By SAM HANANEL
WASHINGTON (AP) — U.S. Supreme Court Justice Stephen Breyer had a conflict of interest under federal law when he heard arguments in a case this week despite his wife’s ownership of stock in a company involved in the dispute.
Supreme Court Clerk Scott Harris said in a letter dated Thursday that Breyer’s wife has since sold her shares in Wisconsin-based Johnson Controls, Inc., which owns a subsidiary that is involved in the high-profile energy case.
The sale of 750 shares worth about $33,000 on Thursday came after an inquiry from Bloomberg News.
“The ordinary conflict check conducted in Justice Breyer’s chambers inadvertently failed to find this potential conflict,” Harris said in the letter to parties in the case.
Justice Samuel Alito had already recused himself from the case earlier this year. Alito’s latest financial disclosure shows that he also owns stock in Johnson Controls worth $15,000 or less.
Federal law prohibits judges from hearing a case if they have a financial interest, however small, in a participating company. That includes the financial holdings of spouses and minor children. The statute does not provide any penalty for violations.
The case illustrates the pitfalls justices and their close family members face by owning stocks in individual companies that could have legal disputes before the high court. In 2009, Alito took part in a case about curse words on television involving ABC Inc. and other networks, even though he owned stock in ABC’s parent, Walt Disney Co., at the time. Alito later said his participation was an oversight.
Harris said Breyer will continue participating in the latest case, which considers whether the federal government can offer financial incentives to large electric customers that save energy during times of peak demand. Power companies say the Federal Energy Regulatory Commission overstepped its authority in approving the program.
Johnson Controls is listed on one of the petitions in the case as owning EnergyConnect, Inc., a party supporting the government’s energy conservation rule. EnergyConnect helps electricity customers reduce their energy consumption and stands to benefit if the regulation is upheld.
Each justice follows his or her own procedures for checking possible conflicts of interest, said court spokeswoman Kathy Arberg.
Breyer’s wife sold her shares a day after the court heard oral arguments, Harris said. He noted that Breyer has already devoted “substantial time” to the case.
“He has no reason to believe that the financial interest could be substantially affected by the outcome of the case,” Harris said.
Stock ownership and the need for recusal has influenced past cases where one justice must sit out. It sets up the undesirable possibility of the court dividing 4-4, leaving the lower court ruling in place and setting no precedent to guide other courts.
In 2008, Chief Justice John Roberts took no part in a product liability case against Pfizer Inc. because he owned less than $15,000 of the company’s stock. The justices split 4-4, which allowed lawsuits against the company to proceed.
Roberts later sold his shares of Pfizer, which allowed him to participate in other cases involving the pharmaceutical maker.