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HomeMy WebLinkAbout15-504 Wild ADVICE OF COUNSEL February 12, 2015 Susan Ellis Wild, Esquire Gross McGinley, LLP 33 S. Seventh Street P.O. Box 4060 Allentown, PA 18105 15-504 Dear Ms. Wild: This responds to your two letters dated December 19, 2014, by which you requested an advisory from the Pennsylvania State Ethics Commission. Issue: Whether, upon assuming part-time employment as a city solicitor, an individual who is a partner in a law firm would have a conflict of interest under Section 1103(a) of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1103 et seq., in matters pertaining to open litigation cases which were contracted to the law firm by the prior city solicitor, where the individual would continue to be a partner in the law firm after becoming the city solicitor. Facts: You request an advisory from the Pennsylvania State Ethics Commission based upon submitted facts that may be fairly summarized as follows. You are a partner in the law firm of Gross McGinley, LLP (the “Firm”). At the time that you submitted your inquiry, you stated that you would become the City Solicitor for the City of Allentown (“City”) effective January 7, 2015. As the City Solicitor, you would be a part-time employee of the City, and you would be paid a salary and not a retainer or hourly rate. You stated that you would continue to be a partner at the Firm after becoming the City Solicitor. For approximately the past eight years, you handled personal injury defense litigation work for the City which was contracted to the Firm by then-City Solicitor Jerry A. Snyder (“Mr. Snyder”). Several Firm associates and a paralegal also performed tasks associated with the aforesaid work for the City, although you handled all trials and significant depositions. There are currently seven open cases (the “Open Cases”) at varying stages of litigation which were referred to the Firm by Mr. Snyder. The contract/engagement letter between the City and the Firm regarding the Open Cases was prepared by Mr. Snyder as the City Solicitor. Firm lawyers currently assigned to the Open Cases are fully familiar with the facts and status of the litigation. It is anticipated that most or all of Wild, 15-504 February 12, 2015 Page 2 the Open Cases will come to a conclusion within the next twelve to eighteen months. The City administration and Mr. Snyder have expressed a preference that you and the Firm would continue to handle the Open Cases even after you would become the City Solicitor, in order to prevent duplicative legal expense from having new counsel become familiar with the Open Cases. You stated that if the Firm would be permitted to continue its representation of the City in the Open Cases, you would supervise the Open Cases in your dual capacity as a partner in the Firm and as the City Solicitor, but no hourly billings would be generated by you in such dual capacity. You stated that you would consider your involvement in the Open Cases to be within the scope of your employment as the City Solicitor without further remuneration. Other attorneys and paralegals in the Firm who would work on the Open Cases would bill in accordance with the hourly fee agreements previously entered into by the Firm and the City. You stated that all bills for legal services from the Firm would be submitted to and approved by an appropriate individual within the City other than you. The narrow question that you have posed is whether you would have any obligations with respect to the Open Cases upon assuming employment as the City Solicitor. You express your understanding that no future legal work of any nature may be referred to the Firm by you as the City Solicitor. You further express your view that retention of the Open Cases by the Firm would not result in a violation of Section 1103(f) of the Ethics Act. Discussion: 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. It is initially noted that this Advice is limited to addressing the narrow question posed. Upon assuming employment as the City Solicitor, you would be considered a public employee subject to the Ethics Act. This conclusion is based upon the submitted fact that as the City Solicitor, you would be a salaried part-time employee of the City. See, P.J.S. v. State Ethics Commission, 555 Pa. 149, 723 A.2d 174 (1999) (holding that a solicitor who is employed by a governmental body and not just on retainer would be considered a “public employee” subject to the provisions of the Ethics Act); cf., C.P.C. v. State Ethics Commission, 698 A.2d 155 (Pa. Cmwlth. 1997), alloc. den., 550 Pa. 686, 704 A.2d 640 (1997) (holding that retained--as opposed to employed--solicitors are not public officials/public employees under the Ethics Act). 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 Wild, 15-504 February 12, 2015 Page 3 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 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. Wild, 15-504 February 12, 2015 Page 4 65 Pa.C.S. § 1102. It is noted that Section 1103(a) of the Ethics Act does not prohibit public officials/public employees from having outside business activities or employment. However, subject to the statutory exclusions to the Ethics Act’s definition of the term “conflict” or “conflict of interest,” 65 Pa.C.S. § 1102, a public official/public employee may not use the authority of his public position--or confidential information obtained by being 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 could form the basis for a conflict of interest under Section 1103(a) of the Ethics Act would include the pursuit of a private business opportunity in the course of public action (Metrick, Order 1037) and 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 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. The abstention requirement 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. Per the Pennsylvania Supreme Court’s decision in Kistler v. State Ethics Commission, 610 Pa. 516, 22 A.3d 223 (2011), in order to violate Section 1103(a) of the Ethics Act, a public official/public employee: … must act in such a way as to put his \[office/public position\] to the purpose of obtaining for himself a private pecuniary benefit. Such directed action implies awareness on the part of the \[public official/public employee\] of the potential pecuniary benefit as well as the motivation to obtain that benefit for himself. Kistler, supra, 610 Pa. at 523, 22 A.3d at 227. To violate Section 1103(a) of the Ethics Act, a public official/public employee “must be consciously aware of a private pecuniary benefit for himself, his family, or his business, and then must take action in the form of one or more specific steps to attain that benefit.” Id., 610 Pa. at 528, 22 A.3d at 231. Based upon Kistler, the existence of a violation of Section 1103(a) would depend upon the circumstances in a given case. Raphael, Opinion 13-003. In addition, Sections 1103(b) and 1103(c) of the Ethics Act, 65 Pa.C.S. §§ 1103(b), (c), provide in part that no person shall offer or give to a public official/public employee anything of monetary value and no public official/public employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official/public employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the question presented. Section 1103(f) of the Ethics Act, pertaining to contracting, provides as follows: § 1103. Restricted activities (f)Contract.