Testimony of Douglas T. Kendall, 
Executive Director, Community Rights Counsel

Prepared for the House Judiciary Committee
Subcommittee on Courts, the Internet, and Intellectual Property  

November 29, 2001  

            Mr. Chairman and Members of the Committee:  Thank you for conducting this important oversight hearing on the operation of federal judicial misconduct and recusal statutes.  A bedrock of our system of government is the principle that no one – least of all a federal judge – is above the law.  Judicial misconduct and recusal statutes help preserve the sanctity of this principle by ensuring that ethical and legal transgressions by judges are taken seriously, even if they do not rise to the level of an impeachable offense.  These statutes must function properly in order to protect the public trust and confidence upon which our independent judiciary rests.   

            I am the founder and Executive Director of Community Rights Counsel, a not-for-profit, public interest law firm located in Washington, DC with the mission of helping state and local governments defend land-use and environmental protections against court challenges.   Surprisingly, CRC has also become deeply enmeshed in several issues pertaining to judicial ethics. I say surprisingly, because this was not supposed to be a substantial part of CRC’s mission.  CRC also regularly litigates in federal court, making it uncomfortable for us to also play the role of a judicial ethics watchdog organization.    

CRC got involved in judicial ethics issues only after we learned that a corporate-funded outfit called the Foundation for Research on Economics and the Environment (FREE) located in Montana was hosting federal judges for week-long stays at resorts and dude ranches and teaching judges to be deeply skeptical about environmental laws and land-use protections.  We have stayed involved in the subject because each place we looked, under every rock we turned, we have found troubling evidence of a problem.  Our work has convinced me that the federal judicial misconduct and recusal statutes are not working as well as they should and that there is a need for vigilant oversight on this issue by Congress.  

            My testimony today will cover two topics that have been the subject of Community Rights Counsel reports: financial conflicts of interest and corporate-funded trips, what some have labeled "junkets for judges."  While these problems are distinct, common threads run between them.  Both problems illustrate the critical need for accurate and timely public financial disclosure by judges and the serious flaws in the existing disclosure system.  Both problems also illustrate the need for effective penalties for non-compliance with ethical standards and the inadequacy of the current judicial disciplinary system in acting as a serious deterrent.  Finally, corporate litigants -- as the funders of the trips and the source of the financial conflicts -- are at the center of both problems.  This fact is disturbing because at the same time these junkets and stock conflicts have come to light, there has emerged a new form of judicial activism from our federal courts that is pro-market, hostile to government regulations and in keeping with the interest of these same corporations.  

I.          Junkets for Judges Undermine Public Confidence in
             the Judiciary

            Corporations and foundations that have a legal agenda in the courts are advancing this agenda by paying for free trips for federal judges to resorts and dude ranches.  Once there, judges attend lectures making the case for curbing government regulation in favor of a free-market approach to matters like protecting the environment.   

A.        Corporations and Special Interests with Legal Agendas Should Not Be Permitted to Give Judges Gifts worth Thousands of Dollars  

The problem with junkets for judges starts with the funding.  Corporations and foundations with a legal agenda should not be permitted to fund, and thus shape, the legal education received by our federal judges.  The fact that judicial education is being paid for by entities that have an interest in or are parties to federal litigation creates an appearance of improper influence and undermines public trust and confidence in the judiciary.  

A July 2000 report by Community Rights Counsel, Nothing for Free: How Private Judicial Seminars are Undermining Environmental Protections and Breaking the Public's Trust, (recently republished in the Harvard Environmental Law Review and available online at www.tripsforjudges.org) provides a comprehensive look at the problems posed by privately funded judicial seminars.  Nothing for Free found that between 1992 and 1998 more than 230 federal judges – more than a quarter of the federal judiciary – traveled to resorts at the expense of private interests with a stake in federal litigation.   

