*Jeffrey Neuman
I. Introduction
Judges have a duty to ensure that all citizens, no matter their race, religion, background, or bank account, get a fair shot at justice.[1] Federal litigation amplifies the importance of this duty due to the nature of disputes litigated at the federal level.[2] The holdings of federal judges can have far-reaching effects that reverberate throughout the country.[3] Thus, it is crucial that the moral character of judges be beyond reproach. Anything less erodes trust in the judicial system and frustrates the pursuit of justice. However, a recent bombshell report by the Wall Street Journal casts light on the systematic failure of the federal justice system to properly handle financial conflicts of interest.[4]
II. The Judicial Code of Conduct Bars Judges from Deciding Cases in Which they Have a Financial Interest
Like lawyers, federal judges must follow the Code of Conduct for United States Judges (the “Code”).[5] Among other things, the Code provides that judges must disqualify themselves whenever their impartiality might be reasonably questioned.[6] Specifically, the Code provides that a judge “shall” disqualify themselves when
[h]e knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding[.][7]
To dissuade willful ignorance, the Code further states that judges should keep themselves informed about their financial interests and make reasonable efforts to stay informed about their households’ financial interests.[8] “Financial interest” includes “ownership of a legal or equitable interest, however small[.]”[9] Thus, while judges are not barred from owning stocks, they are prohibited from presiding over cases in which they, or their immediate family, own stock in one of the parties to the dispute.[10] To avoid such conflicts, judges are required to complete annual financial disclosure forms and are encouraged to keep “recusal lists” containing parties that they should not have in their courtroom.[11]
III. 131 Federal Judges Failed to Disqualify Themselves in the Face of Financial Conflicts of Interest
Recently, the Wall Street Journal compared the financial disclosures and civil case dockets of roughly 700 federal judges to evaluate their compliance with the Code.[12] Troublingly, 131 of those judges violated the law by failing to disqualify themselves in cases where they, or their families, owned stock in one of the parties to the dispute.[13]
Since 2010, those 131 federal judges improperly presided over a total of 685 cases.[14] In 173 of those cases judges’ stockholdings exceeded $15,000, and in twenty-one cases their stockholdings were more than $50,000.[15] Sixty-one of those judges also actively engaged in stock trading while presiding over cases in which they owned stock.[16] Out of the 685 cases examined, judges ruled on contested motions in 145 of those cases.[17] Ninety-four of those rulings—nearly sixty-five percent—favored the judge’s financial interests.[18]
Judges offered several explanations for their violations.[19] Some blamed their law clerks, while others pointed to faulty conflict software or typos in their recusal list.[20] Several judges claimed a misunderstanding of the law, and a few offered no excuse at all.[21] Whatever the individual reasons, the sheer volume of violations discovered is undeniably troubling.
IV. Widespread Failures of Federal Judges to Disqualify Themselves Erodes Trust in the Judicial System.
Based on the responses from many of the federal judges implicated, it appears that a substantial portion of the violations discovered may have been honest mistakes.[22] Even if most of the violations were honest oversights in reviewable decisions, that still does not render them harmless. Of the 131 judges found to have violated the conflicts laws, 129 were federal district court judges and two were federal appellate judges.[23] Even if every single violation discovered was irrelevant to the ultimate disposition of the case, the mere suggestion that roughly fifteen percent[24] of the federal district and circuit court judges may have decided cases based on their financial interests severely damages the reputation of the federal court system.
V. The Courthouse Ethics and Transparency Act
Currently, judges are notified about requests to view their financial disclosures.[25] However, the fear of annoying a judge is sufficient to prevent many litigators from requesting their judge’s financial disclosures.[26] Additionally, the process of obtaining a judge’s financial disclosures is cumbersome and can take years to complete.[27] Thus, the current disclosure system insulates judges from oversight by disincentivizing litigators from seeking their financial disclosures.[28]
However, new legislation designed to facilitate greater transparency of financial disclosures among federal judges is nearing passage in Congress.[29] To date, both the House of Representatives and Senate have passed a version of the Courthouse Ethics and Transparency Act (collectively, the “Act”).[30] Both versions of the Act contemplate the creation of a publicly searchable database for judicial financial disclosures.[31] Only minor differences in the language concerning the scope of the Act stand in the way of its presentation to President Biden for final approval.[32]
If passed, the Act would help minimize the barriers to obtaining financial disclosures that currently insulate federal judges from meaningful oversight.[33] In effect, this would likely shift the burden of identifying potential financial conflicts to attorneys. Due to the adversarial nature of litigation, attorneys are likely to be more motivated to identify and address financial conflicts. Thus, the Act seems poised to bring about important judicial reform.
However, some may view the Act as impermissible congressional infringement on judicial independence,[34] especially considering current criticism over congressional stock trading.[35] Others may criticize the Act for shifting the burden to attorneys.[36] Seeking the disqualification of a judge can be a risky endeavor for lawyers as it could prejudice the judge against the lawyer in future, unrelated cases.[37] Thus, the lack of an independent enforcement mechanism could minimize the efficacy of the Act.
