NOTE: Effective January 1, 2000, the "180-day fundraising period" in MCJC 7B(2)(c) has been replaced by a fund-raising period starting on February 15 of the year of the election.
January 26, 1990
The period for phasing out judges serving on boards of directors having expired, full-time and part-time judges are prohibited from serving as director, officer, manager, advisor or employee of any business, with or without compensation.
A retired judge who serves as visiting judge under special assignment by the State Court Administrative Office may serve as director, officer, manager, advisor or employee of a business, provided that during the period of any judicial assignment, the judge (a) takes a leave of absence as director, officer, manager, advisor or employee of the business, (b) receives no remuneration from the business during the period of judicial service, and (c) is disqualified from hearing any matter related to the interests of the organization on which the judge serves.
A part-time or retired judge may serve as director of a charitable, religious, educational, fraternal or civic organization which is not regularly engaged in adversary proceedings in any court.
References: MCJC 5(B), 5(C)(2), 5(F); J-1; C-180; CI-580, CI-914, CI-1079; MCR 2.003(B); ABA iC-759, ABA iC-559(a).
The Committee has been asked to interpret MCJC 5(C)(2) concerning a judge serving as director, officer, manager, advisor or employee of a business in the following circumstances:
- A judge serves as director, officer, manager, advisor or employee of a business, receives remuneration from the business for services, and reports this income as required under MCJC 6(C).
- A judge serves as director, officer, manager, advisor or employee of a business located in a county separate from the county in which the judge sits as judge.
- A retired circuit court judge serves as director, officer, manager, advisor or employee of a business and a hospital. The retired judge is subject to call by the State Court Administrator to hear cases at the district and circuit level.
MCJC 5(C)(1) and (2) state:
"(1) A judge should refrain from financial and business dealings that trend to reflect adversely on his impartiality or his judicial office, interfere with the proper performance of his judicial duties, exploit his judicial position, or involve him in frequent transactions with lawyers or persons likely to come before the court on which he serves.
"(2) Subject to the requirements of subsection (1), a judge may hold and manage investments, including real estate, and engage in other remunerative activity, but should not serve as director, officer, manager, advisor or employee of any business. Provided, however, as to a judge holding office and serving as an officer, director, manager, advisor or employee of any business not prohibited heretofore by law or judicial canon, the effective date of the prohibition contained herein shall be the date of expiration of his current judicial term of office." Emphasis added.
Prior to the Code's adoption in 1974, the State Bar, by letter of August 27, 1974, to the Supreme Court, recommended the addition of the proviso clause saying in its memorandum to the Court:
"This amendment is intended to soften the impact of the new Code on judges who at the present time hold directorships not violative of the existing Canons of Judicial Ethics which would be immediately barred by the adoption of this provision of the proposed Code. The Board of Commissioners has been advised that a number of judges in Michigan find themselves in this position and agreed that it would be arbitrary to require these judges to make an immediate choice between their services as a judge and their positions as directors. The effect of the amendment is limited to such directorships as are ethical under existing standards and would delay the effective date of this section insofar as it applies to judges who now hold such directorships until the expiration of the judges' present term as a judge at which time he would be required to make the choice previously referred to."
It is clear that the Supreme Court adopted this rationale and added the suggested "grandparent clause" to the Canon. It is also clear that the effect of the proviso clause was to be temporary only, to the end of the terms of office being served in 1974. All of those terms of office have now expired, the "grandparent clause" is thus no longer operative, and all full time judges are now subject to the prohibition contained in the first sentence of the Canon, i.e., that a judge "should not serve as an officer, director, manager, advisor or employee of any business." C-180.
This language is clear and unambiguous. A full time judge may not serve as director of any business, with or without compensation. The prohibition is absolute. A violation is not cured by recusal. Therefore, in answer to questions 1 and 2, a full time judge violates MCJC 5(C)(2) by serving as director, officer, manager, advisor or employee of any business, regardless of where the business is located, regardless of whether the judge properly reports compensation from the business to the State Court Administrative Office, and regardless of whether the judge serves on a single-judge or multi-judge court.
It is not as clear whether a part-time judge or retired judge is subject to the same prohibition. The underlying policy behind the prohibition is that judicial office is intended to be a full time occupation; to the extent a judge's time is taken by his business service, the business conflicts with judicial duties, in contravention of MCJC 5C(1). Second, pursuant to MCJC 5C(3), a judge must manage investments to minimize the number of cases in which the judge is disqualified. Serving an outside business increases the incidence of disqualification.
