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DAILY JOURNAL NEWSWIRE ARTICLE
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August 14, 2006

Seminar Program Keeps Judges in Dark on Donors; Some See Ethical Issue With Jurists Unaware Of Corporate Litigants' Hand in Free Courses

By Lawrence Hurley
Daily Journal Staff Writer
WASHINGTON - Federal appellate Judge Andrew J. Kleinfeld may be best known for writing a decision that was music to the ears of oil giant ExxonMobil Corp.

That was five years ago, when the 9th U.S. Circuit Court of Appeals ruled that $5 billion in punitive damages amounted to an excessive jury award against Exxon for its role in the huge Alaska oil spill of 1989.

But despite his participation in such a high-profile case, which continues to this day, the Fairbanks, Alaska-based jurist said recently he did not know that Exxon has for years been giving tens of thousands of dollars to a university-affiliated judicial education program where he studied and now sits on an advisory board.

His unawareness is not an accident: The Law and Economics Center based at Virginia's George Mason University has a strict policy of not telling judges where the funding comes from for the all-expense paid seminars that it sponsors at luxury resorts throughout the country.

At a time when Congress is aggressively scrutinizing the conduct of federal judges, some legal ethics experts and even some of Kleinfeld's colleagues say a "don't ask, don't tell" approach to funding disclosure puts judges in a precarious spot.

They believe judges can better equip themselves against complaints about potential conflicts of interest by demanding to know who funds the continuing education programs they attend.

As the nation's oldest and largest privately funded judicial education program, the Law and Economics Center has for 30 years sponsored seminars on free-market economics and other topics, but not without controversy.

While the programs run are popular with judges, who describe them as intellectually demanding, their reliance on corporate funding has fueled criticism from liberal activists and newspaper editorials that they peddle a pro-business agenda.

Kleinfeld maintains his support for the center's silence on its funding sources.

"I don't have the faintest idea who contributes to George Mason, nor do I want to know," the judge said in a phone interview.

The center, which pays travel and accommodation expenses for judicial seminars, says it has 200 underwriters, all of which contribute via the university's foundation, and that none provide more than a fifth of the center's overall budget.

When a Daily Journal reporter told Kleinfeld last month that Exxon has contributed $215,000 to the center since 1998 - information publicized by Exxon on the Internet in annual reports - the judge responded that he would have preferred not to know. Speaking a day later, Kleinfeld clarified his thoughts.

"It's better that we not know who contributed to the Law and Economics Center," he said. "What we should know is that no organization is contributing so much as to dominate."

Kleinfeld added that Exxon's contribution is "small potatoes" for a corporation of its size, and accounts for a minute proportion of the center's budget.

He also defended his right as a judge to attend educational programs wherever he wants.

"I support as much freedom of speech and diversity of opinion as can possibly be obtained," said Kleinfeld, who was appointed to the bench by President George H.W. Bush in 1991.

At present, no one is arguing that judges should be banned from participating in corporate-funded seminars.

But San Francisco U.S. District Chief Judge Vaughn R. Walker, a frequent seminar participant who sits with Kleinfeld on the center's judicial advisory panel, said it may be time for the program to come clean on where its money comes from.

"I don't see a problem with disclosure," he said. "I have no problem with changing the current policy."

Walker, a Ronald Reagan appointee, said there's nothing inherently wrong with shielding the identity of the center's donors from judges. But he said that in the light of what he termed an "unwarranted suspicion" that special interests are guiding the curriculum, some judges may be unwilling to accept invitations to free seminars without knowing who's underwriting them.

Pasadena-based 9th Circuit Judge Raymond C. Fisher, an appointee of President Bill Clinton, voices similar concerns.

Fisher serves on a U.S. Judicial Conference committee that is addressing ethics issues surrounding privately funded seminars. He made it clear that the judges can do more to avoid negative publicity.

"I think judges need to be more sensitive to the appearance of conflict," he said in an interview. "We are obliged to do that."

Addressing the center's non-disclosure policy, Fisher said the identity of donors is "the kind of information that ought to be out there."

Private Programs Are Popular
Taxpayer-funded continuing education is available to all U.S. judges through the Federal Judicial Center.

But hundreds of federal judges nationwide have opted to participate in educational vacations sponsored by private interests.

Many take place in upscale hotels and resorts in places like Santa Fe, N.M., and Hilton Head, S.C.

In California alone, federal district judges took 36 trips between 1992 and 2004 sponsored either by the Law and Economics Center or the next most active group, the Montana-based Foundation for Research on Economics and the Environment, according to data compiled by Community Rights Counsel.

