Cross-Posted at the Houston Press
State supreme courts don’t get nearly the attention the United States Supreme Court (SCOTUS) does. State supreme courts decide more mundane issues related to contract, tort and state procedural law, while SCOTUS decides the hot-button/culture war issues surrounding abortion, guns, the death penalty and affirmative action.
But while the media spotlight is not as bright on the state supreme courts, one should not forget that they decide cases that are extremely important to business interests, and business-driven special interests groups have made changing the composition of state supreme courts’ one of their high priorities. The results have been deleterious, to say the least.
What exacerbates this situation is that many states are failing to properly regulate state supreme court justices who hear cases when there is a financial conflict of interest. The Center for Public Integrity has a new report out and it is not pretty. Forty-two states, including Texas, received a grade of “F” for their rules regarding financial disclosure by their states’ highest judges.
Some stark examples include:
Last December, the California Supreme Court declined to hear an appeal filed by a couple who had accused financial giant Wells Fargo & Co. of predatory lending.
One justice, who owned stock in the bank, recused himself from the case. But Justice Kathryn Werdegar, who owned as much as $1 million of Wells Fargo stock, participated — and shouldn’t have.
This is almost unbelievable. Even if one can swallow that Werdegar’s financial interests played no role in her decision, the simple appearance of impropriety would shake anyone’s idea of a fair and impartial judicial vote.
One Arkansas Supreme Court justice’s acceptance of gifts is arguably worse:
In 2012, Arkansas Justice Courtney Goodson accepted a $50,000 trip to Italy from Arkansas attorney W.H. Taylor, according to Goodson’s financial disclosure. The year before, Taylor paid for Goodson’s $12,000 “Caribbean Cruise.”
As one law professor remarked: “I just can’t imagine that there are very many legal cultures around the country where that would be viewed as anything but crazy, horrible judgment.” Indeed.
For Texas’s part, it does require that judges disclose real estate holdings and “[u]nlike most states, Texas judges must report investment income, transactions and the number of shares they own in an individual company’s stock.” While this is good news, Texas’s downfall is two-fold. First, gifts must be reported only if they cash or cash equivalents (like a gift card). This does not solve the Italian vacation problem.
While judges are required to disclose their family members’ financial interests, the reporting instructions advise judges to report information about their spouse and dependent children only if the filer has “actual control over that financial activity.”
“Actual control” allows significant wiggle room. It does not take a clever lawyer to figure out ways to work around this; say, a luxury car leased by someone else for the judge’s use.
The federal courts, meanwhile, have a much more stringent requirement:
The federal recusal statute, however, says that a judge may not sit if he or she or certain family members have even one share of stock in one of the parties involved in a case.
It is difficult to understand why each state would not simply adopt the federal rule. Besides the necessity of the public trust in the state judicial system — which far more people participate in than the federal court system — there simply cannot be differing sets of rules for players in the judicial system depending on if one is chummy with a judge (most people aren’t). The Texas Legislature and the Texas Ethics Commission are on notice.