VI. Conclusion
The systematic failure of federal judges to address financial conflicts threatens the integrity of the entire judicial system and clearly indicates a pressing need for judicial reform.[38] If passed, the Act would prevent future conflicts of interest by making judicial financial disclosures publicly available.[39] However, because attorneys may be hesitant to seek judicial disqualification for fear of future prejudice, the Act may fall short of accomplishing its intended purpose.[40] Nevertheless, the Act presents an important step forward on the path to judicial reform.[41]
*Jeff Neuman is the incoming Articles Editor for Law Review and a second-year student at the University of Baltimore School of Law. He currently works as a teaching assistant for Professor Closius’s Constitutional Law class and as a law scholar for Professor Bessler’s Contracts II class. Jeff is also a Distinguished Scholar of the Royal Graham Shannonhouse III Honor Society and a proud Towson University alum. This summer, Jeff will be working as a summer associate at DLA Piper.
[1] See The Role of Judges, NAACP, https://naacp.org/find-resources/know-your-rights/role-judges (last visited May 1, 2022).
[2] See id.
[3] See id.
[4] See James V. Grimaldi et al., 131 Federal Judges Broke the Law by Hearing Cases Where They Had a Financial Interest, Wall St. J. (Sept. 28, 2021, 9:07 AM), https://www.wsj.com/articles/131-federal-judges-broke-the-law-by-hearing-cases-where-they-had-a-financial-interest-11632834421.
[5] Code of Conduct for United States Judges, U.S. Cts., https://www.uscourts.gov/judges-judgeships/code-conduct-united-states-judges (last visited May 1, 2022).
[6] 28 U.S.C. § 455(a).
[7] § 455(b)(4) (emphasis added).
[8] § 455(c).
[9] § 455(d)(4) (emphasis added).
[10] Grimaldi et al., supra note 4.
[11] Id.
[12] Id. The same rules of judicial conduct apply to criminal cases; however, the investigation revealed no instances of judges holding stock in corporate criminal defendants. Presumably, this is due, at least in part, to the minimal number of large corporations charged with criminal offenses. Id.
[13] Id.
[14] Id.
[15] Id.
[16] Id.
[17] Id.
[18] Id.
[19] Id.
[20] Id.
[21] Id.
[22] Id.
[23] Id.
[24] This percentage is based off the current number of authorized judgeships in the United States District Courts and Circuit Courts, without regard to current vacancies. See Judicial Vacancies, U.S. Cts., https://www.uscourts.gov/judges-judgeships/judicial-vacancies (last visited May 1, 2022).
[25] Grimaldi et al., supra note 4; Nate Raymond, Democratic Lawmakers Ask Justice Roberts for Info on Judicial Conflict Failures, Reuters (Oct. 14, 2021, 2:07 PM), https://www.reuters.com/legal/government/democratic-lawmakers-ask-justice-roberts-info-judicial-conflict-failures-2021-10-14/.
[26] Grimaldi et al., supra note 4.
[27] Id.
[28] Id.
[29] See Madison Alder, Online Stock Disclosure Bill for U.S. Judges Passes Senate, Bloomberg L., (Feb. 18, 2022, 1:47 PM) https://news.bloomberglaw.com/us-law-week/online-stock-disclosure-bill-for-u-s-judiciary-passes-senate.
[30] See id.; Courthouse Ethics and Transparency Act, S. 3059, 117th Cong. (2022); Courthouse Ethics and Transparency Act, H.R. 5720, 117th Cong. (2022).
[31] See Alder, supra note 29; S. 3059; H.R. 5720.
[32] See Alder, supra note 29.
[33] See supra Part V; Grimaldi et al., supra note 4.
[34] See FBA Bd. of Dirs., Statement on Judicial Independence, Fed. Bar Ass’n (Feb. 2017), https://www.fedbar.org/government-relations/fba-statements-letters-and-testimony/statement-of-the-fba-board-of-directors-on-judicial-independence-february-2017/.
[35] See Alder, supra note 29.
[36] See Michael Downey, The Delicate Balance of Booting Judges, Nat’l L.J. (Nov. 4, 2013), reprinted as Michael Downey, The Delicate Balance of Booting Judges, Downey L. Grp. L.L.C. (2013), https://www.downeylawgroup.com/wp-content/uploads/sites/34/2017/12/85_-_dlg_-_delicate_balance_of_booting_judges.pdf.
[37] See id.
[38] See supra Part III.
[39] See Alder, supra note 29; Courthouse Ethics and Transparency Act, S. 3059, 117th Cong. (2022); Courthouse Ethics and Transparency Act, H.R. 5720, 117th Cong. (2022).
[40] See supra Part V.
[41] See supra Parts IV–V.
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