Alito And The "Vanguard" Case

In 1990, Sam Alito agreed during his Senate confirmation process for a seat on the 3rd Circuit Court that he would recuse himself from cases involving Vanguard, the mutual fund company in which he held most of his investments. In his 15 years on the court Alito had not participated in any cases involving Vanguard, save one.

In 2002, Judge Alito sat on the initial appeal in a case involving two people with a financial dispute. One person was suing another over $170,000 being held in Vanguard (mutual fund) accounts. The question was whether Vanguard should transfer some of the funds it held for one person to another. The dispute was between two people and not a “little guy” versus the “big guy” Vanguard. Vanguard was involved in the case to the extent the firm would be required to take action to the benefit or detriment of one of the two parties, depending on the court’s ruling.

After the case was decided, Alito received a recusal motion from the losing party. The legal code of conduct did not require Alito to recuse himself, although he did and the case was retried. Ultimately a new panel of judges heard the case and ruled the same as had Judge Alito’s panel, which ruled the same as the lower district court.

Experts on legal ethics have since looked into the Alito/Vanguard resucal matter and have found that Alito was not ethically or legally required to recuse himself, although in fact he did, and the case was reheard.

Senator Kennedy has repeatedly tried to imply Judge Alito acted improperly, unethically or perhaps illegally in this “Vanguard” case and was motivated to do so for financial gain. Kennedy asks Alito: “In 1990, you owned $80,000 of Vanguard funds. Is that right? And over the year it grew to hundreds of thousands. Is that correct?”

Kennedy makes much of whether or not Vanguard was on Alito’s resucal list, but fails to mention the Judge had recused himself in all other cases involving Vanguard and ultimately did so in this case – BASED ON HIS OWN DECISION.

The Senator obviously knows Altito had nothing to gain or lose personally by sitting on this case and he knows legal ethics experts have found Alito did nothing wrong. Kennedy knows Alito went above and beyond what was legally or ethically required and yet he persists in impugning Judge Alito’s honesty and integrity.

Now you have to ask yourself why Kennedy would stoop so low in an attempt to smear and destroy a man with a clear record of impartiality and personal integrity? The answer is obvious – Kennedy lacks the very qualities Alito has consistently demonstrated in all aspects of his professional and private life.

Below are relevant sections of the Senate hearing transcripts, with links, providing the facts for those that may have misled by Democrat distortions of the record or superficial media accounts.

Day 2 Transcript – Senator DeWine summarizes the “Vanguard” Case

DEWINE: And, finally, let me add my two cents on this Vanguard issue. I'm going take it from a little different perspective than has been done so far.

To me, this is really a non-issue. In the so-called Vanguard lawsuit, two people were in a financial dispute. The plaintiff sued to force the defendant to turn over $170,000 held by him in some Vanguard accounts. The defendant went to court to prevent Vanguard from turning over the money.

Now, while Vanguard was technically part of the suit, and was technically a defendant, it wasn't really a defendant in any sense of the term that would be used by the public or understood by the public. It was not accused of any wrongdoing. It didn't stand to lose anything.

Really, the only question was whether Vanguard would transfer some of the funds it held for one person over to another. It was simply being asked: Who do I pay the money to? Who do I give the money to? That's all Vanguard was being asked to do. So nothing in the classic sense of being a defendant. Nothing about this case could realistically have affected Vanguard as a company, let alone -- let alone affected your mutual funds. It's a joke. It's ridiculous. It's absurd. And everybody on this panel knows that.

Now, for the sake of the process, I hope we can put these issues behind us.

Transcript Day 2 - Judge Alito Explains The “Vanguard“ Recusal Issue

ALITO: Thank you, Senator.

And I appreciate the opportunity to address this, because a lot's been said about it, and very little by me.

And I think that once the facts are set out, I think that everybody will realize that in this instance I not only complied with the ethical rules that are binding on federal judges -- and they're very strict -- but also that I did what I've tried to do throughout my career as a judge, and that is to go beyond the letter of the ethics rules and to avoid any situation where there might be an ethical question raised. And is a case that came up in 2002, 12 years after I took the bench, and I acknowledged that if I had to do it over again, there are things that I would have done differently. And it's not because I violated any ethical standard, but it's because when this case first came before me, I did not focus on the issue of recusal and apply my own personal standard, which is to go beyond what the code of conduct for judges requires.

This was a pro se case, and we take our pro se cases very seriously.

HATCH: By pro se...

ALITO: It's a case where the plaintiff was not represented by a lawyer. She was representing...

HATCH: She was paying for her own counsel and represented herself.

