Illustration by William Rieser
Gene Fittshur was seeking justice. Fittshur had been exposed to asbestos while working as a laborer, boilermaker and ship fitter from 1958 to 1966 at the Oak Creek Power Plant and other companies. By 2005, the medical bills topped a quarter-million dollars for treating his malignant mesothelioma, a lung cancer that can be caused by asbestos. So Fittshur and his wife Marlene, now both in their 70s, joined an estimated 600,000 other plaintiffs who have filed asbestos-related suits in the United States.
They chose their attorney well. Jill Rakauski founded the Racine law firm Penn Rakauski in 2004, specializing in asbestos and lung disease cases. Rakauski had worked as a trial assistant in asbestos litigation for two years at the Sutter Law Firm in Charleston, W.Va., after college, before earning a degree from the West Virginia School of Law in 1998. During the years she’s practiced in this state, Rakauski has litigated asbestos cases in 14 Wisconsin counties.
The defendants in Gene L. Fittshur et al v. Acoustech Supply Inc. et al would include some 18 companies, notably General Electric, one of the most sued companies in asbestos cases nationally. The case was assigned to Milwaukee Circuit Court Judge Michael J. Dwyer.
Dwyer’s assignment was done by the Wisconsin Consolidated Court Automation Programs system, a computerized process created to avoid burdening any judge with too many cases. Overseen by the state Supreme Court, the system is supposed to be numeric and neutral and thereby advance the ideal of blind justice. Yet it is not programmed to consider a judge’s financial interests and thus could not know that, in 2005, Judge Dwyer had reported to the Wisconsin Ethics Board – as required by state law – investments of as much as $50,000 each in two of the 18 defendants named in the Fittshur case: General Electric and Viacom.
Even worse, the state had blindly assigned another asbestos case to Dwyer – Carol Fischer v. American Standard Inc. et al – al-though that case also names General Electric as a defendant.
The situation screamed out an appearance of impropriety, something the state Supreme Court’s code of ethics commands judges to avoid. Typically, a judge with a potential financial conflict will announce this to the parties in a lawsuit and, if anyone objects, will then consider whether to withdraw from the case. But by mid-summer of last year, some 10 months after the Fittshur case was filed, court records show Dwyer hadn’t provided any such notification.
“I honestly don’t recall whether that discussion happened or not,” Dwyer concedes. And so the case has continued, with Dwyer presiding over a matter involving a company in which he has an obvious financial interest. Even if the case’s ruling has no impact on the company’s stock price, the case presents the appearance of an egregious conflict of interest.
No judge in Milwaukee has more such conflicts than Dwyer. Of 71 cases in 2005 in Milwaukee County where judges had a finan-cial interest in one of the parties to the case, 54 involved Dwyer. His Ethics Board filings in 2004 and 2005 report five dozen in-vestments of $5,000 or more, including stock in companies that are frequent parties in local civil cases: UnitedHealth Group, Bank of America, Citigroup, General Electric and one of the most litigious corporations in town, Wells Fargo.
To determine how frequently judges have such conflicts, Milwaukee Magazine analyzed all civil cases in Milwaukee from the be-ginning of 2004 through the first eight months of 2006 and checked them against financial interest statements filed by judges. The re-sults show 202 cases in which judges had a financial conflict. Besides Dwyer, other judges with conflicts were Elsa Lamelas, Clare Fiorenza, Dennis Moroney and Francis Wasielewski.
The federal court system bars judges from hearing cases where they have a financial interest at stake. But Wisconsin is one of many states that have moved to a system that allows judges to decide what level of investment by them creates a conflict. In es-sence, Wisconsin leaves it to judges to impartially rule on whether they can be impartial in trying a case against a company in which they have an economic stake.
University of Southern California Law School professor Greg Keating calls states with a system like this “pretty lax.”
Local attorney John Carter, former head of the Milwaukee County Ethics Board, says an honor system for judges does not assure citizens that justice is impartial. “It’s absolutely the appearance of a conflict to sit in judgment in a case where the judge has an inter-est in the outcome,” he charges.
So how do judges like Dwyer defend themselves?
A TRAGEDY IN THE FAMILY
A decade before he was first elected judge in 1997, Michael Dwyer endured a terrible tragedy. His son, Michael P. “Mikie” Dwyer, nearly died. “The Caesarean section birth of the baby was unnecessarily delayed for several hours because of poor communication so that the boy was essentially born dead and suffered severe brain damage,” the Milwaukee Sentinel reported. Dwyer told the Sentinel his young son was “profoundly retarded, is a spastic cerebral palsy child and will need constant care.”
