Alito's ruling in '02 appellate case viewed as "improper"

WASHINGTON — When Samuel Alito appeared before the Senate Judiciary Committee 15 years ago as a nominee for the appellate bench, he promised in writing to disqualify himself from "any cases involving the Vanguard companies," a stock and mutual-fund firm in which he had substantial personal investments.

That is why several Senate aides said they were wondering Monday why Alito agreed to participate in 2002 with two other judges in an appellate case in which he ruled in Vanguard's favor, dismissing a complaint that the company had improperly seized some private accounts and blocked the owner's widow from obtaining the funds they contained.

Alito's ruling, issued on April 12, 2002, was withdrawn the following year by Anthony Joseph Scirica, the chief administrative judge for the 3rd Circuit where Alito worked. Scirica acted after the widow complained in a court motion that Alito's participation in the decision was "unlawful" under judicial ethics rules.

"It was improper for him to participate in the decision," said retired Northeastern University law professor John G.S. Flym, who helped prepare the court motion on behalf of Shantee Maharaj of Wayne, Pa. Her husband had established the accounts that Vanguard froze and then disbursed to others in settling a business dispute with her husband's former partner.

"The law was quite clear," Flym said, even though some controversy exists among judges about how to interpret the rules. "It's clear that [Alito's] ... holdings were substantial" in Vanguard company investments.

White House spokeswoman Dana Perino said Alito had become involved in the case because a "computer screening program" at the 3rd Circuit had failed to pick up the potential conflict. She said that "as soon as the matter was brought to [Alito's] attention" by Maharaj's motion, he wrote a letter to Scirica requesting the verdict be withdrawn and the case presented to a new panel.

Perino said she did not have a copy of Alito's letter, and Scirica did not return a telephone call Monday.

The case, as presented to the appellate court, specifically names Vanguard Group, Vanguard Fiduciary Trust and Vanguard's Morgan Growth Fund as some of the litigants. The motion complaining about Alito's involvement, citing Alito's financial-disclosure statement for 2002, said he owned shares in 17 Vanguard funds at the time of his ruling, with a total value between $390,000 and $975,000.

Judicial ethics rules require disqualification whenever judges know they have "ownership of a legal or equitable interest, however small" in a company that is party to a legal dispute. While the rule is meant primarily to cover direct holdings in the stock of one company, Flym noted the Vanguard Fund describes itself as being owned by the "fund's shareholders."

Perino said that after the decision was withdrawn, the case was heard by another panel of 3rd Circuit judges.