Report: Federal Judge Took on 138 Cases Involving Companies in Which He Had a Financial Interest

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A report in the Wall Street Journal published on Tuesday revealed the eye-opening information that 131 federal judges heard cases involving companies in which they or a spouse held a financial interest. Federal law “requires judges to disqualify themselves from cases if they, their spouse or minor children hold a financial interest in a plaintiff or defendant, including the interest of a beneficiary in assets held by a trust,” according to the Journal.


The judges expressed shock, shock, I say, at the notion they violated federal law and damaged the credibility of an independent, non-biased judiciary.


“I dropped the ball,” said Judge Lewis Babcock of the U.S. District Court of Colorado when asked about his recusal violation. He blamed flawed internal procedures. “Thank you for helping me stay on my toes the way I’m supposed to.”

The judge in question owned thousands of dollars in Comcast stock and overruled a lawsuit against the company.

“I had no idea that I had an interest in any of these companies in what was a most modest retirement account” managed by a broker.

Another judge almost certainly holds the record for self-aggrandizement. Judge Rodney Gilstrap is a patent infringement judge. He has taken on 138 cases since 2011 that involved companies in which he or a family member had a financial interest, more than any other federal judge.

Wall Street Journal:

Judge Gilstrap, the chief judge for the U.S. District Court for the Eastern District of Texas, also disclosed one of the largest holdings in a conflicted company. He oversaw a patent-infringement case against a Walt Disney Co. unit while he or his wife reported holding between $100,001 and $250,000 of Disney stock. The plaintiff later withdrew its claim.

The 64-year-old Judge Gilstrap, one of America’s most prominent district judges, said he believed he didn’t need to recuse himself from some cases because they required little or no action on his part, and in other cases because the stocks were in a trust created for his wife without her stock-picking input. Legal-ethics experts disagree on both counts.


Gilstrap told the Journal in some emails, “I take my obligations related to potential conflicts/recusals seriously. Throughout my judicial career, I have endeavored to comply with all such obligations, and I will continue to do so.”

The question of bias should never be raised in any court proceeding, federal or state. That’s why the standard is so unforgiving. A judge must be above suspicion or the system will fail.

Federal district judges have considerable discretion on matters of fact finding and other pretrial issues, and this can be especially important in patent litigation, a complex area of law. “The more important questions in any given patent case are the small discretionary, often procedural questions that the judge resolves before trial,” said Paul Gugliuzza, a law professor at Temple University.

Friends and other lawyers who know judge Gilstrap can’t imagine him basing his opinion on financial interests of any kind. But being above suspicion means avoiding even the potential unconscious bias present when one’s self-interest is involved — even tangentially.

The way to avoid any appearance of conflict is to place all nominated judges’ assets in blind trusts managed by a third party. It’s not perfect, but it’s better than the current hit-or-miss system.



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