An April 2001 ABC News’ 20/20 program, which focused on a trip hosted by George Mason's Law and Economics Center (LEC) at the Omni Tucson Golf Resort and Spa, perfectly illustrated this problem.  The 20/20 program featured federal judges on the golf course and lounging poolside with cocktails.  Several judges interviewed on camera called the trip a “vacation.”  Meanwhile, ABC News discovered numerous cases in which LEC’s corporate sponsors were litigating before a LEC attendee.   

Consider finally a recusal motion recently filed in a case called Aguinda v. Texaco.  Lawyers for 30,000 Ecuadorian Indians sought to remove the judge hearing their $1 billion environmental case against Texaco after learning that Texaco had been a regular and substantial contributor to FREE, which hosted a junket attended by the presiding judge.  At the FREE trip, the former CEO of Texaco gave a lecture to the judge entitled "The Environment: A CEO's Perspective."  

On the 20/20 program and elsewhere, judges have asserted that they were unaware of the corporate funding of FREE and LEC.  For example, one judge told 20/20: "I have no idea where [LEC] gets its money."  When asked by 20/20 whether he knew that LEC gets its money from corporations, another judge responded, "[LEC] didn't tell us that."  When asked whether he had an obligation to find out, this judge responded: "Not necessarily, I mean because what's the difference?"   

Advisory Opinion 67, issued by the Judicial Conference’s Committee on Codes of Conduct, requires that judges investigate the sponsors and "source of funding" for any privately funded seminar before attending.    A September 1998 report, prepared by the Committee on Codes of Conduct in response to a request by several members of this Subcommittee, reaffirmed that under Advisory Opinion 67, "specific information about the sponsor of the seminar, the source of funding, their involvement in litigation, the content of the seminar, and the judge's relationship to such litigation all bear on the question of whether a judge's participation is proper or improper under the Code of Conduct."   

 B.       Corporations and Special Interests are Using
            Junkets to Advance a Legal Agenda

During an interview for 20/20, the Dean of the George Mason Law School frankly admitted that LEC is "out to influence minds . . .  If court cases are changed, then that is something we are proud of as well."   FREE is equally brazen about using its seminars to promote “free market environmentalism,” a school of thought that embraces, in their words, “property rights, market processes and responsible liberty” and rejects “command and control” environmentalism.  

Particularly troubling is the evidence that suggests that these private seminars are in fact changing court cases.  CRC's Nothing for Free report documents a pattern of disturbing facts, including the following:  

·        In 10 of the last decade’s most dramatic departures from established precedent in the area of environmental law, the judge striking down the protection took part in at least one junket.

·        In six of these cases, the judge attended the trip while the case was pending.

·        In at least three of these cases, the judge ruled in favor of a litigant bankrolled by the trip’s sponsors.

·        In one of the decade’s most important environmental rulings, a judge ruled to uphold habitat protection, attended a seminar, came back, switched his vote, and wrote an opinion striking down a central component of the Endangered Species Act.  

Even assuming that the remarkable correlation documented in Nothing for Free is complete coincidence, this correlation still creates an awful appearance problem for judges and the judiciary.  As Representative Zoe Lofgren of this subcommittee stated eloquently at an oversight hearing three years ago when word of these trips first came to light:  

There is nothing more damaging to citizens' faith in the country and in the due process of law than the belief, even if inaccurate, that those who are trusted to judge have been influenced by financial connections.  

            C.        Judicial Education Should Not Take Place in
                        a Vacation Setting  

The exotic locales of the FREE and LEC trips exacerbate the appearance problems stemming from these programs in several ways.  Most obviously, even if corporate litigants were permitted to fund judicial education, they certainly should not be permitted to pay for judicial vacations.  Additionally, however, the resort settings give FREE and LEC a competitive advantage over seminars hosted by the taxpayer-funded Federal Judicial Center .  As Abner Mikva stated in a recent New York Times opinion piece:  

The federal judiciary has a Federal Judicial Center that provides educational seminars for judges on a wide range of legal topics.  Since it uses taxpayer funds and answers to Congress, the program locales are not exotic, but the presentations are balanced.   

