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).
TEXT
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:
1.
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).
2.
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.
3.
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).