ALITO: She represented herself initially, and we take those very seriously. We give those just as much consideration, in fact more consideration in many respects than we do with the cases without lawyers because we take into account that somebody who is representing himself or herself can't be expected to comply with all the legal technicalities.

But, for whatever reason, our court system for handling the monitoring of recusals in these pro se cases is different from the system that we use in the cases with lawyers, and maybe that's because recusal issues don't come up very often in pro se cases.

But in any event, in a case with a lawyer, before the case is ever sent to us, we receive what are known as clearance sheets, and those are -- it's a sheet of -- it's a stack of papers, and it lists all the cases that the clerk's office is thinking of sending to us. It lists the parties in each case, and it lists the lawyers in each case, and it says, "Do you need to recuse yourself in any of these cases?"

And this is the time when the judges -- and this is the time when I focus on the issue of recusal. And I look at each case, I look at the parties, I look at the lawyers, and I ask myself, "Is there a reason why I should not participate in the case?"

Now, because this case, the Monga case, was a pro se case, it didn't come to me with clearance sheets. I just received the briefs, and it had been through our staff attorney's office.

They take a first look at the pro se cases, and they try to make sure -- they try to translate the pro se arguments into the sort of legal arguments that lawyers would make, to help the pro se litigants. And they give us a recommended disposition and a draft opinion.

And when this came to me, I just didn't focus on the issue of recusal. And I sat on the initial appeal in the case.

ALITO: And then after the case was decided, I received a recusal motion. And I was quite concerned because I take my ethical responsibilities very seriously.

So I looked into the question of whether I was required, under the code, because I just wanted to see where the law was on this. Was I required, under the code of conduct, to recuse myself in this case?

And it seemed to me that I was not. And a number of legal experts, experts on legal ethics, have now looked into this question, and their conclusion is: No, I was not required to recuse. But I didn't stand on that because of my own personal policy of going beyond what the code requires.

So, I did recuse myself. And, not only that, I asked that the original decision in the case be vacated -- that is, wiped off the books -- and that the losing party in the case, the appellant, Ms. Monga, be given an entirely new appeal before an entirely new panel.

And that was done. And I wanted to make sure she did not go away from this case with the impression that she had gotten anything less than an absolutely fair hearing.

And then, beyond that, I realized that the fact that this had slipped through in a pro se case pointed to a bigger problem, and that was the absence of clearance sheets.

So, since that time, I have developed my own forms that I use in my own chambers. And, for pro se cases now, there's -- I have a red sheet of paper printed up, and it's red so nobody misses it. And when a pro se case comes in, it initially goes to my law clerks. And they prepare a clearance sheet for me in that case and then they do an initial check to see whether they spot any recusal problem.

And if they don't, then there's a space at the bottom where they initial it. And then it comes to me, and there's a space at the bottom for me to initial to make sure that I focus on the recusal problem.

And in very bold print at the bottom of the sheet, for my secretary, it says: No vote is to be sent in in this case unless this form is completely filled out.

ALITO: So there are a number of internal checks now in my own office to make sure that I follow my own policy of going beyond what the code requires.

HATCH: In other words, there was never any possibility of you benefiting financially, no matter how that case came out, is that right?

ALITO: There was absolutely no chance and...

HATCH: You actually did recuse yourself when the question was eventually raised, even though you didn't have to?

ALITO: That's correct, Senator.

HATCH: Did you genuinely feel you were either legally or ethically required to recuse under those circumstances?

ALITO: I did not think the code required me...

HATCH: You were just going beyond, which has been your philosophy...

ALITO: That's right.

HATCH: ... and your personal ethical approach to it.

Well, your own conclusion certainly is supported by the independent ethics experts that you mentioned, who have recently examined this case. I know one of them is Professor Geoffery Hazard from the University of Pennsylvania.

Now, that name stuck out in particular because I remember when a financial conflict-of-interest issue arose in connection with the nomination of Supreme Court Justice Stephen Breyer. In 1994, Senator Kennedy and I -- we strongly defended the Breyer nomination. I did, too.

And during the hearing, Senator Kennedy highlighted a letter from Professor Geoffery Hazard to answer Justice Breyer's critics.

Well, Professor Hazard, he has examined this matter and concluded that you, Judge Alito, handled it, in his words, "quite properly."

Now, Mr. Chairman, I'd like to put not only Professor Hazard's letter into the record, but the letter of Stephen Lubet, Thomas Morgan and Professor Ronald Rotunda, all of whom found that you made no ethical mistakes.

SPECTER: Without objection, all will be made a part of the record.

HATCH: All right.