Many judges attend only once or twice, but others are regulars on the seminar circuit. Walker, of San Francisco, has participated in seven, while Judge Manuel Real of Los Angeles, has gone to six.

Real stands out in another way. He was appointed to the bench in 1966 by Democratic President Lyndon B. Johnson. The vast majority of seminar participants have been Republican appointees.

Controversy Over Law and Economics
The Law and Economics Center was founded in 1974 by Henry G. Manne, who was a law professor at the University of Miami. The center has been based at George Mason University since 1986.

Manne was one of the early proponents of law and economics scholarship, which is the interpretation of the law from an economics perspective.

Manne advocates a conservative anti-regulatory, pro-free-market approach to the law, which now has a strong following at mainstream law schools ranging from the University of Chicago to the University of Virginia.

Left-leaning critics say the center Manne founded, along with Montana-based FREE, seek to teach a conservative approach to the law that favors corporate interests.

George Mason University law professor Francis H. Buckley, director of the center, disputed that assertion, saying the curriculum mirrors that of a liberal arts college.

This year, for example, there are programs on English man of letters Samuel Johnson and Renaissance humanism scattered among the more law-related seminars on "economics and tort law" and "international law from an economic perspective."

Kleinfeld's own participation in classes at the center doesn't fit the stereotype of seminars as brainwashing exercises.

His first seminar, in 2003, took him to New Haven, Conn. - not known as a vacation destination - to study the ancient Greek historian Thucydides. The next fall, Kleinfeld traveled from Alaska to La Jolla, near the San Diego coast, to study the writings of 19th century French historian Alexis de Tocqueville.

Like Kleinfeld, Walker praised the high quality of the programs he has attended since the early 1990s.

"It's a little bit like going back to college," he said. "It's certainly not indoctrination. It's not spoon-feeding a philosophical approach to the law."

The center's Buckley emphasized that the programs are designed to avoid perennial hot-button issues, such as asbestos litigation or punitive damages.

But as long as they've been around, private seminars have been unable to escape negative publicity.

In 1999, the Wall Street Journal reported how industrial giant Koch Industries sought to influence judges by funding seminars run by the University of Kansas and rewarding business-friendly judges with favorable scorecard ratings during election season.

More recently, the media has reported on Community Rights Counsel's findings that judges were flown to Montana for FREE seminars on trips paid for by the same businesses that had litigation in those judges' courts.

Last year, three judges on FREE's advisory board resigned their positions after Community Rights Counsel filed ethics complaints against them.

Community Rights Counsel complained that the judges on FREE's board had too close of a relationship with corporate donors that went beyond merely advising on academic matters.

Exxon's Involvement
ExxonMobil Corp. is not shy about touting its contributions to the Law and Economics Center and other judicial education organizations.

"This is one of many grants ExxonMobil makes in support of activities and efforts aimed at promoting the rule of law and improving the quality of the judiciary," spokesman Dave Gardner said of the company's most recent $30,000 contribution to the center.

Other groups Exxon funds include the Institute for Civil Justice, which is sponsored by the Rand Corp. in Santa Monica, and two not-for-profits, the National Judicial College and the National Center for State Courts.

Another beneficiary is FREE.

Exxon donated $210,000 between 1998 and 2004, according to the company's annual reports on corporate giving.

For a company as large as Exxon that is frequently involved in high-stakes litigation, the nation's courts are an important public resource.

A simple cost-benefit analysis suggests that judicial education is a good investment: Of the six judges on the 9th Circuit in addition to Kleinfeld who have participated in seminars through the Law and Economics Center or FREE since the early 1990s, court records show that all have at some point presided over at least one civil case involving Exxon.

For Community Law Counsel executive director Douglas T. Kendall, Exxon's intent in helping to underwrite seminars is obvious.

"Exxon funds these trips to influence the key judicial decision-makers," he said.

Seminar programs are not the only recipients of academic grants from Exxon.

The company was roundly criticized for funding scholarly studies of jury behavior in the mid-1990s that Exxon lawyers then cited to show that the record-setting punitive damages in the Alaska oil spill case were the work of a runaway jury.

The studies by well-known professors were summarized in an appeal brief filed with the 9th Circuit, but the lawyers didn't mention that Exxon helped to pay for them.

One of the critics is Theodore Eisenberg, a law professor at Cornell Law School, who contends that Exxon's No. 1 priority in paying for the research was "to get the $5 billion in punitive damages reduced."

Eisenberg, who helped write an amicus brief against Exxon in the oil spill case, said in an interview that Exxon had a duty to its shareholders to win the oil spill appeal. Part of the company's strategy, he added, may be to influence judges.