MCJC 5(F) prohibits a judge from practicing law for compensation except as otherwise provided by law, J-2. It is clearly contemplated that part-time judges and retired or visiting judges may practice law when they are not performing judicial duties. The State Court Administrator's Judicial Assignments Guidelines, Policy and Procedure Manual, as amended November, 1988, provides the following information on the assignment of part-time and retired judges.
"Guideline I. H, Part-Time/Former Judges-Practice of Law: No part-time or former judge who engages in the practice of law will be assigned to act as a judge in any court before which he/she regularly appears as retained or appointed counsel. Part-time judges shall not engage in the practice of law during the period of the assignment period.
"Guideline I. I, Former Judges: . . . 3. Former judges shall not engage in the practice of law during the period of assignment . . . 8. No former judge serving another branch of government may be used on judicial assignment (No person exercising powers of one branch shall exercise powers properly belonging to another branch except as expressly provided in this constitution,' Article III, Sec. 2, Separation of Powers of Government, Constitution of 1963) . . . 11. Any former judge who has acted as a mediator will not be assigned to preside at the trial of any case in which he or she served as a mediator."
A part-time judge, although at times serving as lawyer and at times serving as judge, has a permanent judicial assignment. The part-time judge is not subject to an unscheduled call to the bench, and is known in the jurisdiction as a permanent part of the judicial contingent. Therefore, the MCJC 5C(2) prohibition applies equally to full time and part-time judges.
Although retired judges may engage in the practice of law, they may not do so during the term of assignment. During the period of assignment, i.e., while the retired judge is serving as judge in a matter, the retired judge is bound by the Code of Judicial Conduct. A retired judge when not serving on judicial assignment has the status of a practicing lawyer and is not bound by the Code of Judicial Conduct and its prohibitions against serving on a board of directors.
ABA iC-759 and ABA iC-759(a) reasoning from Canon 31 of the former Canons of Judicial Ethics state:
"One who in keeping with the established judicial system of his state, serves as special or pro tem judge in the aid of the regular judge, . . . receives therefore no compensation, or only a small compensation based on the time of service and, as his primary means of livelihood engages in the practice of law in the courts of his state, including the court over which he at times presides, [does not violate Canon 31]."
Serving an outside business is analogous to the practice of law. Clearly the State Court Administrative Office expects the practice of law to cease upon assignment of the judge. Similarly, the service to an outside business should cease upon assignment. When assigned judicial duties the visiting or retired judge should take a leave of absence from the business, receive no compensation from the business during the period of time in which the judge is adjudicating matters, and of course, recuse from hearing matters that are related to the interests of the outside business.
With regard to serving a hospital, the facts of this inquiry do not state whether the judge serves a for-profit hospital or a not-for-profit hospital. If the position is with a for-profit hospital, the foregoing discussion relating to businesses applies. With regard to a non-profit hospital, MCJC 5B applies:
"B. Civic and Charitable Activities: A judge may participate in civic and charitable activities that do not reflect adversely upon his impartiality or interfere with the performance of his judicial duties. A judge may serve as an officer, director, trustee, or non-legal advisor of a bona fide educational, religious, charitable, fraternal, or civic organization, subject to the following limitations:
"(1) A judge should not serve if it is likely that the organization will be engaged in proceedings that would ordinarily come before him or will be regularly engaged in adversary proceedings in any court.
"(2) A judge should not individually solicit funds for any educational, religious, charitable, fraternal, or civic organization, or use or permit the use of the prestige of his office for that purpose, but he may be listed as an officer, director, or trustee of such an organization. A judge may, however, join a general appeal on behalf of an educational, religious, charitable, or fraternal organization, or speak on behalf of such organization."
The guidelines for a full-time judge's participation in civic/charitable activities are set forth in J-1. CI-1070 held that a judge-elect must resign from the board of not-for-profit hospital regularly engaged in adversary proceedings in any court or engaged in proceedings that would ordinarily come before the judge. In accord, CI-914, CI-580. Retired and part-time judges are similarly eligible to serve nonprofit organizations, but should not serve if the organization is regularly engaged in adversary proceedings in any court. Of course the retired judge must be recused from a judicial assignment in which the organization would come before the judge, whether as party, witness or otherwise. MCR 2.003(B).