Conflicts of interest lead justices to toss apartheid case

WASHINGTON -- The Supreme Court tossed itself off a big case Monday.

The court couldn't take up an apartheid dispute involving some of the nation's largest companies because too many of the justices had investments or other ties with those corporate giants.

It appeared to be the first time in at least a quarter-century that the justices' financial holdings prevented them from taking a case.

The result is that a lawsuit will go forward accusing dozens of corporations of violating international law by assisting South Africa's former apartheid government. The companies and the Bush administration had asked the court to intervene, arguing that the lawsuit was damaging international relations, threatening to hurt South Africa's economic development and punishing the companies using a fuzzy legal concept.

Four of the nine justices sat out the court's consideration of the case. Federal law calls for at least six to hear any case.

Short of the required number, the court took the only path available to it and upheld an appeals court ruling allowing the lawsuit to proceed.

Chief Justice John Roberts and Justices Samuel Alito, Stephen Breyer and Anthony Kennedy provided no explanation for their decision not to take part in the case.

But those justices have ties to Bank of America Corp., Bristol-Myers Squibb Co., Colgate-Palmolive Co., Credit Suisse, Exxon Mobil Corp., Hewlett-Packard Co., IBM and Nestle SA, among nearly three dozen companies that asked the high court to step in.

The justices' latest financial disclosures show:

• Roberts owned Hewlett-Packard stock worth $15,000 to $50,000.
• Breyer owned stock in Colgate-Palmolive, Bank of America, IBM and Nestle valued at $145,000 to $350,000.
• Alito holds $100,000 to $250,000 in Exxon Mobil stock, which also caused him to sit out the still-pending dispute over the $2.5 billion punitive damages award for the Exxon Valdez disaster. Alito also owns as much as $15,000 in Bristol-Myers Squibb.

Kennedy does not hold stock in any affected company, but his son, Gregory, is a managing director at Credit Suisse. Kennedy sat out a case last term involving the investment bank.

New York University law professor Stephen Gillers, an expert on judicial ethics, said he expects this issue to arise from time to time. "Whether it's family relationships or wealth, this is going to happen," Gillers said. "It hasn't reached the point where we need to do something."

Some apparent conflicts, like Kennedy's, are beyond the justices' direct command.

But they maintain control over their investment portfolios, and should take steps to minimize conflicts, said Arthur Hellman, an ethics expert at the University of Pittsburgh law school.

Alito, Breyer and Roberts could have been involved in the case if they had sold the affected investments. Roberts has done just that on two occasions to get back into a case from which he initially stepped aside. On another occasion this term, Roberts sat out a case involving a drug company in which he owned stock, resulting in a 4-4 tie vote that allowed a lawsuit against the company to proceed and left unresolved the issue the court had agreed to settle.

Indeed, Congress passed a law in 2006 that allows all federal judges to sell shares of stock and reinvest the proceeds in mutual funds and other investments without immediately having to pay capital gains tax on the profits.

Hellman said of the current case: "This decision is particularly disturbing because the law was specifically designed to cure the problem of justices being reluctant to sell certain stocks because of capital gains consequences."

The justices should avoid corporations that are regularly involved in lawsuits, Hellman said.

Referring to Alito, he said, "He has a very powerful position, and I don't think it's too much to say he shouldn't own stock in a corporation like Exxon Mobil."

Historically, the most notable case the Supreme Court could not resolve because of conflicts was the Depression-era antitrust lawsuit against Alcoa Inc. The case dragged on so long that, by the time it reached the court, there were three justices who had worked on it as Justice Department lawyers and another who was involved in an earlier government lawsuit against Alcoa.

The Alcoa case was important enough that Congress passed a law directing an appeals court to resolve it.