Under federal law, a Supreme Court justice must recuse from a case when he or his spouse have a "financial interest" in it.
Justice Stephen Breyer didn't know his wife held stock in a company with a stake in a big energy case the court heard on Wednesday, and apparently neither did she. When he learned about it following a reporter's inquiry, she immediately got rid of it.
Late on Thursday, Bloomberg reported Breyer's wife, Joanna, sold about $33,000 worth of stock in Johnson Controls Inc., a company with a stake in Federal Energy Regulatory Commission v. Electric Power Supply Association, a case the court heard on Wednesday testing the validity of a federal rule energy groups are challenging as "arbitrary and capricious."
A Supreme Court spokesperson confirmed Breyer took action with respect to the stock once Greg Stohr, a Bloomberg reporter, inquired about it following the hearing.
In a Thursday letter to the lawyers for the numerous parties in the case, the court's clerk, Scott Harris, said that Breyer's wife sold 750 shares of Johnson Controls Inc. -- owner of EnergyConnect Inc., a party in the case -- that same day, noting that the "ordinary conflict-check" the justice's staff conducts ahead of considering a case "inadvertently failed to find this potential conflict."
Citing the judicial ethics canon federal judges should follow in the event of a potential disqualification, Harris said Breyer's wife went on to sell her entire interest in Johnson Controls, and that the justice decided he would remain on the case. Johnson Controls' EnergyConnect supports the federal rule at issue in the dispute.
"Justice Breyer has devoted substantial judicial time to this case," Harris wrote. "He has no reason to believe that the financial interest could be substantially affected by the outcome of the case."
Curiously, another justice, Samuel Alito, did sit out the energy case and was not present at the Wednesday hearing, probably due to a similar conflict. He recused in May, when the Supreme Court first agreed to hear the case, but didn't indicate why he did so.
Gabe Roth, the executive director of Fix the Court, a nonprofit that aims to bring more transparency and accountability to the Supreme Court, noted Alito's latest financial disclosure form indicates he also owns stock in Johnson Controls, and lamented his absence from the case.
"It is deeply unsettling that Justice Alito’s ownership of a few thousand dollars in energy stock could yield a 4-4 tie in [a] case about regulating the many-billion-dollar energy market," Roth said in a statement. "Alito’s recusal underscores the need for justices to get rid of their shares in individual companies or instead place their shares into blind trusts for the duration of their tenure."
If the court were to split 4-4 in the case, which is possible given the liberal-conservative divide among the justices, its decision would have no binding effect, and the ruling from the federal appeals court that struck the rule at issue would control.
Justice Anthony Kennedy once told a congressional panel that those ties "'mean that everybody's time is wasted."
That ought to worry the Obama administration, which on Wednesday defended the Federal Energy Regulatory Commission's authority to adopt an agency rule that allows for financial incentives to major energy consumers for "demand response" -- or the coordinated reduction in power consumption in tandem with price fluctuations. Trade publications and the energy industry are closely following the case.
For court watchers like Roth, the Breyer and Alito situations reveal the lack of uniformity on how the court deals with recusals.
"There's no communications between the justices on this," he told The Huffington Post. "Each has their own set of practices as to how they determine conflicts." Roth said Alito could have alerted the other justices with holdings in public companies about the potential for problems.
The FERC case won't be the last time there'll be an empty chair inside the Supreme Court.
In December, Justice Elena Kagan is expected to sit out the oral arguments in Fisher v. University of Texas, a case that may further narrow -- and maybe even do away with -- affirmative action programs at public universities. She was involved in the early stages of the case while serving as solicitor general for President Barack Obama.