Judge Rya Zobel, former Director of the Federal Judicial Center , echoed Judge Mikva in testimony before this Subcommittee: "we have offered annually a program on environmental law, for example, in conjunction with Lewis & Clark University .  The primary complaint we've had about that is that we work the judges too hard."  

II.        Judicial Stock Conflicts Cannot Be Tolerated  

            Over the last three years, news organizations and Community Rights Counsel have looked at different judges and different geographic regions and come to the same conclusion: judges are ruling far too frequently in cases in which they have a disqualifying financial conflict of interest.  

            A.        Legal and Ethical Standards Are
                        Unequivocal  

The legal and ethical standards with respect to financial conflicts of interest could not be clearer. Judges cannot rule in a case in which he or she has a financial interest, period. This obligation is enshrined in federal law (28 U.S.C. § 455) and the Canons of Judicial Ethics (Canon 3). It is enforced by a certification requirement which every judge must sign each year, subject to criminal and civil sanctions, certifying that:  

In compliance with the provisions of 28 U.S.C. § 455 and of Advisory Opinion No. 57 of the Advisory Committee on Judicial Activities, and to the best of my knowledge at the time after reasonable inquiry, I did not perform any adjudicatory function in any litigation during the period covered by this report in which I, my spouse, or my minor or dependent children had a financial interest, as defined in Canon 3C(3)(c), in the outcome of such litigation.

            B.        Studies Reveal Remarkable Numbers of
                        Stock Conflicts  

            Perhaps the most dramatic results were found in a study published in 1998 by the Kansas City Star.  The Star looked at district court judges in four courthouses in four states and found 57 cases in which a judge had issued one or more orders despite owning stock in one of the parties.   Remarkably, in three of the four courts examined, at least half of the judges ruled in one or more cases in which he or she had a financial conflict of interest.   

            Following up on the Kansas City Star’s series, Community Rights Counsel conducted a study to identify conflicts of interest among active federal appellate judges.  Looking only at a single year and at rulings on the merits published in the Lexis® database, we identified eight judges that ruled in 17 cases in which they had a disqualifying financial interest (this study is available online at www.communityrights.org).   

            The results of CRC’s study are particularly remarkable in light of the context in which they occurred.  The disclosure forms we reviewed were filed after the Kansas City Star series and after receipt by each of the judges of an urgent letter from the Judiciary’s Codes of Conduct Committee reminding them of the legal obligation “not only to be informed about his or her personal financial interests but also to make a reasonable effort to be informed about the personal financial interests of the judge’s spouse and minor children.”   

            Nevertheless, every judge identified in our study certified under penalty of criminal and civil sanctions that they had not performed any adjudicatory function in which they had a disqualifying financial interest.  For each judge, this certification was apparently inaccurate and a simple search on Lexis® (available to every federal judge) would have revealed these conflicts.  Moreover, each circuit court requires corporations to file a corporate disclosure form early in the appellate litigation process to ensure that judges can easily flag any financial conflicts.  Our study strongly suggests that many judges are not taking their obligation to avoid financial conflicts seriously enough.  

            It is also troubling to note that in more than 80 percent of the conflict cases we identified, the judges in question ruled at least partially in favor of their financial interests.  I do not view this as evidence that the judges were using their judicial power to advance their pecuniary interests.  I am convinced that in the vast majority (if not all) of these cases, the conflict resulted from mere oversight.   But I do find it very troubling when judges hold a great deal of stock in major corporate litigants, rule in favor of these litigants in most cases and, occasionally, rule in cases where they have a stock conflict.  It certainly adds grist to the mill of those who argue that the judicial system is biased in favor of wealthy corporate interests.  

III.       Judges’ Financial Disclosure Forms are Hard to
            Obtain and Omit Required Information  

            A theme running through both the stock conflict and junkets stories is the fact that judges’ financial disclosure forms are inordinately difficult to obtain and, too frequently, omit required information.  

