Serving as Elected Officer or Director of Golf Club

April 13, 1998

CJE Opinion No. 98-7

You have asked this Committee's advice with respect to the propriety of your serving as an elected officer and director of your golf club, a non-profit corporation with 600 members. The officers set club policies, oversee the raising and spending of all monies, including a several million dollar capital project currently under way that involves the negotiating and awarding of contracts and the arranging of financing.

Canon 5(B) of the Code of Judicial Conduct permits, with some qualifications, service as an officer or director of an "educational, religious, charitable, fraternal, or civic organization not conducted for the economic . . . advantage of its members." Canon 5(C)(2), however, prohibits service "as an officer, director, manager, advisor, or employee of any business." Canon 5 seems to divide the world of organizations into the categories described in Canon 5(B) and 5(C)(2). A non-profit golf club seems to fit neatly into neither category since it is not clearly either a "civic" or "fraternal" organization or a "business." We faced the troublesome question of what constitutes a business in our Opinion 95-2, which dealt with the propriety of a judge's service as treasurer of a twenty-one person investment partnership that traded in publicly listed securities. We set forth our view of the governing considerations as follows:

"Normally, one thinks of a business as an organization that deals in some way with the general public for profit. Your group operates only for the benefit of its members. It is small and, we assume, admits new members only infrequently, if at all. In that sense, it is not a business. The Canons of Judicial Ethics appear to look at 'business' in a somewhat different way for a specific purpose. The leading text on judicial ethics uses the difference between capital and labor as the test for differentiating business from investment. 'Use of one's savings is not typically understood as a means of livelihood; use of one's labor is.' Shaman, Lubet, and Alfini, Judicial Conduct and Ethics, 176 (1990). In the situation you describe, the collegial nature of the investment process suggests a rather more substantial use of your labor than would be the case if you were just deciding on your own personal investments."

In Opinion 95-2, we were differentiating managing investment from advising a business and in the end we found it crucial that the judge was advising others about investments. Your inquiry does not contain that feature. But the Committee was leaning toward the position that the judge's service as treasurer could be regarded as engaging in a business.

Participation as director of a golf club has many more elements of participation in a business. The club has 600 members and a budget in excess of a million dollars. The officers and directors supervise eighteen to thirty employees and monitor all receipts and expenditures. There is also a big capital improvement project under way. While the club does not operate to make a profit, in every other respect your work and responsibility would be the same if the organization were designed to make a profit. The Canons of Judicial Conduct permit a judge to engage in such time-consuming work only when the beneficiary is a civic or fraternal organization. "Civic" has the ring of public service or public interest. The joinder of "fraternal" with "educational, religious, charitable, or civic" organizations in Canon 5 emphasizes the important civic and charitable components of the groups in which judges are permitted to serve in leadership positions. The golf club you describe is primarily a large recreational facility whose operation resembles that of a business. (See Advisory Opinion 29 (1973) of the federal Advisory Committee on Judicial Activities responding to an inquiry about service as officer or director of the cooperative apartment or condominium in which the judge resided. The committee stated that such service became questionable if the judge's duties "entail business-type contacts, substantial in number or character, with outside enterprises particularly of the kind that could result in litigation.") Consequently, it is the Committee's view that Canon 5(C)(2) should be read as not permitting service as a director of the golf club.

You inquire further whether if service as a director or officer is forbidden, service as a member of club committees that assess entry fees, award monetary prizes, and make decisions as to participation in golf tournaments and local club rules of competition is also forbidden. The only possible provision that would forbid such service would be the prohibition against serving as an "advisor" of any business. In the Committee's view, that prohibition, as it relates to a golf club, relates to taking major advisory roles on policy issues of the sort involved in service as an officer or director and not service on the committees you mention. Therefore, so long as you are in compliance with the general prohibitions set forth in the Code of Judicial Conduct, especially those contained in Canon 5(C)(1) and 2(C), we see no ethical problems with service on the committees you mention.