Dwyer and his wife Debra sued Sinai Samaritan Medical Center and won a $4.5 million settlement, which was paid from the Wis-consin Patients Compensation Fund, one of the largest such settlements in the 1990s. “I’d trade the money for his health in a min-ute,” Dwyer told the press.
The settlement helped Dwyer set up a fund to provide for his brain-damaged child. The investment in General Electric, the com-pany involved in two asbestos-related cases Dwyer was recently assigned, was among the stocks in the fund created for his son. Ironically, Judge Dwyer now faces financial conflicts in cases he hears because of the fruits of a court case he himself won.
There has been no hint of bias by Dwyer in the ongoing Fittshur case, says the plaintiffs’ attorney. “Judge Dwyer has been fair and a good judge in this case,” Rakauski said last summer. But that was before being told by a Milwaukee Magazine reporter that Dwyer had a financial interest in two companies being sued. This seemed to surprise Rakauski, who said she should have checked the records.
From there, the case – and its conflicts – grew stranger and stranger.
When Milwaukee Magazine contacted Dwyer last summer to discuss how he deals with cases where he may have a financial conflict, Dwyer declined an interview request and shot back a letter two days later. “Be advised,” he wrote, “that it is my practice to consider whether the interest, whatever it may be, would require that I recuse myself under Wisconsin Supreme Court Rule.”
The rule requires that judges disqualify themselves from any case when “a judge has a significant financial or personal interest in the outcome of the matter.” If, however, the financial conflict is de minimis – meaning so insignificant it doesn’t raise “reasonable question as to the judge’s impartiality” – no disqualification is required. But it’s up to the judges themselves to decide that question.
Given that the state Ethics Board requires judges to report any investment or financial interest with a value of at least $5,000, this could be interpreted by judges to mean that anything below this cutoff is de minimis and anything above it is not. By that standard, Dwyer’s financial interest in General Electric was not de minimis.
During a brief telephone encounter, Dwyer was asked whether his interest in General Electric was de minimis. His response: “I am not going to discuss a pending case.”
Yet on Sept. 18, 2006 – 11 months after the case was filed – and some time after his interview with Milwaukee Magazine, Dwyer announced to six lawyers in the courtroom and three more on the telephone his financial interest in General Electric. He acknowledged the record did not show he had previously alerted them, but he was doing so now after questions from Milwaukee Magazine.
With black-robed solemnity, Dwyer announced that he believed his interest in the General Electric stock was de minimis and would not affect his impartiality, and the lawyers for all sides responded with earnest assurances that they did not question his ability to be fair. In such a situation, says Tom Fitton, president of the conservative, nonpartisan educational foundation Judicial Watch, “the attorneys are afraid to say anything.”
As it happens, however, Dwyer’s financial interest in General Electric was not his only conflict. He had also reported his family’s ownership of stock in Viacom, another party to the suit, which should have required notification as well. When a Milwaukee Magazine writer pointed this out to Dwyer, he got annoyed. “Why are you even bothering with this?” he shot back. “Why don’t you look at the judges who play cards with lawyers? There’s a bigger problem.”
Meanwhile, it turns out that Rakauski’s partner, Steven R. Penn, also has stock in General Electric. Rakauski volunteered this infor-mation during an interview with Milwaukee Magazine, but when she was asked whether her clients, the Fittshurs, were informed that Penn had a financial interest in the defendant, Rakauski cited attorney-client privilege and declined to answer. Neither Rakauski or Penn would comment further on this issue. State Supreme Court rules say attorneys must also inform their clients of any financial conflicts.
Penn’s investment presents an egregious appearance of ethical conflict, considering that Rakauski handled two other asbestos cases where General Electric was actually dismissed from the case. In Christine R. Moyses et al v. Rockwell Automation Inc. et al and in William Cantwell et al v. Electric Furnace Company et al (a case in Kenosha County), Rakauski represented plaintiffs suing for damages in asbestos cases, but General Electric was dismissed as a defendant.
The issue of such conflicts has sometimes arisen for jurors, and judges then may take a very firm stand. In a 2001 asbestos-related case, Marvin Boede et al v. Wisconsin Electric Power Co. et al, Judge John A. Franke disqualified an alternate juror because the juror acknowledged he owned stock in the defendant company.
“You cannot sit on a case if you have a financial interest in the outcome,” Franke explained in a recent interview. Franke struggled to explain why the standard might be more flexible for judges, but the bottom line seems to be this: “A judge has to determine whether the judge can be fair,” Franke noted, “and second, whether the case has the appearance of a conflict.” Jurors, of course, don’t get to make that decision for themselves.
