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James Robart, a federal judge, just threw out a $72 million verdict against Boeing.
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He disclosed trades of up to $15,000 in Boeing stock in his wife’s IRA last year, while the case was ongoing.
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It’s not clear whether he made or lost any money. But it could still create complications.
A federal judge in Seattle who just threw out a $72 million verdict against Boeing disclosed that he bought and sold between $1,000 and $15,000 of the company’s stock last year while he was overseeing the case, records show.
Judge James Robart told Business Insider a bank that managed his wife’s IRA purchased Boeing stock in April 2023. He said as soon as he learned about it, he had the stocks sold; his financial disclosures said the shares were sold on two dates in May and June.
It’s not clear whether Robart’s wife made money on the trades overall. Based on the prices that Boeing shares traded at on the days her IRA bought and sold the shares, at least one of the two sales was a money-loser, while the second could have potentially been profitable.
Zunum Aero, an electric aircraft startup, sued Boeing in 2020 and expanded its lawsuit in 2021 to accuse the company and its suppliers of conspiring to deprive Zunum of funding and steal its plans for an electric short-haul airplane.
Robart described the trades to BI as an error and said he immediately took steps to correct it by selling the stocks. Still, he said, he did not notify the lawyers for either side and made no public acknowledgment of the trades aside from financial disclosures he is required by law to file.
“There could be some market movement, but it’s not going to influence my decision,” he said.
Judges’ finances in focus
The financial lives of federal judges have been under a microscope, with Supreme Court justices Clarence Thomas‘s luxury trips and Sonia Sotomayor’s book sales the subject of critical stories.
In 2021, the Wall Street Journal reported that 131 federal judges had broken an ethics law by not recusing themselves in cases where they or their family members bought or held stock. Some of the judges faulted clerks, some said they weren’t aware of holding the assets that created the conflict, and others admitted errors, the Journal reported.
Robart — who wasn’t among the judges in the Journal’s story — said he was aware of the report and was cautious about his trading. He said he didn’t realize that his wife’s IRA was in a pooled fund that traded individual stocks until receiving a monthly report on its trading activity.
A jury awarded Zunum a whopping $72 million in June and found Boeing’s theft of its trade secrets had been “willful.” Boeing argued that the jury had erred. Robart threw out the verdict earlier this month after concluding that testimony wasn’t detailed enough to establish what Zunum’s trade secrets were. He and his family disposed of their Boeing shares more than a year before that decision.
Bill Hodes, a retired law professor who focused on legal ethics, said as long as the trades were accidental, quickly fixed, and not repeated, he didn’t think it was more than a technical violation.
“Whether the remedy would be that — after he quickly did it, and did the ‘oops’ — whether he should announce it to the parties,” he said, “I don’t know.”
Gabe Roth, whose group Fix The Court focuses on Supreme Court and judicial ethics, said the level of care Robart said he took was what judges are supposed to do. He said the law allows judges to sell shares so that they can hear a case.
Zunum could bring up the issue on appeal, Roth said, but it probably wouldn’t change anything. He said the law doesn’t require disqualification if a judge has already sunk significant time into a case when issues like this arise.
“I think he probably should’ve mentioned this to the parties,” Roth said.
The amount of Boeing stock traded isn’t much compared to Robart’s total wealth. According to his 2021 annual disclosure, the most recent available, Robart owns several million dollars’ worth of financial assets, largely diversified funds.
Robart told BI he believed his wife’s retirement account would be managed like a mutual fund, which judges frequently hold because they reduce the need for recusals. It was only after he received a statement that he realized the pooled fund was trading individual stocks.
“I’m trying pretty hard to abide by the rules,” he said.
He said his wife eventually transferred the retirement account back to Charles Schwab and hasn’t had issues since.
Boeing and Zunum didn’t respond to requests for comment.
Read the original article on Business Insider
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