June 25, 2008

If Supreme Court Justices Were Required to Put Their Stock Holdings in Blind Trusts, Exxon Might Have Saved $500 Million

David A. Ridenour has written a Christian Science Monitor editorial entitled "Blind Trusts Will Improve Blind Justice in the High Court." Ridenour contends that the president and the senate should require Supreme Court nominees to place their assets in a blind trust as a condition of serving, to avoid recusals due to a financial conflict of interest.

Ridenour's article is particularly timely, coming out on the same day as the decision in Exxon Shipping Co. v. Baker. In that case, Justice Alito recused himself because he owns stock in Exxon Mobil. As a result, the Court split 4-4 and could not reach a decision about Exxon's argument that, under maritime law, punitive damages cannot be imposed on a ship owner based on the acts of a ship captain. Because the Court couldn't reach a decision, the Ninth Circuit's decision on that issue was affirmed.

There's a good chance Justice Alito would have adopted Exxon's argument on that issue if he had not recused himself. If so, his recusal cost Exxon $500 million. But Exxon saved $2 billion even without Justice Alito's participation, so they probably won't be complaining.

1 comment:

  1. It's possible that the pro-Exxon 4 would only have given Exxon a new trial with a chance to argue against punitives on the basis of a policymaker or a Kolstad standard, though.

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