Supreme Court nominee Stephen G. Breyer, who as a federal appeals court judge has ruled in a number of toxic waste cases, had a major financial interest in the outcome of similar liability suits against U.S. polluters, Newsday has learned.
Breyer's financial disclosure statements filed with the Judicial Ethics Committee in Washington show that the judge had between $250,000 and $500,000 invested in the Lloyd's of London insurance company in the mid- and late 1980s.
The forms do not reveal which syndicates Breyer invested in. But internal Lloyd's documents obtained by Newsday in the United States and Great Britain indicate that one of Breyer's investments was a syndicate known as Merrett 418 (1985), whose liabilities for U.S. Superfund and asbestos claims were so great for that underwriting year that the group remains unable to close its books, nine years after it stopped operating. Lloyd's investors (known in England as "names") are personally liable for all claims.
In 1988, the last year in which Breyer made new investments in Lloyd's, there were 80 syndicates with unresolved U.S. pollution liabilities, according to the British trade press. The company is actually a group of syndicates, with wealthy investors putting up cash and pledging other assets to cover any potential losses. They make money on their investments when premiums collected for the syndicate exceed claims against it.
As a federal appeals court judge in Boston for the past 13 years, Breyer has ruled on a number of Superfund cases, including two that environmental lawyers describe as major legal precedents. In both of those, Breyer ruled against the government and in favor of the defendants.
At the same time, in speeches, articles in legal journals, and in his recently published book, "Breaking the Vicious Circle: Toward Effective Risk Regulation," Breyer has made a vigorous argument that the U.S. government has been needlessly overzealous in environmental cleanup, particularly in spending large amounts of money to eliminate what he asserts are marginal risks.
Breyer's chambers referred questions about the Lloyd's investment and his rulings to the White House.
White House Counsel Lloyd Cutler, in response to inquiries by Newsday, said that "there was no case to Judge Breyer's knowledge where his syndicate or Lloyd's itself had an interest in the particular case he was deciding."
Without a direct involvement with the parties to a case, there is no obligation by any judge to remove himself from sitting on a case, Cutler said.
"What he did is generally accepted as the way (the judicial ethics) rules should be applied," Cutler said. "If the rules were applied the way you want to apply it, no judge could own shares of any company."
But Cutler said Breyer decided to recuse, or remove, himself from sitting on asbestos cases "once it became generally clear that Lloyd's had some risk in asbestos cases. …