And let me just observe that these are all top ethics experts in our country today. And, you know, I have to say that Morgan of the George Washington University Law School, he happens to be the co- author of the nation's most widely read ethics textbook. Now, he was blunt in his assessment, saying that there was simply no basis for suggesting that you did anything improper.

So I'm glad to put those in the record.

Now, you actually did more than simply recusing yourself in this case. As you have explained, you have even set up a special system to make sure that this -- you know, that there never is going to be a question about this. And so you went farther than you were legally or ethically mandated to do.

ALITO: I did, Senator. And that is what I have tried to do throughout my time on the bench.

HATCH: When the new panel of judges looked at this case, how did they rule?

ALITO: They ruled the same way that we had, and we had ruled the same way that the district court did.

So let me just clarify this one more time, and you tell me if this accurately describes the situation.

You did not believe that you were ethically or legally required to recuse yourself in this case. All the ethics experts agree with you. Yet you recused yourself anyway when the issue was raised.

The party raising the issue got an entirely new hearing before a new and different panel of judges, who ruled the same way that you did originally.

Does that about sum it up?

ALITO: That's correct, Senator.

HATCH: Well, I have to say, Judge, that you went above and beyond your ethical duties here. And I think you're to be applauded, not to be criticized, for your rigorous attention to judicial impartiality and integrity.

Day 4 Transcript – Senator Kennedy Misleads on “Vanguard” Case

KENNEDY: I want to move on. I want to come back just briefly again to the Vanguard issue, which continues to trouble and puzzle me by your answers to me and others.

Now, just to get back to the starting point, in your sworn statement to the committee when you were nominated to the circuit court in 1990, on page 15 of that statement you wrote this about your recusal practices: "I do not believe that conflicts of interest relating to my financial interests are likely to arise. I would, however, disqualify myself from any cases involving the Vanguard Companies."

KENNEDY: So according to your sworn promise, you were going to recuse yourself from cases involving the Vanguard Companies, is that correct?

ALITO: I said I would disqualify myself from any cases involving the Vanguard Companies.

KENNEDY: Recuse. All right.

You also said you'd recuse yourself from any case involving your sister's firm...

ALITO: That's correct.

KENNEDY: ... in cases in which you were involved in the U.S. Attorney's Office. Is that correct?

ALITO: Yes, that's correct.

KENNEDY: And there's been some discussion as to whether that commitment covered only the initial period of your judgeship. And I'm not going to go on into that. I'm not going into that.

I just want to know about the steps you took to meet your commitment to the committee even in the initial years. On Tuesday, you told Senator Feingold that you had no recollection of whether you put Vanguard on your recusal list when you were first appointed to the bench in 1990.

Is that still right?

ALITO: That's correct. I don't have the initial list that was submitted to the clerk's office. And I think I clarified, in response to Senator Feingold's question, that that is a list that is used by the clerk's office to make the first cut on recusal issues. But it is not by any means the last word.

KENNEDY: OK.

And in 1990, you owned $80,000 of Vanguard funds. Is that right? And over the year it grew to hundreds of thousands. Is that correct?

ALITO: It grew, yes.

KENNEDY: So you were getting reports from Vanguard now either monthly or quarterly or annually, were you not -- reporting?

ALITO: Yes, I was.

KENNEDY: All during this period of time?

ALITO: Yes.

KENNEDY: Do you know whether Vanguard was on your recusal list in 1991?

ALITO: I don't know what was on the list that was with the clerk's office prior to the time when the system was computerized.

ALITO: And I have seen recently -- and I believe you have -- copies of the list that were on the computer. And those lists do not include Vanguard. There's no question about that.

KENNEDY: We received your standing recusal list from the 3rd Circuit earlier this week. It's dated January 28th, 1993. Vanguard is not on it. You have your sister's law firm on it, you have your cases from the U.S. Attorney's Office on it, but not Vanguard, your largest investment.

Here are the recusal lists for 1994, 1995, 1996 and Vanguard is not on it any of them either.

Do you have any reason to disagree with the report from the clerk of the court?

ALITO: I don't, Senator. I don't know whether -- I have no comment on the list. That's the list that they had. I don't know exactly how that list came about, but that's the list they have.

KENNEDY: What does it say at the top of 1/28/93 list under the date? As I understand it, it says no changes.

ALITO: As of 1/28/93, no changes. That's correct.

KENNEDY: This was '93. So there were no changes in that from '92. And you've listed probably eight or nine different items on there, have you not?

ALITO: There are eight items listed.

KENNEDY: OK. So you have eight items on there. Vanguard isn't on. And it says no changes from the previous year. So I assume that means '92 list was the same. So you did not have Vanguard on the '92 list either.

