FLORIDA SUPREME COURT

Judicial Ethics Advisory Committee

Opinion Number: 2008-25
Date of Issue: December 30, 2008

ISSUES

(1) May a judge serve as an officer or director of a closely held family corporation?

ANSWER: Yes.

(2) May a judge receive compensation for the corporation based upon a percentage of the value of property to be sold?

ANSWER: Yes.

FACTS

The inquiring judge serves as an officer and director of a closely held family corporation that is solely an agricultural enterprise.  The corporation will be selling real property that will result in substantial income to the business and significant compensation to the inquiring judge.  The judge’s compensation will be based upon a percentage of the value of the transaction.

DISCUSSION

Canon 5D(3) provides as follows:

A judge shall not serve as an officer, director, manager, general partner, advisor or employee of any business entity except that a judge may, subject to the requirements of this Code, manage and participate in:

(a) a business closely held by the judge or members of the judge’s family, or
(b) a business entity primarily engaged in investment of the financial resources of the judge or members of the judge’s family.

It is clear that the language authorizing a judge to “manage and participate in” a business closely held by the judge or members of the judge’s family includes participation as an officer, director, manager, general partner, advisor or employee of a closely  held family corporation.  Any other interpretation would defy logic.

Furthermore, Canon 5D(2) authorizes the judge to “hold and manage investments of the judge and members of the judge’s family, including real estate, and engage in other remunerative activity.”  This language authorizes the judge to receive compensation from the closely held family corporation.  There are no restrictions on how the compensation is to be determined.  Thus, compensation on a percentage or commission basis is authorized.

However, the judge should be aware that all of the judge’s business and financial dealings with the closely held family corporation are subject to other requirements of the Code.  The Commentary to Canon 5D(3) explains this provision:

Although participation by a judge in a closely held family business might otherwise be permitted by Section 5D(3), a judge may be prohibited from participation by other provisions of this Code when, for example, the business entity frequently appears before the judge’s court or the participation requires significant time away from judicial duties.  Similarly, a judge must avoid participating in a closely held family business if the judge’s participation would involve misuse of the prestige of judicial office.

Therefore, the inquiring judge may be an officer and director of a closely held family corporation and may receive compensation in the form of a commission.  It is incumbent upon the judge to ensure that the judge’s activities in this family business comply with all other requirements of the Code.

REFERENCES

Fla. Code Jud. Conduct, Canons 5d(2) and 5D(3).

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The Judicial Ethics Advisory Committee is expressly charged with rendering advisory opinions interpreting the application of the Code of Judicial Conduct to specific circumstances confronting or affecting the judge or judicial candidate. Its opinions are advisory to the inquiring party, to the Judicial Qualifications Commission and the judiciary at large. Conduct that is consistent with an advisory opinion issued by the Committee may be evidence of good faith on the part of the judge, but the Judicial Qualifications Commission is not bound by the interpretive opinions by the Committee. Petition of the Committee on Standards of Conduct Governing Judges, 698 So. 2d 834 (Fla. 1997). However, in reviewing the recommendations of the Judicial Qualifications Commission for discipline, the Florida Supreme Court will consider conduct in accordance with a Committee opinion as evidence of good faith. Id.

The opinions of this Committee express no view on whether any proposed conduct of an inquiring judge is consistent with the substantive law which governs any proceeding over which the inquiring judge may preside.  This Committee only has authority to interpret the Code of Judicial Conduct, and therefore its opinions deal only with the issue of whether the proposed conduct violates a provision of that Code.

For further information, contact: Judge C. McFerrin Smith, III, Chair, Judicial Ethics Advisory Committee, 101 N. Alabama Avenue, Suite 437, Deland, FL 32724.

Participating Members:
Judge Roberto Arias, Judge Robert T. Benton, Dean Bunch, Esquire, Judge Lisa Davidson, Judge Kerry I. Evander, Judge T. Michael Jones, Patricia E. Lowry, Esquire, Judge Jose Rodriguez, Judge Leslie B. Rothenberg, Judge C. McFerrin Smith, III, Judge Richard R. Townsend, Judge Dorothy Vaccaro.


Copies furnished to:
Justice Peggy Quince
Thomas D. Hall, Clerk of Supreme Court
All Committee Members
Executive Director of the J.Q.C.
Office of the State Courts Administrator
Inquiring Judge (Name of inquiring judge deleted from this copy)