Judges rarely remove themselves from cases in which they have an interest – in Milwaukee County, it happened only 12 times in all of 2005 and 25 times in 2003. Meanwhile, the problem of financial conflicts is growing. The number of cases in Milwaukee in which judges had a financial conflict grew from 42 cases in 2004 to 71 in 2005 and 89 for the first eight months of 2006. At that pace, there would be 133 cases with a conflict in 2006.
Of 75 cases with a conflict in 2005, 57 involved Dwyer, with eight for Judge Clare Fiorenza, nine for Judge Francis Wasielewski and one for Hon. Dennis Moroney. Dwyer had cases where he had a financial interest in Bank of America (three), Caterpillar (one), Citibank/CitiFinancial (eight), General Electric (two), Home Depot (one), Target Corporation (one), Wells Fargo (19), Unit-edHealth (18) and Viacom (one). Fiorenza had eight cases involving M&I Bank and Wasielewski had seven that involved Chase Home Finance.
In 2006, Dwyer was presiding over 51 cases involving three corporations in which he reported a financial interest between $5,000 and $50,000: Citigroup, United Health Group Inc. and Wells Fargo. Judge Elsa Lamelas was presiding over 20 cases involving five corpo-rations in which she reported a financial interest: Associated Banc-Corp, Capital One Financial Corp., CitiGroup Inc., Countrywide Financial and TCF Financial Corp. And Wasielewski was presiding over 17 cases in which he reported an interest: 16 involved JPMorgan Chase Bank, and one was another asbestos case with General Electric as a defendant.
Many of the conflicts that involve financial institutions are uncontested foreclosures, and lawyers generally agree a party that doesn’t appear loses the opportunity to object to a judge’s financial conflict. Still, if there is an attorney making an appearance on behalf of the debtor, the judge should reveal any conflict if one exists, says attorney Rollie Hanson, whose practice is primarily in federal bankruptcy court.
But such notification often isn’t given, even when the highest officials are involved in a case. Assistant U.S. Attorney Lennie A. Lehman represented the United States government in a foreclosure case in Milwaukee with federal tax implications. Judge Wa-sielewski, who handled the case, had a financial interest in Chase Home Finance LLC, the plaintiff. Did the judge let the U.S. Attor-ney’s office know about his potential conflict? “No, he absolutely didn’t say anything,” Lehman says.
Some cases with conflicts are garnishments, in which a creditor owed money wants an employer to withhold wages until a debt is paid. Other cases may involve personal injuries, in which an injured person is often suing an insurance company. In the 1991 lawsuit he brought over his son’s birth injuries, would Dwyer have felt comfortable with Judge Pat McMahon (who presided over the case) if she were trustee of a fund with a $5,000 to $50,000 interest in the defendant insurance company? As it turns out, Dwyer would never have to face that, because McMahon only reports stock in Textron Inc., an international supplier of weapons, aircraft and financial services with no cases filed in Milwaukee County.
That is one way for judges to avoid any conflicts: By not investing in companies likely to have cases coming before Milwaukee courts. An obvious one to avoid is Wells Fargo, the banking giant which was a party to 357 new cases filed in Milwaukee in the first eight months of 2006 alone. Among the judges assigned some of the cases are two reporting between $5,000 and $50,000 interest in Wells Fargo: Dwyer, who received 29 cases, and Lamelas, who was assigned 16.
The conflict problem has become especially challenging for Lamelas, who was reassigned from a criminal to a civil calendar in August. Married in 2005, Lamelas now has to report her own holdings as well as those of her husband, Foley & Lardner partner Luke Sims. Lamelas took over the civil cases from Judge Michael Guolee and immediately acquired cases where she has conflicts. Guolee had no such problem because his wealth was placed in money market accounts or mutual funds.
Most judges opt for mutual funds or other investments that water down the impact of any one company’s stock. Of the 47 judges in Milwaukee County Circuit Courts, less than half, or 21 judges, have direct investments in 648 stocks, funds or other financial interests, according to their financial disclosure reports. But it’s the civil (rather than criminal) cases that are likely to present finan-cial conflicts, and of 20 judges who handled civil cases in the first eight months of 2006, just seven own stock in any companies.
In theory, the decisions of these judges to recuse (or not recuse) themselves from cases where they have financial conflicts are monitored by the Wisconsin Judicial Commission. But just how closely is the commission watching?
JUDGING THE JUDGES
Since 2001, the Wisconsin Judicial Commission has handled 2,408 inquiries regarding potentially questionable conduct by a judge. Just one resulted in the state Supreme Court taking up the complaint. The results buttress the charge of some observers that the commission does not aggressively patrol wrongdoing by judges.
