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HomeMy WebLinkAbout09-527 CambrestJohn F. Cambest, Esquire Dodaro, Matta & Cambest, P.C. 1001 Ardmore Boulevard, Suite 100 Pittsburgh, PA 15221 -5233 Dear Mr. Cambest: ADVICE OF COUNSEL March 23, 2009 09 -527 This responds to your letters dated February 2, 2009, and February 5, 2009, by which you requested an advisory from the Pennsylvania State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., would present any prohibitions or restrictions upon a high school principal, who in a private capacity is the sole owner of a fundraising business, with regard to selling fundraising products at cost to a high school - affiliated club, when the high school principal would not receive any pecuniary benefit from the club's sale of such products. Facts: As the legal representative of a school district ( "the School District "), you have been authorized by Michael Hauser ( "Mr. Hauser "), a Principal for a School District high school ( "the High School "), to request an advisory from the Pennsylvania State Ethics Commission on his behalf. You have submitted facts that may be fairly summarized as follows. A High School- affiliated club ( "the Club ") seeks to raise funds for Club purposes. The Club has as a sponsor a professional employee who would be under the supervision of Mr. Hauser. You state that due to the small size of the Club, the profit margins on normal fundraising activities such as sandwich or candy bar sales would not provide the Club with the money necessary to fund its projects. In a private capacity, Mr. Hauser is the sole owner of a fundraising business ( "the Business "). The Business deals in waterless car wash products. Mr. Hauser has offered to sell the Business's products to the Club at cost. The wholesale cost of each bottle of the Business's product is $16.95. The Club would earn a profit of between $9.00 to $10.00 for each bottle of product sold. You state that Mr. Hauser would not receive a pecuniary benefit from the Club's sale of the products. Based upon the above submitted facts, you ask whether the Ethics Act would prohibit Mr. Hauser from selling the Business's products to the Club at cost, for sale by the Club as a fundraiser. Cambest, 09 -527 March 23, 2009 Page 2 Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. Preliminarily, it is noted that the submitted facts do not include an official job description for Mr. Hauser's position as a Principal with the High School. This advice assumes, without deciding, that in his public capacity as a High School Principal, Mr. Hauser is a public official /public employee subject to the Ethics Act. See, 51 Pa. Code § 11.1 (definition of "public employee" (iv)(F)). Sections 1103(a) and 1103(j) of the Ethics Act provide: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. (j) Voting conflict. - -Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three - member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa.C.S. §§ 1103(a), (j). The following terms related to Section 1103(a) are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or Cambest, 09 -527 March 23, 2009 Page 3 employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or has a financial interest. 65 Pa. C. S. § 1102. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. In each instance of a conflict of interest, the public official /public employee would be required to abstain fully from participation. The abstention requirement would not be limited merely to voting, but would extend to any use of authority of office, including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. Subject to certain statutory exceptions, in each instance of a voting conflict, Section 1103(j) of the Ethics Act requires the public official /public employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes. It is noted that Section 1103(a) of the Ethics Act pertaining to conflicts of interest does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may not use the authority of his public position - -or confidential information obtained by loeing in that position - -for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89 -011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order 1037; (2) the use of governmental facilities, such as governmental telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct Cambest, 09 -527 March 23, 2009 Page 4 private business activities, Freind, Order 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity or private client(s). Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010. A reasonable and legitimate expectation that a business relationship will form may also support a finding of a conflict of interest. Amato, Opinion 89 -002. In each instance of a conflict of interest, the public official /public employee would be required to abstain from participation, and in the instance of a voting conflict, to abstain and fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. The Business is a business with which Mr. Hauser is associated in his capacity as the owner. Subject to the statutory exclusions to the definition of "conflict" or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, in his capacity as a High School Principal, Mr. Hauser would have a conflict of interest in matters that would financially impact him, the Business, or the Business's customer(s) /client(s). See, Kannebecker, supra; Miller, supra; cf., Coll, Advice 05 -501 (self - employed public official would not have a conflict of interest as to a customer /client from which he /his business would receive only a de minimis financial benefit). In each instance of a conflict of interest, Mr. Hauser would be required to abstain fully from participation. The abstention requirement would extend to any use of authority of office. In response to your specific inquiry, you are advised that under the submitted facts, Mr. Hauser's sale of the Business's fundraising products to the Club at cost would not in and of itself form the basis for a transgression of the Ethics Act where Mr. Hauser would not receive any pecuniary benefit from the Club's sale of such products. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Specifically not addressed herein is the applicability of the Public School Code. Conclusion: This Advice assumes, without deciding, that in his capacity as a Principal for a high school ("the High School "), Michael Hauser ( "Mr. Hauser ") is a public official /public employee subject to the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Based upon the submitted facts that: (1) a High School- affiliated club ( "the gub ") seeks to raise funds for club purposes; (2) in a private capacity, Mr. Hauser is the sole owner of a fundraising business ( "the Business ") that deals in waterless car wash products; (3) Mr. Hauser has offered to sell the Business's products to the Club at cost; (4) the wholesale cost of each bottle of the Business's product is $16.95; (5) the Club would earn a profit of between $9.00 to $10.00 for each bottle of product sold and (6) Mr. Hauser would not receive any pecuniary benefit from the Business's sale of the products, you are advised as follows. The Business is a business with which Mr. Hauser is associated in his capacity as the owner. Subject to the statutory exclusions to the definition of "conflict" or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, in his capacity as a High School Principal, Mr. Hauser would have a conflict of interest in matters that would financially impact him, the Business, or the Business's customer(s)/client(s). In each instance of a conflict of interest, Mr. Hauser would be required to abstain fully from participation. The abstention requirement would extend to any use of authority of office. Under the submitted facts, Mr. Hauser's sale of the Business's fundraising products to the Club at cost would not in and of itself form the basis for a transgression of the Ethics Act where Mr. Hauser would not receive any pecuniary benefit from the Club's sale of such products. Cambest, 09 -527 March 23, 2009 Page 5 Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11) of the Ethics Act, an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requester has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717 - 787 - 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Robin M. Hittie Chief Counsel