Legal News

A Solution for SCOTUS Deadlocks: Justices, Sell Your Stock

By Ashby Jones

The Supreme Court deadlocked 4-4 earlier today on a case involving alleged injuries sustained from Pfizer’s Rezulin, a diabetes drug that was removed from the market in 2000. The suit was filed under a Michigan drug law that generally bars lawsuits over drugs approved for sale by the FDA. At issue: whether an exemption that allows suits in certain circumstances violates federal preemption law. Because Chief Justice Roberts owns “less than $15,000 in Pfizer stock,” he recused himself from the case, rendering the problematic even-numbered panel.

In baseball, ties go to the runner. But at One First Street, N.E., ties go to the respondent — or, in legalese, the lower-court ruling stands. So in this case, since the 2nd Circuit had allowed the lawsuit to proceed, the plaintiffs who are suing Pfizer go home happy.

Still, the tie brought one fat tear to our eye. A tie? Ah, the wasted time! Attorney fees! This sad little per curiam order! And we wonder. Did it have to be like this?

Turns out, we were in good company. UCLA law prof Eugene Volokh asked the same question last week, upon reading a report that the Exxon punitive-damages case might end in a 4-4 tie (Justice Alito had recused himself from that case, also over stock holdings). Writes Volokh, on his blog: This would be “a pretty bad result, it seems to me: An important issue will be unresolved, the Justices’ time will be wasted, the parties’ money will be wasted, and all over what is likely just a few thousand dollars’ worth of investment.”

Volokh throws out this possible solution:

If the problem is indeed just that the Justice owns actual stock (as opposed to owning a share in some fund that owns the stock), wouldn’t it be much better for the Justice simply to sell the stock if certiorari is granted? This would presumably be little loss for the Justice, who could sell at market rates and lose just the commission (plus perhaps have some taxable capital gain that he might rather have deferred). Nor would the Justice have any enduring bias in favor of the company — it’s not like the past stock ownership created or reflected an emotional relationship that persists even when the stock is sold.

LB Readers, whaddya think? On the one hand, it seems a little harsh to make a justice revamp his or her investments when an issue like this arises. On the other hand, it’s not that harsh — you’re a Supreme Court justice, fer cryin’ out loud!

Full post as published by Law Blog - WSJ.com on March 03, 2008 (boomark / email).