The big legal ethics story of the day is a Wall Street Journal report showing that 131 federal judges, appointed by nearly every President from Lyndon Johnson to Donald Trump, have violated federal law by failing to recuse themselves in cases where either they or family members held a financial interest in one of the parties, meaning that the judge’s decision could have resulted in a direct or indirect benefit. This is, of course, a conflict of interest. Even if the judge was as trustworthy as a saint and would never dream of allowing such a conflict to interfere with his or her judgment, allowing these cases to appear before them violates the judicial ethics canon requiring judges to avoid even the appearance of impropriety.
The Wall Street Journal report found that the judges failed to recuse themselves from 685 court cases since 2010. About two-thirds of all federal district judges had holdings of individual stocks, about one of every five of these heard at least one case involving those stocks without withdrawing. When these judges participated in such cases, about two-thirds of their rulings on motions favored the party that their or their family’s financial interests would benefit from prevailing.
Sure, that could be a coincidence. The point is that it raises suspicion,and suspicion undermines trust. The requirement that judges must avoid the appearance of impropriety exists to prevent exactly this.
As a result of the Journal’s report, 56 judges have directed court clerks to notify parties in 329 lawsuits about their breach. New judges may be assigned to the cases. Writes law prof Jonathan Adler on the Volokh Conspiracy, “The majority of the cases identified by the WSJ may have involved simple oversights, but the report highlights the need for federal judges to place their investments in index funds and equivalent instruments or place their investments in trust.”
The principle that no one should be a judge of his or her own cause was first enunciated by Congress in 1792 to assure the public that courts could be trusted. Since 1974, Federal law has prohibited judges from hearing cases that involve a party in which they, their spouses or their minor children have a “legal or equitable interest, however small.” The law requires judges to avoid even the appearance of a conflict even though most lawsuits don’t directly affect a company’s stock price, because, as the Supreme Court wrote in 1988, the law’s purpose is to promote confidence in the judiciary.
Well, back to the drawing board!