            A.        The Disclosure Review Process Is Unduly
                        Burdensome  

            Unlike the other two branches of government, which allow review and duplication of financial disclosure forms on the same day they are requested, the judiciary's Financial Disclosure Office notifies a judge in writing before granting access to a financial disclosure report. This advance notification seems contrary to the Ethics Reform Act of 1989, which establishes detailed procedures for the disclosure process and makes no allowance for such advance notification.   Because most litigants would rather not risk upsetting a judge, advance notification creates a powerful deterrent to many potential reviewers.  It also takes at least a week, and frequently over a month, for the Financial Disclosure Office to process requests for review of a financial disclosure form.  

            The Judiciary’s resistance to making public disclosures easily available to the public is perhaps best illustrated by the Committee on Financial Disclosure’s decision to deny a request for disclosures filed by an online publisher called APBnews.com. In late 1999, APBnews.com requested a copy of the 1998 disclosure forms for each federal judge and magistrate with the intent of publishing them on the Internet (something already done for members of Congress).  APBnews.com paid for the copies, but while waiting for the reports, the Financial Disclosure Committee issued an indefinite moratorium on the public release of any disclosures, to anybody.  Eventually the Financial Disclosure Committee lifted the moratorium, but permanently barred APBnews.com from obtaining copies of the disclosure forms.   

B.        Judges Routinely Omit Required
                        Information  

Those succeeding in obtaining judges' financial disclosure forms are often disappointed in the accuracy and completeness of the information conveyed therein.   

For example, after publishing its series on stock conflicts in April 1998, the Kansas City Star reviewed the financial disclosure forms filed in May 1998 by the 33 judges included in their study.  The Star found that one out of every three reports included information that by law should have been disclosed earlier.  This new information led to the discovery of three additional conflicts of interest that were hidden by omissions in prior disclosure forms.   

CRC made similar findings with respect to disclosure of judicial junkets. The laws and guidelines concerning what a judge must disclose to the public are clear and simple.  Both federal law and Advisory Opinion 67 require that judges "report the reimbursement of expenses and the value of the gift on their financial disclosure reports."   

Comparing financial disclosure forms with attendee lists prepared by FREE and LEC, CRC determined that at least 22 federal judges failed to report FREE or LEC junkets, even after a September 1998 memorandum from the Financial Disclosure Committee warning: "Judges who have accepted such trips and not reported them on their financial disclosure forms in past years should immediately file amended reports."  This represents approximately 11% of the judges that FREE and LEC report attending junkets during this same time period.  Put another way, nearly one out of every nine federal judges apparently failed to report a privately funded trip even after a personal reminder about the requirements of federal law from the Disclosure Committee.   

Under-disclosure is as large a problem as non-disclosure. Again despite clear mandates, judges’ financial disclosure reports routinely fail to report all the information required.  For example, in 1998, only 3 of the 34 judges who reported attending FREE seminars attempted to estimate the value of the seminar gift, as required under federal disclosure law.  

IV.       The Judicial Discipline System Established in 28 U.S.C. § 372 Is Not Acting as an Effective Deterrent  

Federal judges are taking trips funded by corporate litigants, ruling despite financial conflicts and omitting basic information from financial disclosure forms.  One searching for an explanation need look no further than recent statistics from the Administrative Office of the U.S. Courts regarding judicial disciplinary actions pursuant to the process established in 28 U.S.C. § 372.  These statistics, summarized in an April 1998 story by the Kansas City Star, demonstrate that the judicial discipline system is not working effectively to deter ethical violations. 

            According to the Star, in fiscal years 1996 and 1997 more than 1,000 formal complaints were filed against federal judges nationwide.  The chief judges' decided that not one of these cases required official discipline.  Indeed, the chief judges failed to send a single complaint on to the next level in the complaint process; investigation by a committee of judges.  In more than 450 cases, complainants appealed the dismissal of their complaint to the judicial council of an appellate court.  These councils rejected every appeal.    

