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Over 130 federal judges accused of breaking law by taking cases where they held financial interests

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More than 130 federal judges have violated the law by accepting and deciding cases in which they had a financial interest, according to an in-depth investigation by The Wall Street Journal, published Tuesday.

The paper discovered that the judges, spanning appointments from presidents as far back as Lyndon B. Johnson to as recently as Donald Trump, neglected to disqualify themselves from 685 cases around the country since 2010, and that two-thirds of U.S. district court judges have disclosed that they hold individual stocks. Also, “nearly one of every five” who made the disclosures “heard at least one case involving those stocks,” the report added.

After being told of the alleged violations by the WSJ, 56 of the judges told court clerks to inform parties involved in 329 lawsuits that they should have recused from their cases, meaning that new judges could be assigned to re-hear the cases and that different outcomes are possible.

“When judges participated in such cases, about two-thirds of their rulings on motions that were contested came down in favor of their or their family’s financial interests,” the Journal added.

One case, for instance, involved U.S. District Judge Edgardo Ramos of the Southern District of New York, who presided over a lawsuit between a unit of Exxon Mobil Corp. and TIG Insurance Co. regarding a pollution claim when he owned between $15,001 and $50,000 worth of Exxon stock, per a financial disclosure form seen by the newspaper. “He accepted an arbitration panel’s opinion that TIG should pay Exxon $25 million and added $8 million of interest to the tab,” the WSJ noted.

Meanwhile, Judge Lewis Babcock in Colorado presided over a case relating to a subsidiary of Comcast Corp., in which he ruled in favor of the company when he also owned between $15,001 and $50,000 of stock in Comcast.

Another example involved Judge Julia Smith Gibbons, with the United States Court of Appeals for the Sixth Circuit in Cincinnati, Ohio, who ruled in favor of Ford Motor Co. in a case involving a trademark dispute when her husband owned stock in the automobile manufacturer. The WSJ said after she and the other judges on the three-judge panel heard arguments from both parties ahead of their ruling, Gibbons’ husband’s financial adviser made two purchases of Ford stock, both of which were valued at $15,000 at the time, for his retirement account, her financial disclosure forms revealed.

“The hundreds of recusal violations found by the Journal breach a bedrock principle of American jurisprudence: No one should be a judge of his or her own cause. Congress first laid out that principle in 1792 to guarantee litigants an impartial judge and reassure the public that courts could be trusted,” the WSJ reported.

One official with the Southern District of New York told the paper that Ramos was not aware he violated any rules during the Exxon case because a “recusal list” he and other judges keep in their chambers containing parties that should not appear in their courtrooms only listed parent company Exxon Mobil Corp., not the unit in question, which also includes the term “oil.” The official added that the software used to screen cases used exact term matches.

After the WSJ reached out to Ramos, who was appointed by then-President Barack Obama, and the court clerk informed the parties of his stock holdings, attorneys for TIG asked the court to vacate his ruling and give the case over to a new judge due to “the inevitable appearance of partiality.” Exxon Mobil opposes that, stating a “manifest unfairness, gross inefficiency, and waste of judicial resources” as its justification. The paper said that for now, “an appellate court has put a hearing on hold until the district court decides what the to,” the paper said.

When contacted, Babcock admitted, “I dropped the ball,” adding: “Thank you for helping me stay on my toes the way I’m supposed to.” He sent the Comcast case back to a state court, which is what the company wanted.

Gibbons, meanwhile, said that she did not believe she was required to recuse from the Ford case because the stock belonged to her husband. She has directed the appeals court to notify the parties in the case of her violation.

“I regret my misunderstanding, but I assure you it was an honest one,” she said, according to the WSJ.

Jon Dougherty

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