Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Supreme Court Justice Anthony Kennedy’s son Gregory is a managing director of Credit Suisse, the investment banking firm that is a party in a major antitrust case set for argument before his father’s court March 27.

It is apparently because of his son’s employment that Kennedy on Monday suddenly recused in the case, Credit Suisse v. Billing, after having participated in the decision last December to grant review.

Kennedy’s late-stage recusal triggered an unusual sequence of events in the case, announced on an otherwise routine order list Monday. The Court vacated its December grant of review in the case, “having been advised by Justice Kennedy that he now realizes that he should have recused himself from participation in this case, and does now recuse himself.”

But then, the order continued, the Court reconsidered the Credit Suisse petition, without the participation of Kennedy or Chief Justice John Roberts Jr., who had previously recused. Minus the two justices, the Court granted review again, and the case will be argued as previously scheduled — though before a seven-member Court. At issue in the case is whether investment firms and underwriters like Credit Suisse are immune from antitrust lawsuits over alleged manipulation of prices of stocks sold in initial public offerings. (Late on March 23, the Court indicated, without explanation, that Roberts has decided to rejoin the case.)

Kennedy, like most justices, never publicly explains his reasons for recusal. But his son’s employment is almost certainly the cause, since no financial conflict of interest is apparent from Kennedy’s latest financial disclosure form. Gregory Kennedy, who works in Credit Suisse’s New York offices, declined comment and referred calls to the firm’s public relations office, which also declined comment. Mayer, Brown Rowe & Maw partner Stephen Shapiro, who will argue the case for Credit Suisse next week, says he was not aware that Kennedy’s son worked for the firm.

What is unclear so far is why Justice Kennedy did not recuse in the Credit Suisse case last December, even though his son has been a managing director at Credit Suisse since August 2005.

Kennedy was among seven justices who signed a statement in 1993 specifying that in cases in which their lawyer-spouses or lawyer-children had a connection, they would recuse only when the justices knew their relative had an interest that could be “substantially affected,” or when the justice’s impartiality “might reasonably be questioned.”

Gregory Kennedy, a 1992 graduate of Stanford Law School, formerly practiced law at Sullivan & Cromwell in New York. At that time he, like Eugene Scalia, a son of Justice Antonin Scalia who works at Gibson, Dunn & Crutcher, structured his compensation so that it was not dependent on Supreme Court litigation.

But once the younger Kennedy left the law for Wall Street, the 1993 agreement no longer applied. The statute governing the recusal of federal judges makes it unnecessary to recuse in most cases in which a judge’s close adult relatives are involved in a case before the judge.

Northwestern University judicial ethics expert Steven Lubet says that in such a situation the judge must recuse only if the relative is “known by the judge to have an interest” that would be substantially affected by the outcome of the case. Typically, if a relative of a judge is a salaried employee of a company in a case that falls short of life-or-death importance for that company, recusal is not required, Lubet says.

But on Wall Street, managing directors are typically compensated with a combination of salary and stock. A Credit Suisse spokesman declined to say if Gregory Kennedy’s compensation includes stock.

But assuming that is the case for the young Kennedy, his father may have decided to act because the outcome of the Credit Suisse case could conceivably affect its stock value, Lubet says.

“He probably came to the belated conclusion that his son had an interest that could be substantially affected by the case,” Lubet says.

Lubet says Kennedy “was prudent to be concerned” about the ethical issue, though he wishes Kennedy — and his colleagues — would be more open in their decision-making. “It is frustrating, baffling, and unjustifiable that they make this all so mysterious.”

Roberts did not explain his recusal in the Credit Suisse case last December, but his 2005 disclosure form reveals he has investments with several of the firms connected to the case, including: Merrill Lynch, Pierce, Fenner & Smith; Fidelity; and Janus.

Tony Mauro can be contacted at [email protected].

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.