As it turns out, one of the prominent scholars who now lectures on tort law at seminars at the center, Yale University law professor George Priest, wrote an introduction to the book containing all the Exxon-funded jury research.

Priest and another LEC lecturer, William Landes of University of Chicago, also sit on the academic advisory board of the American Enterprise Institute, a pro-business think tank in Washington, D.C., whose board of trustees vice-chairman is the retired chief executive of Exxon.

A third distinguished LEC lecturer, Harvard University law professor Steven Shavell, served as a paid consultant to Exxon in the Alaska oil spill litigation.

Eisenberg emphasized that just because Exxon may have an agenda in funding seminar programs doesn't mean that those programs are necessarily slanted with any corporate bias.

The center's Web site explicitly states that none of its financial supporters have any say in the program.

"The curriculum, faculty, invitation list and acceptance policy for LEC programs is determined solely by professors at George Mason University School of Law," it says.

Exxon's spokesman bristled at the notion that Exxon would seek to influence judges in pending litigation by sponsoring seminars.

"Your question is an insult,' Gardner said.

Funding Disclosure Debate
The point of the center's policy not to disclose its funding to judges is to avoid creating any appearance that judges might be beholden to sponsors.

Some states where judges run for office in contested elections take a similar approach, requiring candidates to refrain from learning the identities of contributors who write checks to their campaigns.

But by and large, conflict of interest rules typically are built on the principle that disclosure is the best way to avoid conflicts.

Ethics rules at both the federal and state level presume that judges are aware of any personal or financial interests that might be affected by their court rulings and require them to recuse themselves when they perceive a possible conflict.

The center says its policy follows a U.S. Judicial Conference advisory opinion on ethics first released in 1980 and most recently revised in 2004.

"It would look bad if we disclosed," Buckley, the program director, said. "The sounder policy, we are advised, is one in which the possibility of these conflicts don't arise."

Buckley acknowledged that "reasonable people may differ" about disclosure versus non-disclosure. He stressed, though, that the final decision rests with center's 14-member advisory board.

Corporate support of the center is less than 10 percent of its overall budget, he added.

Some legal scholars say LEC has opened itself to criticism that it's got something to hide.

Charles Geyh, a professor at Indiana University School of Law at Bloomington, said the reluctance of the center to reveal its funding sources has "given the judiciary a black eye." He said he can understand why some lawmakers want tighter ethics guidelines, even though he personally opposes a pending bill that would create an inspector general for the judiciary.

"The public perception is something that needs to be the focus of attention," he said.

Stephen Gillers, an ethics expert at New York University School of Law, pointed to another flaw in the center's policy of silence about its funding. He noted that judges can easily discover information about at least some corporate donors just by logging onto the Internet.

"It's not possible to keep that deep a secret, and the public won't believe them," Gillers said.

Exxon's contributions to LEC, for instance, are listed both on the corporation's own web site and on www.exxonsecrets.org, a web site created by environmental activist group Greenpeace to track "how ExxonMobil funds climate change skeptics."

This spring, an announcement of Exxon's contribution to George Mason University Law School showed up somewhere else - in a press release issued by the university and posted on the Internet.

Gillers contends that corporate sponsors actually want judges to know they are underwriting seminars.

Another supporter of full disclosure is Community Rights Counsel. Kendall, the executive director, argues that Judge Kleinfeld has a special duty to know who funds the center above and beyond the judges who attend the various classes.

"Judges sitting on an advisory board have an obligation to know where the money for that organization is coming from," he said.

Kendall also said Kleinfeld should not allow LEC to pay any of his travel expenses while the Exxon case remains pending before him.

FREE, founded in 1985, says it has always released information about its funding sources upon request from judges and scholars who've participated in its programs.

Its policy is to list all its donors on its Web site, said founder and chairman John A. Baden.

FREE receives about 20 percent of its budget from corporate donors, but that money is not assigned to judicial education programs.

Baden said that the majority of funding comes from foundations that have no role in ongoing court cases.

"That minimizes the possibilities of a conflict," he said.

For his part, Kleinfeld said he sees nothing wrong with LEC's policy or with private seminars in general, which he sees as essential to an independent judiciary.

He said any corporation that thinks judges can be bought off might want to reconsider its decision to fund continuing education.

If "some evil corporation that wanted to pollute the environment" was to fund the Law and Economics Center," Kleinfeld said, "the ethical issue there would not be that we were bought ... but that the directors of the corporation wasted their shareholders' money."

Friday, August 04, 2006

Posted 3:20 PM by Howard Bashman

Tuesday, August 01, 2006

Posted 4:40 PM by Howard Bashman

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