Do you remember whether you ever placed Vanguard on your recusal list at anytime between the time you were sworn in and January 1993?

ALITO: As I said, I don't have a copy of lists that predate this. In fact, I didn't have a copy of these lists. And I don't know -- obviously, I can't recall what was on their earlier list.

KENNEDY: Well, in 1994, you removed the U.S. Attorney's Office from your recusal list. Is that right?

ALITO: Yes.

KENNEDY: So you did revisit the recusal list at that time?

ALITO: I notified the clerk's office to take the U.S. Attorney's Office off the list. I actually think I have a copy of the letter that I sent there. I don't believe that I looked at the list and crossed it off the list.

I sent them a letter and I outlined -- I say, it's now been four years. This was another instance of my going beyond what I had to do. I recused myself in everything from the office, not just things that were there while I was in office.

And after the passage of four years, I thought that the cases that I had had any possible connection has washed out.

And so, I sent a letter, and have a copy of the letter, saying, take it off this list but notify the U.S. Attorney's Office and the public defender's offices that they should notify the clerk's office if any case comes up in which they have any reason to believe that any aspect of the case was in the U.S. Attorney's Office while I was there.

KENNEDY: Well, I just mentioned that one of the things you had to do was put Vanguard on the list, was it not, because you gave assurances to the committee, sworn testimony, that you were going to recuse yourself? That was one of the things.

ALITO: Senator, if it was not on the initial list, then that would be an oversight on my part. I said, in answering the question to the Senate, I don't believe conflicts of interest are likely to arise. They rarely do arise with respect to mutual funds.

That's one of the main reasons judges and other people who have to worry about conflicts, invest in mutual funds. And no Vanguard case -- no case involving Vanguard -- came before me for 12 years.

KENNEDY: Well, the point is judges, as I understand and as their responsibility, take the whole issue on recusal extremely seriously and review those lists very, very carefully. And given the assurances and the pledge and the promise under oath to the committee and not to find out that it's on your list.

And over the periods of these last weeks, we've heard so many explanations, Judge. This is what confuses us.

We heard, first of all, that it's a computer glitch. And then we hear, "Well, it doesn't really apply because it's an initial service list. So Vanguard didn't -- I wasn't in it because I didn't make the decisions on it until after I'd been in 12 years. I made the pledge to the committee. I don't know how good that pledge was, or how many years it was good, but that initial pledge -- initial service meant I didn't have to do it."

And then we heard the excuse, "Well, it was a pro se case, and we had different computers." That was what was mentioned in my office, "It's a pro se case, and we have different computers. They're different computers in the clerk's office than exist in the law firms here in Washington from all over the country."

I could never quite understand it, because pro se, obviously talking about individuals, you'd think that might even have a higher kind of a requirement.
But the facts are that you never put that Vanguard on your recusal list and all of these papers were in your control. And that, I think, is a matter of concern -- should be to all of us for the reasons.

ALITO: Senator, can I just say a brief comment on that?

I've tried to be as forthcoming in explaining what happened here as I possibly could be. And I am one of those judges that you described who take recusals very, very seriously. And I served for 15 and a half years. I sat on the merits on well over 4,000 cases.

ALITO: In addition to that, let me just mention the statistics for a recent year. And I think these are typical of my entire period of service.

During the last calendar year, I received over 500 petitions for rehearing -- most of those are in cases I didn't sit on initially; over 400 motions -- most of those are in cases that I didn't hear on the merits.

And many of those are just as important as appeals on the merits because they involve things like whether someone is going to be removed to a country where the person claims that they will be subjected to persecution or there are applications by habeas petitioners for permission to take an appeal in a habeas case. And if we don't issue the certificate of appealability, that's the end of the matter for that petitioner, who may be serving a very length sentence or a life sentence.

So we're talking about well over a thousand cases a year. And this is over a course of 15 years. This Monga case is one case -- and I've said there was an oversight on my part in not focusing on my personal practice when the issue came before me. And when the recusal issue was brought to my attention, I did everything that I could to make sure that nobody could come away from this with the impression that this Ms. Maharaj got anything other than an absolutely fair appeal.

But I've tried to explain the whole thing. I have not given conflicting answers. But I've been asked a number of different questions and there are a number of steps that were involved in what took place.

The fact that it was a pro se case -- I mention that not because the pro se cases are any less important than any other category of cases; they're very important. But it is the fact that our court uses a different system.

ALITO: For pro se cases, we don't have these clearance sheets. And that's when I have typically focused on the issue of recusal.