Interesting article in this week’s Legal Times: Issue of "Strategic Recusals" Arises in Key Supreme Court Case, by Tony Mauro:
In the case before the Court, Scientific-Atlanta and Motorola were vendors of cable boxes that played a role in an effort by Charter Communications, a cable TV provider, to fraudulently inflate its revenue. The 8th U.S. Circuit Court of Appeals said that as mere vendors, the two companies should not be sued by investors in the same way that Charter itself could be sued. The issue could be crucial to other cases in the legal pipeline as to whether bankers, lawyers, accountants and other "innocent bystanders," in the words of the U.S. Chamber of Commerce’s Robin Conrad, can be sued. Currently, only the government itself can go after such parties, under a narrower "aiding and abetting" standard. …
The new round of speculation centers on the exact makeup of the Court, which back in March agreed to hear Stoneridge in the upcoming term. Chief Justice John Roberts Jr. and Justice Stephen Breyer initially recused in the case. According to their 2006 financial disclosure forms, both justices own between $50,001 and $100,000 of stock in Cisco Systems Inc., the parent company of Scientific-Atlanta, one of the respondents in the case. …
The notion of justices "unrecusing" and re-entering a case strikes some as attempting to unring a bell, and it is causing discomfort among some judicial ethics experts. But a new — and little-noticed — federal law may be encouraging the practice.
Under the new law [I.R.C. § 1043] — which Roberts urged Congress to pass in his capacity as head of the Judicial Conference — judges can defer the capital gains taxes on stock they sell if they can demonstrate they made the sale to remove a conflict of interest. Executive branch officials have long had this ability, but judges were not allowed the same privilege until the change was included in a tax bill signed into law on Dec. 20.
Roberts may have made use of this new tax-deferral power already, when he recused from — and then rejoined — the antitrust case of Credit Suisse v. Billing last term. He first announced his recusal on Dec. 6, 2006, evidently because of holdings he had in investment firms involved in the case. Then on March 19, Justice Anthony Kennedy recused in the same case after apparently realizing, belatedly, that his son Gregory Kennedy’s compensation as a managing director at Credit Suisse might be affected by the outcome. Possibly to avoid a seven-member Court, Roberts suddenly rejoined the case on March 26, a day before oral argument. Under federal law, Roberts probably could not have rejoined the case without first curing the conflict — most likely by selling stock. In Stoneridge, all it would take for Roberts and Breyer to participate is to sell their Cisco stock, which they can now do without tax consequences.