-- No public official or public employee or his spouse or child or any business in which the person or Wild, 15-504 February 12, 2015 Page 5 his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 Pa.C.S. § 1103(f). The term “contract” is defined in the Ethics Act as follows: § 1102. Definitions "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. The term shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. 65 Pa.C.S. § 1102. Section 1103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official/public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an “open and public process” be observed as to the contract with the governmental body. Section 1103(f) of the Ethics Act also provides that the public official/public employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. Having established the above general principles, you are advised as follows. The Firm is a business with which you are associated in your capacity as a partner. Section 1103(a) of the Ethics Act, pertaining to conflict of interest, imposes restrictions upon public officials and public employees. Therefore, Section 1103(a) would impose restrictions upon you in your capacity as a public employee, rather than upon you in your private capacity as a partner in the Firm. Wild, 15-504 February 12, 2015 Page 6 The submitted facts do not specify what actions you would take in “supervising” the Open Cases upon becoming City Solicitor. You are advised that although the Ethics Act would not prohibit you from providing legal representation to the City for the Open Cases in your capacity as the salaried City Solicitor, Section 1103(a) of the Ethics Act would prohibit you from acting in your capacity as City Solicitor for the private pecuniary benefit of the Firm. Specifically, you would have a conflict of interest and would transgress Section 1103(a) of the Ethics Act by action(s) taken in your capacity as the City Solicitor if: (1) you would be consciously aware of a private pecuniary benefit for you or the Firm; (2) your action(s) would constitute one or more specific steps to attain that benefit; and (3) neither of the statutory exclusions to the definition of "conflict" or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, would be applicable. In each instance of a conflict of interest, you would be required to abstain fully from participation. Section 1103(f) of the Ethics Act would not be applicable to the current contract(s) between the Firm and the City involving the Open Cases given that such contract(s) would have been entered into prior to you assuming employment as the City Solicitor. Cf., Lewis, Advice 13-587; Bowers, Advice 07-588; Burkhart, Advice 03-535. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Specifically not addressed herein is the applicability of the City of Allentown Home Rule Charter or the Rules of Professional Conduct. Conclusion: Based upon the submitted facts that: (1) you are a partner in the law firm of Gross McGinley, LLP (the “Firm”); (2) at the time that you submitted your inquiry, you stated that you would become the City Solicitor for the City of Allentown (“City”) effective January 7, 2015; (3) as the City Solicitor, you would be a part-time employee of the City, and you would be paid a salary and not a retainer or hourly rate; (4) you would continue to be a partner at the Firm after becoming the City Solicitor; (5) for approximately the past eight years, you handled personal injury defense litigation work for the City which was contracted to the Firm by then-City Solicitor Jerry A. Snyder (“Mr. Snyder”); (6) several Firm associates and a paralegal also performed tasks associated with the aforesaid work for the City, although you handled all trials and significant depositions; (7) there are currently seven open cases (the “Open Cases”) at varying stages of litigation which were referred to the Firm by Mr. Snyder; (8) the contract/engagement letter between the City and the Firm regarding the Open Cases was prepared by Mr. Snyder as the City Solicitor; (9) Firm lawyers currently assigned to the Open Cases are fully familiar with the facts and status of the litigation; (10) it is anticipated that most or all of the Open Cases will come to a conclusion within the next twelve to eighteen months; (11) the City administration and Mr. Snyder have expressed a preference that you and the Firm would continue to handle the Open Cases even after you would become the City Solicitor, in order to prevent duplicative legal expense from having new counsel become familiar with the Open Cases; (12) if the Firm would be permitted to continue its representation of the City in the Open Cases, you would supervise the Open Cases in your dual capacity as a partner in the Firm and as the City Solicitor, but no hourly billings would be generated by you in such dual capacity; (13) you would consider your involvement in the Open Cases to be within the scope of your employment as the City Solicitor without further remuneration; (14) other attorneys and paralegals in the Firm who would work on the Open Cases would bill in accordance with the hourly fee agreements previously entered into by the Firm and the City; and (15) all bills for legal services from the Firm would be submitted to and approved by an appropriate individual within the City other than you, you are advised as follows. Upon assuming employment as the City Solicitor, you would become a public employee subject to the provisions of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq. The Firm is a business with which you are Wild, 15-504 February 12, 2015 Page 7 associated in your capacity as a partner. Section 1103(a) of the Ethics Act, pertaining to conflict of interest, imposes restrictions upon public officials and public employees. Therefore, Section 1103(a) would impose restrictions upon you in your capacity as a public employee, rather than upon you in your private capacity as a partner in the Firm. The submitted facts do not specify what actions you would take in “supervising” the Open Cases upon becoming City Solicitor. You are advised that although the Ethics Act would not prohibit you from providing legal representation to the City for the Open Cases in your capacity as the salaried City Solicitor, Section 1103(a) of the Ethics Act would prohibit you from acting in your capacity as City Solicitor for the private pecuniary benefit of the Firm. Specifically, you would have a conflict of interest and would transgress Section 1103(a) of the Ethics Act by action(s) taken in your capacity as the City Solicitor if: (1) you would be consciously aware of a private pecuniary benefit for you or the Firm; (2) your action(s) would constitute one or more specific steps to attain that benefit; and (3) neither of the statutory exclusions to the definition of "conflict" or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, would be applicable. In each instance of a conflict of interest, you would be required to abstain fully from participation. Section 1103(f) of the Ethics Act would not be applicable to the current contract(s) between the Firm and the City involving the Open Cases given that such contract(s) would have been entered into prior to you assuming employment as the City Solicitor. 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