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Most area federal
judges have owned stock in litigants
NAME: Kathryn H. Vratil
Vratil owned stock in more companies than did any other local federal judge. She also issued orders in more lawsuits involving those companies.
And she offered by far the most extensive explanation of any judge.
The cases involved General Electric, Travelers Group Inc., Sprint Corp., General Motors, Transamerica Corp. and their subsidiaries. Vratil owned no more than $30,000 in stock in any of the corporations.
Vratil acknowledged that her stock ownership may have created the appearance of impropriety. "It's a bad situation," she said.
In fact, last year Vratil wrote to litigants in six of the lawsuits and offered to consider vacating her judgment and reopening their cases. (None has accepted.) She told them her stock holdings resulted in an "actual or apparent" conflict of interest.
In interviews and a detailed letter complete with footnotes, she offered a series of explanations:
That, she said, meant the stock ownership did not bias her rulings and did not create what she considered a true conflict of interest.
However, federal law states: "A judge should inform himself about his ... financial interests." Ethicists said Congress enacted that rule to prevent judges from claiming ignorance of their investments.
Investments made through a mutual fund are exempt from ethics laws. Judges are not required to disclose the underlying stocks.
But Vratil's disclosure reports list her stocks as individual assets. The reports do not identify the securities as part of a fund and do not indicate they were under independent management.
And Vratil acknowledged that, unlike mutual fund investors, she took direct ownership of the stock and was notified about all trades.
"I considered the ownership to be sort of technical in nature," Vratil said. "I don't know if I made the right call."
Vratil said she discovered her stock ownership last spring while in the midst of two of the lawsuits. She disclosed the investments, withdrew from the cases, then told her staff to search for similar problems in older, closed lawsuits.
Vratil eventually notified litigants in at least six of those legal actions about her stock. She mailed letters to them about two weeks after The Star began reviewing her finances. The timing, she said, had nothing to do with the newspaper's inv
estigation.
In some other lawsuits, Vratil said, she was unaware she had owned stock in a litigant or in a litigant's parent company until questioned by The Star.
Vratil says she has moved her savings into mutual funds to avoid similar problems in the future.
"I'm sorry this happened," she said. "And this is not going to happen again."
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NAME: Elmo B. Hunter
Hunter's financial disclosure reports show he owned General Motors stock worth as much as $250,000 while presiding over all or part of four legal actions involving the car company or one of its wholly owned subsidiaries.
Midway through one lawsuit against a General Motors subsidiary, Hunter notified lawyers for both sides that he owned General Motors stock. The lawyers waived any objection, and Hunter remained on the case until its conclusion seven months later.
Federal law requires judges to withdraw when they know they have an interest in a litigant, even when no one objects.
In a fifth case, Hunter's wife owned stock in General Electric while he appointed a legal courier in a lawsuit involving the company.
Hunter, who has been ill, could not be reached for comment. Lawyers in the cases, like those in the other lawsuits identified by The Kansas City Star's study, said they saw no evidence of bias in the judge's rulings.
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NAME: Fernando J. Gaitan Jr.
Gaitan owned stock in AT&T while presiding over all or part of three cases involving the company or one of its wholly owned subsidiaries. Gaitan declined repeated requests for an interview.
In a brief letter, however, he described his handling of the lawsuits as minimal and called his investment in the company insubstantial. Federal records show his stock was worth $15,000 or less.
Gaitan said he acquired the stock during the six years he worked for a subsidiary of AT&T.
"Obviously, I would not intentionally violate a code of conduct," Gaitan wrote. "I have scrupulously avoided conflicts during my nearly 18 years as a judicial officer.
"Two of the three cases were dismissed by agreement of the parties at a very early stage. The third was dismissed for plaintiff's failure to comply with procedures necessary to prosecute the case, again at an early stage of the case."
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NAME: Howard F. Sachs
Sachs owned up to $50,000 worth of stock in AT&T while entering orders in three cases against AT&T or one of its wholly owned subsidiaries.
