North Carolina earns ‘F’ for judicial financial disclosure

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The Center for Public Integrity evaluated the disclosure rules for judges in the highest state courts nationwide. The level of disclosure in the 50 states and the District of Columbia was poor, with 43 receiving failing grades, making it difficult for the public to identify potential conflicts of interest on the bench. Despite the lack of information in the public records, the Center’s investigation found nearly three dozen conflicts, questionable gifts and entanglements among top judges around the country. Here’s what the Center found in North Carolina:

Strengths:

North Carolina ranks in 25th place with two sets of disclosure forms for justices to fill out each year. Its disclosure rules are tailored to the state and go beyond the extent of many other states’ rules in some areas. For example, North Carolina asks any judges who have been appointed whether they have contributed financially to the person who appointed them. One form also asks whether anyone in the judge’s family works for a nonprofit organization that has received state funds or does business with the state.

Weaknesses:

The rules also limit the extent of what is disclosed. For example, they only seek information about property owned within the state. The rules also do not require judges to provide the names of creditors. The gift policy is confusing due to the two different forms. On one, gifts worth more than $500 must be reported. On the other, they must be reported if they were received when both the giver and the judge were outside of the state and the value exceeds $200 per quarter.

Separately, if Supreme Court justices do violate judicial ethics rules, they now face disciplinary action from their peers. A law passed in August 2013 took away the independent powers of the state’s judicial standards commission to publicly reprimand judges and gave that power to the Supreme Court.

Highlights:

Justice Paul Newby disclosed earning income from the Tobacco Transition Payment Program, in which money from a settlement with tobacco companies goes to former tobacco farmers to help them transition to other types of farming. In 2005 and 2009, he authored two opinions related to the program, known as the tobacco buyout. For the 2005 case, he was among five of seven North Carolina justices who had ties to tobacco companies, according to news reports. The court had disclosed the conflicts and asked the two sides whether they wanted the justices to hear the case despite their involvement. The court’s ruling provided a green light for the payments to farmers, including Newby. In the 2009 case, the ruling he wrote meant that the tobacco giants no longer had to make payments to former tobacco farmers in Maryland and Pennsylvania. As a North Carolina farmer, though, his payments, once estimated at $35,700 over a ten-year period for his Wake County farm, were not affected. He declined to comment to the Center, via his law clerk.

Justice Robert Edmunds presided over three cases in which he reported owning a financial interest in the companies named in the cases. The rulings favored his financial interest in two of the three cases:

In 2009 and 2010, Edmunds reported owning Abbott Laboratories’ stock, yet he wrote a 2010 decision that sided with the company. The case hinged on whether lawyers from out of state, representing a mother whose baby died, should have been allowed to try the case against a hospital and Abbott, which made the baby formula her infant drank. The Supreme Court upheld the trial judge’s power to bar the out-of-state attorneys from the case for alleged misconduct.

Edmunds also reported owning Wells Fargo stock in 2011 but was part of a decision that favored Wells Fargo. The court’s ruling upheld a lower court’s decision about proving who held a loan in a foreclosure case. The court found that Wells Fargo did not need to present an original note to show it held the mortgage.

Edmunds reported owning Duke Energy stock in 2012, yet he participated in a case involving the energy company that year. Ultimately, the court did not side with the energy company in its 2013 decision, though, and overturned a substantial rate hike sought by Duke Energy.

Edmunds told the Center there was no conflict for him to preside in those cases. “Our ethical rules allow participation if the ownership is de minimis,” he said, using the Latin term to describe a trivial amount. “It was so miniscule. … It effectively means whatever decision I make will not have any impact on my financial situation.”

North Carolina’s forms, however, only require that judges report investments worth at least $10,000. Edmunds declined to say how much his stake in the companies was worth. “Our job is to make decisions and not to try to get out of cases,” he said.