            Undoubtedly, many of these complaints were filed by disgruntled litigants and warranted no disciplinary action.  But given the evidence that suggests that ethical transgressions do occur with some regularity, it strains credibility to suggest that not one of over 1,000 formal complaints warranted any official disciplinary action.  

            As every judge knows, the law only works if there are penalties for its violation.  In the case of transgressions by judges of legal and ethical standards, there appears to be no effective deterrent.  This is reflected in the persistence of stock conflicts and non-disclosures despite explicit rules and clear reminders from the Administrative Office.  It is also reflected in the cavalier reaction of many judges to reports of improprieties.  For example:  

• Judge Tom Stagg of Louisiana responded to proof that he failed to disclose a junket by telling the Washington Post: "The food was wonderful; the teachers were wonderful.  If somebody doesn't like it, I'm sorry."  

• When the Kansas City Star confronted Judge Ancer Haggerty with evidence that his financial disclosure form omitted basic information on his stock holdings, he refused to detail his actual holdings claiming: "You are entitled to these reports, but that is all you are entitled to."  

• When asked by the New York Daily News if he had read the financial disclosure form upon which the judge certified, inaccurately, that he had not ruled in any cases where he had a financial conflict, Judge Whitman Knapp replied: "Heavens, no!  It wouldn't have any meaning to me."  

V.        Conclusion and Recommendations:  

I again want to commend the Committee for conducting this important oversight hearing.  As described above, there is substantial evidence that suggests that the federal judicial misconduct and recusal statutes are not working effectively enough to prevent erosion of the public’s trust and confidence in the judicial branch.  Permit me to leave you with several recommendations for using this Committee’s oversight authority in responding to the problems posed by judicial junkets, stock conflicts and non-disclosure.  

I also note that in the 106th Congress, Senator John Kerry (D-MA) and Senator Russ Feingold (D-WI) introduced legislation (S. 2990) that would have banned large gifts associated with privately funded judicial seminars.  They have promised to introduce a revised bill this term and to fight for its passage.  I urge members of this Committee to consider introducing legislation on this topic in the House.   

            Impose Penalties for Stock Conflicts and
            Non-Disclosure: There should be more effective penalties to enforce judges' disclosure obligations and the ban on ruling in cases in which a judge owns stock.  For example, litigants discovering a stock conflict within some statute of limitations period should be able to vacate any adverse rulings and seek a new hearing before a judge without a conflict.  

            Post Recusal Lists at Local Courthouses:  The Judicial Conference's Committee on Financial Disclosure considered and rejected a proposal that would have required judges to maintain an up-to-date "recusal list" available to litigants (without advance notification of the judge) at the clerk's office.  This Committee should ask the Judicial Conference to reconsider implementation of this common-sense reform.  

            Make Financial Disclosure Forms Available without
            Advance Notification: The judiciary is currently seeking the extension of statutory authority (5 U.S.C. app. 4, § 105(b)(3)) for the Judicial Conference to prevent "the immediate and unconditional availability of [financial disclosure reports]" where release of the forms could endanger a federal judge.  This is sound public policy, but this statutory provision strongly implies that where there is no danger to a particular judge, financial disclosure forms should be immediately available.  This is never the case with judges' financial disclosure forms.  As described above, there is always a lengthy advance notification process that significantly hinders public review of judges' disclosure forms.  

An alternative procedure that seems to address the legitimate concerns of the judiciary would be as follows.  Judges should annually file two versions of their financial disclosure forms: one for the Financial Disclosure Office and one for public review.  Judges should be permitted to redact from the public review copy any information that is truly personal and sensitive (i.e. the judge's signature, any reference to the names of the judge's children, etc).  These public review copies should then be made available immediately upon request.  If the Judiciary, in consultation with the United States Marshal Service, decides that release of even this public review copy could endanger a judge, they should be permitted to further redact the report only to the extent necessary to protect the judge and only for as long as the danger to the judge exists. 

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