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Supreme Court Nominee Had Conflict of Interest in Case, Boston Lawyer Asserts

Posted on: Monday, 31 October 2005, 21:00 CST

By L. Stuart Ditzen, The Philadelphia Inquirer

Nov. 1--A Boston law professor asserted two years ago that he had found a clear conflict of interest involving Samuel A. Alito Jr., who was nominated Monday for the U.S. Supreme Court.

"The merits on this are a slam dunk in my view," said John G.S. Flym, a professor at Northeastern University School of Law, in a 2003 interview.

Flym contended that Alito, a judge on the Philadelphia-based Third Circuit U.S. Court of Appeals, had improperly participated in a case involving the Vanguard Group at a time when he held investments worth hundreds of thousands of dollars in Vanguard mutual funds.

Whether Flym was correct was never decided by an independent authority.

But Alito, while denying any ethical breach, voluntarily withdrew from the case in which Flym accused him of a conflict.

At issue was a case in which Shantee Maharaj, formerly of Wayne and now of Jamaica Plain, Mass., accused Vanguard in a lawsuit of improperly releasing funds from her late husband's retirement account to pay a Massachusetts judgment.

Maharaj, 50, acting as her own lawyer, filed the suit in U.S. District Court in Philadelphia in 1995. Vanguard contended that it had acted in response to a court order in releasing the retirement funds.

Maharaj's suit was dismissed in 2001. She filed an appeal to the Third Circuit. A three-judge panel of which Alito was a member upheld the dismissal in 2002, and Alito wrote the court's opinion.

After the ruling, Maharaj obtained copies of financial disclosure statements of the three judges who had ruled on her case and found that Alito held investments worth $390,000 to $930,000 in 11 Vanguard funds.

Maharaj contacted Flym, whom she had known in the 1980s when she was a law student at Northeastern University, and asked his help in seeking a rehearing.

Flym, who represented Maharaj for no fee, contended in a petition in 2003 that Alito clearly had a financial interest in Vanguard and should have disqualified himself from Maharaj's case. He asked the Third Circuit to vacate its decision and assign the case to a new panel of judges.

Alito said at the time that he believed his Vanguard holdings did not constitute a conflict because he was only an investor in the company's mutual funds, not an owner. Flym noted that Vanguard, unlike some other mutual funds, considers its investors to be owners.

Said Alito: "They have $600 billion invested with them. The idea that a case like this would affect that is just ludicrous."

Even so, the judge disqualified himself from any further involvement in the matter, saying he did not want to participate in a case in which his objectivity was in question.

In response to Flym's petition, a new panel of judges reviewed Maharaj's case. In 2004, the second panel affirmed the decision of the first in nearly identical language.

Maharaj and Flym appealed to the U.S. Supreme Court but were denied a hearing.

In his most recent disclosure statement filed this year, Alito said that he owned shares in 14 Vanguard mutual funds worth $455,000 to $1,050,000.

He listed his total net worth at between $615,000 and $1,600,000.

Alito's largest holding other than the Vanguard shares is stock in Exxon Mobil Corp. worth between $100,000 and $250,000; he inherited the stock from a family friend. He owns lesser amounts of McDonald's, Intel, Bristol Meyers Squibb and Disney.

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Source: The Philadelphia Inquirer

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