Journal Staff Writer
Wal-Mart's lawyers appealed to the California Supreme Court in early
2008 to let them build a new store in Stockton, Chief Justice Ronald M.
George was forced to step aside because he owned shares in the retail
about a year and a half, when the court circulated a proposed decision
known as a calendar memo among the justices. George looked into the
matter and realized Wal-Mart was among the shares he sold in January
when he divested himself of all his stock.
concluded that there was no basis for me to be recused at this
point," he said, and officially "unrecused" himself in a
Nov. 10 order.
maneuver was made possible by a change in policy the court has recently
adopted to minimize disqualifications.
of following its tradition of "once recused, always recused,"
the court decided to loosen its guidelines and allow justices to come
back onto a case if their financial conflict has disappeared.
the policy had been in place two years ago, it might have avoided an
unprecedented quadruple recusal in a series of cases known as the
Lockheed litigation. The plaintiffs' appeal of a multimillion-dollar
toxic tort case had to be dismissed in November 2007 because four of the
seven justices owned stock in the defendant oil companies.Lockheed
Litigation Cases, S132167.
the court normally replaces disqualified justices with alternates from
the Court of Appeal, George felt that having four substitutes would not
give trial courts, lawyers and the public assurance that the decision
wouldn't have come out a different way under the full court.
then, George has made a concerted effort to reduce financial conflicts
of interest on the court. He routinely circulates memos listing
overlapping investments so the justices can keep them in mind when they
buy or sell stock.
sold all of his own stock, partly to cut down on the number of cases he
had to disqualify himself from and partly because he was fed up with the
ups and downs of the market.
Joyce L. Kennard and Carol A. Corrigan have also sold stocks that were
held by their colleagues.
idea to change the recusal policy came from stories last year about the
U.S. Supreme Court's policy of allowing justices to sell their stock to
avoid conflicts. Chief Justice John Roberts Jr. sold his stock in Cisco
Systems Inc. and Citigroup Inc. in 2007 to rejoin cases the court heard
encouraged the practice in 2006 by passing a law allowing the justices
to sell shares for conflict-of-interest reasons without paying taxes on
their gains as long as they roll the money over into a mutual fund or
other approved investment.
California Supreme Court researched the issue and found that the state
justices could also avoid conflicts by selling stock, although they
aren't exempt from capital gains taxes.
watcher Gerald Uelmen said he doesn't think the policy will solve the
problem and could create new ones.
just seems to me problematic," said Uelmen, a professor at Santa
Clara University School of Law. "If a justice unrecuses himself by
dumping the stock, it could create the appearance that they see a
decline in the price coming as a result of a decision or might even
participate in bringing about that decline and were motivated to dump
the stock while the price was still higher."
legal ethics expert Diane Karpman of Los Angeles called it a
"brilliant solution to a huge problem" because it allows the
justices to continue investing in stocks with less chance it will
impinge on their responsibility to the public.
the entire bench is tainted by stock ownership, then plaintiffs cannot
receive justice," she said. "Big issues are on the horizon
involving drugs, toxic waste, medical devices and a host of
change doesn't apply to recusals made for personal reasons, such as a
relative with ties to a firm coming before the court, George said.
of Civil Procedure Section 170 says that a judge has a "duty to
decide any proceeding in which he or she is not disqualified." That
could be read to mean the justices must hear a case if they sell their
stock and eliminate the conflict, but George did not want to pass
always up to the individual justice," he said.
court hasn't kept tabs on how often the new policy has been invoked, but
the Wal-Mart case was the most recent example.
that case, the court will decide an issue involving the time limit for
challenging a project under the California Environmental Quality Act. Stockton
Citizens for Sensible Planning v. City of Stockton, S159690.
far, the courts have rejected Wal-Mart's argument that the citizens'
group missed the deadline to object to construction of a new Wal-Mart
Supercenter. The 3rd District Court of Appeal held 2-1 that an approval
by Stockton's community development director, which wasn't made public,
did not start the clock running on the statute of limitations.
Kopper, a Davis attorney who represents the Stockton Citizens for
Responsible Planning, said as long as George's stock ownership was the
only reason for his recusal, he has no problem with the chief justice
now hearing the case.
existence of a calendar memo indicates the justices are close to setting
the case for oral argument, after which a decision will be due within 90