by Barry Goldman
Because I serve as an arbitrator for FINRA, the Financial Industry Regulatory Authority, I have a Disclosure Report posted on the FINRA website. That 11-page document shows my employment history, education and training, and it lists every place I’ve had an investment account, every agency where I’ve served as an arbitrator, every professional organization I belong to, and it provides a link to each of my FINRA decisions.
Parties who have cases with FINRA can review that report when they are selecting their arbitration panel. If I am selected to serve on a panel, I am required to complete a more case-specific Arbitrator Disclosure Checklist. That 14-page document requires me to disclose:
- any direct or indirect financial or personal interest in the outcome of the arbitration;
- any existing or past financial, business, professional, family, social, or other relationships or circumstances with any party, any party’s representative, or anyone who the arbitrator is told may be a witness in the proceeding, that are likely to affect impartiality or might reasonably create an appearance of partiality or bias;
- any such relationship or circumstances involving members of the arbitrator’s family or the arbitrator’s current employers, partners, or business associates; and
- any existing or past service as a mediator for any of the parties in the case for which the arbitrator was selected.
There’s more. The duty to disclose is ongoing. We could be four days into a hearing when a witness appears who I recognize from a previous case. I have a duty to disclose that fact when it occurs. FINRA arbitrators are required to complete training programs periodically, and the organization produces several publications. The thrust of those training programs and many of the publications is the importance of disclosure. The rule is to disclose anything that may appear to present a conflict of interest. The threshold is low: if the potential for the appearance of a conflict occurs to us, we are required to disclose it.
There are two reasons for this. The first is practical. If an arbitrator discloses a potential conflict before a case is completed and an award is made, the parties, the arbitrators, and FINRA can make a decision about it. Most of the time the discussion is rather brief. The arbitrator who recognizes a witness, for instance, might say, “I believe Mr. Fonebone testified in another case I had some years ago. I don’t remember anything about it. I have no reason to think it will affect my judgment in this matter. I just want to get that fact on the record in case the parties have any questions or concerns.” The parties say thank you, no problem, and we proceed.
If the arbitrator fails to disclose, however, and the parties don’t learn about the potential conflict until somebody loses the case, the conversation is very different. Now, the testimony of that particular witness and the arbitrator’s withholding of crucial information about his previous experience with that witness makes all the difference in the world. Lawyers must be retained, pleadings filed, hearings held. Money must be spent and the vast machinery of Justice must be engaged.
Objections that would have been waived without hesitation before a ruling can turn into time and money-devouring monsters if they come after a ruling has been made.
The other reason for disclosure requirements, obviously, is that they are essential to basic fairness. You simply cannot have a fair adjudicative process if the decision maker has an interest in the outcome of the case. The principle is so venerable it’s in Latin: Nemo judex in causa sua. No man can be a judge in his own case. Where there is interest or prejudice, or the appearance of interest or prejudice, a judge is disqualified from hearing a case and needs to recuse.
That’s why the relationship between Justices Samuel Alito and Clarence Thomas and their respective “emotional support billionaires” is so disturbing. I know it’s old news, but it is important not to lose sight of just how transgressive the situation is. For those who may need a refresher, the ProPublica coverage of the issue is here.
Justices Alito and Thomas believe they are entitled to enjoy the generosity of their right-wing billionaire friends without having to disclose the details and without having to recuse from any cases where those relationships create the appearance of conflict. People generally tend to give themselves the benefit of the doubt. It’s a feature of mental health. That’s how it’s possible for most of us to believe we are better than average drivers or for most professors to believe they are better than average professors. And it makes perfect sense that Supreme Court justices should have a more inflated sense of their own rectitude than the rest of us. After all, they have reached the pinnacle of success in their field. There are 1.3 million lawyers in the United States. There are only nine Supreme Court justices. You can see how they might develop what the literature calls “acquired narcissistic personality disorder.” Rock stars have it. It’s an occupational hazard of celebrity.
Even so, consider Justice Alito’s letter to the Wall Street Journal regarding the ProPublica revelations. Not to put too fine a point on it, this is a document prepared by a man who thinks his shit don’t stink.
There is an upper limit to the amount of damage a narcissistic rock star or a dissenting Supreme Court justice can do. But when there is a delusional Supreme Court supermajority there is no such limit. They can ignore precedent (see Dobbs). They can contradict themselves (see the difference between the definition of “official act” in Snyder and in the Trump immunity decision). They can make up rules (see the “major questions doctrine”). They can ignore the plain meanings of words (see the Trump ineligibility case). And there is no one to stop them.
We have entered a new era. When the court was divided between a conservative wing and a liberal wing with a swing vote in between, the justices had to make legal arguments to persuade the swing vote. No more. Now that there is a supermajority, persuasion is no longer necessary. We are playing with Big Jule’s dice. Fans of Guys and Dolls will recall that Big Jule liked to bring his own dice to a crap game. He had the spots on the dice removed “for luck.” But he remembered where they formerly were.
This new world is run, as Wordsworth said, according to “the good old rule… the simple plan, that they should take who have the power, and they should keep who can.”
It will be difficult to return to the earlier state of affairs. As they used to say in the Solidarity movement: It’s easier to turn an aquarium into fish soup than the other way around.
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