Bush nominee broke law

Jan. 23, 2006 | A judge nominated by President Bush to one of the highest courts in the nation apparently violated federal law repeatedly while serving on the federal bench. Judge James H. Payne, 64, who was nominated by Bush in late September to join the 10th U.S. Circuit Court of Appeals, based in Denver, issued more than 100 orders in at least 18 cases that involved corporations in which he owned stock, a review of court and financial records shows.

Federal law and the official Code of Conduct for U.S. judges explicitly prohibit judges from sitting on cases involving companies in which they own stock -- no matter how small their holdings -- in order to uphold the integrity of the judicial system. (Judges' financial filings typically don't differentiate ownership between the judge and immediate family members.) The clear-cut, objective standard aims to prevent even the appearance that a judge may be taking into consideration his or her personal financial interests.

Payne's financial filings show holdings of up to $100,000 in SBC Communications stock, up to $50,000 in Wal-Mart stock and up to $15,000 in Pfizer stock, among others, while he presided over lawsuits involving the companies or their subsidiaries. In fact, it appears that since he was appointed by Bush in 2001 as a federal district judge in Oklahoma, Payne has been sitting inappropriately on at least one case at any given moment for nearly his entire federal judgeship.

Last fall, Payne's nomination to the 10th Circuit got little public attention while the media focused on the president's Supreme Court nominations. But Chief Justice John Roberts and current nominee Samuel Alito have tripped over the conflict of interest issue as well. Roberts, who holds an array of blue chip stocks and has unprecedented corporate ties for a sitting Supreme Court justice, has already recused himself from numerous cases and admitted a mistake in not recusing himself earlier from another. Alito was grilled in Senate hearings this month about why in one instance he didn't follow through on a pledge to recuse himself from any case involving the mutual fund company Vanguard, in which he held investments.

Payne refused to answer repeated requests by Salon for comment regarding conflicts of interest in the cases over which he presided. When reached by phone for comment on Dec. 20, Payne said, "I do not have time ... I can't do it," before abruptly hanging up. He did not respond to a subsequent call, or to a follow-up letter delivered to his office on Dec. 22, detailing the problematic cases and asking for an explanation.

Praised for his integrity by a number of Oklahoma lawyers, Payne did eventually recuse himself in some cases and kept himself off others from the start. In the cases in which he didn't recuse himself, most of his actions were routine and procedural. Most of the cases were settled, rather than going to trial.

But informed of Payne's reported stock holdings, plaintiffs in some of the cases say that the judge may well have been swayed by those holdings. Whether he was or not, legal experts say he should have never presided over the lawsuits.

"If I was suing Wal-Mart and I knew the judge held stock in Wal-Mart, I'd be concerned about that," said professor Leslie W. Abramson, a legal ethics expert at the University of Louisville's law school, after reviewing Payne's cases. While there is no proof of malfeasance on Payne's part, Abramson says, the letter of the law is clear on judicial conflict of interest -- and Payne's conduct, he says, leaves the impression that Payne has run his court in a "sloppy" fashion. "He took an oath to follow the law. The judge is supposed to recognize these things himself. If he owned the stock, he shouldn't have been sitting on the case. That to me is a clear call," Abramson said. "I think it speaks to whether a judge has been doing his job responsibly and is likely to do his job responsibly in the future."

"There's no wriggle room here," says professor Stephen Gillers, a scholar of legal ethics at the New York University School of Law. "It's not just an ethics rule, it's a congressional statute -- a law." Even if he doesn't make any orders during the proceedings, he can't be the judge on such a case, Gillers says. "He's disqualified, period."

Linda Chambers, a resident of Muskogee, Okla., says she certainly wouldn't have wanted to go before a judge who owned stock in Pfizer when she sued the pharmaceutical giant for the death of her mother. Chambers' case was one of thousands of lawsuits provoked by the diabetes drug Rezulin, which was withdrawn from the market after being linked to liver damage and deaths. Chambers' mother, Margaret Owens, died at age 65 after liver and kidney failure while taking Rezulin. Chambers' case happened to go before Payne in 2002 and again in 2003, when he reported holdings of up to $15,000 in Pfizer stock. The lawsuit later moved to another court, bundled with similar suits, and was settled. Chambers' attorney, Tony Edwards, said Payne made no significant decisions in the case -- but Chambers said she would have asked for a different judge if she had known of his conflict of interest at the time.

"Sounds like the judge is deciding this case on his best interest also," said Chambers. "I wanted a judge that was impartial. That's what I thought the judges are supposed to be."

Next page: Why lawyers may be afraid to scrutinize a federal judge's investments