nation's appellate courts is that the judge that is hearing your case against the corporation is going to own stock in the corporation you are fighting."

"We take this conscientiously. It's obviously embarrassing when it happens," U.S. Circuit Judge Edward Becker told CNN.

Becker, who sits on the 3rd U.S. Circuit Court of Appeals in Philadelphia, was cited for having heard arguments in two cases against Hercules, Inc. while holding about $10,000 in Hercules stock.

Becker said he erroneously thought he had sold the stock and the circuit court's clerk did not catch the conflict in assigning the cases.

Community Rights Counsel researched the financial statements filed by the more than 150 federal appellate judges for 1997 and cross-referenced those with cases heard by the judges. The result showed eight appellate judges had participated in 17 cases during 1997 in which the judges, their spouses or trusts had financial holdings in one of the parties to the case.

The holdings at the time could have been as small as $1,000 or as large as $250,000. Federal financial disclosure statements require holdings to be reported within a value range.

"We're concerned. The judges are concerned. We're trying to do what we can," said David Sellers, spokesman for the federal courts' administrative office in Washington.

Sellers said the "law is very unforgiving" but added that the number of cases is "very, very small."

"It's a 'gotcha' statute," Sellers said, because even a single share of stock is sufficient to require a judge to disqualify himself.

The judges involved are:

  • Judge Laurence Silberman, D.C. Circuit Court
  • Judge Bruce M. Selya, 1st Circuit Court of Appeals
  • Judge Sandra L. Lynch, 1st Circuit Court of Appeals
  • Judge Edward R. Becker, 3rd Circuit Court of Appeals
  • Judge Alice M. Batchelder, 6th Circuit Court of Appeals
  • Judge Daniel Manion, 7th Circuit Court of Appeals
  • Judge Morris S. Arnold, 8th Circuit Court of Appeals
  • Judge Alex Kozinski, 9th Circuit Court of Appeals.

The companies involved in the cases include General Electric, Eli Lilly, Monsanto, Hercules, Wal-Mart, Lucent, DuPont and General Motors. No allegations of impropriety are made against the companies.

A court of three judges typically hears cases on appeal. Kendall said that in about 80 percent of the cases the court ruled in favor of the company in which one judge held a financial interest. However, Kendall also said that none of the judges cast what would have been a deciding vote for such companies.

Community Rights Counsel made its findings available to coincide with the annual Washington meeting of the Judicial Conference this week. The Judicial Conference is the association of federal judges.

Last year the Judicial Conference issued a memorandum to all federal judges reminding them that "a decision to disqualify based on financial interest is mandatory under the statute and cannot be waived by the parties."

Community Rights Counsel is proposing that judges be required to post a list of companies for which they would recuse themselves. The Judicial Conference declined to require such a measure last year.

Becker noted that the 3rd Circuit now has an automated computer matching program to identify cases in which a judge should recuse himself.

"Had we had then what we have now, this couldn't have happened," he said.



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Monday, September 13, 1999

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