To assist with insuring that "justice is blind," a presiding judge is expected to recuse from any case where he/she is financially conflicted with any of the litigating parties. Evidence that this expectation is not being consistently met was widely reported in 2020-2021. Indeed, the public controversy elicited a response from Chief Justice John Roberts. In his 2021 annual report on the federal judiciary, and in direct response to the controversy surrounding numerous federal judges, Chief Justice Roberts downplayed the controversy’s significance, characterizing the incidents as "isolated violations" and "unintentional oversights."
Notwithstanding Justice Roberts' characterizations, given the widespread implications posed by judges' failures to recuse when proper it is important to understand whether these recent episodes are one-time incidents or point to a larger, systemic problem. To address this question, in a recent paper, Judge Financial Holdings and Case Outcomes: Evidence from Judge Financial Disclosures, Tuhin Harit (Univ. Dallas--Mgmt.) et al. examine whether there is a relation between judges' disclosed financial holdings and the outcomes of the trials over which they presided.
Drawing from a sample that includes cases from 2000–2021, the paper finds that “stock ownership by judges significantly improves the chances of a litigant's winning a case.” In cases where the presiding judge is financially conflicted with either the defendant or plaintiff, “their chance of a favorable decision improves by 3.3% and 4.3%, respectively, after controlling for judge, industry, district, case file year, and firm characteristics.” An excerpted abstract follows.
"... Using novel data on financial disclosures of judges and the civil case information of public firms across district courts in the United States between 2000 and 2021, we document multiple instances in which judges fail to recuse themselves in cases where they hold common stock. We find robust evidence that judges rule more favorably and take longer when deciding over conflicted cases as compared to unconflicted ones. We also find that investors are positively surprised by these outcomes, as reflected by stock returns to trial outcomes. Collectively, our results provide the first large-scale evidence of the relation between judges' financial holdings and case outcomes.”
Comments