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State appellate justices at center of conflict-of-interest concerns

Pair heard Boeing case while owning thousands of dollars in company stock, documents show

Two California appellate court justices may have violated state conflict-of-interest rules by hearing a multimillion-dollar case involving Boeing Co. while they owned stock in the company, according to court documents and financial disclosure forms obtained by The Bay Citizen.

Associate Justice Elizabeth Grimes and Presiding Justice Patricia Bigelow were part of a 2nd District Court of Appeal panel considering whether to overturn a $603 million fraud and breach-of-contract verdict against Boeing and one of its subsidiaries, but they recused themselves from the panel before it ruled in Boeing's favor in April, documents show.

In May, ICO Global Communications, which won the jury verdict against Boeing in 2008, asked the state Supreme Court to review the appellate court's decision, arguing that the justices should have immediately recused themselves because they owned stock in the aerospace giant.

Under the California Code of Judicial Ethics, appellate justices are required to recuse themselves if they hold $1,500 or more of stock in a company involved in a case to which they are assigned. Judges who fail to do so may be disciplined by California’s Commission on Judicial Performance, which oversees investigations into complaints of misconduct by the state’s judiciary.

Grimes was assigned to the case for 13 months before she recused herself last November without explanation. At the time, she owned Boeing stock worth between $101,000 and $1,000,000, according to court documents. 

Bigelow appointed herself to replace Grimes, sitting on the case for roughly a month and a half before recusing herself in early January, according to ICO's petition. Bigelow owned Boeing stock worth between $2,000 and $10,000 in 2011, according to financial disclosures obtained from the California Fair Political Practices Commission. 

Barry W. Lee, ICO's lead appellate attorney, said the fact that the justices' recusals occurred later in the case raise questions about the integrity of the judicial system.

Grimes heard first the oral arguments in October and most likely read the briefs and conducted research during the case, Lee said. It is not clear what actions Bigelow took after she assigned herself to the case, Lee added.

“It shouldn’t be that the litigants, the lawyers or the public should have to question what went on in the case," Lee said. “That is exactly the point.”

Asked about her recusal, Bigelow said through her judicial assistant, Shelly Perez, that she could not discuss her role because the case is pending before the state Supreme Court. Grimes did not return a message requesting comment left with her assistant.

Victoria Henley, director-chief counsel of the California Commission on Judicial Performance, would not confirm or deny whether the justices were being investigated, citing the state constitution and commission rules, which require that the commission’s ongoing investigations remain confidential.

A judge who fails to recuse himself or herself from a case that presents a conflict of interest would typically receive an advisory letter or private admonishment, confidential actions that are the mildest forms of discipline.

“Theoretically, the Commission on Judicial Performance could discipline a judge for not disqualifying him or herself from a case in which he or she is disqualified,” said Mark Jacobson, a senior attorney at the state’s Judicial Council, a policymaking body that is charged with ensuring that California courts are impartial.

Judges are supposed to know what financial interests they hold. California's Code of Judicial Ethics states, “A judge shall manage personal investments and financial activities so as to minimize the necessity for disqualification.”

In its appeal to the state Supreme Court, ICO claimed the justices' failure to immediately recuse themselves violated the company's right to due process. The company's attorneys argued that the Court of Appeal should have empaneled three new judges to consider the case.

“Both due process and sound judicial administration required the Court of Appeal to begin the decision-making process anew, with a wholly new panel,” the company's petition said.

Laurie Levenson, a law professor at the Loyola Law School in Los Angeles, said such conflict-of-interest cases are somewhat unusual.

“It is clearly embarrassing,” said Levenson, the William M. Rains Fellow and David W. Burcham Chair in Ethical Advocacy at Loyola. “The reason you have the rule is so that people trust that the justices are objective and fair, and it doesn’t become like a John Grisham novel. Perception is everything. Now everybody will say, what about my judge? Did they make a mistake on my case too?”

The Associated Press first reported the recusals of Grimes and Bigelow.

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