High Court Recusals Derail Apartheid Case

The justices of the Supreme Court, a group of individuals accustomed to facing the public's displeasure with their work, are now coming under criticism on an unlikely issue: their stock holdings.

Yesterday the court announced that the recusals of four justices forced their colleagues to turn down a case involving some of the world's largest corporations, which are being sued because of their business dealings with South Africa during the apartheid era.

The court requires a quorum of six justices to hear an appeal. While the justices offered no reasons for the recusals, their financial disclosures show that three have owned stock in some of the companies that are being sued, including Hewlett-Packard, Bank of America, and IBM. Another defendant in the suit, Credit Suisse, employs Gregory Kennedy, a son of the fourth justice who recused himself, Anthony Kennedy.

The case at issue, a class-action lawsuit on behalf of all South Africans who suffered under apartheid, could lead to a trial in U.S. District Court in Manhattan of the corporations that sold guns, trucks, and computers, and provided other assistance, such as bank loans, to the apartheid government.

Federal law prohibits judges from hearing cases involving companies in which they own stock. But in 2006, Congress passed a law intended to encourage judges to sell stocks in order to avoid having to recuse: They could defer capital gains taxes until later. So far there has been little public pressure on the justices to sell some of their stocks in order to be able to hear cases.

"I think people have a right to ask why you have to hold on to this stock when Congress has done its best to help you dispose of this without injurious financial consequences," a law professor at the University of Pittsburgh School of Law and an expert on judicial ethics, Arthur Hellman, said. "I don't think it's unreasonable to say to a Supreme Court justice that you are in a position of great power, and with power comes responsibility, and you should not own stocks in companies that are going to be frequent litigants in the Supreme Court."

Had the mass recusal not occurred, the chances were high that the Supreme Court would have accepted the case for review, several legal observers say. The solicitor general's office had requested that the court hear it on the grounds that the suit could "have serious consequences for the Nation's foreign relations."

Although a district court judge in Manhattan, John Sprizzo, threw out the lawsuit in 2004, the 2nd U.S. Circuit Court of Appeals revived the suit last year. The corporations had asked the Supreme Court to reverse the 2nd Circuit. So far the litigation had largely focused on how involved a company must be in the wrongs of a foreign government before an American court had jurisdiction to hear human rights cases against the company.

The decision now facing Judge Sprizzo is whether the suit should be thrown out at the request of the executive branch, on the grounds that the case has implications for American foreign policy. President Mbeki of South Africa has criticized in sharp terms the 2nd Circuit decision allowing the suits to go forward, saying a major reckoning over apartheid, which ended in the early 1990s, should not take place in an American courtroom.

Justice Breyer's portfolio contained stock in four companies that are being sued in the apartheid case: Bank of America, Colgate-Palmolive, IBM, and Nestle, according to a 2006 disclosure. Only his holdings in Colgate-Palmolive were then worth more than $50,000, although the precise amount is not given.

Justice Roberts's disclosure indicated that he owned between $15,000 and $50,000 in stock in Hewlett-Packard, another defendant. Justice Alito, had stock in yet another defendant, Exxon Mobil, worth between 100,000 and 250,000. Justice Alito also holds stock in Bristol-Myers Squibb, which is a defendant in the suit.

Justice Alito's shares in Exxon Mobil also led him to stay out of a pending case arising out of the Exxon Valdez oil spill in 1989.