James Alexander, 60, has served as director of the Wisconsin Judicial Commission for 16 years. He evaluates all inquiries regarding the state’s judges and makes recommendations to the state Supreme Court, the ultimate overseer of judicial conduct. When asked at what point a judge’s investment or financial conflict might constitute something that is not de minimis, Alexander said there was no cut-and-dried rule.
“A judge might have a bigger conflict if he owed one of the parties $200 than if the judge had $5,000 worth of stock,” he says. “It could be the $200 that triggers the investigation.”
If loans could be a bigger problem than stock holdings, Milwaukee County is all the more conflicted: in the first eight months of 2006, 11 judges hearing civil matters were assigned 52 cases in which they owed a party more than $5,000; in 42 of those cases the judge owed more than $50,000 to a litigant like a mortgage company, bank or brokerage. In the double-whammy category, Judge Lam-elas reports debt of more than $50,000 and an investment of as much as $50,000 in Countrywide Financial, a mortgage company with seven cases before her court.
All of this is public record, but it took Milwaukee Magazine five months to obtain records and weeks to cross-check the financial interests and cases handled by judges. Does the mere existence of the records provide an assurance to the public that the justice sys-tem is impartial? USC legal ethics professor Greg Keating is unconvinced. “The reporting requirements,” he suggests, “are designed to generate the appearance of legitimacy as opposed to its reality.”
For decades, judges operated by a stricter code. Until the mid-1990s, the American Bar Association model code adopted by most states allowed no exception to the rule that “judges could not hear cases they had an interest in,” notes Steven Lubet, director of Northwestern University Law School’s Program on Advocacy and Professionalism and a nationally known expert on legal ethics.
But in the 1990s, Lubet adds, the ABA amended the code to allow the de minimis exception. “Wisconsin adopted the amendment, but not every state did that,” he explains. “The federal law does not have a de minimis exception. But many people think the former rule was too strict.”
The de minimis exception was added in order to reduce the number of judicial disqualifications. “Sometimes, if there’s a merger in the middle of a case, the judge would have a conflict,” Lubet explains. The new standard makes case assignment easier but leaves the vexing question of how much is de minimis and how much is enough financial interest to influence a judge. “That is the problem with the standard,” Lubet says.
At the state level, where the de minimis standard was adopted, the courts oversee the judges, Lubet notes, while at the federal level, which rejected de minimis, “it is the legislative branch that decides how something appears to the public…. Apparently, the Wisconsin Supreme Court decided that the public’s confidence in the judiciary would not be undermined.”
In September 2006, the Judicial Conference of the United States voted to require all federal courts to use conflict-checking com-puter software to identify cases in which judges have a financial conflict of interest and must disqualify themselves.
But the system cannot easily be converted to state use because it is part of a complex federal electronic case-management package. And the cost of creating a state-based software package could be considerable.
Could the county itself institute a screening system? Milwaukee County Clerk of Courts John Barrett said he would gladly research the possibility of a pre-assignment filtering system if Chief Judge Kitty Brennan requested this. But Brennan scoffed at the suggestion, saying she had received no complaints about the current system.
Dwyer offered no opinion. “My opinion [on the assignment process] is less than worthless,” he explained. “I have nothing to do with it. The director of the state courts runs the system.”
But some legal observers question how any judge can be allowed to oversee cases in which they have as much of a financial interest as Dwyer often does. Tom Fitton, whose Judicial Watch concerns itself with such ethical questions, says Dwyer’s “interest is a con-siderable interest. At least under the federal rules, he’d be required to recuse himself. Five thousand dollars to $50,000, this would not be de minimis.”
Douglas T. Kendall, founder and executive director of Community Rights Counsel, a nonprofit Washington, D.C. law firm, ques-tions any system that lets the judges decide when there is a conflict. While electronic screening systems can be helpful, he adds, no such system is foolproof.
“Judicial ethics rules are about more than actual impropriety. They are about perceptions,” says Kendall. “There need to be rules of conduct that apply to judges just like rules of professional responsibility for lawyers. Judges should not want to own stock in a company.”
Milwaukee Magazine analyzed only the financial conflicts in Milwaukee County. If an equal percentage of judges in the state’s other 71 counties hold stock or loans in companies involved in cases they try, what message does that send about the judicial system’s fair-ness? Perceptions about the impartiality of judges can have a large influence on whether people think the justice system is fair.
“We all watch the judges,” says Walt Kelly, who has been practicing law in Wisconsin for decades. “The way we lawyers present ourselves to the public is that justice is blind. But the first thing we ask is, ‘What judge did you get?’ ”
The second and more loaded question we can now ask is this: What is the judge’s financial interest in the outcome of the case?
Geoff Davidian is a Milwaukee-based freelance writer.