When a federal judge was overseeing a case against Apple and Microsoft, he bought Apple and Microsoft bonds and then dismissed it.
According to the federal judge who rejected a child-trafficking and forced labor lawsuit against Apple and Microsoft, his judgment should not be overturned because of charges that he was biased in favor of the defendants.
A seasoned corporate lawyer who was appointed by President Donald Trump in 2019 to the United States District Court for the District of Columbia, Carl J. Nichols, held Apple and Microsoft bonds when he was handed the case in December of that year. According to an appeal filed against his decision last month, he purchased further bonds in both companies in 2020 while the case was still before him. Judge Nichols’ financial disclosure papers show that he purchased Apple and Microsoft bonds seven times each in 2020, with holdings ranging from $60,000 to $200,000.
After a September Wall Street Journal article reported that 131 federal judges did not recuse themselves from 685 lawsuits in which they or their families had a financial interest, in apparent violation of the law, from 2010 to 2018, the dispute over Nichols’ financial interest in companies involved in a case before him has arisen. Hundreds of cases might be thrown out of whack because of the Journal investigation, which opened the way for appeals. As a result of some of those cases, several of the judges named apologized and issued mea culpas.
Under Section 455, judges are required to step aside from instances in which their impartiality may be questioned, especially if they have any “financial interest” related to the case or any parties involved.
For the record, Nichols declined to comment for this article. However, in an April lawsuit, he stated that he had not violated Section 455 because his holdings in Apple and Microsoft were bonds, not stocks, as the plaintiffs had initially asserted. As a result, he had not been required to remove himself from the case. His reasoning was that holding a bond does not “transfer an ownership interest in the issuer,” hence it does not “create a financial interest in the debtor.” The fact that Nichols no longer owns stock in either Apple or Microsoft is a further indication of his financial independence.
Stephen Gillers, a judicial ethics professor at NYU Law School, wrote in an email that “even one share of stock in a party may recuse a judge, but under the judge’s position, a significant bond holding, paying substantial interest, would have no effect.” “It seems to me to be incongruous.”
Other investments by Judge Nichols in tech-oriented ETF funds centered on four of the defendant corporations were cited as evidence by plaintiffs. According to a legal filing, Judge Nichols possessed between $265,00 and $550,000 in Vanguard Growth stock before and during his tenure overseeing the case, a fund dominated by shares of Apple, Microsoft, Alphabet, and Tesla, each defendant in the lawsuit. According to the plaintiffs, Judge Nichols had an interest in the companies named as defendants in the action worth between $90,000 and $192,000, based on Vanguard Growth’s interests in those companies. The plaintiffs asserted that this interest was large enough to compel Nichols’ recusal.
Professor Charles Geyh, an expert on judicial ethics and procedure at Indiana University Maurer School of Law, thinks that Judge Nichols’ actions are “real concern.” Although Nichols had large interests, Geyh claims, he enhanced them several times while the case was in court. Geyh remarks, “This is more than your average issue.” Judges “feathering their nests on purpose” is “very rare,” according to the author. “Normally, you’d see a judge recusal.”
Attorney Terrence Collingsworth of the Washington, DC area filed the lawsuit on behalf of 16 unnamed plaintiffs, all of whom were either youngsters who had been injured or killed while working in an artisanal cobalt mine in the Democratic Republic of the Congo. Several mining corporations, including Glencore, allegedly supplied cobalt for batteries built by five technology company defendants, which also included Dell, according to a lawsuit.
As part of his reasoning for dismissing the complaint, Nichols cited the plaintiffs’ inability to show a causal link between the cobalt mines where the children were wounded and the tech companies. Collingsworth describes the circumstances as “ideal.” An appointment of Trump’s who had worked in corporate law for years and had investments in the businesses we had sued.
The District of Columbia Circuit of the United States Court of Appeals should rule in the coming days.