In one lawsuit, Sachs issued two orders, then disclosed his stock ownership and withdrew.
In another, Sachs said a clerk stamped his signature on an order appointing a legal courier; Sachs later disclosed his stock and passed the case to another judge. That order, like many identified by the study, was routine and had little effect on the c
ase.
None of the litigants in Sachs' cases contested any of the orders, and Sachs estimated he spent no more than a minute working on each lawsuit.
He acknowledged that "conceivably, somebody could say it's an illegal situation." But he called any violation a technicality and said he would be inclined to do the same thing in the future.
"Maybe," he joked, "I will be impeached."
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NAME: Dean Whipple
Whipple presided over two lawsuits against the Philip Morris Cos. and other cigarette manufacturers. The suits, each filed by a state inmate, accused the tobacco companies of manipulating nicotine levels to addict smokers.
Whipple declared both cases "frivolous" and threw them out of court. He said he believed he could lawfully handle the lawsuits, despite owning up to $15,000 worth of stock in Philip Morris.
"I take the position that whatever I rule will not affect the bottom line of Philip Morris," he said.
After researching the issue, however, Whipple agreed his position was not supported by most legal ethicists or by case law.
"I'm in the minority in my opinion," he acknowledged. "Although I think that I have a valid argument, I'm not going to fight it. And so, from now on, if I have a case where I own any stock, I'll just disqualify (withdraw)."
Shortly after being questioned by a reporter, Whipple sold all his shares in Philip Morris.
"I don't want any question," he said, "about whether I had any ulterior motive on those cases."
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NAME: John W. Lungstrum
Lungstrum presided over two lawsuits against companies in which he and his family owned stock. In each instance, he acknowledged, his actions appeared contrary to ethics laws.
Lungstrum entered several orders in a $2 million lawsuit against the Chrysler Corp. that the litigants ultimately settled out of court. He said the case slipped by because he bought stock in the car company -- up to $15,000, according to his disclosure
form -- after the case was assigned to his courtroom.
"I forgot I had the case at the time the stock was bought," he said. "By the time the case came back to my attention, I had forgotten I had the stock."
Lungstrum also filed one order and approved a consent decree in a lawsuit over the multimillion-dollar cost of cleaning up a Superfund hazardous waste site in Johnson County. Lungstrum and his family owned up to $50,000 in stock in one of the many comp
anies named in the lawsuit.
"I may not have even checked who the parties were," he said. "I probably just got lazy."
Lungstrum said he made no contested rulings in that case. Still, he says he plans to tighten his procedures for identifying financial conflicts.
"We should be concerned about these things," he said. "I'm glad to have my attention called to it, and to redouble my efforts to make sure things don't fall through the cracks."
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NAME: D. Brook Bartlett
Bartlett, chief judge for the Western District of Missouri, presided over two lawsuits against McDonald's restaurants while he owned up to $50,000 in stock in McDonald's Corp.
In one case, Bartlett issued two orders, then disclosed his stock ownership and withdrew. In the other, he issued one order, then granted the plaintiff's request that he dismiss the lawsuit.
"I should not have done that," Bartlett said. "It probably was a technical violation (of ethics laws).
"It's below the standards I set for myself. It just means I have to be more careful."
Upon checking, Bartlett said he was relieved to discover that "all orders entered were either routine or not opposed by plaintiff."
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NAME: Ortrie D. Smith
Smith issued a single order setting deadlines in an employment discrimination lawsuit against Wal-Mart Stores Inc. Two months later, Smith withdrew because he owned up to $15,000
worth of stock in the company.
"It probably was a technical violation (of the law)," Smith said. "I regret that it happened, but it did."
Smith said he did not read the routine order, which was issued by a clerk using a signature stamp. The order did not affect the outcome of the lawsuit, he said.
"There should have been a procedure in place to avoid it ever coming to me to begin with," he said of the case. "That is now in place."
• Joseph E. Stevens
Jr.:
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No problems
WESTERN DISTRICT OF MISSOURI
Gary A. Fenner
Earl E. O'Connor |
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