State of Washington

Ethics Advisory Committee

Question

May a judicial officer be a shareholder in a corporation if the judicial officer does not serve as an officer, director, manager or employee of the corporation?

The judicial officer has an opportunity to become a shareholder with another person in a business which will be incorporated. The corporation will be engaged in a home building business. This will involve incorporation, contracts with subcontractors, procurement of building sites, home construction with an eventual conversion to automated building (where homes are build in a controlled environment and the panels assembled on the homesite). Initially, the judicial officer’s participation will only include carpentry labor. Compensation to the judicial officer will be in the form of a dividend. Any activities associated with the corporation will be performed during non-court hours in the evening or on a weekend.

The judicial officer’s position will be eliminated within the next two years.

Answer

Generally, CJC Canon 5(C) provides that judges may engage in business and financial dealings that: 1) do not reflect adversely on their impartiality, interfere with the proper performance of their judicial duties or exploit the judicial office; 2) do not involve them in frequent business transactions with lawyers or persons likely to come before them in the court in which they preside; and 3) do not require they serve as officers, directors, managers, advisors or employees of any business. Based on the facts presented in this request, it appears the judicial officer may become a shareholder in an incorporated home building business subject to the restrictions set out in CJC Canon 5(C) because the judicial officer will not be an officer, director, manager, advisor or employee of the corporation; rather the judicial officer will have an independent contractor relationship with the corporation in which the judicial officer will provide carpentry labor for which the judicial officer will receive a dividend as a shareholder. The judicial officer may not transact any business while on official judicial business and the business may not conflict with any assigned judicial duties. The judicial officer may not refer to the judicial officer’s status in conjunction with the business and the business may not be involved with persons who appear regularly before the court, either as a lawyer or as a party.

Also, see Opinion 00-15.

Opinion 05-04

03/29/2005