Supreme Court Nominees Could Face Tough Decisions About Stocks
Many of the people whose names are being bounced around as possible candidates to fill the seat vacated by Justice David Souter have extensive holdings
in companies whose cases might end up before the Supreme Court.
If selected to the Court, those candidates will have to decide whether to recuse themselves if such a case does come before the court, or whether to just get rid of the stock altogether.
It's an old question, and the Justices have dealt with it in different
ways. Sandra Day O'Connor chose not to take part in over 700 cases
that involved a potential financial conflict during her time on the
Court. Other justices have opted to turn over their holdings to a
blind trust that would manage the assets without informing the justice
of where the money was actually invested.
Just this term, the
issue of recusal arose over Chief Justice John Roberts' ownership of
Pfizer stock. The Court was scheduled to hear arguments in a major
medical product safety and labeling case, Wyeth v. Levine
Meanwhile, Pfizer had purchased Wyeth, the defendant in the case, leading many
legal commentators to argue that Roberts should step away from the
Roberts did not do so, and joined the dissent in opposing the Court's eventual ruling against the company.
Pfizer ownership also created conflict last term when the Chief Justice
decided not to participate in the decision in Warner-Lambert Company v.
, which dealt with claims for damages against makers of federally
approved pharmaceuticals. The case eventually resulted in a 4-4 tie.
Also last term, the Court automatically affirmed a lower court's
decision to allow a case against 50 companies that did business with
the South African apartheid regime to move forward after the Court
could not muster a quorum to decide whether or not to hear the case.
Four justices had to recuse themselves because of financial or personal
interests in the companies named as defendants.
As more and more wealth enters the stock market, it's becoming likely
that these types of situations will arise with increasing frequency.
Judges are not required to sell their stock holdings, but must recuse
themselves if they own any shares in a company that is party to a
case. This, in turn, can lead to a lack of quorum or a tie decision
like the ones above.
Congress has already made divestiture for judges more appealing financially, but is it time for a rule requiring
members of the Supreme Court to divest themselves of their holdings and place their assets into a blind trust or mutual fund?
Court, in love with its tradition, would likely oppose such a rule
vigorously. But do the instances recounted above show a need to buck
the Court's tradition and ensure that the justices will be available to
decide on important legal questions?
Does blind Justice require a blind trust?